2003 Non-Qualified Stock Option Plan - Mid Atlantic Medical Services Inc.
MID ATLANTIC MEDICAL SERVICES, INC.
2003 NON-QUALIFIED STOCK OPTION PLAN
Article I. Purpose, Adoption and Term of the Plan
1.01 Purpose. The purpose of the Mid Atlantic Medical Services, Inc. 2003
Non-Qualified Stock Option Plan (hereinafter referred to as the "Plan") is to
advance the interests of the Company (as hereinafter defined) and its
Subsidiaries (as hereinafter defined) by encouraging and providing for the
acquisition of an equity interest in the Company by non-employee directors,
officers and key employees through the grant of options to purchase Common Stock
(as hereinafter defined). The Plan will enable the Company to retain the
services of non-employee directors, officers and key employees upon whose
judgment, interest, and special effort the successful conduct of its operations
is largely dependent and to compete effectively with other enterprises for the
services of non-employee directors, officers and key employees as may be needed
for the continued improvement of its business.
1.02 Adoption and Term. The Plan shall become effective on May 1, 2003,
subject to the prior approval of a simple majority of the holders of Common
Stock represented, by person or by proxy, and entitled to vote at an annual or
special meeting of the holders of Common Stock. The Plan shall terminate on May
1, 2013, or such earlier date as shall be determined by the Board (as
hereinafter defined); provided, however, that, in the event the Plan is not
approved by a simple majority of the holders of Common Stock represented, by
person or by proxy, and entitled to vote at an annual or special meeting at or
before the Company's 2003 annual meeting of holders of Common Stock, the Plan
shall terminate on such date and any Options (as hereinafter defined) made under
the Plan prior to such date shall be void and of no force and effect.
Article II. Definitions
For purposes of the Plan, capitalized terms shall have the following
meanings:
2.01 "Beneficiary" means an individual, trust or estate who or that, by
will or the laws of descent and distribution, succeeds to the rights and
obligations of the Participant under the Plan and an Option Agreement upon the
Participant's death.
2.02 "Board" means the Board of Directors of the Company.
2.03 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor thereto. References to a section of the Code shall
include that section and any comparable section or sections of any future
legislation that amends, supplements, or supersedes said section.
2.04 "Committee" means a committee of the Board as may be appointed, from
time to time, by the Board.
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(a) The Board may appoint more than one Committee to
administer the Plan. If it appoints more than one Committee, one Committee (the
"Compensation and Stock Option Committee") shall have the authority to grant
Options to a Participant who is either, at the Date of Grant of the Option, a
"covered employee" as defined in Section 162(m) or who is subject to Section 16
of the Exchange Act; however, such Committee shall also have the authority to
grant Options to other Participants. The Compensation and Stock Option Committee
shall be composed of at least two directors of the Company, each of whom is a
"non-employee director" as defined in Rule 16b-3 and an "outside director"
within the meaning of Section 162(m). If, however, at least two of the Company's
directors are not both "non-employee directors" and "outside directors," the
Board may grant Options to a Participant who is either a "covered employee" or
subject to Section 16 of the Exchange Act, in which case the Board may also
administer the Plan and the term "Committee" as used herein shall also include
the Board. The other Committee (the "Select Committee") shall be composed of at
least one director, who may be an officer of the Company. The Select Committee
shall have authority to grant Options to a Participant who is not, at the Date
of Grant of the Option, either a "covered employee" as defined in Section 162(m)
or subject to Section 16 of the Exchange Act.
(b) The Board may, from time to time, appoint members of each
Committee in substitution for those members who were previously appointed and
may fill vacancies, however caused, in the Committee.
(c) The Compensation and Stock Option Committee and the Select
Committee shall each have the power and authority to administer the Plan in
accordance with Article III with respect to particular classes of Participants
(as specified in Section 2.04(a)) and, when used herein, the term "Committee"
shall mean either the Compensation and Stock Option Committee or the Select
Committee if the Board appoints more than one Committee to administer the Plan.
If, however, there is a conflict between the determinations made by the
Compensation and Stock Option Committee and the Select Committee, the
determinations made by the Compensation and Stock Option Committee shall
control.
2.05 "Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
2.06 "Company" means Mid Atlantic Medical Services, Inc., a corporation
organized under the laws of the State of Delaware, and its successors.
2.07 "Date of Grant" means the date designated by the Committee as the date
as of which it grants an Option, which shall not be earlier than the date on
which the Committee approves the granting of such Option.
2.08 "Disability" has the meaning specified in Section 22(e)(3) of the
Code.
2.09 "Disability Date" means the date as of which an Employee Participant
is determined by the Committee to have a Disability.
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2.10 "Employee Participant" means a Participant who is not a Non-Employee
Director.
2.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2.12 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.13 "Fair Market Value" of a share of Common Stock means, as of any given
date, the closing sales price of a share of Common Stock on such date on the
principal national securities exchange on which the Common Stock is then traded
or, if the Common Stock is not then traded on a national securities exchange,
the closing sales price or, if none, the average of the bid and asked prices of
the Common Stock on such date as reported on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq"); provided, however,
that, if there were no sales reported as of such date, Fair Market Value shall
be computed as of the last date preceding such date on which a sale was
reported; provided, further, that, if any such exchange or quotation system is
closed on any day on which Fair Market Value is to be determined, Fair Market
Value shall be determined as of the first date immediately preceding such date
on which such exchange or quotation system was open for trading. If the Common
Stock is not admitted to trade on a securities exchange or quoted on Nasdaq, the
Fair Market Value of a share of Common Stock as of any given date shall be as
determined in good faith by the Committee, in its sole and absolute discretion,
which determination may be based on, among other things, the opinion of one or
more independent and reputable appraisers qualified to value companies in the
Company's line of business. Notwithstanding the foregoing, the Fair Market Value
of a share of Common Stock shall never be less than par value per share.
2.14 "Non-Employee Director" means each member of the Board or of the Board
of Directors of a Subsidiary, in each case who is not an employee of the Company
or of any of its Subsidiaries.
2.15 "Option Agreement" means a written agreement between the Company and a
Participant specifically setting forth the terms and conditions of an Option
granted to a Participant under the Plan.
2.16 "Option" means any option to purchase Common Stock granted under the
Plan to an Employee Participant or to a Non-Employee Director. All Options
granted under the Plan shall be Options that do not qualify as incentive stock
options under Section 422 of the Code.
2.17 "Participant" means any employee or Non-Employee Director of the
Company or any of its Subsidiaries selected by the Committee to receive an
Option under the Plan in accordance with Articles V and/or VI.
2.18 "Plan" means the Mid Atlantic Medical Services, Inc. 2003
Non-Qualified Stock Option Plan as set forth herein, and as the same may be
amended from time to time.
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2.19 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under Section 16
of the Exchange Act and any successor rule.
2.20 "SEC" means the Securities and Exchange Commission.
2.21 "Section 162(m)" means Section 162(m) of the Code and the regulations
thereunder.
2.22 "Subsidiary" means a company more than 50% of the equity interests of
which are beneficially owned, directly or indirectly, by the Company.
2.23 "Termination of Employment" means, with respect to an Employee
Participant, the voluntary or involuntary termination of a Participant's
employment with the Company or any of its Subsidiaries for any reason,
including, without limitation, death, Disability, retirement or as the result of
the sale or other divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, and whether a Termination of Employment is
a result of Disability, shall be determined in each case by the Committee in its
sole and absolute discretion.
Article III. Administration
3.01 Committee. The Plan shall be administered by the Committee, which
shall have exclusive and final authority in each determination, interpretation,
or other action affecting the Plan and its Participants. The Committee shall
have the sole and absolute discretion to interpret the Plan, to establish and
modify administrative rules for the Plan, to select the Non-Employee Directors,
officers and other key employees to whom Options may be granted, to determine
the terms and provisions of the respective Option Agreements (which need not be
identical), to determine all claims for benefits under the Plan, to impose such
conditions and restrictions on Options as it determines appropriate, to
determine whether the shares delivered on exercise of Options will be treasury
shares or will be authorized but previously unissued shares, and to take such
steps in connection with the Plan and Options granted hereunder as it may deem
necessary or advisable. No action of the Committee will be effective if it
contravenes or amends the Plan in any respect.
3.02 Actions of the Committee. Except when the "Committee" is the "Board"
in the circumstance described in the fourth sentence of Section 2.04(a), all
determinations of the Committee shall be made by a majority vote of its members.
A majority of a Committee's members shall constitute a quorum. Any decision or
determination reduced to writing and signed by all of the members shall be fully
as effective as if it had been made by a majority vote at a meeting duly called
and held. The Committee shall also have express authorization to hold Committee
meetings by conference telephone, or similar communication equipment by means of
which all persons participating in the meeting can hear each other.
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Article IV. Shares of Common Stock
4.01 Number of Shares of Common Stock Issuable. Subject to adjustments as
provided in Section 7.05, the lesser of 2,000,000 shares of Common Stock or an
amount not to exceed 5% of the total amount of the class outstanding of Common
Stock as of the record date for the 2003 Annual Meeting, rounded down to the
lowest multiple of hundred thousand shares, shall be available for Options under
the Plan. Any and all of such shares may be issued pursuant to Options granted
to Employee Participants or to Non-Employee Directors. The Common Stock to be
offered under the Plan shall be authorized and unissued Common Stock, or issued
Common Stock that shall have been reacquired by the Company and held in its
treasury.
4.02 Number of Shares of Common Stock Awarded to any Participant. In the
event the purchase price of an Option is paid, or related tax or withholding
payments are satisfied, in whole or in part through the delivery of shares of
Common Stock issuable in connection with the exercise of the Option, a
Participant will be deemed to have received an Option with respect to those
shares of Common Stock.
4.03 Shares of Common Stock Subject to Terminated Options. The Common Stock
covered by any unexercised portions of terminated Options may again be subject
to new Options under the Plan.
Article V. Participation
5.01 Eligible Participants. Employee Participants shall be such officers
and other key employees of the Company or its Subsidiaries, whether or not
directors of the Company, as the Committee, in its sole and absolute discretion,
may designate from time to time. Non-Employee Director Participants shall be
such Non-Employee Directors as the Committee, in its sole and absolute
discretion, may designate from time to time. In making such designation, the
Committee may take into account the nature of the services rendered by the
officers, key employees and Non-Employee Directors, their present and potential
contributions to the success of the Company and its Subsidiaries, and such other
factors as the Committee, in its sole and absolute discretion, may deem
relevant. The Committee's designation of a Participant in any year shall not
require the Committee to designate such person to receive Options in any other
year. The Committee shall consider such factors as it deems pertinent in
selecting Participants and in determining the type and amount of their
respective Options. A Participant may hold more than one Option granted under
the Plan. During the term of the Plan, no Employee Participant may receive
Options to purchase more than 1,000,000 shares of Common Stock under the Plan.
Article VI. Stock Options
6.01 Grant of Option. Any Option granted under the Plan shall have such
terms as the Committee may, from time to time, approve, and the terms and
conditions of Options need not be the same with respect to each Participant.
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6.02 Terms of Options. Options granted under the Plan shall be subject to
the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the time of
grant but shall not be less than the Fair Market Value of a share of Common
Stock on the Date of Grant; provided, however, that, except as required by Rule
16b-3 with respect to Options granted to persons subject to Section 16 of the
Exchange Act, no amendment of an Option shall be deemed to be the grant of a new
Option for purposes of this Section 6.02(a). Notwithstanding the foregoing, the
option price per share of Common Stock of an Option shall never be less than par
value per share.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the Date
of Grant.
(c) Exercisability. An Option Agreement with respect to
Options may contain such performance targets, waiting periods, exercise dates
and restrictions on exercise (including, but not limited to, a requirement that
an Option is exercisable in periodic installments), and restrictions on transfer
of the underlying shares of Common Stock, if any, as may be determined by the
Committee at the time of grant. To the extent not exercised, installments shall
cumulate and be exercisable, in whole or in part, at any time after becoming
exercisable, subject to the limitations set forth in Sections 6.02(b), (f), (g)
and (h).
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions that apply under Section 6.02(c) and
subject to Sections 6.02(b), (f), (g) and (h), Options may be exercised in whole
or in part at any time during the term of the Option, by giving written notice
of exercise to the Company specifying the number of shares of Common Stock to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price in such form as the Committee may accept (including payment in accordance
with a cashless exercise program approved by the Committee). If and to the
extent the Committee determines in its sole and absolute discretion at or after
grant, payment in full or in part may also be made in the form of shares of
Common Stock already owned by the Participant (and for which the Participant has
good title, free and clear of any liens or encumbrances) based on the Fair
Market Value of the shares of Common Stock on the date the Option is exercised;
provided, however, that any already owned Common Stock used for payment must
have been held by the Participant for at least six months. No Common Stock shall
be issued on exercise of an Option until payment, as provided herein, therefor
has been made. A Participant shall generally have the right to dividends or
other rights of a stockholder with respect to Common Stock subject to the Option
only when certificates for shares of Common Stock are issued to the Participant.
(e) Non-Transferability of Options. No Option shall be
transferable by the Participant otherwise than by will, by the laws of descent
and distribution, or pursuant to a domestic relations order.
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(f) Acceleration or Extension of Exercise Time. The Committee,
in its sole and absolute discretion, shall have the right (but shall not in any
case be obligated) to permit purchase of Common Stock subject to any Option
granted to a Participant prior to the time such Option would otherwise become
exercisable under the terms of the Option Agreement. In addition, the Committee,
in its sole and absolute discretion, shall have the right (but shall not in any
case be obligated) to permit any Option granted to a Participant to be exercised
after the day the Option would otherwise expire, subject, however, to the
limitation set forth in Section 6.02(b).
(g) Exercise of Options Upon Termination of Employment. The
following provisions apply to Options granted to Employee Participants:
(i) Exercise of Vested Options Upon Termination of
Employment.
(A) Termination. Unless the Committee, in
its sole and absolute discretion,
provides for a shorter or longer period
of time in an Option Agreement or a
longer period of time in accordance
with Section 6.02(f), upon an Employee
Participant's Termination of Employment
other than by reason of death or
Disability, the Employee Participant
may, within 90 days from the date of
such Termination of Employment,
exercise all or any part of his or her
Options as were exercisable at the date
of Termination of Employment. In no
event, however, may any Option be
exercised later than the date
determined pursuant to Section 6.02(b).
(B) Disability. Unless the Committee, in
its sole and absolute discretion,
provides for a shorter or longer period
of time in an Option Agreement or a
longer period of time in accordance
with Section 6.02(f), upon an Employee
Participant's Disability Date, the
Employee Participant may, within one
year after the Disability Date,
exercise all or a part of his or her
Options, whether or not such Option was
exercisable on the Disability Date, but
only to the extent not previously
exercised. In no event, however, may
any Option be exercised later than the
date determined pursuant to Section
6.02(b).
(C) Death. Unless the Committee, in its
sole and absolute discretion, provides
for a shorter period of time in an
Option Agreement, in the event of the
death of an Employee Participant while
employed by the Company or a Subsidiary,
the Employee Participant's Beneficiary
shall be entitled to exercise any
Options that were vested at the date of
the Employee Participant's death until
the initial expiration date of such
Option determined pursuant to Section
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6.02(b). Notwithstanding the above, if
the Employee Participant at the time of
death had been an employee of the
Company or a Subsidiary for a period of
ten years, 50% of the Employee
Participant's unvested Option would
become vested and subject to exercise as
stated above and if the Employee
Participant at the time of death had
been an employee of the Company or a
Subsidiary for a period of fifteen
years, all of the Employee Participant's
unvested Options would become vested and
subject to exercise as stated above and
shall expire on the date of expiration
of the Option determined pursuant to
Section 6.02(b).
(ii) Expiration of Unvested Options Upon Termination of
Employment. Subject to Sections 6.02(f) and
6.02(g)(i)(B) and (C), to the extent all or any part of
an Option granted to an Employee Participant was not
exercisable as of the date of Termination of
Employment, such right shall expire at the date of such
Termination of Employment. Notwithstanding the
foregoing, the Committee, in its sole and absolute
discretion and under such terms as it deems
appropriate, may permit an Employee Participant to
continue to accrue service with respect to the right to
exercise his or her Options.
(h) Exercise of Options Upon Termination of Service. Unless
the Committee, in its sole and absolute discretion, provides for a shorter or
longer period of time in an Option Agreement or a longer period of time in
accordance with Section 6.02(f), if a Non-Employee Director's service with the
Company or a Subsidiary terminates for any reason or if such person ceases to be
a Non-Employee Director, such Option may be exercised to the extent it was
exercisable on the date of such termination of service until the expiration of
the stated term of the Option, but only to the extent it was not previously
exercised.
Article VII. Terms Applicable to All Options Granted Under the Plan
7.01 Plan Provisions Control Option Terms. The terms of the Plan shall
govern all Options granted under the Plan, and in no event shall the Committee
have the power to grant to a Participant any Option under the Plan that is
contrary to any provisions of the Plan. If any provision of any Option granted
under the Plan conflicts with any of the terms in the Plan as constituted on the
Date of Grant of such Option, the terms in the Plan as constituted on the Date
of Grant of such Option shall control.
7.02 Option Agreement. No person shall have any rights under any Option
granted under the Plan unless and until the Company and the Participant to whom
such Option shall have been granted shall have executed and delivered an Option
Agreement authorized by the Committee expressly granting the Option to such
person and containing provisions setting forth the terms of the Option. If there
is any conflict between the provisions of an Option Agreement and the terms of
the Plan, the terms of the Plan shall control.
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7.03 Modification of Option After Grant. Except as provided by the
Committee, in its sole and absolute discretion, in the Option Agreement or as
provided in Section 7.05, no Option granted under the Plan to a Participant may
be modified (unless such modification does not materially decrease the value of
the Option) after the Date of Grant except by express written agreement between
the Company and the Participant, provided that any such change (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. In addition, the repricing of any Option granted under this Plan
shall require shareholder approval.
7.04 Taxes. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any Common Stock issuable
under such Participant's Option, and the Company may defer issuance of Common
Stock upon the grant or exercise of an Option unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee or its delegate
and shall be payable by the Participant at such time as the Committee
determines. A Participant shall be permitted to satisfy his or her tax or
withholding obligation by (a) having cash withheld from the Participant's salary
or other compensation payable by the Company or a Subsidiary, (b) the payment of
cash by the Participant to the Company, (c) the payment in shares of Common
Stock already owned by the Participant valued at Fair Market Value, and/or (d)
the withholding from the Option, at the appropriate time, of a number of shares
of Common Stock sufficient, based upon the Fair Market Value of such Common
Stock, to satisfy such tax or withholding requirements. The Committee shall be
authorized, in its sole and absolute discretion, to establish rules and
procedures relating to any such withholding methods it deems necessary or
appropriate (including, without limitation, rules and procedures relating to
elections by Participants who are subject to the provisions of Section 16 of the
Exchange Act to have shares of Common Stock withheld from an Award to meet those
withholding obligations).
7.05 Adjustments to Reflect Capital Changes; Change in Control.
(a) Recapitalization. The number and kind of shares subject to
outstanding Options, the purchase price or exercise price of such Options, the
limit set forth in the last sentence of Section 5.01 of the Plan, and the number
and kind of shares available for Options subsequently granted under the Plan
shall be appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or the Options
granted under the Plan. The Committee shall have the power and sole and absolute
discretion to determine the nature and amount of the adjustment to be made in
each case.
(b) Sale or Reorganization. After any reorganization, merger,
or consolidation in which the Company is the surviving entity, each Participant
shall, at no additional cost, be entitled upon the exercise of an Option
outstanding prior to such event to receive (subject to any required action by
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stockholders), in lieu of the number of shares of Common Stock receivable on
exercise pursuant to such Option, the number and class of shares of stock or
other securities to which such Participant would have been entitled pursuant to
the terms of the reorganization, merger, or consolidation if, at the time of
such reorganization, merger, or consolidation, such Participant had been the
holder of record of a number of shares of Common Stock equal to the number of
shares of Common Stock receivable on exercise pursuant to such Option.
Comparable rights shall accrue to each Participant in the event of successive
reorganizations, mergers, or consolidations of the character described above.
(c) Options to Purchase Stock of Acquired Companies. After any
reorganization, merger, or consolidation in which the Company shall be a
surviving entity, the Committee may grant substituted Options under the
provisions of the Plan, replacing old options granted under a plan of another
party to the reorganization, merger, or consolidation whose stock subject to the
old options may no longer be issued following such reorganization, merger, or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions shall be determined by the Committee in its sole and
absolute discretion. Any such adjustments may provide for the elimination of any
fractional shares of Common Stock that might otherwise become subject to any
Options.
(d) Changes in Control. (i) Upon the dissolution or
liquidation of the Company, (ii) upon a reorganization, merger, or consolidation
in which the Company is not the surviving corporation, (iii) upon the sale of
substantially all of the property or assets of the Company to another
corporation, or (iv) if at least 50% or more of the voting stock of the Company
is sold either through a tender offer or otherwise to a party or an affiliated
group of parties, then the Plan and the Options issued thereunder shall
terminate, unless provisions are made in connection with such transaction for
the assumption of Options theretofore granted, or for the substitution for such
Options of new options of the successor corporation or a parent or subsidiary
thereof, with appropriate adjustment as to the number and kinds of shares and
the per share exercise prices. In the event such Options shall be terminated,
all outstanding Options shall be exercisable in full for at least 30 days prior
to such termination date, whether or not exercisable during such period,
subject, however, to the limitation set forth in Section 6.02(b). For purposes
of this Section 7.05(d), the Company refers to Mid Atlantic Medical Services,
Inc., MD-Individual Practice Association, Inc., Optimum Choice, Inc., and/or
Physicians Health Plan of Maryland, Inc., jointly or separately. The Committee
shall determine the date on which Options may become exercisable pursuant to
this Section 7.05(d).
7.06 Surrender of Options. Any Option granted to a Participant under the
Plan may be surrendered to the Company for cancellation on such terms as the
Committee and holder approve.
7.07 No Right to Option; No Right to Employment. No director, employee or
other person shall have any claim or right to be granted an Option. Neither the
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or any of its
Subsidiaries.
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7.08 Options Not Includable for Benefit Purposes. Income recognized by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any employee pension benefit plan (as such term
is defined in Section 3(2) of ERISA) or group insurance or other benefit plans
applicable to the Participant that are maintained by the Company or any of its
Subsidiaries, except as may be provided under the terms of such plans or
determined by resolution of the Board.
7.09 Governing Law. The Plan and all determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Delaware
other than the conflict of laws provisions of such laws, and shall be construed
in accordance therewith.
7.10 No Strict Construction. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Option granted under the
Plan or any rule or procedure established by the Committee.
7.11 Compliance with Rule 16b-3 and Section 162(m). It is intended that the
Plan be applied and administered in compliance with Rule 16b-3 and with Section
162(m). If any provision of the Plan would be in violation of Section 162(m) if
applied as written, such provision shall not have effect as written and shall be
given effect so as to comply with Section 162(m) as determined by the Committee
in its sole and absolute discretion. The Board is authorized to amend the Plan
and the Committee is authorized to make any such modifications to Option
Agreements to comply with Rule 16b-3 and Section 162(m), as they may be amended
from time to time, and to make any other such amendments or modifications deemed
necessary or appropriate to better accomplish the purposes of the Plan in light
of any amendments made to Rule 16b-3 and Section 162(m). Notwithstanding the
foregoing, the Board may amend the Plan so that it (or certain of its
provisions) no longer comply with either or both of Rule 16b-3 or Section 162(m)
if the Board specifically determines that such compliance is no longer desired
and the Committee may grant Options that do not comply with Rule 16b-3 and/or
Section 162(m) if the Committee determines, in its sole and absolute discretion,
that it is in the interest of the Company to do so.
7.12 Captions. The captions (i.e., all Article and Section headings) used
in the Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize, or affect in any way any provisions
of the Plan, and all provisions of the Plan shall be construed as if no captions
have been used in the Plan.
7.13 Severability. Whenever possible, each provision in the Plan and every
Option at any time granted under the Plan shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of the Plan
or any Option at any time granted under the Plan shall be held to be prohibited
by or invalid under applicable law, then (a) such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law, and (b) all other provisions of the Plan
and every other Option at any time granted under the Plan shall remain in full
force and effect.
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7.14 Legends. All certificates for Common Stock delivered under the Plan
shall be subject to such transfer restrictions set forth in the Plan and such
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
the Common Stock is then listed, and any applicable federal or state securities
law. The Committee may cause a legend or legends to be put on any such
certificates to make appropriate references to such restrictions.
7.15 Investment Representation. The Committee may, in its sole and absolute
discretion, demand that any Participant awarded an Option deliver to the
Committee at the time of grant or exercise of such Option a written
representation that the shares of Common Stock to be acquired upon exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such written representation
by the Participant prior to the delivery of any shares of Common Stock pursuant
to the exercise of his or her Option shall be a condition precedent to the
Participant's right to purchase or otherwise acquire such shares of Common Stock
by such grant or exercise. The Company is not legally obliged hereunder if
fulfillment of its obligations under the Plan would violate federal or state
securities laws.
7.16 Amendment and Termination.
(a) Amendment. The Board shall have complete power and
authority to amend the Plan at any time it is deemed necessary or appropriate;
provided, however, that the Board shall not, without the affirmative approval of
a simple majority of the holders of Common Stock, represented, by person or by
proxy, and entitled to vote at an annual or special meeting of the holders of
Common Stock, make any amendment that requires stockholder approval under
applicable law or rule, unless the Board determines that compliance with such
law or rule is no longer desired with respect to the Plan as a whole or the
provision to be amended. No termination or amendment of the Plan may, without
the consent of the Participant to whom any Option shall theretofore have been
granted under the Plan, adversely affect the right of such individual under such
Option; provided, however, that the Committee may, in its sole and absolute
discretion, make provision in an Option Agreement for such amendments that, in
its sole and absolute discretion, it deems appropriate.
(b) Termination. The Board shall have the right and the power
to terminate the Plan at any time. No Option shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan shall not
have any other effect, and any Option outstanding at the time of the termination
of the Plan may be amended and exercised and may vest after termination of the
Plan at any time prior to the expiration date of such Option to the same extent
such Option could have been amended and would have been exercisable or would
have vested had the Plan not terminated.
7.17 Costs and Expenses. All costs and expenses incurred in administering
the Plan shall be borne by the Company.
7.18 Unfunded Plan. The Company shall not be required to establish any
special or separate fund or make any other segregation of assets to assure the
payment of any award under the Plan.