2003 Employee Stock Purchase Plan - Pyramid Breweries Inc.
PYRAMID BREWERIES INC.
2003 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSES
The purposes of the Pyramid Breweries Inc. 2003 Employee Stock Purchase
Plan (the "Plan") are to (a) assist employees of Pyramid Breweries Inc. (the
"Company") and its Designated Corporations (as defined in Section 2) in
acquiring a stock ownership interest in the Company pursuant to a plan that is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"), and (b) encourage
such employees to remain in the employment of the Company and its Designated
Corporations.
SECTION 2. DEFINITIONS
As used in the Plan:
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Company's Compensation Committee or any other
committee of the Board appointed by the Board to administer the Plan.
"COMPANY" means Pyramid Breweries Inc., a Washington corporation.
"COMPANY TRANSACTION" means consummation of
(a) a merger or consolidation of the Company with or into any other
company, entity or person; or
(b) a sale, lease, exchange or other transfer in one transaction or a
series of related transactions of all or substantially all the Company's
outstanding securities or all or substantially all the Company's assets;
provided, however, that a Company Transaction shall not include a Related Party
Transaction.
"DESIGNATED CORPORATION" means any domestic Parent Corporation or
Subsidiary Corporation or any other Parent Corporation or Subsidiary Corporation
that is designated as eligible to participate in the Plan by the Board or the
Committee.
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"ELIGIBLE COMPENSATION" means all regular straight time salary or
earnings and does not include severance pay, hiring and relocation bonuses, pay
in lieu of vacations, sick leave or any other special payments.
"ELIGIBLE EMPLOYEE" means any employee of the Company or a Designated
Corporation who is in the employ of the Company or any Designated Corporation on
one or more Offering Dates and who meets the following criteria:
(a) the employee does not, immediately after the Option is granted, own
stock (as defined by Code Sections 423(b)(3) and 424(d)) possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or of a Parent Corporation or a Subsidiary Corporation;
(b) the employee's customary employment is for 20 hours or more per
week (or any lesser number of hours established by the Plan Administrator for a
future Offering); and
(c) if specified by the Plan Administrator for a future Offering, the
employee has been employed for a certain minimum period of time as of an
Offering Date; provided, however, that any such minimum employment period may
not exceed two years.
If any employee of a Designated Corporation is eligible to participate
in the Plan, then all employees of that Designated Corporation who meet the
requirements of this paragraph shall also be considered Eligible Employees.
"ENROLLMENT AGREEMENT" means a written instrument, in a form designated
or approved by the Plan Administrator, that an Eligible Employee must submit to
the Company to enroll in the Plan.
"ESPP BROKER" means a qualified stock brokerage or other financial
services firm that has been designated or approved by the Plan Administrator.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall be as established in good faith by the Plan
Administrator or, if the Stock is listed on the Nasdaq National Market, Fair
Market Value shall mean the closing price of the Stock on the Offering Date or
on the Purchase Date, as applicable. If no sales of the Stock were made on the
Nasdaq National Market on the applicable date, Fair Market Value shall mean the
closing price of a share of the Stock as reported for the next preceding day on
which sales of the Stock were made on the Nasdaq National Market.
"OFFERING" has the meaning set forth in Section 5.1.
"OFFERING DATE" means the first day of an Offering.
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"OPTION" means an option granted under the Plan to an Eligible Employee
to purchase shares of Stock.
"PARENT CORPORATION" means any corporation, other than the Company, in
an unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations, other than the Company, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"PARTICIPANT" means any Eligible Employee who has elected to
participate in an Offering in accordance with the procedures set forth in
Section 7.1 and who has not withdrawn from the Plan or whose participation in
the Plan has not terminated.
"PLAN" means the Pyramid Breweries Inc. 2003 Employee Stock Purchase
Plan.
"PLAN ADMINISTRATOR" has the meaning set forth in Section 3.1.
"PURCHASE DATE" means the last day of each Purchase Period.
"PURCHASE PERIOD" has the meaning set forth in Section 5.2.
"PURCHASE PRICE" has the meaning set forth in Section 6.
"RELATED PARTY TRANSACTION" means (a) a merger or consolidation of the
Company in which the holders of the outstanding voting securities of the Company
immediately prior to the merger or consolidation hold at least a majority of the
outstanding voting securities of the Successor Company immediately after the
merger or consolidation; (b) a sale, lease, exchange or other transfer of the
Company's assets to a majority-owned subsidiary company; (c) a transaction
undertaken for the principal purpose of restructuring the capital of the
Company, including but not limited to, reincorporating the Company in a
different jurisdiction or creating a holding company; or (d) a corporate
dissolution or liquidation.
"STOCK" means the common stock, $.01 par value per share, of the
Company.
"SUBSIDIARY CORPORATION" means any corporation, other than the Company,
in an unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"SUCCESSOR COMPANY" has the meaning set forth in Section 17.3.
"WITHDRAWAL NOTICE" means a notice, in a form designated or approved by
the Plan Administrator, that a Participant must submit to the Company to
withdraw from the Plan pursuant to Section 11.3.
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SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or the Committee or, if and
to the extent the Board or Committee designates an executive officer of the
Company to administer the Plan, by such executive officer (each, the "Plan
Administrator"). Any decisions made by the Plan Administrator shall be
applicable equally to all Participants.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Subject to the provisions of the Plan, the Plan Administrator shall
have exclusive authority, in its discretion, to determine all matters relating
to Options granted under the Plan, including all terms, conditions, restrictions
and limitations of Options; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and privileges within
the meaning of Code Section 423(b)(5). The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, unless reserved to the Board or the
Committee, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate ministerial duties to such of the Company's
officers or employees as it so determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in Section 17, a
maximum of 500,000 shares of Stock shall be available for issuance under the
Plan. Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company.
SECTION 5. OFFERING DATES
5.1 OFFERINGS
(a) Except as otherwise set forth below, the Plan shall be implemented
by a series of Offerings (each, an "Offering"). Offerings shall commence on
January 1, April 1, July 1 and October 1 of each year and end on the next March
31, June 30, September 31 and December 31, respectively, occurring thereafter.
(b) Notwithstanding the foregoing, the Plan Administrator may establish
(i) a different term for one or more future Offerings and (ii) different
commencing and ending dates for such Offerings; provided, however, that an
Offering may not exceed five years; and provided, further, that if the Purchase
Price may be less than 85% of the Fair Market Value of the Stock on the Purchase
Date, the Offering may not exceed 27 months.
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(c) In the event the first or the last day of an Offering is not a
regular business day, then the first day of the Offering shall be deemed to be
the next regular business day and the last day of the Offering shall be deemed
to be the last preceding regular business day.
5.2 PURCHASE PERIODS
(a) Each Offering shall consist of one Purchase Period (a "Purchase
Period"). The last day of each Purchase Period shall be the Purchase Date for
such Purchase Period. Purchase Periods shall commence on January 1, April 1,
July 1 and October 1 of each year and shall end on the next March 31, June 30,
September 30 and December 31, respectively, occurring thereafter.
(b) Notwithstanding the foregoing, the Plan Administrator may establish
(i) a different term for one or more future Purchase Periods and (ii) different
commencing dates and Purchase Dates for any such Purchase Period.
(c) In the event the first or last day of a Purchase Period is not a
regular business day, then the first day of the Purchase Period shall be deemed
to be the next regular business day and the last day of the Purchase Period
shall be deemed to be the last preceding regular business day.
SECTION 6. PURCHASE PRICE
6.1 GENERAL RULES
Subject to Section 6.2, the purchase price (the "Purchase Price") at
which Stock may be acquired in an Offering pursuant to the exercise of all or
any portion of an Option granted under the Plan shall be 85% of the lesser of
(a) the Fair Market Value of the Stock on the Offering Date of such Offering and
(b) the Fair Market Value of the Stock on the Purchase Date. Notwithstanding the
foregoing, the Plan Administrator may establish a different Purchase Price for
any Offering, which shall not be less than the Purchase Price set forth in the
preceding sentence.
6.2 CHANGE IN PURCHASE PRICE
(a) Notwithstanding the foregoing, if on the effective date of
shareholder approval of the Plan, the Fair Market Value of a share of Stock is
higher than the Fair Market Value on an Offering Date that occurred prior to the
date of such shareholder approval, the Purchase Price for the Stock in such
Offering shall be 85% of the lesser of (i) the Fair Market Value of the Stock on
the effective date of shareholder approval of the Plan and (ii) the Fair Market
Value of the Stock on the Purchase Date.
(b) In addition, if an increase in the number of shares of Stock
authorized for issuance under the Plan is approved by the shareholders of the
Company and all or a portion of such additional shares are to be issued during
one or more Offerings that are underway at
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the time of shareholder approval of such increase, then, if as of the date of
such shareholder approval, the Fair Market Value of a share of Stock is higher
than the Fair Market Value on the Offering Date for any such Offering, the
Purchase Price for such additional shares shall be 85% of the lesser of (a) the
Fair Market Value of the Stock on the date of such shareholder approval and (b)
the Fair Market Value of the Stock on the Purchase Date.
SECTION 7. PARTICIPATION IN THE PLAN
7.1 INITIAL PARTICIPATION
An employee shall become a Participant in the Plan on the first
Offering Date after (a) qualifying as an Eligible Employee under the Plan and
(b) delivering a completed Enrollment Agreement to the Company that complies
with the procedures and requirements established by the Plan Administrator for
enrollment in the Plan. An Eligible Employee who does not submit an Enrollment
Agreement to the Company shall not participate in the Plan for that Offering or
for any subsequent Offering, unless such Eligible Employee subsequently enrolls
in the Plan by filing an Enrollment Agreement that complies with the Company's
requirements and procedures.
An employee who becomes eligible to participate in the Plan after an
Offering has commenced shall not be eligible to participate in that Offering but
may participate in any subsequent Offering, provided that such employee is still
an Eligible Employee as of the commencement of any such subsequent Offering.
Eligible Employees may not participate in more than one Offering at a time.
7.2 CONTINUED PARTICIPATION
A Participant shall automatically participate in the next Offering
until such time as such Participant withdraws from the Plan pursuant to Section
11.3 or terminates employment as provided in Section 13. If a Participant is
automatically withdrawn from an Offering at the end of a Purchase Period
pursuant to Section 12, then the Participant shall automatically participate in
the Offering commencing on the next regular business day.
SECTION 8. LIMITATIONS ON RIGHT TO PURCHASE SHARES
8.1 $25,000 LIMITATION
No Participant shall be entitled to purchase Stock under the Plan (or
any other employee stock purchase plan that is intended to meet the requirements
of Code Section 423 sponsored by the Company, a Parent Corporation or a
Subsidiary Corporation) at a rate that exceeds $25,000 in Fair Market Value,
determined as of the Offering Date for each Offering (or such other limit as may
be imposed by the Code), for each calendar year in which a Participant
participates in the Plan (or any other employee stock purchase plan described in
this Section 8.1).
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8.2 NUMBER OF SHARES PURCHASED
No Participant shall be entitled to purchase more than 8,000 shares of
Stock (or such other number as the Plan Administrator shall specify for a future
Offering) under the Plan in any Purchase Period.
8.3 PRO RATA ALLOCATION
In the event the number of shares of Stock that might be purchased by
all Participants in the Plan exceeds the number of shares of Stock available in
the Plan, the Plan Administrator shall make a pro rata allocation of the
remaining shares of Stock in as uniform a manner as shall be practicable and as
the Plan Administrator shall determine to be equitable. Fractional shares may be
issued under the Plan only to the extent permitted by the Board or the Plan
Administrator.
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 GENERAL RULES
Subject to Section 9.11, Stock that is acquired pursuant to the
exercise of all or any portion of an Option may be paid for only by means of
payroll deductions from the Participant's Eligible Compensation. Except as set
forth in this Section 9, the amount of compensation to be withheld from a
Participant's Eligible Compensation during each pay period shall be determined
by the Participant's Enrollment Agreement.
9.2 AMOUNT WITHHELD
The amount of payroll withholding for each Participant for purchases
pursuant to the Plan during any pay period shall be a fixed dollar amount or
percentage of the Participant's Eligible Compensation, such amount to be, in
either case, at least 1% of the Participant's Eligible Compensation for such pay
period and not more than 10% of the Participant's Eligible Compensation for such
pay period (or such other percentages as the Plan Administrator may establish
for future Offerings). Amounts shall be withheld in whole dollars or percentages
only, as applicable.
9.3 PAYROLL DEDUCTIONS
Payroll deductions shall commence on the first payday following the
Offering Date and shall continue through the last payday of the Offering unless
sooner altered or terminated as provided in the Plan.
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9.4 MEMORANDUM ACCOUNTS
Individual accounts shall be maintained for each Participant for
memorandum purposes only. All payroll deductions from a Participant's Eligible
Compensation shall be credited to such account, but shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
9.5 NO INTEREST
No interest shall be paid on payroll deductions received or held by the
Company.
9.6 ACQUISITION OF STOCK
Subject to Section 8, on each Purchase Date of an Offering, each
Participant shall automatically acquire, pursuant to the exercise of the
Participant's Option, the number of whole shares of Stock arrived at by dividing
the total amount of the Participant's accumulated payroll deductions for the
Purchase Period by the Purchase Price. Fractional shares may be issued under the
Plan only to the extent permitted by the Board or the Plan Administrator.
9.7 REFUND OF EXCESS AMOUNTS
Any cash balance remaining in a Participant's account at the
termination of a Purchase Period that is not sufficient to purchase a whole
share of Common Stock shall be applied to the purchase of Common Stock in the
next Purchase Period, provided that the Participant participates in the next
Purchase Period and the purchase complies with Section 8. All other amounts
remaining in a Participant's account after a Purchase Date shall be refunded to
the Participant as soon as practicable after the Purchase Date without the
payment of any interest.
9.8 WITHHOLDING OBLIGATIONS
At the time the Option is exercised, in whole or in part, or at the
time some or all of the Stock is disposed of, the Participant shall make
adequate provision for local, federal, state and foreign withholding obligations
of the Company, if any, that arise upon exercise of the Option or upon
disposition of the Stock. The Company may, but shall not be obligated to,
withhold from the Participant's compensation the amount necessary to meet such
withholding obligations.
9.9 TERMINATION OF PARTICIPATION
No Stock shall be purchased on behalf of a Participant on a Purchase
Date whose participation in the Plan has terminated on or before such Purchase
Date.
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9.10 PROCEDURAL MATTERS
The Plan Administrator may, from time to time, establish (a)
limitations on the frequency and/or number of changes in the amount withheld
during an Offering, (b) an exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, (c) payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, and (d)
such other limitations or procedures as deemed advisable by the Plan
Administrator in the Plan Administrator's sole discretion that are consistent
with the Plan and in accordance with the requirements of Code Section 423.
9.11 LEAVES OF ABSENCE
During unpaid leaves of absence approved by the Company and meeting the
requirements of Treasury Regulations Section 1.421-7(h)(2), a Participant may
continue participation in the Plan by delivering cash payments to the Company on
the Participant's normal paydays equal to the amount of his or her payroll
deductions under the Plan had the Participant not taken a leave of absence.
Currently, the Treasury Regulations provide that a Participant may continue
participation in the Plan only during the first 90 days of a leave of absence
unless the Participant's reemployment rights are guaranteed by statute or
contract.
SECTION 10. COMMON STOCK PURCHASED UNDER THE PLAN
(a) If the Plan Administrator designates or approves an ESPP Broker to
hold shares under the Plan for the accounts of Participants, the following
procedures shall apply. As soon as practicable following each Purchase Date, the
number of shares of Stock purchased by each Participant shall be deposited into
an account established in the Participant's name with the ESPP Broker. Each
Participant shall be the beneficial owner of the Stock purchased under the Plan
and shall have all the rights of beneficial ownership in such Stock. A
Participant shall be free to undertake a disposition of the shares of Stock in
his or her account at any time, but, in the absence of such a disposition, the
shares of Stock must remain in the Participant's account at the ESPP Broker
until the holding periods set forth in Code Section 423(a) has been satisfied.
With respect to shares of Stock for which the Code Section 423(a) holding
periods have been satisfied, the Participant may move those shares of Stock to
another brokerage account of the Participant's choosing or request that a stock
certificate be issued and delivered to him or her. A Participant who is not
subject to payment of U.S. income taxes may move his or her shares of Stock to
another brokerage account of his or her choosing or request that a stock
certificate be delivered to him or her at any time, without regard to the Code
Section 423(a) holding periods.
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(b) A Participant may direct, by written notice to the Company prior to
the pertinent Purchase Date, that the ESPP Broker account be established in the
names of the Participant and one such other person as may be designated by the
Participant as joint tenants with right of survivorship, tenants in common or
community property, to the extent and in the manner permitted by applicable law.
SECTION 11. CHANGES IN WITHHOLDING AMOUNTS; VOLUNTARY WITHDRAWAL FROM THE PLAN
11.1 CHANGES IN WITHHOLDING AMOUNTS DURING A CURRENT OFFERING
(a) A Participant may discontinue participation in the Plan as provided
in Section 11.3, but may not otherwise change the terms of participation in a
current Offering and, specifically, a Participant may not alter the amount or
rate of payroll deductions for a current Offering.
(b) Notwithstanding the foregoing, to the extent necessary to comply
with Code Section 423 and Section 8.2, a Participant's payroll deductions shall
be decreased to 0% during any Purchase Period if the aggregate of all payroll
deductions accumulated with respect to one or more Purchase Periods ending
within the same calendar year exceeds $25,000 of Fair Market Value of the Stock
determined as of the first day of an Offering ($21,250 to the extent the
Purchase Price may be 85% of the Fair Market Value of the Stock on the Offering
Date of the Offering). Payroll deductions shall re-commence at the rate provided
in such Participant's Enrollment Agreement at the beginning of the first
Purchase Period that is scheduled to end in the following calendar year, unless
the Participant terminates participation in the Plan as provided in Section 11.3
or indicates otherwise in an amended Enrollment Agreement. Also notwithstanding
the foregoing, a Participant's payroll deductions shall be decreased to 0% at
such time that the aggregate of all payroll deductions accumulated with respect
to a Purchase Period exceeds the amount necessary to purchase 8,000 shares of
Stock in such Purchase Period (or such other number as the Plan Administrator
shall specify for a future Offering). Payroll deductions shall re-commence at
the rate provided in such Participant's Enrollment Agreement at the beginning of
the next Purchase Period, provided the Participant continues to participate in
the Plan and such participation complies with Section 8.2.
11.2 CHANGES IN WITHHOLDING AMOUNTS FOR FUTURE OFFERINGS
Unless the Plan Administrator establishes otherwise for a future
Offering, a Participant may elect to increase or decrease the amount to be
withheld from his or her Eligible Compensation for future Offerings by
completing and filing an amended Enrollment Agreement with the Company by such
date established by the Plan Administrator. An amended Enrollment Agreement
shall remain in effect until the Participant changes such agreement in
accordance with the terms of the Plan.
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11.3 WITHDRAWAL FROM THE PLAN
(a) A Participant may withdraw from the Plan, in whole but not in part,
prior to a Purchase Date by delivering a completed Withdrawal Notice to the
Company. Following withdrawal, the withdrawing Participant may not resume
participation in the Plan during the same Offering, but may participate in any
subsequent Offering under the Plan by again satisfying the definition of
Participant. The Plan Administrator may, from time to time, impose a requirement
that the Withdrawal Notice be on file with the Company for a reasonable period
prior to the effectiveness of the Participant's withdrawal.
(b) Upon withdrawal from the Plan, the withdrawing Participant's
accumulated payroll deductions that have not been applied to the purchase of
Stock shall be returned as soon as practicable after the withdrawal, without the
payment of any interest, to the Participant, and the Participant's interest in
the Offering shall terminate. Such accumulated payroll deductions may not be
applied to any other Offering under the Plan.
SECTION 12. AUTOMATIC WITHDRAWAL FROM AN OFFERING
For any future Offering with multiple Purchase Periods within such
Offering, if the Fair Market Value of the Stock on a Purchase Date of any such
Offering (other than the final Purchase Date of such Offering) is less than the
Fair Market Value of the Stock on the Offering Date for such Offering and the
Plan Administrator has established that the Purchase Price for the Offering may
be the lesser of the Fair Market Value (or a percentage thereof) of the Stock on
the Offering Date and the Fair Market Value of the Stock on the Purchase Date,
then every Participant shall automatically (a) be withdrawn from such Offering
at the close of such Purchase Date and (b) after the acquisition of Stock for
such Purchase Period, be enrolled in the Offering commencing on the first
business day subsequent to such Purchase Period.
SECTION 13. TERMINATION OF EMPLOYMENT
A Participant's termination of employment with the Company for any
reason, including by reason of retirement, death or the failure of a Participant
to remain an Eligible Employee, shall immediately terminate the Participant's
participation in the Plan. In such event, the payroll deductions credited to the
Participant's account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of a Participant's
death, to the Participant's legal representative, and all the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this Section 13.
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SECTION 14. RESTRICTIONS UPON ASSIGNMENT
14.1 TRANSFERABILITY
Options may not be assigned, pledged or transferred by the Participant
or made subject to attachment or similar proceedings otherwise than by will or
the laws of descent and distribution. The Plan Administrator shall not
recognize, and shall be under no duty to recognize, any assignment or purported
assignment by a Participant, other than by will or the laws of descent and
distribution, of the Participant's interest in the Plan, of his or her Option or
of any rights under his or her Option.
14.2 BENEFICIARY DESIGNATION
A Participant may designate on a Company-approved form a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event the Participant dies after the Purchase Date for an
Offering but prior to delivery to the Participant of such shares and cash. In
addition, a Participant may designate on a Company-approved form a beneficiary
who is to receive any cash from the Participant's account under the Plan in the
event that the Participant dies before the Purchase Date for an Offering. Such
designation may be changed by the Participant at any time by written notice to
the Company.
SECTION 15. NO RIGHTS OF SHAREHOLDER UNTIL SHARES ISSUED
With respect to shares of Stock subject to an Option, a Participant
shall not be deemed to be a shareholder of the Company, and he or she shall not
have any of the rights or privileges of a shareholder. A Participant shall have
the rights and privileges of a shareholder of the Company when, but not until,
the shares have been issued following exercise of the Participant's Option.
SECTION 16. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Stock for investment and not for
resale. The Company does not, however, intend to restrict or influence any
Participant in the conduct of his or her own affairs. A Participant, therefore,
may sell Stock purchased under the Plan at any time he or she chooses subject to
compliance with Company policies and any applicable federal and state securities
laws. A Participant assumes the risk of any market fluctuations in the price of
the Stock.
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SECTION 17. ADJUSTMENTS
17.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Stock, then the Plan Administrator, in its sole
discretion, shall make such equitable adjustments as it shall deem appropriate
in the circumstances in (i) the maximum number and kind of shares of Stock
subject to the Plan as set forth in Section 4, (ii) the maximum number and kind
of securities that are subject to any outstanding Option and the per share price
of such securities and (iii) the maximum number and kind of shares of Stock that
may be purchased by a Participant in a Purchase Period. The determination by the
Plan Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding. Notwithstanding the foregoing, a dissolution,
liquidation or Company Transaction shall not be governed by this Section 17.1
but shall be governed by Sections 17.2 and 17.3, respectively.
17.2 DISSOLUTION OR LIQUIDATION OF THE COMPANY
In the event of the dissolution or liquidation of the Company, the
Offering then in progress shall be shortened by setting a new Purchase Date that
shall occur prior to the consummation of such proposed dissolution or
liquidation, unless provided otherwise by the Plan Administrator. The Plan
Administrator shall notify each Participant in writing prior to the new Purchase
Date that the Purchase Date for the Participant's Option has been changed to the
new Purchase Date and that the Participant's Option shall be exercised
automatically on the new Purchase Date, unless prior to such date the
Participant has withdrawn from the Plan as provided in Section 11.3.
17.3 COMPANY TRANSACTION
In the event of a Company Transaction, each outstanding Option shall be
assumed or an equivalent option substituted by the successor company or parent
thereof (the "Successor Company"). In the event that the Successor Company
refuses to assume or substitute for the Option, any Offering then in progress
shall be shortened by setting a new Purchase Date. The new Purchase Date shall
be a specified date before the date of the Company Transaction. The Plan
Administrator shall notify each Participant in writing, prior to the new
Purchase Date, that the Purchase Date for the Participant's Option has been
changed to the new Purchase Date and that the Participant's Option shall be
exercised automatically on the new Purchase Date, unless prior to such date the
Participant has withdrawn from the Plan as provided in Section 11.3.
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17.4 LIMITATIONS
The grant of Options shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SECTION 18. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
18.1 AMENDMENT
The Board may amend the Plan in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Code Section 423 or any applicable law or regulation, shareholder approval shall
be required for any amendment that will (a) increase the total number of shares
as to which Options may be granted under the Plan or (b) otherwise require
shareholder approval under any applicable law or regulation; and provided
further, no amendment to the Plan shall make any change in any Option previously
granted which adversely affects the rights of any Participant.
18.2 SUSPENSION OR TERMINATION
The Board may suspend or terminate the Plan at any time. Unless the
Plan shall theretofore have been terminated by the Board, the Plan shall
terminate on, and no Options shall be granted after, February 5, 2013.
No Options shall be granted during any period of suspension of the
Plan. Except as provided in Section 17, no such termination of the Plan may
affect Options previously granted; provided, however, that the Plan or an
Offering may be terminated by the Board on a Purchase Date or by the Board's
setting a new Purchase Date with respect to an Offering and a Purchase Period
then in progress if the Board determines that termination of the Plan and/or the
Offering is in the best interests of the Company and the shareholders or if
continuation of the Plan and/or the Offering would cause the Company to incur
adverse accounting charges as a result of a change in the generally accepted
accounting rules applicable to the Plan.
SECTION 19. GENERAL
19.1 NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including
any Eligible Employee or Participant) the right to remain in the employ of the
Company or a Parent Corporation or Subsidiary Corporation or to affect the right
of the Company or a Parent Corporation or a Subsidiary Corporation to terminate
the employment of any person (including any Eligible Employee or Participant) at
any time with or without cause.
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19.2 EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Parent Corporation or
Subsidiary Corporation. Nothing in the Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation to
(a) establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) grant or
assume options otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
19.3 NOTICES
All notices or other communications by a Participant to the Company in
connection with the Plan shall be deemed to have been duly given when received
in the form specified by the Plan Administrator at the location, or by the
person, that is designated by the Plan Administrator from time to time for the
receipt thereof, and, in the absence of such a designation, the Company's Human
Resources Department; Attn: Director, Compensation and Benefits, shall be
authorized to receive such notices or other communications.
19.4 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale under the Securities Act of 1933, as amended, or register
or qualify under state securities laws, any shares of Stock. The Company may
issue certificates for shares with such legends and subject to such restrictions
on transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
19.5 INDEMNIFICATION
Each person who is or shall have been a member of the Board, or a
Committee appointed by the Board, or an officer of the Company to whom authority
was delegated in accordance with Section 3 shall be indemnified and held
harmless by the Company against and from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company's approval, or paid by him
or her in satisfaction of any judgment in any such claim, action, suit, or
proceeding against him or her, provided that he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf, unless such loss,
cost, liability or expense is a result of his or her own willful misconduct or
except as expressly provided by statute.
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The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's articles of incorporation or bylaws, as a matter of law, or otherwise,
or of any power that the Company may have to indemnify them or hold them
harmless.
19.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Stock, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant, and
no Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
19.7 SEVERABILITY
If any provision of the Plan or any Option is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Option under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Option, such provision shall be stricken as to such jurisdiction,
person or Option, and the remainder of the Plan and any such Option.
19.8 CHOICE OF LAW
The Plan, all Options granted thereunder and all determinations made
and actions taken pursuant hereto, to the extent not otherwise governed by the
laws of the United States, shall be governed by the laws of the State of
Washington without giving effect to principles of conflicts of law.
SECTION 20. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, provided the shareholders approve the Plan within twelve months of such
date.
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