Attached files
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8-K - WORLDGATE COMMUNICATIONS INC | v186527_8k.htm |
EX-3.2 - WORLDGATE COMMUNICATIONS INC | v186527_ex3-2.htm |
EX-14.1 - WORLDGATE COMMUNICATIONS INC | v186527_ex14-1.htm |
EX-10.2 - WORLDGATE COMMUNICATIONS INC | v186527_ex10-2.htm |
WORLDGATE
COMMUNICATIONS, INC. 2003 EQUITY INCENTIVE PLAN, AS AMENDED BY AMENDMENT
2009-1
1.
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Establishment,
Purpose and Term of Plan.
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1.1 Establishment. WorldGate
Communications, Inc. (the “Company”), a Delaware corporation, hereby establishes
the WorldGate Communications, Inc. 2003 Equity Incentive Plan (the “Plan”).
This Plan, having been adopted by the Board November 13, 2003, shall become
effective on that date (the “Effective Date”), but subject to the approval of
the stockholders of the Company, to the extent required by prevailing law and/or
exchange listing requirements. Awards may be granted under the Plan prior to
such stockholder approval (but after the Board’s adoption of the Plan), subject
to, and contingent upon, any such required stockholder approval.
1.2 Purpose. The
purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group. The Plan seeks to achieve this purpose by providing
for Awards in the form of Options, Stock Appreciation Rights, Stock Purchase
Rights, Stock Bonuses, Stock Units, Performance Shares and Performance
Units.
1.3 Term of Plan. The
Plan shall continue in effect until the earlier of its termination by the Board
or the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Awards granted under the Plan have lapsed.
However, all Incentive Stock Options shall be granted, if at all, within ten
(10) years from the earlier of the date the Plan is adopted by the Board or the
date the Plan is duly approved by the stockholders of the Company, if so
required.
2.
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Definitions
and Construction.
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2.1 Definitions. Whenever
used herein, the following terms shall have their respective meanings set forth
below:
(a) “Award”
means any Option, SAR, Stock Purchase Right, Stock Bonus, Stock Unit,
Performance Share or Performance Unit granted under the Plan.
(b) “Award
Agreement” means a written agreement between the Company and a Participant
setting forth the terms, conditions and restrictions of the Award granted to the
Participant. An Award Agreement may be an “Option Agreement,” an “SAR
Agreement,” a “Stock Purchase Agreement,” a “Stock Unit Agreement”, a “Stock
Bonus Agreement,” a “Performance Share Agreement” or a “Performance Unit
Agreement.”
(c) “Board”
means the Board of Directors of the Company.
(d) “Code”
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
(e) “Committee”
means the committee of the Board duly appointed by the Board to administer the
Plan and having such powers as shall be specified by the Board. If no committee
of the Board has been appointed to administer the Plan, the Board shall exercise
all of the powers of the Committee granted herein, and, in any event, the Board
may in its discretion exercise any or all of such powers.
(f) “Company”
means WorldGate Communications, Inc., a Delaware corporation, or any
successor corporation thereto that adopts this Plan.
(g) “Consultant”
means a person engaged to provide bona fide consulting or advisory services
(other than as an Employee or a member of the Board) to a Participating Company,
provided that the identity of such person, the nature of such services or the
entity to which such services are provided would not preclude the Company from
offering or selling securities to such person pursuant to the Plan in reliance
on registration on a Form S-8 Registration Statement under the Securities
Act.
(h) “Disability”
means the permanent and total disability of the Participant, within the meaning
of Section 22(e)(3) of the Code.
(i) “Dividend
Equivalent” means a bookkeeping entry representing a credit, made at the
discretion of the Committee or as otherwise provided by the Plan, to the account
of a Participant in an amount equal to the cash dividends paid on one share of
Stock for each share of Stock represented by an Award held by such
Participant.
(j) “Employee”
means any person treated as an employee (including an Officer or a member of the
Board who is also treated as an employee) in the records of a Participating
Company and, with respect to any Incentive Stock Option granted to such person,
who is an employee for purposes of Section 422 of the Code; provided,
however, that neither service as a member of the Board nor payment of a
director’s fee shall be sufficient to constitute employment for purposes of the
Plan, and further provided that the identity of such person, the nature of such
services or the entity to which such services are provided would not preclude
the Company from offering or selling securities to such person pursuant to the
Plan in reliance on registration on a Form S-8 Registration Statement under
the Securities Act.
(k) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(l) “Fair
Market Value” means, as of any date, the value of a share of Stock as determined
by the Committee, in its discretion, or by the Company, in its discretion, if
such determination is expressly allocated to the Company herein, subject to the
following:
(i) if
there are sales of shares on a national securities exchange or in an
over-the-counter market on the date of grant (or on such other date as value
must be determined), then the closing price on such date; or
(ii) if
there are no such sales of shares on the date of grant (or on such other date as
value must be determined) but there are such sales on dates within a reasonable
period both before and after such date, then the weighted average of the closing
price on the nearest date before and the nearest date after such date on which
there were such sales; or
(iii) if
actual sales are not available during a reasonable period beginning before and
ending after the date of grant (or on such other date as value must be
determined), then the mean between the bid and asked price on such date as
reported by the National Quotation Bureau; or
(iv) if
(i) through (iii) are not applicable, then such other method of determining fair
market value as shall be adopted by the Committee.
Where the Fair Market Value of Shares
is determined under (ii) above, the average of the quoted closing prices on the
nearest date before and the nearest date after the last business day prior to
the specified date shall be weighted inversely by the respective numbers of
trading days between the dates of reported sales and such date (i.e., the
valuation date), in accordance with Treas. Reg. §20.2031-2(b)(1) or any
successor thereto.
(m) “Incentive
Stock Option” or “ISO” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning
of Section 422(b) of the Code.
(n) “Insider”
means an officer (as defined in Rule 16a-1(f) of the Exchange Act,) a
member of the Board or any other person whose transactions in Stock are subject
to Section 16 of the Exchange Act.
(o) “Non-Employee
Director” means a person serving as a member of the Board who is, at the time of
receiving any Award hereunder, not an Employee.
(p) “Nonstatutory
Stock Option” or “NSO” means an Option not intended to be (as set forth in the
Award Agreement) an incentive stock option within the meaning of Section 422(b)
of the Code.
(q) “Option”
means the right to purchase Stock at a stated price for a specified period of
time granted to a participant pursuant to Section 6 of the Plan. An Option may
be either an Incentive Stock Option or a Nonstatutory Stock Option.
(r) “Parent
Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.
(s) “Participant”
means any eligible person who has been granted one or more
Awards.
(t) “Participating
Company” means the Company or any Parent Corporation or Subsidiary
Corporation.
(u) “Participating
Company Group” means, at any point in time, all corporations collectively which
are then Participating Companies.
(v) “Performance
Award” means an Award of Performance Shares or Performance Units.
(w) “Performance
Award Formula” means, for any Performance Award, a formula or table established
by the Committee pursuant to Section 9.3 of the Plan which provides the basis
for computing the value of a Performance Award at one or more threshold levels
of attainment of the applicable Performance Goal(s) measured as of the end of
the applicable Performance Period.
(x) “Performance
Goal” means a performance goal established by the Committee pursuant to Section
9.3 of the Plan.
(y) “Performance
Period” means a period established by the Committee pursuant to Section 9.3 of
the Plan at the end of which one or more Performance Goals are to be
measured.
(z) “Performance
Share” means a bookkeeping entry representing a right granted to a Participant
pursuant to Section 9 of the Plan to receive a payment equal to the value of one
share of Stock, as determined by the Committee, based on
performance.
(aa)
“Performance Unit” means a bookkeeping entry representing a right
granted to a Participant pursuant to Section 9 of the Plan to receive a payment
equal to the value as determined by the Committee, based upon
performance.
(bb) “Predecessor
Plan” means, the WorldGate Communications, Inc. 1996 Stock Option
Plan.
(cc)
“Restriction Period” means the period established in accordance with
Section 8.5 of the Plan during which shares subject to a Stock Award are subject
to Vesting Conditions.
(dd) “SAR”
or “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 7 of the Plan to receive payment of an amount equal to the excess, if
any, of the Fair Market Value of a share of Stock on the date of exercise of the
SAR over the value of a share of Stock on the date of grant of the
SAR.
(ee) “Securities
Act” means the Securities Act of 1933, as amended.
(ff) “Service”
means a Participant’s employment or service with the Participating Company Group
as an Employee, Consultant or a member of the Board, whichever such capacity the
Participant held on the date of grant of an Award or, if later, the date on
which the Participant commenced Service. Unless otherwise determined by the
Committee, a Participant’s Service shall be deemed to have terminated if the
Participant ceases to render service to the Participating Company Group in such
initial capacity. However, a Participant’s Service shall not be deemed to have
terminated merely because of a change in the Participating Company for which the
Participant renders such Service in such initial capacity, provided that there
is no interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any bona fide leave of absence approved by the Company of ninety
(90) days or less. In the event of a leave in excess of ninety
(90) days, the Participant’s Service shall be deemed to terminate on the
ninety-first (91st) day of the leave unless the Participant’s right to return to
Service is guaranteed by statute or contract. Notwithstanding the foregoing,
unless otherwise designated by the Company or required by law, a leave of
absence shall not be treated as Service for purposes of determining vesting
under the Participant’s Award Agreement. A Participant’s Service shall be deemed
to have terminated either upon an actual termination of Service or upon the
corporation for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant’s Service has terminated and the
effective date of such termination.
(gg) “Stock”
means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2 of the Plan.
(hh) “Stock
Award” means an Award of a Stock Bonus, Stock Unit or a Stock Purchase
Right.
(ii) “Stock
Bonus” means Stock granted to a Participant pursuant to Section 8 of the
Plan.
(jj) “Stock
Purchase Right” means a right to purchase Stock granted to a Participant
pursuant to Section 8 of the Plan.
(kk) “Stock
Unit” means the right to receive in cash or Stock the Fair Market Value of a
share of Stock granted pursuant to Section 8 of the Plan.
(ll) “Subsidiary
Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.
(mm) “Ten
Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of a Participating Company within
the meaning of Section 422(b)(6) of the Code.
(nn)
“Vesting Conditions” mean those conditions established in accordance
with Section 8.5 of the Plan prior to the satisfaction of which shares
subject to a Stock Award remain subject to forfeiture or a repurchase option in
favor of the Company.
2.2 Construction. Captions and
titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be
exclusive, unless the context clearly requires otherwise.
3.
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Administration.
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3.1 Administration by the
Committee. The Plan shall be administered by the Committee.
All questions of interpretation of the Plan or of any Award shall be determined
by the Committee, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Award.
3.2 Authority of Certain
Officers. The Committee may, in its discretion, and subject to
the prevailing and applicable rules and regulations of any exchange upon which
the Stock is traded, delegate to a sub-committee comprised of one or more
Officers the authority to grant one or more Options, without further approval of
the Board or the Committee, to any Employee, other than to a person who, at the
time of such grant, is an Insider; provided, however, that (i) such Awards shall
not be granted for shares in excess of the maximum aggregate number of shares of
Stock authorized for issuance pursuant to Section 4.1, (ii) the
exercise price per share of each Option shall be not less than the Fair Market
Value per share of the Stock on the effective date of grant (or, if the Stock
has not traded on such date, on the last day preceding the effective date of
grant on which the Stock was traded), and (iii) each such Award shall be
subject to the terms and conditions of the Plan and such other guidelines as
shall be established from time to time by the Board or the Committee. Any such
committee of Officers shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the committee of Officers has been duly delegated the authority with respect to
such matter, right, obligation, determination or election.
3.3 Administration with Respect to
Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered
pursuant to Section 12 of the Exchange Act, the Plan shall be administered
in compliance with the requirements, if any, of Rule 16b-3.
3.4 Committee Complying with
Section 162(m). If the Company is a “publicly held
corporation” as defined in Section 162(m)(2) of the Code, the Committee
may, in its discretion, and subject to the prevailing and applicable rules and
regulations of any exchange upon which the Stock is traded, delegate to a
sub-committee comprised solely of two or more “outside directors” as defined in
Treas. Reg. §1.162-27(e)(3), both of which also comply with the definition of
independent directors as set forth in NASDAQ Rule 4200, each as the same
may be amended, the authority to grant one or more Options, without further
approval of the Board or the Committee, to any Employee, or to otherwise approve
the grant of any Award which might reasonably be anticipated to result in the
payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).
3.5 Powers of the
Committee. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:
(a)
to determine the persons to whom, and the time or times at which, Awards
shall be granted and the number of shares of Stock or units to be subject to
each Award;
(b)
to determine the type of Award granted and to designate Options as
Incentive Stock Options or Nonstatutory Stock Options;
(c)
to determine the Fair Market Value of shares of Stock;
(d)
to determine the terms, conditions and restrictions applicable to each
Award (which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the exercise or purchase price of shares
purchased pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any
tax withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v) the Performance Award Formula and Performance Goals
applicable to any Award and the extent to which such Performance Goals have been
attained, (vi) the time of the expiration of any Award, (vii) the
effect of the Participant’s termination of Service on any of the foregoing, and
(viii) all other terms, conditions and restrictions applicable to any Award
or shares acquired pursuant thereto not inconsistent with the terms of the
Plan;
(e)
to determine whether an Award of SARs, Stock Units, Performance Shares or
Performance Units will be settled in shares of Stock, cash, or in any
combination thereof;
(f)
to approve one or more forms of Award Agreement;
(g)
to amend, modify, extend, cancel or renew any Award or to
waive any restrictions or conditions applicable to any Award or any shares
acquired pursuant thereto;
(h)
to accelerate, continue, extend or defer the
exercisability or vesting of any Award or any shares acquired pursuant thereto,
including with respect to the period following a Participant’s termination of
Service;
(i)
to prescribe, amend or rescind rules, guidelines
and policies relating to the plan, or to adopt sub-plans or supplements to, or
alternative versions of, the Plan, including, without limitation, as the
Committee deems necessary or desirable to comply with the laws of or to
accommodate the laws, regulations, tax or accounting effectiveness, accounting
principles or custom of, foreign jurisdictions whose citizens may be granted
Awards; and
(j) to
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Award as the Committee may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.
Such determinations and actions of the
Committee, and all other determinations and actions of the Committee made or
taken under authority granted by any provision of the Plan, shall be conclusive
and shall bind all parties. Nothing in this subsection 3.5 shall be construed as
limiting the power of the Board or the Committee to make the adjustments
described in Section 4 hereof.
3.6 Indemnification. In
addition to such other rights of indemnification as they may have as members of
the Board or the Committee or as Officers or employees of the Participating
Company Group, members of the Board or the Committee and any Officers or
employees of the Participating Company Group to whom authority to act for the
Board, the Committee or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty
(60) days after the institution of such action, suit or proceeding, such
person shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.
4.
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Shares
Subject to Plan.
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4.1 Maximum Number of Shares
Issuable. Subject to adjustment as provided in Section 4.2,
the maximum aggregate number of shares of Stock that may be issued under the
Plan shall be equivalent to 26,500,000 shares. Such shares shall
consist of authorized but unissued or reacquired shares (and the Company may
purchase shares reacquired for this purpose) of Stock or any combination
thereof. If an
outstanding Award for any reason expires or is terminated or canceled without
having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company at the Participant’s purchase price, the shares of
Stock allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall again be available for issuance under the
Plan. Shares of Stock shall not be deemed to have been issued pursuant to the
Plan (i) with respect to any portion of an Award that is settled in cash or (ii)
to the extent such shares are withheld in satisfaction of tax withholding
obligations pursuant to Section 13.2. Upon payment in shares of Stock pursuant
to the exercise of an SAR, the number of shares available for issuance under the
Plan shall be reduced only by the number of shares actually issued in such
payment. If the exercise price of an Option is paid by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the Participant, the
number of shares available for issuance under the Plan shall be reduced by the
gross number of shares for which the Option is exercised.
4.2 Adjustments for Changes in Capital
Structure. In the event of any change in the Stock through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or similar change
in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than
Stock (excepting normal cash dividends) that has a material effect on the Fair
Market Value of shares of Stock, appropriate adjustments shall be made in the
number and class of shares subject to the Plan, in the ISO Share Limit set forth
in Section 5.3(b), the Award limits set forth in Section 5.4 and to
any outstanding Awards, and in the exercise or purchase price per share under
any outstanding Award. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded
down to the nearest whole number, and in no event may the exercise or purchase
price under any Award be decreased to an amount less than the par value, if any,
of the stock subject to such Award. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and
conclusive.
5.
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Eligibility
and Award Limitations.
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5.1 Persons Eligible for
Awards. Awards may be granted only to Employees, Consultants
and Non-Employee Directors of Participating Companies. For purposes of the
foregoing sentence, “Employees,” “Consultants” and “Non-Employee Directors”
shall, to the extent allowed by prevailing laws, rules and regulations, include
prospective Employees, prospective Consultants and prospect Non-Employee
Directors to whom Awards are granted in connection with written offers of an
employment or other service relationship with the Participating Company Group;
provided, however, that no Stock subject to any such Award shall vest, become
exercisable or be issued prior to the date on which such person commences
Service.
5.2 Participation. Awards
are granted solely at the discretion of the Committee. Eligible persons may be
granted more than one (1) Award. However, eligibility in accordance with
this Section shall not entitle any person to be granted an Award, or, having
been granted an Award, to be granted an additional Award.
5.3 Award Limits for Publicly Held
Corporations. The following limits
shall apply to the grant of any Award hereunder if, at the time of the grant,
the Company is a “publicly held corporation” as defined in
Section 162(m)(2) of the Code:
(a) Options. Subject
to adjustment as provided in Section 4.2, no Participant shall be granted within
any fiscal year of the Company one or more Options which in the aggregate are
for more than two million (2,000,000) shares of Stock,
(b) SARS. Subject to
adjustment as provided in Section 4.2, no Participant shall be granted
within any fiscal year of the Company one or more SARS which in the aggregate
are for more than one million (1,000,000) shares of Stock,
(c) Stock
Awards. Subject to adjustment as provided in Section 4.2,
no Participant shall be granted within any fiscal year of the Company one or
more Stock Awards, subject to Vesting Conditions based on the attainment of
Performance Goals, for more than one million (1,000,000) shares of
Stock.
(d) Performance
Awards. Subject to adjustment as provided in Section 4.2,
no Employee shall be granted (i) Performance Shares which could result in
such Employee receiving more than one million (1,000,000) shares of Stock for
each full fiscal year of the Company contained in the Performance Period for
such Award, or (ii) Performance Units which could result in such Employee
receiving more than two million five hundred thousand dollars ($2,500,000) for
each full fiscal year of the Company contained in the Performance Period for
such Award. No Participant may be granted more than one Performance Award for
the same Performance Period.
6.
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Terms and
Conditions of Options.
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Options shall be evidenced by Award
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Committee shall from time to time establish. No Option or purported
Option shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Award Agreement. Award Agreements evidencing Options may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
6.1 Exercise
Price. The exercise price for each Option shall be established
in the discretion of the Committee; provided, however, that (a) no Option shall
have an exercise price per share less than one hundred percent (100%) of the
Fair Market Value of a share of Stock on the effective date of grant of the
Option and (b) no Incentive Stock Option granted to a Ten Percent Owner shall
have an exercise price per share less than one hundred ten percent (110%) of the
Fair Market Value of a share of Stock on the effective date of grant of the
Option.
6.2 Incentive Stock Option
Limitations.
(a) Persons
Eligible. An Incentive Stock Option may be granted only to a
person who, on the effective date of grant, is an Employee of the Company, a
Parent Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying
Corporation”). Any person who is not an Employee of an ISO-Qualifying
Corporation on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted
to a prospective Employee upon the condition that such person become an Employee
of an ISO-Qualifying Corporation shall be deemed granted effective on the date
such person commences Service with an ISO-Qualifying Corporation, with an
exercise price determined as of such date in accordance with Section 6.1.
Notwithstanding the foregoing provisions, failure to exercise an Incentive Stock
Option within the periods of time prescribed under sections 421 and 422(a) of
the Code shall cause the Incentive Stock Option to cease to be treated as an
“incentive stock option” for purposes of sections 421 and 422 of the
Code.
(b) Fair Market Value
Limitation. To the extent that options designated as Incentive
Stock Options (granted under all stock option plans of the Participating Company
Group, including the Plan) become exercisable by a Participant for the first
time during any calendar year for stock having a Fair Market Value greater than
One Hundred Thousand Dollars ($100,000), the portion of such options which
exceeds such amount shall be treated as Nonstatutory Stock Options. For purposes
of this Section, options designated as Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market Value
of stock shall be determined as of the time the option with respect to such
stock is granted. If the Code is amended to provide for a different limitation
from that set forth in this Section, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section, the Participant may
designate which portion of such Option the Participant is exercising. In the
absence of such designation, the Participant shall be deemed to have exercised
the Incentive Stock Option portion of the Option first. Upon exercise, each
portion shall be separately identified.
6.3 Exercisability and Term of
Options. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance
criteria and restrictions as shall be determined by the Committee and set forth
in the Award Agreement evidencing such Option; provided, however, that
(a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no
Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, (c) no Option granted to a prospective Employee or prospective
Consultant may become exercisable prior to the date on which such person
commences Service, and (d) no option shall be exercisable during any period
which the Committee has designated in writing as a prohibited exercise period.
Subject to the foregoing, unless otherwise specified by the Committee in the
grant of an Option, any Option granted hereunder shall terminate ten
(10) years after the effective date of grant of the Option, unless earlier
terminated in accordance with its provisions. The Committee may at any time and
from time to time accelerate the time at which all or any part of the Option may
be exercised. Any exercise of an Option must be in writing, signed by the proper
person, and delivered or mailed to the Company, accompanied by (i) any
other documents required by the Committee and (ii) payment in full in
accordance with subsection (6.4) below for the number of shares for which the
Option is exercised (except that, in the case of an exercise arrangement
approved by the Committee and described in subsection (6.4)(a)(iii) below,
payment may be made as soon as practicable after the exercise). Only full shares
shall be issued under the Plan, and any fractional share that might otherwise be
issuable upon exercise of an Option granted hereunder shall be forfeited. All
obligations of the Company hereunder shall be subject to the rights of the
Company as set forth in the Plan to withhold or otherwise require the payment of
amounts required to be withheld for any taxes. If the Participant fails to
accept delivery of, or to pay for, any of the shares of Stock specified in the
Participant’s notice of exercise upon tender or delivery of the shares, the
Participant’s right to purchase such shares may be terminated at the sole
discretion of the Committee. The date that the notice of exercise, in compliance
with the terms and conditions hereof, is received by the Company shall be deemed
the date of exercise hereunder.
6.4 Payment of Exercise
Price.
(a) Forms of Consideration
Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any
Option shall be made (i) in cash, by check or cash equivalent, (ii) by
tender to the Company of shares of Stock owned by the Participant having a Fair
Market Value not less than the exercise price, (iii) by delivery of a
properly executed notice of exercise together with irrevocable instructions to a
broker providing for the assignment to the Company of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the
Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), or
(iv) by any combination thereof. The Committee may at any time or from time
to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.
(b) Limitations on Forms of
Consideration.
(i) Tender of
Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. Unless otherwise provided by the Committee, an Option
may not be exercised by tender to the Company, or attestation to the ownership,
of shares of Stock unless such shares either have been owned by the Participant
for more than six (6) months (and not used for another Option exercise by
attestation during such period) or were not acquired, directly or indirectly,
from the Company.
(ii) Cashless
Exercise. The Company reserves, at any and all times, the
right, in the Company’s sole and absolute discretion, to establish, decline to
approve or terminate any program or procedures for the exercise of Options by
means of a Cashless Exercise.
6.5 Effect of Termination of
Service. Except as otherwise determined by the Committee or as
expressly set forth in the Award Agreement, if there is a termination of Service
of a Participant for any reason the following shall apply (in no event, however,
shall an Option remain exercisable beyond the latest date on which it could have
been exercised without regard to this Section):
(a) In
the event of a termination of Service for any reason other than death,
Disability, voluntary termination by the Participant without the consent of the
applicable Participating Company, or termination for cause (as defined below,)
all Options held by the Participant that were not exercisable immediately prior
to the termination of Service shall terminate effective with the termination of
Service. Any Options that were exercisable immediately prior to the termination
of Service will continue to be exercisable for three months, and shall thereupon
terminate.
(b) In
the event termination of Service on account of a “termination for cause” by the
applicable Participating Company, as determined in accordance with the policies
of such Participating Company in effect before any Change in Control or as
determined by a written contract between the Consultant and the Company, or on
account of a voluntary separation from the applicable Participating Company
without the consent of such Participating Company, all Options held by the
Participant shall terminate effective with the termination of
Service.
(c) In
the event of a termination of Service for (i) the death of the Participant
or (ii) due to Disability, any Option which is otherwise exercisable by the
Participant on the date immediately prior to the termination of Service, shall
terminate unless exercised by the Participant or the Participant’s personal
representative within one year of the date on which Service is
terminated.
6.6 Transferability of
Options. During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative. No Option shall be assignable or transferable by the
Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and as set forth in the Award Agreement evidencing a Nonstatutory
Stock Option, such option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to
Form S-8 Registration Statement under the Securities Act.
6.7 Automatic Options for Non-Employee
Directors. Each Non-Employee Director shall automatically be
granted the following Nonstatutory Stock Options hereunder, without further
action by the Committee, but otherwise subject to the terms and conditions of
this Plan:
(a) An
initial grant upon being initially elected as a member of the Board, an Option
to purchase 30,000 shares of Stock, and
(b) An
annual grant on July 1 2004 and each anniversary thereof (if there are no
sales of Stock on July 1, then the nearest date before July 1 on which
there were such sales,) provided the Participant has been a Non-Employee
Director for at least one year, and is then a Non-Employee Director, an Option
to purchase 10,000 shares of Stock.
The numbers of shares subject to each
Option awarded hereunder shall, however, be reduced by the number of shares
subject to options, if any, granted to such Non-Employee Director, as a
Non-Employee Director under any Predecessor plan, with any initial grant
offsetting the above initial grant and any annual grants offsetting the
corresponding annual grant, each as set forth above.
7.
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Terms and
Conditions of Stock Appreciation
Rights.
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SARs shall be evidenced by Award
Agreements specifying the number of SARs subject to the Award, in such form as
the Committee shall from time to time establish. No SAR or purported SAR shall
be a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement. Award Agreements evidencing SARs may incorporate all
or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
7.1 Types of SARs
Authorized. SARs may be granted in tandem with all or any
portion of a related Option (a “Tandem SAR”) or may be granted independently of
any Option (a “Freestanding SAR”). A SAR granted in tandem with an NQSO may be
granted either at or after the time the NQSO is granted. A SAR granted in tandem
with an ISO may be granted only at the time the ISO is granted.
7.2 Exercise
Price. The exercise price for each SAR shall be established in
the discretion of the Committee.
7.3 Exercisability and Term of
SARs.
(a) Tandem
SARs. Tandem SARs shall be exercisable only at the time and to
the extent, and only to the extent, that the related Option is exercisable,
subject to such provisions as the Committee may specify where the Tandem SAR is
granted with respect to less than the full number of shares of Stock subject to
the related Option. The Committee may, in its discretion, provide in any Award
Agreement evidencing a Tandem SAR that such SAR may not be exercised without the
advance approval of the Company and, if such approval is not given, then the
Option shall nevertheless remain exercisable in accordance with its terms. A
Tandem SAR shall terminate and cease to be exercisable no later than the date on
which the related Option expires or is terminated or canceled. Upon the exercise
of a Tandem SAR with respect to some or all of the shares subject to such SAR,
the related Option shall be canceled automatically as to the number of shares
with respect to which the Tandem SAR was exercised. Upon the exercise of an
Option related to a Tandem SAR as to some or all of the shares subject to such
Option, the related Tandem SAR shall be canceled automatically as to the number
of shares with respect to which the related Option was
exercised.
(b) Freestanding
SARs. Freestanding SARs shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such SAR; provided, however,
that no Freestanding SAR shall be exercisable after the expiration of eight
(8) years after the effective date of grant of such SAR.
7.4 Exercise of
SARs. Upon the exercise (or deemed exercise pursuant to
Section 7.5) of an SAR, the Participant (or the Participant’s legal
representative or other person who acquired the right to exercise the SAR by
reason of the Participant’s death) shall be entitled to receive payment of an
amount for each share with respect to which the SAR is exercised equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the value of a share of Stock on the date of grant of
the SAR. Payment of such amount shall be made in cash, shares of Stock, or any
combination thereof as determined by the Committee. Unless otherwise provided in
the Award Agreement evidencing such SAR, payment shall be made in a lump sum as
soon as practicable following the date of exercise of the SAR. The Award
Agreement evidencing any SAR may provide for deferred payment in a lump sum or
in installments. When payment is to be made in shares of Stock, the number of
shares to be issued shall be determined on the basis of the Fair Market Value of
a share of Stock on the date of exercise of the SAR. For purposes of
Section 7, an SAR shall be deemed exercised on the date on which the
Company receives notice of exercise from the Participant.
7.5 Deemed Exercise of
SARs. If, on the date on which an SAR would otherwise
terminate or expire, the SAR by its terms remains exercisable immediately prior
to such termination or expiration and, if so exercised, would result in a
payment to the holder of such SAR, then any portion of such SAR which has not
previously been exercised shall automatically be deemed to be exercised as of
such date with respect to such portion.
7.6 Effect of Termination of
Service. An SAR shall be exercisable after a Participant’s
termination of Service to such extent and during such period as determined by
the Committee, in its discretion, and set forth in the Award Agreement
evidencing such SAR.
7.7 Non-transferability
of SARs. SARs may not be assigned or transferred in any manner except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, shall be exercisable only by the Participant or the Participant’s
guardian or legal representative.
8.
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Terms and Conditions of Stock
Awards.
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Stock Awards shall be evidenced by
Award Agreements specifying whether the Award is a Stock Bonus or a Stock
Purchase Right or a Stock Unit, and the number of shares of Stock subject to the
Award, in such form as the Committee shall from time to time establish. No Stock
Award or purported Stock Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Stock Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:
8.1 Types of Stock Awards
Authorized. Stock Awards may be in the form of either a Stock
Bonus, Stock Purchase Right or a Stock Unit. Stock Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation,
upon the attainment of one or more Performance Goals described in
Section 9.4. If either the grant of a Stock Award or the lapsing of the
Restriction Period is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5(a).
8.2 Purchase
Price. The purchase price for shares of Stock issuable under
each Stock Purchase Right shall be established by the Committee in its
discretion. No monetary payment (other than applicable tax withholding) shall be
required as a condition of receiving shares of Stock pursuant to a Stock Bonus
or a Stock Unit, the consideration for which shall be services actually rendered
to a Participating Company or for its benefit. Notwithstanding the foregoing,
the Participant shall furnish consideration in the form of cash or past services
rendered to a Participating Company or for its benefit having a value not less
than the par value of the shares of Stock subject to such Stock
Award.
8.3 Purchase Period. A
Stock Purchase Right shall be exercisable within a period established by the
Committee, which shall in no event exceed thirty (30) days from the
effective date of the grant of the Stock Purchase Right; provided, however, that
no Stock Purchase Right granted to a prospective Employee or prospective
Consultant may become exercisable prior to the date on which such person
commences Service.
8.4 Payment of Purchase
Price. Except as otherwise provided below, payment of the
purchase price for the number of shares of Stock being purchased pursuant to any
Stock Purchase Right shall be made (i) in cash, by check, or cash
equivalent, (ii) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by applicable law, or
(iii) by any combination thereof. The Committee may at any time or from
time to time grant Stock Purchase Rights which do not permit all of the
foregoing forms of consideration to be used in payment of the purchase price or
which otherwise restrict one or more forms of consideration. Stock Bonuses and
Stock Units shall be issued in consideration for past services actually rendered
to a Participating Company or for its benefit.
8.5 Vesting and Restrictions on
Transfer. Shares issued pursuant to any Stock or Performance
Award may or may not be made subject to vesting conditioned upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 9.4 (the “Vesting Conditions”), as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award. During any period (the “Restriction Period”) in which shares
acquired pursuant to a Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise
disposed of other than pursuant to an Ownership Change Event, as defined in
Section 11.1, or as provided in Section 8.8. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.
8.6 Voting Rights; Dividends and
Distributions. Except as provided in this Section,
Section 8.5 and any Award Agreement, during the Restriction Period
applicable to shares acquired pursuant to a Stock Award, the Participant shall
have all of the rights of a stockholder of the Company holding shares of Stock,
including the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares. Participants who have been
granted Stock Units shall possess no incidents of ownership with respect to
shares of Stock underlying such Stock Units; provided, however, that a Stock
Unit Agreement may provide for payments in lieu of dividends in a manner
identical to that specified in Section 10.6 of the Plan. However, in the
event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.2, then any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the
Participant is entitled by reason of the Participant’s Stock Award shall be
immediately subject to the same Vesting Conditions as the shares subject to the
Stock Award with respect to which such dividends or distributions were paid or
adjustments were made.
8.7 Effect of Termination of
Service. Unless otherwise provided by the Committee in the
grant of a Stock Award and set forth in the Award Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including
the Participant’s death or disability), then (i) the Company shall have the
option to repurchase for the purchase price paid by the Participant any shares
acquired by the Participant pursuant to a Stock Purchase Right which remain
subject to Vesting Conditions as of the date of the Participant’s termination of
Service and (ii) the Participant shall forfeit to the Company any shares
acquired by the Participant pursuant to a Stock Bonus or a Stock Unit which
remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service.
8.8 Non-transferability of Stock Award
Rights. Rights to acquire shares of Stock pursuant to a Stock
Award may not be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors
of the Participant or the Participant’s beneficiary, except by will or the laws
of descent and distribution, and, during the lifetime of the Participant, shall
be exercisable only by the Participant or the Participant’s guardian or legal
representative.
9.
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Terms and
Conditions of Performance
Awards.
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Performance Awards shall be evidenced
by Award Agreements in such form as the Committee shall from time to time
establish. No Performance Award or purported Performance Award shall be a valid
and binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing Performance Awards may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
9.1 Types of Performance Awards
Authorized. Performance Awards may be in the form of either
Performance Shares or Performance Units. Each Award Agreement evidencing a
Performance Award shall specify the number of Performance Shares or Performance
Units subject thereto, the Performance Award Formula, the Performance Goal(s)
and Performance Period applicable to the Award, and the other terms, conditions
and restrictions of the Award.
9.2 Initial Value of Performance Shares
and Performance Units. Unless otherwise provided by the
Committee in granting a Performance Award, each Performance Share shall have an
initial value equal to the Fair Market Value of one (1) share of Stock,
subject to adjustment as provided in Section 4.2, on the effective date of
grant of the Performance Share, and each Performance Unit shall have an initial
value of one hundred dollars ($100). The final value payable to the Participant
in settlement of a Performance Award determined on the basis of the applicable
Performance Award Formula will depend on the extent to which Performance Goals
established by the Committee are attained within the applicable Performance
Period established by the Committee.
9.3 Establishment of Performance Period,
Performance Goals and Performance Award Formula. In granting
each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals
which, when measured at the end of the Performance Period, shall determine on
the basis of the Performance Award Formula the final value of the Performance
Award to be paid to the Participant. Unless otherwise permitted in compliance
with the requirements under Section 162(m) with respect to
“performance-based compensation,” the Committee shall establish the Performance
Goal(s) and Performance Award Formula applicable to each Performance Award no
later than the earlier of (a) the date ninety (90) days after the
commencement of the applicable Performance Period or (b) the date on which
25% of the Performance Period has elapsed, and, in any event, at a time when the
outcome of the Performance Goals remains substantially uncertain. Once
established, the Performance Goals and Performance Award Formula shall not be
changed during the Performance Period. The Company shall notify each Participant
granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award
Formula.
9.4 Measurement of Performance
Goals. Performance Goals shall be established by the Committee
on the basis of targets to be attained (“Performance Targets”) with respect to
one or more measures of business or financial performance (each, a “Performance
Measure”), subject to the following:
(a) Performance
Measures. Performance Measures shall have the same meanings as
used in the Company’s financial statements, or, if such terms are not used in
the Company’s financial statements, they shall have the meaning applied pursuant
to generally accepted accounting principles, or as used generally in the
Company’s industry. Performance Measures shall be calculated with respect to the
Company and each Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by
the Committee. For purposes of the Plan, the Performance Measures applicable to
a Performance Award shall be calculated in accordance with generally accepted
accounting principles, but prior to the accrual or payment of any Performance
Award for the same Performance Period and excluding the effect (whether positive
or negative) of any change in accounting standards or any extraordinary, unusual
or nonrecurring item, as determined by the Committee, occurring after the
establishment of the Performance Goals applicable to the Performance Award.
Performance Measures may be one or more of the following, as determined by the
Committee:
(i) growth
in revenue;
(ii) growth
in the market price of the Stock;
(iii) operating
margin;
(iv) gross
margin;
(v) operating
income;
(vi) pre-tax
profit;
(vii) earnings
before interest, taxes and depreciation;
(viii) net
income;
(ix) total
return on shares of Stock relative to the increase in an appropriate index as
may be selected by the Committee;
(x) earnings
per share;
(xi) return
on stockholder equity;
(xii) return
on net assets;
(xiii) expenses;
(xiv) return
on capital;
(xv) economic
value added;
(xvi) market
share; and
(xvii) cash
flow, as indicated by book earnings before interest, taxes, depreciation and
amortization.
(b) Performance
Targets. Performance Targets may include a minimum, maximum,
target level and intermediate levels of performance, with the final value of a
Performance Award determined under the applicable Performance Award Formula by
the level attained during the applicable Performance Period. A Performance
Target may be stated as an absolute value or as a value determined relative to a
standard selected by the Committee.
9.5 Settlement of Performance
Awards.
(a) Determination of Final
Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall
certify in writing the extent to which the applicable Performance Goals have
been attained and the resulting final value of the Award earned by the
Participant and to be paid upon its settlement in accordance with the applicable
Performance Award Formula.
(b) Discretionary Adjustment of Award
Formula. In its discretion, the Committee may, either at the
time it grants a Performance Award or at any time thereafter, provide for the
positive or negative adjustment of the Performance Award Formula applicable to a
Performance Award granted to any Participant who is not a “covered employee”
within the meaning of Section 162(m) (a “Covered Employee”) to reflect such
Participant’s individual performance in his or her position with the Company or
such other factors as the Committee may determine. If permitted under a Covered
Employee’s Award Agreement, the Committee shall have the discretion, on the
basis of such criteria as may be established by the Committee, to reduce some or
all of the value of the Performance Award that would otherwise be paid to the
Covered Employee upon its settlement notwithstanding the attainment of any
Performance Goal and the resulting value of the Performance Award determined in
accordance with the Performance Award Formula. No such reduction may result in
an increase in the amount payable upon settlement of another Participant’s
Performance Award.
(c) Effect of Leaves of
Absence. Unless otherwise required by law, payment of the
final value, if any, of a Performance Award held by a Participant who has taken
in excess of thirty (30) days of leaves of absence during a Performance
Period shall be prorated on the basis of the number of days of the Participant’s
Service during the Performance Period during which the Participant was not on a
leave of absence.
(d) Notice to
Participants. As soon as practicable following the Committee’s
determination and certification in accordance with Sections 9.5(a) and (b), the
Company shall notify each Participant of the determination of the
Committee.
(e) Payment in Settlement of Performance
Awards. As soon as practicable following the Committee’s
determination and certification in accordance with Sections 9.5(a) and (b),
payment shall be made to each eligible Participant (or such Participant’s legal
representative or other person who acquired the right to receive such payment by
reason of the Participant’s death) of the final value of the Participant’s
Performance Award. Payment of such amount shall be made in cash, shares of
Stock, or a combination thereof as determined by the Committee. Unless otherwise
provided in the Award Agreement evidencing a Performance Award, payment shall be
made in a lump sum. An Award Agreement may provide for deferred payment in a
lump sum or in installments. If any payment is to be made on a deferred basis,
the Committee may, but shall not be obligated to, provide for the payment during
the deferral period of Dividend Equivalents or interest.
(f) Provisions Applicable to Payment in
Shares. If payment is to be made in shares of Stock, the
number of such shares shall be determined by dividing the final value of the
Performance Award by the value of a share of Stock determined by the method
specified in the Award Agreement. Such methods may include, without limitation,
the closing market price on a specified date (such as the settlement date) or an
average of market prices over a series of trading days. Shares of Stock issued
in payment of any Performance Award may be fully vested and freely transferable
shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by
an appropriate Award Agreement and shall be subject to the provisions of
Sections 8.5 through 8.8 above.
9.6 Dividend
Equivalents. In its discretion, the Committee may provide in
the Award Agreement evidencing any Performance Share Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of
cash dividends on Stock having a record date prior to the date on which the
Performance Shares are settled or forfeited. Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that Performance Shares
become non-forfeitable, as determined by the Committee. Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of
the related Performance Share as provided in Section 9.5. Dividend
Equivalents shall not be paid with respect to Performance Units.
9.7 Effect of Termination of
Service. The effect of a Participant’s termination of Service
on the Participant’s Performance Award shall be as determined by the Committee,
in its discretion, and set forth in the Award Agreement evidencing such
Performance Award.
9.8 Non-transferability of Performance
Awards. Prior to settlement in accordance with the provisions
of the Plan, no Performance Award may be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except by will or by the laws of descent and distribution. All rights with
respect to a Performance Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.
10.
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Standard
Forms of Award Agreement.
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10.1 Award
Agreements. Each Award shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Award Agreement
approved by the Committee and as amended from time to time. Any Award Agreement
may consist of an appropriate form of Notice of Grant and a form of Agreement
incorporated therein by reference, or such other form or forms as the Committee
may approve from time to time.
10.2 Authority to Vary
Terms. The Committee shall have the authority from time to
time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the
Plan.
11.
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Change in
Control.
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11.1 Definitions.
(a) An
“Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect
sale or exchange by the stockholders of the Company of all or substantially all
of the voting stock of the Company (but excluding for purposes hereof sales and
exchanges to family members or trusts for the benefit of or controlled by family
members or other like sales and exchanges in which a voting right or other
beneficial interest is maintained; (ii) a merger or consolidation in which
the Company is a party, but not the successor; (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company (other than a
sale, exchange or transfer to one or more subsidiaries of the Company); or
(iv) a liquidation or dissolution of the Company.
(b) “Change
in Control” shall mean an Ownership Change Event or series of related Ownership
Change Events (collectively, a “Transaction”) following which the stockholders
of the Company immediately before the Transaction do not retain immediately
after the Transaction, direct or indirect beneficial ownership of more than
fifty percent (50%) of the total combined voting power of the outstanding voting
securities of the Company or, in the case of an Ownership Change Event described
in Section 11.1(a)(iii), the entity to which the assets of the Company were
transferred.
11.2 Effect of Change in Control on
Options and SARs. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing entity or parent thereof, as the
case may be (the “Acquiror”), may, without the consent of any Participant,
either assume the Company’s rights and obligations under outstanding Options and
SARs or substitute for outstanding Options and SARs substantially equivalent
options and SARs (as the case may be) for the Acquiror’s stock. In the event the
Acquiror elects not to assume or substitute for outstanding Options or SARs in
connection with a Change in Control, the Committee shall provide that any
unvested portions of outstanding Options and SARs shall be immediately
exercisable and vested in full as of the date thirty (30) days prior to the
date of the Change in Control. The vesting of any Option or SAR that was
permissible solely by reason of this paragraph 11.2 shall be conditioned
upon the consummation of the Change in Control. Any Options or SARs which are
not assumed by the Acquiror in connection with the Change in Control nor
exercised as of the time of consummation of the Change in Control shall
terminate and cease to be outstanding effective as of the time of consummation
of the Change in Control.
11.3 Effect of Change in Control on Stock
Awards. The Committee may, in its discretion, provide in any
Award Agreement evidencing a Stock Award that, in the event of a Change in
Control, the lapsing of the Restriction Period applicable to the shares subject
to the Stock Award held by a Participant whose Service has not terminated prior
to such date shall be accelerated effective as of the date of the Change in
Control to such extent as specified in such Award Agreement. Any acceleration of
the lapsing of the Restriction Period that was permissible solely by reason of
this Section 11.3 and the provisions of such Award Agreement shall be
conditioned upon the consummation of the Change in Control.
11.4 Effect of Change in Control on
Performance Awards. The Committee may, in its discretion,
provide in any Award Agreement evidencing a Performance Award that, in the event
of a Change in Control, the Performance Award held by a Participant whose
Service has not terminated prior to such date shall become payable effective as
of the date of the Change in Control to such extent as specified in such Award
Agreement.
12.
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Compliance with Securities
Law.
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The grant of Awards and the issuance of
shares of Stock pursuant to any Award shall be subject to compliance with all
applicable requirements of federal, state and foreign law with respect to such
securities, as well as all applicable requirements of any stock exchange or
market system upon which the Stock may then be listed, and such approvals by
governmental agencies, shareholders, etc., as may be deemed appropriate by the
Committee, including, among other things, such steps as the Company legal
counsel shall deem necessary or appropriate to comply with these requirements
and approvals. Awards hereunder may be canceled or amended by the Committee, in
whole or in part, at any time if the Committee determines, in its sole
discretion, that cancellation or amendment is necessary or advisable in light of
any change after the Award was granted, in (a) the Code or (b) any
federal or state securities law or other law or regulation, which change by its
term is effective retroactively to a date on or before the grant date; provided,
however, that no such cancellation or amendment shall, without the Participant’s
consent, apply to or affect installments that vested on or before the date on
which the Committee makes such determination. In addition, no Award may be
exercised or shares issued pursuant to an Award unless (i) a registration
statement under the Securities Act shall at the time of such exercise or
issuance be in effect with respect to the shares issuable pursuant to the Award
or (ii) in the opinion of legal counsel to the Company, the shares issuable
pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the
Company.
13.
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Tax
Withholding.
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13.1 Tax Withholding in
General. The Company shall have the right to deduct from any
and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement, or to
make any payment in cash under the Plan until the Participating Company Group’s
tax withholding obligations have been satisfied by the Participant.
13.2 Withholding in
Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.
14.
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Termination
or Amendment of Plan.
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The Committee may terminate or amend
the Plan at any time. However, without the approval of the Company’s
stockholders, to the extent required by prevailing law and/or exchange listing
requirements, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation
of the provisions of Section 4), (b) no change in the class of persons
eligible to receive Incentive Stock Options, and (c) no other amendment of
the Plan that would require approval of the Company’s stockholders under any
applicable law, regulation or rule. No termination or amendment of the Plan
shall affect any then outstanding Award unless expressly provided by the
Committee. In any event, no termination or amendment of the Plan may adversely
affect any then outstanding Award without the consent of the Participant, unless
such termination or amendment is necessary to comply with any applicable law,
regulation or rule.
15.
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Miscellaneous
Provisions.
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15.1 Repurchase
Rights. Shares issued under the Plan may be subject to one or
more repurchase options, or other conditions and restrictions as determined by
the Committee in its discretion at the time the Award is granted. Upon request
by the Company, each Participant shall execute any agreement evidencing such
transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.
15.2 Rights as Employee or
Consultant. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having
been so selected, to be selected again as a Participant. Nothing in the Plan or
any Award granted under the Plan shall confer on any Participant a right to
remain an Employee or Consultant, or interfere with or limit in any way any
right of a Participating Company to terminate the Participant’s Service at any
time. To the extent that an Employee of a Participating Company other
than the Company receives an Award under the Plan, that Award can in no event be
understood or interpreted to mean that the Company is the Employee’s employer or
that the Employee has an employment relationship with the Company.
15.3 Rights as a
Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.2 or another provision of the Plan.
15.4 Fractional
Shares. The Company shall not be required to issue fractional
shares upon the exercise or settlement of any Award.
15.5 Beneficiary
Designation. Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime. If a Participant dies without an effective designation
of a beneficiary who is living at the time of the Participant’s death, the
Company will pay any remaining unpaid benefits to the Participant’s legal
representative.
15.6 Notice. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given upon delivery, if delivered in person, or on the
third business day after mailing, if mailed by registered or certified mail,
return receipt requested, addressed in the case of the Company, to the board of
directors, Attn.: Stock Options, at the last principal address of record for the
Company; to the Participant, at the Participant’s last address as reflected on
the books and records of the Company; or in each case, to such other address as
may be reasonably designated to the Company or the Participant from time to time
as provided above.
15.7 Governing Law. The
Plan shall be governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the laws of the Commonwealth of Pennsylvania (without
reference to principles of conflicts of laws) shall govern the operation of, and
the rights of Participants under the Plan, and Awards granted
thereunder.