Attached files
file | filename |
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EX-10.9 - EXHIBIT 10.9 - NUPATHE INC. | c08125exv10w9.htm |
10-Q - FORM 10-Q - NUPATHE INC. | c08125e10vq.htm |
EX-10.5 - EXHIBIT 10.5 - NUPATHE INC. | c08125exv10w5.htm |
EX-10.3 - EXHIBIT 10.3 - NUPATHE INC. | c08125exv10w3.htm |
EX-10.4 - EXHIBIT 10.4 - NUPATHE INC. | c08125exv10w4.htm |
EX-10.8 - EXHIBIT 10.8 - NUPATHE INC. | c08125exv10w8.htm |
EX-10.2 - EXHIBIT 10.2 - NUPATHE INC. | c08125exv10w2.htm |
EX-32.1 - EXHIBIT 32.1 - NUPATHE INC. | c08125exv32w1.htm |
EX-31.2 - EXHIBIT 31.2 - NUPATHE INC. | c08125exv31w2.htm |
EX-10.7 - EXHIBIT 10.7 - NUPATHE INC. | c08125exv10w7.htm |
EX-31.1 - EXHIBIT 31.1 - NUPATHE INC. | c08125exv31w1.htm |
Exhibit 10.1
NUPATHE INC.
2010 OMNIBUS INCENTIVE COMPENSATION PLAN
NUPATHE INC.
2010 OMNIBUS INCENTIVE COMPENSATION PLAN
Effective as of the Effective Date (as defined below), the NuPathe 2010 Omnibus Incentive
Compensation Plan (the Plan) is hereby established as a successor to the 2005 Equity
Compensation Plan (the 2005 Plan). The 2005 Plan is hereby merged with and into this
Plan effective as of the Effective Date, and no additional grants shall be made thereafter under
the 2005 Plan. Outstanding grants under the 2005 Plan shall continue in effect according to their
terms as in effect before the Plan merger (subject to such amendments as the Committee (as defined
below) determines, consistent with the 2005 Plan, as applicable), and the shares with respect to
outstanding grants under the 2005 Plan shall be issued or transferred under this Plan.
The purpose of the Plan is (i) to provide employees of NuPathe Inc. (the Company)
and its subsidiaries, certain consultants and advisors who perform services for the Company or its
subsidiaries and non-employee members of the Board of Directors of the Company with the opportunity
to receive grants of incentive stock options, nonqualified stock options, stock appreciation
rights, stock awards, stock units, performance units and other stock-based awards, and (ii) to
provide selected executive employees with the opportunity to receive bonus awards that are
considered qualified performance-based compensation under section 162(m) of the Code (as defined
below).
The Company believes that the Plan will encourage the participants to contribute materially to
the growth of the Company, thereby benefitting the Companys stockholders, and will align the
economic interests of the participants with those of the stockholders. The Plan shall be effective
as of Effective Date.
Section 1. Definitions
The following terms shall have the meanings set forth below for purposes of the Plan:
(a) Board shall mean the Board of Directors of the Company.
(b) Bonus Award shall mean a bonus awarded under the Plan that is designated as
qualified performance-based compensation under section 162(m) of the Code, as described in
Section 15.
(c) Cause shall mean, except to the extent specified otherwise by the Committee, a
finding by the Committee that the Participant (i) has breached his or her employment or service
contract with the Employer, (ii) has engaged in disloyalty to the Employer, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) has
disclosed trade secrets or confidential information of the Employer to persons not entitled to
receive such information, (iv) has breached any written non-competition, non-solicitation,
invention assignment or confidentiality agreement between the Participant and the Employer or (v)
has engaged in such other behavior detrimental to the interests of the Employer as the Committee
determines.
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(d) Unless otherwise set forth in a Grant Instrument, a Change of Control shall be
deemed to have occurred if:
(i) Any person (as such term is used in sections 13(d) and 14(d) of the Exchange Act)
becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50% of the voting power of the then
outstanding securities of the Company; provided that a Change of Control shall not be deemed to
occur as a result of a transaction in which the Company becomes a subsidiary of another corporation
and in which the stockholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such stockholders to more
than 50% of all votes to which all stockholders of the parent corporation would be entitled in the
election of directors.
(ii) The consummation of (A) a merger or consolidation of the Company with another corporation
where the stockholders of the Company, immediately prior to the merger or consolidation, will not
beneficially own in substantially the same proportion as ownership immediately prior to the merger
or consolidation, immediately after the merger or consolidation, shares entitling such stockholders
to more than 50% of all votes to which all stockholders of the surviving corporation would be
entitled in the election of directors, or where the members of the Board, immediately prior to the
merger or consolidation, would not, immediately after the merger or consolidation, constitute a
majority of the board of directors of the surviving corporation, (B) a sale or other disposition of
all or substantially all of the assets of the Company, or (C) a liquidation or dissolution of the
Company.
(iii) A change in the composition of the Board over a period of twelve (12) consecutive months
or less such that a majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board members described
in clause (A) who were still in office at the time the Board approved such election or nomination.
The Committee may modify the definition of Change of Control for a particular Grant as the
Committee deems appropriate to comply with section 409A of the Code or otherwise.
(e) Code shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
(f) Committee shall mean the Compensation Committee of the Board or another
committee appointed by the Board to administer the Plan. With respect to Grants and Bonus Awards
that are intended to be qualified performance-based compensation under section 162(m) of the
Code, the Committee shall consist of two or more persons appointed by the Board, all of whom shall
be outside directors as defined under section 162(m) of the Code. The Committee shall also
consist of directors who are non-employee directors as defined under Rule 16b-3 promulgated under
the Exchange Act.
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(g) Company shall mean NuPathe Inc. and shall include its successors.
(h) Company Stock shall mean common stock of the Company.
(i) Disability or Disabled shall mean a Participants becoming disabled
within the meaning of section 22(e)(3) of the Code, within the meaning of the Employers long-term
disability plan applicable to the Participant or as otherwise determined by the Committee.
(j) Dividend Equivalent shall mean an amount determined by multiplying the number of
shares of Company Stock subject to a Grant by the per-share cash dividend paid by the Company on
its outstanding Company Stock, or the per-share fair market value (as determined by the Committee)
of any dividend paid on its outstanding Company Stock in consideration other than cash.
(k) Effective Date shall mean the date at which the registration statement for the
initial public offering of the Company Stock is declared effective by the Securities and Exchange
Commission and the Company Stock is priced for the initial public offering of such Company Stock,
subject to approval of the Plan by the stockholders of the Company.
(l) Employee shall mean an employee of the Employer (including an officer or
director who is also an employee), but excluding any person who is classified by the Employer as a
contractor or consultant, no matter how characterized by the Internal Revenue Service, other
governmental agency or a court. Any change of characterization of an individual by the Internal
Revenue Service or any court or government agency shall have no effect upon the classification of
an individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.
(m) Employed by, or providing service to, the Employer shall mean employment or
service as an Employee, Key Advisor or member of the Board (so that, for purposes of exercising
Options and SARs and satisfying conditions with respect to Stock Awards, Stock Units, Performance
Units and Other Stock-Based Awards, a Participant shall not be considered to have terminated
employment or service until the Participant ceases to be both an Employee, Key Advisor and member
of the Board).
(n) Employer shall mean the Company and each of its subsidiaries.
(o) Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
(p) Exercise Price shall mean the per share price at which shares of Company Stock
may be purchased under an Option, as designated by the Committee.
(q) Fair Market Value shall mean:
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(i) If the Company Stock is publicly traded, then the Fair Market Value per share shall be
determined as follows: (A) if the principal trading market for the Company Stock is a national
securities exchange, the closing price during regular trading hours on the relevant date or (if
there were no trades on that date) the latest preceding date upon which a sale was reported, or (B)
if the Company Stock is not principally traded on any such exchange, the last reported sale price
of a share of Company Stock during regular trading hours on the relevant date, as reported by the
OTC Bulletin Board or, if shares are not reported on the OTC Bulletin Board, as determined by the
Committee through any reasonable valuation method authorized under the Code.
(ii) If the Company Stock is not publicly traded or, if publicly traded, is not subject to
reported transactions as set forth above, the Fair Market Value per share shall be as determined by
the Committee through any reasonable valuation method authorized under the Code.
(r) Grant shall mean an Option, SAR, Stock Award, Stock Unit, Performance Unit,
Other Stock-Based Award or Bonus Award granted under the Plan.
(s) Grant Instrument shall mean the written agreement that sets forth the terms and
conditions of a Grant, including all amendments thereto.
(t) Incentive Stock Option shall mean an Option that is intended to meet the
requirements of an incentive stock option under section 422 of the Code.
(u) Key Advisor shall mean a consultant or advisor of the Employer
(v) Non-Employee Director shall mean a member of the Board who is not an Employee.
(w) Nonqualified Stock Option shall mean an Option that is not intended to be taxed
as an incentive stock option under section 422 of the Code.
(x) Option shall mean an option to purchase shares of Company Stock, as described in
Section 6.
(y) Other Stock-Based Award shall mean any Grant based on, measured by or payable in
Company Stock, as described in Section 11.
(z) Plan shall mean this NuPathe Inc. 2010 Omnibus Incentive Compensation Plan, as
in effect from time to time.
(aa) Participant shall mean an Employee, Key Advisor or Non-Employee Director
designated by the Committee to participate in the Plan.
(bb) Performance Unit shall mean a performance unit award, as described in Section
10.
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(cc) SAR shall mean a stock appreciation right, as described in Section 9.
(dd) Stock Award shall mean an award of Company Stock, as described in Section 7.
(ee) Stock Unit shall mean an award of a phantom unit representing a share of
Company Stock, as described in Section 8.
Section 2. Administration
(a) Committee. The Plan shall be administered and interpreted by the Committee;
provided, however, that any Grants to members of the Compensation Committee must be authorized by a
disinterested majority of the Board. The Committee may delegate authority to one or more
subcommittees, as it deems appropriate. To the extent that the Board or a subcommittee administers
the Plan, references in the Plan to the Committee shall be deemed to refer to the Board
or such subcommittee. In the absence of a specific designation by the Board to the contrary, the
Plan shall be administered by the Committee of the Board or any successor Board committee
performing substantially the same functions.
(b) Committee Authority. The Committee shall have the sole authority to (i) determine
the individuals to whom Grants or Bonus Awards shall be made under the Plan, (ii) determine the
type, size and terms of the Grants or Bonus Awards to be made to each such individual, (iii)
determine the time when the Grants or Bonus Awards will be made, (iv) determine the duration of any
applicable exercise or restriction period, including the criteria for exercisability and the
acceleration of exercisability, (v) amend the terms of any previously issued Grant or Bonus Award,
subject to the provisions of Section 20 below, and (vi) deal with any other matters arising under
the Plan.
(c) Committee Determinations. The Committee shall have full power and express
discretionary authority to administer and interpret the Plan, to make factual determinations and to
adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and
for the conduct of its business as it deems necessary or advisable, in its sole discretion. The
Committees interpretations of the Plan and all determinations made by the Committee pursuant to
the powers vested in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in
keeping with the objectives of the Plan and need not be uniform as to similarly situated
individuals.
Section 3. Grants
Grants under the Plan may consist of Options as described in Section 6, Stock Awards as
described in Section 7, Stock Units as described in Section 8, SARs as described in Section 9,
Performance Units as described in Section 10 and Other Stock-Based Awards as described in Section
11. Bonus Awards may be granted as described in Section 15. All Grants and Bonus Awards shall be
subject to the terms and conditions set forth herein and to such other terms and
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conditions consistent with this Plan as the Committee deems appropriate and as are specified
in writing by the Committee to the individual in the Grant Instrument. All Grants and Bonus Awards
shall be made conditional upon the Participants acknowledgement, in writing or by acceptance of
the Grant or Bonus Award, that all decisions and determinations of the Committee shall be final and
binding on the Participant, his or her beneficiaries and any other person having or claiming an
interest under such Grant or Bonus Award. Grants and Bonus Awards under a particular Section of
the Plan need not be uniform as among the Participants.
Section 4. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below, the aggregate number
of shares of Company Stock that may be issued or transferred under the Plan shall be equal to the
sum of the following: (i) 686,221 shares, plus (ii) the number of shares of Company Stock subject
to outstanding grants under the 2005 Plan as of the Effective Date, and (iii) the number of shares
of Company Stock remaining available for issuance under the 2005 Plan but not subject to previously
exercised, vested or paid Grants as of the Effective Date; provided, however, that the aggregate
number of shares of Company Stock that may be issued or transferred under the Plan pursuant to
Incentive Stock Options shall not exceed 124,767 shares of Company Stock. In addition, as of the
first trading day of January during the term of the Plan (excluding any extensions), beginning with
calendar year 2011, an additional positive number of shares of Company Stock shall be added to the
number of shares of Company Stock authorized to be issued or transferred under the Plan and the
number of shares authorized to be issued or transferred pursuant to Incentive Stock Options, equal
to five percent (5%) of the total number of shares of Company Stock outstanding on the last trading
day in December of the immediately preceding calendar year, or 499,070 shares, whichever is less.
(b) Source of Shares; Share Counting. Shares issued or transferred under the Plan may
be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including
shares purchased by the Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan (including options granted under the 2005 Plan) terminate,
expire or are canceled, forfeited, exchanged or surrendered without having been exercised, or if
any Stock Awards, Stock Units or Other Stock-Based Awards (including Stock Awards granted under the
2005 Plan) are forfeited, terminated or otherwise not paid in full, the shares subject to such
Grants shall again be available for purposes of the Plan. If shares of Company Stock otherwise
issuable under the Plan are surrendered in payment of the Exercise Price of an Option, then the
number of shares of Company Stock available for issuance under the Plan shall be reduced only by
the net number of shares actually issued by the Company upon such exercise and not by the gross
number of shares as to which such Option is exercised. Upon the exercise of any SAR under the
Plan, the number of shares of Company Stock available for issuance under the Plan shall be reduced
by the gross number of shares as to which such right is exercised, and not by the net number of
shares actually issued by the Company upon such exercise. If shares of Company Stock otherwise
issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes
incurred in connection with the issuance, vesting or exercise of any Grant or the issuance of
Company Stock thereunder, then the number of shares of Company Stock available for issuance under
the Plan shall be reduced by the net
number of shares issued, vested or exercised under such Grant, calculated in each instance
after payment of such share withholding. To the extent any Grants are paid in cash, and not in
shares of Company Stock, any shares previously subject to such Grants shall again be available for
issuance or transfer under the Plan.
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(c) Individual Limits. Each person participating in the Plan shall be subject the
following limitations:
(i) for Grants measured in shares of Company Stock (whether payable in Company Stock, cash or
a combination of both), the maximum number of shares of Company Stock for which such Grants may be
made to such person in any calendar year shall not exceed 124,767 shares of Company Stock in the
aggregate, and
(ii) for Grants measured in cash dollars (whether payable in cash, Company Stock or a
combination of both), the maximum dollar amount for which such Grants may be made to such person in
any calendar year shall not exceed $3,000,000 in the aggregate, with such limitation to be measured
at the time the Grant is made.
(d) Adjustments. If there is any change in the number or kind of shares of Company
Stock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) a merger, reorganization or consolidation, (iii) a
reclassification or change in par value, or (iv) any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Companys receipt of consideration, or if the
value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or
the Companys payment of an extraordinary dividend or distribution, the maximum number of shares of
Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock
for which any individual may receive Grants in any year, the kind and number of shares covered by
outstanding Grants, the kind and number of shares issued and to be issued under the Plan, and the
price per share or the applicable market value of such Grants shall be equitably adjusted by the
Committee to reflect any increase or decrease in the number of, or change in the kind or value of,
the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under the Plan and such outstanding Grants; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. In addition, in the
event of a Change of Control, the provisions of Section 14 of the Plan shall apply. Any
adjustments to outstanding Grants shall be consistent with section 409A or 424 of the Code, to the
extent applicable. The Committee shall have the sole discretion and authority to determine what
appropriate adjustments shall be made and any adjustments determined by the Committee shall be
final, binding and conclusive.
Section 5. Eligibility for Participation
(a) Eligible Persons. All Employees (including, for all purposes of the Plan, an
Employee who is a member of the Board) and Non-Employee Directors shall be eligible to participate
in the Plan. Key Advisors shall be eligible to participate in the Plan if the Key Advisors render
bona fide services to the Employer, the services are not in connection with the
offer and sale of securities in a capital-raising transaction and the Key Advisors do not
directly or indirectly promote or maintain a market for the Companys securities.
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(b) Selection of Participants. The Committee shall select the Employees, Non-Employee
Directors and Key Advisors to receive Grants and shall determine the number of shares of Company
Stock subject to a particular Grant in such manner as the Committee determines.
Section 6. Options
The Committee may grant Options to an Employee, Non-Employee Director or Key Advisor upon such
terms as the Committee deems appropriate. The following provisions are applicable to Options:
(a) Number of Shares. The Committee shall determine the number of shares of Company
Stock that will be subject to each Grant of Options to Employees, Non-Employee Directors and Key
Advisors.
(b) Type of Option and Exercise Price.
(i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options or any
combination of the two, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to employees of the Company or its parent or subsidiary
corporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to
Employees, Non-Employee Directors and Key Advisors.
(ii) The Exercise Price of Company Stock subject to an Option shall be determined by the
Committee and shall be equal to or greater than the Fair Market Value of a share of Company Stock
on the date the Option is granted. However, an Incentive Stock Option may not be granted to an
Employee who, at the time of grant, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary corporation of the
Company, as defined in section 424 of the Code, unless the Exercise Price per share is not less
than 110% of the Fair Market Value of a share of Company Stock on the date of grant.
(c) Option Term. The Committee shall determine the term of each Option. The term of
any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option
that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, or any parent or subsidiary
corporation of the Company, as defined in section 424 of the Code, may not have a term that exceeds
five years from the date of grant.
(d) Exercisability of Options. Options shall become exercisable in accordance with
such terms and conditions, consistent with the Plan, as may be determined by the
Committee and specified in the Grant Instrument. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
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(e) Grants to Non-Exempt Employees. Notwithstanding the foregoing, Options granted to
persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may
not be exercisable for at least six months after the date of grant (except that such Options may
become exercisable, as determined by the Committee, upon the Participants death, Disability or
retirement, or upon a Change of Control or other circumstances permitted by applicable
regulations).
(f) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be exercised while the Participant is
employed by, or providing service to, the Employer as an Employee, member of the Board or Key
Advisor.
(ii) In the event that a Participant ceases to be employed by, or provide service to, the
Employer for any reason other than Disability, death or termination for Cause, any Option which is
otherwise exercisable by the Participant shall terminate unless exercised within 90 days after the
date on which the Participant ceases to be employed by, or provide service to, the Employer (or
within such other period of time as may be specified by the Committee), but in any event no later
than the date of expiration of the Option term. Except as otherwise provided by the Committee, any
of the Participants Options that are not otherwise exercisable as of the date on which the
Participant ceases to be employed by, or provide service to, the Employer shall terminate as of
such date.
(iii) In the event the Participant ceases to be employed by, or provide service to, the
Company on account of a termination for Cause by the Employer, any Option held by the Participant
shall terminate as of the date the Participant ceases to be employed by, or provide service to, the
Employer. In addition, notwithstanding any other provisions of this Section 6, if the Committee
determines that the Participant has engaged in conduct that constitutes Cause at any time while the
Participant is employed by, or providing service to, the Employer or after the Participants
termination of employment or service, any Option held by the Participant shall immediately
terminate and the Participant shall automatically forfeit all shares underlying any exercised
portion of an Option for which the Company has not yet delivered the share certificates, upon
refund by the Company of the Exercise Price paid by the Participant for such shares. Upon any
exercise of an Option, the Company may withhold delivery of share certificates pending resolution
of an inquiry that could lead to a finding resulting in a forfeiture.
(iv) In the event the Participant ceases to be employed by, or provide service to, the
Employer because the Participant is Disabled, any Option which is otherwise exercisable by the
Participant shall terminate unless exercised within one year after the date on which the
Participant ceases to be employed by, or provide service to, the Employer (or within such other
period of time as may be specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee, any of the
Participants Options which are not otherwise exercisable as of the date on which the
Participant ceases to be employed by, or provide service to, the Employer shall terminate as
of such date.
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(v) If the Participant dies while employed by, or providing service to, the Employer or within
90 days after the date on which the Participant ceases to be employed or provide service on account
of a termination specified in Section 6(f)(ii) above (or within such other period of time as may be
specified by the Committee), any Option that is otherwise exercisable by the Participant shall
terminate unless exercised within one year after the date on which the Participant ceases to be
employed by, or provide service to, the Employer (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of expiration of the Option
term. Except as otherwise provided by the Committee, any of the Participants Options that are not
otherwise exercisable as of the date on which the Participant ceases to be employed by, or provide
service to, the Employer shall terminate as of such date.
(g) Exercise of Options. A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the Company. The
Participant shall pay the Exercise Price for an Option as specified by the Committee (i) in cash,
(ii) unless the Committee determines otherwise, by delivering shares of Company Stock owned by the
Participant and having a Fair Market Value on the date of exercise at least equal to the Exercise
Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company
Stock having a Fair Market Value on the date of exercise at least equal to the Exercise Price,
(iii) by payment through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board, or (iv) by such other method as the Committee may approve. In addition, to
the extent an Option is at the time exercisable for vested shares of Company Stock, all or any part
of that vested portion may be surrendered to the Company for an appreciation distribution payable
in shares of Company Stock with a Fair Market Value at the time of the Option surrender equal to
the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the
surrendered portion exceeds the aggregate Exercise Price payable for those shares. Shares of
Company Stock used to exercise an Option shall have been held by the Participant for the requisite
period of time necessary to avoid adverse accounting consequences to the Company with respect to
the Option. Payment for the shares to be issued or transferred pursuant to the Option, and any
required withholding taxes, must be received by the Company by the time specified by the Committee
depending on the type of payment being made, but in all cases prior to the issuance or transfer of
such shares.
(h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect
to which Incentive Stock Options are exercisable for the first time by a Participant during any
calendar year, under the Plan or any other stock option plan of the Company or a parent or
subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option.
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Section 7. Stock Awards
The Committee may issue or transfer shares of Company Stock to an Employee, Non-Employee
Director or Key Advisor under a Stock Award, upon such terms as the Committee deems appropriate.
The following provisions are applicable to Stock Awards:
(a) General Requirements. Shares of Company Stock issued or transferred pursuant to
Stock Awards may be issued or transferred for consideration or for no consideration, and subject to
restrictions or no restrictions, as determined by the Committee. The Committee may, but shall not
be required to, establish conditions under which restrictions on Stock Awards shall lapse over a
period of time or according to such other criteria as the Committee deems appropriate, including,
without limitation, restrictions based upon the achievement of specific performance goals. The
period of time during which the Stock Awards will remain subject to restrictions will be designated
in the Grant Instrument as the Restriction Period.
(b) Number of Shares. The Committee shall determine the number of shares of Company
Stock to be issued or transferred pursuant to a Stock Award and the restrictions applicable to such
shares.
(c) Requirement of Employment or Service. If the Participant ceases to be employed
by, or provide service to, the Employer during a period designated in the Grant Instrument as the
Restriction Period, or if other specified conditions are not met, the Stock Award shall terminate
as to all shares covered by the Grant as to which the restrictions have not lapsed, and those
shares of Company Stock must be immediately returned to the Company. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction
Period, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of
a Stock Award except under Section 18(a) below. Unless otherwise determined by the Committee, the
Company will retain possession of certificates for shares of Stock Awards until all restrictions on
such shares have lapsed. Each certificate for a Stock Award, unless held by the Company, shall
contain a legend giving appropriate notice of the restrictions in the Grant. The Participant shall
be entitled to have the legend removed from the stock certificate covering the shares subject to
restrictions when all restrictions on such shares have lapsed. The Committee may determine that
the Company will not issue certificates for Stock Awards until all restrictions on such shares have
lapsed.
(e) Right to Vote and to Receive Dividends. Unless the Committee determines
otherwise, during the Restriction Period, the Participant shall have the right to vote shares of
Stock Awards and to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee, including, without limitation, the
achievement of specific performance goals.
(f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse upon
the expiration of the applicable Restriction Period and the satisfaction of all conditions, if any,
imposed by the Committee. The Committee may determine, as to any or all Stock Awards, that the
restrictions shall lapse without regard to any Restriction Period.
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Section 8. Stock Units
The Committee may grant Stock Units, each of which shall represent one hypothetical share of
Company Stock, to an Employee, Non-Employee Director or Key Advisor upon such terms and conditions
as the Committee deems appropriate. The following provisions are applicable to Stock Units:
(a) Crediting of Units. Each Stock Unit shall represent the right of the Participant
to receive a share of Company Stock or an amount of cash based on the value of a share of Company
Stock, if and when specified conditions are met. All Stock Units shall be credited to bookkeeping
accounts established on the Companys records for purposes of the Plan.
(b) Terms of Stock Units. The Committee may grant Stock Units that are payable if
specified performance goals or other conditions are met, or under other circumstances. Stock Units
may be paid at the end of a specified performance period or other period, or payment may be
deferred to a date authorized by the Committee. The Committee shall determine the number of Stock
Units to be granted and the requirements applicable to such Stock Units.
(c) Requirement of Employment or Service. If the Participant ceases to be employed
by, or provide service to, the Employer prior to the vesting of Stock Units, or if other conditions
established by the Committee are not met, the Participants Stock Units shall be forfeited. The
Committee may, however, provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d) Payment With Respect to Stock Units. Payments with respect to Stock Units shall
be made in cash, Company Stock or any combination of the foregoing, as the Committee shall
determine.
Section 9. Stock Appreciation Rights
The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately
or in tandem with any Option. The following provisions are applicable to SARs:
(a) General Requirements. The Committee may grant SARs to an Employee or Non-Employee
Director separately or in tandem with any Option (for all or a portion of the applicable Option).
Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while
the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committee
shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each
SAR shall be equal to the per share Exercise Price of the related Option or, if there is no related
Option, an amount equal to or greater than the Fair Market Value of a share of Company Stock as of
the date of Grant of the SAR.
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(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a
Participant that shall be exercisable during a specified period shall not exceed the number of
shares of Company Stock that the Participant may purchase upon the exercise of the related
Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock
covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall
terminate to the extent of an equal number of shares of Company Stock.
(c) Exercisability. An SAR shall be exercisable during the period specified by the
Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as
may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any
or all outstanding SARs at any time for any reason. SARs may only be exercised while the
Participant is employed by, or providing service to, the Employer or during the applicable period
after termination of employment or service as described in Section 6(f) above. A tandem SAR shall
be exercisable only during the period when the Option to which it is related is also exercisable.
(d) Grants to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted to
persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may
not be exercisable for at least six months after the date of grant (except that such SARs may
become exercisable, as determined by the Committee, upon the Participants death, Disability or
retirement, or upon a Change of Control or other circumstances permitted by applicable
regulations).
(e) Value of SARs. When a Participant exercises SARs, the Participant shall receive
in settlement of such SARs an amount equal to the value of the stock appreciation for the number of
SARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value of
the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR
as described in subsection (a).
(f) Form of Payment. The appreciation in an SAR shall be paid in shares of Company
Stock, cash or any combination of the foregoing, as the Committee shall determine. For purposes of
calculating the number of shares of Company Stock to be received, shares of Company Stock shall be
valued at their Fair Market Value on the date of exercise of the SAR.
Section 10. Performance Units
The Committee shall have the discretionary authority to make Performance Unit awards in
accordance with the terms of this Section 10. The following provisions are applicable to
Performance Unit awards:
(a) General Requirements. A Performance Unit award shall represent a participating
interest in a special bonus pool tied to the attainment of pre-established corporate performance
objectives based on one or more performance goals or the right to receive a targeted dollar amount
tied to the attainment of pre-established corporate performance objectives based on one or more
performance goals. The amount of the bonus pool may vary with the level at which the applicable
performance objectives are attained, and the value of each Performance Unit which becomes due and
payable upon the attained level of performance shall be determined by dividing the amount of the
resulting bonus pool, if any, by the total number of Performance
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Units issued and outstanding at the completion of the applicable performance period.
Similarly, the targeted dollar amount may vary with the level at which the applicable performance
objectives are attained and the value of the Performance Units which becomes due and payable upon
the attained level of performance shall be determined based on the threshold, target and maximum
amounts that may be paid if the performance goals are met.
(b) Continued Employment or Service Requirement. Performance Units may also be
structured to include a requirement that the Participant continue to be employed by, or providing
service to, the Employer following the completion of the performance period in order to vest in the
Performance Units awarded with respect to that performance period.
(c) Payment with Respect to Performance Units. Payments with respect to Performance
Units shall be made in cash, Company Stock or any combination of the foregoing, as the Committee
shall determine.
(d) Requirement of Employment or Service. If a Participant ceases to be employed by,
or providing service to the Company prior to the vesting of Performance Units, or if other
conditions established by the Committee are not met, the Participants Performance Units shall be
forfeited. The Committee may provide for complete or partial exceptions to this requirement as it
deems appropriate.
Section 11. Other Stock-Based Awards
The Committee may grant Other Stock-Based Awards, which are awards (other than those described
in Sections 6, 7, 8, 9 and 10 of the Plan) that are based on or measured by Company Stock, to any
Employee, Non-Employee Director or Key Advisor, on such terms and conditions as the Committee shall
determine. Other Stock-Based Awards may be awarded subject to the achievement of performance goals
or other conditions and may be payable in cash, Company Stock or any combination of the foregoing,
as the Committee shall determine.
Section 12. Dividend Equivalents
The Committee may grant Dividend Equivalents in connection Stock Units or Other Stock-Based
Awards. Dividend Equivalents may be paid currently or accrued as contingent cash obligations and
may be payable in cash or shares of Company Stock, and upon such terms as the Committee may
establish, including, without limitation, the achievement of specific performance goals.
Section 13. Qualified Performance-Based Compensation
The Committee may determine that Stock Awards, Stock Units, Performance Units Other
Stock-Based Awards and Dividend Equivalents granted to an Employee shall be considered qualified
performance-based compensation under section 162(m) of the Code. The following provisions shall
apply to Grants of Stock Awards, Stock Units, Performance Units Other Stock-Based Awards and
Dividend Equivalents that are to be considered qualified performance-based compensation under
section 162(m) of the Code:
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(a) Performance Goals.
(i) When Stock Awards, Stock Units, Performance Units, Other Stock-Based Awards or Dividend
Equivalents that are to be considered qualified performance-based compensation are granted, the
Committee shall establish in writing (A) the objective performance goals that must be met, (B) the
performance period during which the performance will be measured, (C) the threshold, target and
maximum amounts that may be paid if the performance goals are met, and (D) any other conditions
that the Committee deems appropriate and consistent with the Plan and section 162(m) of the Code.
(ii) The performance goal criteria may relate to the Participants business unit or the
performance of the Company and its parents and subsidiaries as a whole, or any combination of the
foregoing. The Committee shall use objectively determinable performance goals based on one or more
of the following criteria: cash flow; earnings (including gross margin, earnings before interest
and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and
charges for stock-based compensation, earnings before interest, taxes, depreciation and
amortization, and net earnings); earnings per share; growth in earnings or earnings per share;
stock price; return on equity or average stockholder equity; total stockholder return or growth in
total stockholder return either directly or in relation to a comparative group; return on capital;
return on assets or net assets; revenue, growth in revenue or return on sales; income or net
income; operating income, net operating income or net operating income after tax; operating profit
or net operating profit; operating margin; return on operating revenue or return on operating
profit; regulatory filings; regulatory approvals, litigation and regulatory resolution goals; other
operational, regulatory or departmental objectives; budget comparisons; growth in stockholder value
relative to established indexes, or another peer group or peer group index; development and
implementation of strategic plans and/or organizational restructuring goals; development and
implementation of risk and crisis management programs; improvement in workforce diversity;
compliance requirements and compliance relief; safety goals; productivity goals; workforce
management and succession planning goals; economic value added (including typical adjustments
consistently applied from generally accepted accounting principles required to determine economic
value added performance measures); measures of customer satisfaction, employee satisfaction or
staff development; development or marketing collaborations, formations of joint ventures or
partnerships or the completion of other similar transactions intended to enhance the Corporations
revenue or profitability or enhance its customer base; merger and acquisitions; and other similar
criteria consistent with the foregoing.
(b) Establishment of Goals. The Committee shall establish the performance goals in
writing either before the beginning of the performance period or during a period ending no later
than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on
which 25% of the performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code. The performance goals
shall satisfy the requirements for qualified performance-based compensation, including the
requirement that the achievement of the goals be substantially uncertain at the time they are
established and that the goals be established in such a way that a third party with knowledge of
the relevant facts could determine whether and to what extent the
performance goals have been met. The Committee shall not have discretion to increase the
amount of compensation that is payable upon achievement of the designated performance goals.
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(c) Certification of Results. The Committee shall certify and announce the results
for each performance period to all Participants after the announcement of the Companys financial
results for the performance period. If and to the extent that the Committee does not certify that
the performance goals have been met, the grants of Stock Awards, Stock Units, Performance Units,
Other Stock-Based Awards and Dividend Equivalents for the performance period shall be forfeited or
shall not be made, as applicable. If Dividend Equivalents are granted as qualified
performance-based compensation under section 162(m) of the Code, a Participant may not accrue more
than $1,000,000 of such Dividend Equivalents during any calendar year.
(d) Death, Disability or Other Circumstances. The Committee may provide that Stock
Awards, Stock Units, Performance Units, Other Stock-Based Awards and Dividend Equivalents shall be
payable or restrictions on such Grants shall lapse, in whole or in part, in the event of the
Participants death or Disability during the performance period, or under other circumstances
consistent with the Treasury regulations and rulings under section 162(m) of the Code.
Section 14. Consequences of a Change of Control
(a) Notice and Acceleration. Unless the Committee determines otherwise, effective
upon the date of the Change of Control, (i) all outstanding Options and SARs shall automatically
accelerate and become fully exercisable, (ii) the restrictions and conditions on all outstanding
Stock Awards shall immediately lapse, and (iii) all Stock Units, Performance Units, Other
Stock-Based Awards and Dividend Equivalents shall become fully vested and shall be paid at their
target values, or in such greater amounts as the Committee may determine.
(b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change of
Control, the Committee may take one or more of the following actions with respect to any or all
outstanding Grants: the Committee may (i) require that Participants surrender their outstanding
Options and SARs in exchange for one or more payments by the Company, in cash or Company Stock as
determined by the Committee, in an amount equal to the amount by which the then Fair Market Value
of the shares of Company Stock subject to the Participants unexercised Options and SARs exceeds
the Exercise Price of the Options or the base amount of the SARs, as applicable, (ii) after giving
Participants an opportunity to exercise their outstanding Options and SARs, terminate any or all
unexercised Options and SARs at such time as the Committee deems appropriate, or (iii) determine
that outstanding Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation, (or a parent or subsidiary of the
surviving corporation), and other outstanding Grants that remain in effect after the Change of
Control shall be converted to similar grants of the surviving corporation (or a parent or
subsidiary of the surviving corporation). Such surrender or termination shall take place as of the
date of the Change of Control or such other date as the Committee may specify.
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Section 15. Bonus Awards
(a) General Requirements. The Committee may grant Bonus Awards that shall be
considered qualified performance-based compensation under section 162(m) of the Code to Employees
who are executive Employees, upon such terms and conditions as the Committee deems appropriate
under this Section 15.
(b) Target Bonus Awards and Performance Goals. When the Committee decides to make
Bonus Awards under this Section 15, the Committee shall select the executive Employees who will be
eligible for Bonus Awards, specify the performance period and establish target Bonus Awards and
performance goals for the performance period. The performance period shall be the Companys fiscal
year or such other period (of not more than 12 months) as the Committee determines. The Committee
shall determine each Participants target Bonus Award based on the Participants responsibility
level, position or such other criteria as the Committee shall determine. A Participants target
Bonus Award may provide for differing amounts to be paid based on differing thresholds of
performance. The Committee shall establish in writing (i) the objective performance goals that
must be met in order for the Bonus Awards to be paid for the performance period, (ii) the maximum
amounts that may be paid if the performance goals are met, (iii) any threshold levels of
performance that must be met in order for Bonus Awards to be paid, and (iv) any other conditions
that the Committee deems appropriate and consistent with the requirements of section 162(m) of the
Code for qualified performance-based compensation. The performance goals shall satisfy the
requirements for qualified performance-based compensation, including the requirement that the
achievement of the goals be substantially uncertain at the time they are established and that the
performance goals be established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been met. The Company
shall notify each Participant of the Participants target Bonus Award and the applicable
performance goals for the performance period.
(c) Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the criteria described in
Section 13(a)(ii) above. The performance goals may relate to one or more business units or the
performance of the Company and its subsidiaries as a whole, or any combination of the foregoing.
Performance goals need not be uniform among Participants.
(d) Timing of Establishment of Target Bonus Awards and Goals. The Committee shall
establish each Participants target Bonus Award and performance goals in writing either before the
beginning of the performance period or during a period ending no later than the earlier of (i) 90
days after the beginning of the performance period or (ii) the date on which 25% of the performance
period has been completed, or such other date as may be required or permitted under applicable
regulations under section 162(m) of the Code.
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(e) Section 162(m) Requirements. A target Bonus Award that is designated as
qualified performance-based compensation under section 162(m) of the Code may not be awarded as
an alternative to any other award that is not designated as qualified
performance-based compensation, but instead must be separate and apart from all other awards
made. The Committee shall not have discretion to increase the amount of compensation that is
payable based achievement of the performance goals, but the Committee may reduce the amount of
compensation that is payable based upon the Committees assessment of personal performance or other
factors. Any reduction of a Participants Bonus Award shall not result in an increase in any other
Participants Bonus Award.
(f) Certification of Results. The Committee shall certify the performance results for
the performance period after the performance period ends. The Committee shall determine the
amount, if any, to be paid pursuant to each Bonus Award based on the achievement of the performance
goals, the Committees exercise of its discretion to reduce Bonus Awards and the satisfaction of
all other terms of the Bonus Awards. Subject to the provisions of Sections 15(i) and Section 16,
payment of the Bonus Awards certified by the Committee shall be made in a single lump sum cash
payment on or after January 1, but not later than March 15 of the calendar year following the close
of the performance period.
(g) Limitations on Rights to Payment of Bonus Awards. No Participant shall have any
right to receive payment of a Bonus Award under the Plan for a performance period unless the
Participant remains in the employ of the Employer through the last day of the performance period;
provided, however, that the Committee may determine that if a Participants employment with the
Company terminates prior to the end of the performance period, the Participant may be eligible to
receive all or a prorated portion of any Bonus Award that would otherwise have been earned for the
performance period, under such circumstances as the Committee deems appropriate.
(h) Change of Control. If a Change of Control occurs prior to the end of a
performance period, the Committee may determine that each Participant who is then an Employee and
was awarded a target Bonus Award for the performance period may receive a Bonus Award for the
performance period, in such amount and at such time as the Committee determines.
(i) Discretionary and Other Bonuses. In addition to Bonus Awards that are designated
qualified performance-based compensation under section 162(m) of the Code, as described above,
the Committee may grant to executive Employees such other bonuses as the Committee deems
appropriate, which may be based on individual performance, Company performance or such other
criteria as the Committee determines. Decisions with respect to such bonuses shall be made
separate and apart from the Bonus Awards described in this Section 15.
Section 16. Deferrals
The Committee may permit or require a Participant to defer receipt of the payment of cash or
the delivery of shares that would otherwise be due to such Participant in connection with any Grant
or Bonus Award. If any such deferral election is permitted or required, the Committee shall
establish rules and procedures for such deferrals and may provide for interest or other earnings to
be paid on such deferrals. The rules and procedures for any such deferrals shall be consistent
with applicable requirements of section 409A of the Code.
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Section 17. Withholding of Taxes
(a) Required Withholding. All Grants and Bonus Awards under the Plan shall be subject
to applicable federal (including FICA), state and local tax withholding requirements. The Employer
may require that the Participant or other person receiving Grants or Bonus Awards or exercising
Grants pay to the Employer the amount of any federal, state or local taxes that the Employer is
required to withhold with respect to such Grants or Bonus Awards, or the Employer may deduct from
other wages and compensation paid by the Employer the amount of any withholding taxes due with
respect to such Grants or Bonus Awards.
(b) Election to Withhold Shares. If the Committee so permits, a Participant may elect
to satisfy the Employers tax withholding obligation with respect to Grants paid in Company Stock
by having shares withheld up to an amount that does not exceed the Participants minimum applicable
withholding tax rate for federal (including FICA), state and local tax liabilities. The election
must be in a form and manner prescribed by the Committee and may be subject to the prior approval
of the Committee.
Section 18. Transferability of Grants
(a) Nontransferability of Grants. Except as described in subsection (b) below, only
the Participant may exercise rights under a Grant during the Participants lifetime. A Participant
may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii)
with respect to Grants other than Incentive Stock Options, pursuant to a domestic relations order.
When a Participant dies, the personal representative or other person entitled to succeed to the
rights of the Participant may exercise such rights. Any such successor must furnish proof
satisfactory to the Company of his or her right to receive the Grant under the Participants will
or under the applicable laws of descent and distribution. Bonus Awards are not transferable. If a
Participant dies, any amounts payable after the Participants death pursuant to a Bonus Award shall
be paid to the personal representative or other person entitled to succeed to the rights of the
Participant.
(b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the
Committee may provide, in a Grant Instrument, that a Participant may transfer Nonqualified Stock
Options to family members, or one or more trusts or other entities for the benefit of or owned by
family members, consistent with the applicable securities laws, according to such terms as the
Committee may determine; provided that the Participant receives no consideration for the transfer
of an Option and the transferred Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately before the transfer.
Section 19. Requirements for Issuance or Transfer of Shares
No Company Stock shall be issued or transferred in connection with any Grant hereunder unless
and until all legal requirements applicable to the issuance or transfer of such Company Stock have
been complied with to the satisfaction of the Committee. The Committee shall have the right to
condition any Grant on the Participants undertaking in writing to comply with such restrictions on
his or her subsequent disposition of the shares of Company Stock as the
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Committee shall deem necessary or advisable, and certificates representing such shares may be
legended to reflect any such restrictions. Certificates representing shares of Company Stock
issued or transferred under the Plan may be subject to such stop-transfer orders and other
restrictions as the Committee deems appropriate to comply with applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
Section 20. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time; provided,
however, that the Board shall not amend the Plan without stockholder approval if such approval is
required in order to comply with the Code or other applicable law, or to comply with applicable
stock exchange requirements.
(b) Repricing of Options or SARs.
(i) The Committee shall have the authority to effect, at any time and from time to time, with
the consent of the affected holders, the cancellation of any or all outstanding Options or SAR
(including outstanding options transferred from the 2005 Plan) and to grant in exchange one or more
of the following: (A) new Options or SARs covering the same or a different number of shares of
Company Stock but with an Exercise Price or base amount per share not less than the Fair Market
Value per share of Company Stock on the new grant date or (B) cash or shares of Company Stock,
whether vested or unvested, equal in value to the value of the cancelled Options or SARs.
(ii) The Committee shall also have the authority, exercisable at any time and from time to
time, with the consent of the affected holders, to reduce the Exercise Price or base amount of one
or more outstanding Options or SARs to the then current Fair Market Value per share of Company
Stock or issue new Options or SARs with a lower Exercise Price or base amount on immediate
cancellation of outstanding Options or SARs with a higher Exercise Price or base amount.
(c) Stockholder Approval Requirements.
(i) The Plan is intended to comply with the transition relief set forth at Treas. Reg.
§1.162-27(f)(1) for companies that become publicly held in connection with an initial public
offering, and shall be approved by the stockholders of the Company no later than the first to occur
of (A) the expiration of the Plan, (B) a material modification of the Plan within the meaning of
section 162(m) and the regulations thereunder, (C) the issuance of all Company Stock authorized
under the Plan, or (D) the first meeting of stockholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in which the initial
public offering occurs (the period commencing on the initial public offering and ending on the
first to occur of the foregoing events shall be hereinafter referred to as the Reliance
Period).
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(ii) Following the Reliance Period, if Grants are made as qualified performance-based
compensation under Section 13 above or if Bonus Awards are made under
Section 15 above, the Plan must be reapproved by the stockholders no later than the first
stockholders meeting that occurs in the fifth year following the year in which the stockholders
previously approved the provisions of Sections 13 and 15, if additional Grants are to be made under
Section 13 or if additional Bonus Awards are made under Section 15 and if required by section
162(m) of the Code or the regulations thereunder.
(d) Termination of Plan. The Plan shall terminate on the day immediately preceding
the tenth anniversary of its Effective Date, unless the Plan is terminated earlier by the Board or
is extended by the Board with the approval of the stockholders.
(e) Termination and Amendment of Outstanding Grants. A termination or amendment of
the Plan that occurs after a Grant or Bonus Award is made shall not materially impair the rights of
a Participant unless the Participant consents or unless the Committee acts under Section 21(f)
below. The termination of the Plan shall not impair the power and authority of the Committee with
respect to an outstanding Grant or Bonus Award. Whether or not the Plan has terminated, an
outstanding Grant or Bonus Award may be terminated or amended under Section 21(f) below or may be
amended by agreement of the Company and the Participant consistent with the Plan.
Section 21. Miscellaneous
(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained
in the Plan shall be construed to (i) limit the right of the Committee to make Grants under the
Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of
the business or assets of any corporation, firm or association, including Grants to employees
thereof who become Employees, or (ii) limit the right of the Company to grant stock options or make
other awards outside of the Plan. The Committee may make a Grant to an employee of another
corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of
stock or property, reorganization or liquidation involving the Company, in substitution for a stock
option or stock awards grant made by such corporation. Notwithstanding anything in the Plan to the
contrary, the Committee may establish such terms and conditions of the new Grants as it deems
appropriate, including setting the Exercise Price of Options or the base price of SARs at a price
necessary to retain for the Participant the same economic value as the prior options or rights.
(b) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or written, may amend the Plan
in any manner. The Plan shall be binding upon and enforceable against the Company and its
successors and assigns.
(c) Funding of the Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants or Bonus Awards under the Plan.
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(d) Rights of Participants. Nothing in the Plan shall entitle any Employee,
Non-Employee Director, Key Advisor or other person to any claim or right to receive a Grant or
Bonus Award under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ of the Employer or
any other employment rights.
(e) No Fractional Shares. No fractional shares of Company Stock shall be issued or
delivered pursuant to the Plan or any Grant. Except as otherwise provided under the Plan, the
Committee shall determine whether cash, other awards or other property shall be issued or paid in
lieu of such fractional shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
(f) Compliance with Law.
(i) The Plan, the exercise of Options and SARs and the obligations of the Company to issue or
transfer shares of Company Stock under Grants shall be subject to all applicable laws and
regulations, and to approvals by any governmental or regulatory agency as may be required. With
respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or
its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive
Stock Options comply with the applicable provisions of section 422 of the Code, that Grants of
qualified performance-based compensation and Bonus Awards comply with the applicable provisions
of section 162(m) of the Code and that, to the extent applicable, Grants and Bonus Awards comply
with the requirements of section 409A of the Code. To the extent that any legal requirement of
section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code as set forth in the Plan
ceases to be required under section 16 of the Exchange Act or section 422, 162(m) or 409A of the
Code, that Plan provision shall cease to apply. The Committee may revoke any Grant or Bonus Award
if it is contrary to law or modify a Grant or Bonus Award to bring it into compliance with any
valid and mandatory government regulation. The Committee may also adopt rules regarding the
withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree
to limit its authority under this Section.
(ii) The Plan is intended to comply with the requirements of section 409A of the Code, to the
extent applicable. Each Grant shall be construed and administered such that the Grant either (A)
qualifies for an exemption from the requirements of section 409A of the Code or (B) satisfies the
requirements of section 409A of the Code. If a Grant is subject to section 409A of the Code, (I)
distributions shall only be made in a manner and upon an event permitted under section 409A of the
Code, (II) payments to be made upon a termination of employment shall only be made upon a
separation from service under section 409A of the Code, (III) unless the Grant specifies
otherwise, each installment payment shall be treated as a separate payment for purposes of section
409A of the Code, and (IV) in no event shall a Grantee, directly or indirectly, designate the
calendar year in which a distribution is made except in accordance with section 409A of the Code.
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(iii) Any Grant that is subject to section 409A of the Code and that is to be distributed to a
Key Employee (as defined below) upon separation from service shall be
administered so that any distribution with respect to such Award shall be postponed for six
months following the date of the Participants separation from service, if required by section 409A
of the Code. If a distribution is delayed pursuant to section 409A of the Code, the distribution
shall be paid within 15 days after the end of the six-month period. If the Grantee dies during
such six-month period, any postponed amounts shall be paid within 90 days of the Grantees death.
The determination of Key Employees, including the number and identity of persons considered Key
Employees and the identification date, shall be made by the Committee or its delegate each year in
accordance with section 416(i) of the Code and the specified employee requirements of section
409A of the Code.
(iv) Notwithstanding anything in the Plan or any Grant agreement to the contrary, each Grantee
shall be solely responsible for the tax consequences of Grants under the Plan, and in no event
shall the Company have any responsibility or liability if a Grant does not meet any applicable
requirements of section 409A of the Code. Although the Company intends to administer the Plan to
prevent taxation under section 409A of the Code, the Company does not represent or warrant that the
Plan or any Grant complies with any provision of federal, state, local or other tax law.
(g) Employees Subject to Taxation Outside the United States. With respect to
Participants who are believed by the Committee to be subject to taxation in countries other than
the United States, the Committee may make Grants on such terms and conditions, consistent with the
Plan, as the Committee deems appropriate to comply with the laws of the applicable countries, and
the Committee may create such procedures, addenda and subplans and make such modifications as may
be necessary or advisable to comply with such laws.
(h) Clawback Rights. Subject to the requirements of applicable law, the Committee may
provide in any Grant Instrument that, if a Participant breaches any restrictive covenant agreement
between the Participant and the Employer or otherwise engages in activities that constitute Cause
either while employed by, or providing service to, the Employer or within a specified period of
time thereafter, all Grants held by the Participant shall terminate, and the Company may rescind
any exercise of an Option or SAR and the vesting of any other Grant and delivery of shares upon
such exercise or vesting, as applicable on such terms as the Committee shall determine, including
the right to require that in the event of any such rescission, (i) the Participant shall return to
the Company the shares received upon the exercise of any Option or SAR and/or the vesting and
payment of any other Grant or, (ii) if the Participant no longer owns the shares, the Participant
shall pay to the Company the amount of any gain realized or payment received as a result of any
sale or other disposition of the shares (or, in the event the Participant transfers the shares by
gift or otherwise without consideration, the Fair Market Value of the shares on the date of the
breach), net of the price originally paid by the Participant for the shares. Payment by the
Participant shall be made in such manner and on such terms and conditions as may be required by the
Committee. The Employer shall be entitled to set off against the amount of any such payment any
amounts otherwise owed to the Participant by the Employer.
(i) Governing Law. The validity, construction, interpretation and effect of the Plan
and Grant Instruments issued under the Plan shall be governed and construed by and
determined in accordance with the laws of the State of Delaware, without giving effect to the
conflict of laws provisions thereof.
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