E-centives Inc. Contracts
Sample Business Contracts
Stock Option and Incentive Plan - E-centives Inc.
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AMENDED AND RESTATED
E-CENTIVES, INC.
STOCK OPTION AND INCENTIVE PLAN
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TABLE OF CONTENTS
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1. PURPOSE..........................................................................1
2. DEFINITIONS......................................................................1
3. ADMINISTRATION OF THE PLAN.......................................................6
3.1. Board.....................................................................6
3.2. Committee.................................................................6
3.3. Terms of Awards...........................................................6
3.4. No Liability..............................................................7
4. STOCK SUBJECT TO THE PLAN........................................................8
5. EFFECTIVE DATE AND TERM OF THE PLAN..............................................8
5.1. Effective Date............................................................8
5.2. Term......................................................................8
6. AWARD ELIGIBILITY................................................................9
6.1. Company or Subsidiary Employees; Service Providers; Other Persons.........9
6.2. Successive Awards.........................................................9
7. LIMITATIONS ON GRANTS............................................................9
7.1. Limitation on Shares of Stock Subject to Awards and Cash Awards...........9
7.2. Limitations on Incentive Stock Options....................................9
8. AWARD AGREEMENT.................................................................10
9. OPTION PRICE....................................................................10
10. VESTING, TERM AND EXERCISE OF OPTIONS...........................................10
10.1. Vesting..................................................................10
10.2. Term.....................................................................11
10.3. Acceleration.............................................................11
10.4. Termination of Service...................................................11
10.5. Limitations on Exercise of Option........................................11
10.6. Method of Exercise.......................................................11
10.7. Form of Payment..........................................................12
10.8. Rights of Holders of Options.............................................12
10.9. Delivery of Stock Certificates...........................................12
10.10. Reload Options...........................................................13
11. TRANSFERABILITY OF OPTIONS......................................................13
11.1. Transferability of Options...............................................13
11.2. Family Transfers.........................................................13
12. STOCK APPRECIATION RIGHTS.......................................................14
12.1. Right to Payment.........................................................14
12.2. Other Terms..............................................................14
13. RESTRICTED STOCK................................................................14
13.1. Grant of Restricted Stock or Restricted Stock Units......................14
13.2. Restrictions.............................................................14
13.3. Restricted Stock Certificates............................................15
13.4. Rights of Holders of Restricted Stock....................................15
13.5. Rights of Holders of Restricted Stock Units..............................15
13.6. Termination of Service...................................................15
13.7. Delivery of Stock and Payment Therefor...................................16
14. DEFERRED STOCK AWARDS...........................................................16
14.1. Nature of Deferred Stock Awards..........................................16
14.2. Election to Receive Deferred Stock Awards in Lieu of Compensation........16
14.3. Rights as a Stockholder..................................................17
14.4. Restrictions on Transfer.................................................17
14.5. Termination..............................................................17
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15. UNRESTRICTED STOCK AWARDS.......................................................17
16. PERFORMANCE STOCK AWARDS........................................................17
16.1. Nature of Performance Stock Awards.......................................17
16.2. Rights as a Stockholder..................................................18
16.3. Termination of Service...................................................18
17. DIVIDEND EQUIVALENT RIGHTS......................................................18
17.1. Dividend Equivalent Rights...............................................18
17.2. Interest Equivalents.....................................................19
17.3. Termination of Service...................................................19
18. CERTAIN PROVISIONS APPLICABLE TO AWARDS.........................................19
18.1. Stand-Alone, Additional, Tandem, and Substitute Awards...................19
18.2. Form and Timing of Payment Under Awards; Deferrals.......................19
18.3. Performance and Annual Incentive Awards..................................20
18.3.1.Performance Conditions............................................20
18.3.2.Performance or Annual Incentive Awards Granted to
Designated Covered Employees......................................20
18.3.3.Written Determinations............................................22
18.3.4.Status of Section 18.3.2 Awards Under Code Section 162(m).......22
19. PARACHUTE LIMITATIONS...........................................................23
20. REQUIREMENTS OF LAW.............................................................23
20.1. General..................................................................23
20.2. Rule 16b-3...............................................................24
20.3. Limitation Following a Hardship Distribution.............................24
21. AMENDMENT AND TERMINATION OF THE PLAN...........................................25
22. EFFECT OF CHANGES IN CAPITALIZATION.............................................25
22.1. Changes in Stock.........................................................25
22.2. Reorganization in Which the Company Is the Surviving Entity and in
Which No Change in Control Occurs........................................26
22.3. Reorganization, Sale of Assets or Sale of Stock Which Involves a
Change in Control........................................................26
22.4. Adjustments..............................................................26
22.5. No Limitations on Company................................................27
23. POOLING.........................................................................27
24. DISCLAIMER OF RIGHTS............................................................27
25. NONEXCLUSIVITY OF THE PLAN......................................................28
26. WITHHOLDING TAXES...............................................................28
27. CAPTIONS........................................................................28
28. OTHER PROVISIONS................................................................29
29. NUMBER AND GENDER...............................................................29
30. SEVERABILITY....................................................................29
31. GOVERNING LAW...................................................................29
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AMENDED AND RESTATED
E-CENTIVES, INC.
STOCK OPTION AND INCENTIVE PLAN
e-centives, Inc., a Delaware corporation (the "Company"), sets forth
herein the terms of the Company's Amended and Restated Stock Option and
Incentive Plan (the "Plan").
1. PURPOSE
The purpose of the Plan is to enhance the Company's ability to attract,
retain, and compensate highly qualified officers, key employees and other
persons, and to motivate such officers, key employees and other persons to serve
the Company and its Affiliates (as defined herein) and to expend maximum effort
to improve the business results and earnings of the Company, by providing to
such officers, key employees and other persons an opportunity to acquire or
increase a direct proprietary interest in the operations and future success of
the Company and with other financial incentives. To this end, the Plan provides
for the grant of stock options, stock appreciation rights, restricted stock,
restricted stock units, deferred stock awards, unrestricted stock awards,
performance stock awards, dividend equivalent rights, performance awards and
annual incentive awards in accordance with the terms hereof. Stock options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:
2.1 "AFFILIATE" means, with respect to the Company, any company or
other trade or business that controls, is controlled by or is under common
control with the Company within the meaning of Rule 405 of Regulation C under
the Securities Act, including, without limitation, any Subsidiary.
2.2 "ANNUAL INCENTIVE AWARD" means a conditional right granted to a
Grantee under SECTION 18.3.2 hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
2.3 "AWARD" means a grant of an Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Deferred Stock, Unrestricted Stock,
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Performance Stock, Dividend Equivalent Rights or Performance or Annual Incentive
Awards under the Plan.
2.4 "AWARD AGREEMENT" means the written agreement between the Company
and a Grantee that evidences and sets out the terms and conditions of an Award.
2.5 "BENEFIT ARRANGEMENT" shall have the meaning set forth in SECTION
19 hereof.
2.6 "BOARD" means the Board of Directors of the Company.
2.7 "CAUSE" means, as determined by the Board and unless otherwise
provided in an applicable employment agreement with the Company or an Affiliate:
(i) gross negligence or willful misconduct in connection with the performance of
duties; (ii) conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between the Service Provider or employee and the Company or
an Affiliate.
2.8 "CHANGE IN CONTROL" means (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity,
(ii) a sale of substantially all of the assets of the Company to another person
or entity or (iii) any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity (other than persons who are stockholders or Affiliates
immediately prior to the transaction) owning 50% or more of the combined voting
power of all classes of stock of the Company.
2.9 "CODE" means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended.
2.10 "COMMITTEE" means a committee of, and designated from time to time
by resolution of, the Board, which shall consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any Affiliate.
2.11 "COMPANY" means e-centives, Inc.
2.12 "COVERED EMPLOYEE" means a Grantee who is a Covered Employee
within the meaning of Section 162(m)(3) of the Code.
2.13 "DEFERRED STOCK" means a right, granted to a Grantee under SECTION
14 hereof, to receive Stock, cash or a combination thereof at the end of a
specified deferral period.
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2.14 "DISABILITY" means the Grantee is unable to perform each of the
essential duties of such Grantee's position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than 12 months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee's
Service, Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
2.15 "DIVIDEND EQUIVALENT RIGHT" means a right, granted to a Grantee
under SECTION 17 hereof, to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
2.16 "EFFECTIVE DATE" means the date that a registration statement
relating to the Stock becomes effective under Section 12 of the Exchange Act.
2.17 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.
2.18 "FAIR MARKET VALUE" means the value of a share of Stock,
determined as follows: if on the Grant Date or other determination date the
Stock is listed on an established national or regional stock exchange, is
admitted to quotation on The Nasdaq Stock Market, or is publicly traded on an
established securities market (including a foreign stock exchange), the Fair
Market Value of a share of Stock shall be the closing price of the Stock on such
exchange or in such market (if there is more than one such exchange or market
the Board shall determine the appropriate exchange or market) on the Grant Date
or such other determination date (or if there is no such reported closing price,
the Fair Market Value shall be the mean between the highest bid and lowest asked
prices or between the high and low sale prices on such trading day) or, if no
sale of Stock is reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Stock is not listed on such an
exchange, quoted on such system or traded on such a market, Fair Market Value
shall be the value of the Stock as determined by the Board in good faith.
2.19 "FAMILY MEMBER" means a person who is a spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law, including adoptive relationships, of the Grantee, any person
sharing the Grantee's household (other than a tenant or employee), a trust in
which any one or more these persons have more than fifty percent of the
beneficial interest, a foundation in which any one or more of these persons (or
the Grantee) control the management of assets, and
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any other entity in which one or more these persons (or the Grantee) own more
than fifty percent of the voting interests.
2.20 "GRANT DATE" means, as determined by the Board or authorized
Committee, the latest to occur of (i) the date as of which the Board approves an
Award, (ii) the date on which the recipient of an Award first becomes eligible
to receive an Award under SECTION 6 hereof or (iii) such other date as may be
specified by the Board.
2.21 "GRANTEE" means a person who receives or holds an Award under the
Plan.
2.22 "INCENTIVE STOCK OPTION" means an "incentive stock option" within
the meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.
2.23 "NON-QUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option.
2.24 "OPTION" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.25 "OPTION PRICE" means the purchase price for each share of Stock
subject to an Option.
2.26 "OTHER AGREEMENT" shall have the meaning set forth in SECTION 19
hereof.
2.27 "OUTSIDE DIRECTOR" means a member of the Board who is not an
officer or employee of the Company.
2.28 "PARACHUTE PAYMENT" shall have the meaning set forth in SECTION 19
hereof.
2.29 "PERFORMANCE AWARD" means a conditional right granted to a Grantee
under SECTION 18.3 hereof to receive a cash payment, Stock or other Award,
unless otherwise determined by the Committee, after the end of a period of up to
10 years.
2.30 "PERFORMANCE STOCK AWARD" means Awards granted pursuant to SECTION
16.
2.31 "PLAN" means this Amended and Restated e-centives, Inc. Stock
Option and Incentive Plan.
2.32 "REPORTING PERSON" means a person who is required to file reports
under Section 16(a) of the Exchange Act.
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2.33 "RESTRICTED PERIOD" shall have the meaning set forth in SECTION
13.2 hereof.
2.34 "RESTRICTED STOCK" means shares of Stock, awarded to a Grantee
pursuant to SECTION 13 hereof, that are subject to restrictions and to a risk of
forfeiture.
2.35 "RESTRICTED STOCK UNIT" means a unit awarded to a Grantee pursuant
to SECTION 13 hereof, which represents a conditional right to receive a share of
Stock in the future, and which is subject to restrictions and to a risk of
forfeiture.
2.36 "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended.
2.37 "SERVICE" means service as an employee, officer, director or other
Service Provider of the Company or an Affiliate. Unless otherwise stated in the
applicable Award Agreement, a Grantee's change in position or duties shall not
result in interrupted or terminated Service, as long as such Grantee continues
to be an employee, officer, director or other Service Provider of the Company or
an Affiliate. Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and conclusive.
2.38 "SERVICE PROVIDER" means a consultant or adviser to the Company, a
manager of the Company's properties or affairs, or other similar service
provider or Affiliate, and employees of any of the foregoing, as such persons
may be designated from time to time by the Board pursuant to SECTION 6 hereof.
2.39 "STOCK" means the common stock, par value $0.01 per share, of the
Company.
2.40 "STOCK APPRECIATION RIGHT" or "SAR" means a right granted to a
Grantee under SECTION 12 hereof.
2.41 "SUBSIDIARY" means any "subsidiary corporation" of the Company
within the meaning of Section 424(f) of the Code.
2.42 "TERMINATION DATE" shall have the meaning set forth in SECTION
10.2 hereof.
2.43 "UNRESTRICTED STOCK" shall have the meaning set forth in SECTION
15 hereof.
2.44 "UNRESTRICTED STOCK AWARD" means an Award granted pursuant to
SECTION 15 hereof.
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3. ADMINISTRATION OF THE PLAN
3.1. BOARD
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation and
by-laws and applicable law. The interpretation and construction by the Board of
any provision of the Plan, any Award or any Award Agreement shall be final and
conclusive. To the extent permitted by law, the Board may delegate its authority
under the Plan to a member of the Board or to an executive officer of the
Company who is a member of the Board.
3.2. COMMITTEE.
The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in SECTION 3.1 above and in other applicable provisions, as the Board
shall determine, consistent with the certificate of incorporation and by-laws of
the Company and applicable law. In the event that the Plan, any Award or any
Award Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided in this SECTION
3.2. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive. To the
extent permitted by law, the Committee may delegate its authority under the Plan
to a member of the Board or an executive officer of the Company who is a member
of the Board.
3.3. TERMS OF AWARDS.
Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority:
(i) to designate Grantees;
(ii) to determine the type or types of Awards to be made to a Grantee;
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(iii) to determine the number of shares of Stock to be subject to an
Award;
(iv) to establish the terms and conditions of each Award (including,
but not limited to, the exercise price of any Option, the nature and duration of
any restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer or forfeiture of an Award or the shares of Stock
subject thereto, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options);
(v) to prescribe the form of each Award Agreement evidencing an Award;
(vi) to amend, modify, or supplement the terms of any outstanding
Award; and
(vii) such authority as may be necessary to effectuate the purposes of
the Plan without amending the Plan, including the authority to modify Awards to
eligible individuals who are foreign nationals or are individuals who are
employed outside the United States to recognize differences in local law, tax
policy or custom.
As a condition to any subsequent Award, the Board shall have the right,
at its discretion, to require Grantees to return to the Company Awards
previously made under the Plan. Subject to the terms and conditions of the Plan,
any such new Award shall be upon such terms and conditions as are specified by
the Board at the time the new Award is made. The Board shall have the right, in
its discretion, to make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate. The Company may retain the right in an
Award Agreement to cause a forfeiture of the gain realized by a Grantee on
account of actions taken by the Grantee in violation or breach of or in conflict
with any non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any Affiliate thereof or any
confidentiality obligation with respect to the Company or any Affiliate thereof
or otherwise in competition with the Company or any Affiliate thereof, to the
extent specified in such Award Agreement applicable to the Grantee. Furthermore,
the Company may annul an Award if the Grantee is an employee of the Company or
an Affiliate thereof and is terminated for Cause as defined in the applicable
Award Agreement or the Plan, as applicable. The grant of any Award shall be
contingent upon the Grantee executing the appropriate Award Agreement.
3.4. NO LIABILITY.
No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award or
Award Agreement.
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4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in SECTION 22 hereof, the number of
shares of Stock available for issuance under the Plan shall be 3,700,000, which
number shall automatically increase on the first trading day of December each
calendar year, beginning with December in calendar year 2002 and continuing
through December in calendar year 2006, by a number of shares equal to the
lesser of two percent (2%) of the total number of shares of Stock outstanding on
the last trading day in the immediately preceding November or the number of
shares that would cause the number of shares of Stock available for issuance
under the Plan to equal twenty percent (20%) of the total number of shares of
Stock outstanding on such last trading day in November; provided that no annual
increase shall be effective to increase the number of shares of Stock available
for issuance under the Plan unless the Board shall ratify such increase on or
prior to the effective date of such increase. Stock issued or to be issued under
the Plan shall be authorized but unissued shares. If any shares covered by an
Award are not purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Stock subject thereto, then the number of shares of
Stock counted against the aggregate number of shares available under the Plan
with respect to such Award shall, to the extent of any such forfeiture or
termination, again be available for making Awards under the Plan. If the
exercise price of any Option granted under the Plan is satisfied by tendering
shares of Stock to the Company (by either actual delivery or by attestation),
only the number of shares of Stock issued net of the shares of Stock tendered
shall be deemed delivered for purposes of determining the maximum number of
shares of Stock available for delivery under the Plan.
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1. EFFECTIVE DATE.
The Plan shall be effective as of the Effective Date, subject to approval
of the Plan by the Company's stockholders within one year of the Effective Date.
Upon approval of the Plan by the stockholders of the Company as set forth above,
all Awards made under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the Plan on the
Effective Date. If the stockholders fail to approve the Plan within one year
after the Effective Date, any Awards made hereunder shall be null and void and
of no effect.
5.2. TERM.
The Plan shall terminate automatically ten (10) years after its adoption
by the Board and may be terminated on any earlier date as provided in SECTION
21.
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6. AWARD ELIGIBILITY
6.1. COMPANY OR SUBSIDIARY EMPLOYEES; SERVICE PROVIDERS; OTHER PERSONS.
Subject to SECTION 7, Awards may be made under the Plan to: (i) any
employee of, or a Service Provider to, the Company or of any Affiliate,
including any such employee or Service Provider who is an officer or director of
the Company, or of any affiliate, as the Board shall determine and designate
from time to time; (ii) any Outside Director; and (iii) any other individual
whose participation in the Plan is determined to be in the best interests of the
Company by the Board.
6.2. SUCCESSIVE AWARDS.
An eligible person may receive more than one Award, subject to such
restrictions as are provided herein.
7. LIMITATIONS ON GRANTS
7.1. LIMITATION ON SHARES OF STOCK SUBJECT TO AWARDS AND CASH AWARDS.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, the maximum number of shares of
Stock subject to Options that can be awarded under the Plan to any person
eligible for an Award under SECTION 6 hereof is _________ (_________) per year.
During any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, the maximum number of shares that can be awarded
under the Plan, other than pursuant to an Option to any person eligible for an
Award under SECTION 6 hereof is __________ thousand (__) per year. The preceding
limitations in this SECTION 7.1 are subject to adjustment as provided in SECTION
22 hereof. The maximum amount that may be earned as an Annual Incentive Award or
other cash Award in any fiscal year by any one Grantee shall be [$__________]
and the maximum amount that may be earned as a Performance Award or other cash
Award in respect of a performance period by any one Grantee shall be
[$___________].
7.2. LIMITATIONS ON INCENTIVE STOCK OPTIONS.
An Option shall constitute an Incentive Stock Option only: (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year
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(under the Plan and all other plans of the Grantee's employer and its
Affiliates) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.
8. AWARD AGREEMENT
Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, to be executed by the Company and by the Grantee, in such form or
forms as the Board shall from time to time determine. Award Agreements granted
from time to time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan. Each Award Agreement evidencing
an Award of Options shall specify whether such Options are intended to be
Non-qualified Stock Options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed Non-qualified Stock Options.
9. OPTION PRICE
The Option Price of each Option shall be fixed by the Board and stated in
the Award Agreement evidencing such Option. The Option Price shall be at least
the aggregate Fair Market Value on the Grant Date of the shares of Stock subject
to the Option; provided, however, that in the event that a Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the Company's outstanding Stock), the Option Price
of an Option granted to such Grantee that is intended to be an Incentive Stock
Option shall be not less than the greater of the par value of a share of Stock
or 110 percent of the Fair Market Value of a share of Stock on the Grant Date.
In no case shall the Option Price of any Option be less than the par value of a
share of Stock.
10. VESTING, TERM AND EXERCISE OF OPTIONS
10.1. VESTING.
Subject to SECTIONS 10.2 AND 22.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this SECTION 10.1, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. The Board may provide,
for example, in the Award Agreement for (i) accelerated exercisability of the
Option in the event the Grantee's Service terminates on account of death,
Disability or another event, (ii) expiration of the Option prior to its term in
the event of the termination of the Grantee's Service, (iii) immediate
forfeiture of the Option in the event the Grantee's Service is terminated for
Cause or (iv) unvested Options to be
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exercised subject to the Company's right of repurchase with respect to unvested
shares of Stock.
10.2. TERM.
Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option (the
"Termination Date"); provided, however, that in the event that the Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the outstanding Stock), an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its Grant Date.
10.3. ACCELERATION.
Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option shall be exercisable
in whole or in part prior to the date the Plan is approved by the stockholders
of the Company as provided in SECTION 5.1 hereof.
10.4. TERMINATION OF SERVICE.
Each Award Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Option following termination of the
Grantee's Service. Such provisions shall be determined in the sole discretion of
the Board, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of Service.
10.5. LIMITATIONS ON EXERCISE OF OPTION.
Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part, prior to the date the Plan is approved
by the stockholders of the Company as provided herein, or after ten years
following the Grant Date, or after the occurrence of an event referred to in
SECTION 22 hereof which results in termination of the Option.
10.6. METHOD OF EXERCISE.
An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the
Company's principal office, on the form specified by the Company. Such notice
shall specify the
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number of shares of Stock with respect to which the Option is being exercised
and shall be accompanied by payment in full of the Option Price of the shares
for which the Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in part, at any
time shall be the lesser of (i) 100 shares or such lesser number set forth in
the applicable Award Agreement and (ii) the maximum number of shares available
for purchase under the Option at the time of exercise.
10.7. FORM OF PAYMENT.
Payment of the Option Price for the shares purchased pursuant to the
exercise of an Option shall be made: (i) in cash or in cash equivalents
acceptable to the Company; (ii) through the tender to the Company of shares of
Stock, which shares, if acquired from the Company, shall have been held for at
least six months and which shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in (i) and (ii). Unless the Board provides otherwise in the Award
Agreement, payment in full of the Option Price need not accompany the written
notice of exercise provided that the notice of exercise directs that the
certificate or certificates for the shares of Stock for which the Option is
exercised be delivered to a licensed broker acceptable to the Company as the
agent for the individual exercising the Option and, at the time such certificate
or certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if
any) of federal and/or other taxes which the Company may in its judgment, be
required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be
invalid and of no force and effect.
10.8. RIGHTS OF HOLDERS OF OPTIONS.
Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in SECTION 22 hereof, no adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.
10.9. DELIVERY OF STOCK CERTIFICATES.
Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership of the shares
of Stock subject to the Option.
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10.10. RELOAD OPTIONS.
At the discretion of the Board and subject to such restrictions, terms
and conditions as the Board may establish, Options granted under the Plan may
include a "reload" feature pursuant to which a Grantee exercising an Option by
the delivery of a number of shares of Stock in accordance with SECTION 10.6
hereof would automatically be granted an additional Option (with an exercise
price equal to the Fair Market Value of the Stock on the date the additional
Option is granted and with such other terms as the Board may provide) to
purchase that number of shares of Stock equal to the number delivered to
exercise the original Option with an Option term equal to the remainder of the
original Option term unless the Board otherwise determines in the Option Award
Agreement for the original grant.
11. TRANSFERABILITY OF OPTIONS
11.1. TRANSFERABILITY OF OPTIONS
Except as provided in SECTION 11.2, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetence, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in SECTION 11.2, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution.
11.2. FAMILY TRANSFERS.
If authorized in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member. For the purpose of this SECTION 11.2, a "not for value"
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this SECTION 11.2, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. Subsequent transfers of transferred Options are prohibited except
to Family Members of the original Grantee in accordance with this SECTION 11.2
or by will or the laws of descent and distribution. The events of termination of
Service of SECTION 10.4 hereof shall continue to be applied with respect to the
original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in SECTION 10.4.
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12. STOCK APPRECIATION RIGHTS
The Board is authorized to grant SARs to Grantees on the following terms
and conditions:
12.1. RIGHT TO PAYMENT.
A SAR shall confer on the Grantee to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value of one
share of Stock on the date of exercise over (B) the grant price of the SAR as
determined by the Board. The grant price of an SAR shall not be less than the
Fair Market Value of a share of Stock on the date of grant except as provided in
SECTION 18.1.
12.2. OTHER TERMS.
The Board shall determine at the date of grant or thereafter, the time or
times at which and the circumstances under which a SAR may be exercised in whole
or in part (including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to be or
become exercisable following termination of Service or upon other conditions,
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Grantees, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR. SARs may be
either freestanding or in tandem with other Awards.
13. RESTRICTED STOCK
13.1. GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS.
The Board may from time to time grant Restricted Stock or Restricted
Stock Units to persons eligible to receive Awards under SECTION 6 hereof,
subject to such restrictions, conditions and other terms as the Board may
determine.
13.2. RESTRICTIONS.
At the time a grant of Restricted Stock or Restricted Stock Units is
made, the Board shall establish a period of time (the "Restricted Period")
applicable to such Restricted Stock or Restricted Stock Units. Each Award of
Restricted Stock or Restricted Stock Units may be subject to a different
Restricted Period. The Board may, in its sole discretion, at the time a grant of
Restricted Stock or Restricted Stock Units is made, prescribe restrictions in
addition to or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which may be
applicable to all or any portion of the Restricted Stock or Restricted Stock
Units in accordance with SECTION 18.3.1 and 18.3.2. Neither
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Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the Restricted Period or
prior to the satisfaction of any other restrictions prescribed by the Board with
respect to such Restricted Stock or Restricted Stock Units.
13.3. RESTRICTED STOCK CERTIFICATES.
The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee; provided, however, that such certificates shall bear a
legend or legends that complies with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.
13.4. RIGHTS OF HOLDERS OF RESTRICTED STOCK.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.
13.5. RIGHTS OF HOLDERS OF RESTRICTED STOCK UNITS.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding Stock,
a cash payment for each Restricted Stock Unit held equal to the per-share
dividend paid on the Stock. Such Award Agreement may also provide that such cash
payment will be deemed reinvested in additional Restricted Stock Units at a
price per unit equal to the Fair Market Value of a share of Stock on the date
that such dividend is paid.
13.6. TERMINATION OF SERVICE.
Unless the Board otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee's
Service,
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any Restricted Stock or Restricted Stock Units held by such Grantee that have
not vested, or with respect to which all applicable restrictions and conditions
have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of
Restricted Stock or Restricted Stock Units, the Grantee shall have no further
rights with respect to such Award, including but not limited to any right to
vote Restricted Stock or any right to receive dividends with respect to shares
of Restricted Stock or Restricted Stock Units.
13.7. DELIVERY OF STOCK AND PAYMENT THEREFOR.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units shall lapse,
and, unless otherwise provided in the Award Agreement, upon payment by the
Grantee to the Company, in cash or by check, of the aggregate par value of the
shares of Stock represented by such Restricted Stock or Restricted Stock Units
(or such other higher purchase price determined by the Board), a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee's beneficiary or estate, as the case may be.
14. DEFERRED STOCK AWARDS
14.1. NATURE OF DEFERRED STOCK AWARDS.
A Deferred Stock Award is an Award of phantom stock units to a Grantee,
subject to restrictions and conditions as the Board may determine at the time of
grant. Conditions may be based on continuing Service and/or achievement of
pre-established performance goals and objectives. The terms and conditions of
each such agreement shall be determined by the Board, and such terms and
conditions may differ among individual Awards and Grantees. At the end of the
deferral period, the Deferred Stock Award, to the extent vested, shall be paid
to the Grantee in the form of shares of Stock.
14.2. ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF COMPENSATION.
The Board may, in its sole discretion, permit a Grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such Grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Board and in accordance with rules and procedures
established by the Board. The Board shall have the sole right to determine
whether and under what circumstances to permit such elections and to impose such
limitations and other terms and conditions thereon as the Board deems
appropriate.
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14.3. RIGHTS AS A STOCKHOLDER.
During the deferral period, a Grantee shall have no rights as a
stockholder; provided, however, that the Grantee may be credited with Dividend
Equivalent Rights with respect to the phantom stock units underlying his
Deferred Stock Award, subject to such terms and conditions as the Board may
determine.
14.4. RESTRICTIONS ON TRANSFER.
A Deferred Stock Award may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of during the deferral period.
14.5. TERMINATION.
Except as may otherwise be provided by the Board either in the Award
Agreement or, in writing after the Award Agreement is issued, a Grantee's right
in all Deferred Stock Awards that have not vested shall automatically terminate
upon the Grantee's termination of Service for any reason.
15. UNRESTRICTED STOCK AWARDS
The Board may, in its sole discretion, grant (or sell at par value or
such other higher purchase price determined by the Board) an Unrestricted Stock
Award to any Grantee pursuant to which such Grantee may receive shares of Stock
free of any restrictions ("Unrestricted Stock") under the Plan. Unrestricted
Stock Awards may be granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in lieu of any cash
compensation due to such Grantee.
16. PERFORMANCE STOCK AWARDS
16.1. NATURE OF PERFORMANCE STOCK AWARDS.
A Performance Stock Award is an Award entitling the recipient to acquire
shares of Stock upon the attainment of specified performance goals. The Board
may make Performance Stock Awards independent of or in connection with the
granting of any other Award under the Plan. The Board in its sole discretion
shall determine whether and to whom Performance Stock Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Stock; provided, however, that the Board
may rely on the performance goals and other standards applicable to other
performance unit plans of the Company in setting the standards for Performance
Stock Awards under the Plan. At any time prior to the Grantee's termination of
Service, the Board may in its sole
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discretion accelerate, waive or amend any or all of the goals, restrictions or
conditions imposed under any Performance Stock Award.
16.2. RIGHTS AS A STOCKHOLDER.
A Grantee receiving a Performance Stock Award shall have the rights of a
stockholder only as to shares actually received by the Grantee under the Plan
and not with respect to shares subject to the Award but not actually received by
the Grantee. A Grantee shall be entitled to receive a stock certificate
evidencing the acquisition of Stock under a Performance Stock Award only upon
satisfaction of all conditions specified in the written instrument evidencing
the Performance Stock Award (or in a performance plan adopted by the Board).
16.3. TERMINATION OF SERVICE.
Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee's rights
in all Performance Stock Awards shall automatically terminate upon the Grantee's
termination of Service for any reason.
17. DIVIDEND EQUIVALENT RIGHTS
17.1. DIVIDEND EQUIVALENT RIGHTS.
A Dividend Equivalent Right is an Award entitling the recipient to
receive credits based on cash distributions that would have been paid on the
shares of Stock specified in the Dividend Equivalent Right (or other award to
which it relates) if such shares had been issued to and held by the recipient. A
Dividend Equivalent Right may be granted hereunder to any Grantee as a component
of another Award or as a freestanding award. The terms and conditions of
Dividend Equivalent Rights shall be specified in the grant. Dividend Equivalent
Rights may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend
Equivalent Rights may be settled in cash or Stock or a combination thereof, in a
single installment or installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled upon exercise,
settlement, or payment of, or lapse of restrictions on, such other award, and
that such Dividend Equivalent Right shall expire or be forfeited or annulled
under the same conditions as such other award. A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.
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17.2. INTEREST EQUIVALENTS.
Any Award under this Plan that is settled in whole or in part in cash on
a deferred basis may provide in the grant for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
17.3. TERMINATION OF SERVICE.
Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee's rights
in all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantee's termination of Service for any reason.
18. CERTAIN PROVISIONS APPLICABLE TO AWARDS
18.1. STAND-ALONE, ADDITIONAL, TANDEM AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any Affiliate or any business entity to be acquired by the Company or
an Affiliate, or any other right of a Grantee to receive payment from the
Company or any Affiliate. Such additional, tandem and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award, the Board shall require the surrender of such other
Award in consideration for the grant of the new Award. In addition, Awards may
be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Affiliate, in which the value of
Stock subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).
18.2. FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or an Affiliate upon the exercise of an
Option or other Award or settlement of an Award may be made in such forms as the
Board shall determine, including, without limitation, cash, Stock, other Awards
or other property, and may be made in a single payment or transfer, in
installments or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Board or
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upon occurrence of one or more specified events. Installment or deferred
payments may be required by the Board or permitted at the election of the
Grantee on terms and conditions established by the Board. Payments may include,
without limitation, provisions for the payment or crediting of a reasonable
interest rate on installment or deferred payments or the grant or crediting of
Dividend Equivalent Rights or other amounts in respect of installment or
deferred payments denominated in Stock.
18.3. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
18.3.1. PERFORMANCE CONDITIONS.
The right of a Grantee to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Board. The Board may use such
business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under SECTIONS 18.3.2 hereof in the case of a Performance
Award or Annual Incentive Award intended to qualify under Code Section 162(m).
If and to the extent required under Code Section 162(m), any power or authority
relating to a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the Committee and not the
Board.
18.3.2. PERFORMANCE OR ANNUAL INCENTIVE AWARDS GRANTED TO
DESIGNATED COVERED EMPLOYEES.
If and to the extent that the Committee determines that a
Performance or Annual Incentive Award to be granted to a Grantee who is
designated by the Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance or Annual Incentive Award shall
be contingent upon achievement of preestablished performance goals and other
terms set forth in this SECTION 18.3.2.
(i) Performance Goals Generally. The performance goals
for such Performance or Annual Incentive Awards shall consist of
one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by
the Committee consistent with this SECTION 18.3.2. Performance
goals shall be objective and shall otherwise meet the requirements
of Code Section 162(m) and regulations thereunder, including the
requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such
Performance or
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Annual Incentive Awards shall be granted, exercised and/or settled
upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance or Annual Incentive
Awards. Performance goals may differ for Performance or Annual
Incentive Awards granted to any one Grantee or to different
Grantees.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis, and/or
specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance or Annual
Incentive Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to,
the Standard & Poor's 500 Stock Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees and
extraordinary or special items; (7) operating margin; (8) earnings
per share; (9) return on equity; (10) return on capital; (11)
return on investment; (12) operating earnings; (13) working
capital; (14) ratio of debt to stockholders' equity; and (15)
revenue.
(iii) Performance Period; Timing For Establishing
Performance Goals. Achievement of performance goals in respect of
Performance Awards shall be measured over a performance period of
up to ten years and achievement of performance goals in respect of
Annual Incentive Awards shall be measured over a performance
period of up to one year, as specified by the Committee.
Performance goals shall be established not later than 90 days
after the beginning of any performance period applicable to such
Performance or Annual Incentive Awards, or at such other date as
may be required or permitted for "performance-based compensation"
under Code Section 162(m).
(iv) Performance or Annual Incentive Award Pool. The
Committee may establish a Performance or Annual Incentive Award
pool, which shall be an unfunded pool, for purposes of measuring
Company performance in connection with Performance or Annual
Incentive Awards.
(v) Settlement of Performance or Annual Incentive
Awards; Other Terms. Settlement of such Performance or Annual
Incentive Awards shall be in cash, Stock, other Awards or other
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property, in the discretion of the Committee. The Committee may,
in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance or Annual Incentive
Awards. The Committee shall specify the circumstances in which
such Performance or Annual Incentive Awards shall be paid or
forfeited in the event of termination of Service by the Grantee
prior to the end of a performance period or settlement of
Performance Awards.
18.3.3. WRITTEN DETERMINATIONS.
All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of final
Annual Incentive Awards, shall be made in writing in the case of any Award
intended to qualify under Code Section 162(m). To the extent required to comply
with Code Section 162(m), the Committee may delegate any responsibility relating
to such Performance Awards or Annual Incentive Awards.
18.3.4. STATUS OF SECTION 18.3.2 AWARDS UNDER CODE SECTION 162(m).
It is the intent of the Company that Performance Awards and
Annual Incentive Awards under SECTION 18.3.2 hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of SECTION 18.3.2, including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given Grantee
will be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance Awards or an
Annual Incentive Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
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19. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract or understanding heretofore or hereafter entered into by a
Grantee with the Company or any Affiliate, except an agreement, contract or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
Grantees or beneficiaries of which the Grantee is a member), whether or not such
compensation is deferred, is in cash or is in the form of a benefit to or for
the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting, payment or benefit,
taking into account all other rights, payments or benefits to or for the Grantee
under this Plan, all Other Agreements and all Benefit Arrangements, would cause
any payment or benefit to the Grantee under this Plan to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then
in effect (a "Parachute Payment") and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts received by the Grantee from
the Company under this Plan, all Other Agreements and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the
Grantee without causing any such payment or benefit to be considered a Parachute
Payment. If the receipt of any such right to exercise, vesting, payment or
benefit under this Plan, in conjunction with all other rights, payments or
benefits to or for the Grantee under any Other Agreement or any Benefit
Arrangement would cause the Grantee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee's sole
discretion, to designate those rights, payments or benefits under this Plan, any
Other Agreements and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.
20. REQUIREMENTS OF LAW
20.1. GENERAL.
The Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising an Option or the
Company of any provision of any law or regulation of any governmental authority,
including, without limitation, any federal or state securities laws or
regulations. If at any time the Company shall
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determine, in its discretion, that the listing, registration or qualification of
any shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, no shares of
Stock may be issued or sold to the Grantee or any other individual exercising an
Option pursuant to such Award unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way
affect the date of termination of the Award. Specifically, in connection with
the Securities Act, upon the exercise of any Option or the delivery of any
shares of Stock underlying an Award, unless a registration statement under such
Act is in effect with respect to the shares of Stock covered by such Award, the
Company shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other individual
exercising an Option may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this connection by
the Board shall be final, binding and conclusive. The Company may, but shall in
no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or the issuance of shares of
Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
20.2. RULE 16b-3.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the Company
that Awards pursuant to the Plan and the exercise of Options granted hereunder
will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.
20.3. LIMITATION FOLLOWING A HARDSHIP DISTRIBUTION.
To the extent required to comply with Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(4), or any amendment or successor thereto, a Grantee's
"elective and employee contributions" (within the meaning of such Treasury
Regulation) under the Plan shall be suspended for a period of twelve months
following such Grantee's
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receipt of a hardship distribution made in reliance on such Treasury Regulation
from any plan containing a cash or deferred arrangement under Section 401(k) of
the Code maintained by the Company or a related party within the provisions of
subsections (b), (c), (m) or (o) of Section 414 of the Code.
21. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Awards have not been
made; provided, however, that the Board shall not, without approval of the
Company's stockholders, amend the Plan such that it does not comply with the
Code. Except as permitted under this SECTION 21 or SECTION 22 hereof, no
amendment, suspension or termination of the Plan shall, without the consent of
the Grantee, alter or impair rights or obligations under any Award theretofore
awarded under the Plan.
22. EFFECT OF CHANGES IN CAPITALIZATION
22.1. CHANGES IN STOCK.
If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind
of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall be
adjusted proportionately and accordingly by the Company. In addition, the number
and kind of shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment in outstanding
Options shall not change the aggregate Option Price payable with respect to
shares that are subject to the unexercised portion of an Option outstanding but
shall include a corresponding proportionate adjustment in the Option Price per
share. The conversion of any convertible securities of the Company shall not be
treated as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of a spin-off that results in no
change in the number of outstanding shares of Stock of the Company, the Company
may, in such manner as the Company deems appropriate, adjust (i) the number and
kind of shares subject to outstanding Awards and/or (ii) the exercise price of
outstanding Options and Stock Appreciation Rights.
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22.2. REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY AND IN
WHICH NO CHANGE IN CONTROL OCCURS.
Subject to SECTION 22.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger or consolidation of the Company with one or
more other entities in which no Change in Control occurs, any Option theretofore
granted pursuant to the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to such Option would
have been entitled immediately following such reorganization, merger or
consolidation, with a corresponding proportionate adjustment of the Option Price
per share so that the aggregate Option Price thereafter shall be the same as the
aggregate Option Price of the shares remaining subject to the Option immediately
prior to such reorganization, merger, or consolidation. Subject to any contrary
language in an Award Agreement evidencing an Award, any restrictions applicable
to such Award shall apply as well to any replacement shares received by the
Grantee as a result of the reorganization, merger or consolidation.
22.3. REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE IN CONTROL.
(a) Subject to SECTION 22.3(b), upon any transaction that results
in a Change in Control, (i) all outstanding shares subject to Awards shall be
deemed to have vested, and all restrictions and conditions applicable to such
shares subject to Awards shall be deemed to have lapsed, immediately prior to
the occurrence of such event and (ii) all Options outstanding hereunder shall
become immediately exercisable for a period of fifteen days immediately prior to
the scheduled consummation of the event. Any exercise of an Option during such
fifteen-day period shall be conditioned upon the consummation of the event and
shall be effective only immediately before the consummation of the event. Upon
consummation of any such event, the Plan and all outstanding but unexercised
Options shall terminate. The Board shall send written notice of an event that
will result in such a termination to all individuals who hold Options not later
than the time at which the Company gives notice thereof to its stockholders.
(b) SECTION 22.3(a) shall not apply to the extent provision is
made in writing in connection with a transaction described in SECTION 22.3(a)
for the assumption of such Options theretofore granted, or for the substitution
for such Options of new options covering the stock of a successor entity, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares or units and exercise prices, in which event the Plan and
Options theretofore granted shall continue in the manner and under the terms so
provided.
22.4. ADJUSTMENTS.
Adjustments under this SECTION 22 related to shares of Stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall
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be final, binding and conclusive. No fractional shares or other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share. The Board may provide in the Award Agreements at the time
of grant, or any time thereafter with the consent of the Grantee, for different
provisions to apply to an Award in place of those described in SECTIONS 22.1,
22.2 and 22.3.
22.5. NO LIMITATIONS ON COMPANY.
The making of Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
23. POOLING
In the event any provision of the Plan or the Award Agreement would
prevent the use of pooling of interests accounting in a corporate transaction
involving the Company and such transaction is contingent upon pooling of
interests accounting, then that provision shall be deemed amended or revoked to
the extent required to preserve such pooling of interests. The Company may
require in an Award Agreement that a Grantee who receives an Award under the
Plan shall, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.
24. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Award
granted under the Plan shall be affected by any change of duties or position of
the Grantee, as long as such Grantee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment
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<PAGE> 31
to any Grantee or beneficiary under the terms of the Plan. No Grantee shall have
any of the rights of a stockholder with respect to the shares of Stock subject
to an Option except to the extent the certificates for such shares of Stock
shall have been issued upon the exercise of the Option.
25. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
26. WITHHOLDING TAXES
The Company or an Affiliate, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option or pursuant to an
Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to
the Company or the Affiliate, as the case may be, any amount that the Company or
the Affiliate may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the Company or the
Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the Affiliate to
withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering
to the Company or the Affiliate shares of Stock already owned by the Grantee.
The shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by the
Company or the Affiliate as of the date that the amount of tax to be withheld is
to be determined. A Grantee who has made an election pursuant to this SECTION 26
may satisfy his or her withholding obligation only with shares of Stock that are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
27. CAPTIONS
The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.
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<PAGE> 32
28. OTHER PROVISIONS
Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.
29. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.
30. SEVERABILITY
If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.
31. GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing
the Grants awarded hereunder shall be governed by the laws of the State of
Maryland, other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Plan and the instruments
evidencing the Awards awarded hereunder to the substantive laws of any other
jurisdiction.
* * *
To record adoption the amendment and restatement of the Plan by the Board
as of __________ __, 2000, and approval of the Plan by the stockholders on
__________ __, 2000, the Company has caused its authorized officer to execute
the Plan as amended and restated.
e-centives, Inc.
By:
--------------------------
Title:
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