Exhibit 10.8
NATIONAL PATENT DEVELOPMENT CORPORATION
2003 INCENTIVE STOCK PLAN
Section 1. Purpose of the Plan
The purpose of this 2003 Incentive Stock Plan (the "Plan") is to
attract, retain and motivate employees, officers, directors, consultants,
agents, advisors and independent contractors of National Patent Development
Corporation (the "Company") by providing them the opportunity to acquire a
proprietary interest in the Company and to link their interests and efforts to
the long-term interests of the Company's stockholders.
Section 2. Definitions
As used in the Plan,
"Award" means any Option, Stock Appreciation Right, Restricted Stock,
Stock Unit, Performance Share, Performance Unit, dividend equivalent, cash-based
award or other incentive payable in cash or in shares of Company Stock as may be
designated by the Committee from time to time.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Compensation Committee of the Board, which
Committee shall consist solely of two or more outside directors within the
meaning of Treas. Reg. ss. 1.163-27(e)(3).
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company" means National Patent Development Corporation, a Delaware
corporation.
"Company Stock" shall mean the Common Stock.
"Covered Employee" means a "covered employee" as that term is defined
in Section 162(m)(3) of the Code or any successor provision.
"Effective Date" has the meaning set forth in Section 18.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" of Company Stock of either class, as of a date of
determination, shall mean the following:
(a) Class Listed and Shares Traded On Date Of Determination.
If such class of Company Stock is listed and traded on a national securities
exchange (as such term is defined by the Exchange Act) or on the Nasdaq Stock
Market on the date of determination, the Fair Market Value per share shall be
the last sale price of a share of such class of Company Stock on the applicable
national securities exchange or Nasdaq Stock Market on the date of determination
at the close of trading on such date. If such class of Company Stock is traded
in the over-the-counter market, the Fair Market Value per share shall be the
average of the closing bid and asked prices on the date of determination.
(b) Class Listed But No Shares Traded On Date Of
Determination. If such class of Company Stock is listed on a national securities
exchange or on the Nasdaq Stock Market but no shares of such class of Company
Stock are traded on the date of determination but there were shares traded on
dates within a reasonable period before the date of determination, the Fair
Market Value shall be the last sale price of such class of Company Stock on the
most recent trade date before the date of determination at the close of trading
on such date. If such class of Company Stock is regularly traded in the
over-the-counter market but no shares of such class of Company Stock are traded
on the date of determination (or if records of such trades are unavailable or
burdensome to obtain) but there were shares traded on dates within a reasonable
period before the date of determination, the Fair Market Value shall be the
average of the closing bid and asked prices of such class of Company Stock on
the most recent date before the date of determination. If such class of Company
Stock is listed on a national securities exchange or on the Nasdaq Stock Market
or are traded in the over-the-counter market but no shares of such class of
Company Stock are traded on the date of determination or within a reasonable
period before the date of determination, then the Committee shall determine the
Fair Market Value of such class of Company Stock from all relevant available
facts, which may include opinions of independent experts as to value and may
take into account any recent sales and purchases of such class of Company Stock
to the extent they are representative.
(c) Class Not Listed. If such class of Company Stock is not
listed on a national securities exchange or on the Nasdaq Stock Market and is
not regularly traded in the over-the-counter market, then the Committee shall
determine the Fair Market Value of such class of Company Stock from all relevant
available facts, which may include the average of the closing bid and ask prices
reflected in the over-the-counter market on a date within a reasonable period
either before or after the date of determination or opinions of independent
experts as to value and may take into account any recent sales and purchases of
such class of Company Stock to the extent they are representative.
"Grant Date" means the date on which the Committee completes the
corporate action authorizing the grant of an Award or such later date specified
by the Committee, provided that conditions to the exercisability or vesting of
Awards shall not defer the Grant Date.
"Incentive Stock Option" means an Option granted with the intention
that it qualify as an "incentive stock option" as that term is defined in
Section 422 of the Code or any successor provision.
"Nonqualified Stock Option" means an Option other than an Incentive
Stock Option.
"Nonrecurring Items" means nonrecurring items deemed not reflective of
the Company's core operating performance, including, but not limited to,
exogenous events, acquisitions, divestitures, changes in accounting principles
or "extraordinary items" determined under generally accepted accounting
principles.
"Option" means a right to purchase Company Stock granted under Section
7.
"Participant" means any eligible person as set forth in Section 5 to
whom an Award is granted.
"Performance Criteria" has the meaning set forth in Section 11.1.
"Performance Share" has the meaning set forth in Section 10.1.
"Performance Unit" has the meaning set forth in Section 10.2.
"Plan" means this National Patent Development Corporation 2003
Incentive Stock Plan.
"Related Company" means any entity that is directly or indirectly
controlled by the Company, as determined under section 424 of the Code.
"Reload Option" means an Option granted to a Participant who exercises
a previously held Option by surrendering Company Stock for all or part of the
exercise price, pursuant to the provisions of Section 7.8.
"Restricted Stock" means an Award of shares of Company Stock granted
under Section 9, the rights of ownership of which may be subject to restrictions
prescribed by the Committee.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Stock Appreciation Right" has the meaning set forth in Section 8.1.
"Stock Unit" means an Award granted under Section 9 denominated in
units of Common Stock.
"Substitute Awards" means Awards granted or shares of Common Stock
issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted by a company acquired by the Company or with which the
Company combines in accordance with the rules of section 424 of the Code.
"Termination of Service," unless otherwise defined by the Committee or
in the instrument evidencing the Award or in a written employment or services
agreement, means a termination of employment or service relationship with the
Company or a Related Company for any reason, whether voluntary or involuntary.
Any question as to whether and when there has been a Termination of Service for
the purposes of an Award and the cause of such Termination of Service shall be
determined by the Committee, and such determination shall be final. Transfer of
a Participant's employment or service relationship between wholly owned
subsidiaries of the Company, or between the Company and any wholly owned
subsidiary of the Company, shall not be considered a Termination of Service for
purposes of an Award. Unless the Committee determines otherwise, a Termination
of Service shall be deemed to occur if the Participant's employment or service
relationship is with an entity that has ceased to be a Related Company.
Section 3. Administration
3.1 Administration of the Plan
The Plan shall be administered by the Committee.
3.2 Administration and Interpretation by Committee
Except for the terms and conditions explicitly set forth in the Plan,
the Committee shall have full power and exclusive authority, subject to such
orders or resolutions not inconsistent with the provisions of the Plan and the
Code as may from time to time be adopted by the Board, to (a) select the
eligible persons as set forth in Section 5 to whom Awards may from time to time
be granted under the Plan; (b) determine the type or types of Award to be
granted to each Participant under the Plan; (c) determine the number of shares
of Company Stock to be covered by each Award granted under the Plan; (d)
determine whether shares of Company Stock to be covered by each Award granted
under the Plan shall be shares of Common Stock; (e) determine the terms and
conditions of any Award granted under the Plan; (f) approve the forms of
agreements for use under the Plan; (g) determine whether, to what extent and
under what circumstances Awards may be settled in cash, shares of Company Stock
or other property or canceled or suspended; (h) determine whether, to what
extent and under what circumstances cash, shares of Company Stock, other
property and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the Participant; (i) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(j) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; (k) delegate
ministerial duties to such of the Company's officers as it so determines; and
(l) make any other determination and take any other action that the Committee
deems necessary or desirable for administration of the Plan. Decisions of the
Committee shall be final, conclusive and binding on all persons, including the
Company, any Participant, any stockholder and any eligible person.
Section 4. Shares Subject to the Plan
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 15, the
maximum number of shares of Company Stock available for issuance under the Plan
shall be 1,750,000.
4.2 Share Usage
(a) Shares of Common Stock covered by an Award shall not be counted as
used unless and until they are actually issued and delivered to a Participant.
If any Award lapses, expires, terminates or is canceled prior to the issuance of
shares thereunder or if shares of Common Stock are issued under the Plan to a
Participant and thereafter are reacquired by the Company, the shares subject to
such Awards and the reacquired shares shall again be available for issuance
under the Plan. Any shares of Common Stock (i) tendered by a Participant or
retained by the Company as full or partial payment to the Company for the
purchase price of an Award or to satisfy tax withholding obligations in
connection with an Award, (ii) covered by an Award that is settled in cash, or
(iii) reacquired by the Company on the open market using cash proceeds received
by the Company from the exercise of Options shall be available for Awards under
the Plan. The number of shares available for issuance under the Plan shall not
be reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares or credited as additional Restricted Stock, Stock Units,
Performance Shares or Performance Units. All shares issued under the Plan may be
either authorized and unissued shares or issued shares reacquired by the
Company.
(b) Notwithstanding the foregoing, the maximum number of shares that
may be issued upon the exercise of Options shall equal the aggregate share
number stated in Section 4.1, subject to adjustment as provided in Section 15;
and provided, further, that for purposes of Section 4.3, any such shares shall
be counted in accordance with the requirements of Section 162(m) of the Code.
4.3 Limitation
Subject to adjustment as provided in Section 15, no Participant shall
be eligible to receive in any one calendar year Awards relating to more than
250,000 shares of Company Stock.
Section 5. Eligibility
An Award may be granted to any employee, officer or director of the
Company or a Related Company whom the Committee from time to time selects. An
Award may also be granted to any consultant, agent, advisor or independent
contractor for bona fide services rendered to the Company or any Related Company
that (a) are not in connection with the offer and sale of the Company's
securities in a capital-raising transaction and (b) do not directly or
indirectly promote or maintain a market for the Company's securities. The above
are "eligible persons."
Section 6. Awards
6.1 Form and Grant of Awards
The Committee shall have the authority, in its sole discretion, to
determine the type or types of Awards to be granted under the Plan. Such Awards
may be granted either alone or in addition to or in tandem with any other type
of Award.
6.2 Evidence of Awards
Awards granted under the Plan shall be evidenced by a written
instrument that shall contain such terms, conditions, limitations and
restrictions as the Committee shall deem advisable and that are not inconsistent
with the Plan.
Section 7. Options
7.1 Grant of Options
The Committee may grant Options designated as Incentive Stock Options
or Nonqualified Stock Options.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be as
determined by the Committee, but shall not be less than 100% of the Fair Market
Value of the Common Stock issuable pursuant to the Option on the Grant Date,
except in the case of Substitute Awards. In no event shall the Committee,
without the prior approval of the Company's stockholders, cancel any outstanding
Option for the purpose of reissuing the Option to the Participant at a lower
exercise price or reduce the exercise price of an outstanding Option.
7.3 Term of Options
Subject to earlier termination in accordance with the terms of the Plan
and the instrument evidencing the Option, the maximum term of an Option shall be
as established for that Option by the Committee and set forth in the instrument
that evidences that Option or, if not so established, shall be ten years from
the Grant Date.
7.4 Exercise of Options
The Committee shall establish and set forth in each instrument that
evidences an Option the time at which, or the installments in which, the Option
shall vest and become exercisable, any of which provisions may be waived or
modified by the Committee at any time.
To the extent an Option has vested and become exercisable, the Option
may be exercised in whole or from time to time in part by delivery as directed
by the Company to the Company or a brokerage firm designated or approved by the
Company of a written stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Committee, setting forth the
number of shares with respect to which the Option is being exercised, the
restrictions imposed on the shares purchased under such exercise agreement, if
any, and such representations and agreements as may be required by the
Committee, accompanied by payment in full as described in Section 7.5. An Option
may be exercised only for whole shares and may not be exercised for less than a
reasonable number of shares at any one time, as determined by the Committee.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid
in full as directed by the Company to the Company or a brokerage firm designated
or approved by the Company by delivery of consideration equal to the product of
the Option exercise price and the number of shares purchased. Such consideration
must be paid before the Company will issue the shares being purchased and must
be in a form or a combination of forms acceptable to the Committee as indicated
in the instrument evidencing the Option for that purchase, which forms may
include: (a) check; (b) wire transfer; (c) tendering by attestation shares of
Company Stock already owned by the Participant that on the day prior to the
exercise date have a Fair Market Value equal to the aggregate exercise price of
the shares being purchased under the Option; or (d) to the extent permitted by
applicable law, delivery of a properly executed exercise notice, together with
irrevocable instructions to a brokerage firm designated or approved by the
Company to deliver promptly to the Company the aggregate amount of sale or loan
proceeds to pay the Option exercise price and any tax withholding obligations
that may arise in connection with the exercise, all in accordance with the
regulations of the Federal Reserve Board.
7.6 Post-Termination Exercise
The Committee shall establish and set forth in each instrument that
evidences an Option whether the Option shall continue to be exercisable, and the
terms and conditions of such exercise, after a Termination of Service, any of
which provisions may be waived or modified by the Committee at any time.
7.7 Incentive Stock Options
The terms of any Incentive Stock Options shall comply in all respects
with the provisions of Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. Any such Incentive Stock Option by its
terms must not be exercisable after the expiration of ten years from the Grant
Date for the Incentive Stock Option, must not be exercisable by anyone other
than the grantee otherwise than by will or the laws of descent and distribution,
must be exercisable, during the grantee's lifetime, only by the grantee, and
must state that it is an Incentive Stock Option. Individuals who are not
employees of the Company or one of its parent or subsidiary corporations (as
such terms are defined for purposes of Section 422 of the Code) may not be
granted Incentive Stock Options. To the extent that the aggregate Fair Market
Value of Company Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000 or, if different, the maximum limitation in effect at the time of grant
under the Code (the Fair Market Value being determined as of the Grant Date for
the Option), such portion in excess of $100,000 shall be treated as Nonqualified
Stock Options.
7.8 Reload Options.
When the Committee grants an Option, it may designate in the instrument
that evidences such Option whether a Reload Option accompanies the Option and
any limitations that will apply to such Reload Option. Unless otherwise
designated by the Committee in the instrument that evidences an Option, such
Option shall not be subject to any Reload Options. If it so desires, the
Committee may permit multiple, successive Reload Options for an Option, and may
designate such in the instrument that evidences an Option; but if no number of
Reload Options is specified in the instrument that provides for such Reload
Option, then the Option shall be subject to only one Reload Option. If the
Committee has designated an Option as having an accompanying Reload Option, the
Reload Option shall be for the same number of shares as is surrendered by the
Participant in payment of the exercise price of the Option (but not for shares
surrendered for tax or other withholding obligations) upon its exercise. The
Reload Option shall have the same terms and conditions as the related original
Option, including the expiration date of the original Option, except that (i)
the exercise price for a Reload Option shall be the Fair Market Value of the
Company Stock as of the date of grant of such Reload Option, and (ii) the Reload
Option shall become fully exercisable no earlier than six months after its date
of grant.
Section 8. Stock Appreciation Rights
8.1 Grant of Stock Appreciation Rights
The Committee may grant stock appreciation rights ("Stock Appreciation
Rights" or "SARs") to Participants at any time on such terms and conditions as
shall be set forth in the instrument evidencing the Award. An SAR may be granted
in tandem with an Option or alone ("freestanding"). The grant price of a tandem
SAR shall be equal to the exercise price of the related Option, and the grant
price of a freestanding SAR shall be equal to the Fair Market Value of the
Common Stock, on the Grant Date. An SAR may be exercised upon such terms and
conditions and for the term as the Committee determines in its sole discretion;
provided, however, that, subject to earlier termination in accordance with the
terms of the Plan and the instrument evidencing the SAR, (a) the term of a
freestanding SAR shall be as established for that SAR by the Committee or, if
not so established, shall be ten years, and (b) in the case of a tandem SAR, (i)
the term shall not exceed the term of the related Option and (ii) the tandem SAR
may be exercised for all or part of the shares subject to the related Option
upon the surrender of the right to exercise the equivalent portion of the
related Option, except that the tandem SAR may be exercised only with respect to
the shares for which its related Option is then exercisable.
8.2 Payment of SAR Amount
Upon the exercise of an SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying: (a) the excess
of the Fair Market Value of the Common Stock on the date of exercise over the
grant price by (b) the number of shares with respect to which the SAR is
exercised. At the discretion of the Committee, the payment upon exercise of an
SAR may be in cash, in shares of equivalent value, in some combination thereof
or in any other manner approved by the Committee in its sole discretion.
Section 9. Restricted Stock and Stock Units
9.1 Grant of Restricted Stock and Stock Units
The Committee may grant Restricted Stock and Stock Units on such terms
and conditions and subject to such repurchase or forfeiture restrictions, if any
(which may be based on continuous service with the Company or a Related Company
or the achievement of any of the Performance Criteria set forth in Section
11.1), as the Committee shall determine in its sole discretion, which terms,
conditions and restrictions shall be set forth in the instrument evidencing the
Award.
9.2 Issuance of Shares
Upon the satisfaction of any terms, conditions and restrictions
prescribed with respect to Restricted Stock or Stock Units, or upon a
Participant's release from any terms, conditions and restrictions of Restricted
Stock or Stock Units, as determined by the Committee, and subject to the
provisions of Section 13, (a) the shares of Restricted Stock covered by each
Award of Restricted Stock shall become freely transferable by the Participant,
and (b) Stock Units shall be paid in cash, shares of Company Stock or a
combination of cash and shares of Company Stock as the Committee shall determine
in its sole discretion. Any fractional shares subject to such Awards shall be
paid to the Participant in cash.
9.3 Dividends and Distributions
Participants holding shares of Restricted Stock or Stock Units may, if
the Committee so determines, be credited with dividends paid with respect to the
underlying shares or dividend equivalents while they are so held in a manner
determined by the Committee in its sole discretion. The Committee may apply any
restrictions to the dividends or dividend equivalents that the Committee deems
appropriate. The Committee, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including cash, shares of Company
Stock, Restricted Stock or Stock Units.
9.4 Waiver of Restrictions
Notwithstanding any other provisions of the Plan, the Committee, in its
sole discretion, may waive the repurchase or forfeiture period and any other
terms, conditions or restrictions on any Restricted Stock or Stock Unit under
such circumstances and subject to such terms and conditions as the Committee
shall deem appropriate; provided, however, that the Committee may not adjust
performance goals for any Restricted Stock or Stock Unit intended to be exempt
under Section 162(m) of the Code for the year in which the Restricted Stock or
Stock Unit is settled in such a manner as would increase the amount of
compensation otherwise payable to a Participant.
Section 10. Performance Shares and Performance Units
10.1 Grant of Performance Shares
The Committee may grant Awards of performance shares ("Performance
Shares") and designate the Participants to whom Performance Shares are to be
awarded and determine the number of Performance Shares, the length of the
performance period and the other terms and conditions of each such Award. Each
Award of Performance Shares shall entitle the Participant to a payment in the
form of shares of Company Stock upon the attainment of performance goals and
other terms and conditions specified by the Committee. Notwithstanding
satisfaction of any performance goals, the number of shares issued under an
Award of Performance Shares may be adjusted on the basis of such further
consideration as the Committee shall determine in its sole discretion. However,
the Committee may not, in any event, increase the number of shares earned upon
satisfaction of any performance goal by any Covered Employee.
10.2 Grant of Performance Units
The Committee may grant Awards of performance units ("Performance
Units") and designate the Participants to whom Performance Units are to be
awarded and determine the number of Performance Units and the terms and
conditions of each such Award. Performance Units shall entitle the Participant
to a payment in cash upon the attainment of performance goals and other terms
and conditions specified by the Committee. Notwithstanding the satisfaction of
any performance goals, the amount to be paid under an Award of Performance Units
may be adjusted on the basis of such further consideration as the Committee
shall determine in its sole discretion. However, the Committee may not, in any
event, increase the amount earned under Awards of Performance Units upon
satisfaction of any performance goal by any Covered Employee, and the maximum
amount earned by such Covered Employee in any calendar year may not exceed
$500,000. The Committee, in its discretion, may substitute actual shares of
Company Stock for the cash payment otherwise required to be made to a
Participant pursuant to a Performance Unit.
Section 11. Performance Criteria
11.1 Awards Subject to Performance Goals
Awards of Restricted Stock, Stock Units, Performance Shares,
Performance Units and other Awards made pursuant to the Plan may be made subject
to the attainment of performance goals relating to one or more of the following
business criteria within the meaning of Section 162(m) of the Code: profits
(including, but not limited to, profit growth, net operating profit or economic
profit); profit-related return ratios; return measures (including, but not
limited to, return on assets, capital, equity or sales); cash flow (including,
but not limited to, operating cash flow, free cash flow or cash flow return on
capital); earnings (including, but not limited to, net earnings, earnings per
share, or earnings before or after taxes); net sales growth; net income (before
or after taxes, interest, depreciation and/or amortization); gross or operating
margins; productivity ratios; share price (including, but not limited to, growth
measures and total stockholder return); expense targets; margins; operating
efficiency; customer satisfaction; and working capital targets ("Performance
Criteria"). Performance Criteria may be stated in absolute terms or relative to
comparison companies or indices to be achieved during a period of time.
11.2 Use and Calculation of Performance Criteria
Any Performance Criteria may be used to measure the performance of the
Company as a whole or any business unit of the Company. Any Performance Criteria
may include or exclude Nonrecurring Items. Performance Criteria shall be
calculated in accordance with the Company's financial statements or generally
accepted accounting principles, or under a methodology established by the
Committee prior to the issuance of an Award that is consistently applied and
identified in the audited financial statements, including footnotes, or the
Management's Discussion and Analysis section of the Company's annual report. The
Committee may not in any event increase the amount of compensation payable to a
Covered Employee upon the satisfaction of any Performance Criteria.
Section 12. Other Stock or Cash-Based Awards
In addition to the Awards described in Sections 7 through 10, and
subject to the terms of the Plan, the Committee may grant other incentives
payable in cash or in shares of Company Stock under the Plan as it determines to
be in the best interests of the Company and subject to such other terms and
conditions as it deems appropriate.
Section 13. Withholding
The Company may require the Participant to pay to the Company the
amount of (a) any taxes that the Company is required by applicable federal,
state, local or foreign law to withhold with respect to the grant, vesting or
exercise of an Award ("tax withholding obligations") and (b) any amounts due
from the Participant to the Company or to any Related Company ("other
obligations"). The Company shall not be required to issue any shares of Company
Stock or other consideration under the Plan until such tax withholding
obligations and other obligations are satisfied.
The Committee may permit or require a Participant to satisfy all or
part of his or her tax withholding obligations and other obligations by (a)
paying cash to the Company, (b) having the Company withhold an amount from any
cash amounts otherwise due or to become due from the Company to the Participant,
(c) having the Company withhold a number of shares of Company Stock that would
otherwise be issued to the Participant (or become vested in the case of
Restricted Stock) having a Fair Market Value equal to the tax withholding
obligations and other obligations, or (d) surrendering a number of shares of
Company Stock the Participant already owns having a Fair Market Value equal to
the tax withholding obligations and other obligations.
Section 14. Assignability
No Award or interest in an Award may be sold, assigned, pledged (as
collateral for a loan or as security for the performance of an obligation or for
any other purpose) or transferred by the Participant or made subject to
attachment or similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, except that to the extent permitted by the
Committee, in its sole discretion, a Participant may designate one or more
beneficiaries on a Company-approved form who may receive payment under an Award
after the Participant's death. During a Participant's lifetime, an Award may be
exercised only by the Participant. Notwithstanding the foregoing, with the
approval of the Committee and in its sole discretion, an Award may be amended to
permit the Participant to transfer Awards under this Plan to such persons as the
Committee deems appropriate.
Section 15. Adjustments
In the event, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend or
other change in the Company's corporate or capital structure results in (a) the
outstanding shares of Company Stock, or any securities exchanged therefore or
received in their place, being exchanged for a different number or kind of
securities of the Company or of any other company or (b) new, different or
additional securities of the Company or of any other company being received by
the holders of shares of Company Stock, then the Committee shall make
proportional adjustments in (i) the maximum number and kind of securities
available for issuance under the Plan; (ii) the maximum number and kind of
securities issuable as Incentive Stock Options as set forth in Section 4.2 all
in accordance with section 424 of the Code and the Treasury regulations issued
thereunder; (iii) the maximum number and kind of securities that may be issued
to an individual in any one calendar year as set forth in Section 4.3; (iv) the
maximum number and kind of securities that may be made subject to the different
types of Awards available under the Plan; and (v) the number and kind of
securities that are subject to any outstanding Award and the per share price of
such securities, without any change in the aggregate price to be paid therefor.
The determination by the Committee as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
Notwithstanding the foregoing, the issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services rendered, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefore, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Awards.
Section 16. Amendment and Termination
16.1 Amendment, Suspension or Termination of the Plan
The Board or the Committee may amend, suspend or terminate the Plan or
any portion of the Plan at any time and in such respects as it shall deem
advisable; provided, however, that, to the extent required by applicable law,
regulation or stock exchange rule, stockholder approval shall be required for
any amendment to the Plan.
16.2 Term of the Plan
Unless sooner terminated as provided herein, the Plan shall terminate
ten years from the Effective Date. After the Plan is terminated, no future
Awards may be granted, but Awards previously granted shall remain outstanding in
accordance with their applicable terms and conditions and the Plan's terms and
conditions. Notwithstanding the foregoing, no Incentive Stock Options may be
granted more than ten years after the earlier of (a) the adoption of the Plan by
the Board and (b) the Effective Date.
16.3 Consent of Participant
The amendment, suspension or termination of the Plan or a portion
thereof or the amendment of an outstanding Award shall not, without the
Participant's consent, materially adversely affect any rights under any Award
theretofore granted to the Participant under the Plan. Any change or adjustment
to an outstanding Incentive Stock Option shall not, without the consent of the
Participant, be made in a manner so as to constitute a "modification" within the
meaning of section 424 of the Code and the Treasury regulations thereunder that
would cause such Incentive Stock Option to fail to continue to qualify as an
Incentive Stock Option. Specifically, the Committee may, with the consent of the
person entitled to exercise any outstanding Option, amend an Option in any
manner consistent with the provisions of this Plan that it may deem advisable.
Notwithstanding the foregoing, any adjustments made pursuant to Section 15 shall
not be subject to these restrictions.
Section 17. General
17.1 No Individual Rights
No individual or Participant shall have any claim to be granted any
Award under the Plan, and the Company has no obligation for uniformity of
treatment of Participants under the Plan.
Furthermore, nothing in the Plan or any Award granted under the Plan
shall be deemed to constitute an employment contract or confer or be deemed to
confer on any Participant any right to continue in the employ of, or to continue
any other relationship with, the Company or any Related Company or limit in any
way the right of the Company or any Related Company to terminate a Participant's
employment or other relationship at any time, with or without cause.
17.2 Issuance of Shares
Notwithstanding any other provision of the Plan, the Company shall have
no obligation to issue or deliver any shares of Company Stock under the Plan or
make any other distribution of benefits under the Plan unless, in the opinion of
the Company's counsel, such issuance, delivery or distribution would comply with
all applicable laws (including, without limitation, the requirements of the
Securities Act or the laws of any state or foreign jurisdiction) and the
applicable requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under the laws of any state or foreign jurisdiction, any
shares of Company Stock, security or interest in a security paid or issued
under, or created by, the Plan, or to continue in effect any such registrations
or qualifications if made. The Company may issue certificates for shares with
such legends and subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal, state and foreign securities laws. The
Company may also require such other action or agreement by the Participants as
may from time to time be necessary to comply with applicable securities laws.
To the extent the Plan or any instrument evidencing an Award provides
for issuance of stock certificates to reflect the issuance of shares of Company
Stock, the issuance may be effected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.
17.3 No Rights as a Stockholder
Unless otherwise provided by the Committee or in the instrument
evidencing the Award or in a written employment or services agreement, no Option
or Award denominated in units shall entitle the Participant to any cash
dividend, voting or other right of a stockholder unless and until the date of
issuance under the Plan of the shares that are the subject of such Award.
17.4 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the Committee, in
its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are officers
or directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
17.5 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Company Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant, and no Participant shall have any rights that are greater than
those of a general unsecured creditor of the Company.
17.6 Successors
All obligations of the Company under the Plan with respect to Awards
shall be binding on any successor to the Company, whether the existence of such
successor is the result of a merger, consolidation, direct or indirect purchase
of all or substantially all the business and/or assets of the Company, or
otherwise.
17.7 Severability
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Committee's determination, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction, person or
Award, and the remainder of the Plan and any such Award shall remain in full
force and effect.
17.8 Choice of Law
The Plan, all Awards granted thereunder and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by the laws
of the United States, shall be governed by the laws of the State of Delaware
without giving effect to principles of conflicts of law.
Section 18. Effective Date
The Plan shall become effective (the "Effective Date") immediately
following stockholder approval of the Plan.