MARTHA STEWART LIVING OMNIMEDIA, INC. OMNIBUS STOCK AND OPTION COMPENSATION PLAN
TABLE OF
CONTENTS
Page | ||||||
SECTION 1.
|
INTRODUCTION | 1 | ||||
SECTION 2.
|
DEFINITIONS | 1 | ||||
(a) |
“Affiliate”
|
1 | ||||
(b) |
“Award”
|
1 | ||||
(c) |
“Award Agreement”
|
1 | ||||
(d) |
“Board”
|
1 | ||||
(e) |
“Cashless Exercise”
|
1 | ||||
(f) |
“Cause”
|
2 | ||||
(g) |
“Change in Control”
|
2 | ||||
(h) |
“Code”
|
3 | ||||
(i) |
“Committee”
|
3 | ||||
(j) |
“Common Stock”
|
3 | ||||
(k) |
“Company”
|
3 | ||||
(l) |
“Consultant”
|
3 | ||||
(m) |
“Covered Employees”
|
3 | ||||
(n) |
“Director”
|
3 | ||||
(o) |
“Disability”
|
3 | ||||
(p) |
“Employee”
|
3 | ||||
(q) |
“Exchange Act”
|
4 | ||||
(r) |
“Exercise Price”
|
4 | ||||
(s) |
“Fair Market Value”
|
4 | ||||
(t) |
“Fiscal Year”
|
4 | ||||
(u) |
“Immediate Family”
|
4 | ||||
(v) |
“Incentive Stock Option” or “ISO”
|
4 | ||||
(w) |
“Key Service Provider”
|
4 | ||||
(x) |
“Non-Employee Director”
|
4 | ||||
(y) |
“Nonstatutory Stock Option” or “NSO”
|
4 | ||||
(z) |
“Option”
|
4 | ||||
(aa) |
“Optionee”
|
4 | ||||
(bb) |
“Parent”
|
5 | ||||
(cc) |
“Participant”
|
5 | ||||
(dd) |
“Performance Goals”
|
5 | ||||
(ee) |
“Performance Period”
|
5 | ||||
(ff) |
“Person”
|
5 | ||||
(gg) |
“Plan”
|
5 | ||||
(hh) |
“Re-Price”
|
5 | ||||
(ii) |
“SAR Agreement”
|
5 | ||||
(jj) |
“SEC”
|
5 | ||||
(kk) |
“Section 16 Persons”
|
5 | ||||
(ll) |
“Securities Act”
|
5 |
i
Page | ||||||
(mm) |
“Service”
|
5 | ||||
(nn) |
“Share”
|
6 | ||||
(oo) |
“Stock Appreciation Right” or “SAR”
|
6 | ||||
(pp) |
“Stock Grant”
|
6 | ||||
(qq) |
“Stock Grant Agreement”
|
6 | ||||
(rr) |
“Stock Option Agreement”
|
6 | ||||
(ss) |
“Stock Unit”
|
6 | ||||
(tt) |
“Stock Unit Agreement”
|
6 | ||||
(uu) |
“Subsidiary”
|
6 | ||||
(vv) |
“10-Percent Stockholder”
|
6 | ||||
SECTION 3.
|
ADMINISTRATION | 6 | ||||
(a) |
Committee Composition
|
6 | ||||
(b) |
Authority of the Committee
|
7 | ||||
SECTION 4.
|
GENERAL | 7 | ||||
(a) |
General Eligibility
|
7 | ||||
(b) |
Incentive Stock Options
|
7 | ||||
(c) |
Restrictions on Shares
|
7 | ||||
(d) |
Beneficiaries
|
8 | ||||
(e) |
Performance Conditions
|
8 | ||||
(f) |
No Rights as a Stockholder
|
8 | ||||
(g) |
Termination of Service
|
8 | ||||
(h) |
Director Fees
|
8 | ||||
SECTION 5.
|
SHARES SUBJECT TO PLAN AND SHARE LIMITS | 8 | ||||
(a) |
Basic Limitation
|
8 | ||||
(b) |
Additional Shares
|
9 | ||||
(c) |
Dividend Equivalents
|
9 | ||||
(d) |
Share Limits
|
9 | ||||
(i) Limits on Options
|
9 | |||||
(ii) Limits on SARs
|
9 | |||||
(iii) Limits on Stock Grants and Stock Units
|
9 | |||||
(iv) Application of Limits to Key Service Providers in Multiple Roles
|
9 | |||||
(e) |
Non-Employee Directors
|
9 | ||||
SECTION 6.
|
TERMS AND CONDITIONS OF OPTIONS | 9 | ||||
(a) |
Stock Option Agreement
|
9 | ||||
(b) |
Number of Shares
|
9 | ||||
(c) |
Exercise Price
|
9 | ||||
(d) |
Exercisability and Term
|
10 | ||||
(e) |
Payment for Option Shares
|
10 | ||||
(i) Surrender of Stock
|
10 | |||||
(ii) Cashless Exercise
|
10 | |||||
(iii) Other Forms of Payment
|
10 |
ii
Page | ||||||
(f) |
Modifications or Assumption of Options
|
10 | ||||
(g) |
Assignment or Transfer of Options
|
10 | ||||
SECTION 7.
|
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS | 10 | ||||
(a) |
SAR Agreement
|
10 | ||||
(b) |
Number of Shares
|
11 | ||||
(c) |
Exercise Price
|
11 | ||||
(d) |
Exercisability and Term
|
11 | ||||
(e) |
Exercise of SARs
|
11 | ||||
(f) |
Modification or Assumption of SARs
|
11 | ||||
(g) |
Assignment or Transfer of SARs
|
11 | ||||
SECTION 8.
|
TERMS AND CONDITIONS FOR STOCK GRANTS | 12 | ||||
(a) |
Time, Amount and Form of Awards
|
12 | ||||
(b) |
Stock Grant Agreement
|
12 | ||||
(c) |
Payment for Stock Grants
|
12 | ||||
(d) |
Vesting Conditions
|
12 | ||||
(e) |
Assignment or Transfer of Stock Grants
|
12 | ||||
(f) |
Voting and Dividend Rights
|
12 | ||||
(g) |
Modification or Assumption of Stock Grants
|
12 | ||||
SECTION 9.
|
TERMS AND CONDITIONS OF STOCK UNITS | 12 | ||||
(a) |
Stock Unit Agreement
|
12 | ||||
(b) |
Number of Shares
|
13 | ||||
(c) |
Payment for Awards
|
13 | ||||
(d) |
Vesting Conditions
|
13 | ||||
(e) |
Form and Time of Settlement of Stock Units
|
13 | ||||
(f) |
Voting and Dividend Rights
|
13 | ||||
(g) |
Creditors’ Rights
|
13 | ||||
(h) |
Modification or Assumption of Stock Units
|
13 | ||||
(i) |
Assignment or Transfer of Stock Units
|
13 | ||||
SECTION 10.
|
PROTECTION AGAINST DILUTION | 13 | ||||
(a) |
Adjustments
|
13 | ||||
(b) |
Participant Rights
|
14 | ||||
(c) |
Fractional Shares
|
14 | ||||
SECTION 11.
|
EFFECT OF A CHANGE IN CONTROL | 14 | ||||
(a) |
Change in Control
|
14 | ||||
(b) |
Acceleration
|
14 | ||||
(c) |
Dissolution
|
14 | ||||
SECTION 12.
|
LIMITATIONS ON RIGHTS | 15 | ||||
(a) |
Participant Rights
|
15 | ||||
(b) |
Stockholders’ Rights
|
15 | ||||
(c) |
Regulatory Requirements
|
15 |
iii
Page | ||||||
SECTION 13.
|
WITHHOLDING TAXES | 15 | ||||
(a) |
General
|
15 | ||||
(b) |
Share Withholding
|
15 | ||||
SECTION 14.
|
DURATION AND AMENDMENTS | 16 | ||||
(a) |
Term of the Plan
|
16 | ||||
(b) |
Right to Amend or Terminate the Plan
|
16 |
iv
SECTION 1. INTRODUCTION.
On April 1, 2008 the Board adopted this Xxxxxx Xxxxxxx
Living Omnimedia, Inc. Omnibus Stock and Option Compensation
Plan, which shall become effective upon its approval by the
Company’s stockholders (the “Effective
Date”). If this Plan is approved by the Company’s
stockholders, this Plan will supersede the Xxxxxx Xxxxxxx Living
Omnimedia, Inc. Amended and Restated 1999 Stock Incentive Plan
and the Amended and Restated Xxxxxx Xxxxxxx Living Omnimedia,
Inc. Non-Employee Director Stock and Option Compensation Plan
(the “Prior Plans”) effective as of the
Effective Date such that no further awards shall be made under
the Prior Plans on or after such date. However, this Plan will
not, in any way, affect awards under the Prior Plans that are
outstanding as of the Effective Date. A total of 10,000,000
shares of Common Stock will be available for issuance under this
Plan. As of March 24, 2008, the Prior Plans had
approximately 1,850,000 shares of Common Stock available
for issuance under the plans, not including shares that were
subject to outstanding awards under the plans. This means that,
if this Plan is approved and the Prior Plans are cancelled, the
total net effect will be an increase of approximately
8,150,000 shares of Common Stock that will become available
for issuance under the Company’s stock plans. If the
Company’s stockholders do not approve this Plan, no Awards
will be made under this Plan and the Prior Plans will continue
in effect in accordance with their terms.
The purpose of this Plan is to promote the long-term success of
the Company and the creation of stockholder value by offering
Key Service Providers the opportunity to share in such long-term
success by acquiring equity in the Company. The Plan seeks to
achieve this purpose by providing for discretionary long-term
incentive Awards in the form of Options (which may be Incentive
Stock Options or Nonstatutory Stock Options), Stock Appreciation
Rights, Stock Grants and Stock Units.
The Plan shall be governed by, and construed in accordance with,
the laws of the State of Delaware (except its choice-of-law
provisions). Capitalized terms shall have the meaning provided
in Section 2 unless otherwise provided in this Plan or any
related Award Agreement.
SECTION 2. DEFINITIONS.
(a) “Affiliate” means any entity other than a
Parent or Subsidiary, controlled by, controlling or under common
control with, the Company and designated by the Committee from
time to time as such.
(b) “Award” means an Option, SAR, Stock Grant or
Stock Unit.
(c) “Award Agreement” means any Stock Option
Agreement, SAR Agreement, Stock Grant Agreement or Stock Unit
Agreement.
(d) “Board” means the Board of Directors of the
Company, as constituted from time to time.
(e) “Cashless Exercise” means a program approved
by the Committee in which payment of the aggregate Exercise
Price of an Option
and/or
satisfaction of any applicable withholding obligations may be
made, all or in part, with Shares subject to the Award,
including, but not limited to, by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities
broker to sell Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate Exercise
Price and, if applicable, the amount necessary to satisfy the
Company’s withholding obligations (such that the
Participant receives Shares upon exercise or settlement of the
Award, net of those Shares that must be withheld or sold to
satisfy the aggregate Exercise Price and, if applicable, the
Company’s withholding obligations).
1
(f) “Cause” means, except as may otherwise be
provided in a Participant’s employment agreement or Award
Agreement, (i) Participant’s willful failure to
perform his or her duties and responsibilities to the Company or
material violation of a written Company policy;
(ii) Participant’s commission of any act of fraud,
embezzlement, dishonesty or any other willful misconduct that
has caused or is reasonably expected to result in material
injury to the Company; (iii) unauthorized use or disclosure
by Participant of any proprietary information or trade secrets
of the Company or any other party to whom the Participant owes
an obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) Participant’s
willful breach of any of his or her obligations under any
written agreement or covenant with the Company. The
determination as to whether a Participant is being terminated
for Cause shall be made in good faith by the Committee and shall
be conclusive and binding on the Participant. The foregoing
definition does not in any way limit the Company’s ability
to terminate a Participant’s Service at any time as
provided in Section 12(a), and the term “Company”
will be interpreted to include any Parent, Subsidiary,
Affiliate, or any successor thereto, if appropriate.
(g) “Change in Control” means the consummation of
any of the following transactions:
(i) the acquisition by any Person of beneficial ownership
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of both (A) thirty
percent (30%) or more of either (1) the then outstanding
shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (2) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
“Outstanding Company Voting Power”) and
(B) more than both the Outstanding Company Common Stock and
the Outstanding Company Voting Power owned or controlled
directly or indirectly by Xxxxxx Xxxxxxx
and/or her
controlled affiliates, heirs, estate, legal representative
and/or
beneficiaries (collectively, “Xxxxxxx”);
provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute
a Change in Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (1), (2) and (3) of subsection (iii) of
this Section 2(g); or
(ii) individuals who, as of the effective date of the Plan,
constitute the Board (the “Incumbent Board”)
cease for any reason not to constitute at least a majority of
the Board; provided, however, that any individual
becoming a director subsequent to the effective date of the Plan
whose election, or nomination for election by the Company’s
stockholders, was approved by Xxxxxx Xxxxxxx and her controlled
affiliates (so long as such affiliates are controlled by her) at
a time when such entities controlled at least a majority of the
Outstanding Company Voting Power or by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a
“Business Combination”), in each case, unless,
following such Business Combination: (1) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Power immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the
then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the
2
Company’s assets either directly or through one or more
subsidiaries), (2) in the event that Xxxxxxx does not own
or control at least fifty percent (50%) of the Outstanding
Company Voting Power upon the consummation of the Business
Combination, no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such
corporation (and such amount exceeds the amount owned or
controlled by Xxxxxxx) except to the extent that such person had
such ownership of the Outstanding Company Common Stock or
Outstanding Company Voting Power immediately prior to the
Business Combination and (3) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business
Combination; or
(iv) approval by the shareholders of the Company or a
complete liquidation or dissolution of the Company.
A transaction shall not constitute a Change in Control if its
sole purpose is to change the place of the Company’s
incorporation or to create a holding company that will be owned
in substantially the same proportions by the persons who held
the Company’s securities immediately before such
transactions.
(h) “Code” means the Internal Revenue Code of
1986, as amended, and the regulations and interpretations
promulgated thereunder.
(i) “Committee” means a committee described in
Section 3.
(j) “Common Stock” means the Company’s
Class A common stock, par value $.01 per share.
(k) “Company” means Xxxxxx Xxxxxxx Living
Omnimedia, Inc., a Delaware corporation.
(l) “Consultant” means an individual or entity
who provides bona fide services to the Company, a Parent, a
Subsidiary or an Affiliate, other than services as an Employee,
Director or Non-Employee Director. For purposes of clarity, an
individual may be eligible under the Plan both as a Consultant
and as a Non-Employee Director.
(m) “Covered Employees” means those persons
identified by the Company who are or who may be subject to the
limitations of Code Section 162(m).
(n) “Director” means a member of the Board, or a
member of the Board of Directors of any Parent, Subsidiary or
Affiliate, who is also an Employee. For purposes of clarity, an
individual may be eligible under the Plan both as a Director and
as an Employee.
(o) “Disability” means that the Participant is
classified as disabled under the long-term disability policy of
the Company or, if no such policy applies, the Participant is
unable to engage in any substantial gainful activity by reason
of any 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
twelve (12) months.
(p) “Employee” means any individual who is an
employee of the Company, a Parent, a Subsidiary or an Affiliate.
For purposes of clarity, an individual may be eligible under the
Plan both as an Employee and as a Director.
3
(q) “Exchange Act” means the Securities Exchange
Act of 1934, as amended.
(r) “Exercise Price” means, in the case of an
Option, the amount for which a Share may be purchased upon
exercise of such Option, as specified in the applicable Stock
Option Agreement. “Exercise Price,” in the case of a
SAR, means an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value in
determining the amount payable upon exercise of such SAR.
(s) “Fair Market Value” means the market price of
a Share as determined in good faith by the Committee. Such
determination shall be conclusive and binding on all persons.
The Fair Market Value shall be determined by the following:
(i) If the Shares are admitted to trading on any
established national stock exchange or market system on the date
in question then the Fair Market Value shall be equal to the
closing sales price for such Shares as quoted on such national
exchange or system on such date; or
(ii) if the Shares are admitted to quotation or are
regularly quoted by a recognized securities dealer but selling
prices are not reported on the date in question, then the Fair
Market Value shall be equal to the mean between the bid and
asked prices of the Shares reported for such date.
In each case, the applicable price shall be the price reported
in The Wall Street Journal or such other source as the Committee
deems reliable; provided, however, that if there is no such
reported price for the Shares for the date in question, then the
Fair Market Value shall be equal to the price reported on the
last preceding date for which such price exists. If neither
(i) or (ii) are applicable, then the Fair Market Value
shall be determined by the Committee in good faith on such basis
as it deems appropriate.
(t) “Fiscal Year” means the Company’s fiscal
year.
(u) “Immediate Family” means, except as otherwise
defined by the Committee, any child, sibling, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former
spouse, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
sister-in-law,
or
brother-in-law,
including adoptive relationships, any person sharing the
employee’s household (other than a tenant or employee), a
trust in which these persons have more than fifty percent (50%)
of the beneficial interest, a foundation in which these persons
(or the Participant) own more than fifty percent (50%) or more
of the voting interests.
(v) “Incentive Stock Option” or “ISO”
means an incentive stock option described in Code
Section 422.
(w) “Key Service Provider” means an Employee,
Director, Non-Employee Director
and/or
Consultant who has been selected by the Committee to receive an
Award under the Plan.
(x) “Non-Employee Director” means a member of the
Board, or a member of the Board of Directors of any Parent,
Subsidiary or Affiliate, who is not an Employee. For purposes of
clarity, an individual may be eligible under the Plan both as a
Non-Employee Director and as a Consultant.
(y) “Nonstatutory Stock Option” or
“NSO” means a stock option that is not an ISO.
(z) “Option” means an ISO or NSO granted under
the Plan entitling the Optionee to purchase Shares.
(aa) “Optionee” means an individual, estate or
other entity that holds an Option.
4
(bb) “Parent” means any corporation (other than
the Company) in an unbroken chain of corporations ending with
the Company, if each of the corporations other than the Company
owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain. For purposes of this
definition a “corporation” shall include an
S corporation (as defined in Code Section 1361, a
foreign corporation (as defined in Code 7701(a)(5)), a limited
liability corporation that is treated as a corporation for all
U.S. Federal tax purposes, and any other entity defined as
a corporation pursuant to Code Section 7701(a)(3) and Treasury
Regulation Section 301.7701-2(b).
A corporation that attains the status of a Parent on a date
after the adoption of the Plan shall be considered a Parent
commencing as of such date.
(cc) “Participant” means an individual or estate
or other entity that holds an Award.
(dd) “Performance Goals” means an objective
formula or standard determined by the Committee with respect to
each Performance Period utilizing one or more of the following
factors and any objectively verifiable adjustment(s) thereto
permitted and pre-established by the Committee in accordance
with Code Section 162(m): (i) operating income;
(ii) earnings before interest, taxes, depreciation and
amortization; (iii) earnings; (iv) cash flow;
(v) market share; (vi) sales, (vii) revenue;
(viii) expenses; (ix) cost of goods sold;
(x) profit/loss or profit margin; (xi) working
capital; (xii) return on capital, equity or assets;
(xiii) earnings per share; (xiv) economic value added;
(xv) price/earnings ratio; (xvi) stock price;
(xvii) price/earnings ratio; (xviii) debt or
debt-to-equity; (xix) accounts receivable;
(xx) writeoffs; (xxi) cash; (xxii) assets;
(xxiii) liquidity; (xxiv) operations;
(xxv) intellectual property (e.g., patents);
(xxvi) product development; (xxvii) regulatory
activity; (xxviii) manufacturing, production or inventory;
(xxix) mergers, acquisitions, investments or divestitures;
(xxx) financings
and/or
(xxxi) customer satisfaction, each with respect to the
Company
and/or one
or more of its Parent, Subsidiaries, Affiliates or operating
units. Awards that are not intended to comply with Code Section
162(m) may take into account other factors (including subjective
factors).
(ee) “Performance Period” means any period not
exceeding seven (7) years as determined by the Committee,
in its sole discretion. The Committee may establish different
Performance Periods for different Participants and the Committee
may establish concurrent or overlapping Performance Periods.
(ff) “Person” means any individual, entity or
group within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act.
(gg) “Plan” means this Xxxxxx Xxxxxxx Living
Omnimedia, Inc. Omnibus Stock and Option Compensation Plan as it
may be amended from time to time.
(hh) “Re-Price” means that the Company has
lowered or reduced the Exercise Price of outstanding Options
and/or
outstanding SARs for any Participant(s) in any manner, including
through amendment, cancellation or replacement grants, or any
other means.
(ii) “SAR Agreement” means the agreement
described in Section 7 evidencing a Stock Appreciation
Right.
(jj) “SEC” means the Securities and Exchange
Commission.
(kk) “Section 16 Persons” means those
officers, directors or other persons who are subject to 16 of
the Exchange Act.
(ll) “Securities Act” means the Securities Act of
1933, as amended.
(mm) “Service” means service as an Employee,
Director, Non-Employee Director or Consultant. A
Participant’s Service does not terminate if he or she is an
Employee and goes on a bona fide leave of
5
absence that was approved by the Company in writing and the
terms of the leave provide for continued service crediting, or
when continued service crediting is required by applicable law.
However, for purposes of determining whether an Option is
entitled to continuing ISO status, an Employee’s Service
will be treated as terminating ninety (90) days after such
Employee went on leave, unless such Employee’s right to
return to active work is guaranteed by law or by a contract.
Service terminates in any event when the approved leave ends,
unless such Employee immediately returns to active work.
Further, unless otherwise determined by the Committee, a
Participant’s Service will not terminate merely because of
a change in the capacity in which the Participant provides
service to the Company, a Parent, Subsidiary or Affiliate, or a
transfer between entities (the Company or any Parent,
Subsidiary, or Affiliate); provided that there is no
interruption or other termination of Service.
(nn) “Share” means one share of Common Stock.
(oo) “Stock Appreciation Right” or
“SAR” means a stock appreciation right awarded under
the Plan.
(pp) “Stock Grant” means Shares awarded under the
Plan.
(qq) “Stock Grant Agreement” means the agreement
described in Section 8 evidencing a Stock Grant.
(rr) “Stock Option Agreement” means the agreement
described in Section 6 evidencing an Option.
(ss) “Stock Unit” means a bookkeeping entry
representing the equivalent of one Share awarded under the Plan.
(tt) “Stock Unit Agreement” means the agreement
described in Section 9 evidencing a Stock Unit.
(uu) “Subsidiary” means any corporation (other
than the Company) in an unbroken chain of corporations beginning
with the Company, if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain. For purposes of this definition a “corporation”
shall include an S corporation (as defined in Code
Section 1361, a foreign corporation (as defined in Code
7701(a)(5)), a limited liability corporation that is treated as
a corporation for all U.S. Federal tax purposes, and any
other entity defined as a corporation pursuant to Code
Section 7701(a)(3) and Treasury
Regulation Section 301.7701-2(b).
A corporation that attains the status of a Subsidiary on a date
after the adoption of the Plan shall be considered a Subsidiary
commencing as of such date.
(vv) “10-Percent Stockholder” means an
individual who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Code
Section 424(d) shall be applied.
SECTION 3. ADMINISTRATION.
6
Section 16 Persons or Covered Employees, respectively,
may grant Awards under the Plan to such Key Service Providers
and may determine all terms of such Awards. Members of any such
committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of
the committee and reassume all powers and authority previously
delegated to the committee. Notwithstanding the foregoing, the
Board shall administer the Plan with respect to all Awards
granted to Non-Employee Directors. The Board and any committee
appointed to administer the plan is referred to herein as the
“Committee”.
(i) selecting Key Service Providers who are to receive
Awards under the Plan;
(ii) determining the type, number, vesting requirements and
other features and conditions of such Awards;
(iii) amending any outstanding Awards;
(iv) accelerating the vesting, or extending the
post-termination exercise term, of Awards at any time and under
such terms and conditions as it deems appropriate;
(v) interpreting the Plan and any Award Agreement;
(vi) correcting any defect, supplying any omission or
reconciling any inconsistency in the Plan or any Award Agreement;
(vii) adopting such rules or guidelines as it deems
appropriate to implement the Plan;
(viii) making all other decisions relating to the operation
of the Plan; and
(ix) adopting such plans or subplans as may be deemed
necessary or appropriate to provide for the participation by
employees of the Company, its Parent, Subsidiaries and
Affiliates who reside outside of the U.S., which plans
and/or
subplans shall be attached hereto as Appendices.
The Committee’s determinations under the Plan shall be
final and binding on all persons.
SECTION 4. GENERAL.
7
(d) Beneficiaries. Unless stated otherwise in an Award
Agreement and then only to the extent permitted by applicable
law, a Participant may designate one or more beneficiaries with
respect to an Award by timely filing the prescribed form with
the Company. A beneficiary designation may be changed by filing
the prescribed form with the Company at any time before the
Participant’s death. If no beneficiary was designated or if
no designated beneficiary survives the Participant, then after a
Participant’s death any vested Award(s) shall be
transferred or distributed to the Participant’s estate.
SECTION 5. SHARES
SUBJECT TO PLAN AND SHARE
LIMITS.
8
(iv) Application of Limits to Key Service Providers in
Multiple Roles. For purposes of clarity, if any Key Service
Provider provides services to the Company, a Parent, Subsidiary
or Affiliate in more than one role and each such role would
separately make such Key Service Provider eligible for Awards
under the Plan, then the limits set forth in this
Section 5(d) shall apply separately to each such role.
SECTION 6. TERMS
AND CONDITIONS OF
OPTIONS.
9
(iii) Other Forms of Payment. Payment may be made in any
other form that is consistent with applicable laws, regulations
and rules and approved by the Committee.
In the case of an ISO granted under the Plan, except to the
extent permitted by applicable law, payment shall be made only
pursuant to the express provisions of the applicable Stock
Option Agreement. In the case of an NSO granted under the Plan,
the Committee may, in its discretion at any time, accept payment
in any form(s) described in this Section 6(e).
(g) Assignment or Transfer of Options. No Option or
interest therein shall be transferred, assigned, pledged or
hypothecated by the Optionee during his or her lifetime, whether
by operation of law or otherwise, or be made subject to
execution, attachment or similar process, other than (i) by
will or by the laws of descent and distribution, or (ii) in
the case of a Nonstatutory Stock Option, as otherwise expressly
permitted by the Committee including, if so permitted, pursuant
to a transfer to such Optionee’s Immediate Family. An
Option may be exercised, subject to the terms of the Plan and
the applicable Stock Option Agreement, only by the Optionee, the
guardian or legal representative of the Optionee, a beneficiary
designated pursuant to Section 4(d) below, or any person to
whom such Option is transferred pursuant to this paragraph.
(a) SAR Agreement. Each SAR granted under the Plan shall be
evidenced by a SAR Agreement between the Participant and the
Company. Such SAR shall be subject to all applicable terms of
the Plan and may be subject to any other terms that are not
inconsistent with the Plan. An SAR Agreement may provide for a
maximum limit on the amount of any payout notwithstanding the
Fair Market Value on
10
the date of exercise of the SAR. The provisions of the various
SAR Agreements entered into under the Plan need not be
identical. SARs may be granted in consideration of a reduction
in the Participant’s compensation.
(d) Exercisability and Term. Each SAR Agreement shall
specify the date when all or any installment of the SAR is to
become exercisable
and/or may
include time-based vesting or performance-based vesting
(including Performance Goals pursuant to Section 4(e)). The
SAR Agreement shall also specify the maximum term of the SAR
which shall not exceed ten (10) years from the date of
grant. A SAR Agreement may provide for accelerated
exercisability in connection with certain events. SARs may be
awarded in combination with Options or Stock Grants, and such an
Award shall provide that the SARs will not be exercisable unless
the related Options or Stock Grants are forfeited. A SAR may be
included in an ISO only at the time of grant but may be included
in an NSO at the time of grant or at any subsequent time, but
not later than six months before the expiration of such NSO.
Notwithstanding any other provision of the Plan or the SAR
Agreement, no SAR can be exercised after the expiration date
provided in the applicable SAR Agreement.
(g) Assignment or Transfer of SARs. No SAR or interest
therein shall be transferred, assigned, pledged or hypothecated
by the Participant during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution,
attachment or similar process, other than (i) by will or by
the laws of descent and distribution, or (ii) as otherwise
expressly permitted by the Committee including, if so permitted,
pursuant to a transfer to such Participant’s Immediate
Family. A SAR may be exercised, subject to the terms of the Plan
and the applicable SAR Agreement, only by the Participant, the
guardian or legal representative of the Participant, a
beneficiary designated pursuant to Section 4(d) below, or
any person to whom such XXX is transferred pursuant to this
paragraph.
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SECTION 8. TERMS
AND CONDITIONS FOR STOCK
GRANTS.
(a) Time, Amount and Form of Awards. Awards under this
Section 8 may be granted in the form of a Stock Grant. A
Stock Grant may be awarded in combination with NSOs, and such an
Award may provide that the Stock Grant will be forfeited in the
event that the related NSOs are exercised.
SECTION 9. TERMS
AND CONDITIONS OF STOCK
UNITS.
12
(e) Form and Time of Settlement of Stock Units. Settlement
of vested Stock Units may be made in the form of (a) cash,
(b) Shares or (c) any combination of both. Methods of
converting Stock Units into cash may include (without
limitation) a method based on the average Fair Market Value of
Shares over a series of trading days. Vested Stock Units may be
settled in a lump sum or in installments. The distribution may
occur or commence when the vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be
deferred, in accordance with applicable law, to any later date.
The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents.
SECTION 10. PROTECTION
AGAINST
DILUTION.
13
consolidation of the outstanding Shares (by reclassification or
otherwise) into a lesser number of Shares, an extraordinary
corporate transaction, such as any merger, consolidation,
separation (including a spin-off), any reorganization (whether
or not such reorganization comes within the definition of such
term in Code Section 368) or any partial or complete
liquidation of the Company, the Committee shall make appropriate
and equitable adjustments in one or more of:
(i) the number of Shares and the kind of shares or
securities available for future Awards under Section 5;
(ii) the limits on Awards specified in Section 5;
(iii) the number of Shares and the kind of shares or
securities covered by each outstanding Award;
(iv) the Exercise Price under each outstanding SAR or
Option;
(v) any applicable performance-based vesting provisions set
forth in an outstanding Award, whether or not such provisions
include Performance Goals or otherwise; or
(vi) any other term or provision of the Plan or any
outstanding Award necessary to ensure that there is no increase
or decrease in the value of Awards that may be issued under the
Plan or the value of any outstanding Award.
SECTION 11. EFFECT
OF A CHANGE IN
CONTROL.
14
SECTION 12. LIMITATIONS
ON
RIGHTS.
Neither the Plan nor any Award granted under the Plan shall be
deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent, a Subsidiary or
an Affiliate. The Company and its Parent, Subsidiaries and
Affiliates reserve the right to terminate the Service of any
person at any time, and for any reason, subject to applicable
laws, the Company’s Articles of Incorporation and Bylaws
and any applicable written employment agreement (if any), and
such terminated person shall be deemed irrevocably to have
waived any claim to damages or specific performance for breach
of contract or dismissal, compensation for loss of office, tort
or otherwise with respect to the Plan or any outstanding Award
that is forfeited
and/or is
terminated by its terms or to any future Award, except as is
otherwise provided in any contractual arrangement with a
U.S. Participant.
SECTION 13. WITHHOLDING
TAXES.
15
of any Shares that he or she previously acquired; provided that
Shares withheld or previously owned Shares that are tendered
shall not exceed the amount necessary to satisfy the
Company’s tax withholding obligations at the minimum
statutory withholding rates, including, but not limited to,
U.S. federal and state income taxes, payroll taxes and
foreign taxes, if applicable, unless the previously owned Shares
have been held for the minimum duration necessary to avoid
financial accounting charges under applicable accounting
guidance or as otherwise permitted by the Committee in its sole
and absolute discretion. Any payment of taxes by assigning
Shares to the Company may be subject to restrictions, including,
but not limited to, any restrictions required by rules of the
SEC.
SECTION 14. DURATION
AND
AMENDMENTS.
(a) Term of the Plan. The Plan shall become effective upon
its approval by the Company’s stockholders. The Plan shall
terminate on March 31, 2018 and may be terminated on any
earlier date pursuant to this Section 14.
(b) Right to Amend or Terminate the Plan. The Board may
amend or terminate the Plan at any time and for any reason. Any
such termination of the Plan, or any amendment thereof, shall
not impair any Award previously granted under the Plan. No
Awards shall be granted under the Plan after the Plan’s
termination. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent
such approval is required by applicable laws, regulations or
rules.
16