1
EXHIBIT 10.8
AMENDED AND RESTATED
UTI ENERGY CORPORATION
1996 EMPLOYEE STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Amended and Restated UTI Energy Corporation
1996 Employee Stock Option Plan is to promote the interests of UTI Energy
Corporation (the "Company") and its stockholders by providing it with a
mechanism to enable the Company and its subsidiaries to attract, retain and
motivate their key employees with compensatory arrangements and benefits that
make use of the Company's stock so as to provide for or increase the
proprietary interests of such employees in the Company.
SECTION 2. DEFINITIONS
(A) "AGREEMENT" shall mean a written agreement setting forth
the terms of an Award.
(B) "AWARD" shall mean an Option (which may be designated as
an Incentive Stock Option or a Non-Incentive Stock Option) granted under this
Plan.
(C) "BOARD" shall mean the Board of Directors of the Company.
(D) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(E) "COMMITTEE" shall mean the committee appointed by the
Board to administer this Plan.
(F) "COMMON STOCK" shall mean the Company's Common Stock,
$.001 par value (or such other par value as may be designated by act of the
Company's stockholders).
(G) "COMPANY" shall mean UTI Energy Corporation, a Delaware
corporation.
(H) "DISABILITY" shall mean a mental or physical disability
which, in the opinion of a physician selected by the Committee, shall prevent
the Employee from earning a reasonable livelihood with the Company or any
Subsidiary and 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 and
which: (a) was not contracted, suffered or incurred while the Employee was
engaged in, or did not result from having engaged in, a felonious criminal
enterprise; (b) did not result from alcoholism or addiction to narcotics; and
(c) did not result from an injury incurred while a member of the Armed Forces
of the United States for which the Employee receives a military pension.
(I) Intentionally omitted.
2
(J) "EMPLOYEE" shall mean an officer or employee of the
Company or a Subsidiary.
(K) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(L) "FAIR MARKET VALUE" shall mean the closing sale price of
a share of Common Stock on that date as reported by the principal national
securities exchange on which the Common Stock is listed if the Common Stock is
then listed on a national securities exchange, or if the Common Stock is not so
listed, the average of the bid and asked price of a share of Common Stock on
that date and reported in the National Association of Securities Dealers
Automated Quotation system (the "NASDAQ System"); provided that if no such
closing price or quotes are so reported on that date or if in the discretion of
the Committee another means of determining the Fair Market Value of a share of
stock at such date shall be necessary or advisable, the Committee may provide
for another means for determining such Fair Market Value.
(M) "INCENTIVE STOCK OPTION" shall mean an Option that is
intended by the Committee to meet the requirements of Section 422 of the Code
or any successor provision.
(N) "NON-INCENTIVE STOCK OPTION" shall mean an Option granted
pursuant to this Plan which does not qualify as an Incentive Stock Option.
(O) "OPTION" shall mean the right to purchase Common Stock at
a price to be specified and upon terms to be designated by the Committee
pursuant to this Plan. An Option shall be designated by the Committee as an
Incentive Stock Option or a Non-Incentive Stock Option.
(P) "OPTION PRICE" shall mean the price at which shares may
be purchased pursuant to an Option.
(Q) "PLAN" shall mean this UTI Energy Corporation 1996
Employee Stock Option Plan.
(R) "RETIRE" or "RETIREMENT" shall mean retirement in
accordance with the terms of a retirement plan that is qualified under Section
401(a) of the Code and maintained by the Company or a Subsidiary in which the
employee is a participant.
(S) "SUBSIDIARY" shall mean any present or future subsidiary
corporations, as defined in Section 424 of the Code, of the Company.
SECTION 3. STOCK SUBJECT TO THE PLAN
The total amount of the Common Stock with respect to which
Awards may be granted shall not exceed in the aggregate 300,000 shares. The
class and aggregate number of shares which may be subject to the Options
granted under this Plan shall be subject to adjustment under Section 7. Shares
may be treasury shares or authorized but unissued shares. If any Award under
the Plan shall expire or terminate
-2-
3
for any reason without having been exercised in full, or if any Award shall be
forfeited, the shares subject to the unexercised or forfeited portion of such
Award shall again be available for the purposes of the Plan.
SECTION 4. ADMINISTRATION
The Committee shall consist of not less than two members of
the Board, who are not Employees. The Board shall have the power from time to
time to add or remove members of the Committee, and to fill vacancies arising
for any reason. The Committee shall designate a chairman from among its
members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
any time and place as it shall choose. A majority of the members of the
Committee shall constitute a quorum for the transaction of business. The vote
of a majority of those members present at any meeting shall decide any question
brought before that meeting. In addition, the Committee may take any action
otherwise proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. All questions of
interpretation and application of the Plan, or as to Awards granted under it
shall be subject to the determination of a majority of the Committee. The
Committee in exercising any power or authority granted under this Plan or in
making any determination under this Plan shall perform or refrain from
performing those acts using its sole discretion and judgment. Any decision
made by the Committee or any refraining to act or any act taken by the
Committee in good faith shall be final and binding on all parties. The
Committee's decision shall never be subject to de novo review. When
appropriate the Plan shall be administered in order to qualify certain of the
Options granted under it as Incentive Stock Options.
SECTION 5. ELIGIBILITY
The individuals who shall be eligible to participate in the
Plan shall be those full-time key Employees, including directors if they are
Employees, as the Committee shall determine during the term of this Plan. No
individual shall be eligible to receive an Award under the Plan while that
individual is a member of the Committee.
No Employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the corporation
employing the Employee or of its parent or subsidiary corporation shall be
eligible to receive an Option which is an Incentive Stock Option unless at the
time that the Option is granted the option price is at least 110% of the Fair
Market Value of the Common Stock at the time the Option is granted and the
Option by its own terms is not exercisable after the expiration of five years
from the date the Option is granted.
-3-
4
An Employee will be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants. Stock owned,
directly or indirectly, by or for a corporation, partnership, estate or trust
will be considered as being owned proportionately by or for its stockholders,
partners or beneficiaries. For all purposes of this Plan, a parent corporation
is any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, on the date of grant of the Option in
question, each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in that chain; and a subsidiary corporation is any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, on the date of grant of the Option in question,
each of the corporations, other than the last corporation in the chain, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in that chain.
SECTION 6. MAXIMUM NUMBER OF SHARES SUBJECT TO AN AWARD
The maximum number of shares of Common Stock subject to
Options that may be awarded to any Employee under the Plan during any
consecutive three year period is 100,000.
SECTION 7. STOCK OPTIONS
A. AUTHORITY TO GRANT OPTIONS. The Committee may grant
Incentive Stock Options or Non-Incentive Stock Options at any time during the
term of this Plan to any eligible Employee that it chooses.
Each Option granted shall be approved by the Committee.
Subject only to any applicable limitations set forth in this Plan, the number
of shares of Common Stock to be covered by an Option shall be as determined by
the Committee.
B. OPTION PRICE. The price at which shares may be purchased
pursuant to an Option shall be fixed by the Committee, but such price for an
Incentive Stock Option shall be not less than the Fair Market Value of the
shares of Common Stock on the date the Option is granted. The Committee in its
discretion may provide that the price at which shares may be purchased shall be
more than the minimum price required.
C. DURATION OF OPTIONS. No Option which is an Incentive
Stock Option shall be exercisable after the expiration of ten years from the
date such Option is granted. The Committee in its discretion may provide that
such Option shall be exercisable throughout the ten year period or during any
lesser period of time commencing on or after the date of grant of such Option
and ending upon or before the expiration of the ten year period. If an
Employee owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the corporation employing the Employee or of its
parent or subsidiary corporation, no Option which is an Incentive Stock Option
shall be exercisable after the expiration of five years from the date such
Option is granted. No Option which is a Non-Incentive Stock Option shall
-4-
5
be exercisable after the expiration of ten years from the date such Option is
granted. The Committee in its discretion may provide that such Option shall be
exercisable throughout the ten year period or during any lesser period of time
commencing on or after the date of grant of such Option and ending upon or
before the expiration of the ten year period.
D. MAXIMUM VALUE OF STOCK SUBJECT TO OPTIONS WHICH ARE
INCENTIVE STOCK OPTIONS. To the extent that the aggregate Fair Market Value
(determined as of the date the Option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first time by the
Optionee in any calendar year (under this Plan and any other incentive stock
option plan(s) of the Company and any parent and subsidiary corporation)
exceeds $100,000, the Options shall be treated as Non-Incentive Stock Options.
In making this determination, Options shall be taken into account in the order
in which they were granted.
E. AMOUNT EXERCISABLE. The Committee, in its discretion, may
fix the terms of exercise of any Option so that any Option may be exercised so
long as it is valid and outstanding from time to time in part or as a whole in
such manner and subject to such conditions as it may set. In addition, the
Committee, in its discretion, may accelerate the time in which any outstanding
Option may be exercised. But in no event shall any Option be exercisable after
the tenth anniversary of the date of the grant.
F. EXERCISE OF OPTIONS. An Optionee may exercise such
optionee's Option by delivering to the Company a written notice stating (i)
that such optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which the Option
is to be exercised and (iii) the address to which the certificate representing
such shares of stock should be mailed. In order to be effective, such written
notice shall be accompanied by (i) payment of the Option Price of such shares
of stock and (ii) payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Each such payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars or
other check acceptable to the Committee.
If, at the time of receipt by the Company of such written
notice, (i) the Company has unrestricted surplus in an amount not less than the
Option Price of such shares of stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid, (iii) the acquisition by
the Company of its own shares of stock for the purpose of enabling such
optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, and (iv) there
shall have been adopted, and there shall be in full force and effect, a
resolution of the Board of Directors of the Company authorizing the acquisition
by the Company of its own shares of stock for such purpose, then such optionee
may deliver to the Company, in payment of the Option Price of the shares of
stock with respect to which such Option is exercised, (x) certificates
registered in the name of such optionee that represent a number of shares of
stock legally and beneficially owned by such optionee (free of all liens,
claims and encumbrances of every kind) and having a Fair
-5-
6
Market Value on the date of receipt by the Company of such written notice that
is not greater than the Option Price of the shares of stock with respect to
which such Option is to be exercised, such certificates to be accompanied by
stock powers duly endorsed in blank by the record holder of the shares of stock
represented by such certificates, with the signature of such record holder
guaranteed by a national banking association (or, in lieu of such certificates,
other arrangements for the transfer of such shares to the Company which are
satisfactory to the Company) and (y) if the Option Price of the shares of stock
with respect to which such Options are to be exercised exceeds such Fair Market
Value, a cashier's check drawn on a national banking association and payable to
the order of the Company in an amount, in United States dollars, equal to the
amount of such excess plus the amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Notwithstanding the provisions of the immediately preceding sentence, the
Committee, in its sole discretion, may refuse to accept shares of stock in
payment of the Option Price of the shares of stock with respect to which such
Option is to be exercised and, in that event, any certificates representing
shares of stock that were received by the Company with such written notice
shall be returned to such optionee, together with notice by the Company to such
optionee of the refusal of the Committee to accept such shares of stock. The
Company may, at its option and upon approval by the Board of Directors of the
Company, retain shares of Common Stock which would otherwise be issued upon
exercise of an Option to satisfy any withholding tax liability that may result
from the exercise of such Option, which shares shall be valued for such purpose
at their then Fair Market Value. If, at the expiration of seven business days
after the delivery to such optionee of such written notice from the Company,
such optionee shall not have delivered to the Company a cashier's check drawn
on a national banking association and payable to the order of the Company in an
amount, in United States dollars, equal to the Option Price of the shares of
stock with respect to which such Option is to be exercised, such written notice
from the optionee to the Company shall be ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of
(i) such written notice from the optionee, (ii) payment, in the form required
by the foregoing provisions of this Paragraph F, of the Option Price of the
shares of stock with respect to which such Option is to be exercised, and (iii)
payment, if required, in the form required by the foregoing provisions of this
Paragraph F, of an amount necessary to satisfy any withholding tax liability
that may result from the exercise of such Option, a certificate representing
the number of shares of stock with respect to which such Option has been so
exercised, reduced, to the extent applicable by the number of shares retained
by the Company to pay any required withholding tax, such certificate to be
registered in the name of such optionee, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such optionee at the address specified for such purpose in
such written notice from the optionee to the Company.
G. TRANSFERABILITY OF OPTIONS. Options shall not be
transferable by the optionee except by will or under the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by him. Any
attempted sale, assignment, transfer, pledge or encumbrance of an Option in
violation of this Agreement shall be void and the Company shall not be bound
thereby.
-6-
7
H. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE.
1. Except as may be otherwise expressly provided in the
Option Agreement with respect to an Option that is a Non-Incentive Stock
Option, all Options shall terminate on the earlier of the date of the
expiration of the Option or one day less than three months after the date of
severance, upon severance of the employment relationship between the Company
and the optionee, whether with or without cause, for any reason other than the
death, Disability or, in the case of Non-Incentive Stock Options only,
Retirement of the optionee, during which period the optionee shall be entitled
to exercise the Option in respect of the number of shares that the optionee
would have been entitled to purchase had the optionee exercised the Option on
the date of such severance of employment. Whether authorized leave of absence,
or absence on military or government service, shall constitute severance of the
employment relationship between the Company and the optionee for purposes of
the Plan shall be determined by the Committee at the time thereof. In the
event of severance because of the Disability of the holder of any Incentive
Stock Option while in the employ of the Company and before the date of
expiration of such Incentive Stock Option, such Incentive Stock Option shall
terminate on the earlier of such date of expiration or one year following the
date of such severance because of Disability, during which period the optionee
shall be entitled to exercise the Incentive Stock Option in respect to the
number of shares that the optionee would have been entitled to purchase had the
optionee exercised the Incentive Stock Option on the date of such severance
because of Disability.
2. In the event of the death of the holder of any
Incentive Stock Option while in the employ of the Company and before the date
of expiration of such Incentive Stock Option, such Incentive Stock Option shall
terminate on the earlier of such date of expiration or one year following the
date of death. After the death of the optionee, his executors, administrators
or any person or persons to whom his Incentive Stock Option may be transferred
by will or by the laws of descent and distribution, shall have the right, at
any time prior to the termination of an Incentive Stock Option to exercise the
Incentive Stock Option, in respect to the number of shares that the optionee
would have been entitled to exercise if he had exercised the Incentive Stock
Option on the date of his death while in employment. For purposes of Incentive
Stock Options issued under this Plan, an employment relationship between the
Company and the optionee shall be deemed to exist during any period in which
the optionee is employed by the Company, a corporation issuing or assuming an
option in a transaction to which Section 424(a) of the Code applies, or a
parent or subsidiary corporation of such corporation issuing or assuming an
option. For this purpose, the phrase "corporation issuing or assuming an
option" shall be substituted for the word "Company" in the definitions of
parent and subsidiary corporations in Section 5 and the parent-subsidiary
relationship shall be determined at the time of the corporate action described
in Section 424(a) of the Code.
3. In the event of the death, Disability, or Retirement
of a holder of a Non-Incentive Stock Option, before the date of expiration of
such Non-Incentive Stock Option, such Non-Incentive Stock Option shall continue
fully in effect, including provisions providing for subsequent vesting of such
Option, and shall terminate on the date of expiration of the Non-Incentive
Stock Option. After the death of the optionee,
-7-
8
his executors, administrators or any person or persons to whom his
Non-Incentive Stock Option may be transferred by will or by the laws of descent
and distribution, shall have the right, at any time prior to the termination of
the Non-Incentive Stock Option to exercise the Non-Incentive Stock Option, in
respect to the number of shares that the optionee would have been entitled to
exercise if he were still alive. Notwithstanding the foregoing provisions of
this Section, in the case of a Non-Incentive Stock Option the Committee may
provide for a different option termination date in the Option Agreement with
respect to such Option.
I. NO RIGHTS AS STOCKHOLDER. No optionee shall have rights
as a stockholder with respect to shares covered by his Option until the date a
stock certificate is issued for the shares. Except as provided in the
following provisions of this Section 7, no adjustment for dividends, or other
matters shall be made if the record date is prior to the date the certificate
is issued.
J. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence
of outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital adjustment of, or the payment of a dividend in capital
stock or other equity securities of the Company on, its Common Stock, or other
increase or reduction of the number of shares of the Common Stock without
receiving consideration therefor in money, services, or property, or the
reclassification of its Common Stock, in whole or in part, into other equity
securities of the Company, then (a) the number, class and per share price of
shares of stock subject to outstanding Options hereunder shall be appropriately
adjusted (or in the case of the issuance of equity securities as a dividend on,
or in a reclassification of, the Common Stock, the Options shall extend to such
other securities) in such a manner as to entitle an optionee to receive, upon
exercise of an Option, for the same aggregate cash compensation, the same total
number and class or classes of shares (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) he would
have held after such adjustment if he had exercised his Option in full
immediately prior to the event requiring the adjustment, or, if applicable, the
record date for determining stockholders to be affected by such adjustment; and
(b) the number and class of shares then reserved for issuance under the Plan
(or in the case of a dividend of, or reclassification into, other equity
securities, such other securities) shall be adjusted by substituting for the
total number and class of shares of stock then received, the number and class
or classes of shares of stock (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) that
would have been received by the owner of an equal number of outstanding shares
of Common Stock as the result of the event requiring the adjustment.
Comparable rights shall accrue to each optionee in the event of successive
-8-
9
subdivisions, consolidations, capital adjustment, dividends or
reclassifications of the character described above.
If the Company shall distribute to all holders of its shares
of Common Stock (including any such distribution made to non-dissenting
stockholders in connection with a consolidation or merger in which the Company
is the surviving corporation and in which holders of shares of Common Stock
continue to hold shares of Common Stock after such merger or consolidation)
evidences of indebtedness or cash or other assets (other than cash dividends
payable out of consolidated retained earnings not in excess of, in any one year
period, the greater of (a) $.10 per share of Common Stock and (b) two times the
aggregate amount of dividends per share paid during the preceding calendar year
and dividends or distributions payable in shares of Common Stock or other
equity securities of the Company described in the immediately preceding
paragraph), then in each case the Option Price shall be adjusted by reducing
the Option Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such distribution by the Fair
Market Value, as determined in good faith by the Board of Directors of the
Company (whose determination shall be described in a statement filed in the
Company's corporate records and be available for inspection by any holder of an
Option) of the portion of the evidence of indebtedness or cash or other assets
so to be distributed applicable to one share of Common Stock; provided that in
no event shall the Option Price be less than the par value of a share of Common
Stock. Such adjustment shall be made whenever any such distribution is made,
and shall become effective on the date of the distribution retroactive to the
record date for the determination of the stockholders entitled to receive such
distribution. Comparable adjustments shall be made in the event of successive
distributions of the character described above.
After the Company shall make a tender offer for, or grant to
all of its holders of its shares of Common Stock the right to require the
Company to acquire from such stockholders shares of, Common Stock, at a price
in excess of the Current Market Price (a "Put Right") or the Company shall
grant to all of its holders of its shares of Common Stock the right to acquire
shares of Common Stock for less than the Current Market Price (a "Purchase
Right") then, in the case of a Put Right, the Option Price shall be adjusted by
multiplying the Option Price in effect immediately prior to the record date for
the determination of stockholders entitled to receive such Put Right by a
fraction, the numerator of which shall be the number of shares of Common Stock
then outstanding minus the number of shares of Common Stock which could be
purchased at the Current Market Price for the aggregate amount which would be
paid if all Put Rights are exercised and the denominator of which is the number
of shares of Common Stock which would be outstanding if all Put Rights are
exercised; and, in the case of a Purchase Right, the Option Price shall be
adjusted by multiplying the Option Price in effect immediately prior to the
record date for the determination of the stockholders entitled to receive such
Purchase Right by a fraction, the numerator of which shall be the number of
shares of Common Stock then outstanding plus the number of shares of Common
Stock which could be purchased at the Current Market Price for the aggregate
amount which would be paid if all Purchase Rights are exercised and the
denominator of which is the number of shares of Common Stock which would be
outstanding if all Purchase Rights are exercised. In addition, the number of
shares subject to the Option shall be increased by multiplying the number of
shares then
-9-
10
subject to the Option by a fraction which is the inverse of the fraction used
to adjust the Option Price. Notwithstanding the foregoing if any such Put
Rights or Purchase Rights shall terminate without being exercised, the Option
Price and number of shares subject to Option shall be appropriately readjusted
to reflect the Option Price and number of shares subject to the Option which
would have been in effect if such unexercised Rights had never existed.
Comparable adjustments shall be made in the event of successive transactions of
the character described above.
After the merger of one or more corporations into the Company,
after any consolidation of the Company and one or more corporations, or after
any other corporate transaction described in Section 424(a) of the Internal
Revenue Code of 1986, as amended (the "Code") in which the Company shall be the
surviving corporation, each optionee, at no additional cost, shall be entitled
to receive, upon any exercise of his Option, in lieu of the number of shares as
to which the Option shall then be so exercised, the number and class of shares
of stock or other equity securities to which the optionee would have been
entitled pursuant to the terms of the agreement of merger or consolidation if
at the time of such merger or consolidation such optionee had been a holder of
a number of shares of Common Stock equal to the number of shares as to which
the Option shall then be so exercised and, if as a result of such merger,
consolidation or other transaction, the holders of Common Stock are not
entitled to receive any shares of Common Stock pursuant to the terms thereof,
each optionee, at no additional cost, shall be entitled to receive, upon
exercise of his Option, such other assets and property, including cash, to
which he would have been entitled if at the time of such merger, consolidation
or other transaction he had been the holder of the number of shares of Common
Stock equal to the number of shares as to which the Option shall then be so
exercised. Comparable rights shall accrue to each optionee in the event of
successive mergers or consolidations of the character described above.
After a merger of the Company into one or more corporations,
after any consolidation of the Company and any one or more corporations, or
after any other corporate transaction described in Section 424(a) of the Code
in which the Company is not the surviving corporation, each optionee shall, at
no additional cost, be entitled at the option of the surviving corporation, (i)
to have his then existing Option assumed or to have a new option substituted
for the existing Option by the surviving corporation to the transaction which
is then employing him, or a parent or subsidiary of such corporation, on a
basis where the excess of the aggregate Fair Market Value of the shares subject
to the option immediately after the substitution or assumption over the
aggregate option price of such option is equal to the excess of the aggregate
Fair Market Value of all shares subject to the option immediately before such
substitution or assumption over the aggregate option price of such shares,
provided that the shares subject to the new option must be traded on the New
York Stock Exchange or the American Stock Exchange or quoted on the NASDAQ, or
(ii) to receive upon any exercise of his Option, in lieu of the number of
shares as to which the Option shall then be so exercised, the securities,
property and other assets, including cash, to which the Optionee would have
been entitled pursuant to the terms of the agreement of merger or consolidation
or the agreement giving rise to the other corporate transaction if at the time
of such merger, consolidation or other transaction such optionee had been the
holder of the number of shares of Common Stock equal to the number of shares as
to which the Option shall then be so exercised.
-10-
11
If a corporate transaction described in Section 424(a) of the
Code which involves the Company is to take place and there is to be no
surviving corporation while an Option remains in whole or in part unexercised,
it shall be cancelled by the Board of Directors as of the effective date of any
such corporate transaction but before the date each optionee shall be provided
with a notice of such cancellation and each optionee shall have the right to
exercise such Option in full (without regard to any limitations set forth in or
imposed pursuant to Paragraph 9 of the Plan) to the extent it is then still
unexercised during a 30-day period preceding the effective date of such
corporate transaction.
For purposes of this Paragraph J, "Current Market Price per
share of Common Stock" shall mean the closing price of a share of Common Stock
on the principal national securities exchange on which the Common Stock is
listed or, if the Common Stock is not so listed, the average bid and asked
price of a share of Common Stock as reported in the NASDAQ System, in each case
on the trading day immediately preceding the first trading day on which, as a
result of the establishment of a record date or otherwise, the trading price
reflects that an acquiror of Common Stock in the public market will not
participate in or receive the payment of any applicable dividend or
distribution.
Except a hereinbefore expressly provided, the issue by the
Company of shares of Common Stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, 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, the number or price
of shares of Common Stock then subject to outstanding Options.
K. SUBSTITUTION OPTIONS. Options may be granted under this
Plan from time to time in substitution for stock options held by employees of
other corporations who are about to become employees of the Company, or whose
employer is about to become a parent or subsidiary corporation, conditioned in
the case of an incentive stock option upon the employee becoming an employee as
the result of a merger or consolidation of the Company with another
corporation, or the acquisition by the Company of substantially all the assets
of another corporation, or the acquisition by the Company of at least 50% of
the issued and outstanding stock of another corporation as the result of which
it becomes a subsidiary of the Company. The terms and conditions of the
substitute Options granted may vary from the terms and conditions of this Plan
to the extent the Board at the time of grant may deem appropriate to conform,
in whole or in part, to the provisions of the stock options in substitution for
which they are granted. But with respect to stock options which are incentive
stock options, no variation shall be made which will affect the status of any
substitute option as an "incentive stock option" under Section 422 of the Code.
-11-
12
L. ACCELERATION AND CANCELLATION OF OPTION IN CONTEMPLATION
OF CHANGE IN CONTROL. Notwithstanding the provisions of this Section 7, the
Committee shall have the power, in the event of a disposition of all or
substantially all of the assets of the Company, or the dissolution of the
Company, or any merger or consolidation of the Company with or into any other
Company, or the merger or consolidation of any other entity into the Company,
or the making of a tender offer to purchase 30% or more of the outstanding
shares of Common Stock, to amend all outstanding Options (upon such conditions
as it shall deem appropriate) to (i) permit the exercise of Options prior to
the effective date of the transaction and to terminate all unexercised Options
as of such date or (ii) require the forfeiture of all Options, provided the
Company pays to each Optionee the excess of the Fair Market Value of the Stock
subject to the Option over the exercise price of the Option, or (iii) make any
other provision with respect to the Options that the Committee deems
appropriate and equitable.
SECTION 8. REQUIREMENTS OF LAW
The Company shall not be required to sell, issue or deliver
any shares of Common Stock under any Award if such sale, issuance or delivery
shall constitute a violation by the Award recipient or the Company of any
provisions of any law or regulation of any governmental authority. Each Award
granted under this Plan shall be subject to the requirements that, if at any
time the Board or the Committee shall determine that the listing, registration
or qualification of the shares upon any securities exchange or under any state
or federal law of the United States or of any other country or governmental
subdivision, or the consent or approval of any governmental regulatory body, or
investment or other representations, are necessary or desirable in connection
with the issue, or purchase or delivery of shares subject to an Award, that
Award shall not be exercised in whole or in part and no shares shall be
delivered pursuant to an Award unless the listing, registration, qualification,
consent, approval or representations shall have been effected or obtained free
of any conditions not acceptable to the Committee. Any determination in this
connection by the Committee shall be final. In the event the shares issuable
or deliverable on exercise or vesting of an Award are not registered under the
Securities Act of 1933, the Company may imprint on the certificate for those
shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of 1933:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any state and may not be sold or
transferred except upon registration or upon receipt by the
Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for a sale or
transfer."
The Company may, but shall in no event be obligated to, register any securities
covered by this Plan under the Securities Act of 1933 (as now in effect or as
later amended) and, in the event any shares are registered, the Company may
remove any legend on certificates representing those shares. The Company shall
not be obligated to take any
-12-
13
other affirmative action in order to cause the exercise of an Award or the
issuance or delivery of shares under the Award to comply with any law or
regulation or any governmental authority.
SECTION 9. EMPLOYMENT OBLIGATION
The granting of any Award shall not impose upon the Company
any obligation to employ or continue to employ any Award recipient. The right
of the Company to terminate the employment of any officer or other Employee
shall not be diminished or affected by reason of the fact that an Award has
been granted to him.
SECTION 10. FORFEITURE FOR CAUSE
Notwithstanding any other provision of this Plan, if the
Committee finds by a majority vote, that the Award recipient, before or after
termination of his employment with the Company (a) committed a fraud,
embezzlement, theft, felony or act of dishonesty in the course of his
employment by the Company which conduct damaged the Company or (b) disclosed
trade secrets of the Company, then any outstanding options which have not been
exercised by the individual and any Awards which have not yet vested will be
forfeited. The decision of the Committee as to the cause of an Award
recipient's discharge, the damage done to the Company and the extent of the
individual's competitive activity will be final. No decision of the Committee,
however, will affect the finality of the discharge of the individual by the
Company.
SECTION 11. AMENDMENT OR TERMINATION OF PLAN
The Board may modify, revise or terminate this Plan at any
time and from time to time. However, without the further Company stockholder
approval by a majority of the votes cast at a duly held stockholders' meeting
at which a quorum representing a majority of all outstanding voting stock (or
if the provisions of the corporate charter, bylaws or applicable state law
prescribe a greater degree of stockholder approval for this action, without the
degree of stockholder approval thus required) is, either in person or by proxy,
present and voting on the issue, the Board may not (a) increase the aggregate
number of shares that may be subject to Awards pursuant to the provisions of
this Plan; (b) materially increase the benefits accruing to participants under
this Plan or (c) materially modify the requirements as to eligibility for
participation in this Plan unless, in each such case, the Board of Directors of
the Company shall have obtained an opinion of legal counsel to the effect that
stockholder approval of the amendment is not required (i) by law, (ii) by the
applicable rules and regulations of, or any agreement with, any national
securities exchange that the Common Stock is then listed on or if the Common
Stock is not so listed, the rules and regulations, or any agreement with, the
National Association of Securities Dealers, Inc., and (iii) in order to make
available to the optionee with respect to any option granted under the Plan,
the benefits of Rule 16b-3 of the Rules and Regulations under the Securities
Exchange Act of 1934, or any similar or successor rule.
-13-
14
SECTION 12. WRITTEN AGREEMENT
Each Award granted under this Plan shall be embodied in a
written Agreement, which shall be subject to the terms and conditions
prescribed above, and shall be signed by the recipient and by the appropriate
officer of the Company for and in the name and on behalf of the Company. Each
Agreement shall contain any other provisions consistent with this Plan that the
Committee in its discretion shall deem advisable.
SECTION 13. INDEMNIFICATION OF THE COMMITTEE
The Company shall indemnify each present and future member of
the Committee against, and each member of the Committee shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including the amount of judgments and the amount of approved settlements made
with a view to the curtailment of costs of litigation, other than amounts paid
to the Company itself) reasonably incurred by him in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
his being or having been a member of the Committee, whether or not he continues
to be such member of the Committee at the time of incurring such expenses;
provided, however, that such indemnity shall not include any expenses incurred
by any such member of the Committee (a) in respect of matters as to which he
shall be finally adjudged in any such action, suit or proceeding to have been
guilty of gross negligence or willful misconduct in the performance of his duty
as such member of the Committee, or (b) in respect of any matter in which any
settlement is effected, to an amount in excess of the amount approved by the
Company on the advice of its legal counsel; and provided further, that no right
of indemnification under the provisions set forth herein shall be available to
or enforceable by any such member of the Committee unless, within sixty (60)
days after institution of any such action, suit or proceeding, he shall have
offered the Company, in writing, the opportunity to handle and defend the same
at its own expense. The foregoing right of indemnification shall inure to the
benefit of the heirs, executors or administrators of each such member of the
Committee and shall be in addition to all other rights to which such member of
the Committee may be entitled to as a matter of law, contract or otherwise.
Nothing in this Section shall be construed to limit or otherwise affect any
right to indemnification or payment of expense, or any provisions limiting the
liability of any officer or director of the Company or any member of the
Committee, provided by law, the Certificate of Incorporation of the Company or
otherwise.
SECTION 14. AWARD GRANT TERMINATION.
No Awards shall be granted pursuant to this Plan after December
19, 2005.
-14-
