ATMI, Inc. Executive Management Restricted Stock Grant Agreement
Exhibit 10.20
ATMI, Inc.
Executive Management Restricted Stock Grant Agreement
Executive Management Restricted Stock Grant Agreement
THIS AGREEMENT, made as of the Grant Date, between ATMI, Inc. (the “Company”) and
[employee] (the “Participant”).
WHEREAS, the Company has adopted and maintains the ATMI, Inc. 2003 Stock Plan (the
“Plan”), attached hereto as Exhibit A;
WHEREAS, the Plan provides that the Board of Directors of the Company shall administer the
Plan and determine the key persons to whom awards shall be granted and the amount and type of such
awards; and
WHEREAS, the Board of Directors has determined that the purposes of the Plan would be
furthered by granting the Participant an award under the Plan as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set
forth, the parties hereto hereby agree as follows:
1. Grant of Restricted Stock. Pursuant to, and subject to, the terms and conditions
set forth herein and in the Plan, the Board of Directors hereby grants to the Participant _______
restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01
per share (“Common Stock”).
2. Grant Date. The Grant Date of the Restricted Stock is _______(the “Grant
Date”).
3. Incorporation of Plan. All terms, conditions and restrictions of the Plan are
incorporated herein and made part hereof as if stated herein. If there is any conflict between the
terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as
interpreted by the Board of Directors, shall govern. Except as otherwise provided herein, all
capitalized terms used herein shall have the meaning given to such terms in the Plan.
4. Vesting.
(a) The number of restricted shares granted as set forth in Section 1 above is the theoretical
maximum number of shares of Restricted Stock that may be earned by the Participant pursuant to this
grant agreement (the “Theoretical Maximum”). Such grants shall become provisionally vested
based upon the Company’s achievement of operating income growth targets over _____operating income
of $_______, as previously established by the Board of Directors, with actual shares
provisionally vested on a straight-line basis ranging from 0% to 100% of the Theoretical Maximum,
with 0% to be provisionally vested for below “threshold” operating income growth performance, 50%
to be provisionally vested for “target” operating income growth performance, and 100% to be
provisionally vested for “stretch” operating income growth performance. The number of shares of
Restricted Stock provisionally vested (the “Provisionally Vested Restricted Stock”) shall
be determined by action of the Board
of Directors as soon as practicable following completion of the Company’s fiscal year ___
audit.
(b) In addition to the performance criteria set forth in paragraph (a) above, subject to the
further provision of this Agreement, the shares of Provisionally Vested Restricted Stock shall vest
with respect to a number of whole shares as close as possible to the following percentage of the
total number of shares of Provisionally Vested Restricted Stock on the following dates (each, a
“Vesting Date”):
| Percentage of Total Shares of | ||
| Provisionally Vested Restricted Stock | Vesting Date | |
25%
|
Date of determination of the number shares of Provisionally Vested Restricted Stock (as set forth in paragraph (a) above) | |
25%
|
Second anniversary of Grant Date | |
25%
|
Third anniversary of Grant Date | |
25%
|
Fourth anniversary of Grant Date |
5. Restrictions on Transferability. Until a share of Restricted Stock vests, such
share may not be sold, assigned, transferred, alienated, commuted, anticipated, or otherwise
disposed of (except by will or the laws of descent and distribution), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or be otherwise
encumbered, and are not subject to attachment, garnishment, execution or other legal or equitable
process, and any attempt to do so shall be null and void. If the Participant attempts to dispose of
or encumber the Participant’s unvested shares of Restricted Stock, such shares of Restricted Stock,
together with any property in respect of such shares held by the custodian pursuant to Section 8
hereof, shall be forfeited as of the date of such attempted transfer and the Participant promptly
shall return to the Company any certificates that may have been issued evidencing such shares.
6. Termination of Employment. In the event that the Participant’s employment with the
Company or one of the Company’s subsidiaries terminates for any reason, all unvested shares of
Restricted Stock, together with any property in respect of such shares held by the custodian
pursuant to Section 8 hereof, shall be forfeited as of the date of such termination of employment
and the Participant promptly shall return to the Company any certificates that may have been issued
evidencing such shares. For purposes of this Agreement, the Participant shall be deemed to have a
terminated employment or incurred a termination of employment upon (i) the date the Participant
ceases to be employed by, or to provide consulting services for, the Company or any Company
subsidiary; or (ii) the date the Participant ceases to be a Board member, provided, however, that
if the Participant (x) at the time of reference is both an employee or consultant and a Board
member, or (y) ceases to be engaged as an employee, consultant or Board member and immediately is
engaged in another of such relationships with the Company or any Company subsidiary, the
Participant shall not be deemed to have a “termination of employment” until the last of the dates
determined pursuant to subparagraphs (i) and (ii) above. The Committee, in its discretion, may
determine whether any leave of absence constitutes a termination of employment for purposes of this
Agreement.
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7. Issuance of Shares.
(a) Reasonably promptly after the Grant Date, the Company shall issue and deliver to the
Participant stock certificates, registered in the name of the Participant, or direct the Company’s
transfer agent to make a book entry, evidencing the shares of Restricted Stock, with such legends
as deemed appropriate by the Company.
(b) Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4
hereof, in exchange for the surrender to the Company of the certificates evidencing such shares of
Restricted Stock delivered to the Participant under Section 7(a) hereof, as the case may be, the
Company shall issue and deliver to the Participant (or the Participant’s legal representative,
beneficiary or heir) certificates evidencing such shares of Restricted Stock, or direct the
Company’s transfer agent to make a book entry evidencing such shares of Restricted Stock held in
the name of the Participant, in each case, free of the legend provided in Section 7(a) hereof,
together with any property in respect of such shares held by the custodian pursuant to Section 8
hereof.
(c) The Company may require as a condition of the delivery of stock certificates, or book
entry, as the case may be, pursuant to Section 7(b) hereof that the Participant remit to the
Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other
governmental tax withholding requirements related to the vesting of the shares represented by such
certificate or book entry.
(d) The Participant shall not be deemed for any purpose to be, or have rights as, a
shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock
certificate is issued, or book entry made, as the case may be, therefor pursuant to Section 7(a)
hereof, and then only from the date such certificate is issued or book entry made. Upon the
issuance of a stock certificate, or book entry, the Participant shall have the rights of a
shareholder with respect to the Restricted Stock, including the right to vote the shares, subject
to the restrictions on transferability, the forfeiture provisions and the requirement that
dividends be held in escrow until the shares vest, as set forth in this Agreement.
8. Dividends, etc. Unless the Board of Directors otherwise determines, any property,
including cash dividends, received by a Participant with respect to a share of Restricted Stock as
a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares
or otherwise and for which the Grant Date occurs prior to such event but which has not vested as of
the date of such event, will not vest until such share of Restricted Stock vests, and shall be
promptly deposited with the Company or a custodian designated by the Company. The Company shall or
shall cause such custodian to issue to the Participant a receipt evidencing the property held by it
in respect of the Restricted Stock.
9. Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any party hereto upon any breach or default of any party under this Agreement, shall
impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of
any other breach or default theretofore or thereafter occurring. Any waiver,
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permit, consent or approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party or any provisions or
conditions of this Agreement, must be in a writing signed by such party and shall be effective only
to the extent specifically set forth in such writing.
10. Right of Discharge Preserved. Nothing in this Agreement shall confer upon the
Participant the right to continue in the employ or other service of the Company or one of the
Company’s subsidiaries, or affect any right that the Company may have to terminate such employment
or service.
11. Integration. This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement, including, without limitation, the Plan, supersedes
all prior agreements and understandings between the parties with respect to its subject matter.
12. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same instrument.
13. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to the provisions governing
conflict of laws.
14. Obligation to Notify. If the Participant makes the election permitted under
section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in
gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall
notify the Company of such election within 10 days of filing notice of the election with the
Internal Revenue Service and shall within the same 10-day period remit to the Company an amount
sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax
withholding requirements related to such inclusion in Participant’s income. The Participant should
consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted
Stock and the advantages and disadvantages of filing the Section 83(b) election. The Participant
acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely
election under Section 83(b), even if the Participant requests the Company or its representatives
to make this filing on his or her behalf.
15. Participant Acknowledgment. The Participant hereby acknowledges receipt of a copy
of the Plan. The Participant hereby acknowledges that all decisions, determinations and
interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted
Stock shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly
authorized officer, and the Participant has hereunto signed this Agreement
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on his own behalf, thereby representing that he has carefully read and understands this
Agreement and the Plan as of the day and year first written above.
| ATMI, INC. | ||||||
Title: Chief Executive Officer |
||||||
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Exhibit 10.20
Exhibit A
ATMI, INC.
2003 STOCK PLAN
(as amended May 21, 2003)
2003 STOCK PLAN
(as amended May 21, 2003)
SECTION 1 Purpose
The purpose of the 2003 Stock Plan (the “Plan”) is to secure for ATMI, Inc. (the “Company”),
its parent (if any) and any subsidiaries of the Company (collectively, the “Related Companies”) the
benefits arising from capital stock ownership and the receipt of capital stock-based incentives by
those employees, directors, officers and consultants of the Company and any Related Companies who
will be responsible for the Company’s future growth and continued success.
The Plan will provide a means whereby (a) employees of the Company and any Related Companies
may purchase stock in the Company pursuant to options which qualify as “incentive stock options”
(“Incentive Stock Options”) under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”); (b) directors, employees and consultants of the Company and any Related Companies may
purchase stock in the Company pursuant to options granted hereunder which do not qualify as
Incentive Stock Options (“Non-Qualified Options”); (c) directors, employees and consultants of the
Company and any Related Companies may receive stock appreciation rights (“SARs”) and (d) directors,
employees and consultants of the Company and any Related Companies may receive shares of stock in
the Company that are subject to restrictions on transferability and may be forfeited (“Restricted
Stock”). Both Incentive Stock Options and Non-Qualified Options are referred to hereafter
individually as an “Option” and collectively as “Options.” As used herein, the terms “parent” and
“subsidiary” mean “parent corporation” and “subsidiary corporation” as those terms are defined in
Section 424 of the Code. Options, SARs and Restricted Stock are referred to hereafter individually
as a “Plan Benefit” and collectively as “Plan Benefits.” Directors, employees and consultants of
the Company and any Related Companies are referred to herein as “Participants.”
SECTION 2 Administration
2.1 Board of Directors and the Committee. The Plan will be administered by the Board
of Directors of the Company whose construction and interpretation of the terms and provisions
hereof shall be final and conclusive. Any director to whom a Plan Benefit is awarded shall be
ineligible to vote upon his or her Plan Benefit, but Plan Benefits may be granted to any such
director by a vote of the remainder of the directors, except as limited below. The Board of
Directors may in its sole discretion grant Options, issue shares upon exercise of such Options and
grant SARs and Restricted Stock, all as provided in the Plan. The Board of Directors shall have
authority, subject to the express provisions of the Plan, to construe the Plan and its related
agreements, to prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Option, SAR and Restricted Stock agreements,
which need not be identical, and to make all other determinations in the judgment of the Board of
Directors necessary or desirable for the administration of the Plan. Notwithstanding the foregoing
or any other provision of the Plan, the Board may delegate to one or more officers of the Company
the authority to designate the Participants (other than such officer(s)) who will receive Options,
SARs or Restricted Stock under the Plan and the size and terms of each such grant, to the fullest
extent permitted by ss.157 of the Delaware General Corporation Law (or any successor provision
thereto). The Board of Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan
into effect and it shall be the sole and final judge of any such expediency. No director shall
be liable for any action or determination made in good faith. The Board of Directors may delegate
any or all of its powers under the Plan to a Compensation Committee or other Committee (the
“Committee”) appointed by the Board of Directors consisting of at least two members of the Board of
Directors. While it is intended that at all times that the Committee acts in connection with the
Plan all the members of the Committee shall be: (i) “outside directors” as that term is defined in
Treas. Reg. ss.1.162-27(e)(3) (or any successor regulation); and (ii) “non-employee directors”
within the meaning of Rule 16b-3 (or any successor rule) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), as such terms are interpreted from time to time, the fact that the
Committee is not so comprised will not invalidate the grant of any Plan Benefit that otherwise
satisfies the terms of the Plan. If the Committee is so appointed, all references to the Board of
Directors herein shall mean and relate to such Committee, unless the context otherwise requires.
2.2 Compliance with Section 162(m) of the Code. Section 162(m) of the Code generally
limits the tax deductibility to publicly held companies of compensation in excess of $1,000,000
paid to certain “covered employees” (“Covered Employees”). It is the Company’s intention to
preserve the deductibility of such compensation to the extent it is reasonably practicable and to
the extent it is consistent with the Company’s compensation objectives. For purposes of this Plan,
Covered Employees of the Company shall be those employees of the Company described in Section
162(m)(3) of the Code.
SECTION 3 Eligibility
3.1 Incentive Stock Options. Participants who are employees of the Company and any
Related Company shall be eligible to receive Incentive Stock Options pursuant to the Plan; provided
that no person shall be granted an Incentive Stock Option under the Plan who, at the time such
Option is granted, owns, directly or indirectly, Common Stock of the Company possessing more than
10% of the total combined voting power of all classes of stock of the Company or of its Related
Companies, unless the requirements of Section 6.6(b) hereof are satisfied. In determining whether
this 10% threshold has been reached, the stock attribution rules of Section 424(d) of the Code
shall apply. Directors who are not regular employees are not eligible to receive Incentive Stock
Options.
3.2 Non-Qualified Options, SARs and Restricted Stock. Non-Qualified Options, SARs and
Restricted Stock may be granted to any Participant.
3.3 Generally. The granting of Plan Benefits is within the discretion of the Board of
Directors. The Board of Directors may take into consideration a Participant’s individual
circumstances in determining whether to grant an Incentive Stock Option, a Non-Qualified Option,
SAR or Restricted Stock. Granting of any Plan Benefit to any Participant shall neither entitle that
Participant to, nor disqualify that Participant from, participation in any other grant of Plan
Benefits.
SECTION 4 Stock Subject to Plan
Subject to adjustment as provided in Sections 8 and 9 hereof, the stock to be offered under
the Plan shall consist of shares of the Company’s Common Stock, $.01 par value, and the maximum
number of shares which will be reserved for issuance, and in respect of which Plan Benefits may be
granted pursuant to the provisions of the Plan, shall not exceed in the aggregate 3,000,000 shares.
Such shares may be authorized and unissued shares, treasury shares or shares purchased on the open
market. If an Option or SAR granted hereunder shall expire or terminate for any reason without
having been exercised in full or if a share of Restricted Stock shall be forfeited, the unpurchased
or forfeited shares subject thereto shall again be available for subsequent grants of Plan Benefits
under the Plan. Stock issued
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pursuant to the Plan may be subject to such restrictions on transfer, repurchase rights or
other restrictions as shall be determined by the Board of Directors.
SECTION 5 Granting of Options and SARs
Plan Benefits may be granted under the Plan at any time after May 21, 2003 (the date of
approval of the Plan by the stockholders of the Company) and prior to May 21, 2013; provided,
however, that nothing in the Plan shall be construed to obligate the Company to grant Plan Benefits
to a Participant or anyone claiming under or through a Participant. The date of grant of Plan
Benefits under the Plan will be the date specified by the Board of Directors at the time the Board
of Directors grants such Plan Benefits; provided, however, that such date shall not be prior to the
date on which the Board of Directors takes such action. The Board of Directors shall have the
right, with the consent of a Participant, to convert an Incentive Stock Option granted under the
Plan to a Non-Qualified Option pursuant to Section 6.7. Any Plan Benefit may be granted alone or in
addition to other Plan Benefits granted under the Plan.
SECTION 6 Provisions Applicable to Options and SARs
6.1
Purchase Price and Shares Subject to Options and SARs.
(a) The purchase price per share of Common Stock deliverable upon the exercise of an Option
shall be determined by the Board of Directors; provided, however, that, except as modified in
Section 6.6(b) hereof, the exercise price shall not be less than the fair market value of such
Common Stock on the day the Option is granted.
(b) Options granted under the Plan may provide for the payment of the exercise price by
delivery of (i) cash or a check payable to the order of the Company in an amount equal to the
exercise price of such Options, (ii) shares of Common Stock of the Company owned by the Participant
having a fair market value equal in amount to the exercise price of the Options being exercised, or
(iii) any combination of (i) and (ii). The fair market value of any shares of the Company’s Common
Stock which may be delivered upon exercise of an Option shall be determined by the Board of
Directors in accordance with Section 6.1(c) hereof. To the extent permitted by law, the Board of
Directors may also permit Participants, either on a selective or aggregate basis, to simultaneously
exercise Options and sell the shares of Common Stock thereby acquired, pursuant to a brokerage or
similar arrangement approved in advance by the Board of Directors, and to use the proceeds from
such sale as payment of the exercise price of such shares.
(c) If, at the time an Option is granted under the Plan, the Company’s Common Stock is
publicly traded, “fair market value” of a share of the Company’s Common Stock for a specific date
shall mean (i) the average (on such date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if such Common Stock is
then traded on a national securities exchange; (ii) the last reported sale price (on such date) of
the Common Stock on The Nasdaq Stock Market if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on such
date) by an established quotation service for over-the-counter securities, if the Common Stock is
not reported on The Nasdaq Stock Market. If the Company’s Common Stock was not traded on the date
in issue, fair market value shall be determined as of the last preceding business day for which
such prices or quotes are available. However, if the Common Stock is not publicly traded at the
time an Option is granted under the Plan, “fair market value” shall be deemed to be the fair value
of the Common Stock as determined by the Board of Directors after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm’s length.
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(d) The maximum number of shares with respect to which Options or SARs may be granted to any
employee, including any transactions contemplated by Treas. Reg. ss.1.162-27(e)(2)(vi), shall be
limited to 112,500 shares in any calendar year.
6.2 Duration of Options and SARs. Subject to Sections 6.5 and 6.6(b) hereof, each
Option and SAR and all rights thereunder shall expire on such date as the Board of Directors may
determine, but in no event later than ten years from the day on which the Option or SAR is granted.
6.3 Exercise of Options and SARs.
(a) Subject to Section 6.6(b) hereof, each Option and SAR granted under the Plan shall be
exercisable at such time or times and during such period or periods as shall be set forth in the
instrument evidencing such Option or SAR. To the extent that an Option or SAR is not exercised by a
Participant when it becomes initially exercisable, it shall not expire but shall be carried forward
and shall remain exercisable, on a cumulative basis, until the expiration of the exercise period.
No partial exercise may be for less than ten (10) full shares of Common Stock (or its equivalent).
(b) The Board of Directors shall have the right to accelerate the date on which any
installment of any Option or SAR first becomes exercisable; provided that, without the
Participant’s written consent, the Board of Directors shall not accelerate the date on which any
installment of any Incentive Stock Option (not previously converted into a Non-Qualified Option
pursuant to Section 6.7) first becomes exercisable if such acceleration would violate the annual
vesting limitation contained in Section 422(d)(1) of the Code, which provides generally that the
aggregate fair market value (determined at the time the Option is granted) of the stock with
respect to which Incentive Stock Options granted to any Participant are exercisable for the first
time by such Participant during any calendar year (under all plans of the Company and any Related
Companies) shall not exceed $100,000.
6.4 Nontransferability of Options and SARs. No Option or SAR granted under the Plan
shall be assignable or transferable by the Participant, either voluntarily or by operation of law,
except by will or the laws of descent and distribution or, with respect to Non-Qualified Options
and SARs, unless the Participant’s non-qualified stock option agreement granting such options (the
“Non-Qualified Stock Option Agreement”) or the Participant’s SAR agreement granting such SARs (the
“SAR Agreement”) provides otherwise. Unless otherwise provided by the Non-Qualified Stock Option
Agreement or the SAR Agreement, as applicable, during the life of the Participant, the Option or
SAR shall be exercisable only by the Participant. If any Participant should attempt to dispose of
or encumber the Participant’s Options or SARs, other than in accordance with the applicable terms
of a Non-Qualified Stock Option Agreement or SAR Agreement, the Participant’s interest in such
Options or SARs shall terminate.
6.5 Effect of Termination of Employment or Death on Options and SARs.
(a) Except as otherwise provided in the instrument evidencing the Plan Benefit, if a
Participant ceases to be employed by the Company or a Related Company for any reason, including
retirement but other than death, any Option or SAR granted to such Participant under the Plan shall
immediately terminate; provided, however, that, except as otherwise provided in the instrument
evidencing the Plan Benefit, any portion of such Option or SAR which was otherwise exercisable on
the date of termination of the Participant’s employment may be exercised within the three-month
period following the date on which the Participant ceased to be so employed, but in no event after
the expiration of the exercise period. Except as otherwise provided in the instrument evidencing
the Plan Benefit, any such exercise may be made only to the extent of the number of shares subject
to the Option or SAR which were purchasable or exercisable on the date of such termination of
employment. If the Participant dies
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during such three-month period, the Option or SAR shall be exercisable by the Participant’s
personal representatives, heirs or legatees to the same extent and during the same period that the
Participant could have exercised the Option or SAR on the date of his or her death, except as
otherwise provided in the instrument evidencing the Plan Benefit.
(b) Except as otherwise provided in the instrument evidencing the Plan Benefit, if a
Participant dies while an employee of the Company or any Related Company, any Option or SAR granted
to such Participant under the Plan shall be exercisable by the Participant’s personal
representatives, heirs or legatees, for the purchase of or exercise relative to that number of
shares and to the same extent that the Participant could have exercised the Option or SAR on the
date of his or her death. Except as otherwise provided in the instrument evidencing the Plan
Benefit, the Option or SAR or any unexercised portion thereof shall terminate unless so exercised
prior to the earlier of the expiration of six months from the date of such death or the expiration
of the exercise period.
(c) For the purpose of the foregoing provisions of this Section 6.5, a Participant shall be
deemed to have ceased employment upon (i) the date the Participant ceases to be employed by, or to
provide consulting services for, the Company or a Related Company, or any corporation (or any of
its subsidiaries) which assumes the Participant’s Options or SARs in a transaction to which Section
424(a) of the Code applies; (ii) the date the Participant ceases to be a member of the Board of
Directors of the Company; or (iii) in the case of a Participant who is, at the time of reference,
both an employee or consultant and a Board member, the later of the dates determined pursuant to
subparagraphs (i) and (ii) above. For purposes of clause (i) above, a Participant who continues his
employment or consulting relationship with a Related Company subsequent to its sale by the Company
shall have a termination of employment upon the date of such sale. The Board of Directors may in
its discretion determine, in accordance with applicable laws, whether any leave of absence or
absence in military or government service constitutes a cessation of employment for purposes of the
Plan and the impact, if any, of any such leave of absence on Options and SARs theretofore granted
under the Plan. Such determinations of the Board of Directors shall be final and conclusive. A
person whose status changes from consultant, employee, or member of the Board to any other of such
positions without interruption shall not be considered to have ceased employment by reason of such
change. Notwithstanding the foregoing, an Option shall be treated as a Non-Qualified Option to the
extent that it remains exercisable for more than three months after the Participant ceases to be an
employee of the Company or any Related Company for any reason other than death (unless death occurs
within the three months following such termination of employment) or disability, or for more than
one year following a Participant’s ceasing to be an employee as the result of becoming disabled,
even if the Participant continues to be affiliated with the Company as a director or consultant.
6.6 Designation of Incentive Stock Options; Limitations. Options granted under the
Plan which are intended to be Incentive Stock Options qualifying under Section 422 of the Code
shall be designated as Incentive Stock Options and shall be subject to the following additional
terms and conditions:
(a) Dollar Limitation. The aggregate fair market value (determined at the time the
option is granted) of the Common Stock for which Incentive Stock Options are exercisable for the
first time during any calendar year by any person under the Plan (and all other incentive stock
option plans of the Company and any Related Companies) shall not exceed $100,000. In the event that
Section 422(d)(1) of the Code is amended to alter the limitation set forth therein so that
following such amendment such limitation shall differ from the limitation set forth in this Section
6.6(a), the limitation of this Section 6.6(a) shall be automatically adjusted accordingly. An
Option shall be deemed to be a Non-Qualified Option to the extent that this limitation is exceeded.
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(b) 10% Stockholder. If any Participant to whom an Incentive Stock Option is to be
granted pursuant to the provisions of the Plan is on the date of grant the owner of stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or any Related Companies, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) The option exercise price per share of the Common Stock subject to such Incentive Stock
Option shall not be less than 110% of the fair market value of one share of Common Stock on the
date of grant, determined in accordance with Section 6.1(c) hereof; and
(ii) The option exercise period shall not exceed five years from the date of grant. In
determining whether the 10% threshold has been reached, the stock attribution rules of Section
424(d) of the Code shall apply.
(c) Except as modified by the preceding provisions of this Section 6.6, all of the provisions of
the Plan shall be applicable to Incentive Stock Options granted hereunder.
6.7 Conversion of Incentive Stock Options into Non-Qualified Options; Termination of
Incentive Stock Options. The Board of Directors, at the written request of any Participant,
may in its discretion take such actions as may be necessary to convert such Participant’s Incentive
Stock Options (or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration
of such Incentive Stock Options, regardless of whether the Participant is an employee of the
Company or a Related Company at the time of such conversion. Such actions may include, but not be
limited to, extending the exercise period of the appropriate installments of such Options. At the
time of such conversion, the Board of Directors (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the Board of Directors in
its discretion may determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such
Participant’s Incentive Stock Options converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Board of Directors takes appropriate action. The Board of
Directors, with the consent of the Participant, may also terminate any portion of any Incentive
Stock Option that has not been exercised at the time of such termination.
6.8 Special Rules for Stock Appreciation Rights. An SAR is the right to receive,
without payment, an amount equal to the excess, if any, of the fair market value of a share of
Common Stock on the date of exercise over the xxxxx xxxxx, multiplied by the number of shares with
respect to which the SAR is exercised. The grant of SARs under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the express terms of the Plan, as the Board of Directors shall deem desirable:
(a) Grant. SARs may be granted in tandem with, in addition to or completely
independent of any other Plan Benefit.
(b) Xxxxx Xxxxx. The xxxxx xxxxx of an SAR may be the fair market value of a share of
Common Stock on the date of grant or such other price as the Board of Directors may determine.
(c) Exercise. An SAR may be exercised by a Participant in accordance with procedures
established by the Board of Directors or as otherwise provided in any agreement evidencing any
SARs. The Board of Directors may provide that an SAR shall be automatically exercised on one or
more specified dates.
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(d) Form of Payment. Payment upon exercise of an SAR may be made in cash, in shares of
Common Stock or any combination thereof, as the Board of Directors shall determine.
(e) Fair Market Value. Fair market value shall be determined in accordance with
Section 6.1(c) hereof with reference to the date of grant or the date of exercise of an SAR, as
applicable.
6.9 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Option or SAR until the date of issue of a stock certificate to
the Participant for such shares. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
6.10 Special Provisions Applicable to Options and SARs Granted to Covered Employees.
In order for the full value of Options and SARs granted to Covered Employees to be deductible by
the Company for federal income tax purposes, the Company may intend for such Options and SARs to be
treated as “qualified performance-based compensation” as described in Treas. Reg. ss.1.162-27(e)
(or any successor regulation). In such case, Options and SARs granted to Covered Employees shall be
subject to the following additional requirements:
(a) such Options and SARs shall be granted only by the Committee; and
(b) the exercise price of such Options and the xxxxx xxxxx of such SARs granted shall in no
event be less than the fair market value of the Common Stock as of the date of grant of such
Options or SARs, determined in accordance with Section 6.1(c) hereof.
SECTION 7 Restricted Stock
7.1 Grants of Restricted Stock. The Board of Directors may grant a Participant an
award of Restricted Stock subject to such terms and conditions as the Board of Directors deems
appropriate, including, without limitation, restrictions on the pledging, sale, assignment,
transfer or other disposition of such shares and the requirement that the Participant forfeit all
or a portion of such shares back to the Company upon termination of employment.
7.2 Conditions. Unless the Board of Directors determines otherwise at the time of the
grant, awards of Restricted Stock shall be subject to the following conditions:
(a) A Participant shall have no rights to an award of Restricted Stock unless the Participant
executes an agreement (a “Restricted Stock Agreement”) with the Company in a form and including
such terms and conditions as the Board of Directors deems appropriate.
(b) Any stock certificates evidencing shares of Restricted Stock shall remain in the
possession of the Company or such other custodian as the Company in its sole discretion may
determine until such shares are free of the restrictions set forth herein. Dividends and other
property paid in respect of a share of Restricted Stock may be held by the Company or other
custodian until such share of Restricted Stock is free of restrictions.
(c) Certificates for shares issued pursuant to an Award shall bear a legend to the effect that
they are issued subject to specified restrictions.
(d) Certificates representing the shares issued pursuant to an Award shall be registered in
the name of the Participant and shall be owned by such Participant. Such Participant shall be the
holder of
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record of such shares for all purposes, including voting and receipt of dividends paid with
respect to such shares, except that such dividends my be held in escrow until the underlying share
is free of restrictions, as described in paragraph (b) above.
(e) If required by the Board of Directors, a Participant receiving an award of Restricted
Stock shall not make, in connection with such award, the election permitted under Section 83(b) of
the Code.
7.3 Nontransferability. Shares of Restricted Stock may not be sold, assigned,
transferred, alienated, commuted, anticipated, or otherwise disposed of (except, subject to the
provisions of such Participant’s Restricted Stock Agreement, by will or the laws of descent and
distribution), or pledged or hypothecated as collateral for a loan or as security for the
performance of any obligation, or be otherwise encumbered, and are not subject to attachment,
garnishment, execution or other legal or equitable process, prior to the lapse of restrictions on
such shares, and any attempt at action in contravention of this Section shall be null and void. If
any Participant should attempt to dispose of or encumber the Participant’s shares of Restricted
Stock prior to the lapse of the restrictions imposed on such shares, the Participant’s interest in
such shares shall terminate. The restrictions with respect to Restricted Stock may lapse based on
the passage of a period of time or the achievement of specified performance goals. In the case of a
time-based lapse of restrictions, the earliest that the restrictions may lapse is over the three
years following the date of grant, with one third of the shares of Restricted Stock becoming free
of restrictions on each of the first three anniversaries of the date of grant. In the case of a
performance-based lapse of restrictions, the earliest that the restrictions may lapse is on the
first anniversary of the date of grant, upon the achievement of specified performance goals with
respect to that one-year period. The restrictions with respect to Restricted Stock may lapse based
on the passage of a period of time or the achievement of specified performance goals. In the case
of a time-based lapse of restrictions, the earliest that the restrictions may lapse is over the
three years following the date of grant, with one third of the shares of Restricted Stock becoming
free of restrictions ratably over a period of no less than three (3) years from the date of grant.
In the case of a performance-based lapse of restrictions, the earliest that the restrictions may
lapse is on the first anniversary of the date of grant, upon the achievement of specified
performance goals with respect to that one-year period.
7.4 Effect of Termination of Employment or Death. Except as otherwise provided in the
instrument evidencing the award of Restricted Stock with respect to a Participant’s death,
disability, retirement or similar occurrences, if, prior to the lapse of restrictions applicable to
the Restricted Stock, the Participant ceases to be an employee of the Company or the Related
Companies for any reason, any shares of Restricted Stock as to which the restrictions have not
lapsed shall be forfeited to the Company, effective on the date of the Participant’s termination of
employment. The Board of Directors may not amend an award of Restricted Stock to provide that the
restrictions thereon shall lapse earlier than as provided in Sections 7.3 and 7.4 hereof.
SECTION 8 Requirements of Law
8.1 Violations of Law. No shares shall be issued and delivered upon exercise of any
Option or the payment of any SAR unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act of 1933, as amended, any applicable
listing requirements of any national securities exchange or the Nasdaq Stock Market, as applicable,
on which stock of the same class is then listed, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery, shall have been fully
complied with. Each Participant may, by accepting Plan Benefits, be required to represent and agree
in writing, for himself or herself and for his or her transferees by will or the laws of descent
and distribution, that the stock acquired by him, her or them is being acquired for investment. The
requirement for any such representation may be waived at any
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time by the Board of Directors. An Option or SAR may not be exercised if, in the determination
of the Board of Directors, such exercise would violate the Xxxxxxxx-Xxxxx Act of 2002 or other
applicable law.
8.2 Compliance with Rule 16b-3. The intent of this Plan is to qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To the extent any provision of the Plan
does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board of Directors and shall not affect the validity
of the Plan. In the event Rule 16b-3 is revised or replaced, the Board of Directors may exercise
discretion to modify this Plan in any respect necessary to satisfy the requirements of the revised
exemption or its replacement.
SECTION 9 Recapitalization
In the event that dividends are payable in Common Stock of the Company or in the event there
are splits, sub-divisions or combinations of shares of Common Stock of the Company, the number of
shares available under the Plan and the maximum number of shares with respect to which Plan
Benefits may be granted to an employee in a calendar year shall be increased or decreased
proportionately, as the case may be, and the number of shares deliverable upon the exercise
thereafter of any Option previously granted shall be increased or decreased proportionately, as the
case may be, without change in the aggregate purchase price, and the number of shares to which
granted SARs relate shall be increased or decreased proportionately, as the case may be, and the
xxxxx xxxxx of such SARs shall be decreased or increased proportionately, as the case may be.
SECTION 10 Reorganization
If the Company is merged or consolidated with another entity and the Company is not the
surviving corporation in such transaction, or the property or stock of the Company is acquired by
any other entity or in the case of a reorganization or liquidation of the Company, the Board of
Directors of the Company, or the board of directors of any entity assuming the obligations of the
Company hereunder, shall, as to outstanding Plan Benefits, (i) make appropriate provision for the
protection of any such outstanding Plan Benefits by the substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated, acquiring or otherwise reorganized
entity which will be issuable in respect of the shares of Common Stock of the Company; provided
only that the excess of the aggregate fair market value of the shares subject to the Plan Benefits
immediately after such substitution over the purchase or xxxxx xxxxx thereof is not more than the
excess of the aggregate fair market value of the shares subject to such Plan Benefits immediately
before such substitution over the purchase or xxxxx xxxxx thereof, (ii) upon written notice to the
Participants, provide that all unexercised Plan Benefits must be exercised within a specified
number of days of the date of such notice or such Plan Benefits will be terminated, and/or (iii)
upon written notice to the Participants, provide that the Company or the merged, consolidated,
acquiring or otherwise reorganized entity shall have the right, upon the effective date of any such
merger, consolidation, acquisition, reorganization or liquidation, to purchase all Plan Benefits
held by each Participant and unexercised as of that date at an amount equal to the aggregate fair
market value on such date of the shares subject to the Plan Benefits held by such Participant over
the aggregate purchase or xxxxx xxxxx therefor, such amount to be paid in cash or, if stock of the
merged, consolidated, acquiring or otherwise reorganized entity is issuable in respect of the
shares of the Common Stock of the Company, then, in the discretion of the Board of Directors, in
stock of such merged, consolidated, acquiring or otherwise reorganized entity equal in fair market
value to the aforesaid amount. In any such case the Board of Directors shall, in good faith,
determine fair market value and may, in its discretion, advance the lapse of any waiting or
installment periods and exercise dates.
SECTION 11 No Special Employment or Other Rights
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Nothing contained in the Plan or in any Plan Benefit documentation shall confer upon any
Participant receiving a grant of any Plan Benefit any right with respect to the continuation of his
or her employment by or other relationship with the Company (or any Related Company) or interfere
in any way with the right of the Company (or any Related Company), subject to the terms of any
separate employment or other written agreement to the contrary, at any time to terminate such
employment or other relationship or to increase or decrease the compensation of the Participant
from the rate in existence at the time of the grant of any Plan Benefit.
SECTION 12 Amendment of the Plan
The Board of Directors may at any time and from time to time suspend or terminate all or any
portion of the Plan or modify or amend the Plan in any respect, provided, however, that the Board
of Directors, without stockholder approval, may not (i) increase the aggregate number of shares of
the Company’s Common Stock subject to the Plan (except pursuant to Section 9 hereof) or (ii)
otherwise amend the Plan in any material respect. The suspension or termination or any modification
or amendment of the Plan shall not, without the consent of a Participant, affect the Participant’s
rights under any Plan Benefit previously granted. With the consent of the affected Participant, the
Board of Directors may amend outstanding agreements relating to any Plan Benefit in a manner not
inconsistent with the Plan. The Board of Directors, however, may not, without stockholder approval,
amend the exercise price of any Option previously awarded pursuant to the Plan by either reducing
the exercise price of such Option or canceling such Option and granting a new replacement Option
with a lower exercise price. The Board of Directors hereby reserves the right to amend or modify
the terms and provisions of the Plan and of any outstanding Options to the extent necessary to
qualify any or all Options under the Plan for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code; provided, however, that the consent of a Participant is required if such
amendment or modification would cause unfavorable income tax treatment for such Participant.
SECTION 13 Withholding
The Company’s obligation to deliver shares of stock upon the exercise of any Option or SAR and
to make payment upon exercise of any SAR shall be subject to the satisfaction by the Participant of
all applicable federal, state and local income and employment tax withholding requirements.
SECTION 14 Effective Date and Duration of the Plan
14.1 Effective Date. The Plan shall become effective as of May 21, 2003 (the date
of approval of the Plan by the stockholders of the Company).
14.2 Duration. Unless sooner terminated in accordance with Section 12 hereof, the Plan
shall terminate upon the earlier of (i) the tenth anniversary of the effective date or (ii) the
date on which all shares available for issuance under the Plan shall have been issued pursuant to
the issuance lapsing of restrictions or Restricted Stock and the exercise of Options and SARs
granted hereunder. If the date of termination is determined under (i) above, then Plan Benefits
outstanding on such date shall continue to have force and effect in accordance with the provisions
of the instruments evidencing such Plan Benefits.
SECTION 15 Governing Law
The Plan and all actions taken thereunder shall be governed by the laws of the State of Delaware.
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