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EXHIBIT 10.8
NET2000 GROUP, INC.
1997 EQUITY INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01. Administrator means the Board or any delegate of the Board that is
appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company, including a corporation that
becomes an Affiliate after the adoption of this plan.
1.03. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an Option or SAR granted to such Participant.
1.04. Award means any Option, SAR, or Stock Award granted under the Plan.
1.05. Board means the Board of Directors of the Company.
1.06. Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.07. Committee means the Compensation Committee of the Board.
1.08. Common Stock means the common stock of the Company.
1.09. Company means Net2000 Group, Inc.
1.10. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.11. Exchange Act means the Securities Exchange Act of 1934, as amended
and as in effect on the date of this Agreement.
1.12. Fair Market Value of a share of the Common Stock for any purpose on a
particular date means the fair market value of such share as determined in a
manner such as the Board (or the Committee if such responsibilities are
delegated thereto by the Board) shall in good faith determine to be appropriate;
provided, however, that in the case of incentive stock options, the
determination of Fair Market Value shall be made by the Board (or the Committee
if such responsibilities are delegated thereto by the Board) in good faith in
conformance with the Treasury Regulations under Section 422 of the Code.
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1.13. Initial Value means, with respect to an SAR, the Fair Market Value of
one share of Common Stock on the date of grant.
1.14. Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.15. Participant means an employee of the Company or an Affiliate,
including an employee who is a member of the Board, or an individual who
provides services to the Company or an Affiliate, who satisfies the requirements
of Article IV and is selected by the Administrator to receive a Stock Award, an
Option, an SAR or a combination thereof.
1.16. Plan means the Net2000 Group, Inc., 1997 Equity Incentive Plan.
1.17. SAR means a stock appreciation right that in accordance with the
terms of an Agreement entitles the holder to receive, with respect to each share
of Common Stock encompassed by the exercise of such SAR, the amount determined
by the Administrator and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the excess of the
Fair Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
1.18. Share means a share of the Common Stock.
1.19. Stock Award means Common Stock awarded to a Participant under Article
VIII.
1.20. Stock Restriction Agreement means the agreement between the Company
and the Participant, restricting the transfer of Common Stock, that the Company
will require to be executed prior to the exercise of Options and may require to
be executed prior to the issuance of Stock Awards.
1.21. Ten Percent Shareholder means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of an Affiliate. An individual shall be considered to own any voting
stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner
or beneficiary.
1.22 Change of control shall be deemed to occur upon the first of the
following events:
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(i) any person becomes the beneficial owner, directly or
indirectly, of the securities of the company representing 50% or more of the
combined voting power of the Company's then outstanding voting securities and
such person has the ability to elect a majority of the members of the Company's
Board of Directors, if such ownership is not in place on the date of the grant:
(ii) any person becomes the beneficial owner, directly or
indirectly, of the securities of the Company sufficient to elect a majority of
the members of the Board of Directors of the Company, provided that the
Optionee's responsibilities as an employee of the Company are materially
adversely diminished by such change in control; or
(iii) the sale of all or substantially all of the assets of the
Company, or a merger, consolidation, or similar transaction of the company in
which the Company is not the surviving entity or the Company's stockholders
immediately prior to such transaction hold less than 50% of the voting
securities of the surviving entity:
A "change in control" shall not include either of the
following events:
(i) a transaction, the sole purpose of which is to change the
state of the Company's incorporation; or
(ii) a transaction, the result of which is to sell all or
substantially all of the assets of the Company to another entity ( the
"surviving entity"); provided the surviving entity is owned directly or
indirectly by the Company's stockholders immediately following such transaction
in substantially the same proportions as their ownership of the Company's voting
capital stock immediately preceding such transaction.
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ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Affiliates in recruiting
and retaining individuals with ability and initiative by enabling such persons
to participate in the future success of the Company and its Affiliates and to
associate their interests with those of the Company and its shareholders. The
Plan is intended to permit the grant of both Options qualifying under Section
422 of the Code ("incentive stock options") and Options not so qualifying, and
the grant of SARs and Stock Awards. No Option that is intended to be an
incentive stock option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator, subject to the
supervision of the Board. The Board may at any time designate the Committee or
another committee as Administrator. Until such time, the Board shall act as
Administrator. The Administrator shall have authority to grant Awards upon such
terms as the Administrator may consider appropriate. Such terms may include
conditions (in addition to those contained in this Plan) on the exercisability
of all or any part of an Option or SAR or on the transferability or
forfeitability of a Stock Award. Notwithstanding any such conditions, the
Administrator may, in its discretion, accelerate the time at which any Option or
SAR may be exercised, or the time at which a Stock Award may become transferable
or nonforfeitable. In addition, the Administrator shall have complete authority
to interpret all provisions of this Plan; to prescribe the form of Agreements;
to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. The express grant in the Plan of
any specific power to the Administrator shall not be construed as limiting any
power or authority of the Administrator. Any decision made, or action taken, by
the Administrator or in connection with the administration of this Plan shall be
final and conclusive. Neither the Administrator nor any member of the Board
shall be liable for any act done in good faith with respect to this Plan or any
Agreement or Award. All expenses of administering this Plan shall be borne by
the Company.
To the extent permitted by applicable law, the Administrator, in its
discretion, may delegate to another committee or officer, all or part of the
Administrator's authority and duties under the Plan. The Administrator may
revoke or amend the terms of a delegation at any time but such action shall not
invalidate any prior actions of the Administrator's delegate that were
consistent with the terms of the Plan.
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ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate or a person who provides
services to the Company or an Affiliate is eligible to participate in this Plan
if the Administrator, in its sole discretion, determines that such person has
contributed significantly or can be expected to contribute significantly to the
profits or growth of the Company or an Affiliate. Incentive stock options may be
granted only to persons eligible to receive such Options under the Code.
ARTICLE V
STOCK SUBJECT TO PLAN
5.01. Shares Issued. Upon the award of shares of Common Stock pursuant to a
Stock Award, or upon the exercise of any Option or SAR, the Company may issue
shares of Common Stock from its authorized but unissued Common Stock or treasury
shares.
5.02. Aggregate Limit. Subject to adjustment as provided in Article IX, the
maximum aggregate number of shares of Common Stock that may be issued under this
Plan pursuant to the exercise of SARs and Options and the grant of Stock Awards
is 335,766 shares.
5.03. Reallocation of Shares. If any Award expires or is terminated
unexercised or is forfeited or settled in a manner that results in fewer shares
outstanding than were awarded, the shares subject to such Award, to the extent
of such expiration, termination, forfeiture, or decrease, shall again be
available for award under the Plan.
ARTICLE VI
OPTIONS
6.01. Terms of Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards.
Each award will be evidenced by an Agreement that details the terms and
conditions of the award, which need not be identical for different participants.
The Agreement may specify terms and conditions for the award in addition to, but
not inconsistent with, those appearing in this Plan.
6.02. Option Price. The price per share for Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant, but in the case of an incentive stock option, the price shall not be less
than the Fair Market Value on the date the
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Option is granted. Notwithstanding the preceding sentence, the price per share
for Common Stock purchased on the exercise of any incentive stock option granted
to an individual who is a Ten Percent Shareholder on the date such option is
granted, shall not be less than one hundred ten percent (110%) of the Fair
Market Value on the date the Option is granted.
6.03. Maximum Option Period. The maximum period in which an Option may be
exercised shall be determined by the Administrator on the date of grant, except
that no incentive stock option shall be exercisable after the expiration of ten
years from the date such Option was granted. In the case of an incentive stock
option that is granted to a Participant who is a Ten Percent Shareholder on the
date of grant, such Option shall not be exercisable after the expiration of five
years from the date of grant. The terms of any incentive stock option may
provide that it is exercisable for a period less than such maximum period.
6.04. Vesting of Options. Incentive stock options and non-qualified stock
options shall vest according to the terms and conditions specified in the
applicable Agreement.
6.05. Nontransferability. Except as provided in Section 6.06, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, the Option and
any Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities. During the lifetime of the
Participant to whom the Option is granted, the Option may be exercised only by
the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.06. Transferable Options. Section 6.05 to the contrary notwithstanding,
if the Agreement provides, an Option that is not an incentive stock option may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners; provided,
however, that Participant may not receive any consideration for the transfer. In
addition to transfers described in the preceding sentence the Administrator may
grant Options that are not incentive stock options that are transferable on
other terms and conditions as may be permitted under Securities Exchange
Commission Rule 16b-3 as in effect from time to time. The holder of an Option
transferred pursuant to this Section 6.05 shall be bound by the same terms and
conditions that governed the Option during the period that it was held by the
Participant. In the event of any such transfer, the Option and any Corresponding
SAR that relates to such Option must be transferred to the same person or
persons or entity or entities.
6.07. Death. In the case of the death of a Participant, the Option shall
expire on the one (1) year anniversary of the Participant's death, or if
earlier, the date specified in Section 6.03 above. During the one (1) year
period following the Participant's death, the Option may be exercised to the
extent it could have been exercised at the time the Participant died, subject to
any adjustment under Article IX herein.
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6.08. Disability. If a Participant becomes disabled within the meaning of
Code section 22(3)(3) and as a result thereof, his or her employment with the
Company terminates, the Option shall expire on the one (1) year anniversary date
of the Participant's last day of employment, or, if earlier, the date specified
in Section 6.03 above. During the one (1) year period following the
Participant's termination of employment by reason of disability, the Option may
be exercised as to the number of Shares for which it could have been exercised
at the time the Participant became disabled, subject to any adjustments under
Article IX herein.
6.09. Retirement. If the Participant's employment terminates by reason of
normal retirement under the Company's normal retirement policies, the Option
will expire ninety (90) days after the Participant's last day of employment, or,
if earlier, on the date specified in Section 6.03 above. During the ninety (90)
day period following the Participant's normal retirement, the Option may be
exercised as to the number of Shares for which the Option would have been
exercisable on the retirement date, subject to any adjustment under Article IX
herein.
6.10. Termination of Service. Unless an Agreement provides otherwise, if
the Participant ceases employment for any reason other than death, disability,
or retirement (as described above), all Options held by the Participant shall
lapse and terminate on the 30th day following the day upon which the
Participant's employment with the Company is terminated. For purposes of
determining the applicability of Section 422 of the Code (relating to incentive
stock options), the Administrator may decide to what extent leaves of absence
for governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment.
6.11. Securities Law Compliance. Options granted to Employees under the
Plan shall be exercisable only if the issuance of Shares pursuant to the
exercise would be in compliance with applicable securities laws, as contemplated
by Article X of the Plan.
6.12. Exercise. Subject to the provisions of this Plan, including the
vesting schedule in Section 6.04, and the applicable Agreement, an Option may be
exercised in whole at any time or in part from time to time at such times and in
compliance with such requirements as the Administrator shall determine;
provided, however, that incentive stock options (granted under the Plan and all
plans of the Company and its Affiliates) may not be first exercisable in a
calendar year for stock having a Fair Market Value (determined as of the date an
Option is granted) exceeding $100,000. In addition, no Option may be exercised
until the Participant executes a Stock Restriction Agreement covering the Shares
to be acquired by exercise of the Option. An Option granted under this Plan may
be exercised with respect to any number of whole shares less than the full
number for which the Option could be exercised. A partial exercise of an Option
shall not affect the right to exercise the Option from time to time in
accordance with this Plan and the applicable Agreement with respect to the
remaining shares subject to the Option. The exercise of an Option shall result
in the termination of any Corresponding SAR to the extent of the number of
shares with respect to which the Option is exercised.
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6.13. Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the Option
price may be made by surrendering shares of Common Stock to the Company. If
Common Stock is used to pay all or part of the Option price, the sum of the cash
and cash equivalent and the Fair Market Value (determined as of the day
preceding the date of exercise) of the shares surrendered must not be less than
the Option price of the shares for which the Option is being exercised.
6.14. Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.15. Disposition of Stock. A Participant shall notify the Company of any
permitted sale or other disposition of Common Stock acquired pursuant to an
incentive stock option if such permitted sale or disposition occurs (i) within
two years of the grant of an Option or (ii) within one year of the issuance of
the Common Stock to the Participant. Such notice shall be in writing and
directed to the Secretary of the Company.
ARTICLE VII
SARS
7.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by such awards. For purposes of the
preceding sentence, an Option and Corresponding SAR shall be treated as a single
award. In addition no Participant may be granted Corresponding SARs (under all
incentive stock option plans of the Company and its Affiliates) that are related
to incentive stock options which are first exercisable in any calendar year for
stock having an aggregate Fair Market Value (determined as of the date the
related Option is granted) that exceeds $100,000.
7.02. Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be determined by the Administrator on the date of grant, except
that no Corresponding SAR that is related to an incentive stock option shall be
exercisable after the expiration of ten years from the date such related Option
was granted. In the case of a Corresponding SAR that is related to an incentive
stock option granted to a Participant who is a Ten Percent Shareholder, such
Corresponding SAR shall not be exercisable after the expiration of five years
from the date such related Option was granted. The terms of any Corresponding
SAR that is related to an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
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7.03. Nontransferability. Except as provided in Section 7.04, each SAR
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, the
Corresponding SAR and the related Option must be transferred to the same person
or persons or entity or entities. During the lifetime of the Participant to whom
the SAR is granted, the SAR may be exercised only by the Participant. No right
or interest of a Participant in any SAR shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
7.04. Transferable SARs. Section 7.03 to the contrary notwithstanding, the
Administrator may grant transferable SARs to the extent that, and on such terms
as, may be permitted by Securities Exchange Commission Rule 16b-3 as in effect
from time to time. In the event of any such transfer, the Corresponding SAR and
the related Option must be transferred to the same person or person or entity or
entities. The holder of an SAR transferred pursuant to this Section 7.04 shall
be bound by the same terms and conditions that governed the SAR during the
period that it was held by the Participant.
7.05. Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the SAR could be exercised. A partial exercise of an SAR shall not affect the
right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the SAR.
The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares with respect to which the
SAR is exercised.
7.06. Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
7.07. Settlement. At the Administrator's discretion, the amount payable as
a result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.08. Shareholder Rights. No Participant shall, as a result of receiving an
SAR award, have any rights as a shareholder of the Company or any Affiliate
until the date that the SAR is exercised and then only to the extent that the
SAR is settled by the issuance of Common Stock.
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ARTICLE VIII
STOCK AWARDS
8.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by such awards.
8.02. Vesting. The Administrator, on the date of the award, may prescribe
that a Participant's rights in the Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement, or may require that the Participant execute a Stock
Restriction Agreement. If a Stock Award is not nonforfeitable and transferable
upon its grant, the period of restriction shall be at least three years;
provided, however, that the minimum period of restriction shall be at least one
year in the case of a Stock Award that will become transferable and
nonforfeitable on account of the satisfaction of performance objectives
prescribed by the Administrator.
8.03. Performance Objectives. In accordance with Section 8.02, the
Administrator may prescribe that Stock Awards will become vested or transferable
or both based on objectives stated with respect to the Company's, an Affiliate's
or an operating unit's return on equity, earnings per share, total earnings,
earnings growth, return on capital, return on assets, or Fair Market Value. If
the Administrator, on the date of award, prescribes that a Stock Award shall
become nonforfeitable and transferable only upon the attainment of performance
objectives stated with respect to one or more of the foregoing criteria, the
shares subject to such Stock Award shall become nonforfeitable and transferable
only to the extent that the Administrator certifies that such objectives have
been achieved.
8.04. Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
8.05. Shareholder Rights. Prior to their forfeiture (in accordance with the
applicable Agreement and while the shares of Common Stock granted pursuant to
the Stock Award may be forfeited or are nontransferable), a Participant will
have all rights of a shareholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii)
the Participant will deliver to the Company a stock power,
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endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares of Common Stock
granted under the Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
ADJUSTMENT UPON CERTAIN EVENTS
The maximum number of shares as to which Awards may be granted under this
Plan, and the terms of outstanding Awards shall be adjusted as the Administrator
shall determine to be equitably required in the event that (a) the Company (i)
effects one or more stock dividends, stock split-ups, subdivisions or
consolidations of shares or (ii) engages in a transaction to which Section 424
of the Code applies or (b) there occurs any other event which, in the judgment
of the Administrator, necessitates such action. Any determination made under
this Article IX by the Administrator shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, 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 maximum
number of shares as to which Awards may be granted, or the terms of outstanding
Awards.
The Administrator may make Stock Awards and may grant Options and SARs in
substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in the first paragraph of this Article IX. Notwithstanding
any provision of the Plan (other than the limitation of Section 5.02), the terms
of such substituted Awards shall be as the Administrator, in its discretion,
determines is appropriate.
If there is a Change of Control 50% of the options or SARs outstanding will
vest immediately.
Except as otherwise expressly provided in this Article IX, the Participant
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class in the Company or by
reason of any dissolution, liquidation, merger, or consolidation or spin-off of
assets or stock of another corporation, and any issue by the Company of shares
of stock or any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of the Shares subject to the Option or SAR, or
the Stock Award.
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The grant of an Award pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassification,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any of its business
or assets.
ARTICLE X
TAXES, COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
As a condition to the issuance of Shares upon Option exercise (whether to
the Participant or to his beneficiary), the Company shall have the right to
withhold from payments otherwise due and owing to the Participant (or his
beneficiary) or to require the Participant (or his beneficiary) to remit to the
Company in cash upon demand an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, or local withholding tax requirements
at the time the Participant (or his beneficiary) recognizes income for federal,
state, or local tax purposes as the result of the receipt of Shares pursuant to
the Plan
Options and SARs are exercisable, and Shares may be delivered under this
Plan, only in compliance with all applicable federal and state laws and
regulations and the rules of all stock exchanges on which the Company's stock is
listed at any time. An Option or SAR is exercisable only if either: (a) a
registration statement pertaining to the Shares to be issued upon exercise of
the Option or SAR has been filed with and declared effective by the Securities
and Exchange Commission and remains effective on the date of exercise; or (b) an
exemption from the registration requirements of applicable securities laws is
available. This Plan does not require the Company, however, to file such a
registration statement or to assure the availability of such exemptions. Any
certificate issued to evidence Shares issued under the Plan may bear such
legends and statements, and shall be subject to such transfer restrictions, as
the Administrator deems advisable to assure compliance with federal and state
laws and regulations and with the requirements of this Article X. No Option or
SAR may be exercised, and Shares may not be issued under this Plan, until the
Company has obtained the consent or approval of every regulatory body, federal
or state, having jurisdiction over such matters as the Administrator deems
advisable.
Each person who acquires the right to exercise an Option or SAR or to
ownership of Shares by bequest or inheritance may be required by the
Administrator to furnish reasonable evidence of ownership of the Option or SAR
as a condition to his exercise of the Option or SAR. In addition, the
Administrator may require such consents and releases of taxing authorities as
the Administrator deems advisable.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under this Plan are intended to comply
with all applicable conditions
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of Rule 16b-3 under the 1934 Act or its successor under the 1934 Act. To the
extent any provision of the Plan or action by the Plan administrators fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Plan administrators.
ARTICLE XI
GENERAL PROVISIONS
11.01. Effect on Employment and Service. Neither the adoption of this Plan,
its operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
11.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.03. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
11.04. Indemnification of the Administrator, Committee, and the Board. In
addition to such other rights of indemnification as they may have as directors,
the members of the Administrator, Committee and the Board shall be indemnified
by the Company against the reasonable expenses, including attorneys' fees
actually and necessarily incurred in connection with the defense of any action,
suit, or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any award granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any action, suit, or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit, or
proceeding that such Administrator, Committee, or Board member is liable for
negligence or misconduct in the performance of his duties; provided that within
sixty (60) days after institution of any such action, suit, or proceeding, the
Administrator, Committee or Board member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
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11.05. Applicable Law. The validity, interpretation, and enforcement of
this Plan is governed in all respects by the laws of the State of Delaware and
the United States of America.
11.06. Investment Purpose. Each Award shall be granted on the condition
that the purchase or issuance of Shares thereunder shall be for investment
purposes, and not with a view to resale or distribution except that in the event
that the Shares issued or subject to such Option or SAR are registered under the
Securities Act of 1933, as amended, or in the event a resale of such Shares
without such registration would otherwise be permissible, such condition shall
be inoperative if in the opinion of counsel for the Company such condition is
not required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
11.07. Liability of the Company. The Company shall not be liable to any
person for any tax consequences expected but not realized by a Participant or
other person due to the exercise of an Option or SAR.
11.08. Stock Restriction Agreement. The Shares acquired under this Plan
shall be subject to the Stock Restriction Agreement to be executed by such
Participant as a condition precedent to the exercise of an Option or SAR, or to
the issuance of a Stock Award. The Stock Restriction Agreement shall include,
among other items, the right of the Company to purchase any Shares offered by a
Participant and an offer of the Shares to the Company if a Participant's
employment by the Company terminates for any reason.
11.09. Designation of Beneficiary. Each Participant shall designate in the
Agreement he executes, a beneficiary to receive Awards granted hereunder in the
event of his death; provided, that if no such beneficiary is designated or if
the beneficiary so designated does not survive the Participant, the estate of
such Participant shall be deemed to be his beneficiary. Participants may, by
written notice to the Board, change the beneficiary designated in any
outstanding Agreements.
ARTICLE XII
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any vested rights of such
Participant under any Award outstanding at the time such amendment is made.
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ARTICLE XIII
DURATION OF PLAN
No Award may be granted under this Plan after October 20, 2007. Awards
granted before that date shall remain valid in accordance with their terms.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
Options and SARs may be granted under this Plan upon its adoption by the
Board, provided that no Option or SAR shall be effective or exercisable unless
this Plan is approved by a majority of the votes entitled to be cast by the
Company's shareholders, voting either in person or by proxy, at a duly held
shareholders' meeting within twelve months of such adoption. Stock Awards may be
granted under this Plan upon the later of its adoption by the Board or its
approval by shareholders in accordance with the preceding sentence.
Date Plan adopted by Board of Directors: October 20, 1997
Date Plan approved by Shareholders: October 20, 1997
This Plan, having been approved by the Board of Directors and Shareholders
of the Company, is effective as of October 20, 1997.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxx, Xx.
Secretary President
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