SENTO CORPORATION
1999 OMNIBUS STOCK INCENTIVE PLAN
TABLE OF CONTENTS
1. ESTABLISHMENT AND PURPOSE.. . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) "AWARD AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . .1
(b) "BOARD OF DIRECTORS". . . . . . . . . . . . . . . . . . . . . . . . .1
(c) "CAUSE," . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(d) "CHANGE IN CONTROL" . . . . . . . . . . . . . . . . . . . . . . . . .1
(e) "CODE". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(f) "COMMITTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(g) "COMPANY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(h) "COMMON STOCK". . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(i) "DIRECTOR". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(j) "DISABILITY". . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(k) "EFFECTIVE DATE". . . . . . . . . . . . . . . . . . . . . . . . . . .2
(l) "EXCHANGE ACT". . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(m) "EXECUTIVE OFFICER" . . . . . . . . . . . . . . . . . . . . . . . . .3
(n) "EXERCISE DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(o) "FAIR MARKET VALUE" . . . . . . . . . . . . . . . . . . . . . . . . .3
(p) "INCENTIVE AWARD" . . . . . . . . . . . . . . . . . . . . . . . . . .3
(q) "INCENTIVE STOCK OPTION". . . . . . . . . . . . . . . . . . . . . . .3
(r) "ISSUE DATE". . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(s) "NON-EMPLOYEE DIRECTOR" . . . . . . . . . . . . . . . . . . . . . . .3
(t) "NON-QUALIFIED STOCK OPTION". . . . . . . . . . . . . . . . . . . . .3
(u) "OPTION". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(v) "PARTICIPANT" . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(w) "PHANTOM STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(x) "PLAN". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(y) "REFERENCE VALUE" . . . . . . . . . . . . . . . . . . . . . . . . . .4
(z) "RESTRICTED STOCK". . . . . . . . . . . . . . . . . . . . . . . . . .4
(aa) "RULE 16b-3". . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(ab) "SECURITIES ACT" . . . . . . . . . . . . . . . . . . . . . . . .4
(ac) "STAND-ALONE SAR". . . . . . . . . . . . . . . . . . . . . . . .4
(ad) "STOCK BONUS". . . . . . . . . . . . . . . . . . . . . . . . . .4
(ae) "SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . . . . .4
(af) "TANDEM SAR. . . . . . . . . . . . . . . . . . . . . . . . . . .4
(ag) "VESTING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3. STOCK SUBJECT TO THE PLAN.. . . . . . . . . . . . . . . . . . . . . . . . . . .4
(a) SHARES AVAILABLE FOR AWARDS . . . . . . . . . . . . . . . . . . . . .4
(b) ADJUSTMENT FOR CHANGE IN CAPITALIZATION.. . . . . . . . . . . . . . .4
(c) RE-USE OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .5
4. ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .5
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5. ELIGIBILITY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6. AWARDS UNDER THE PLAN; AWARD AGREEMENT. . . . . . . . . . . . . . . . . . . . .6
7. OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(a) IDENTIFICATION OF OPTIONS . . . . . . . . . . . . . . . . . . . . . .6
(b) EXERCISE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(c) TERM AND EXERCISE OF OPTIONS. . . . . . . . . . . . . . . . . . . . .6
(d) LIMITATIONS ON INCENTIVE STOCK OPTIONS. . . . . . . . . . . . . . . .7
(e) EFFECT OF TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . .7
(g) ACCELERATION OF EXERCISE DATE UPON CHANGE IN CONTROL. . . . . . . . .8
8. TANDEM SARS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(a) BENEFIT UPON EXERCISE . . . . . . . . . . . . . . . . . . . . . . . .9
(b) TERM AND EXERCISE OF TANDEM SAR.. . . . . . . . . . . . . . . . . . .9
9. STAND-ALONE SARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) BENEFIT UPON EXERCISE . . . . . . . . . . . . . . . . . . . . . . . 10
(b) TERM AND EXERCISE OF STAND-ALONE SARS . . . . . . . . . . . . . . . 10
(c) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) ACCELERATION OF EXERCISE DATE UPON CHANGE IN CONTROL. . . . . . . . 11
10. RESTRICTED STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) ISSUE DATE AND VESTING DATE.. . . . . . . . . . . . . . . . . . . . 11
(b) CONDITIONS TO VESTING . . . . . . . . . . . . . . . . . . . . . . . 11
(c) RESTRICTIONS ON TRANSFER PRIOR TO VESTING.. . . . . . . . . . . . . 11
(d) DIVIDENDS ON RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . 12
(e) ISSUANCE OF CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . 12
(f) CONSEQUENCES OF VESTING . . . . . . . . . . . . . . . . . . . . . . 12
(g) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) EFFECT OF CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . 13
(i) SPECIAL PROVISIONS REGARDING RESTRICTED STOCK AWARDS. . . . . . . . 13
11. PHANTOM STOCK.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) VESTING DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) BENEFIT UPON VESTING. . . . . . . . . . . . . . . . . . . . . . . . 14
(c) CONDITIONS TO VESTING . . . . . . . . . . . . . . . . . . . . . . . 14
(d) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) EFFECT OF CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . 15
(f) SPECIAL PROVISIONS REGARDING PHANTOM STOCK AWARDS . . . . . . . . . 15
12. STOCK BONUSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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13. RIGHTS AS A STOCKHOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD. . . . . . . . . . .16
15. SECURITIES MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
16. WITHHOLDING TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
17. NOTIFICATION OF ELECTION UNDER SECTION 83(B) OF THE CODE. . . . . . . . . . . 17
18. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(B) OF
THE CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
19. AMENDMENT OR TERMINATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . 17
20. TRANSFERS UPON DEATH; NONASSIGNABILITY. . . . . . . . . . . . . . . . . . . . 17
21. EXPENSES AND RECEIPTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
22. FAILURE TO COMPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
23. EFFECTIVE DATE AND TERM OF PLAN.. . . . . . . . . . . . . . . . . . . . . . . 18
24. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
25. PARTICIPANT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
26. UNFUNDED STATUS OF AWARDS. . . . . . . . . . . . . . . . . . . . . . . . . . .19
27. NO FRACTIONAL SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
28. BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
29. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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SENTO CORPORATION
1999 OMNIBUS STOCK INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE.
There is hereby adopted the Sento Corporation 1999 Omnibus Stock Incentive
Plan (the "PLAN"). The Plan shall be the successor to the Stock Incentive Plan,
as amended and restated on August 11, 1998 (the "PREDECESSOR PLAN"). Upon
adoption of the Plan by the Board of Directors and approval of the Plan by
stockholders of Sento Corporation (the "COMPANY"), no further awards shall be
made under the Predecessor Plan. If the Plan is not approved by the
stockholders of the Company, the Predecessor Plan shall remain in full force and
effect. The Plan is intended to promote the interests of the Company and the
stockholders of the Company by providing officers and other employees of the
Company (including directors who are also employees of the Company) and persons
who are expected to make a long-term contribution to the success of the Company
with appropriate incentives and rewards to encourage them to enter into and
continue in the employ of the Company and/or to acquire a proprietary interest
in the long-term success of the Company, thereby aligning their interest more
closely to the interest of stockholders.
2. DEFINITIONS.
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "AWARD AGREEMENT" shall mean the written agreement between the Company
and a Participant evidencing an Incentive Award.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company
or any Subsidiary of the Company as the case may be.
(c) "CAUSE," when used in connection with the termination of a
Participant's employment by the Company, shall mean (i) the willful
and continued failure by the Participant substantially to perform his
duties and obligations to the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) or
(ii) the willful engaging by the Participant in misconduct which is
materially injurious to the Company. For purposes of this Section
2(c), no act, or failure to act, on a Participant's part shall be
considered "willful" unless done, or omitted to be done, by the
Participant in bad faith and without reasonable belief that his action
or omission was in the best interest of the Company. The Committee
shall determine whether a termination of employment is for Cause.
(d) "CHANGE IN CONTROL" shall mean any of the following occurrences:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Company's then out standing securities;
(ii) during any period of not more than two consecutive years
(not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the Board
of Directors and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect
a transaction described in clause (i), (iii) or (iv) of this Section)
whose election by the Board of Directors or nomination for election
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve, and the Company
consummates, a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as herein above defined) acquires
more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve, and the Company
consummates, a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "COMMITTEE" shall mean the committee of the Board of Directors
appointed by the Board of Directors to administer the Plan. The
Committee shall consist of two or more persons each of whom is an
"outside director" within the meaning of Section 162(m) of the Code
and a "Non-Employee Director" within the meaning of Rule 16b-3 under
the Exchange Act (or who satisfies any other criteria for
administering employee benefit plans as may be specified by the
Securities and Exchange Commission in order for transactions under
such plan to be exempt from the provisions of Section 16(b) of the
Exchange Act).
(g) "COMPANY" shall mean, Sento Corporation, a Utah corporation, or any
successor corporation.
(h) "COMMON STOCK" shall mean the common stock, $.25 par value, of the
Company.
(i) "DIRECTOR" shall mean any member of the Board of Directors.
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(j) "DISABILITY" shall mean, when used in connection with the exercise of
an Incentive Stock Option following termination of employment,
disability within the meaning of Section 22(e)(3) of the Code.
(k) "EFFECTIVE DATE" shall mean the date upon which this Plan is adopted
by the Board of Directors.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(m) "EXECUTIVE OFFICER" shall have the meaning set forth in Rule 3b-7
promulgated under the Exchange Act.
(n) "EXERCISE DATE" shall mean the date on which a Participant may
exercise an Incentive Award.
(o) "FAIR MARKET VALUE" of a share of Common Stock, as of a date of
determination, shall mean (i) the closing sales price per share of
Common Stock on the national securities exchange on which such stock
is principally traded for the last preceding date on which there was a
sale of such stock on such exchange, or (ii) if the shares of Common
Stock are not listed or admitted to trading on any such exchange, the
closing price as reported by the Nasdaq Stock Market for the last
preceding date on which there was a sale of such stock on such
exchange, or (iii) if the shares of Common Stock are not then listed
on the Nasdaq Stock Market, the average of the highest reported bid
and lowest reported asked prices for the shares of Common Stock as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System for the last preceding date on which there
was a sale of such stock in such market, or (iv) if the shares of
Common Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as determined by the
Committee in good faith.
(p) "INCENTIVE AWARD" shall mean an Option, Tandem SAR, Stand-Alone SAR,
Restricted Stock grant, Phantom Stock grant or Stock Bonus granted
pursuant to the terms of the Plan.
(q) "INCENTIVE STOCK OPTION" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code.
(r) "ISSUE DATE" shall mean the date established by the Company on which
certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 10(e)of the Plan.
(s) "NON-EMPLOYEE DIRECTOR" shall mean a Director who is not also an
employee of the Company or any Subsidiary of the Company.
(t) "NON-QUALIFIED STOCK OPTION" shall mean an Option that is not an
Incentive Stock Option.
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(u) "OPTION" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 7 of the Plan.
(v) "PARTICIPANT" shall mean an employee of the Company or a Subsidiary of
the Company or any Non-Employee Director to whom an Incentive Award is
granted pursuant to the Plan, and, upon such individual's death, such
individual's successors, heirs, executors and administrators, as the
case may be.
(w) "PHANTOM STOCK" shall mean the right, granted pursuant to Section 11
of the Plan, to receive in cash the Fair Market Value of a share of
Common Stock.
(x) "PLAN" shall mean this 1999 Omnibus Stock Incentive Plan, as amended
from time to time.
(y) "REFERENCE VALUE" shall mean, with respect to Stand-Alone SARs, the
greater of the Fair Market Value or the value given by the Committee
on the date of the grant.
(z) "RESTRICTED STOCK" shall mean a share of Common Stock which is granted
pursuant to the terms of Section 10 hereof and which is subject to the
restrictions set forth in Section 10 of the Plan.
(aa) "RULE 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act.
(ab) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
(ac) "STAND-ALONE SAR" shall mean a stock appreciation right granted
pursuant to Section 9 of the Plan which is not related to any Option.
(ad) "STOCK BONUS" shall mean a bonus payable in shares of Common Stock
granted pursuant to Section 12 of the Plan.
(ae) "SUBSIDIARY" shall mean a "subsidiary corporation" within the meaning
of Section 424(f) of the Code.
(af) "TANDEM SAR" shall mean a stock appreciation right granted pursuant to
Section 8 of the Plan which is related to an Option.
(ag) "VESTING DATE" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. STOCK SUBJECT TO THE PLAN.
(a) SHARES AVAILABLE FOR AWARDS.
The maximum number of shares of Common Stock reserved for issuance
under the Plan shall be 3,500,000 shares (subject to adjustment as
provided herein), which shall include 2,500,000 shares authorized but
unissued under the Predecessor Plan. The total number of
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shares reserved for issuance hereunder may be authorized but unissued
Common Stock or authorized and issued Common Stock held in the
Company's treasury or acquired by the Company for the purposes of the
Plan. The Committee may direct that any stock certificate evidencing
shares issued pursuant to the Plan shall bear a legend setting forth
such restrictions on transfer ability as may apply to such shares
pursuant to the Plan. The grant of a Tandem SAR shall not reduce the
number of shares of Common Stock with respect to which Incentive
Awards may be granted pursuant to the Plan. Upon the exercise of any
Tandem SAR, the related Option shall be canceled to the extent of the
number of shares of Common Stock as to which the Tandem SAR is
exercised and, notwithstanding the foregoing, such number of shares
shall no longer be available for Incentive Awards under the Plan.
(b) ADJUSTMENT FOR CHANGE IN CAPITALIZATION.
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Common Stock, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction
or event, affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights
of Participants under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of stock which may
thereafter be issued in connection with Incentive Awards, (ii) the
number and kind of shares of stock issued or issuable in respect of
outstanding Incentive Awards, and (iii) the exercise price, xxxxx
xxxxx, or purchase price relating to any Incentive Award; provided
that, with respect to Incentive Stock Options, such adjustment shall
be made in accordance with Section 424 of the Code.
(c) RE-USE OF SHARES.
Subject to the last sentence of Section 3(a), the following shares of
Common Stock shall again become available for Incentive Awards: any
shares subject to an Incentive Award that remain unissued upon the
cancellation, surrender, exchange or termination of such award for any
reason whatsoever; any shares of Restricted Stock forfeited; and any
shares in respect of which a Stand-Alone SAR.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Incentive Awards; to determine the persons to
whom and the time or times at which Incentive Awards shall be granted; to
determine the type and number of Incentive Awards to be granted, the number of
shares of Stock to which an Award may relate and the terms, conditions,
restrictions and performance criteria relating to any Incentive Award; to
determine whether, to what extent, and under what circumstances an Incentive
Award may be settled, canceled, forfeited, exchanged, or surrendered; to make
adjustments in the performance goals in
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recogintion of unusual or non-recurring events affecting the Company or the
financial statements of the Company (to the extent in accordance with Section
162(m)of the Code, if applicable), or in response to changes in applicable
laws, regulations, or accounting principles; to construe and interpret the
Plan and any Incentive Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of
Award Agreements; and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Tandem SAR or Stand-Alone SAR or
Incentive Award relating to Phantom Stock granted under the Plan becomes
exercisable, waive or amend the operation of Plan provisions respecting exercise
after termination of employment or otherwise adjust any of the terms of such
Tandem SAR relating to Non-Qualified Stock Options or Stand-Alone SAR or
Incentive Award relating to Phantom Stock, and (ii) accelerate the Exercise Date
or Issue Date, or waive any condition imposed hereunder, with respect to any
share of Restricted Stock or Phantom Stock or otherwise adjust any of the terms
applicable to such share.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, if, in either case, such action, omission or
determination was taken or made by such member, director or employee in good
faith and in a manner such member, director or employee reasonably believed to
be in or not opposed to the best interests of the Company.
5. ELIGIBILITY.
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such Participants as the Committee shall select from time to
time. Notwithstanding the foregoing, only individuals who are employees of the
Company or any Subsidiary of the Company as of the date of the grant of any
Incentive Stock Option shall be eligible to receive such Incentive Stock
Options.
6. AWARDS UNDER THE PLAN; AWARD AGREEMENT.
The Committee may grant Options, Tandem SARs, Stand-Alone SARs, shares of
Restricted Stock, shares of Phantom Stock and Stock Bonuses, in such amounts and
with such terms and conditions as the Committee shall determine, subject to the
provisions of the Plan.
Each Incentive Award granted under the Plan (except an unconditional Stock
Bonus) shall be evidenced by an Award Agreement which shall contain such
provisions as the Committee may in its sole discretion deem necessary or
desirable. By accepting an Incentive Award, a Participant thereby agrees that
the award shall be subject to all of the terms and provisions of the Plan and
the applicable Award Agreement.
7. OPTIONS.
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(a) IDENTIFICATION OF OPTIONS.
Each Option shall be clearly identified in the applicable Award
Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option.
(b) EXERCISE PRICE.
Each Award Agreement with respect to an Option shall set forth the
amount (the "OPTION EXERCISE PRICE") payable by the grantee to the
Company upon exercise of the Option. The Option Exercise Price per
share shall be determined by the Committee; provided, however, that in
the case of an Incentive Stock Option, the Option Exercise Price shall
in no event be less than the Fair Market Value of a share of Common
Stock on the date the Option is granted.
(c) TERM AND EXERCISE OF OPTIONS.
(1) The Committee shall determine the vesting schedule and
expiration date of each Option; provided, however, that no Incentive
Stock Option shall be exercisable more than 10 years after the date of
grant.
(2) An Option may be exercised for all or any portion of the
shares as to which it is exercisable, provided, that no partial
exercise of an Option shall be for an aggregate exercise price of less
than $1,000. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining portion
thereof.
(3) An Option shall be exercised by delivering notice (in the
form attached to the Award Agreement, if a form of notice is attached)
to the Company's principal office, to the attention of its Secretary,
no less than one business day in advance of the effective date of the
proposed exercise. Such notice shall specify the number of shares of
Common Stock with respect to which the Option is being exercised and
the effective date of the proposed exercise and shall be signed by the
Participant or other person then having the right to exercise the
Option. Such notice may be withdrawn at any time prior to the close
of business on the business day immediately preceding the effective
date of the proposed exercise. Payment for shares of Common Stock
purchased upon the exercise of an Option shall be made on the
effective date of such exercise by one or a combination of the
following means: (i) in cash, by certified check, bank cashier's check
or wire transfer; (ii) by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or
loan proceeds to pay the full amount of the purchase price, (iii) by
delivering shares of Common Stock owned by the Participant with
appropriate stock powers, (iv) by electing to have the Company retain
shares of Common Stock which would otherwise be issued on the exercise
of the Option, or (v) any combination of the foregoing forms. In
determining the number of shares of Common Stock necessary to be
delivered to or retained by the Company, such shares shall be valued
at their Fair Market Value as of the exercise date.
7
(4) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant
or other person entitled to receive such shares, and delivered to the
Participant or such other person as soon as practicable following the
effective date on which the Option is exercised.
(d) LIMITATIONS ON INCENTIVE STOCK OPTIONS.
(1) To the extent that the aggregate Fair Market Value of shares
of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar
year under the Plan and any other stock option plan of the Company (or
any Subsidiary of the Company) shall exceed $100,000, such Options
shall be treated as Non-Qualified Stock Options. Such Fair Market
Value shall be determined as of the date on which each such Incentive
Stock Option is granted.
(2) No Incentive Stock Option may be granted to an individual
if, at the time of the grant, such individual owns stock possessing
more than 10 percent of the total combined voting power of all classes
of stock of the Company unless (i) the exercise price per share of
such Incentive Stock Option is at least 110 percent of the Fair Market
Value of a share of Common Stock at the time such Incentive Stock
Option is granted and (ii) such Incentive Stock Option is not
exercisable after the expiration of 5 years from the date such
Incentive Stock Option is granted.
(e) EFFECT OF TERMINATION OF EMPLOYMENT
(1) Unless the applicable Award Agreement provides otherwise and
except as provided by Sections 7(g) and 9(d) with respect to a Change
of Control, in the event that the employment of a Participant with the
Company or a Subsidiary of the Company shall be terminated by the
employee or by the Company for Cause (i) Options granted to such
Participant, to the extent that they are exercisable at the time of
such termination, shall remain exercisable until the date that is 30
days after such termination, on which date they shall expire, and (ii)
Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close
of business on the date of such termination. Notwithstanding the
foregoing, no Option shall be exercisable after the expiration of its
term.
(2) Unless the applicable Award Agreement provides otherwise, in
the event that the employment of a Participant with the Company or a
Subsidiary of the Company shall terminate on account of the
Disability or death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the first anniversary
of such termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close
of business on the date of such termination. Notwithstanding the
foregoing, no Option shall be exercisable after the expiration of its
term.
8
(3) Unless the applicable Award Agreement provides otherwise and
except as provided by Sections 7(g) and 9(d), in the event that the
employment of a Participant with the Company or a Subsidiary of the
Company shall terminated by the Company in connection with a reduction
in force or for any other reason other than death, Disability or
Cause, (i) Options granted to such Participant, to the extent that
they are exercisable at the time of such termination, shall remain
exercisable until the date that is 90 days after such termination, on
which date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at the time
of such termination, shall expire at the close of business on the date
of such termination. Notwithstanding the foregoing, no Option shall
be exercisable after the expiration of its term.
(f) EFFECT OF REMOVAL FROM BOARD OF DIRECTORS
Unless the applicable Award Agreement provides otherwise, in the event
a Director ceases to serve on the Board of Directors, the Committee
shall determine the effect such termination has with respect to
Options granted to such Director; PROVIDED, that (i) Options granted
to such Director, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the
date of such termination and (ii) no Option shall be exercisable after
the expiration of its term. Notwithstanding the foregoing, Options
granted to a Director while such Director was also an employee of the
Company or any Subsidiary of the Company shall be governed by the
provisions set forth in Section 7(e).
(g) ACCELERATION OF EXERCISE DATE UPON CHANGE IN CONTROL.
(1) Upon the occurrence of a Change in Control described in
Section 2(d)(i), (ii), or (iii), if, (A) the Company, any Subsidiary
of the Company or any entity into which the Company or any Subsidiary
is merged or consolidated requires such Participant to move more than
50 miles from such Participant's place of residence within 1 year of
the Change in Control; or (B) notwithstanding Section 7(e)(1)(ii), the
employment of the Participant with the Company, any Subsidiary of the
Company or any entity into which the Company or any Subsidiary is
merged or consolidated is terminated within 1 year of the Change in
Control; or (C) the Participant is required to change assignments
within the Company, any Subsidiary of the Company or any entity into
which the Company or any Subsidiary is merged or consolidated and is
given lower responsibilities as a result of such change within 1 year
of the Change in Control, then each Option granted under the Plan and
outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until the later of (Y) 30
days following the occurrence of said Change in Control, and (Z) 30
days following the occurrence of the change described in (A), (B), or
(C) above. Notwithstanding the foregoing, no Option shall be
exercisable after the expiration of its term.
(2) Upon the occurrence of a Change in Control to which Section
7(g)(1) does not apply, each Option granted under the Plan and
outstanding at such time shall be treated as provided by any written
plan or agreement approved by the stockholders pursuant to which such
Change in Control occurs; provided, that if such Change in Control is
not
9
governed by any plan or agreement approved by the stockholders, the
erms and conditions, including the vesting and expiration, of each
Option shall not be affected by such Change in Control.
8. TANDEM SARS.
The Committee may grant in connection with any Option granted hereunder one
or more Tandem SARs relating to a number of shares of Common Stock less than or
equal to the number of shares of Common Stock subject to the related Option. A
Tandem SAR may be granted at the same time as, or, in the case of a
Non-Qualified Stock Option, subsequent to the time that, its related Option is
granted.
(a) BENEFIT UPON EXERCISE.
The exercise of a Tandem SAR with respect to any number of shares of
Common Stock shall entitle the Participant to a cash payment, for each
such share, equal to the excess of (i) the Fair Market Value of a
share of Common Stock on the exercise date over (ii) the Option
Exercise Price per share of the related Option. Such payment shall be
made as soon as practicable after the effective date of such exercise.
(b) TERM AND EXERCISE OF TANDEM SAR.
(1) A Tandem SAR shall be exercisable (i) only if and to the
extent that its related Option is exercisable and (ii) only if at the
time of such exercise, the Fair Market Value of a share of Common
Stock exceeds the Option Exercise Price per share of the related
Option.
(2) The exercise of a Tandem SAR with respect to a number of
shares of Common Stock shall cause the immediate and automatic
cancellation of its related Option with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination
or expiration of an Option (other than pursuant to this Section
8(b)(2)), with respect to a number of shares of Common Stock shall
cause the automatic and immediate cancellation of any related Tandem
SARs to the extent that the number of shares of Common Stock remaining
subject to such Option is less than the number of shares then subject
to such Tandem SAR. Such Tandem SARs shall be canceled in the order
in which they become exercisable.
(3) A Tandem SAR may be exercised for all or any portion of the
shares as to which the related Option is exercisable; provided, that
no partial exercise of a Tandem SAR shall be for less than a number of
shares having an aggregate option exercise price of less than $1,000.
The partial exercise of a Tandem SAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof.
(4) No Tandem SAR shall be assignable or transferable otherwise
than together with its related Option, and any such transfer or
assignment will be subject to the provisions of Section 20 of the
Plan.
10
(5) A Tandem SAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less
than one business day in advance of the effective date of the proposed
exercise. Such notice shall specify the number of shares of Common
Stock with respect to which the Tandem SAR is being exercised and the
effective date of the proposed exercise and shall be signed by the
Participant or other person then having the right to exercise the
Option to which the Tandem SAR is related. Such notice may be
withdrawn at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed exercise.
9. STAND-ALONE SARS.
(a) BENEFIT UPON EXERCISE.
The exercise of a Stand-Alone SAR with respect to any number of shares
of Common Stock shall entitle the Participant to a cash payment, for
each such share, equal to the excess of (i) the Fair Market Value of a
share of Common Stock on the exercise date over (ii) the Reference
Value of the Stand-Alone SAR. Such payments shall be made as soon as
practicable after the effective date of such exercise.
(b) TERM AND EXERCISE OF STAND-ALONE SARS.
(1) Unless the applicable Award Agreement provides otherwise, a
Stand-Alone SAR shall become cumulatively exercisable as to 25 percent
of the shares covered thereby on each of the first, second, third and
fourth anniversaries of the date of grant. The Committee shall
determine the expiration date of each Stand-Alone SAR. Unless the
applicable Award Agreement provides other wise, no Stand-Alone SAR
shall be exercisable prior to the date of grant.
(2) A Stand-Alone SAR may be exercised for all or any portion of
the shares as to which it is exercisable; provided, that no partial
exercise of a Stand-Alone SAR shall be for an aggregate Reference
Value of less than $1,000. The partial exercise of a Stand-Alone SAR
shall not cause the expiration, termination or cancellation of the
remaining portion thereof.
(3) A Stand-Alone SAR shall be exercised by delivering notice to
the Company's principal office, to the attention of its Secretary, no
less than one business day in advance of the effective date of the
proposed exercise. Such notice shall specify the number of shares of
Common Stock with respect to which the Stand-Alone SAR is being
exercised, and the effective date of the proposed exercise, and shall
be signed by the Participant. The Participant may withdraw such
notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise.
11
(c) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS.
The provisions set forth in Section 7(e) and 7(f) with respect to the
exercise of Options shall apply as well to the exercise of Stand-Alone
SARs.
(d) ACCELERATION OF EXERCISE DATE UPON CHANGE IN CONTROL.
The provisions set forth in Section 7(g) with respect to the exercise
of Options shall apply as well to the exercise of Stand-Alone SARs.
10. RESTRICTED STOCK.
(a) ISSUE DATE AND VESTING DATE.
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide
such shares into classes and assign a different Issue Date and/or
Vesting Date for each class. If the grantee is employed by the
Company or a Subsidiary of the Company on an Issue Date (which may be
the date of grant), the specified number of shares of Restricted Stock
shall be issued in accordance with the provisions of Section 10(e) of
the Plan. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 10(b) of the plan are
satisfied, and except as provided in Section 10(g) of the Plan, upon
the occurrence of the Vesting Date with respect to a share of
Restricted Stock, such share shall vest and the restrictions of
Section 10(c) of the Plan shall lapse.
(b) CONDITIONS TO VESTING.
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions to the vesting of such
shares as it, in its absolute discretion, deems appropriate.
(c) RESTRICTIONS ON TRANSFER PRIOR TO VESTING.
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall be permitted.
Immediately upon any attempt to transfer such rights, such share, and
all of the rights related thereto, shall be forfeited by the
Participant.
(d) DIVIDENDS ON RESTRICTED STOCK.
The Committee in its discretion may require that any dividends paid on
shares of Restricted Stock shall be held in escrow until all
restrictions on such shares have lapsed.
(e) ISSUANCE OF CERTIFICATES.
12
(1) Reasonably promptly after the Issue Date with respect to
shares of Restricted Stock, the Company shall cause to be issued a
stock certificate, registered in the name of the Participant to whom
such shares were granted, evidencing such shares; provided, that the
Company shall not cause such a stock certificate to be issued unless
it has received a stock power duly endorsed in blank with respect to
such shares. Each such stock certificate shall bear the following
legend:
The transferability of this certificate and the
shares of stock represented hereby are subject to
the restrictions, terms and conditions (including
forfeiture provisions and restrictions against
transfer) contained in the 1999 Omnibus Stock
Incentive Plan of Sento Corporation (the
"Company") and an Award Agreement entered into
between the registered owner of such shares and
the Company. A copy of such Plan and Award
Agreement is on file in the office of the
Secretary of the Company, 000 Xxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx Xxxx, Xxxx 00000.
Such legend shall not be removed until such shares vest pursuant to
the terms of the applicable Award Agreement.
(2) Each certificate issued pursuant to this Section 10(e),
together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be held by the Company
unless the Committee determines otherwise.
(f) CONSEQUENCES OF VESTING.
Upon the vesting of a share of Restricted Stock pursuant to the terms
of the applicable Award Agreement, the restrictions of Section 10(c)
of the Plan shall lapse. Reasonably promptly after a share of
Restricted Stock vests, the Company shall cause to be delivered to the
Participant to whom such shares were granted, a certificate evidencing
such share, free of the legend set forth in Section 10(e) of the Plan.
(g) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS.
(1) Unless the applicable Award Agreement provides otherwise, the
Committee shall determine, upon the termination of a Participant's
employment by the Company or any Subsidiary of the Company for any
reason other than Cause, any and all shares to which restrictions on
transferability apply shall be immediately forfeited by the
Participant and transferred to the Company, provided that if the
Committee, in its sole discretion and within 30 days after such
termination of employment notifies the Participant in writing of its
decision not to terminate the Participant's rights in such shares,
then the Participant shall continue to be the owner of such shares
subject to such continuing restrictions as the Committee may prescribe
in such notice. If shares of Restricted Stock are forfeited in
accordance with the provision of this Section 10, the Company shall
also have the right to
13
require the return of all dividends paid on such shares, whether by
termination of any escrow arrangement under which such dividends are
held or otherwise.
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock granted to such
Participant which have not vested as of the date of such termination
shall immediately be returned to the Company, together with any
dividends paid on such shares.
(3) Unless the applicable Award Agreement provides otherwise, the
Committee shall determine the effect the removal of a Director from
the Board of Directors shall have on such Director's Restricted Stock
award. Notwithstanding the foregoing, Restricted Stock awards granted
to a Director while such Director was also an employee of the Company
or any Subsidiary of the Company shall be governed by the provisions
set forth in this Section 10(g)(1) and (2).
(h) EFFECT OF CHANGE IN CONTROL.
(1) Upon the occurrence of a Change in Control described in
Section 2(d)(i), (ii), or (iii), if, (A) the Company, any Subsidiary
of the Company or any entity into which the Company or any Subsidiary
is merged or consolidated requires such Participant to move more than
50 miles from such Participant's place of residence within 1 year of
the Change in Control; or (B) notwithstanding Section 10(g), the
employment of the Participant with the Company, any Subsidiary of the
Company or any entity into which the Company or any Subsidiary is
merged or consolidated is terminated within 1 year of the Change in
Control; or (C) the Participant is required to change assignments
within the Company, any Subsidiary of the Company or any entity into
which the Company or any Subsidiary is merged or consolidated and is
given lower responsibilities as a result of such change within 1 year
of the Change in Control, then each share of Restricted Stock granted
under the Plan and outstanding at such time shall immediately vest and
all restrictions on such shares shall immediately lapse.
(2) Upon the occurrence of a Change in Control to which Section
10(h)(1) does not apply, each share of Restricted Stock granted under
the Plan and outstanding at such time shall be treated as provided by
any written plan or agreement approved by the stockholders pursuant to
which such Change in Control occurs; provided, that if such Change in
Control is not governed by any plan or agreement approved by the
stockholders, the terms and conditions, including the vesting and
expiration, of each share of Restricted Stock shall not be affected by
such Change in Control.
(i) SPECIAL PROVISIONS REGARDING RESTRICTED STOCK AWARDS.
Notwithstanding anything to the contrary contained herein, Restricted
Stock granted pursuant to this Section 10 shall be based on the
attainment by the Company (or a Subsidiary or division of the Company
if applicable) of performance goals pre-established by the Committee,
based on one or more of the following criteria: (i) the attainment of
a specified percentage return on total stockholder equity of the
Company or any Subsidiary
14
of the Company; (ii) the attainment of a specified percentage
increase in earnings per share of Common Stock; (iii) the attainment
of a specified percentage increase in net income of the Company or
any Subsidiary of the Company; and (iv) the attainment of a specified
percentage increase in profit before taxation of the Company or any
Subsidiary of the Company. Attainment of any such performance
criteria shall be determined in accordance with generally accepted
accounting principles as in effect from time to time. Such shares of
Restricted Stock shall be released from restrictions only after the
attainment of such performance measures have been certified by the
Committee.
11. PHANTOM STOCK.
(a) VESTING DATE.
At the time of the grant of shares of Phantom Stock, the Committee
shall establish a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign
a different Vesting Date for each class. Provided that all conditions
to the vesting of a share of Phantom Stock imposed pursuant to Section
11(c) of the Plan are satisfied, and except as provided in Section
11(d) of the Plan, upon the occurrence of the Vesting Date with
respect to a share of Phantom Stock, such share shall vest.
(b) BENEFIT UPON VESTING.
Upon the vesting of a share of Phantom Stock, the Participant shall be
entitled to receive in cash, within 30 days of the date on which such
share vests, an amount equal to the sum of (i) the Fair Market Value
of a share of Common Stock on the date on which such share of Phantom
Stock vests and (ii) the aggregate amount of cash dividends paid with
respect to a share of Common Stock during the period commencing on the
date on which the share of Phantom Stock was granted and terminating
on the date on which such share vests.
(c) CONDITIONS TO VESTING.
At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions to the vesting of such shares
as it, in its absolute discretion, deems appropriate.
(d) EFFECT OF TERMINATION OF EMPLOYMENT OR REMOVAL FROM BOARD OF
DIRECTORS.
(1) Unless the applicable Award Agreement provides otherwise,
shares of Phantom Stock that have not vested, together with any
dividends credited on such shares, shall be forfeited upon the
Participant's termination of employment for any reason.
(2) Unless the applicable Award Agreement provides otherwise, the
Committee shall determine the effect the removal of a Director from
the Board of Directors shall have on such Director's Phantom Stock
award. Notwithstanding the foregoing, Phantom Stock awards granted to
a Director while such Director was also an employee of the Company or
15
any Subsidiary of the Company shall be governed by the provisions set
forth in this Section 11(d)(1).
(e) EFFECT OF CHANGE IN CONTROL.
(1) Upon the occurrence of a Change in Control described in
Section 2(d)(i), (ii), or (iii), if, (A) the Company, any Subsidiary
of the Company or any entity into which the Company or any Subsidiary
is merged or consolidated requires such Participant to move more than
50 miles from such Participant's place of residence within 1 year of
the Change in Control; or (B) notwithstanding Section 11(d), the
employment of the Participant with the Company, any Subsidiary of the
Company or any entity into which the Company or any Subsidiary is
merged or consolidated is terminated within 1 year of the Change in
Control; or (C) the Participant is required to change assignments
within the Company, any Subsidiary of the Company or any entity into
which the Company or any Subsidiary is merged or consolidated and is
given lower responsibilities as a result of such change within 1 year
of the Change in Control, then each share of Phantom Stock granted
under the Plan and outstanding at such time shall immediately vest.
(2) Upon the occurrence of a Change in Control to which Section
11(e)(1) does not apply, each share of Phantom Stock granted under the
Plan and outstanding at such time shall be treated as provided by any
written plan or agreement approved by the stockholders pursuant to
which such Change in Control occurs; provided, that if such Change in
Control is not governed by any plan or agreement approved by the
stockholders, the terms and conditions, including the vesting and
expiration, of each share of Phantom Stock shall not be affected by
such Change in Control.
(f) SPECIAL PROVISIONS REGARDING PHANTOM STOCK AWARDS.
Notwithstanding anything to the contrary contained herein, Phantom
Stock granted pursuant to this Section 11 to officers of the Company
or any Subsidiary of the Company shall be based on the attainment by
the Company or any Subsidiary of the Company of performance goals
pre-established by the Committee, based on one or more of the
following criteria: (i) the attainment of a specified percentage
return on total stockholder equity of the Company or any Subsidiary of
the Company; (ii) the attainment of a specified percentage increase in
earnings per share of Common Stock from continuing operations; (iii)
the attainment of a specified percentage increase in net income of the
Company or any Subsidiary of the Company; and (iv) the attainment of a
specified percentage increase in profit before taxation of the Company
or any Subsidiary of the Company. Attainment of any such performance
criteria shall be determined in accordance with generally accepted
accounting principles as in effect from time to time. No cash payment
in respect of any Phantom Stock award will be paid to any such officer
until the attainment of the respective performance measures have been
certified by the Committee.
12. STOCK BONUSES.
16
In the event that the Committee grants a Stock Bonus, a certificate for the
shares of Common Stock comprising such Stock Bonus shall be issued in the name
of the Participant to whom such grant was made and delivered to such Participant
as soon as practicable after the date on which such Stock Bonus is payable.
13. RIGHTS AS A STOCKHOLDER.
No person shall have any rights as a stockholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award until the date of
issuance of a stock certificate with respect to such shares. Except as
otherwise expressly provided in Section 3(b) of the Plan, no adjustment to any
Incentive Award shall be made for dividends or other rights for which the record
date occurs prior to the date such stock certificate is issued.
14. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD.
Nothing contained in the Plan or any Award Agreement shall confer upon any
Participant any right with respect to the continuation of employment by the
Company or any Subsidiary of the Company or interfere in any way with the right
of the Company or any Subsidiary of the Company, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Participant. No
person shall have any claim or right to receive an Incentive Award hereunder.
The Committee's granting of an Incentive Award to a Participant at any time
shall neither require the Committee to grant any other Incentive Award to such
Participant or other person at any time or preclude the Committee from making
subsequent grants to such Participant or any other person.
15. SECURITIES MATTERS.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any
shares of Common Stock to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding anything herein to
the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental
authority and the requirements of any securities exchange on which
shares of Common Stock are traded. The Committee may require, as a
condition of the issuance and delivery of certificates evidencing
shares of Common Stock pursuant to the terms hereof and of the
applicable Award Agreement, that the recipient of such shares make
such covenants, agreements and representations, and that such
certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The transfer of any shares of Common Stock hereunder shall be
effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of such shares is in
compliance with all applicable laws, regulations of governmental
authority and the requirements of any securities exchange on which
shares of Common Stock are traded. The Committee may, in its sole
discretion, defer the effectiveness of any transfer of shares of
Common Stock hereunder in order to allow the issuance of such shares
to be made
17
pursuant to registration or an exemption from registration or other
methods for compliance available under federal or state securities
laws. The Committee shall inform the Participant in writing of its
decision to defer the effectiveness of a transfer. During the period
of such deferral in connection with the exercise of an Option, the
Participant may, by written notice, withdraw such exercise and obtain
the refund of any amount paid with respect thereto.
16. WITHHOLDING TAXES.
Whenever cash is to be paid pursuant to an Incentive Award, the Company
shall have the right to deduct therefrom an amount sufficient to satisfy any
federal, state and local withholding tax requirements related thereto. Whenever
shares of Common Stock are to be delivered pursuant to an Incentive Award, the
Company shall have the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy any federal, state and local withholding
tax requirements related thereto. With the approval of the Committee, a
Participant may satisfy the foregoing requirement by electing to have the
Company withhold from delivery shares of Common Stock having a fair market value
equal to the amount of tax to be withheld. Such shares shall be valued at their
Fair Market Value on the date on which the amount of tax to be withheld is
determined (the "TAX DATE"). Fractional share amounts shall be settled in cash.
Such a withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to an Incentive Award.
17. NOTIFICATION OF ELECTION UNDER SECTION 83(B) OF THE CODE.
If any Participant shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under Section 83(b) of
the Code (i.e., an election to include in gross income in the year of transfer
the amounts specified in Section 83(b)), such Participant shall notify the
Company in writing of such election within 10 days of filing notice of the
election with the Internal Revenue Service, in addition to any filing and a
notification required pursuant to regulation issued under the authority of Code
Section 83(b).
18. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(B) OF THE
CODE.
Each Award Agreement with respect to an Incentive Stock Option shall
require the Participant to notify the Company in writing of any disposition of
shares of Common Stock issued pursuant to the exercise of such Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.
19. AMENDMENT OR TERMINATION OF THE PLAN.
The Board of Directors may, at any time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent the Board of
Directors determines that such approval is appropriate for purposes of
satisfying Section 162(m) or 422 of the Code or to the extent such approval is
required by the rules of any stock exchange on which the Common Stock is listed.
Nothing herein shall restrict the Committee's ability to exercise its
discretionary authority pursuant to Section 4 of the Plan, which discretion may
be exercised without amendment to the
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Plan. No action hereunder may, without the consent of a Participant, reduce
the Participant's rights under any outstanding Incentive Award.
20. TRANSFERS UPON DEATH; NONASSIGNABILITY.
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executor or administrator of the
Participant's estate or by a person who shall have acquired the right to such
exercise by will or by the laws of descent and distribution. No transfer of an
Incentive Award by will or the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Incentive Award.
During a Participant's lifetime, the Committee may permit the transfer,
assignment or other encumbrance of an outstanding Option or outstanding shares
of Restricted Stock unless such Option is an Incentive Stock Option and the
Committee and the Participant intend that it shall retain such status.
Notwithstanding the foregoing, subject to any conditions as the Committee may
prescribe, a Participant may, upon providing written notice to the secretary of
the Company, elect to transfer any or all Options granted to such Participant
pursuant to the Plan to members of his or her immediate family, including, but
not limited to, children, grandchildren and spouse or to trusts for the benefit
of such immediate family members or to partnerships in which such family members
are the only partners; provided, however, that no such transfer by any
Participant may be made in exchange for consideration.
21. EXPENSES AND RECEIPTS.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
22. FAILURE TO COMPLY.
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant (or beneficiary or transferee) to comply with any of
the terms and conditions of the Plan or the applicable Award Agreement, unless
such failure is remedied by such Participant (or beneficiary or transferee)
within ten days after notice of such failure by the Committee, shall be grounds
for the cancellation and forfeiture of such Incentive Award, in whole or in
part, as the Committee, in its absolute discretion, may determine.
23. EFFECTIVE DATE AND TERM OF PLAN.
The Plan became effective on the Effective Date, but the Plan (and any
grants of Incentive Awards made prior to stockholder approval of the Plan) shall
be subject to the requisite approval of the stockholders of the Company. In the
absence of such approval, such Incentive Awards shall be null and void. Unless
earlier terminated by the Board of Directors, the right to grant Incentive
Awards under the Plan will terminate on the tenth anniversary of the Effective
Date. Incentive Awards outstanding at Plan termination will remain in effect
according to their terms and the provisions of the Plan.
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24. APPLICABLE LAW.
Except to the extent preempted by any applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of Utah,
without reference to the principles of conflicts of law.
25. PARTICIPANT RIGHTS.
No Participant shall have any claim to be granted any Incentive Award under
the Plan, and there is no obligation for uniformity of treatment for
Participants. Except as provided specifically herein, a Participant or a
transferee of an Incentive Award shall have no rights as a stockholder with
respect to any shares covered by any award until the date of the issuance of a
Common Stock certificate to him for such shares.
26. UNFUNDED STATUS OF AWARDS.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Incentive Award, nothing contained in the Plan or any
Award Agreement shall give any such Participant any rights that are greater than
those of a general creditor of the Company.
27. NO FRACTIONAL SHARES.
No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan. The Committee shall determine whether cash, other Incentive
Awards, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
28. BENEFICIARY.
A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the Participant's beneficiary.
29. INTERPRETATION.
The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, with Section 162(m) and 422 of the Code, and all
provisions hereof shall be construed in a manner to so comply.
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