Stock Option Plan for Nonemployee Directors – Storage Technology Corp.
STORAGE TECHNOLOGY CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
RECITALS
A. Pursuant to a resolution dated June 15, 1987, the board of
directors (the 'Board') of Storage Technology Corporation, a Delaware
corporation (the 'Company'), adopted the Stock Option Plan for NonEmployee
Directors (the 'Plan'). The Plan was approved by the stockholders of the
Company at a meeting held October 20, 1987 (the 'Original Adoption Date'). The
Plan was thereafter amended (the 'First Amendment') by the Board on March 29,
1989 and such amendment was approved by the stockholders of the Company at a
meeting held June 28, 1989, and again amended (the 'Second Amendment') by the
Board on November 7, 1990 and such amendment was approved by the stockholders
of the Company at a meeting held May 29, 1991. This Amended and Restated Plan
incorporates the above amendments, and amendments approved by the Board on July
26, 1995 and March 6, 1996.
B. The Board reserved the right to amend the Plan from time to time
with certain restrictions and only with the approval of the stockholders with
respect to certain amendments, all as specified in the Plan. Pursuant to such
authority, the Plan is hereby amended in its entirety as set forth below (the
'Amended Plan'), provided, however, that the amendments made hereby and options
first granted hereby, pursuant to Section 3.2.1.6, are all subject to the
approval of the Company's stockholders at the Company's next annual meeting
following the Board's adoption of this Amended Plan.
C. The purposes of the Plan are to secure for the Company the benefits
arising from capital stock ownership by its current and future nonemployee
directors by providing to such directors added incentive to continue in the
service of the Company and a more direct interest in the future success of the
operations of the Company through the granting to such directors of options
('Option' or 'Options') to purchase shares of the $.10 par value common stock
of the Company (the 'Stock') subject to the terms and conditions described
below.
ARTICLE I
1 GENERAL
1.1 Definitions. For purposes of this Amended Plan, and as used
herein, a 'nonemployee director' is an individual who (a) is a
member of the board of directors of the Company, and (b) is not an
employee of the Company. For purposes of this Amended Plan, an
employee is an individual whose wages are subject to the
withholding of federal income tax under section 3401 of the
Internal Revenue Code of 1986, as amended from time to time (the
'Code').
1.2 Options. The Options granted hereunder shall be options that are
not qualified as incentive stock options under section 422A of the
Code.
ARTICLE II
2 ADMINISTRATION
2.1 The Stock Option Committee. The Amended Plan shall be administered
by the Compensation Committee of the Board ('the Committee'), which
shall be composed in such a manner to satisfy the requirements, if
any, of Rule 16b-3 promulgated under the Securities Exchange Act of
1934 or any successor rule ('Rule 16b-3') with respect to
committees administering formula plans that comply with Rule 16b-3
and in accordance with the General Corporation Law of Delaware.
The persons comprising the Committee shall be appointed by and
serve at the pleasure of the Board. The Committee members shall
all be members of the Board.
2.2 Quorum. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at
which a quorum is present or participating by the means described
in the last sentence of this section 2.2, or acts approved in
writing by all members of the Committee, shall be the acts of the
Committee. The Committee shall keep minutes of its meetings. One
or more members of the Committee may participate in a meeting of
the Committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other.
2.3 Authority of the Committee. The Committee shall have no authority
or discretion or power to select the participants who will receive
Options, to set the number of shares to be covered by each Option,
or to set the exercise price or the period within which the Options
may be exercised or to alter any other terms or conditions
specified herein, except in the sense of administering the Amended
Plan subject to the provisions of the Amended Plan. Subject to the
foregoing limitations, the Committee shall have authority and power
to adopt such rules and regulations and to take such action as it
shall consider necessary or advisable for the administration of the
Amended Plan and to construe, interpret and administer the Amended
Plan and the decisions of the Committee shall be final and binding
upon the Company, the Holders (as defined below) and all other
persons. No member of the Committee shall incur any liability by
reason of any action or determination made in good faith with
respect to the Amended Plan or any stock option agreement.
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ARTICLE III
3 OPTIONS
3.1 Participation. Each individual who was a nonemployee director of
the Company on the Original Adoption Date or who becomes such
thereafter shall receive Options to purchase Stock under the Plan
on the terms and conditions described herein.
3.2 Stock Option Agreements. Each Option granted under the Amended
Plan shall be evidenced by a written stock option agreement in
substantially the form attached hereto, which shall be entered into
by the Company and the nonemployee director to whom the Options
are granted (the 'Holder'), and which shall include or conform to
the following terms and conditions, and which may include such
other terms and conditions, if any, not inconsistent therewith or
with the terms and conditions of this Amended Plan as the Committee
considers appropriate:
3.2.1 Number of Options and Grant Dates. Each nonemployee
director is entitled to receive, under the Plan, Options to
purchase shares of Stock as described below and subject to
adjustment from and after the Original Adoption Date as
provided in section 4.2 hereof.
3.2.1.1 Each nonemployee director who was such on
October 20, 1987, has received an Option,
granted as of October 20, 1987, to purchase
2,500 shares of Stock (after adjustment for the
one-for-ten reverse stock split effected on May
19, 1989) pursuant to the Plan.
3.2.1.2 Each individual who became a nonemployee
director of the Company after March 29, 1989,
and prior to November 7, 1990, has received an
Option, granted as of his or her election date,
to purchase 2,500 shares of Stock pursuant to
the First Amendment.
3.2.1.3 Between October 20, 1987 and November 7, 1990,
each nonemployee director holding an Option
granted under 3.2.1.1 or 3.2.1.2 above who had,
after such grant, been elected to serve on the
Board at two consecutive annual meetings of
stockholders as a nonemployee director after
receipt of the Option granted under 3.2.1.1 or
3.2.1.2 above, has received an additional
Option, granted as of such election date, to
purchase 2,500 shares of Stock.
3.2.1.4 Options granted under 3.2.1.1, 3.2.1.2 and
3.2.1.3 above will hereinafter be collectively
referred to as 'Initial Options'. All Initial
Options shall continue to be held pursuant to
the terms and conditions of this Amended Plan.
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3.2.1.5 Each nonemployee director who was such on
November 7, 1990, or who first becomes such
after November 7, 1990, shall receive an Option
(the 'New Option'), granted as of the later to
occur of November 7, 1990, or his or her first
election or appointment as a nonemployee
director, to purchase a number of shares of
Stock equal to 25,000 less any shares subject to
the Initial Options granted to such director.
3.2.1.6 Each nonemployee director who was such on July
26, 1995 or is thereafter elected or appointed
shall receive an additional option (the
'Additional Option') granted as of the later to
occur of July 26, 1995 or the third anniversary
of his or her first election or appointment as a
nonemployee director, to purchase 18,000 shares
of Stock.
3.2.1.7 In the event that any grant hereunder would
exceed the number of shares of Stock available
for issuance under the Amended Plan, or is
otherwise subject to stockholder approval, then
each such grant shall be conditioned on and
subject to subsequent stockholder approval to
the extent it exceeds that number of shares
determined by dividing the total number of
shares remaining available for grant under the
Amended Plan on such grant date by the number of
eligible nonemployee directors, or to the
extent that stockholder approval is otherwise
required.
3.2.2 Price. The price at which each share of Stock covered by
an Option may be purchased shall be the greater of 100
percent of the fair market value of such share on the date
of grant of the Option or the par value per share. For
purposes of this determination, 'fair market value' means
the closing price of a share of Stock as reported in the
Wall Street Journal for the last business day prior to the
date of the grant. If no such closing price is reported,
then fair market value shall mean the average of the high
and low sale prices (or if no sale prices are reported, the
average of the high and low bid prices) as reported by the
principal regional stock exchange, or if not so reported,
as reported by NASDAQ or a quotation system of general
circulation to brokers and dealers.
3.2.3 Service Required for Exercise.
3.2.3.1 Each Initial Option shall be exercisable in full
six months after the date of grant, or at any
time after November 7, 1990, whichever shall
occur last.
3.2.3.2 Subject to 3.2.3.5 below, for each nonemployee
director who is such on November 7, 1990, such
director's New Option shall become exercisable
as follows: a number of shares equal to 5,000
less any shares subject to Initial Options
granted to such director, shall become
exercisable six months after the grant date, and
the balance shall become exercisable in
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four equal amounts on the first through fourth
anniversaries of such grant date.
3.2.3.3 Subject to 3.2.3.5 below, for each nonemployee
director who becomes such after November 7,
1990, such director's New Option shall become
exercisable as follows: 5,000 shares shall
become exercisable six months after the grant
date and the balance shall become exercisable in
six equal amounts on the first through the sixth
anniversaries of such grant date (with the first
four years rounded down to the nearest whole
share, and the last two years rounded up).
3.2.3.4 Subject to 3.2.3.5 below, each Additional Option
shall become exercisable as follows: 6,000
shares on each of the first, second, and third
anniversaries of the first date by which all
shares that are subject to New Options held by
such directors have become exercisable.
3.2.3.5 Except as set forth in this Article III, the
Options shall not be exercisable as to any
shares as to which the continuous service
requirement shall not be satisfied, regardless
of the circumstances under which the Holder's
service to the Company shall be terminated. The
number of shares as to which an Option may be
exercised shall be cumulative, so that once an
Option shall become exercisable as to any shares
it shall continue to be exercisable as to such
shares, until expiration or termination of the
Options as provided in the Amended Plan.
3.2.4 Option Period. The period within which each Option may be
exercised shall expire, in all cases, ten years from the
date of grant of the Option (the 'Option Period'), unless
terminated sooner pursuant to subsection 3.2.5 below or
fully exercised prior to the end of such period.
3.2.5 Termination of Service. With respect to the exercise of
such Option in the event that the Holder ceases to be a
nonemployee director of the Company for the reasons
described in this 3.2.5:
3.2.5.1 As to all options granted before July 20, 1995,
and as to options granted on or after July 20,
1995, if the option has not been outstanding, as
of the date of the director ceasing to be a
nonemployee director, for at least six years and
such director has not been an outside director
for at least ten years, the vesting of and
expiration of the right to exercise such options
shall occur as follows:
3.2.5.1.1 Disability. If the Holder
terminates his or her service as a
director due to becoming disabled
(within the meaning of section
22(e)(3) of the Code) while in a
directorship of the
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Company or becomes disabled during
the six-month period after his or
her termination, Options vested as
of the date of termination may be
exercised within twelve months
following the disability (if
otherwise within the Option Period)
but will expire at the end of such
period to the extent they are not
exercised; or
3.2.5.1.2 Death. If the Holder shall die
while in a directorship of the
Company or during the six-month
period after his or her termination
of service as a director, all
Options, including, but not limited
to, Options not otherwise vested
may be exercised within twelve
months following such death (if
otherwise within the Option
Period), but not thereafter, by the
Holder's legal representative or
representatives, or by the person
or persons entitled to do so under
the Holder's last will and
testament, or if the Holder shall
fail to make testamentary
disposition of his or her Options
or shall die intestate, by the
person or persons entitled to
receive said Options under the laws
of descent and distribution; or
3.2.5.1.3 Other. If the directorship of a
Holder is terminated for any reason
prior to such director reaching age
70 (other than the circumstances
specified in 3.2.5.1.1 and
3.2.5.1.2 of this 3.2.5.1) within
the Option Period, the Options
vested as of the date of
termination may be exercised within
six months following the date of
such termination (if otherwise
within the Option Period), but not
thereafter, or
3.2.5.1.4 Retirement. If the directorship of
a Holder is terminated for any
reason after such director reaches
age 70 (other than the
circumstances specified in
3.2.5.1.1 and 3.2.5.1.2) within the
Option Period, all Options,
including, but not limited to,
Options not otherwise vested may be
exercised within six months
following the date of such
termination (if otherwise within
the Option Period), but not
thereafter.
3.2.5.2 As to all Options granted on or after July 20,
1995, if the Option has been outstanding, as of
the date of the director's ceasing to be a
nonemployee director, for at least six years or
such director has been an outside director for
at least ten years, the vesting of and
expiration of the right to exercise such options
shall occur as follows:
3.2.5.2.1 Disability. If the Holder
terminates his or her service as a
director due to becoming disabled
(within the meaning of
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section 22(e)(3) of the Code) while
in a directorship of the Company,
Options vested as of the date of
termination may be exercised within
the Option Period but will expire
at the end of such period to the
extent they are not exercised; or
3.2.5.2.2 Death. If the Holder shall die
while in a directorship of the
Company all Options, including, but
not limited to, Options not
otherwise vested may be exercised
within the Option Period but not
thereafter, by the Holder's legal
representative or representatives,
or by the person or persons
entitled to do so under the
Holder's last will and testament,
or if the Holder shall fail to make
testamentary disposition of his or
her Options or shall die intestate,
by the person or persons entitled
to receive said Options under the
laws of descent and distribution;
or
3.2.5.2.3 Other. If the directorship of the
Holder is terminated for any reason
prior to such director reaching age
70 (other than the circumstances
specified in 3.2.5.2.1 and
3.2.5.2.2 of this 3.2.5.2) within
the Option Period, the Options
vested as of the date of
termination may be exercised within
the Option Period, but not
thereafter; or
3.2.5.2.4 Retirement. If the directorship of
the Holder is terminated for any
reason after such director reaches
age 70 (other than the
circumstances specified in
3.2.5.2.1 and 3.2.5.2.2) within the
Option Period, all Options,
including, but not limited to,
Options not otherwise vested may be
exercised within the Option Period,
but not thereafter.
3.2.6 Transferability. Each Option granted under the Plan or the
Amended Plan shall not be transferable by the Holder except
(i) by will or pursuant to the laws of descent and
distribution, or (ii) pursuant to a qualified domestic
relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules
thereunder, or (iii) as may otherwise be permitted by
applicable law, including the version of Rule 16b-3 that is
applicable to this Amended Plan at the time of the
transfer. Each Option shall be exercisable during the
Holder's lifetime only by the Holder or by his or her
permitted transferee(s) pursuant to clause (ii) or (iii)
hereof.
3.2.7 Exercise of Option. The method for exercising each Option
granted pursuant to the Plan or the Amended Plan shall be
by delivery to the Company of written notice specifying the
number of shares with respect to which the Options are
being exercised. If requested by the Company, such notice
shall contain the Holder's
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representation that he or she is purchasing the Stock for
investment purposes only and his or her agreement not to
sell any Stock so purchased in any manner that is in
violation of the Securities Act of 1933, as amended, or
applicable state law. Such restrictions, or notice
thereof, shall be placed on the certificates representing
the Stock so purchased. The purchase of such Stock shall
take place at the principal offices of the Company within
twenty days following delivery of such notice, at which
time the purchase price of the Stock shall be paid in full
in cash, by check payable to the Company's order, by
delivery to the Company of certificates representing the
number of shares of Stock then owned by the exercising
Holder, the fair market value of which, on the date of
exercise, equals the purchase price of the Stock purchased
pursuant to exercise of the Options, properly endorsed for
transfer to the Company, or by a combination of such
methods of payment. A properly executed certificate or
certificates representing the Stock shall be delivered to
the Holder upon payment therefor.
ARTICLE IV
4 AUTHORIZED STOCK
4.1 The Stock. The total number of shares of Stock as to which Options
may be granted pursuant to the Amended Plan shall not exceed
530,000 in the aggregate, except as such number of shares shall be
adjusted from and after July 26, 1995 in accordance with the
provisions of 4.2 hereof. If any outstanding Option granted under
the Plan or the Amended Plan shall expire or be terminated for any
reason before the end of the Option Period, the shares of Stock
allocable to the unexercised portion of such Option shall be
available for grants pursuant to 3.2.1.5 and 3.2.1.6 above.
Fractional shares shall not be distributed and shall remain
unallocated. The Company shall at all times during the life of any
outstanding Options retain as authorized and unissued shares or
treasury shares at least the number of shares from time to time
included in the outstanding Options, or otherwise assure itself of
its ability to perform its obligations under the Amended Plan.
4.2 Adjustment by Stock Split, Stock Dividend, Etc. In the event that
the outstanding shares of Stock of the Company are changed into or
exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization,
reclassification, stock split, reverse stock split, stock dividend,
combination or subdivision, appropriate adjustment shall be made in
the number and kind of shares available for grant under the Amended
Plan and reserved for issuance under any Options granted under the
Plan or the Amended Plan. Such adjustment to outstanding Options
shall be made without change in the total price applicable to the
unexercised portion of such Options, and a corresponding adjustment
in the applicable exercise price per share shall be made.
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4.3 Rights as a Stockholder. The holder of an Option shall have no
rights as a stockholder with respect to any shares covered by an
Option until the date of issue of a stock certificate to him or her
for such shares. Except as otherwise expressly provided in the
Amended Plan, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock
certificate is issued.
4.4 General Adjustment Rules. No adjustment or substitution provided
for in this Article IV shall require the Company to sell a
fractional share under any stock option agreement and the total
substitution or adjustment with respect to each stock option
agreement shall be limited by deleting any fractional share. In
the case of any such substitution or adjustment, the exercise price
per share in each such stock option agreement shall be equitably
adjusted by the Committee to reflect the greater or lesser number
of shares of Stock or other securities into which the Stock subject
to an Option may have been changed. Adjustments under this Article
IV shall be made by the Committee, whose determination with regard
thereto shall be final and binding.
ARTICLE V
5 REORGANIZATION OR LIQUIDATION
In case the Company is merged or consolidated with another entity and the
stockholders of the Company as of immediately prior to such merger or
consolidation own 50% or less of the voting power of the surviving entity,
or in case all or substantially all of the assets or more than 50% of the
outstanding voting stock of the Company is acquired by any other person or
entity, or in case of a reorganization (other than a reorganization under
federal bankruptcy statutes) or liquidation of the Company that is
approved by the stockholders of the Company (i) any outstanding Options
shall be assumed or substituted on an equitable basis by the merged,
consolidated or otherwise reorganized corporation, person or entity,
provided that no additional benefits shall be conferred upon the Holders
as a result of such assumption or substitution, and the excess of the
aggregate fair market value of the shares subject to the Options
immediately after such assumption or substitution over the purchase price
thereof is not more than the excess of the aggregate fair market value of
the shares subject to the Options immediately before such assumption or
substitution over the purchase price thereof, and (ii) the exercisability
of all outstanding Options shall automatically be accelerated such that
the Options shall become exercisable in full regardless of whether all
conditions of exercise relating to vesting period or length of service of
a director have been satisfied. In the event that the triggering event is
an event that requires approval of the stockholders of the Company prior
to its consummation, then the acceleration of exercisability shall be
effective upon stockholder approval of such triggering event. If the
triggering event does not require stockholder approval (such as the
acquisition by a third party of more than 50% of the outstanding stock of
the Company), then the acceleration of exercisability shall be effective
upon the occurrence of such event.
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ARTICLE VI
6 GENERAL PROVISIONS
6.1 Expiration. The Amended Plan shall terminate whenever the Board
adopts a resolution to that effect. If not sooner terminated under
the preceding sentence, the Amended Plan shall wholly cease and
expire on March 29, 2010. After termination, no Option shall be
granted under this Amended Plan, but the Company shall continue to
recognize Options previously granted.
6.2 Amendments. The Board may from time to time amend, modify, suspend
or terminate the Amended Plan; provided, however, that the
provisions of the Amended Plan that determine which directors may
be granted Options, the timing of the Option grants and the number
of shares of Stock subject to Options granted hereunder may not be
amended more frequently than is permitted for formula plans by Rule
16b-3. Nevertheless, no such amendment, modification, suspension
or termination shall (a) impair any Option earlier granted under
the Plan or the Amended Plan or deprive any Holder of any shares of
Stock that he or she may have acquired through or as a result of
the Plan or the Amended Plan or (b) be made without the approval of
the stockholders of the Company if such approval is required to
retain the exemption provided by Rule 16b-3 with respect to Options
granted under the Plan or the Amended Plan.
6.3 Treatment of Proceeds. Proceeds from the sale of Stock pursuant to
Options granted under the Plan or the Amended Plan shall constitute
general funds of the Company.
6.4 Effectiveness. The effective date of the Plan was October 20,
1987. The 'Effective Date' of this Amended Plan shall be July 26,
1995.
6.5 Paragraph Headings. The paragraph headings are included herein
only for convenience, and they shall have no effect on the
interpretation of the Plan.
ADOPTED by the authority of the Board on March 6, 1996, effective as of
the Effective Date of the Amended Plan.
STORAGE TECHNOLOGY CORPORATION
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