2001 Equity Incentive Plan - HPL Technologies Inc.
HPL TECHNOLOGIES, INC.
AMENDED AND RESTATED
2001 EQUITY INCENTIVE PLAN
DATED JULY 11, 2001
1. PURPOSES OF THE PLAN
The purpose of this HPL Technologies, Inc. Amended and Restated 2001 Equity
Incentive Plan (the "PLAN") is to enhance the long-term shareholder value of HPL
Technologies, Inc. by offering opportunities to qualified individuals (as
provided in the Plan) to participate in the growth in value of the common stock
of HPL Technologies, Inc.
2. DEFINITIONS AND RULES OF INTERPRETATION
2.1 DEFINITIONS. The following defined terms are used in the Plan:
(a) "ADMINISTRATOR" means the Board, the Committee, or, if authority
to administer the Plan has been delegated pursuant to Section 4.1, the Chief
Executive Officer or the President of the Company.
(b) "AFFILIATE" means a "parent" or "subsidiary" corporation as
defined in Section 424 of the Code.
(c) "APPLICABLE LAWS" means the requirements relating to the issuance
of stock or the administration of stock option or stock award plans under U.S.
federal and state laws, any stock exchange or quotation system on which the
Shares are listed or quoted, and the applicable laws of any foreign jurisdiction
where Awards are, or will be, granted under the Plan or to which an Awardee, the
Company or an Affiliate is subject.
(d) "APPROVED LEAVE" means an approved personal or medical leave of
absence with an employment guarantee (by statute or contract) upon return.
(e) "AWARD" means a Stock Award, SAR, Cash Award, or Option granted in
accordance with the terms of the Plan.
(f) "AWARD AGREEMENT" means the document evidencing the grant of an
Award to a Participant.
(g) "AWARDEE" means the holder of an outstanding Award.
(h) "BOARD" means the board of directors of the Company.
(i) "CASH AWARD" means the right to receive cash as described in
(j) "CASHLESS EXERCISE" has the meaning given in Section 6.6.
(k) "CODE" means the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations promulgated thereunder.
(l) "COMMITTEE" means the compensation committee of the Board, or,
if so determined by the Board, some other committee of Directors appointed in
accordance with Section 4.
(m) "COMPANY" means HPL Technologies, Inc.
(n) "CONSULTANT" means any person, entity, or employee of an entity,
engaged to render services to the Company or an Affiliate.
(o) "COVERED EXECUTIVE EMPLOYEES" means Participants who are "covered
employees" under Section 162(m) of the Code.
(p) "DIRECTOR" means a member of the Board of Directors of the
Company or an Affiliate.
(q) "EMPLOYEE" means a regular employee of the Company or any
Affiliate, including an Officer or Director, who is treated as an employee in
the personnel records of the Company or an Affiliate for the relevant period,
but shall exclude individuals who are classified by the Company or an Affiliate
as (i) leased from or otherwise employed by a third party, (ii) independent
contractors, or (iii) intermittent or temporary, even if any such classification
is changed retroactively as a result of an audit, litigation or otherwise. An
Awardee shall not cease to be an Employee in the case of transfers between
locations of the Company or between the Company and an Affiliate, or any
successor to the Company that assumes the Awards granted hereunder pursuant to
Section 10.2. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to make the Director an Employee of the Company.
(r) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
(s) "EXPIRATION DATE" means the latest date on which an Award may be
exercised under the Award Agreement and the Plan.
(t) "FAIR MARKET VALUE" means the value of Shares as determined under
(u) "GRANT DATE" means the date the Administrator approves the grant
of an Award under the Plan, except that, with respect to grants to become
effective on a future date or the satisfaction of a condition, the Grant Date
is the future date or the date the condition is satisfied.
(v) "INCENTIVE STOCK OPTION" or "ISO" means an Option intended to
qualify as an incentive stock option under Section 422 of the Code and
designated as an Incentive Stock Option. The designation of an Option as an ISO
by the Administrator or in the Award Agreement is not a warranty or
representation that it will be treated as an incentive stock option under
Section 422 of the Code.
(w) "NON EMPLOYEE DIRECTOR" means Non -Employee Director as defined
in Rule 16b-3.
(x) "NON-QUALIFIED STOCK OPTION" means an Option other than an
Incentive Stock Option.
(y) "OBJECTIVELY DETERMINABLE PERFORMANCE CONDITION" shall mean a
performance condition (i) that is established at the time an Award is granted,
(ii) that is established no later than the earlier of (x) 90 days after the
beginning of the period of service to which it relates, or (y) before the elapse
of 25% of the period of service to which it relates, (iii) that is uncertain of
achievement at the time it is established, and (iv) the achievement of which is
determinable by a third party with knowledge of the relevant facts. Examples of
measures that may be used in Objectively Determinable Performance Conditions
include net order dollars, net profit dollars, net profit growth, net revenue
dollars, revenue growth, individual performance, earnings per share, return on
assets, return on equity, and other financial objectives, objective customer
satisfaction indicators and efficiency measures, each with respect to the
Company and/or an individual business unit.
(z) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
(aa) "OPTION" means a right to purchase Shares of the Company, as
described in Sections 6 and 7.
(bb) "OPTION PRICE" means the price payable under an Option for
(cc) "OPTIONEE" means a person to whom an Option has been granted.
(dd) "PARTICIPANT" means an individual eligible to receive an Award
under Section 5.
(ee) "PLAN" means this HPL Technologies, Inc. 2001 Equity Incentive
(ff) "REVERSE VESTING" means the right of an Optionee to exercise an
Option before it has vested, receiving in exchange Shares that are subject to
a right of repurchase by the Company at the Option Price for the remainder of
the vesting period.
(gg) "RULE 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time.
(hh) "SHARES" means shares of the common stock of the Company or other
securities substituted for the common stock under Sections 3.3 or 10.2.
(ii) "STOCK APPRECIATION RIGHT" or "SAR" means a right to receive cash
based on a change in the Fair Market Value of the common stock of the Company,
as described in Section 8.1.
(jj) "STOCK AWARD" means a right to receive Shares, as described in
(kk) "TERMINATION" means, with respect to an Awardee, that the
Awardee has ceased to be, for any reason, employed by, or consulting to, the
Company, or an Affiliate; provided, that for purposes of this definition, if
so determined bythe Administrator, "Termination" shall not include a change in
status from an Employee to a Consultant.
(ll) "VEST" means, with respect to an Option, that the Option has
become exercisable by reason of an Awardee's continued employment or
consultancy as provided in the Award Agreement (or, in the case of "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code, by reason of the Awardee meeting one or more of the Objectively
Determinable Performance Conditions), or by reason of restrictions on
exercise having been removed automatically or by action of the Administrator.
With respect to a Stock Award, Cash Award, or SAR, "VEST" means such Award
shall have become exercisable by or payable to the Awardee, as provided in
the Award Agreement or by reason of restrictions on exercise having been
removed automatically or by action of the Administrator.
2.2 RULES OF INTERPRETATION. References to "Sections," without more, are to
sections of this Plan. Captions and titles are for convenience only and shall
not be determinative in the interpretation of the Plan. Except when otherwise
indicated by the context the singular includes the plural and vice versa. "Or"
is not intended to be exclusive unless the context clearly requires otherwise.
3. STOCK SUBJECT TO THE PLAN
3.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 3.3, the
maximum aggregate number of Shares that may be issued under the Plan is
3.2 SHARES MAY BE UNISSUED OR RE-ACQUIRED. The Shares may be authorized,
but unissued, or reacquired securities of the Company. If an Option or Stock
Award expires or becomes unexercisable without having been exercised in full,
the unpurchased Shares which were subject to the Award shall become available
for future Awards under the Plan. Shares actually issued under the Plan shall
not be available for future Awards even if repurchased by the Company. For
purposes of computing the number of Shares available under the Plan, exercise of
a Stock Appreciation Right shall be treated as an issuance of the number of
Shares equivalent to the shares of common stock as to which the Award has been
3.3 ADJUSTMENTS FOR CHANGES TO CAPITAL STRUCTURE. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, spin-off or similar change to the capital structure of the
Company, appropriate adjustments shall be made to (a) the number and class of
securities subject to the Plan, (b) the number and class of securities that may
be awarded to any individual under the Plan, and (c) the exercise price and
number and class of securities under each outstanding Award. Any such
adjustments shall be made by the Board in its absolute discretion, and the
decision of the Board shall be final, binding and conclusive. Any shares of
stock issuable as a result of any such adjustment shall be rounded to the next
lower whole share; no fractional shares of stock shall be issued. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason of such issuance or the conversion of such
securities shall be made with respect to, the number or price of Shares subject
to an Award.
3.4 TERM OF THE PLAN
(a) The Plan shall be effective on the date it has been approved by the
Board; provided that no Award may be exercised unless and until the Plan has
been approved (i) at a duly held stockholders' meeting by the affirmative vote
of the holders of a majority of the voting power of the shares of the Company
entitled to vote and represented at the meeting in person or by proxy, or (ii)
by an action by written consent of the holders of a majority of the voting power
of the shares of the Company entitled to vote.
(b) The Plan has no set termination date; however, it may be
terminated as provided in Section 13, and no Incentive Stock Option may be
granted after the time described in Section 7.
4.1 GENERAL. The Board shall have ultimate responsibility for administering
the Plan. The Board may delegate some of its responsibilities to a Committee of
two or more Board members. The Board or the Committee may further delegate to an
Administrator. Where the Plan specifies that an action is to be taken or a
determination is to be made by the Board, it may be taken or made only by the
Board. Where the Plan references the "Committee" or "Administrator," the action
may be taken or a determination made by the Board, the Committee, or other
Administrator, except that only the Board or the Committee may approve grants to
Covered Executive Employees, and an Administrator other than the Board or the
Committee may grant Awards only to non-executive level employees and within
guidelines established by the Board or the Committee.
4.2 PUBLIC COMPANY. So long as the Company has outstanding a class of
equity securities registered under Section 12 of the Exchange Act, the Committee
shall consist of Board members who are Non-Employee Directors, and, following
the expiration of any transition period permitted by Section 162(m) of the Code,
who are "outside directors" within the meaning of Section 162(m) of the Code.
4.3 AUTHORITY OF ADMINISTRATOR. Subject to the other provisions of this
Plan, the Administrator shall have the authority, in its sole discretion:
(a) to grant Awards;
(b) to determine the Fair Market Value of the Common Stock subject to
(c) to determine the exercise price of Options granted;
(d) to determine the Awardees;
(e) to determine the time or times at which to grant an Award;
(f) to determine the number of shares subject to each Award;
(g) to determine the terms and provisions of each Award granted (which
need not be identical), including but not limited to, the time or times at which
Awards can be exercised, whether and under what conditions an Award is
assignable, and whether an Option is a Non-Qualified Stock Option or an ISO;
(h) to prescribe, amend, and rescind rules and regulations relating to
this Plan, including rules and regulations relating to sub-plans and Plan
(i) to interpret the Plan;
(j) to modify or amend any Award (with the consent of the Awardee);
(k) to defer (with the consent of the Awardee) or to accelerate the
vesting of any Award or class of Awards;
(l) to authorize any person to execute on behalf of the Company any
instrument evidencing the grant of an Award;
(m) to determine the form of Award Agreement and other documents used
in the administration of the Plan, and whether such documents may be in
(n) to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the
Administrator is specifically authorized (i) to adopt the rules and procedures
regarding the conversion of local currency, withholding procedures and handling
of stock certificates which vary with local requirements, (ii) to adopt
sub-plans and Plan addenda as the Administrator deems desirable, to accommodate
foreign laws, regulations and practice, including with respect to taxes;
(o) to authorize conversion or substitution under the Plan of any or
all outstanding stock options held by optionees of an entity acquired by the
Company (the "CONVERSION OPTIONS"). Any conversion or substitution shall be
effective as of the close of the merger or acquisition. The Conversion Options
may be Non-Qualified Stock Options or Incentive Stock Options, as determined by
the Administrator. Unless otherwise determined by the Administrator at the time
of conversion or substitution, all Conversion Options shall have the same terms
and conditions as Options generally granted by the Company under the Plan;
(p) to allow Awardees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Award that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Awardee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;
(q) to determine the effect of a divestiture of an Affiliate;
(r) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan, and any agreement under the Plan; and
(s) to make all other determinations deemed necessary or advisable for
the administration of the Plan. All decisions, determination and
interpretations of the
Administrator shall be final and binding on all Participants, Awardees and any
other holders of Awards.
5. ELIGIBLE PERSONS AND RESTRICTIONS
5.1 ELIGIBLE PERSONS. Awards may be granted to Employees, Directors and
Consultants, including to prospective Employees, Directors and Consultants
conditioned on the beginning of service for the Company or an Affiliate.
5.2 SECTION 162(M) LIMITATIONS.
(a) SARS AND OPTIONS. So long as the Company is a "publicly held
corporation" within the meaning of Section 162(m) of the Code, no Employee or
prospective Employee may be granted one or more Awards of SARs and Options
within any fiscal year of the Company with respect to more than 250,000 shares
(as adjusted pursuant to Section 3.3), and all such Awards must have an exercise
price or reference value of not less than Fair Market Value as of the Grant
Date. An Award that is cancelled by the Company, whether or not in the same
fiscal year in which it was granted, shall continue to be counted against such
limit for such year.
(b) CASH AWARDS AND STOCK AWARDS. Any Stock Award or Cash Award
intended as "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code must be contingent on one or more Objectively
Determinable Performance Conditions, and the material terms of the Award,
including the maximum amount payable or the payment formula, must be approved
by the stockholders of the Company before such Award is paid.
6. TERMS AND CONDITIONS OF OPTIONS
6.1 GENERAL. The Administrator may grant Options to Participants subject to
terms and conditions not inconsistent with the Plan and determined by the
Administrator. The specific terms and conditions applicable to the Awardee shall
be provided for in the Award Agreement. Options shall vest, in whole or in part,
at such times as the Administrator shall specify in the Award Agreement.
6.2 PRICE. No Option may be granted for less than 85% of the Fair Market
Value of the Shares on the Grant Date. No Option intended as "qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
may be granted for less than 100% of the Fair Market Value of the Shares on the
6.3 TERM. No Option shall be exercisable more than ten years after the
Grant Date, or such lesser term as may be fixed by the Administrator in the
6.4 VESTING. Options granted under this Plan shall be exercisable in
accordance with a schedule related to the Grant Date of the Option, the date of
first employment, or
such other date as may be set by the Administrator and specified in the Award
Agreement relating to such Option, but not in any event less than six months
from the Grant Date, date of first employment or other date of set forth in
the Award Agreement for purposes of fixing the vesting of the Option. If so
provided in the Award Agreement, an Option may be exercisable immediately,
subject to Reverse Vesting. The Administrator may require that all Shares
subject to Reverse Vesting be held in escrow until such repurchase right lapses.
6.5 RIGHT OF REPURCHASE. If an Option is subject to Reverse Vesting, the
Company shall have the right, beginning at the Termination of the Optionee and
continuing for the next three months, to repurchase that number of Shares that
the Optionee would not have been able to purchase under the Option if the Option
did not permit Reverse Vesting, based on the vesting schedule provided in the
Award Agreement. Such right of repurchase shall be at the Option Price.
6.6 FORM OF CONSIDERATION. The Administrator shall determine the acceptable
form of consideration for exercising rights under an Award from among the
following acceptable forms of consideration:
(b) check or wire transfer, denominated in U.S. Dollars except with the
consent of the Administrator or as specified by the Administrator for foreign
employees or foreign sub-plans;
(c) delivery or designation of other Shares which (A) in the case of
Shares originally acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of exercise, and (B) have a
Fair Market Value on the date of surrender equal to the aggregate Option
Price of the Shares for which the previously-owned Shares are to be used as
(d) provided that a public market exists for the Shares through a
"same day sale" commitment from the Awardee and a broker-dealer that is a
member of the National Association of Securities Dealers, Inc. (an "NASD
Dealer") whereby the Awardee irrevocably elects to exercise the Option and to
sell a portion of the Shares so purchased to pay for the exercise price of
the Option and all other amounts due to the Company hereunder, and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward
the exercise price and all other amounts due to the Company hereunder
directly to the Company; or
(e) any combination of the foregoing methods of payment.
6.7 NON-EMPLOYEE DIRECTOR OPTIONS.
The provisions of this Section 6.7 shall apply only to grants of Options to
Non-Employee Directors. Except as set forth in this Section 6.7, the other
provisions of the Plan shall apply to grants of Options to Non-Employee
Directors to the extent not inconsistent with this Section.
(a) GENERAL. Non-Employee Directors shall receive Non-Qualified Stock
Options in accordance with this Section 6.7 and may not be granted Incentive
Stock Options under this Plan. The exercise price for Options granted to
Non-Employee Directors shall be the Fair Market Value on the date of grant.
(b) GRANTS TO NON-EMPLOYEE DIRECTORS. Commencing at the 2002 Annual
Meeting of Stockholders of the Company, each Non-Employee Director who is
elected or appointed to the Board (including by a way of re-election or
re-appointment) will, at the time such director is elected or appointed and
duly qualified, and after Board approval of such grant, be granted
automatically, without action by the Administrator, an option to purchase
7,500 Shares. Such Option shall become exercisable with respect to one-third
of the Shares covered by the Option six months after the Grant Date (the
"Initial Vesting Date") and with respect to an additional one-third of the
Shares covered by the Option on each of the next two anniversaries of the
Initial Vesting Date.
(c) DURATION. Subject to the immediately following sentence, each
Option granted to a Non-Employee Director shall be for a term of 10 years. Upon
the cessation of a Non-Employee Director's membership on the Board for any
reason, Options granted to such Non-Employee Director shall expire upon the
earlier of (i) three months from the date of such cessation of Board membership
(or one year if cessation of Board membership is due to the Non-Employee
Director's death or permanent disability); or (ii) expiration of the term of
the Option. The Administrator may not provide for an extended exercise period
beyond the periods set forth in this Section 6.7(c).
7. INCENTIVE STOCK OPTIONS
Notwithstanding any other provision of the Plan, the following provisions
apply to Incentive Stock Options:
(a) The term of an Incentive Stock Option shall be no more than ten
(b) No Incentive Stock Option may be granted under the Plan more than
ten years following the date the Plan was approved by the Board.
(c) Regardless of any other provision of this Plan, for any Optionee
Incentive Stock Options granted under all incentive stock option plans of the
Company and its Affiliates may not vest for more than $100,000 in Fair Market
Value of the shares of stock covered by the Options (measured on the Grant
Dates(s)) in any calendar year.
To the extent that the value of such shares exceeds $100,000 in Fair Market
Value, the excess shall be considered to be a Non-Qualified Stock Option, with
the earliest-granted Options or portions thereof to be treated as Incentive
Stock Options and the remainder to be treated as Non-Qualified Stock Options.
(d) Any Incentive Stock Option granted to a Ten Percent Shareholder, as
defined in Section 7(e), must have an Expiration Date within five years of the
(e) The exercise price of an Incentive Stock Option shall never be less
than the Fair Market Value of the shares covered by the Option at the Grant
Date. The exercise price of an Incentive Stock Option granted to a Ten Percent
Shareholder shall never be less than 110% of the Fair Market Value of the shares
of stock covered by the option at the Grant Date. A "TEN PERCENT SHAREHOLDER" is
any person who owns, directly or by attribution under Section 424(d) of the
Code, an amount of stock greater than ten percent of the total combined voting
power of all classes of stock of the Company or of any Affiliate.
(f) Incentive Stock Options may be granted only to Employees.
(g) No rights under an Incentive Stock Option may be transferred, other
than by will or the laws of descent and distribution. During the life of the
Optionee, an Incentive Stock Option may be exercised only by the Optionee.
(h) Any Incentive Stock Option that is not exercised within three
months following the Termination of the Optionee for any reason other than
death or total and permanent disability, or within one year of the total and
permanent disability of the Optionee, shall be treated as a Non-Qualified Stock
Option; provided, however, that in the case of an Optionee who dies within
three months following Termination this subsection shall not apply.
(i) Any Incentive Stock Option that is not exercised within 90 days
after the beginning of a leave of absence other than an Approved Leave shall be
treated as a Non-Qualified Stock Option; provided, however, that in the case of
an Optionee who dies within three months following the start of the leave of
absence this subsection shall not apply.
8. STOCK APPRECIATION RIGHTS, RESTRICTED STOCK, CASH AWARDS
(a) GENERAL. SARs may be granted either alone, in addition to, or in
tandem with other Awards granted under the Plan. The Administrator may grant
SARs to Participants subject to terms and conditions not inconsistent with the
Plan and determined by the Administrator. The specific terms and conditions
applicable to the Awardee shall
be provided for in the Award Agreement. SARs shall be exercisable, in whole
or in part, at such times as the Administrator shall specify in the Award
(b) EXERCISE. Upon the exercise of a SAR, in whole or in part, an
Awardee shall be entitled to receive, at the Administrator's discretion: (i)
cash payment in an amount equal to the excess of the Fair Market Value of a
fixed number of shares of common stock covered by the exercised portion of the
SAR on the date of such exercise, over the Fair Market Value of the common stock
covered by the exercised portion of the SAR on the Grant Date; or (ii) shares of
common stock having a Fair Market Value on the date of exercise equal to the
excess of the Fair Market Value of a fixed number of shares of common stock
covered by the exercised portion of the SAR on the date of such exercise, over
the Fair Market Value of the common stock covered by the exercised portion of
the SAR on the Grant Date; provided, however, that the Administrator may place
limits on the aggregate cash amount or number of shares of common stock that may
be paid or issued upon the exercise of a SAR.
(c) METHOD OF EXERCISE. A SAR shall be deemed to be exercised when
notice of such exercise has been given to the Company in accordance with the
terms of the SAR by the person entitled to exercise the SAR.
8.2 STOCK AWARDS.
(a) GENERAL. Stock Awards may be granted either alone, in addition to,
or in tandem with other Awards granted under the Plan. The specific terms and
conditions applicable to the Awardee shall be provided for in the Award
Agreement. The Award Agreement shall state the number of Shares that the Awardee
shall be entitled to receive or purchase, the terms and conditions on which the
Shares shall vest, the price to be paid, if any, and, if applicable, the time
within which the Awardee must accept such offer. The offer shall be accepted by
execution of the Award Agreement. The Administrator may require that all Shares
subject to a right of repurchase or risk of forfeiture be held in escrow until
such repurchase right or risk of forfeiture lapses. The grant or vesting of a
Stock Award may be made contingent on achievement of Objectively Determinable
Performance Conditions. The Administrator may require as a condition for
exercise of a Stock Award, that the Awardee pay up to 50% of the Fair Market
Value as of the Grant Date of the Shares underlying the Stock Award, using any
form of consideration described in Section 6.6; provided the Awardee provides a
payment in cash or other valid consideration approved by the Administrator equal
to at least the aggregate par value of such Shares to the extent required by the
Delaware General Corporation Law.
(b) FORFEITURE. Unless otherwise provided for by the Administrator in
the Award Agreement, unvested Shares shall be forfeited upon the Awardee's
Termination, except as provided in Sections 9.4 and 10.2. To the extent that the
Awardee purchased the Shares, the Company shall have a right to repurchase the
unvested Shares at the original
price paid by the Awardee, upon Awardee's Termination, except as provided in
Sections 9.4 and 10.2.
8.3 CASH AWARDS. Cash Awards may be granted either alone, in addition to,
or in tandem with other Awards granted under the Plan. After the Administrator
determines that it will offer a Cash Award, it shall advise the Awardee, by
means of an Award Agreement, of the terms, conditions and restrictions related
to the Cash Award.
9. EXERCISE OF AWARDS
(a) PROCEDURE FOR EXERCISE. Any Award granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as may be determined by the Administrator and set forth in the
respective Award Agreement. Options subject to Reverse Vesting shall be
exercisable only after expiration of six months from the Grant Date.
Notwithstanding any other provision of this Plan, no Award may be exercised
after the term of the Award has expired.
(b) LEAVES OF ABSENCE. An Award shall continue to vest during a
leave of absence. No Award may be exercised during more than 90 days after
the beginning of a leave of absence, other than an Approved Leave, as
described below; provided, however, that in the case of an Awardee who dies
within three months following the start of the leave of absence, the
Awardee's vested Awards may be exercised during the period provided in
Section 9.4(b). Awards held by an Awardee who has taken an Approved Leave may
be exercised within the first three months after the beginning of the leave
of absence, upon the Awardee's return to active employment status, or if the
Awardee dies within three months following the beginning of the leave of
absence, the period specified in Section 9.4(b), in each case to the extent
the Awards have vested.
9.2 TIME OF EXERCISE. An Award shall be deemed exercised when the Company
receives: (a) notice of exercise (in accordance with the Award Agreement) from
the person entitled to exercise the Award, (b) in the case of an Award requiring
payment of an Option Price, full payment, or provision for payment in a form
approved by the Administrator, for the Shares underlying the Award, and (c) in
the case of a Non-Qualified Stock Option, or other Award requiring the payment
of withholding taxes, payment of all applicable withholding taxes due upon such
exercise. An Award may not be exercised for a fraction of a Share.
9.3 ISSUANCE OF SHARES. Shares issued upon exercise of an Award shall be
issued in the name of the Awardee. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Shares subject to
an Award, notwithstanding the exercise of
the Award. The Company shall issue (or cause to be issued) such Shares promptly
after the Award is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 3.3 of the Plan.
(a) GENERAL. Unless otherwise provided for by the Administrator in the
Award Agreement, if an Awardee ceases to be an Employee or Consultant, other
than as a result of circumstances described in Sections 9.4(b), (c) and (d)
below, the Awardee's vested Awards shall be exercisable for thirty days
following the Awardee's Termination, or if earlier, the expiration of the term
of such Awards. If the Awardee does not exercise an Award within the time set
forth above, the Award shall automatically terminate.
(b) DEATH OR DISABILITY. Unless otherwise provided for by the
Administrator in the Award Agreement, if an Awardee dies or becomes totally and
permanently disabled while an Employee or Consultant, the Awardee's vested
Awards shall be exercisable for one year following the Awardee's death or
disability, but not after the expiration of the term of such Award. The Award
may be exercised by the beneficiary designated by the Awardee (as provided in
Section 15), the executor or administrator of the Awardee's estate or, if none,
by the person(s) entitled to exercise the Award under the Awardee's will or the
laws of descent and distribution. If an Award is not so exercised within the
time specified herein, the Award shall automatically terminate.
(c) TERMINATION FOR "CAUSE". If an Awardee ceases to be an Employee or
Consultant for "cause," all Awards held by the Awardee as of the time of
Termination shall immediately terminate, and such Awards shall cease to be
exercisable as of such time. "CAUSE" means dishonesty, fraud, misconduct,
disclosure of confidential information, conviction of, or a plea of guilty or no
contest to, a felony under the laws of the United States or any state thereof,
habitual absence from work for reasons other than illness, intentional conduct
which causes significant injury to the Company, or habitual abuse of alcohol or
a controlled substance, in each case determined by the Administrator, whose
determination will be conclusive and binding.
(d) DIVESTITURE. If an Awardee ceases to be an Employee or Consultant
because of a divestiture of an Affiliate, the Administrator may, in its sole
discretion, make such Awardee's outstanding Awards fully vested and exercisable
and provide that such Awards remain exercisable for a period of time to be
determined by the Administrator. The determination of whether a divestiture will
occur or has occurred shall be made by the Administrator in its sole discretion.
If the Awardee does not exercise an Award by the expiration of such time period,
the Award shall automatically terminate.
9.5 BUYOUT PROVISIONS. At any time, the Administrator may, but shall not be
required to, offer to buy out for a payment in cash or Shares an Award
based on such terms and conditions as the Administrator shall
establish and communicate to the Awardee at the time that such offer is made.
10. DISSOLUTION AND CORPORATE TRANSACTIONS
10.1 DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Awardee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Award to be fully vested
and exercisable until ten days prior to such transaction. In addition, the
Administrator may provide that any restrictions on any Award shall lapse prior
to the transaction, provided the proposed dissolution or liquidation takes place
at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Award will terminate immediately prior to the
consummation of such proposed transaction.
10.2 CORPORATE TRANSACTIONS.
(a) ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event of
(i) a dissolution or liquidation of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Awardees), (iii) a merger in which the Company is the surviving corporation but
after which stockholders owning more than 50% of the voting stock of the Company
immediately prior to the merger (other than any stockholder which merges, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own a majority of the voting stock of the Company
immediately after the merger, or (iv) the sale of all or substantially all of
the assets of the Company (collectively, "Corporate Transaction"), any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on all Awardees. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Awardees as was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Awardees, substantially similar
shares or other property subject to repurchase restrictions no less favorable to
the Awardee. Notwithstanding the foregoing, if (a) any Awardee whose options are
(i) assumed, converted or replaced by the successor corporation (if any), or
(ii) substituted by the successor corporation with equivalent Awards or
substantially similar consideration; and (b) such Awardee is terminated by the
Company or a successor corporation (if any) without cause within twelve months
of the effective date of the Corporate Transaction; then any Options held by the
Awardee will immediately become fully vested and
exercisable by the Awardee. In the event such successor corporation (if any)
refuses to assume or substitute Options, as provided above, pursuant to a
transaction described in this Section 10.2(a) then notwithstanding any other
provision in this Plan to the contrary, such Award will become fully vested at
such time and on such conditions as the Board determines.
(b) OTHER TREATMENT OF AWARDS. Subject to any greater rights
granted to Awardees under the foregoing provisions of this Section 11.2, in
the event of the occurrence of any transaction described in Section 11.2(a),
any outstanding Awards will be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation, sale of
assets or other "corporate transaction."
(c) ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either: (a) granting an Award under the Plan in substitution of
such other company's award; or (b) assuming such award as if it had been
granted under this Plan. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code).
11. WITHHOLDING AND TAX REPORTING
11.1 TAX WITHHOLDING.
(a) WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under the Plan, the Company may require the
Awardee to remit to the Company an amount sufficient to satisfy federal, state
and local withholding tax requirements prior to the delivery of any certificate
or certificates for such Shares. Whenever, under the Plan, payments in
satisfaction of Awards are to be made by the Company, such payment will be net
of an amount sufficient to satisfy federal, state, and local withholding tax
(b) STOCK WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the Shares issuable upon the exercise of an Award, or
to accept from the Awardee the tender of, a number of whole Shares having a Fair
Market Value equal to all or any part of the federal, state, local and foreign
taxes, if any, required by law to be withheld by the Company with respect to
such Award or the Shares acquired upon the exercise thereof. Alternatively or in
addition, in its discretion, the Company shall have the right to require the
Awardee, through payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations arising in connection with the Award or the Shares
acquired upon the exercise thereof. The Company shall have no obligation to
Shares or to release Shares from an escrow established pursuant to the
Award Agreement until the Company's tax withholding obligations have been
satisfied by the Awardee.
11.2 TAX REPORTING. The Awardee of an Incentive Stock Option shall notify
the Administrator within ten days of any disposition of the Shares acquired on
the exercise of such Option for (a) the longer of two years from the Grant Date
or one year from the exercise date of such Option, or (b) such different period
as the Administrator may establish, and shall provide such information in
connection with such disposition as the Administrator may request.
12. COMPLIANCE WITH LAW; MODIFICATION OF PLAN MATERIALS
12.1 COMPLIANCE WITH LAW. The grant of Awards and the issuance of Shares
upon exercise of Awards shall be subject to compliance with Applicable Laws,
including all applicable requirements of federal, state and foreign law with
respect to the offering and sale of securities. Awards may not be exercised if
the issuance of Shares upon exercise would constitute a violation of Applicable
Laws. In addition, no Award may be exercised unless (a) a registration statement
under the Securities Act shall at the time of exercise of the Award be in effect
with respect to the Shares issuable upon exercise of the Award or (b) in the
opinion of legal counsel to the Company, the Shares issuable upon exercise of
the Award may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. The inability of the
Company to obtain from any regulatory body the authority deemed by the Company's
legal counsel to be necessary to the lawful issuance and sale of Shares
hereunder shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares. As a condition to the exercise of any Award, the
Company may require the Awardee to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
12.2 CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stop transfer instructions,
legends and other restrictions as the Administrator may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the
Securities and Exchange Commission or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.
13. AMENDMENT OR TERMINATION OF PLAN
13.1 AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
13.2 SHAREHOLDER APPROVAL. The Company shall obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with
13.3 EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Award,
unless mutually agreed otherwise between the Awardee and the Administrator,
which agreement must be in writing and signed by the Awardee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Awards granted under the Plan
prior to the date of such termination.
14. RESERVED RIGHTS
14.1 NONEXCLUSIVITY OF THE PLAN. The adoption of this Plan shall not limit
the power of the Company in any way to adopt other incentive arrangements,
including, without limitation, the granting of stock options or the granting of
stock or rights with respect to stock other than under this Plan.
14.2 UNFUNDED PLAN. The Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are granted Awards
of Shares under this Plan, any such accounts will be used merely as a
bookkeeping convenience. Except for the holding of restricted stock in escrow
pursuant to Section 8.2 or 6.5, the Company shall not be required to segregate
any assets which may at any time be represented by Awards, and neither shall
this Plan be construed as providing for such segregation, nor shall the Company
or the Administrator be deemed to be a trustee of stock or cash to be awarded
under the Plan. Any liability of the Company to any Awardee shall be based
solely upon any contractual obligations that may be created by the Plan; no such
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the
Administrator shall be required to give any security or bond for the performance
of any obligation that may be created by this Plan.
14.3 CONSULTING OR EMPLOYMENT RELATIONSHIP. This Plan or any Award granted
by this Plan shall not interfere with or limit in any way the right of the
Company or of any of its Affiliates to terminate any Awardee's employment or
consulting at any time. This Plan does not confer upon any Participant any right
to continue in the employ of, or consult with, the Company or any of its
Affiliates. In addition, this Plan does not interfere in any way with any
provision in the Company's charter documents relating to the election,
appointment, terms of office, and removal of members of the Board.
(a) An Awardee may file a written designation of a beneficiary who is
to receive the Awardee's rights pursuant to Awardee's Award or the Awardee may
include his or her Awards in an omnibus beneficiary designation for all benefits
under the Plan.
(b) Any designation of beneficiary may be changed by the Awardee at
any time by written notice. In the event of the death of an Awardee and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Awardee's death, the Company shall allow the executor or
administrator of the estate of the Awardee to exercise the Award, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may allow the spouse or one or more dependents
or relatives of the Awardee to exercise the Award.
16.1 GOVERNING LAW. This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the substantive laws, but not the choice of
law rules, of the State of Delaware.
16.2 DETERMINATION OF VALUE. Fair Market Value shall be determined as
(a) LISTED STOCK. If the stock of the Company is listed on any
established stock exchange or a national market system, its Fair Market Value
shall be the closing sales price for the stock as quoted on the stock exchange
or system for the date the value is to be determined (the "VALUE DATE") as
reported in the Wall Street Journal or a similar publication. If no sales
occurred on the Value Date, then the Company shall use the value for the last
preceding business day on which sales occurred. If no sales occurred for one
week before the Value Date, the Company shall use the closing bid on the Value
Date as the Fair Market Value of the stock. If the stock is listed on multiple
exchanges or systems, the stock's value on the largest exchange will be used.
(b) STOCK QUOTED BY SECURITIES DEALER. If the stock of the Company is
regularly quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the high bid and low
asked prices on the Value Date. If there are no quoted prices for the Value
Date, then the Fair Market Value shall be its value on the last preceding
business day on which there were quoted prices.
(c) NO ESTABLISHED MARKET FOR STOCK. In the absence of an established
market for the stock, the Administrator will determine the Fair Market Value in
good faith. The Administrator will consider the following factors, without
limitation, in determining the value of Shares: the recent issue price of other
securities of the Company, the Company's net worth, its prospective earning
power, its paying capacity regarding dividends, and any other relevant factors,
including the management of the Company, its goodwill, the economic outlook of
the Company's industry, the Company's
position in the industry, and the values of stock of other corporations in
the same industry.
16.3 NOTICE. Any written notice to the Company required by any provisions
of the Plan shall be addressed to the Secretary of the Company and shall be
effective when received.
16.4 RESERVATION OF SHARES. The Company, during the term of the Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16.5 ELECTRONIC COMMUNICATIONS. Any Award Agreement, notice of exercise of
an Option, or other document required or permitted by this Plan may be delivered
in writing or, to the extent determined by the Administrator, electronically.
Signatures may also be electronic to the extent determined by the Administrator.
16.6 NONASSIGNABILITY OF AWARDS. Except as expressly permitted by the
Administrator, no Award granted under this Plan shall be assignable or otherwise
transferable by the Awardee except by will, pursuant to a domestic relations
order (within the meaning of Rule 16a-12 promulgated under the Exchange Act) or
by the laws of descent and distribution. During the life of the Awardee, except
as expressly permitted by the Administrator, an Award shall be exercisable only
by the Awardee. No Award may be assigned before it has vested.
16.7 ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
Awards granted hereunder to, and the purchase of Shares by, Participants subject
to Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. The Plan shall be deemed to contain, and such Awards shall contain,
and the Shares issued upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to
transactions under the Plan.