SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
June
21, 2007
Date
of
Report (Date of earliest event reported)
DISCOVERY
LABORATORIES, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-26422
|
94-3171943
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
Number)
|
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976
(Address
of principal executive offices)
(215)
488-9300
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
| Item 1.01. |
Entry
into a Material Definitive Agreement.
|
On
June
21, 2007, the shareholders of Discovery Laboratories, Inc. (the “Company”)
approved the adoption of a new 2007 Long-Term Incentive Plan (the “2007
Plan”).
The
2007 Plan provides for the grant of long-term equity and cash incentive
compensation awards. The 2007 Plan replaces the Company’s Amended and Restated
1998 Stock Incentive Plan (the “1998
Plan”)
whose
ten-year term was to expire in March 2008. The Board of Directors believes
that
the 2007 Plan is important for the Company’s continuing efforts to attract,
motivate and retain highly qualified and experienced employees. The 2007 Plan
continues many of the features of the 1998 Plan, but is updated to reflect
changes to Nasdaq rules regarding equity compensation, other regulatory changes
and market and corporate governance developments. Awards outstanding under
the
1998 Plan will continue to be governed by the terms of that plan and the
agreements under which they were granted.
| Item 5.02. |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
On
June
21, 2007, the grants set forth below to be made under a 2007 Long-Term Incentive
Plan (the “2007
Plan”)
to the
Company’s named executive officers were approved. The 2007 Plan was approved by
the stockholders on June 21, 2007. The grants will be in the form of incentive
stock options and non qualified stock options, at an exercise price of $3.27
per
share, which was equal to the market price of the Company’s common stock on the
date of the grant.
|
Name
and Position
|
Grants
Effective June 21, 2007
|
|
|
Incentive
Stock Option
|
Non
Qualified
Stock
Option
|
|
|
Roberta
Capetola
|
30,582
|
569,418
|
|
John
Cooper
|
30,582
|
129,418
|
|
David
Lopez
|
30,581
|
129,419
|
|
Tom
Miller
|
20,000
|
60,000
|
|
Robert
Segal
|
15,000
|
45,000
|
| Item 9.01. |
Financial
Statements and Exhibits.
|
| (d) |
Exhibits
|
|
Discovery
Laboratories, Inc. 2007 Long Term Incentive
Plan
|
Cautionary
Note Regarding Forward-looking Statements:
To
the
extent that statements in this Current Report on Form 8-K are not strictly
historical, including statements as to business strategy, outlook, objectives,
future milestones, plans, intentions, goals, future financial conditions, future
collaboration agreements, the success of the Company's
-1-
product
development or otherwise as to future events, such statements are
forward-looking, and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The forward-looking statements
contained in this Current Report are subject to certain risks and uncertainties
that could cause actual results to differ materially from the statements made.
Such risks and others are further described in the Company's filings with the
Securities and Exchange Commission including the most recent reports on Forms
10-K, 10-Q and 8-K, and any amendments thereto.
-2-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Discovery
Laboratories, Inc.
By:
/s/
Robert J. Capetola
Robert
J.
Capetola, Ph.D.
President
and Chief Executive Officer
Date:
June 27, 2007
-3-
EXHIBIT
1.1
DISCOVERY
LABORATORIES, INC.
2007
LONG-TERM INCENTIVE PLAN
SECTION
1. PURPOSE
The
purposes of this 2007 Long-Term Incentive Plan (the “Plan”) are to encourage
selected Employees, Directors and Consultants of Discovery Laboratories,
Inc.
(together with any successor thereto, the “Company”) and its Subsidiaries to
acquire a proprietary interest in the growth and performance of the Company,
to
generate an increased incentive to contribute to the Company’s future success
and prosperity, thus enhancing the value of the Company for the benefit of
its
shareholders, and to enhance the ability of the Company and its Subsidiaries
to
attract and retain exceptionally qualified individuals upon whom, in large
measure, the sustained progress, growth and profitability of the Company
depend.
SECTION
2. DEFINITIONS
As
used
in the Plan, the following terms shall have the meanings set forth
below:
|
(a)
|
“Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent,
or Other
Stock-Based Award granted under the
Plan.
|
|
(b)
|
“Award
Agreement” shall mean any written agreement, contract, or other instrument
or document, including an electronic communication, as may from
time to
time be designated by the Company as evidencing any Award granted
under
the Plan.
|
|
(c)
|
“Board”
shall mean the Board of Directors of the
Company.
|
|
(d)
|
“Cause”,
with respect to any Employee or Consultant of the Company or a
Subsidiary,
shall have the meaning set forth in such person’s employment, consulting
or other applicable agreement, or, in the absence of any such agreement
or
if such term is not defined in any such agreement, shall mean any
one or
more of the following, as determined by the
Committee:
|
|
(i)
|
willful
misconduct or gross negligence in the performance of such person’s duties;
|
|
(ii)
|
willful
and continued failure or refusal to perform satisfactorily any
duties
reasonably requested in the course of such person’s employment by, or
service to, the Company (other than a failure resulting from such
person’s
disability); or
|
|
(iii)
|
fraudulent,
dishonest or other improper conduct engaged in by such person that
causes,
or has the potential to cause, harm to the Company or any of its
Subsidiaries, or its or their business or reputation, including,
without
limitation, such person’s violation of any policies of the Company
applicable to the such person, such person’s violation of laws, rules or
regulations applicable to such person, criminal activity, habitual
drunkenness or use of illegal
drugs.
|
| (e) |
“Change
in Control” shall have the meaning, if any, set forth in a Participant’s
employment, consulting or other applicable agreement, or, if such
term is
not defined in any such agreement, shall mean the occurrence of
any of the
following events:
|
|
(i)
|
the
acquisition, directly or indirectly by any person or related group
of
persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the
Company),
of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act)
of securities possessing more than thirty-five percent (35%) of
the total
combined voting power of the Company’s outstanding
securities;
|
|
(ii)
|
a
change in the composition of the Board over a period of thirty-six
(36)
consecutive months or less such that a majority of the Board ceases
to
consist of Incumbent Members, which term means members of the Board
on the
first day of such period and any person becoming a member of the
Board
subsequent to such date whose election or nomination for election
was
approved by two-thirds of the members of the Board who then comprised
the
Incumbent Directors; or
|
|
(iii)
|
the
Company combines with another company and is the surviving corporation
but, immediately after the combination, the shareholders of the
Company
immediately prior to the combination hold, directly or indirectly,
by
reason of their being stockholders of the Company, fifty percent
(50%) or
less of the voting stock of the combined entity.
|
|
(f)
|
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time
to
time.
|
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(g)
|
“Committee”
shall mean a committee of the Board, acting in accordance with
the
provisions of Section 3, designated by the Board to administer the
Plan and composed of not less than three Non-Employee Directors.
Each
member of the Committee shall qualify as an “outside director” as defined
under Section 162(m) of the Code and the regulations promulgated
thereunder and as a “non-employee director” under Rule 16b-3 promulgated
under the 1934 Act.
|
|
(h)
|
“Consultant”
shall mean any person, including a Director, who is not an Employee
and
who is engaged by the Company or any Subsidiary thereof, to render
services to or for the benefit of the Company or any Subsidiary
and is
compensated for such services.
|
|
(i)
|
“Corporate
Transaction” shall mean a liquidation of the Company, a sale of all or
substantially all of the Company’s assets, or a merger, consolidation or
similar transaction in which the Company is not the surviving entity
or
survives as a wholly-owned or majority-owned subsidiary of another
entity.
|
|
(j)
|
“Director”
shall mean a member of the Board.
|
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(k)
|
“Disability”
for each respective Participant shall have the meaning set forth
in the
Participant’s employment agreement, Award Agreement or other similar
agreement with the Company; provided,
that if such term is not defined in any such agreement to which
the
Participant is a party or if Participant is not a party to any
such
agreement, then “Disability” shall mean a permanent and total disability,
within the meaning of Section 22(e)(3) of the
Code.
|
|
(l)
|
“Dividend
Equivalent” shall mean any right granted under Section 10 of the
Plan.
|
2
| (m) |
“Employee”
shall mean any person treated as an employee (including officers
and
directors) in the records of the Company or any Subsidiary and
who is
subject to the control and direction of the Company or any Subsidiary
with
regard to both the work to be performed and the manner and method
of
performance. For purposes of the Plan, the payment of a director’s fee by
the Company to a Director shall not be sufficient to constitute
“employment” of the Director by the
Company.
|
|
(n)
|
“Fair
Market Value” of
a Share on any date of reference shall be the Closing Price of
a Share on
such date, unless the Committee in its sole discretion shall determine
otherwise in a fair and uniform manner. For this purpose, the “Closing
Price” of a Share on any trading day shall be (i) if the Shares are listed
or admitted for trading on any United States national securities
exchange,
or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of a
Share on
such exchange or reporting system, as reported in any newspaper
of general
circulation, or (ii) if neither clause (i) nor (ii) is applicable, the
mean of the high bid and low asked quotations for a Share as reported
by
the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for the Shares
on at
least five of the 10 preceding trading days. If the information
set forth
in clauses (i) through (iii) above is unavailable or inapplicable
to the
Company (e.g., if the Shares are not then publicly traded or quoted),
then
the “Fair Market Value” of a Share shall be the fair market value
(i.e.,
the price at which a willing seller would sell a Share to a willing
buyer
when neither is acting under compulsion and when both have reasonable
knowledge of all relevant facts) of a Share on such date as the
Committee
in its sole and absolute discretion shall determine in a fair and
uniform
manner.
|
|
(o)
|
“Incentive
Stock Option” shall mean an option granted under Section 6 of the
Plan that is intended to meet the requirements of Sections 422
of the
Code, or any successor provision
thereto.
|
|
(p)
|
“Involuntary
Termination” shall mean the termination of the Service of any individual
which occurs by reason of:
|
|
(i)
|
such
individual’s involuntary dismissal or discharge by the Company for reasons
other than Cause, or
|
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(ii)
|
such
individual’s voluntary resignation following (A) a change in his or her
position with the Company (or Subsidiary employing such individual)
which
materially reduces such individual’s duties and responsibilities or the
level of management to which such individual reports, (B) a reduction
in
such individual’s level of compensation (including base salary, fringe
benefits and target bonus under any corporate performance-based
bonus or
incentive programs) by more than fifteen percent (15%) or (C) a
relocation
of such individual’s place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by
the Company without such individual’s consent.
|
|
(q)
|
“1998
Plan” shall mean the Company’s Amended and Restated 1998 Stock Incentive
Plan, as amended.
|
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(r)
|
“1934
Act” shall mean the Securities Exchange Act of 1934, as amended.
|
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(s)
|
“Non-Employee
Director” shall mean a Director who is not also an Employee.
|
|
(t)
|
“Non-Qualified
Stock Option” shall mean an option granted under Section 6 of the
Plan that is not intended to be an Incentive Stock
Option.
|
|
(u)
|
“Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
|
3
|
(v)
|
“Other
Stock-Based Award” shall mean any right granted under Section 11 of
the Plan.
|
| (w) |
“Participant”
shall mean an Employee, Director or Consultant designated to be
granted an
Award under the Plan.
|
|
(x)
|
“Performance
Award” shall mean any right granted under Section 9 of the
Plan.
|
|
(y)
|
“Performance
Criteria” shall mean any quantitative and/or qualitative measures, as
determined by the Committee, which may be used to measure the level
of
performance of the Company or any individual Participant during
a
Performance Period, including any Qualifying Performance
Criteria.
|
|
(z)
|
“Performance
Period” shall mean any period as determined by the Committee in its sole
discretion.
|
|
(aa)
|
“Person”
shall mean any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated
organization, or government or political subdivision
thereof.
|
|
(bb)
|
“Qualifying
Performance Criteria” shall mean one or more of the following performance
criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit
or related
Subsidiary, and measured either annually or cumulatively over a
period of
years, on an absolute basis or relative to a pre-established target,
to a
previous year’s results or to a designated comparison group, in each case
as specified by the Committee in the Award: achieving specified
milestones
in the discovery and development, commercialization or manufacturing
of
one or more of the Company product candidates, obtaining debt or
equity
financing, achieving personal management objectives, achieving
sales,
revenue, net income (before or after taxes), net earnings, earnings
per
share, return on total capital, return on equity, cash flow, operating
profit and/or margin rate targets, subject to adjustment by the
Committee
to remove the effect of charges for restructurings, discontinued
operations,
extraordinary items and all items of gain, loss or expense determined
to
be extraordinary or unusual in nature or infrequent in occurrence,
related
to the disposal of a segment or a business, or related to a change
in
accounting principle or otherwise.
|
|
(cc)
|
“Restricted
Securities” shall mean Awards of Restricted Stock or other Awards under
which issued and outstanding Shares are held subject to certain
restrictions.
|
|
(dd)
|
“Restricted
Stock” shall mean any award of Shares granted under Section 8 of the
Plan.
|
|
(ee)
|
“Restricted
Stock Unit” shall mean any right granted under Section 8 of the Plan
that is denominated in Shares.
|
|
(ff)
|
“Service”
shall mean the performance of services for the Company (or any
Subsidiary)
by a person in the capacity of an Employee, a Non-Employee Director
or a
Consultant.
|
|
(gg)
|
“Shares”
shall mean the common shares of the Company and such other securities
as
may become the subject of Awards, or become subject to Awards,
pursuant to
an adjustment made under Section 4(b) of the
Plan.
|
| (hh) |
“Stock
Appreciation Right” shall mean any right granted under Section 7 of
the Plan.
|
|
(ii)
|
“Subsidiary”
shall mean a subsidiary company as defined in Section 424(f) of
the Code
(with the Company being treated as the employer corporation for
purposes
of this definition).
|
4
SECTION
3. ADMINISTRATION
Except
as
otherwise provided herein, the Plan shall be administered by the Committee,
which shall have the power to interpret the Plan and to adopt such rules
and
guidelines for implementing the terms of the Plan as it may deem appropriate.
The Committee shall have the ability to modify the Plan provisions, to the
extent necessary, or delegate such authority, to accommodate any changes
in law
and regulations in jurisdictions in which Participants will receive
Awards.
|
(a)
|
Subject
to the terms of the Plan and applicable law, the Committee shall
have full
power and authority to:
|
|
(i)
|
designate
Participants;
|
|
(ii)
|
determine
the type or types of Awards to be granted to each Participant under
the
Plan;
|
|
(iii)
|
determine
the number of Shares to be covered by (or with respect to which
payments,
rights, or other matters are to be calculated in connection with)
Awards;
|
|
(iv)
|
determine
the terms and conditions of any
Award;
|
|
(v)
|
determine
whether, to what extent, and under what circumstances Awards may
be
settled or exercised in cash, Shares, other securities, or other
Awards,
or canceled, forfeited, or suspended, and the method or methods
by which
Awards may be settled, exercised, canceled, forfeited, or
suspended;
|
|
(vi)
|
determine
whether, to what extent, and under what circumstances cash, Shares,
other
securities, other Awards, and other amounts payable with respect
to an
Award under the Plan shall be deferred either automatically or
at the
election of the holder thereof or of the Committee;
|
|
(vii)
|
interpret
and administer the Plan and any instrument or agreement relating
to, or
Award made under, the Plan;
|
|
(viii)
|
establish,
amend, suspend, or waive such rules and
guidelines;
|
|
(ix)
|
appoint
such agents as it shall deem appropriate for the proper administration
of
the Plan;
|
|
(x)
|
make
any other determination and take any other action that the Committee
deems
necessary or desirable for the administration of the Plan;
and
|
|
(xi)
|
correct
any defect, supply any omission, or reconcile any inconsistency
in the
Plan or any Award in the manner and to the extent it shall deem
desirable
to carry the Plan into effect.
|
|
(b)
|
Unless
otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with
respect
to the Plan or any Award shall be within the sole discretion of
the
Committee, may be made at any time, and shall be final, conclusive,
and
binding upon all Persons, including the Company, any Subsidiary,
any
Participant, any holder or beneficiary of any Award, any shareholder,
and
any employee of the Company or of any Subsidiary. Subject to the
requirements of applicable law and regulations, actions of the
Committee
may be taken by:
|
|
(i)
|
a
subcommittee, designated in writing by the
Committee;
|
5
|
(iii)
|
one
or more officers or managers of the Company or any Subsidiary,
or a
committee of such officers or managers, whose authority is subject
to such
terms and limitations set forth by the Committee in writing, and
whose
authority shall not extend to any matter relating to Participants
who are
officers or directors of the Company for purposes of Section 16 of
the 1934 Act.
|
SECTION
4. SHARES
AVAILABLE FOR AWARDS
|
(a)
|
Shares
Available.
|
|
(i)
|
Subject
to adjustment as provided in Section 4(b), the total number of Shares
reserved and available for delivery pursuant to Awards granted
under the
Plan shall be 8,500,000. If any Shares covered by an Award granted
under
the Plan, or to which such an Award relates, are forfeited, or
if an Award
otherwise terminates without the delivery of Shares or of other
consideration, then the Shares covered by such Award, or to which
such
Award relates, or the number of Shares otherwise counted against
the
aggregate number of Shares available under the Plan with respect
to such
Award, to the extent of any such forfeiture or termination, shall
again be
available for granting Awards under the Plan.
|
|
(ii)
|
For
purposes of this Section 4,
|
| (A) |
if
an Award (other than a Dividend Equivalent) is denominated in Shares,
the
number of Shares covered by such Award, or to which such Award
relates,
shall be counted on the date of grant of such Award against the
aggregate
number of Shares available for granting Awards under the Plan;
and
|
| (B) |
Dividend
Equivalents denominated in Shares and Awards not denominated, but
potentially payable, in Shares shall be counted against the aggregate
number of Shares available for granting Awards under the Plan in
such
amount and at such time as the Dividend Equivalents and such Awards
are
settled in Shares, provided,
however,
that Awards that operate in tandem with (whether granted simultaneously
with or at a different time from) other Awards shall only be counted
once
against the aggregate number of shares available, and the Committee
shall
adopt procedures, as it deems appropriate, in order to avoid double
counting. Any Shares that are delivered by the Company, and any
Awards
that are granted by, or become obligations of, the Company through
the
assumption by the Company or a Subsidiary of, or in substitution
for,
outstanding awards previously granted by an acquired company, shall
not be
counted against the Shares available for granting Awards under
this
Plan.
|
|
(C)
|
Notwithstanding
anything herein to the contrary, any Shares related to Awards which
terminate by expiration, forfeiture, cancellation, or otherwise
without
the issuance of such Shares, are settled in cash in lieu of Shares,
or are
exchanged with the Committee’s permission, prior to the issuance of
Shares, for Awards not involving Shares, shall be available again
for
grant under this Plan. Shares subject to an Award under the Plan
may not
again be made available for issuance under the Plan if such Shares
are:
(x) Shares that were subject to an Option or a stock-settled Stock
Appreciation Right and were not issued upon the net settlement
or net
exercise of such Option or Stock Appreciation Right, (y) Shares
delivered to or withheld by the Company to pay the exercise price
or any
withholding taxes under Options or Stock Appreciation Rights, or
(z) Shares repurchased on the open market with the proceeds of an
Option exercise.
|
6
|
(iii)
|
Any
Shares delivered pursuant to an Award may consist, in whole or
in part, of
authorized and unissued Shares or of treasury
Shares.
|
|
(b)
|
Adjustments.
|
|
(i)
|
In
the event that the Committee shall determine that any dividend
or other
distribution (whether in the form of cash, Shares, or other securities),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase,
or
exchange of Shares or other
securities of the Company, issuance of warrants or other rights
to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event constitutes an equity restructuring
transaction, as that term is defined in Statement of Financial
Accounting
Standards No. 123 (revised) or otherwise affects the Shares, then the
Committee shall adjust the following in a manner that is determined
by the
Committee to be appropriate in order to prevent dilution or enlargement
of
the benefits or potential benefits intended to be made available
under the
Plan:
|
|
(A)
|
the
number and type of Shares or other securities which thereafter
may be made
the subject of Awards including the limit specified in
Section 4(a)(i) regarding the number of shares that may be granted in
the form of Restricted Stock, Restricted Stock Units, Performance
Awards,
or Other Stock-Based Awards;
|
|
(B)
|
the
number and type of Shares or other securities subject to outstanding
Awards;
|
|
(C)
|
the
number and type of Shares or other securities specified as the
annual
per-participant limitation under Sections 15(e) and
15(f);
|
|
(D)
|
the
grant, purchase, or exercise price with respect to any Award, or,
if
deemed appropriate, make provision for a cash payment to the holder
of an
outstanding Award; and
|
|
(E)
|
other
value determinations applicable to outstanding
awards;
|
provided,
however,
in each
case, that with respect to Awards of Incentive Stock Options no such adjustment
shall be authorized to the extent that such authority would cause the Plan
to
violate Section 422(b)(1) of the Code or any successor provision thereto;
and
provided
further,
however,
that
the number of Shares subject to any Award denominated in Shares shall always
be
a whole number.
|
(ii)
|
In
the event the Company or any Subsidiary shall assume outstanding
employee
awards or the right or obligation to make future such awards in
connection
with the acquisition of another business or another corporation
or
business entity, the Committee may make such adjustments, not inconsistent
with the terms of the Plan, in the terms of Awards as it shall
deem
appropriate in order to achieve reasonable comparability or other
equitable relationship between the assumed awards and the Awards
granted
under the Plan as so adjusted.
|
|
(iii)
|
The
Committee shall be authorized to make adjustments in the terms
and
conditions of, and the criteria included in, Awards in recognition
of
unusual or nonrecurring events affecting the Company, any Subsidiary,
or
the financial statements of the Company or any Subsidiary, or of
changes
in applicable laws, regulations, or accounting principles, whenever
the
Committee determines that such adjustments are appropriate in order
to
prevent dilution or enlargement of the benefits or potential benefits
to
be made available under the Plan.
|
7
|
(c)
|
1998
Plan.
Except as otherwise provided herein, any Award made under the 1998
Plan
before the expiration of the 1998 Plan shall continue to be subject
to the
terms and conditions of the 1998 Plan and the applicable award
agreement
with respect thereto.
|
SECTION
5. ELIGIBILITY
Any
Employee, Director or Consultant shall be eligible to be designated a
Participant.
SECTION
6. OPTIONS
The
Committee is hereby authorized to grant Options to Participants with the
following terms and conditions and with such additional terms and conditions,
in
either case not inconsistent with the provisions of the Plan, as the Committee
shall determine:
|
(a)
|
Exercise
Price.
The purchase price per Share purchasable under an Option shall
be
determined by the Committee no later than the date of grant of
such
Option; provided, however, and except as provided in Section 4(b),
that such purchase price shall not be less than 100% of the Fair
Market
Value of a Share on the date of grant of such
Option.
|
|
(b)
|
Option
Term.
The term of each Option shall be specified in the applicable Award
Agreement and shall not exceed ten (10) years from its date of
grant.
|
|
(c)
|
Time
and Method of Exercise.
The Committee shall establish in the applicable Award Agreement
the time
or times at which an Option may be exercised in whole or in part,
and the
method or methods by which, and the form or forms, including, without
limitation, cash, Shares, or other Awards, or any combination thereof,
having a Fair Market Value on the exercise date equal to the relevant
exercise price, in which, payment of the exercise price with respect
thereto may be made or deemed to have been made. In addition, the
Committee may allow a Participant to exercise any Option by delivering
to
the Company or its designated agent an executed irrevocable option
exercise form together with irrevocable instructions to a broker-dealer
to
sell Shares and deliver the sale proceeds directly to the Company
to the
extent required to pay the Option exercise price.
|
8
SECTION
7. STOCK
APPRECIATION RIGHTS
The
Committee is hereby authorized to grant Stock Appreciation Rights to
Participants. Subject to the terms of the Plan and any applicable Award
Agreement, a Stock Appreciation Right granted under the Plan shall confer
on the
holder thereof a right to receive, upon exercise thereof, the excess of
(i) the Fair Market Value of one Share on the date of exercise over
(ii) the grant price of the right as specified by the
Committee.
|
(a)
|
Grant
Price.
The grant price of any Stock Appreciation Right shall be determined
by the
Committee no later than the date of grant, provided, however, and
except
as provided in Section 4(b), that such price shall not be less than
100% of the Fair Market Value of one Share on the date of grant
of the
Stock Appreciation Right, except that if a Stock Appreciation Right
is at
any time granted in tandem to an Option, the grant price of the
Stock
Appreciation Right shall not be less than the exercise price of
such
Option.
|
| (b) |
Term.
The term of each Stock Appreciation Right shall be specified in
the
applicable Award Agreement and shall not exceed ten (10) years from
the date of grant.
|
|
(c)
|
Time
and Method of Exercise.
The Committee shall establish in the applicable Award Agreement
the time
or times at which a Stock Appreciation Right may be exercised in
whole or
in part.
|
SECTION
8. RESTRICTED
STOCK AND RESTRICTED STOCK UNITS
|
(a)
|
Issuance.
The Committee is hereby authorized to grant Awards of Restricted
Stock and
Restricted Stock Units to
Participants.
|
|
(b)
|
Restrictions.
Shares of Restricted Stock and Restricted Stock Units shall be
subject to
such restrictions as the Committee may establish in the applicable
Award
Agreement (including, without limitation, any limitation on the
right to
vote a Share of Restricted Stock or the right to receive any dividend
or
other right), which restrictions may lapse separately or in combination
at
such time or times, in such installments or otherwise, as the Committee
may deem appropriate. Unrestricted Shares, evidenced in such manner
as the
Committee shall deem appropriate, shall be delivered to the holder
of
Restricted Stock promptly after such restrictions have
lapsed.
|
|
(c)
|
Registration.
Any Restricted Stock or Restricted Stock Units granted under the
Plan may
be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance
of a
stock certificate or certificates. In the event any stock certificate
is
issued in respect of Shares of Restricted Stock granted under the
Plan,
such certificate shall be registered in the name of the Participant
and
shall bear an appropriate legend referring to the terms, conditions,
and
restrictions applicable to such Restricted
Stock.
|
|
(d)
|
Forfeiture.
Upon termination of Service during the applicable restriction period,
except as set forth herein or in the applicable Award Agreement
or as
otherwise determined by the Committee, all Shares of Restricted
Stock and
all Restricted Stock Units still, in either case, subject to restriction
shall automatically be forfeited and reacquired for no additional
consideration by the Company.
|
9
SECTION
9. PERFORMANCE
AWARDS
The
Committee is hereby authorized to grant Performance Awards to Participants.
Performance Awards include arrangements under which the grant, issuance,
retention, vesting and/or transferability of any Award is subject to such
Performance Criteria and such additional conditions or terms as the Committee
may designate. Subject to the terms of the Plan and any applicable Award
Agreement, a Performance Award granted under the Plan:
|
(a)
|
may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, or other Awards;
and
|
| (b) |
shall
confer on the holder thereof rights valued as determined by the
Committee
and payable to, or exercisable by, the holder of the Performance
Award, in
whole or in part, upon the achievement of such performance goals
during
such Performance Periods as the Committee shall
establish.
|
SECTION
10. DIVIDEND
EQUIVALENTS
The
Committee is hereby authorized to grant to Participants Awards under which
the
holders thereof shall be entitled to receive payments equivalent to dividends
or
interest with respect to a
number
of Shares determined by the Committee, and the Committee may provide that
such
amounts (if any) shall be deemed to have been reinvested in additional Shares
or
otherwise reinvested. Subject to the terms of the Plan and any applicable
Award
Agreement, such Awards may have such terms and conditions as the Committee
shall
determine.
SECTION
11. OTHER
STOCK-BASED AWARDS
The
Committee is hereby authorized to grant to Participants such other Awards
that
are denominated or payable in, valued in whole or in part by reference to,
or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Committee to be
consistent with the purposes of the Plan, provided, however, that such grants
must comply with applicable law. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the terms and
conditions of such Awards. Shares or other securities delivered pursuant
to a
purchase right granted under this Section 11 shall be purchased for such
consideration, which may be paid by such method or methods and in such form
or
forms, including, without limitation, cash, Shares, other securities, or
other
Awards, or any combination thereof, as the Committee shall determine, the
value
of which consideration, as established by the Committee, and except as provided
in Section 4(b), shall not be less than the Fair Market Value of such
Shares or other securities as of the date such purchase right is granted.
SECTION
12. TERMINATION
OF EMPLOYMENT OR SERVICE
|
(a)
|
For
Cause.
Except as otherwise provided by the Committee in an Award Agreement,
if a
Participant’s employment or service is terminated for Cause (i) the
Participant’s Restricted Stock or Restricted Stock Units that are then
forfeitable shall thereupon be forfeited, and (ii) any unexercised
Option,
Stock Appreciation Right, Performance Award or Other Stock-Based
Award
shall terminate effective immediately upon such termination of
employment
or service.
|
| (b) |
On
Account of Death.
Except as otherwise provided by the Committee in an Award Agreement,
if a
Participant’s employment or service terminates on account of death (or if
a Participant dies within ninety (90) days following termination
of
employment due to Disability),
then:
|
|
(i)
|
the
Participant’s Restricted Stock and Restricted Stock Units that were
forfeitable shall thereupon become
nonforfeitable;
|
10
|
(ii)
|
any
unexercised Option or Stock Appreciation Right, to the extent exercisable
on the date of such termination of employment or service, may be
exercised, in whole or in part, within the first twelve (12) months
after
such termination of employment or service (but only during the
term of
such Award) after the death of the Participant by (A) his or her
personal
representative or by the person to whom an Option or Stock Appreciation
Right, as applicable, is transferred by will or the applicable
laws of
descent and distribution or (B) the Participant’s designated beneficiary;
and, to the extent that any such Option or Stock Appreciation Right
was
not exercisable on the date of such termination of employment or
service,
it will immediately terminate; and
|
|
(iii)
|
the
Participant’s rights with respect to any unexercised Performance Shares or
Other Stock-Based Awards shall be as set forth in the applicable
Award
Agreement.
|
|
(c)
|
On
Account of Disability.
Except as otherwise provided by the Committee in an Award Agreement,
if a
Participant’s employment or service terminates on account of Disability,
then:
|
|
(i)
|
the
Participant’s Restricted Stock and Restricted Stock Units that were
forfeitable shall thereupon become
nonforfeitable;
|
|
(ii)
|
any
unexercised Option or Stock Appreciation Right, to the extent exercisable
on the date of such termination of employment or service, may be
exercised
in whole or in part, within the first ninety (90) days after such
termination of employment or service (but only during the term
of such
Award) by the Participant, or by (A) his or her personal representative
or
by the person to whom an Option or Stock Appreciation Right, as
applicable, is transferred by will or the applicable laws of descent
and
distribution or (B) the Participant’s designated beneficiary; and, to the
extent that any such Option or Stock Appreciation Right was not
exercisable on the date of such termination of employment, it will
immediately terminate; and
|
|
(iii)
|
the
Participant’s rights with respect to any unexercised Performance Shares or
Other Stock-Based Awards shall be as set forth in the applicable
Award
Agreement.
|
| (d) |
Any
Other Reason.
Except as otherwise provided by the Committee in an Award Agreement,
if a
Participant’s employment or service terminates for any reason other than
for Cause, death, or Disability,
then:
|
|
(i)
|
the
Participant’s Restricted Stock and Restricted Stock Units, to the extent
forfeitable on the date of the Participant’s termination of employment or
service, shall be forfeited on such
date;
|
|
(ii)
|
any
unexercised Option or Stock Appreciation Right, to the extent exercisable
immediately before the Participant’s termination of employment or service,
may be exercised in whole or in part, not later than three (3)
months
after such termination of employment or service (but only during
the term
of such Award); and, to the extent that any such Option or Stock
Appreciation Right was not exercisable on the date of such termination
of
employment or service, it will immediately terminate;
and
|
11
|
(iii)
|
the
Participant’s rights with respect to any unexercised Performance Shares or
Other Stock-Based Awards shall be as set forth in the applicable
Award
Agreement.
|
|
(e)
|
Repurchase
Rights.
Except
as otherwise provided by the Committee in an Award Agreement, if
at any
time a Participant’s employment or Service with the Company is terminated
for Cause or a Participant breaches any post-termination covenants
set
forth in any written agreement between the Participant and the
Company,
the Company may, in its discretion, for a period of one year after
the
termination for Cause or the actual discovery by the Company of
the
breach, as applicable, and upon 10 (ten) days’ notice to the Participant,
(i) repurchase all or any portion of any Shares acquired by the
Participant upon the Participant’s exercise of an Award, and/or (ii)
require any such Participant to repay to the Company the amount
of any
profits derived by such Participant upon the sale or other disposition
of
any Shares underlying an Award during the preceding three years.
The
purchase price for any Shares repurchased by the Company pursuant
to
clause (i) of this Section 12(e) shall be the lesser of the price
paid to
acquire such Share and the Fair Market Value thereof on the date
of such
purchase by the Company.
|
SECTION
13. CORPORATE
TRANSACTION/CHANGE IN CONTROL
Except
as
otherwise expressly provided for in a Participant’s employment, consulting or
other applicable agreement:
|
(a)
|
In
the event of any Corporate Transaction, each outstanding Option
and Stock
Appreciation Right shall automatically accelerate so that each
such Option
and Stock Appreciation Right shall, immediately prior to the effective
date of the Corporate Transaction, become fully exercisable with
respect
to the total number of Shares at the time subject to such Option
or Stock
Appreciation Right and may be exercised for any or all of those
Shares as
fully−vested Shares. However, an outstanding Option or Stock Appreciation
Right shall not so accelerate if and to the extent: (i) such Option
or
Stock Appreciation Right is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation (or parent thereof)
or
to be replaced with a comparable Option to purchase shares of the
capital
stock of the successor corporation (or parent thereof) or stock
appreciation right, (ii) such Option or Stock Appreciation Right
is to be
replaced with a cash incentive program of the successor corporation
which
preserves the spread existing on the unvested Option Shares or
Stock
Appreciation Right at the time of the Corporate Transaction and
provides
for subsequent payout in accordance with the same vesting schedule
applicable to the Option or Stock Appreciation Right or (iii) the
acceleration of such Option or Stock Appreciation Right is subject
to
other limitations under the applicable Award Agreement. The determination
of comparability under clause (i) above shall be made by the Committee,
and its determination shall be final, binding and
conclusive.
|
|
(b)
|
All
outstanding repurchase rights with respect to any Restricted Stock
or
Restricted Stock Units shall also terminate automatically, and
the Shares
subject to those terminated rights shall immediately vest in full,
in the
event of any Corporate Transaction, except to the extent: (i) those
repurchase rights are to be assigned to the successor corporation
(or
parent thereof) in connection with such Corporate Transaction or
(ii) such
accelerated vesting is precluded by other limitations imposed under
the
applicable Award Agreement.
|
| (c) |
The
Committee shall have the discretion, exercisable either at the
time an
Award is granted or at any time while the Award remains outstanding,
to
provide for the automatic acceleration of one or more outstanding
Awards
upon the occurrence of a Corporate Transaction, whether or not
those
Awards are to be assumed or replaced in the Corporate
Transaction.
|
| (d) |
Each
Option or Stock Appreciation Right which is assumed in connection
with a
Corporate Transaction shall be appropriately adjusted, immediately
after
such Corporate Transaction, to apply to the number and class of
securities
which would have been issuable to the Participant upon consummation
of
such Corporate Transaction had the Option or Stock Appreciation
Right been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments to reflect such Corporate Transaction shall also be
made to
(i) the exercise price payable per Share under each outstanding
Option,
provided the aggregate exercise price payable for such securities
shall
remain the same, (ii) the maximum number and/or class of securities
available for issuance pursuant to Options and other Awards over
the
remaining term of the Plan and (iii) the maximum number and/or
class of
securities for which any one person may be granted Options and
other
Awards under the Plan per calendar
year.
|
12
| (e) |
The
Committee shall have full power and authority exercisable, either
at the
time an Option or Stock Appreciation Right is granted or at any
time while
the Option or Stock Appreciation Right remains outstanding, to
provide for
the automatic acceleration of one or more outstanding Options or
Stock
Appreciation Rights in the event the Participant's Service terminates
by
reason of an Involuntary Termination within a designated period
(not to
exceed eighteen (18) months) following the effective date of any
Corporate
Transaction in which those Options or Stock Appreciation Rights
are
assumed or replaced and do not otherwise accelerate. Unless otherwise
determined by the Committee, any Options or Stock Appreciation
Rights so
accelerated shall remain exercisable for fully−vested Shares until the
earlier of (i) the expiration of the Option term or (ii) the expiration
of
the one (1)−year period measured from the effective date of the
Involuntary Termination. In addition, the Committee may provide
that one
or more of the outstanding repurchase rights with respect to Restricted
Stock or Restricted Stock Units held by a Participant at the time
of such
Involuntary Termination shall immediately terminate, and the Shares
subject to those terminated repurchase rights shall accordingly
vest in
full.
|
| (f) |
The
Committee shall have full power and authority, exercisable either
at the
time an Option or Stock Appreciation Right is granted or at any
time while
the Option or Stock Appreciation Right remains outstanding, to
provide for
the automatic acceleration of one or more outstanding Options or
Stock
Appreciation Rights upon (i) a Change in Control or (ii) the termination
of the Participant's Service by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months)
following
the effective date of such Change in Control. Unless otherwise
determined
by the Committee, each Option or Stock Appreciation Right so accelerated
shall remain exercisable for fully−vested Shares until the earlier of (i)
the expiration of the Option term or (ii) the expiration of the
one
(1)−year period measured from the effective date of the Participant's
cessation of Service. In addition, the Committee may provide that
one or
more of the outstanding repurchase rights with respect to Restricted
Stock
or Restricted Stock Units held by a Participant at the time of
such Change
in Control or Involuntary Termination shall immediately terminate,
and the
Shares subject to those terminated repurchase rights shall accordingly
vest in full.
|
| (g) |
The
outstanding Options or other Awards shall in no way affect the
right of
the Company to adjust, reclassify, reorganize or otherwise change
its
capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
|
SECTION
14. AUTOMATIC
GRANT OF NON-EMPLOYEE DIRECTOR OPTIONS
|
(a)
|
Grant
Dates.
Option grants shall be made to Non-Employee Directors on the dates
specified below:
|
|
(i)
|
Each
individual who is first elected or appointed as a Non−Employee Director at
any time on or after the Company’s 2007 Annual Meeting shall automatically
be granted, on the date of such initial election or appointment,
an Option
to purchase 40,000 Shares, provided that individual has not previously
been a Director or Employee.
|
13
|
(ii)
|
On
the date of the Company’s 2007 Annual Shareholders Meeting and on the date
of each Annual Shareholders Meeting held after such date, each
individual
who is to continue to serve as a Non−Employee Director, whether or not
that individual is standing for re−election to the Board at that
particular Annual Shareholders Meeting, shall automatically be
granted an
Option to purchase 30,000 Shares if such individual has then served
as a
Non−Employee Director for at least six (6) months. There shall be no
limit
on the number of such 30,000−Share Option grants any one Non−Employee
Director may receive over his or her period of Board service, and
any
Non−Employee Directors who have previously been a Director or Employee
shall be eligible to receive one or more such annual Option grants
over
their period of continued Board
service.
|
|
(b)
|
Exercise
Price.
|
|
(i)
|
The
exercise price per Share of any Options granted under this Section
14
shall be equal to the Fair Market Value of a Share on the date
of grant of
such Options.
|
|
(ii)
|
The
exercise price shall be payable in one or more of the alternative
forms
authorized by the Committee under Section
6(c).
|
|
(c)
|
Option
Term.
Each Option granted under this Section 14 shall have a term of
ten (10)
years measured from the Option grant
date.
|
|
(d)
|
Exercise
and Vesting of Options.
Each Option granted under this Section 14 shall vest and become
exercisable for any or all of the Option Shares covered by such
Option on
the first anniversary of the date of grant of such
Option.
|
(e) Termination
of Board Service.
The
following provisions shall govern the exercise of any Options granted under
this
Section 14 held by a Participant at the time the Participant ceases to serve
as
a Board member:
|
(i)
|
The
Participant (or, in the event of the Participant's death, the personal
representative of the Participant's estate or the person or persons
to
whom the Option is transferred pursuant to the Participant's will
or in
accordance with the laws of descent and distribution) shall have
a twelve
(12)−month period following the date of such cessation of Board Service
in
which to exercise each such Option.
|
|
(ii)
|
During
the twelve (12)−month post−service exercise period, the Option may not be
exercised in the aggregate for more than the number of vested Shares
for
which the Option is exercisable at the time of the Participant's
cessation
of Board Service.
|
|
(iii)
|
Should
the Participant cease to serve as a Board member by reason of death
or
Disability, then all Shares at the time subject to the Option shall
immediately vest so that such Option may, during the twelve (12)−month
exercise period following such cessation of Board Service, be exercised
for all or any portion of those Shares as fully−vested
Shares.
|
|
(iv)
|
In
no event shall the Option remain exercisable after the expiration
of the
Option term. Upon the expiration of the twelve (12)−month post−service
exercise period or (if earlier) upon the expiration of the Option
term,
the Option shall terminate and cease to be outstanding for any
vested
Shares for which the Option has not been exercised. However, the
Option
shall, immediately upon the Participant's cessation of Board Service
for
any reason other than death or Disability, terminate and cease
to be
outstanding to the extent the Option is not otherwise at that time
exercisable for vested Shares.
|
14
|
(v)
|
Notwithstanding
anything contained in Subparagraphs (i) through (iv), above, of
this
Section 14(e), the Committee shall have complete discretion, exercisable
either at the time an Option is granted or at any time while the
Option
remains outstanding, to:
|
| (A) |
extend
the period of time for which the Option is to remain exercisable
following
Participant's cessation of Board Service from the limited exercise
period
otherwise in effect for that Option to such greater period of time
as the
Committee shall deem appropriate, but in no event beyond the expiration
of
the Option term, and/or
|
| (B) |
permit
the Option to be exercised, during the applicable post−Service exercise
period, not only with respect to the number of vested Shares for
which
such Option is exercisable at the time of the Participant's cessation
of
Service but also with respect to one or more additional installments
in
which the Participant would have vested had the Participant continued
in
Board Service.
|
|
(f)
|
Compliance
with SEC Regulations.
It is the Company’s interest that the provisions of this Section 14 comply
in all respects with Section 16 of the 1934 Act and any regulations
promulgated thereunder, including Rule 16b-3. If any provision
of this
Section 14 is found not to be in compliance with such rules, the
provision
shall be deemed null and void. All grants and exercises of Options
granted
under this Section 14 shall be executed in accordance with the
requirements of Section 16 of the 1934 Act and any regulations
promulgated
thereunder.
|
|
(g)
|
Tax
Status.
All Options granted pursuant to this Section 14 shall be Non-Qualified
Stock Options.
|
SECTION
15. GENERAL
|
(a)
|
No
Cash Consideration for Awards.
Awards shall be granted for no cash consideration or for such minimal
cash
consideration as may be required by applicable
law.
|
|
(b)
|
Awards
May be Granted Separately or Together.
Awards may, in the discretion of the Committee, be granted either
alone or
in addition to, in tandem with, or in substitution for any other
Award or
any award granted under any other plan of the Company or any Subsidiary.
Awards granted in addition to or in tandem with other Awards, or
in
addition to or in tandem with awards granted under any other plan
of the
Company or any Subsidiary, may be granted either at the same time
as or at
a different time from the grant of such other Awards or
awards.
|
| (c) |
Forms
of Payment Under Awards.
Subject to the terms of the Plan and of any applicable Award Agreement,
payments or transfers to be made by the Company or a Subsidiary
upon the
grant, exercise, or payment of an Award may be made in such form
or forms
as the Committee shall determine, including, without limitation,
cash,
Shares, rights in or to Shares issuable under the Award or other
Awards,
other securities, or other Awards, or any combination thereof,
and may be
made in a single payment or transfer, in installments, or on a
deferred
basis, in each case in accordance with rules and procedures established
by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest
on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred
payments.
|
|
(d)
|
Limits
on Transfer of Awards.
Except as provided by the Committee, no Award and no right under
any such
Award, shall be assignable, alienable, saleable, or transferable
by a
Participant otherwise than by will or by the laws of descent and
distribution provided, however, that, if so determined by the Committee,
a
Participant may, in the manner established by the Committee, designate
a
beneficiary or beneficiaries to exercise the rights of the Participant
with respect to any Award upon the death of the Participant. Each
Award,
and each right under any Award, shall be exercisable, during the
Participant’s lifetime, only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative. No
Award and no right under any such Award, may be pledged, alienated,
attached, or otherwise encumbered, and any purported pledge, alienation,
attachment, or encumbrance thereof shall be void and unenforceable
against
the Company or any Affiliate.
|
15
|
(e)
|
Per-Person
Limitation on Options and SARs.
The number of Shares with respect to which Options and Stock Appreciation
Rights may be granted under the Plan during any year to an individual
Participant shall not exceed 1,500,000 Shares, subject to adjustment
as
provided in Section 4(b).
|
|
(f)
|
Per-Person
Limitation on Certain Awards.
Other than Options and Stock Appreciation Rights, the aggregate
number of
Shares with respect to which Restricted Stock, Restricted Stock
Units,
Performance Awards and Other Stock-Based Awards may be granted
under the
Plan during any year to an individual Participant shall not exceed
750,000
Shares, subject to adjustment as provided in
Section 4(b).
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|
(h)
|
Share
Certificates.
All Shares or other securities delivered under the Plan pursuant
to any
Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable
under
the Plan or the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
such
Shares or other securities are then listed, and any applicable
Federal,
state, or local securities laws, and the Committee may cause a
legend or
legends to be put on any such certificates to make appropriate
reference
to such restrictions.
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|
(i)
|
No
Rights to Awards.
No Participant or other Person shall have any claim to be granted
any
Award under the Plan, or, having been selected to receive an Award
under
this Plan, to be selected to receive a future Award, and further
there is
no obligation for uniformity of treatment of Employees, Directors,
Consultants, Participants, or holders or beneficiaries of Awards
under the
Plan. The terms and conditions of Awards need not be the same with
respect
to each recipient.
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16
| (j) |
Withholding.
The Company or any Subsidiary shall be authorized to withhold from
any
Award granted or any payment due or transfer made under any Award
or under
the Plan the amount (in cash, Shares, other securities, or other
Awards)
of withholding taxes due in respect of an Award, its exercise,
or any
payment or transfer under such Award or under the Plan and to take
such
other action as may be necessary in the opinion of the Company
or
Affiliate to satisfy statutory withholding obligations for the
payment of
such taxes.
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|
(k)
|
No
Limit on Other Compensation Arrangements.
Nothing contained in the Plan shall prevent the Company or any
Subsidiary
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable
or
applicable only in specific cases.
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|
(l)
|
No
Right to Employment.
The grant of an Award shall not constitute an employment contract
nor be
construed as giving a Participant the right to be retained in the
employ
or service of the Company or any Subsidiary. Further, the Company
or a
Subsidiary may at any time dismiss a Participant from employment,
free
from any liability, or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award
Agreement.
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|
(m)
|
Governing
Law.
The validity, construction, and effect of the Plan and any rules
and
regulations relating to the Plan shall be determined in accordance
with
the laws of the State of Delaware and applicable Federal law without
regard to conflict of laws.
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|
(n)
|
Severability.
If any provision of the Plan or any Award is or becomes or is deemed
to be
invalid, illegal, or unenforceable in any jurisdiction, or as to
any
Person or Award, or would disqualify the Plan or any Award under
any law
deemed applicable by the Committee, such provision shall be construed
or
deemed amended to conform to applicable laws, or if it cannot be
so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award,
such
provision shall be stricken as to such jurisdiction, Person, or
Award, and
the remainder of the Plan and any such Award shall remain in full
force
and effect.
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|
(o)
|
No
Trust or Fund Created.
Neither the Plan nor any Award shall create or be construed to
create a
trust or separate fund of any kind or a fiduciary relationship
between the
Company or any Subsidiary and a Participant or any other Person.
To the
extent that any Person acquires a right to receive payments from
the
Company or any Subsidiary pursuant to an Award, such right shall
be no
greater than the right of any unsecured general creditor of the
Company or
any Subsidiary.
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| (p) |
No
Fractional Shares.
No fractional Shares shall be issued or delivered pursuant to the
Plan or
any Award, and the Committee shall determine whether cash, or other
securities shall be paid or transferred in lieu of any fractional
Shares,
or whether such fractional Shares or any rights thereto shall be
canceled,
terminated, or otherwise
eliminated.
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|
(q)
|
Headings.
Headings are given to the Sections and subsections of the Plan
solely as a
convenience to facilitate reference. Such headings shall not be
deemed in
any way material or relevant to the construction or interpretation
of the
Plan or any provision thereof.
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|
(r)
|
Compliance
With Section 409A of the Code.
Except to the extent specifically provided otherwise by the Committee,
Awards under the Plan are intended to satisfy the requirements
of
Section 409A of the Code (and the Treasury Department guidance and
regulations issued thereunder) so as to avoid the imposition of
any
additional taxes or penalties under Section 409A of the Code. If the
Committee determines that an Award, Award Agreement, payment,
distribution, deferral election, transaction or any other action
or
arrangement contemplated by the provisions of the Plan would, if
undertaken, cause a Participant to become subject to any additional
taxes
or other penalties under Section 409A of the Code, then unless the
Committee specifically provides otherwise, such Award, Award Agreement,
payment, distribution, deferral election, transaction or other
action or
arrangement shall not be given effect to the extent it causes such
result
and the related provisions of the Plan and/or Award Agreement will
be
deemed modified, or, if necessary, suspended in order to comply
with the
requirements of Section 409A of the Code to the extent determined
appropriate by the Committee, in each case without the consent
of or
notice to the Participant.
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17
|
(s)
|
No
Representations or Covenants With Respect to Tax
Qualification.
Although the Company may endeavor to (i) qualify an Award for
favorable U.S. or foreign tax treatment (e.g., incentive stock
options
under Section 422 of the Code) or (ii) avoid adverse tax
treatment (e.g., under Section 409A of the Code), the Company makes
no representation to that effect and expressly disavows any covenant
to
maintain favorable or avoid unfavorable tax treatment. The Company
shall
be unconstrained in its corporate activities without regard to
the
potential negative tax impact on holders of Awards under the
Plan.
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|
(t)
|
Compliance
With Laws.
The granting of Awards and the issuance of Shares under the Plan
shall be
subject to all applicable laws, rules, and regulations, and to
such
approvals by any governmental agencies or stock exchanges on which
the
Company is listed as may be required. The Company shall have no
obligation
to issue or deliver evidence of title for Shares issued under the
Plan
prior to:
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|
(i)
|
obtaining
any approvals from governmental agencies that the Company determines
are
necessary or advisable; and
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|
(ii)
|
completion
of any registration or other qualification of the Shares under
any
applicable national or foreign law or ruling of any governmental
body that
the Company determines to be necessary or advisable or at a time
when any
such registration or qualification is not current, has been suspended
or
otherwise has ceased to be
effective.
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The
inability or impracticability of the Company to obtain or maintain authority
from any regulatory body having jurisdiction, which authority is deemed by
the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have
been obtained.
SECTION
16. AMENDMENT
AND TERMINATION
Except
to
the extent prohibited by applicable law and unless otherwise expressly provided
in an Award Agreement or in the Plan:
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(a)
|
Amendments
to the Plan.
The Board of Directors of the Company may amend, alter, suspend,
discontinue, or terminate the Plan, in whole or in part; provided,
however, that without the prior approval of the Company’s shareowners, no
material amendment shall be made if shareholder approval is required
by
law, regulation, or stock exchange, and; provided,
further,
that, notwithstanding any other provision of the Plan or any Award
Agreement, no such amendment, alteration, suspension, discontinuation,
or
termination shall be made without the approval of the shareholders
of the
Company that would:
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|
(i)
|
increase
the total number of Shares available for Awards under the Plan,
except as
provided in Section 4 hereof;
or
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|
(ii)
|
except
as provided in Section 4(b), permit Options, Stock Appreciation
Rights, or Other Stock-Based Awards encompassing rights to purchase
Shares
to be repriced, replaced, or regranted through cancellation, or
by
lowering the exercise price of a previously granted Option or the
grant
price of a previously granted Stock Appreciation Right, or the
purchase
price of a previously granted Other Stock-Based
Award.
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18
|
(b)
|
Amendments
to Awards.
The Committee may waive any conditions or rights under, amend any
terms
of, or amend, alter, suspend, discontinue, or terminate, any Awards
theretofore granted, prospectively or retroactively. No such amendment
or
alteration shall be made which would impair the rights of any Participant,
without such Participant’s consent, under any Award theretofore granted,
provided that no such consent shall be required with respect to
any
amendment or alteration if the Committee determines in its sole
discretion
that such amendment or alteration either (i) is required or advisable
in
order for the Company, the Plan or the Award to satisfy or conform
to any
law or regulation or to meet the requirements of any accounting
standard,
or (ii) is not reasonably likely to significantly diminish the
benefits
provided under such Award.
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SECTION
17. EFFECTIVE
DATE OF THE PLAN
The
Plan
shall be effective as of the date of its approval by the shareholders of
the
Company.
SECTION
18. TERM
OF THE PLAN
No
Award
shall be granted under the Plan after the tenth anniversary of the date of
the
Annual Shareholders Meeting of the Company in 2007, and no incentive stock
option shall be granted under the Plan after the tenth anniversary of the
adoption of the Plan by the Board. However, unless otherwise expressly provided
in the Plan or in an applicable Award Agreement, any Award theretofore granted
may extend beyond such date, and the authority of the Committee to amend,
alter,
adjust, suspend, discontinue, or terminate any such Award, or to waive any
conditions or rights under any such Award, and the authority of the Board
of
Directors of the Company to amend the Plan, shall extend beyond such
date.
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