Exhibit 10.1
AUTOWEB, INC.
2018 EQUITY INCENTIVE PLAN
AutoWeb, Inc. (“Company”), a Delaware corporation, hereby
establishes and adopts the following 2018 Equity Incentive Plan
(“Plan”).
1.
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company and its
Subsidiaries in attracting and retaining selected individuals to
serve as employees, directors, officers, consultants and/or
advisors who are expected to contribute to the Company’s
success and to achieve long-term objectives that will benefit
stockholders of the Company through the additional incentives
inherent in the Awards hereunder.
2.
DEFINITIONS
“Award” means any Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit Award, Other
Share-Based Award, Performance Award or any other right, interest
or option relating to Shares or other property (including cash)
granted pursuant to the provisions of the Plan.
“Award
Agreement” means any
agreement, contract or other instrument or document evidencing any
Award hereunder, whether in writing or through an electronic
medium.
“Board” means the board of directors of the
Company.
“Board Approval
Date” means April 12,
2018, the date the Board approved this Plan.
“Business
Combination” has the
meaning set forth in Section 10.3(c).
“Change in
Control”
has the meaning set forth in Section
10.3.
“Code” means the
Internal Revenue Code of 1986, as amended from time to
time.
“Committee” means the Compensation Committee of the
Board or a subcommittee thereof formed by the Compensation
Committee to act as the Committee hereunder. The Committee
must consist of no fewer than two Directors, each of whom is (i) a
“Non-Employee Director” within the meaning of Rule
16b-3 of the Exchange Act, (ii) to the extent required, an
“outside director” within the meaning of Section 162(m)
of the Code as in effect on immediately before the enactment of
Public Law No. 115-97, and (iii) an “independent
director” for purpose of the rules of the principal U.S.
national securities exchange on which the Shares are traded, to the
extent required by such rules.
“Company Voting
Securities” has the
meaning set forth in Section 10.3(b).
“Consultant” means any consultant or advisor who is a
natural person and who provides services to the Company or any
Subsidiary, so long as such person (i) renders bona fide services
that are not in connection with the offer and sale of the
Company’s securities in a capital raising transaction, (ii)
does not directly or indirectly promote or maintain a market for
the Company’s securities, and (iii) otherwise qualifies as a
consultant under the applicable rules of the Securities and
Exchange Commission for registration of shares of stock on a Form
S-8 registration statement.
“Director” means a non-employee member of the
Board.
“Dividend
Equivalents” has the
meaning set forth in Section 11.5.
“Effective
Date” has the meaning set
forth in Section 12.13.
“Employee” means any employee of the Company or any
Subsidiary and any prospective employee conditioned upon, and
effective not earlier than, such person becoming an employee of the
Company or any Subsidiary.
“Exchange Act” means the Securities Exchange Act of 1934,
as amended.
“Fair Market
Value” means, with
respect to Shares as of any date, (i) the closing price of the
Shares as reported on the principal U.S. national securities
exchange on which the Shares are listed and traded on that date,
or, if there is no closing price on that date, then on the last
preceding date on which a closing price was reported; (ii) if the
Shares are not listed on any U.S. national securities exchange but
are quoted in an inter-dealer quotation system on a last sale
basis, the final ask price of the Shares reported on the
inter-dealer quotation system for such date, or, if there is no
sale on that date, then on the last preceding date on which a sale
was reported; or (iii) if the Shares are neither listed on a U.S.
national securities exchange nor quoted on an inter-dealer
quotation system on a last sale basis, the amount determined by the
Committee to be the fair market value of the Shares as determined
by the Committee in its sole discretion. The Fair Market Value of
any property other than Shares means the market value of that
property determined by such methods or procedures as may be
established from time to time by the Committee.
“Fungible Share
Ratio” means the
rate at which Full-Value Awards are counted against Plan limits as
set forth in Sections 3.1(a) and 3.1(d).
“Full-Value
Awards” means Awards
other than Option and Stock Appreciation
Rights.
“Incumbent
Directors” has the
meaning set forth in Section 10.3(a).
“Incentive Stock
Option” means an Option
that when granted is intended to qualify as an incentive stock
option for purposes of Section 422 of the Code.
“Limitations” has the meaning set forth in Section
3.4.
“Non-Qualifying
Transaction” has the
meaning set forth in Section 10.3(c).
“Officer” means any officer of the Company or any
Subsidiary.
“Option” means any right granted to a Participant
under the Plan allowing that Participant to purchase Shares at such
price or prices and during such period or periods as the Committee
may determine.
“Other Share-Based
Awards” has the meaning
set forth in Section 8.1.
“Parent
Corporation” has the
meaning set forth in Section 10.3(c).
“Participant” means an Employee, Officer, Director or
Consultant who is selected by the Committee to receive an Award
under the Plan.
“Payee” has the meaning set forth in Section
12.2.
“Performance
Award” means any Award of
Performance Cash, Performance Shares or Performance Units granted
pursuant to Article 9.
“Performance
Cash” means any cash
incentives granted pursuant to Article 9 payable to the Participant
upon the achievement of such performance goals as the Committee may
establish.
“Performance
Period” means the period
established by the Committee during which any performance goals
specified by the Committee with respect to a Performance Award are
to be measured.
“Performance
Share” means any grant
pursuant to Article 9 of a unit valued by reference to a designated
number of Shares, which value may be paid to the Participant upon
achievement of such performance goals as the Committee may
establish.
“Performance
Unit” means any grant
pursuant to Article 9 of a unit valued by reference to a designated
amount of cash or property other than Shares, which value may be
paid to the Participant upon achievement of such performance goals
during the Performance Period as the Committee may
establish.
“Permitted
Assignee” has the meaning
set forth in Section 11.3.
“Plan Expiration
Date” means June 19,
2028.
“Prior Plans” means, collectively, the Company’s
1998 Stock Option Plan, 1999 Stock Option Plan, 2000 Stock Option
Plan, Amended and Restated 2001 Restricted Stock and Option Plan,
2004 Restricted Stock and Option Plan, 2010 Equity Incentive Plan,
and Amended and Restated 2014 Equity Incentive
Plan.
“Restricted
Stock” means any Share
issued with the restriction that the holder may not sell, transfer,
pledge or assign such Share and with such other restrictions as the
Committee, in its sole discretion, may impose, which restrictions
may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem
appropriate.
“Restricted Stock
Award” has the meaning
set forth in Section 7.1.
“Restricted Stock
Unit” means an Award that
is valued by reference to a Share, which value may be paid to the
Participant in Shares or cash as determined by the Committee in its
sole discretion upon the satisfaction of vesting restrictions as
the Committee may establish, which restrictions may lapse
separately or in combination at such time or times, in installments
or otherwise, as the Committee may deem
appropriate.
“Restricted Stock Unit
Award” has the meaning
set forth in Section 7.1
“SEC” has the meaning set forth in Section
12.6.
“Shares” means the shares of common stock of the
Company, par value $0.001 per share.
“Stock Appreciation
Right” means the right
granted to a Participant pursuant to Article 6.
“Subsidiary” means any corporation, limited
liability company, partnership, joint venture or similar entity in
which the Company owns, directly or indirectly, an equity interest
possessing more than 50% of the combined voting power of the total
outstanding equity interests of such entity. Provided, however, in the case of an
Incentive Stock Option, “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the relevant time
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain. For purposes of the preceding
sentence, the term “corporation” has the meaning
prescribed in Section 7701(a)(3) of the Code and the regulations
thereunder.
“Substitute
Awards” means Awards
granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, in each case by a
company acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary combines.
“Surviving
Corporation” has the
meaning set forth in Section 10.3(c).
“Vesting
Period” means the period
of time specified by the Committee during which vesting
restrictions for an Award are applicable.
3.
SHARES SUBJECT TO THE PLAN
(a) Subject
to adjustment as provided in Section 11.2, as of the Effective
Date, a maximum total of 2,003,758 Shares are authorized for grant
under the Plan, less one (1) Share for every one (1) Share that was
subject to an Option or Stock Appreciation Right granted under the
Amended and Restated 2014 Equity Incentive Plan after December 31,
2017 and prior to the Effective Date, and one and three-quarters
(1.75) Shares for every one (1) Share that was subject to
Full-Value Awards granted under the Amended and Restated 2014
Equity Incentive Plan after December 31, 2017 and prior to the
Effective Date. Any Shares that are subject to Options
or Stock Appreciation Rights must be counted against this limit as
one (1) Share for every one (1) Share granted, and any Shares that
are subject to Full-Value Awards must be counted against this limit
as one and three-quarters (1.75) Shares for every one (1) Share
granted. After the Effective Date, no awards may be granted
under any Prior Plan.
(b) If
(i) any Shares subject to an Award are forfeited, an Award expires
or an Award is settled for cash (in whole or in part), or (ii)
after December 31, 2017 any Shares subject to an award under the
Prior Plans are forfeited, or an award under the Prior Plans
expires or is settled for cash (in whole or in part), the Shares
subject to such Award or award under the Prior Plans will, to the
extent of such forfeiture, expiration or cash settlement, again be
available for Awards under the Plan, in accordance with Section
3.1(d) below. In the event that withholding tax liabilities
arising from an Award other than an Option or Stock Appreciation
Right or, after December 31, 2017, an award other than an option or stock appreciation
right under any Prior Plan are satisfied by the tendering of Shares
(either actually or by attestation) or by the withholding of Shares
by the Company, the Shares so tendered or withheld shall be added
to the Shares available for Awards under the Plan in accordance
with Section 3.1(d). Notwithstanding anything to the contrary
contained herein, the following Shares may not be added to the
Shares authorized for grant under paragraph (a) of this Section
3.1: (i) Shares tendered by the Participant or withheld by the
Company in payment of the exercise price of an Option or after
December 31, 2017, an option granted under the Prior Plans, or to
satisfy any tax withholding obligation with respect to Options or
Stock Appreciation Rights or, after December 31,
2017, options or stock appreciation rights under the
Prior Plans, (ii) Shares subject to a Stock Appreciation Right, or
after December 31, 2017, a stock appreciation right granted under
the Prior Plans that are not issued in connection with its stock
settlement on exercise thereof, and (iii) Shares reacquired by the
Company on the open market or otherwise using cash proceeds from
the exercise of Options or after December 31, 2017, options granted
under the Prior Plans.
(c) Substitute
Awards will not reduce the Shares authorized for grant under the
Plan or the Limitations applicable to a Participant under Section
3.4, nor will Shares subject to a Substitute Award again be
available for Awards under the Plan to the extent of any
forfeiture, expiration or cash settlement as provided in paragraph
(b) above. Additionally, in the event that a company acquired
by the Company or any Subsidiary or with which the Company or any
Subsidiary combines has shares available under a pre-existing plan
approved by stockholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant
to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or
valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may
be used for Awards under the Plan and will not reduce the Shares
authorized for grant under the Plan; provided that Awards using such available shares may not be
made after the date awards or grants could have been made under the
terms of the pre-existing plan, absent the acquisition or
combination, and will only be made to individuals who were not
Employees or Directors prior to such acquisition or
combination.
(d) Any
Shares that again become available for grant pursuant to this
Section must be added back as (i) one (1) Share if such Shares were
subject to Options or Stock Appreciation Rights granted under the
Plan or options or stock appreciation rights granted under the
Prior Plans, and (ii) as one and three-quarters (1.75) Shares if
such Shares were subject to Full-Value Awards granted under the
Plan or under the Prior Plans.
3.2
Character of Shares. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares purchased in the open market or
otherwise.
3.3
Limit on Awards to Non-Employee Directors.
Notwithstanding any other provision of the Plan to the contrary,
the aggregate of the following during any single calendar year
shall not exceed $750,000: (i) the aggregate grant date fair value
(as calculated by the Company for financial accounting purposes) of
all Awards granted to any non-employee Director for services during
such calendar year and (ii) the sum of all cash payments to any
non-employee Director made for services during such calendar year.
For the avoidance of doubt, any compensation that is deferred shall
be counted toward this limit for the year in which it was first
earned, and not when paid or settled if later.
3.4
Limitations on Grants to Individual Participants. Subject to adjustment as provided in
Section 11.2, no Participant may (i) be granted Options or Stock
Appreciation Rights during any calendar year with respect to more
than 500,000 Shares and (ii) be granted Restricted Stock Awards,
Restricted Stock Unit Awards, Performance Awards and/or Other
Share-Based Awards in any calendar year that are intended to comply
with the qualified performance-based exception under Section 162(m)
of the Code as in effect immediately before enactment of Public Law
No. 115-97 and applicable state tax law and denominated in Shares
and under which more than 500,000 Shares may be earned for
each 12 months in the Performance Period. In addition to the foregoing,
during any calendar year no Participant may be granted
Performance Awards that are intended
to comply with the qualified performance-based exception under
Section 162(m) of the Code as in effect immediately before
enactment of Public Law No. 115-97 and applicable state tax law and
are denominated in cash under which more than
$2,500,000 may be earned for each 12 months in
the Performance Period (together,
collectively with the limitations in the preceding sentence, the
“Limitations”). If an Award an individual
Participant is cancelled, the cancelled Award will continue to be
counted toward the applicable Limitation for such
Participant.
4.
ELIGIBILITY AND
ADMINISTRATION
4.1
Eligibility. Any
Employee, Officer, Director or Consultant is eligible to be
selected as a Participant.
(a)
The Plan must be administered by the
Committee. The Committee has full power and authority,
subject to the provisions of the Plan and subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may
from time to time be adopted by the Board, to: (i) select the
Employees, Officers, Directors and Consultants to whom Awards may
from time to time be granted hereunder; (ii) determine the type or
types of Awards to be granted to each Participant hereunder; (iii)
determine the number of Shares (or dollar value) to be covered by
each Award granted hereunder; (iv) determine the terms and
conditions, not inconsistent with the provisions of the Plan, of
any Award granted hereunder; (v) determine whether, to what extent
and under what circumstances Awards may be settled in cash, Shares
or other property; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other property and other
amounts payable with respect to an Award made under the Plan will
be deferred either automatically or at the election of the
Participant; (vii) determine whether, to what extent and under what
circumstances any Award will be canceled, suspended, accelerated,
or vesting terms waived; (viii) interpret and administer the Plan
and any instrument or agreement entered into under or in connection
with the Plan, including any Award Agreement; (ix) correct any
defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent that the
Committee deems desirable to carry it into effect; (x) establish
such rules and regulations and appoint such agents as it deems
appropriate for the proper administration of the Plan; (xi)
determine whether any Award, other than an Option or Stock
Appreciation Right, will have Dividend Equivalents; and (xii) make
any other determination and take any other action that the
Committee deems necessary or desirable for the administration of
the Plan.
(b)
Decisions of the Committee are final, conclusive
and binding on all persons or entities, including the Company, any
Participant, and any Subsidiary. Meetings and actions of the
Committee are governed by, and must be held and taken in accordance
with the Company’s Bylaws and any rules adopted by the Board
not inconsistent with the Company’s
Bylaws.
(c)
To the extent not inconsistent with applicable
law, including the rules and regulations of the principal U.S.
national securities exchange on which the Shares are traded, the
Committee may: (i) delegate to a committee of one or more directors
of the Company any of the authority of the Committee under the
Plan, including the right to grant, cancel or suspend Awards, and
(ii) authorize one or more executive officers to do one or
both of the following: (A) designate officers (other than officers
subject to Section 16 of the Exchange Act) and employees of the
Company or any Subsidiary to be recipients of Awards, and (B)
determine the number of such Awards to be received by those
officers and employees provided that any resolution of the Committee authorizing
such officer(s) must comply with Sections 152 or 157 of the
Delaware General Corporation Law, as the case may be, and the
Committee may not authorize an officer to designate himself or
herself as a recipient of an Award.
5.
OPTIONS
5.1
Grant of Options. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted
under the Plan. Any Option is subject to the terms and
conditions of this Article and to such additional terms and
conditions, not inconsistent with the provisions of the Plan, as
the Committee deems desirable.
5.2
Award Agreements. All Options must be evidenced by a
written Award Agreement in such form and containing such terms and
conditions as the Committee determines which are not inconsistent
with the provisions of the Plan. The terms and conditions of
Options need not be the same with respect to each
Participant. Granting an Option pursuant to the Plan
does not impose any obligation on the recipient to exercise that
Option. Any Participant who is granted an Option pursuant to
this Article may hold more than one Option granted pursuant to the
Plan at the same time.
5.3
Option Price. Other
than in connection with Substitute Awards, the option price per
each Share purchasable under any Option granted pursuant to this
Article must not be less than 100% of the Fair Market Value of one
Share on the date of grant of that Option; provided, however, that in the case of an Incentive Stock Option
granted to a Participant who, at the time of the grant, owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock
representing more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary, the option
price per share must be no less than 110% of the Fair Market Value
of one Share on the date of grant. Other than pursuant to
Section 11.2, the Committee may not without the approval of the
Company’s stockholders (i) lower the option price per Share
of an Option after it is granted, (ii) cancel an Option when the
option price per Share exceeds the Fair Market Value of one Share
in exchange for cash or another Award (other than in connection
with a Change in Control), or (iii) take any other action with
respect to an Option that would be treated as a repricing under the
rules and regulations of the principal U.S. national securities
exchange on which the Shares are traded.
5.4
Option Term. The
term of each Option must be fixed by the Committee in its sole
discretion; provided that no Option may be exercisable after the
expiration of seven (7) years from the date the Option is granted,
except in the event of death or disability of the
Participant; provided,
however, that the term of the
Option must not exceed five (5) years from the date the Option is
granted in the case of an Incentive Stock Option granted to a
Participant who, at the time of the grant, owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock representing more
than 10% of the total combined voting power of all classes of stock
of the Company or any Subsidiary.
5.5 Exercise
of Options.
(a)
Vested Options granted under the Plan
may be exercised by the Participant or by a Permitted Assignee
thereof (or by the Participant’s executors, administrators,
guardian or legal representative, as may be provided in an Award
Agreement) as to all or part of the Shares covered thereby, by
giving notice of exercise to the Company or its designated agent,
specifying the number of Shares to be purchased. The notice
of exercise must be in such form, made in such manner, and must
comply with such other requirements consistent with the provisions
of the Plan as the Committee may prescribe from time to
time.
(b)
Unless otherwise provided in an Award Agreement,
full payment of the purchase price must be made at the time of
exercise and must be made (i) in cash or cash equivalents
(including certified check or bank check or wire transfer of
immediately available funds), (ii) by tendering previously acquired
Shares (either actually or by attestation) valued at their then
Fair Market Value, (iii) with the consent of the Committee, by
delivery of other consideration having a Fair Market
Value on the exercise date equal to the total purchase price, (iv)
with the consent of the Committee, by withholding Shares otherwise
issuable in connection with the exercise of the Option, (v) through
any other method specified in an Award Agreement (including
same-day sales through a broker) or as authorized by the Committee,
including through any third party option administrator authorized
by the Committee, or (vi) any combination of any of the
foregoing. The notice of exercise, accompanied by such
payment, must be delivered to the Company at its principal business
office or such other office or location as the Committee may from
time to time direct, including to a third party option
administrator authorized by the Committee, and must be in such
form, containing such further provisions consistent with the
provisions of the Plan, as the Committee may from time to time
prescribe. In no event may any Option granted hereunder
be exercised for a fraction of a Share.
(c) Notwithstanding
the foregoing, an Award Agreement may provide that if on the last
day of the term of an Option the Fair Market Value of one Share
exceeds the option price per Share, the Participant has not
exercised the Option (or a tandem Stock Appreciation Right, if
applicable) and the Option has not expired, the Option may be
deemed to have been exercised by the Participant on that day with
payment made by withholding Shares otherwise issuable in connection
with the exercise of the Option. In such event, the Company
must deliver to the Participant the number of Shares for which the
Option was deemed exercised, less the number of Shares required to
be withheld for the payment of the total purchase price and
required withholding taxes; provided,
however, any fractional Share
must be settled in cash.
5.6
Form of Settlement. In its sole discretion, the Committee
may provide that the Shares to be issued upon an Option’s
exercise will be in the form of Restricted Stock or other similar
securities.
5.7
Incentive Stock Options. The Committee may grant Incentive
Stock Options to any Employee of the Company or any Subsidiary,
subject to the requirements of Section 422 of the Code and the
regulations thereunder. Solely for purposes of determining
whether Shares are available for the grant of Incentive Stock
Options under the Plan, the maximum aggregate number of Shares that
may be issued pursuant to Incentive Stock Options granted under the
Plan is 2,003,758 Shares, subject to adjustment as provided in
Sections 3.1(a) and 11.2.
6.
STOCK APPRECIATION RIGHTS
6.1
Grant and Exercise. The Committee may provide Stock
Appreciation Rights (i) in tandem with all or part of any
Option granted under the Plan or at any subsequent time during the
term of such Option, (ii) in tandem with all or part of any Award
(other than an Option) granted under the Plan or at any subsequent
time during the term of such Award, or (iii) without regard to
any Option or other Award in each case upon such terms and
conditions as the Committee may establish in its sole
discretion.
6.2
Terms and Conditions. Stock Appreciation Rights are subject
to such terms and conditions, not inconsistent with the provisions
of the Plan, as are determined from time to time by the Committee,
including the following:
(a) Upon the exercise of a Stock Appreciation Right, the
holder has the right to receive, for each Share for which the Stock
Appreciation Right is exercised, the excess of (i) the Fair Market
Value of one Share on the date of exercise (or such amount less
than such Fair Market Value as the Committee so determines at any
time during a specified period before the date of exercise) over
(ii) the grant price of the Stock Appreciation Right.
(b) The Committee may determine in its sole discretion whether
payment on exercise of a Stock Appreciation Right must be made in
cash, in whole Shares or other property, or any combination
thereof.
(c) The terms and conditions of Stock Appreciation Rights need
not be the same with respect to each Participant.
(d) The Committee may impose such other terms and conditions
on the exercise of any Stock Appreciation Right, as it deems
appropriate. A Stock Appreciation Right must: (i) have a
grant price per Share of not less than the Fair Market Value of one
Share on the date of grant or, if applicable, on the date of grant
of an Option with respect to a Stock Appreciation Right granted in
exchange for or in tandem with, but subsequent to, the Option
(subject to the requirements of Section 409A of the Code) except in
the case of Substitute Awards or in connection with an adjustment
provided in Section 11.2, and (ii) have a term not greater than
seven (7) years.
(e) An Award Agreement may provide that if on the last day of
the term of a Stock Appreciation Right the Fair Market Value of one
Share exceeds the grant price per Share of the Stock Appreciation
Right, the Participant has not exercised the Stock Appreciation
Right or the tandem Option (if applicable), and the Stock
Appreciation Right has not expired, the Stock Appreciation Right
will be deemed to have been exercised by the Participant on that
day. In that event, the Company must make payment to the
Participant in accordance with this Section, reduced by the number
of Shares (or cash) required for withholding taxes; any fractional
Share must be settled in cash.
(f) Without
the approval of the Company’s stockholders, other than
pursuant to Section 11.2, the Committee may not (i) reduce the
grant price of any Stock Appreciation Right after the date of
grant, (ii) cancel any Stock Appreciation Right when the grant
price per Share exceeds the Fair Market Value of one Share in
exchange for cash or another Award (other than in connection with a
Change in Control as defined in Section 10.3), or (iii) take any
other action with respect to a Stock Appreciation Right that would
be treated as a repricing under the rules and regulations of the
principal U.S. national securities exchange on which the Shares are
traded.
7.
RESTRICTED STOCK AND RESTRICTED
STOCK UNITS
7.1
Grants. Awards of
Restricted Stock and of Restricted Stock Units may be issued
hereunder to Participants either alone or in addition to other
Awards granted under the Plan (a “Restricted Stock
Award” or
“Restricted Stock Unit
Award” respectively), and
such Restricted Stock Awards and Restricted Stock Unit Awards may
also be available as a form of payment of Performance Awards and
other earned cash-based incentive compensation. A Restricted
Stock Award or Restricted Stock Unit Award may be subject to
vesting restrictions during the Vesting Period as specified by the
Committee. The Committee has absolute discretion to determine
whether any consideration (other than services) is to be received
by the Company or any Subsidiary as a condition precedent to the
issuance of Restricted Stock or Restricted Stock
Units.
7.2
Award Agreements. The terms of any Restricted Stock
Award or Restricted Stock Unit Award granted under the Plan must be
set forth in an Award Agreement which must contain provisions
determined by the Committee and not inconsistent with the
Plan. The terms of Restricted Stock Awards and Restricted
Stock Unit Awards need not be the same with respect to each
Participant.
7.3
Rights of Holders of Restricted Stock and Restricted Stock
Units. Unless
otherwise provided in the Award Agreement, beginning on the date of
grant of the Restricted Stock Award and subject to execution of the
Award Agreement, the Participant will become a stockholder of the
Company with respect to all Shares subject to the Award Agreement
and will have all of the rights of a stockholder, including the
right to vote those Shares and the right to receive distributions
made with respect to those Shares, subject to this Section
7.3. A Participant receiving a Restricted Stock Unit Award
has only those rights specifically provided for in the Award
Agreements; provided,
however, in no event will the
Participant possess voting rights with respect to that Award.
Notwithstanding anything in this Plan to the contrary, any Shares
or any other property distributable, credited, or accumulated as a
dividend, dividend equivalent, or otherwise with respect to any
Restricted Stock Award or Restricted Stock Unit Award as to which
the restrictions have not yet lapsed are subject to the same
restrictions and risk of forfeiture as the underlying Award, and
shall not vest or be paid unless and until the underlying Award
vests.
7.4
Issuance of Shares. Any Restricted Stock granted under
the Plan may be evidenced in such manner as the Board may deem
appropriate, including book-entry registration or issuance of a
stock certificate or certificates, which certificate or
certificates will be held by the Company. Certificate or
certificates, if any, evidencing Restricted Stock must be
registered in the name of the Participant and must bear an
appropriate legend referring to the restrictions applicable to such
Restricted Stock.
8.
OTHER SHARE-BASED AWARDS
8.1
Grants. Other Awards
of Shares and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares or other property
(“Other Share-Based
Awards”), including
deferred stock units, may be granted hereunder to Participants
either alone or in addition to other Awards granted under the
Plan. Other Share-Based Awards may also be available as a
form of payment of other Awards granted under the Plan and other
earned cash-based compensation.
8.2
Award Agreements. The terms of Other Share-Based Award
granted under the Plan must be set forth in an Award Agreement
which must contain provisions determined by the Committee and not
inconsistent with the Plan. The terms of such Awards need not
be the same with respect to each Participant. Notwithstanding
the provisions of this Section, dividend equivalents and any
property distributed as a dividend or otherwise with respect to the
number of Shares covered by an unvested Other Share-Based Award
will be subject to restrictions and risk of forfeiture to the same
extent as the underlying Award, and shall not be paid unless and
until the underlying Award vests. Other Share-Based Awards may be
subject to vesting restrictions during the Vesting Period as
specified by the Committee.
8.3
Payment. Except
as may be provided in an Award Agreement, Other Share-Based
Awards may be paid in cash, Shares, other property, or any
combination thereof in the sole discretion of the Committee.
Other Share-Based Awards may be paid in a lump sum or in
installments or, in accordance with procedures established by the
Committee, on a deferred basis subject to the requirements of
Section 409A of the Code and the regulations
thereunder.
8.4
Deferral of Director Fees. Subject to the limits set forth in
Section 3.3, Directors must, if determined by the Board, receive
Other Share-Based Awards in the form of deferred stock units in
lieu of all or a portion of their annual retainer. In
addition, Directors may elect to receive Other Share-Based Awards
in the form of deferred stock units in lieu of all or a portion of
their annual and committee retainers and annual meeting fees,
provided that such election is made in accordance with the
requirements of Section 409A of the Code and the regulations
thereunder and subject to the limits set forth in Section
3.3. The Committee may, in its absolute discretion, establish
such rules and procedures as it deems appropriate for such
elections and for the payment in deferred stock
units.
9.
PERFORMANCE
AWARDS
9.1
Grants. Performance
Awards in the form of Performance Cash, Performance Shares or
Performance Units, as determined by the Committee in its sole
discretion, may be granted hereunder to Participants, for no
consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards
granted under the Plan. The performance goals to be achieved
for each Performance Period will be conclusively determined by the
Committee and may be based upon the criteria set forth in Section
9.5.
9.2
Award Agreements. The terms of any Performance Award
granted under the Plan must be set forth in an Award Agreement (or,
if applicable, in a resolution duly adopted by the Committee) which
must contain provisions determined by the Committee and not
inconsistent with the Plan, including whether such Awards will have
Dividend Equivalents. The terms of Performance Awards need
not be the same with respect to each
Participant.
9.3
Terms and Conditions. The performance criteria to be
achieved during any Performance Period and the length of the
Performance Period must be determined by the Committee upon the
grant of each Performance Award; provided, however, that a
Performance Period may not be longer than five years. The
amount of the Award to be distributed will be conclusively
determined by the Committee.
9.4
Payment. Except as
provided in Article 11 or as may be provided in an Award Agreement,
Performance Awards will be distributed only after the end of the
relevant Performance Period. Performance Awards may be paid
in cash, Shares, other property, or any combination thereof, in the
sole discretion of the Committee. Performance Awards may be
paid in a lump sum or in installments following the close of the
Performance Period or, in accordance with procedures established by
the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code and the regulations
thereunder.
9.5
Performance Criteria. Notwithstanding any other provision
of the Plan, if the Committee determines at the time a Restricted
Stock Award, a Restricted Stock Unit Award, a Performance Award or
Other Share-Based Award is granted to a Participant who is, or is
likely to be, as of the end of the tax year in which the Company
would claim a deduction under applicable state law in connection
with such Award, a “covered employee” within the
meaning of Section 162(m) of the Code as in effect immediately
before the enactment of Public Law No. 115-97, then the Committee
may provide that this Section 9.5 is applicable to that Award. If
the Committee determines that an Award is intended to be subject to
this Section 9.5, the lapsing of restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto, as
applicable will be subject to the achievement of one or more
objective performance goals established by the Committee, which
must be based on the attainment of specified levels of one or any
combination of the following: net sales; revenue; revenue growth or
product revenue growth; operating income (before or after taxes);
pre- or after-tax income or loss (before or after allocation of
corporate overhead and bonus); earnings or loss per share; net
income or loss (before or after taxes); return on equity; total
stockholder return; return on assets or net assets; appreciation in
and/or maintenance of the price of the Shares or any other
publicly-traded securities of the Company; market share; gross
profits; earnings or losses (including earnings or losses before
taxes, before interest and taxes, or before interest, taxes,
depreciation and amortization); economic value-added models or
equivalent metrics; comparisons with various stock market indices;
reductions in costs; cash flow or cash flow per share (before or
after dividends); return on capital (including return on total
capital or return on invested capital); cash flow return on
investment; improvement in or attainment of expense levels or
working capital levels, including cash, inventory and accounts
receivable; operating margin; gross margin; year-end cash; cash
margin; debt reduction; stockholders equity; operating
efficiencies; market share; customer satisfaction; customer growth;
employee satisfaction; regulatory achievements (including
submitting or filing applications or other documents with
regulatory authorities or receiving approval of any such
applications or other documents and passing pre-approval
inspections); strategic partnerships or transactions (including
in-licensing and out-licensing of intellectual property);
establishing relationships with commercial entities with respect to
the marketing, distribution and sale of the Company’s
products (including with group purchasing organizations,
distributors and other vendors); lead supply or other supply chain
achievements); co-development, co-marketing, profit sharing, joint
venture or other similar arrangements; financial ratios (including
those measuring liquidity, activity, profitability or leverage);
cost of capital or assets under management; financing and other
capital raising transactions (including sales of the
Company’s equity or debt securities); factoring transactions;
sales or licenses of the Company’s assets (including its
intellectual property, whether in a particular jurisdiction or
territory or globally; or through partnering transactions);
implementation, completion or attainment of measurable objectives
with respect to research, development, manufacturing,
commercialization, products or projects, production volume levels,
acquisitions and divestitures; factoring transactions; and
recruiting and maintaining personnel. These performance
goals also may be based solely by reference to the Company’s
performance or the performance of a Subsidiary, division, business
segment or business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. Any
performance goals that are financial metrics, may be determined in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), in
accordance with accounting principles established by the
International Accounting Standards Board (“IASB Principles”), or may be
adjusted when established to include or exclude any items otherwise
includable or excludable under GAAP or under IASB Principles.
The Committee may also exclude the
impact of an event or occurrence which the Committee determines
should appropriately be excluded, including (i) restructurings,
discontinued operations, items of an unusual nature or infrequency
of occurrence or non-recurring items; (ii) an event either
not directly related to the operations of the Company, Subsidiary,
division, business segment or business unit or not within the
reasonable control of management;
(iii) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting
principles; (iv) asset write-downs, (v) litigation or claim
judgments or settlements; (vi) acquisitions or divestitures; (vii)
reorganization or change in the corporate structure or capital
structure of the Company; (vii) foreign exchange gains and losses;
(ix) a change in the fiscal year of the Company; (x) the
refinancing or repurchase of bank loans or debt securities; (xi),
unbudgeted capital expenditures; (xii) the issuance or repurchase
of equity securities and other changes in the number of outstanding
shares; (xiii) conversion of some or all of convertible securities
to common stock; (xiv) any business interruption event; or (xv) the
effect of changes in other laws or regulatory rules affecting
reported results. The Committee must
set these performance goals (and any exclusions) within the first
90 days of the Performance Period, unless otherwise determined by
the Committee in its sole discretion. Notwithstanding
the foregoing, the Committee, in its sole discretion, may grant
performance-based Awards that are based on other metrics, not
specifically set forth in this Section.
9.6
Adjustments. Notwithstanding any provision of the Plan
(other than Article 11), with respect to any Restricted Stock
Award, Restricted Stock Unit Award, Performance Award or Other
Share-Based Award that is subject to Section 9.5, the Committee may
adjust downwards, but not upwards, the amount payable pursuant to
such Award, and the Committee may not waive the achievement of the
applicable performance goals except in the case of the death or
disability of the Participant or a Change in Control of the
Company.
9.7
Restrictions. The Committee has the power to impose such
other restrictions on Awards subject to Section 9.5 as it may deem
necessary or appropriate to ensure that the Awards satisfy all
requirements for “qualified performance-based compensation"
within the meaning of Section 162(m) of the Code in effect
immediately before enactment of Public Law No. 115-97 and
applicable state tax law.
10.
CHANGE IN CONTROL PROVISIONS
10.1
Impact on Certain Awards. Award Agreements may provide that in
the event of a Change in Control of the Company: (i) Options
and Stock Appreciation Rights outstanding as of the date of the
Change in Control will be cancelled and terminated without payment
therefor if the Fair Market Value of one Share as of the date of
the Change in Control is less than the per Share Option exercise
price or Stock Appreciation Right grant price, and (ii) all
Performance Awards will be considered to be earned and payable
(either in full or pro rata based on the portion of the Performance
Period completed as of the date of the Change in Control), and any
limitations or other restrictions will lapse and such Performance
Awards will be immediately settled or
distributed.
10.2 Assumption
or Substitution of Certain Awards.
(a) Unless otherwise provided in
an Award Agreement, in the event of a Change in Control of the
Company in which the successor company assumes or substitutes for
an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other Share-Based Award (or in which
the Company is the ultimate parent corporation and continues the
Award), if a Participant’s employment with such successor
company (or the Company) or a subsidiary thereof terminates within
24 months following such Change in Control (or such other period
set forth in the Award Agreement, including prior thereto if
applicable) and under the circumstances specified in the Award
Agreement: (i) Options and Stock Appreciation Rights
outstanding as of the date of such termination of employment will
immediately vest, become fully exercisable, and may thereafter be
exercised for 24 months (or the period of time set forth in the
Award Agreement), but in no event later than the earlier of (A) the
latest date on which the Option or Stock Appreciation Right would
have expired by its original terms or (B) the date that is seven
(7) years after the original date of grant of the Option or Stock
Appreciation Right, (ii) the restrictions, limitations and other
conditions applicable to Restricted Stock and Restricted Stock
Units outstanding as of the date of such termination of employment
will lapse and the Restricted Stock and Restricted Stock Units will
become free of all restrictions, limitations and conditions and
become fully vested, and (iii) the restrictions, limitations and
other conditions applicable to any Other Share-Based Awards or any
other Awards will lapse, and such Other Share-Based Awards or such
other Awards will become free of all restrictions, limitations and
conditions and become fully vested and transferable to the full
extent of the original grant. For the purposes of this
Section 10.2, an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Share-Based Award will
be considered assumed or substituted for if following the Change in
Control the Award confers the right to purchase or receive, for
each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other
Share-Based Award immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property)
received in the transaction constituting a Change in Control by
holders of Shares for each Share held on the effective date of such
transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided,
however, that if such
consideration received in the transaction constituting a Change in
Control is not solely common stock of the successor company, the
Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting
of an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other Share-Based Award, for each
Share subject thereto, will be solely common stock of the successor
company substantially equal in fair market value to the per Share
consideration received by holders of Shares in the transaction
constituting a Change in Control. The determination of
such substantial equality of value of consideration may be made by
the Committee in its sole discretion and its determination is
conclusive and binding.
(b) Unless
otherwise provided in an Award Agreement, in the event of a Change
in Control of the Company to the extent the successor company does
not assume or substitute for an Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other
Share-Based Award (or in which the Company is the ultimate parent
corporation and does not continue the Award), then immediately
prior to the Change in Control: (i) those Options and Stock
Appreciation Rights outstanding as of the date of the Change in
Control that are not assumed or substituted for (or continued) will
immediately vest and become fully exercisable, (ii) restrictions,
limitations and other conditions applicable to Restricted Stock and
Restricted Stock Units that are not assumed or substituted for (or
continued) will lapse and the Restricted Stock and Restricted Stock
Units will become free of all restrictions, limitations and
conditions and become fully vested, and (iii) the restrictions,
other limitations and other conditions applicable to any Other
Share-Based Awards or any other Awards that are not assumed or
substituted for (or continued) will lapse, and such Other
Share-Based Awards or such other Awards will become free of all
restrictions, limitations and conditions and become fully vested
and transferable to the full extent of the original
grant.
(c) The Committee, in its discretion, may determine that, upon
the occurrence of a Change in Control of the Company, each Option
and Stock Appreciation Right outstanding will terminate within a
specified number of days after notice to the Participant, and/or
that each Participant will receive, with respect to each Share
subject to such Option or Stock Appreciation Right, an amount equal
to the excess of the Fair Market Value of such Share immediately
prior to the occurrence of such Change in Control over the exercise
price per Share of such Option and/or Stock Appreciation Right;
such amount to be payable in cash, in one or more kinds of stock or
property (including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in its
discretion, may determine.
10.3
Change in Control. For purposes of the Plan, unless
otherwise provided in an Award Agreement,
“Change
in Control” means the
occurrence of any one of the following events:
(a) During any twenty-four (24)
month period, individuals who, as of the beginning of such period,
constitute the Board (“Incumbent
Directors”) cease for any
reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the beginning of
such period whose election or nomination for election was approved
by a vote of at least a majority of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) will be
an Incumbent Director; provided,
however, that no individual
initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened
solicitation of proxies by or on behalf of any person other than
the Board will be deemed to be an Incumbent
Director;
(b) Any
“person”
(as such term is defined in the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial
owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities
eligible to vote for the election of the Board
(“Company Voting
Securities”);
provided,
however, that the event
described in this paragraph (b) will not be deemed to be a Change
in Control by virtue of any of the following
acquisitions: (i) by the Company or any Subsidiary, (ii)
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding securities pursuant to an offering
of such securities, (iv) pursuant to a Non-Qualifying Transaction,
as defined in paragraph (c), or (v) by any person of Voting
Securities from the Company, if a majority of the Incumbent Board
approves in advance the acquisition of beneficial ownership of 50%
or more of Company Voting Securities by that
person;
(c) The consummation of a merger,
consolidation, statutory share exchange or similar form of
corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of
securities in the transaction (a “Business
Combination”), unless
immediately following such Business Combination: (i)
more than 50% of the total voting power of (A) the corporation
resulting from such Business Combination
(“Surviving
Corporation”), or (B) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation
(“Parent
Corporation”), is
represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination, (ii) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 50% or more of the
total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) and (iii) at least a
majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination
were Incumbent Directors at the time of the Board’s approval
of the execution of the initial agreement providing for such
Business Combination (any Business Combination which satisfies all
of the criteria specified in (i), (ii) and (iii) above is deemed to
be a “Non-Qualifying
Transaction”);
or
(d) The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the consummation of a
sale of all or substantially all of the Company’s
assets.
Notwithstanding the foregoing, a Change in Control
will not be deemed to occur solely because any person acquires
beneficial ownership of more than 50% of the Company Voting
Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the Company
such person becomes the beneficial owner of additional Company
Voting Securities that increases the percentage of outstanding
Company Voting Securities beneficially owned by such person, a
Change in Control of the Company will then
occur.
11.
GENERALLY APPLICABLE
PROVISIONS
11.1
Amendment and Termination of the Plan. The Board may, from time to time,
alter, amend, suspend or terminate the Plan as it may deem
advisable, subject to any requirement for stockholder approval
imposed by applicable law, including the rules and regulations of
the principal U.S. national securities exchange on which the Shares
are traded; provided that the Board may not amend the Plan in any
manner that would result in noncompliance with Rule 16b-3 of the
Exchange Act; and further provided that the Board may not, without the approval of
the Company’s stockholders, amend the Plan to (i) increase
the number of Shares that may be the subject of Awards under the
Plan (except for adjustments pursuant to Section 11.2), (ii) expand
the types of awards available under the Plan, (iii) change the
class of persons eligible to receive grants of Incentive Stock
Options or materially expand the class of persons eligible to
participate in the Plan, (iv) increase the maximum number of Shares
that may be issued pursuant to Incentive Stock Options, (v) amend
Section 5.3 or Section 6.2(f) to eliminate the requirements
relating to minimum exercise price, minimum grant price and
stockholder approval, (vi) increase the maximum permissible term of
any Option specified by Section 5.4 or the maximum permissible term
of a Stock Appreciation Right specified by Section 6.2(d), or (vii)
increase the limits specified in Section 3.3 (except for
adjustments pursuant to Section 11.2). Except pursuant
to Section 11.2, the Board may not, without the approval of the
Company’s stockholders, cancel an Option or Stock
Appreciation Right in exchange for cash when the exercise or grant
price per share exceeds the Fair Market Value of one Share or take
any action with respect to an Option or Stock Appreciation Right
that would be treated as a repricing under the rules and
regulations of the principal U.S. securities exchange on which the
Shares are traded, including a reduction of the exercise price of
an Option or the grant price of a Stock Appreciation Right or the
exchange of an Option or Stock Appreciation Right for cash or
another Award. The Plan may be amended without shareholder
approval to provide for Awards that do not receive favorable tax
treatment under Code Sections 162(m) as in effect immediately
before enactment of Public Law 115-7 and applicable state tax law
or 422 or otherwise. In addition, no amendments to, or termination
of, the Plan will impair the rights of a Participant in any
material respect under any Award previously granted without such
Participant’s consent.
11.2
Adjustments. In the
event of any merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares
or other property, other than a regular cash dividend), stock
split, reverse stock split, spin-off or similar transaction or
other change in corporate structure affecting the Shares or the
value thereof, such adjustments and other substitutions must be
made to the Plan and to Awards as the Committee deems equitable or
appropriate taking into consideration the accounting and tax
consequences, including such adjustments in the aggregate number,
class and kind of securities that may be delivered under the Plan,
the number of Shares set forth in the Limitations contained in the
first sentence of Section 3.4 (but not the dollar amount set
forth in the second sentence of Section 3.4), the maximum number of
Shares that may be issued pursuant to Incentive Stock Options and,
in the aggregate or to any Participant, the number, class, and kind
of securities subject to outstanding Awards granted under the Plan
and the exercise price or grant price of such outstanding Awards
granted under the Plan (including, if the Committee deems
appropriate, the substitution of similar options to purchase the
shares of, or other awards denominated in the shares of, another
company) as the Committee may determine to be appropriate;
provided,
however, that the number of
Shares subject to any Award must always be a whole
number.
11.3
Transferability of Awards. Except as provided below, no Award
and no Shares that have not been issued or as to which any
applicable restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and
distribution, and such Award may be exercised during the life of
the Participant only by the Participant or the Participant’s
guardian, members of a committee for incompetent former employees,
or similar persons duly authorized by law to administer the estate
or assets of former employees. To the extent and under such
terms and conditions as determined by the Committee and except for
Incentive Stock Options, Options may be exercised and the Shares
acquired on exercise may be resold by a Participant’s family
member who has acquired the Options from the Participant through a
gift or a domestic relations order (a “Permitted
Assignee”). For
purposes of this Section, “family member” includes any
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing
the Participant’s household (other than a tenant or
employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these
persons (or the Participant) control the management of assets, and
any other entity in which these persons (or the Participant) own
more than fifty percent of the voting interests;
provided
that such Permitted Assignee will be
bound by and subject to all of the terms and conditions of the Plan
and the Award Agreement relating to the transferred Award and must
execute an agreement satisfactory to the Company evidencing such
obligations; and provided further that such Participant remains bound by the
terms and conditions of the Plan. The Company must cooperate
with any Permitted Assignee and the Company’s transfer agent
in effectuating any transfer permitted under this Section.
Awards may not be transferred to third party financial institutions
and Awards may not be transferred for value. A transfer for
value does not include: (i) a transfer under a domestic relations
order in settlement of marital property rights; or (ii) a transfer
to an entity in which more than fifty percent of the voting
interests are owned by the family members (or the Participant) in
exchange for an interest in that entity. An Incentive
Stock Option is not transferable (other than by will or by the laws
of descent and distribution) by the Participant and is exercisable,
during the lifetime of the Participant, only by the
Participant.
11.4
Termination of Employment or Services. The Committee must determine and set
forth in each Award Agreement whether any Awards granted in such
Award Agreement will continue to be exercisable, continue to vest
or be earned and the terms of such exercise, vesting or earning, on
and after the date that a Participant ceases to be employed by or
to provide services to the Company or any Subsidiary (including as
a Director), whether by reason of death, disability, voluntary or
involuntary termination of employment or services, or
otherwise. The date of termination of a Participant’s
employment or services will be determined by the Committee, which
determination will be final.
11.5
Deferral; Dividend Equivalents. The Committee is authorized to
establish procedures pursuant to which the payment of any Award may
be deferred. Subject to the provisions of the Plan and any
Award Agreement, the recipient of an Award other than an Option or
Stock Appreciation Right may, if so determined by the Committee, be
entitled to receive amounts equivalent to cash, stock or other
property dividends on Shares (“Dividend
Equivalents”) with
respect to the number of Shares covered by the Award, as determined
by the Committee, in its sole discretion. The Committee may
provide that the Dividend Equivalents (if any) will be deemed to
have been reinvested in additional Shares or otherwise reinvested;
provided, however, that in all cases, the Dividend Equivalents
shall be subject to the same vesting or performance conditions and
risks of forfeiture as the underlying Award and shall not be paid
unless and until the underlying Award vests.
11.6
Mandatory Deferral of Income.
The Committee, in its sole discretion, may require that one or more
Award Agreements contain provisions which provide that, in the
event Section 162(m) of the Code as in effect on December 31, 2017
or any successor provision relating to excessive employee
remuneration, would operate to disallow a deduction by the Company
with respect to all or part of any Award, a Participant’s
receipt of the benefit relating to such Award that would not be
deductible by the Company shall be deferred until the next
succeeding year or years in which the Participant’s
remuneration does not exceed the limit set forth in such provisions
of the Code; provided, however, that such deferral does not violate
Code Section 409A.
12.
MISCELLANEOUS
12.1
Award Agreements. Each Award Agreement must either be (i) in writing
in a form approved by the Committee and executed by the Company by
an officer duly authorized to act on its behalf, or (ii) an
electronic notice in a form approved by the Committee and recorded
by the Company (or its designee) in an electronic recordkeeping
system used for the purpose of tracking one or more types of Awards
as the Committee may provide; in each case and if required by the
Committee, the Award Agreement must be executed or otherwise
electronically accepted by the recipient of the Award in such form
and manner as the Committee may require. The Committee may
authorize any officer of the Company to execute any or all Award
Agreements on behalf of the Company. The Award Agreement must
set forth the material terms and conditions of the Award as
established by the Committee consistent with the provisions of the
Plan.
12.2
Tax Withholding. The
Company has the right to make all payments or distributions
pursuant to the Plan to a Participant (or a Permitted Assignee
thereof) (any such person, a “Payee”) net of any
applicable federal, state and local taxes required to be paid or
withheld (including any taxes, penalties and interest under Section
409A of the Code) as a result of (i) the grant of any Award, (ii)
the exercise of an Option or Stock Appreciation Right, (iii) the
delivery of Shares or cash, (iv) the lapse of any restrictions in
connection with any Award, (v) the vesting of any Award, or (vi)
any other event occurring pursuant to the Plan. The Company
or any Subsidiary has the right to withhold from wages or other
amounts otherwise payable to such Payee such withholding taxes as
may be required by law, or to otherwise require the Payee to pay
such taxes, penalties and interest required to be withheld or paid
by the Participant. If the Payee fails to make such tax
payments as are required, the Company or its Subsidiaries will, to
the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to such Payee or
to take such other action as may be necessary to satisfy such
withholding obligations. The Committee is authorized to
establish procedures for election by Participants to satisfy such
obligation for the payment of such taxes by tendering previously
acquired Shares (either actually or by attestation, valued at their
then Fair Market Value), or by directing the Company to retain
Shares (up to the Participant’s minimum required tax
withholding rate or such other rate that will not cause an adverse
accounting consequence or cost) otherwise deliverable in connection
with the Award.
12.3
Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of
an Award hereunder confers upon any Employee, Director, officer or
Consultant the right to continue in the employment or service of
the Company or any Subsidiary or affect any right that the Company
or any Subsidiary may have to terminate the employment or service
of (or to demote or to exclude from future Awards under the Plan)
any such Employee, Director, officer or Consultant at any time for
any reason. Except as specifically provided by the
Committee, the Company will not be liable for the loss of existing
or potential profit from an Award granted in the event of
termination of an employment or other relationship. No
Employee, Director, officer or Consultant will have any claim to be
granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Employees, Directors, officers or
Consultants under the Plan.
12.4
Substitute Awards. Notwithstanding any other provision
of the Plan, the terms of Substitute Awards may vary from the terms
set forth in the Plan to the extent the Committee deems appropriate
to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
12.5
Cancellation of Award; Forfeiture of Gain. Notwithstanding anything to the
contrary contained herein, an Award Agreement may provide that the
Award will be canceled if the Participant, without the consent of
the Company, while employed by or providing services to the Company
or any Subsidiary or after termination of such employment or
service, violates a non-competition, non-solicitation or
non-disclosure covenant or agreement or otherwise engages in
activity that is in conflict with or adverse to the interest of the
Company or any Subsidiary (including conduct contributing to any
financial restatements or financial irregularities), as determined
by the Committee in its sole discretion. The Committee may
provide in an Award Agreement that if within the time period
specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred
to in the preceding sentence, the Participant will forfeit any gain
realized on the vesting or exercise of the Award and must repay
such gain to the Company.
12.6
Stop
Transfer Orders. All
certificates or book-entries for Shares delivered under the Plan
pursuant to any Award will be subject to such stop-transfer orders
and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and
Exchange Commission (“SEC”), any stock exchange upon which the Shares
are then listed, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on
any such certificates or noted in the book entries to make
appropriate reference to such restrictions.
12.7
Nature of Payments. All Awards made pursuant to the Plan
are in consideration of services performed or to be performed for
the Company or any Subsidiary, division or business unit of the
Company. Any income or gain realized pursuant to Awards under
the Plan constitutes a special incentive payment to the Participant
and must not be taken into account, to the extent permissible under
applicable law, as compensation for purposes of any of the employee
benefit plans of the Company or any Subsidiary except as may be
determined by the Committee or by the Board or board of directors
of the applicable Subsidiary.
12.8
Other Plans. Nothing
contained in the Plan prevents the Board from adopting other or
additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific
cases.
12.9
Severability. The
provisions of the Plan are severable. If any provision of the
Plan is held unlawful or otherwise invalid or unenforceable in
whole or in part by a court of competent jurisdiction or by reason
of change in a law or regulation, such provision will (i) be deemed
limited to the extent that such court of competent jurisdiction
deems it lawful, valid and/or enforceable and as so limited will
remain in full force and effect, and (ii) not affect any other
provision of the Plan or part thereof, each of which will remain in
full force and effect. If the making of any payment or the
provision of any other benefit required under the Plan is held
unlawful or otherwise invalid or unenforceable by a court of
competent jurisdiction, such unlawfulness, invalidity or
unenforceability will not prevent any other payment or benefit from
being made or provided under the Plan, and if the making of any
payment in full or the provision of any other benefit required
under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or
unenforceability will not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid or unenforceable will
be made or provided under the Plan.
12.10
Construction. As
used in the Plan, the words “include” and
“including,” and variations thereof, are not terms of
limitation, but rather must be deemed to be followed by the words
“without limitation.”
12.11
Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan for incentive compensation. With
respect to any payments not yet made to a Participant by the
Company, nothing contained herein gives any such Participant any
rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver the Shares or
payments in lieu of or with respect to Awards hereunder;
provided,
however, that the existence of
such trusts or other arrangements is consistent with the unfunded
status of the Plan. No deferral of compensation within the
meaning of the Employee Retirement Income Security Act of 1974 is
permitted under this Plan or any Award Agreement for any
Participant that is not an executive officer or director of the
Company or a Subsidiary.
12.12
Governing Law. The Plan and all determinations made
and actions taken thereunder, to the extent not otherwise governed
by the Code or the laws of the United States, is governed by the
laws of the State of Delaware, without reference to principles of
conflict of laws, and construed accordingly.
12.13
Effective Date of Plan; Termination of Plan. The Plan will be effective as of the
date on which the stockholders approve the Plan in accordance with
the Company’s certificate of incorporation and bylaws and the
rules of the principal U.S. national securities exchange on which
the Shares are traded (“Effective
Date”). For the
avoidance of doubt, the Effective Date is the date the
Company’s stockholders approve the Plan at the 2018 Annual
Meeting of Stockholders. The Plan will become effective on the
Effective Date and will be null and void and of no effect if the
foregoing approval is not obtained. No Incentive Stock Option
may be granted under the Plan if the Plan is not approved by the
Company’s stockholders within 12 months of the Board Approval
Date. Awards may be granted under the Plan at any time after
the Effective Date (or prior to the Effective Date, as long as any
such prior grants are subject to and conditioned upon the approval
of the Plan by the Company’s stockholders) and from time to
time on, or prior to, the Plan Expiration Date, on which date the
Plan will expire except as to Awards then outstanding under the
Plan. Such outstanding Awards will remain in effect until they
have been exercised or terminated, or have
expired.
12.14
Foreign
Employees and Consultants. Awards may be granted to Participants
who are foreign nationals or employed or providing services outside
the United States, or both, on such terms and conditions different
from those applicable to Awards to Employees or Consultants
providing services in the United States as may, in the judgment of
the Committee, be necessary or desirable in order to recognize
differences in local law or tax policy. The Committee
also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company’s obligation with respect to
tax equalization for Employees or Consultants on assignments
outside their home country.
12.15
Compliance with Section 409A of the Code. This Plan is intended to comply and
must be administered in a manner that is intended to comply with
Section 409A of the Code and the regulations thereunder and must be
construed and interpreted in accordance with that
intent.
(a)
To the extent that an Award or the
payment, settlement or deferral thereof is subject to Section 409A
of the Code, the Award must be granted, paid, settled or deferred
in a manner that will comply with Section 409A of the Code,
including regulations or other guidance issued with respect
thereto, except as otherwise determined by the Committee. Any
provision of this Plan that would cause the grant of an Award or
the payment, settlement or deferral thereof to fail to satisfy
Section 409A of the Code must be amended to comply with Section
409A of the Code on a timely basis, which may be made on a
retroactive basis, in accordance with regulations and other
guidance issued under Section 409A of the Code and the regulations
thereunder.
(b)
Notwithstanding any other provision of
this Plan or any Award Agreement:
(i) if
this Plan or any Award Agreement provides that a payment,
distribution or benefit constituting deferred compensation under
Code Section 409A and the regulations thereunder will be made or
provided to a Participant as a result of an event constituting a
Change in Control, such payment, distribution or benefit will not
be payable to such Participant as a result of such event unless
such event also constitutes a “change in control event”
as defined in Treasury Regulation Section 1.409A-3(i)(5)(i), and
any such payment, distribution or benefit payable as a result of
such a change in control event must be made or provided to such
Participant no later than five (5) days following the occurrence of
the change in control event.
(ii) With
respect to a Participant who is a “specified employee”
within the meaning of Code Section 409A(a)(2)(B)(i) and the
regulations thereunder, no payment, distribution or benefit that
constitutes deferred compensation under Code Section 409A and the
regulations thereunder may be made or provided to such Participant
during the 6-month period following such Participant’s
“separation from service” (within the meaning of Code
Section 409A(a)(2)(A)(i) and the regulations thereunder), to
the extent necessary in order to avoid the imposition of excise
taxes. However, if any payment, distribution or benefit is
delayed as a result of the previous sentence, then such payment,
distribution or benefit must be made or provided to the
Participant, without interest, on the first business day following
the end of such 6-month period (or such earlier date upon which
such amount can be paid without resulting in a prohibited
distribution under Code Section 409A(a)(2)(B)(i) and the
regulations thereunder, including as a result of the
Participant’s death).
12.16
No Registration Rights; No Right to Settle in
Cash. The Company
has no obligation to register with any governmental body or
organization (including, without limitation, the SEC) any of (i)
the offer or issuance of any Award, (ii) any Shares issuable upon
the exercise of any Award, or (iii) the sale of any Shares issued
upon exercise of any Award, regardless of whether the Company in
fact undertakes to register any of the foregoing. In
particular, in the event that any of (x) any offer or issuance of
any Award, (y) any Shares issuable upon exercise of any Award, or
(z) the sale of any Shares issued upon exercise of any Award are
not registered with any governmental body or organization
(including, without limitation, the SEC), the Company will not
under any circumstance be required to settle its obligations, if
any, under this Plan in cash.
12.17
Captions. The
captions in the Plan are for convenience of reference only, and are
not intended to narrow, limit or affect the substance or
interpretation of the provisions contained
herein.
12.18
Indemnification. To the maximum extent permitted by
applicable law, each member of the Committee and the Board must be
indemnified and held harmless by the Company from and against: (i)
any loss, cost, liability, or expense (including attorneys’
fees and costs) that may be imposed upon or reasonably incurred by
him or her in connection with or resulting from any claim, action,
suit, or proceeding (whether civil, administrative, investigative
or criminal) to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to act
under the Plan or any Award Agreement, and (ii) from any and all
amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of
any such claim, action, suit, or proceeding against him or
her. The foregoing right to indemnification is not
exclusive of any other rights to indemnification to which a member
of the Committee or the Board may be entitled under the
Company’s Certificate of Incorporation, Bylaws, or agreement
or as a matter of law, or otherwise, or under any power that the
Company may have to indemnify the member or hold them
harmless.