Exhibit 10.1
ARENA
PHARMACEUTICALS, INC.
2006 LONG-TERM INCENTIVE PLAN, AS AMENDED
Arena Pharmaceuticals, Inc. (the Company), a
Delaware corporation, hereby establishes and adopts the following 2006
Long-Term Incentive Plan (the 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 directors,
employees, consultants and/or advisors of the Company and its Subsidiaries who
are expected to contribute to the Companys success and to achieve long-term
objectives which will inure to the benefit of all stockholders of the Company
through the additional incentives inherent in the Awards hereunder.
2.
DEFINITIONS
2.1.
Award
shall mean any Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit 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.
2.2.
Award Agreement
shall mean any written agreement, contract
or other instrument or document evidencing any Award granted hereunder,
including through an electronic medium.
2.3.
Board
shall mean the board of directors of the Company.
2.4.
Code
shall mean the Internal Revenue Code of 1986, as
amended from time to time.
2.5.
Committee
shall mean the Compensation Committee of the
Board or a subcommittee thereof formed by the Compensation Committee to act as
the Committee hereunder. The Committee
shall 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) an outside
director within the meaning of Section 162(m) of the Code, and (iii) an independent
director for purpose of the rules and regulations of the NASDAQ Stock Market
(or such other principal securities market on which the Shares are traded).
2.6.
Covered Employee
shall mean a covered employee within the
meaning of Section 162(m) of the Code.
2.7.
Director
shall mean a non-employee member of the Board.
2.8.
Dividend Equivalents
shall have the meaning set forth in
Section 12.5.
2.9.
Employee
shall mean 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. Solely for purposes of the Plan, an Employee
shall also mean 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 Companys securities in a capital-raising transaction and
(ii) does not directly or indirectly promote or maintain a market for the
Companys securities.
2.10.
Exchange
Act
shall mean the Securities Exchange Act of 1934, as amended.
2.11.
Fair
Market Value
shall mean, with respect to any property other than
Shares, the market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee. The Fair Market Value of Shares as of any
date shall be the per Share closing price of the Shares as reported on the
NASDAQ Stock Market on that date (or if there was no reported closing price
on such date, on the last preceding date
on which the closing price was reported) or, if the Company is not then listed
on the NASDAQ Stock Market, on such other principal securities exchange on
which the Shares are traded, and if the Company is not listed on the NASDAQ Stock
Market or any other securities exchange, the Fair Market Value of Shares shall
be determined by the Committee in its sole discretion using appropriate
criteria.
2.12.
Limitations
shall have the meaning set forth in Section 10.5.
2.13.
Option
shall mean any right granted to a Participant under the Plan allowing such
Participant to purchase Shares at such price or prices and during such period
or periods as the Committee shall determine.
2.14.
Participant
shall mean an Employee or Director who is selected by the Committee to receive
an Award under the Plan.
2.15.
Payee
shall have the meaning set forth in
Section 13.1.
2.16.
Performance
Award
shall mean any Award of Performance Shares or Performance
Units granted pursuant to Article 9.
2.17.
Performance
Period
shall mean that period established by the Committee at the
time any Performance Award is granted or at any time thereafter during which
any performance goals specified by the Committee with respect to such Award are
to be measured.
2.18.
Performance
Share
shall mean 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 by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any combination thereof,
upon achievement of such performance goals during the Performance Period as the
Committee shall establish.
2.19.
Performance
Unit
shall mean any grant pursuant to Section 9 of a unit
valued by reference to a designated amount of property other than Shares (or
cash), which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including cash, Shares, other property, or
any combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish.
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2.20.
Permitted
Assignee
shall have the meaning set forth in Section 12.3.
2.21.
Prior
Plans
shall mean, collectively, the Companys Amended and Restated
1998 Equity Compensation Plan, Amended and Restated 2000 Equity Compensation
Plan and the 2002 Equity Compensation Plan.
2.22.
Restricted
Stock
shall mean 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 (including
any restriction on the right to vote such Share and the right to receive any
dividends), which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise, as the Committee may deem
appropriate.
2.23.
Restricted
Stock Award
shall have the meaning set forth in Section 7.1.
2.24.
Restricted
Stock Unit Award
shall have the meaning set forth in
Section 8.1.
2.25.
Shares
shall mean the shares of common stock, $0.0001 par value, of the Company.
2.26.
Stock
Appreciation Right
shall mean the right granted to a Participant
pursuant to Section 6.
2.27.
Subsidiary
shall mean 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.
2.28.
Substitute
Awards
shall mean 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.
2.29.
Vesting
Period
shall have the meaning set forth in Section 7.1.
3.
SHARES
SUBJECT TO THE PLAN
3.1
Number of Shares
.
(a)
Subject to adjustment
as provided in Section 12.2, a total of 6,000,000 Shares shall be
authorized for issuance under the Plan, as increased if applicable under this
Section.
(b)
If any Shares subject
to an Award or to an award under the Prior Plans are forfeited, expire or
otherwise terminate without issuance of such Shares, or any Award or award
under the Prior Plans is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award or award under
the Prior Plans (including on
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payment in Shares on the exercise of a Stock Appreciation Right), such
Shares shall, to the extent of such forfeiture, expiration, termination, cash
settlement or non-issuance, be available for issuance under the Plan.
(c)
In the event that (i)
any Award granted hereunder is exercised through the tendering of Shares
(either actually or by attestation) or by the withholding of Shares by the
Company, or (ii) withholding tax liabilities arising from any Award are
satisfied by the tendering of Shares (either actually or by attestation) or by
the withholding of Shares by the Company, then the Shares so tendered or
withheld shall be available for issuance under the Plan. In the event that (i) any award granted under
the Prior Plans is exercised through the tendering of Shares (either actually
or by attestation) or by the withholding of Shares by the Company, or (ii)
withholding tax liabilities arising from such award are satisfied by the
tendering of Shares (either actually or by attestation) or by the withholding
of Shares by the Company, then the Shares so tendered or withheld shall be
available for issuance under the Plan.
(d)
Shares issued under
Substitute Awards shall not reduce the Shares authorized for issuance under the
Plan or authorized for grant to a Participant under Section 10.5.
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.
4.
ELIGIBILITY
AND ADMINISTRATION
4.1.
Eligibility
. Any Employee or Director shall be eligible to
be selected as a Participant.
4.2.
Administration
. (a)
The Plan shall be administered by the Committee. The Committee shall have 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 and
Directors to whom Awards may from time to time be granted hereunder;
(ii) determine the type or types of Awards, not inconsistent with the
provisions of the Plan, to be granted to each Participant hereunder;
(iii) determine the number of Shares 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 (including the power
to amend outstanding Awards); (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 shall be deferred either automatically
or at the election of the Participant; (vii) determine whether, to what extent
and under what circumstances any Award shall be canceled or suspended;
(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 shall deem desirable to carry it into effect; (x) establish such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; (xi) determine whether any Award, other
than an Option or Stock
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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 administration of the Plan.
(b)
Decisions of the
Committee shall be final, conclusive and binding on all persons or entities,
including the Company, any Participant, and any Subsidiary. A majority of the members of the Committee
may determine its actions, including fixing the time and place of its meetings.
(c)
To the extent not
inconsistent with applicable law, including Section 162(m) of the Code, or the
rules and regulations of the NASDAQ Stock Market (or such other principal
securities market on which the Shares are traded), the Committee may delegate
to: (i) a committee of one or more members of the Board the authority to take
action on behalf of the Committee under the Plan including the right to grant,
cancel, suspend or amend Awards and (ii) one or more executive officers
within the meaning of Rule 16a-1(f) of the Exchange Act or a committee of
executive officers the right to grant Awards to Employees who are not Directors
or executive officers of the Company, to the extent permitted by law.
(d)
The Board in its
discretion may ratify and approve actions taken by the Committee. In addition, to the extent not inconsistent
with applicable law or the rules and regulations of the NASDAQ Stock Market or
such other principal securities market on which the Shares are traded, the
Board may take any action under the Plan that the Committee is authorized to
take. In the event the Board takes such
action references to the Committee hereunder shall be understood to refer to
the Board.
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 shall be
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 shall deem desirable.
5.2.
Award
Agreements
. All Options granted
pursuant to this Article shall be evidenced by a written Award Agreement in
such form and containing such terms and conditions as the Committee shall
determine which are not inconsistent with the provisions of the Plan. The terms of Options need not be the same
with respect to each Participant.
Granting an Option pursuant to the Plan shall impose no obligation on
the recipient to exercise such Option.
Any individual 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 shall not be less than 100% of the Fair Market
Value of one Share on the date of grant of such Option. Other than pursuant to Section 12.2, the
Committee shall not without the approval of the Companys stockholders (a)
lower the option price per Share of an Option after it is granted, (b) cancel
an Option when the option price per Share exceeds the Fair Market Value of the
underlying Shares in exchange for cash or another Award (other than in
connection with Substitute Awards), and
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(c) take any other action with respect to an Option that may be treated
as a repricing under the rules and regulations of the NASDAQ Stock Market (or
such other principal securities market on which the Shares are traded).
5.4.
Option Term
. The term of each Option shall be fixed by the
Committee in its sole discretion; provided that no Option shall be exercisable
after the expiration of ten (10) years from the date the Option is granted,
except in the event of death or disability.
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 Participants
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 the
giving of notice of exercise to the Company or its designated agent, specifying
the number of Shares to be purchased.
The notice of exercise shall be in such form, made in such manner, and
shall comply with such other requirements consistent with the provisions of the
Plan as the Committee may from time to time prescribe.
(b)
Unless otherwise
provided in an Award Agreement, full payment of such purchase price shall be
made at the time of exercise and shall 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 (including, where
permitted by law and the Committee, other Awards) 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, or (vi) any combination of any of the foregoing. In no event may any Option granted hereunder
be exercised for a fraction of a Share.
No adjustment shall be made for cash dividends or other rights for which
the record date is prior to the date of such issuance. Except under circumstances contemplated by
Article 11 or as may be set forth in an Award Agreement with respect to (x)
retirement, death or disability of a Participant, or (y) special circumstances
determined by the Committee (such as the achievement of performance
objectives), Options granted to employees of the Company or any Subsidiary will
not be exercisable before the expiration of one year from the date the Option
is granted (but may become exercisable pro rata over such time).
5.6.
Incentive
Stock Options.
The Committee may
grant Options intended to qualify as incentive stock options as defined in
Section 422 of the Code, to any employee of the Company or any Subsidiary,
subject to the requirements of Section 422 of the Code. Notwithstanding anything in Section 3.1 to
the contrary and solely for the 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 shall be 6,000,000 Shares.
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6.
STOCK APPRECIATION RIGHTS
6.1.
Grant
and Exercise
. The Committee may
provide Stock Appreciation Rights (a) in conjunction with all or part of any
Option granted under the Plan or at any subsequent time during the term of such
Option, (b) in conjunction 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 (c) 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 shall be subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:
(a)
Upon the exercise of
a Stock Appreciation Right, the holder shall have the right to receive the
excess of (i) the Fair Market Value of one Share on the date of exercise
over (ii) the grant price of the right on the date of grant.
(b)
Upon the exercise of a
Stock Appreciation Right, the Committee shall determine in its sole discretion
whether payment shall be made in cash, in whole Shares or other property, or any
combination thereof.
(c)
The provisions of
Stock Appreciation Rights need not be the same with respect to each recipient.
(d)
The Committee may
impose such other conditions or restrictions on the terms of exercise and the
grant price of any Stock Appreciation Right, as it shall deem appropriate. A Stock Appreciation Right shall have (i) a
grant price per Share of not less than Fair Market Value of one Share on the
date of grant (subject to the requirements of Section 409A of the Code with
respect to a Stock Appreciation Right granted in conjunction with, but
subsequent to, an Option), and (ii) a term not greater than ten (10)
years. In addition to the foregoing, but
subject to Section 12.2, the Committee shall not without the approval of the
Companys stockholders (x) lower the grant price per Share of any Stock
Appreciation Right after it is granted, (y) cancel any Stock Appreciation Right
when the grant price per Share exceeds the Fair Market Value of the underlying
Shares in exchange for cash or another Award (other than in connection
with Substitute Awards), and (z) take
any other action with respect to any Stock Appreciation Right that may be
treated as a repricing under the rules and regulations of the NASDAQ Stock
Market (or such other principal securities market on which the Shares are
traded).
(e)
In no event may any
Stock Appreciation Right granted hereunder be exercised for a fraction of a
Share. No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date
of such issuance. Except under
circumstances contemplated by Article 11 or as may be set forth in an Award
Agreement with respect to (x) retirement, death or disability of a Participant,
or (y) special circumstances determined by the Committee (such as the
achievement of performance objectives), Stock Appreciation Rights granted to
employees of the Company or any Subsidiary will not be exercisable before the
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expiration of one year from the date the Stock Appreciation Right is
granted (but may become exercisable pro rata over such time).
(f)
The Committee may
impose such other terms and conditions on Stock Appreciation Rights, not
inconsistent with the Plan, as the Committee shall determine in its sole
discretion.
7.
RESTRICTED
STOCK AWARDS
7.1.
Grants
.
Awards of Restricted Stock may be issued hereunder to Participants
either alone or in addition to other Awards granted under the Plan (a Restricted
Stock Award), and such Restricted Stock Awards may also be available as a form
of payment of Performance Awards and other earned cash-based incentive
compensation. A Restricted Stock Award
shall be subject to vesting restrictions imposed by the Committee covering a
period of time specified by the Committee (the Vesting Period) consistent
with the provisions herein. 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.
7.2.
Award
Agreements
. The terms of any
Restricted Stock Award granted under the Plan shall be set forth in a written
Award Agreement which shall contain provisions determined by the Committee and
not inconsistent with the Plan. The
terms of Restricted Stock Awards need not be the same with respect to each
Participant.
7.3.
Rights
of Holders of Restricted Stock.
Beginning
on the date of grant of the Restricted Stock Award and subject to execution of
the Award Agreement, the Participant shall become a stockholder of the Company
with respect to all Shares subject to the Award Agreement and shall have all of
the rights of a stockholder, including the right to vote such Shares and the
right to receive distributions made with respect to such Shares; provided,
however
,
that except as otherwise
provided in an Award Agreement any Shares or any other property (other than
cash) distributed as a dividend or otherwise with respect to any Restricted
Stock as to which the restrictions have not yet lapsed shall be subject to the
same restrictions as such Restricted Stock.
7.4
.
Minimum Vesting Period.
Except
in the case of a Participants death, disability or retirement, or a Change in
Control (as defined in Article 11), Restricted Stock Awards subject solely to
the continued employment of employees of the Company or a Subsidiary shall have
a Vesting Period of not less than three (3) years from date of grant (but
permitting pro rata vesting over such time); provided that such minimum Vesting
Period shall not be applicable to (i) grants of Substitute Awards to new hires
to replace forfeited awards from a prior employer, or (ii) grants of Restricted
Stock in payment of Performance Awards and other earned cash-based incentive
compensation.
The Committee may, in its sole discretion and subject to the
limitations imposed under Section 162(m) of the Code and the regulations
thereunder in the case of a Restricted Stock Award intended to comply with the
performance-based exception under Code Section 162(m), grant Awards that do not
comply with the minimum vesting periods of this Section 7.4 or Sections 8.3 or 9.3,
or waive the forfeiture period and any other conditions set forth in any Award
Agreement subject to such terms and conditions as the Committee shall deem
appropriate; provided that, except in the case of a Participants death,
disability or retirement, or a Change in Control, such Awards and waivers shall
be limited to less than 10% of the Shares
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authorized for issuance under the Plan.
The minimum Vesting Period requirements of this Section shall not apply
to Restricted Stock Awards granted to Directors or to any consultants or
advisors who provide services to the Company or any Subsidiary.
8.
RESTRICTED
STOCK UNIT AWARDS
8.1.
Grants
.
Other Awards of units having a value equal to an identical number of
Shares (Restricted Stock Unit Awards) may be granted hereunder to
Participants either alone or in addition to other Awards granted under the
Plan. Restricted Stock Unit Awards shall
also be available as a form of payment of other Awards granted under the Plan
and other earned cash-based incentive compensation.
8.2.
Award
Agreements
. The terms of Restricted
Stock Unit Award granted under the Plan shall be set forth in a written Award
Agreement which shall 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.
8.3.
Vesting
. Except in the case of a Participants death,
disability or retirement, or a Change in Control (as defined in Article 11),
Restricted Stock Unit Awards subject solely to the continued employment of
employees of the Company or any Subsidiary shall be subject to a vesting period
determined by the Committee of not less than three (3) years from date of grant
(but permitting pro rata vesting over such time); provided, that such minimum
vesting period shall not be applicable to (i) grants of Substitute Awards to
new hires to replace forfeited awards from a prior employer, or (ii) grants of
Restricted Stock Unit Awards in payment of Performance Awards and other earned
cash-based incentive compensation. The
Committee may, in its sole discretion and subject to the limitations imposed
under Section 162(m) of the Code and the regulations thereunder in the case of
a Restricted Stock Unit Award intended to comply with the performance-based
exception under Code Section 162(m), grant Awards that do not comply with the
minimum vesting periods of this Section 8.3 or Sections 7.4 or 9.3, or waive
the forfeiture period and any other conditions set forth in any Award Agreement
subject to such terms and conditions as the Committee shall deem appropriate;
provided that, except in the case of a Participants death, disability or
retirement, or a Change in Control, such Awards or waivers shall be limited to
less than 10% of the Shares authorized for issuance under the Plan. The minimum vesting period requirements of
this Section shall not apply to Restricted Stock Unit Awards granted to
Directors or to any consultants or advisors who provide services to the Company
or any Subsidiary.
8.4.
Payment.
Except as provided in Article 10 or as
may be provided in an Award Agreement, Restricted Stock Unit Awards may be paid
in cash, Shares, other property, or any combination thereof, in the sole
discretion of the Committee. Restricted
Stock Unit 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.
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9.
PERFORMANCE
AWARDS
9.1.
Grants
. Performance Awards in the form of 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 shall be conclusively determined by the Committee and
may be based upon the criteria set forth in Section 10.2.
9.2.
Award Agreements.
The terms of any Performance Award granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by
the Committee and not inconsistent with the Plan, including whether such Awards
shall 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 shall be determined by the Committee upon the
grant of each Performance Award; provided, however, that a Performance Period
shall not be less than 12 months. The
amount of the Award to be distributed shall 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.
10.
CODE
SECTION 162(m) PROVISIONS
10.1.
Covered Employees
. Notwithstanding any other provision of the
Plan, if the Committee determines at the time a Restricted Stock Award, a Performance
Award or an Restricted Stock Unit 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 tax deduction in connection with such Award, a Covered Employee, then the
Committee may provide that this Article 10 is applicable to such Award.
10.2.
Performance Criteria.
If the Committee determines that a Restricted
Stock Award, a Performance Award or an Restricted Stock Unit Award is intended
to be subject to this Article 10, the lapsing of restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto, as applicable,
shall be subject to the achievement of one or more objective performance goals
established by the Committee, which shall be based on the attainment of
specified levels of one or any combination of the following: net sales;
revenue; revenue or product revenue growth; operating income or loss (before or
after taxes); pre- or after-tax income or loss (before or after allocation of
corporate overhead and bonus); net earnings or loss; earnings or loss per
share; net income or loss (before or after taxes); return on
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equity; total stockholder return; return on assets or net assets;
attainment of strategic and operational initiatives; 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, earnings or losses before interest and taxes,
earnings or losses before interest, taxes and depreciation or earnings or
losses 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; operating margin; gross
margin; year-end cash; cash margin; debt reduction; stockholders equity;
market share; achievement of drug development milestones; regulatory
achievements including approval of a compound; progress of internal research or
clinical programs; progress of partnered programs; implementation or completion
of projects and processes; partner satisfaction; budget management; clinical
progress including timely completion of clinical trials; submission of INDs and
NDAs and other regulatory achievements; partner or collaborator achievements;
internal controls, including those related to the Sarbanes-Oxley Act of 2002;
research progress, including the development of programs; financing; investor
relation, analysts and communication; inlicensing; and recruiting and maintaining
personnel. Such performance goals also
may be based solely by reference to the Companys 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. The Committee may also
exclude charges related to an event or occurrence which the Committee
determines should appropriately be excluded, including (a) restructurings,
discontinued operations, extraordinary items, and other unusual or
non-recurring charges, (b) an event either not directly related to the
operations of the Company or not within the reasonable control of the Companys
management, or (c) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting principles. Such performance goals shall be set by the
Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Section 162(m) of the Code, and the regulations
thereunder.
10.3.
Adjustments
. Notwithstanding any provision of the Plan
(other than Article 11), with respect to any Restricted Stock, Performance
Award or Restricted Stock Unit Award that is subject to this Section 10,
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 as otherwise determined by the Committee in special
circumstances.
10.4.
Restrictions
. The Committee shall have the power to impose
such other restrictions on Awards subject to this Article as it may deem
necessary or appropriate to ensure that such Awards satisfy all requirements
for performance-based compensation within the meaning of Section 162(m)
of the Code.
10.5.
Limitations on Grants to Individual Participants
. Subject to adjustment as provided in Section
12.2, no Participant may be granted (i) Options or Stock Appreciation Rights
during any 36-month period with respect to more than 1,000,000 Shares or (ii)
Restricted Stock, Performance Awards and/or Restricted Stock Unit Awards that
are denominated in Shares in any 36-month period with respect to more than
500,000 Shares (the Limitations). In
addition to
11
the foregoing, the maximum dollar value that may be granted by any
Participant in any 12-month period with respect to Performance Awards is
$5,000,000. If an Award is cancelled,
the cancelled Award shall continue to be counted toward the applicable
Limitations.
11.
CHANGE
IN CONTROL PROVISIONS
11.1.
Impact on
Certain Awards.
The Committee, in
its discretion, may determine that in the event of a Change in Control of the
Company (as defined in Section 11.3) Options and Stock Appreciation Rights
outstanding as of the date of the Change in Control shall be cancelled and
terminated without payment therefore if the Fair Market Value of one Share as
of the date of the Change in Control is less than the Option per Share option
price or Stock Appreciation Right per Share grant price.
11.2.
Assumption or
Substitution of Certain Awards.
(a) To the extent 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 or
Restricted Stock Unit Award, if a Participants employment with such successor
company (or a subsidiary thereof) terminates within the time period following
such Change in Control set forth in the Award Agreement (or 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 the period of time set forth in the Award
Agreement, (ii) restrictions and deferral limitations on Restricted Stock shall
lapse and the Restricted Stock shall become free of all restrictions and
limitations and become fully vested, and (iii) the restrictions and deferral
limitations and other conditions applicable to any Restricted Stock Unit Awards
or any other Awards shall lapse, and such Restricted Stock Unit Awards or such
other Awards shall become free of all restrictions, limitations or conditions
and become fully vested and transferable to the full extent of the original
grant. For the purposes of this Section,
an Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock
Unit Award shall 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
or Restricted Stock Unit 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 or Restricted Stock Unit 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 shall be made by the Committee in its sole
discretion and its determination shall be conclusive and binding.
12
(b)
In the event of a
Change in Control of the Company, to the extent that the successor company does
not assume or substitute for an Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award or Performance Award (unless otherwise
provided in an Award Agreement), then immediately prior to the Change in
Control: (i) those outstanding Options and Stock Appreciation Rights that are
not assumed or substituted for shall immediately vest and become fully
exercisable, (ii) restrictions and deferral limitations on Restricted Stock not
assumed or substituted for shall lapse and the Restricted Stock shall become
free of all restrictions and limitations and become fully vested, (iii) the
restrictions and deferral limitations and other conditions applicable to any
Restricted Stock Unit Awards or any other Awards not assumed or substituted for
shall lapse, and such Restricted Stock Unit Awards or such other Awards shall
become free of all restrictions, limitations or conditions and become fully
vested and transferable to the full extent of the original grant, (iv) all
Performance Awards assumed or substituted for shall be considered to be earned
and payable in full, and any deferral or other restriction shall lapse and such
Performance Awards shall be immediately settled or distributed, and (v) all
Awards not assumed or substituted for shall terminate immediately after the
Change in Control.
(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 shall
terminate within a specified number of days after notice to the Participant,
and/or that each Participant shall receive, with respect to each Share subject
to such Option or Stock Appreciation Right, an amount equal to the excess (if
any) 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, shall determine.
11.3.
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:
(i)
During
any twenty-four (24) month period, individuals who, as of the beginning of such
period, constitute the Board (the 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) shall 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 shall be deemed to be an
Incumbent Director;
(ii)
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 Companys
13
then
outstanding securities eligible to vote for the election of the Board (the
Company Voting Securities);
provided
,
however
, that the event described in this paragraph (ii) shall not
be deemed to be a Change in Control by virtue of any of the following
acquisitions: (A) by the Company or any subsidiary, (B) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction, as defined in paragraph (iii), or (E) 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 such person;
(iii)
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 Companys stockholders, whether for such
transaction or the issuance of securities in the transaction (a Business
Combination),
unless immediately following such Business Combination: (A) more than 60% of the total voting
power of (x) the corporation resulting from such Business Combination (the
Surviving
Corporation),
or (y) 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 (the 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, (B) 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 (C) 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 Boards approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (A), (B) and (C) above shall be
deemed to be a Non
-
Qualifying
Transaction);
(iv)
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 Companys assets; or
(v)
The
occurrence of any other event that the Board determines by a duly approved
resolution constitutes a Change in Control.
Notwithstanding the foregoing, a Change in Control
shall 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
14
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 shall then occur.
12.
GENERALLY
APPLICABLE PROVISIONS
12.1.
Amendment and
Termination of the Plan
. The Board
may, from time to time, alter, amend, suspend or terminate the Plan as it shall
deem advisable, subject to any requirement for stockholder approval imposed by
applicable law, including the rules and regulations of the NASDAQ Stock Market
(or such other principal securities market 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 Companys stockholders to the
extent required by such applicable law, amend the Plan to (a) increase the
number of Shares that may be the subject of Awards under the Plan (except for
adjustments pursuant to Section 12.2), (b) expand the types of awards available
under the Plan, (c) materially expand the class of persons eligible to
participate in the Plan, (d) amend any provision of Section 5.3, or (e)
increase the maximum permissible term of any Option specified by Section 5.4 or
the maximum permissible term of a Stock Appreciation Right. The Board may not without the approval of the
Companys stockholders take any action with respect to an Option or Stock
Appreciation Right that may be treated as a repricing under the rules and
regulations of the NASDAQ Stock Market (or such other principal securities
market on which the Shares are traded), including a reduction of the exercise
price of an Option or Stock Appreciation Right or the exchange of an Option or
Stock Appreciation Right for cash or another Award. In addition, no amendments to, or termination
of, the Plan shall in any way impair the rights of a Participant under any Award
previously granted without such Participants consent.
12.2.
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 shall be made to the
Plan and to Awards as the Committee, in its sole discretion, 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 and, in the aggregate or to any
one Participant, in the number, class, kind and option or exercise price of
securities subject to 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 in its sole
discretion; provided, however, that the number of Shares subject to any Award
shall always be a whole number.
12.3.
Transferability of Awards
.
Except as provided below, and except as otherwise authorized by the
Committee in an Award Agreement, no Award and no Shares subject to Awards
described in Article 8 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
15
Award may be exercised
during the life of the Participant only by the Participant or the Participants
guardian or legal representative.
Notwithstanding the foregoing, to the extent and under such terms and
conditions as determined by the Committee, a Participant may assign or transfer
an Award (each transferee thereof, a Permitted Assignee) to a family member
as such term is defined in the General Instructions to Form S-8 (whether by
gift or a domestic relations order);
provided that such Permitted Assignee shall 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 shall execute an agreement satisfactory to the
Company evidencing such obligations; and provided further that such Participant
shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any
Permitted Assignee and the Companys transfer agent in effectuating any
transfer permitted under this Section.
12.4.
Termination of Employment
.
The Committee shall determine and set forth in each Award Agreement
whether any Awards granted in such Award Agreement will continue to be
exercisable, and the terms of such exercise, 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
Participants employment or services will be determined by the Committee, which
determination will be final.
12.5.
Deferral
;
Dividend Equivalents
. The Committee shall be 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 (including any
deferred Award) other than an Option or Stock Appreciation Right may, if so
determined by the Committee, be entitled to receive, currently or on a deferred
basis, cash, stock or other property dividends, or cash payments in 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 such amounts
and Dividend Equivalents (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested and may provide that such amounts and
Dividend Equivalents are subject to the same vesting or performance conditions
as the underlying Award.
13.
MISCELLANEOUS
13.1.
Tax
Withholding
. The Company shall have
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 as a result of (a) the grant of any Award, (b) the exercise of an
Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the
lapse of any restrictions in connection with any Award or (e) any other event
occurring pursuant to the Plan. The Company
or any Subsidiary shall have 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 withholding taxes. If the Payee shall fail to make such tax
payments as are required, the Company or its Subsidiaries shall, 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 shall be authorized to establish procedures for election
by Participants to satisfy such obligation for
16
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 Participants minimum required tax withholding rate or such
other rate that will not trigger a negative accounting impact) otherwise
deliverable in connection with the Award.
13.2.
Right of
Discharge Reserved; Claims to Awards
.
Nothing in the Plan nor the grant of an Award hereunder shall confer
upon any Employee or Director 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 or
Director at any time for any reason.
Except as specifically provided by the Committee, the Company shall 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 or Participant shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Employees or Participants under the Plan.
13.3.
Prospective
Recipient
. The prospective recipient
of any Award under the Plan shall not, with respect to such Award, be deemed to
have become a Participant, or to have any rights with respect to such Award,
until and unless such recipient shall have executed an agreement or other
instrument evidencing the Award and delivered a copy thereof to the Company,
and otherwise complied with the then applicable terms and conditions.
13.4.
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.
13.5.
Cancellation
of Award
. (a) Notwithstanding anything to the contrary
contained herein, an Award Agreement may provide that the Award shall 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 services, establishes a relationship with a competitor of
the Company or any Subsidiary or engages in activity that is in conflict with
or adverse to the interest of the Company or any Subsidiary, 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.
(b)
In the event the
Participant ceases to be employed by, or provide services to, the Company on
account of a termination for cause (as defined below) by the Company, any
Award held by the Participant shall terminate as of the date the Participant
ceases to be employed by, or provide services to, the Company. In addition, notwithstanding any other
provisions of this Section, if the Committee determines that the Participant
has engaged in conduct that constitutes cause at any time while the Participant
is employed by, or providing services to, the Company or after the Participants
termination of employment or services, any Awards held by the Participant shall
immediately terminate. In the event a
Participants employment or services is terminated for cause, in addition to
the immediate termination of all Awards, the Participant shall automatically
forfeit all shares underlying any exercised portion of
17
an Option for which the Company has not yet delivered the share
certificates, upon refund by the Company of the option price paid by the
Participant for such shares.
(c)
For purposes of this Section, cause shall mean, unless otherwise
provided in an Award Agreement or another agreement between the Participant
and the Company or a Subsidiary or a
plan maintained by the Company or a Subsidiary in which the Participant
participates, a determination by the Committee that the Participant has
breached his or her employment or service contract with the Company, or has
been engaged in disloyalty to the Company, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment or service, or has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information, or has breached any written noncompetition or nonsolicitation
agreement between the Participant and the Company or has engaged in such other
behavior detrimental to the interests of the Company as the Committee
determines
13.6.
Stop Transfer
Orders
. All certificates for Shares
delivered under the Plan pursuant to any Award shall 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, 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 to make appropriate
reference to such restrictions.
13.7.
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 and any Stock Appreciation Rights constitute a special
incentive payment to the Participant and shall 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.
13.8.
Other Plans
. Nothing contained in the Plan shall prevent
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.
13.9.
Severability
. If any provision of the Plan shall be held
unlawful or otherwise invalid or unenforceable in whole or in part by a court
of competent jurisdiction, such provision shall (a) be deemed limited to the
extent that such court of competent jurisdiction deems it lawful, valid and/or
enforceable and as so limited shall remain in full force and effect, and (b)
not affect any other provision of the Plan or part thereof, each of which shall
remain in full force and effect. If the
making of any payment or the provision of any other benefit required under the
Plan shall be held unlawful or otherwise invalid or unenforceable by a court of
competent jurisdiction, such unlawfulness, invalidity or unenforceability shall
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 shall
not prevent such payment or benefit from being made or provided in part,
18
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 shall be made or provided under the Plan.
13.10.
Construction
. As used in the Plan, the words
include
and
including
, and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words
without
limitation
.
13.11.
Unfunded Status of
the Plan.
The Plan is intended to
constitute an unfunded plan for incentive and deferred compensation. With respect to any payments not yet made to
a Participant by the Company, nothing contained herein shall give 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.
13.12.
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, shall be governed by the laws of the State of
Delaware, without reference to principles of conflict of laws, and construed
accordingly.
13.13.
Effective Date of
Plan; Termination of Plan
. The Plan
shall be effective on the date of the approval of the Plan by the holders of
the shares entitled to vote at a duly constituted meeting of the stockholders
of the Company. The Plan shall be null
and void and of no effect if the foregoing condition is not fulfilled and in
such event each Award shall, notwithstanding any of the preceding provisions of
the Plan, be null and void and of no effect.
Awards may be granted under the Plan at any time and from time to time
on or prior to the tenth anniversary of the effective date of the Plan, on
which date the Plan will expire except as to Awards then outstanding under the
Plan. Such outstanding Awards shall
remain in effect until they have been exercised or terminated, or have expired.
13.14.
Foreign Employees
. Awards may be granted to Participants who are
foreign nationals or employed outside the United States, or both, on such terms
and conditions different from those applicable to Awards to Employees employed
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 Companys obligation
with respect to tax equalization for Employees on assignments outside their
home country.
13.15.
Compliance with
Section 409A of the Code.
This Plan
is intended to comply and shall be administered in a manner that is intended to
comply with Section 409A of the Code and shall be construed and interpreted in
accordance with such intent. To the
extent that an Award or the payment, settlement or deferral thereof is subject
to Section 409A of the Code, the Award shall 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
19
shall 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.
13.16.
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.
20