Exhibit
99.1
LANDEC
CORPORATION
2009 STOCK INCENTIVE
PLAN
SECTION 1.
INTRODUCTION
.
1 The
Landec Corporation 2009 Stock Incentive Plan will be effective (the
“Effective Date) upon its approval by an affirmative vote of the holders of a
majority of the Shares that are present in person or by proxy and entitled to
vote at the 2009 Annual Meeting of Stockholders of the Company. The Plan shall
supersede the Existing Equity Plan effective as of the Effective Date such that
no further awards shall be made under the Existing Equity Plan on or after such
date. However, this Plan shall not, in any way, affect awards
that are outstanding as of the Effective Date under the Existing Equity Plan or
any other equity award plan of the Company. If the Company’s
stockholders do not approve this Plan, no Awards will be made under this Plan
and the Existing Equity Plan will continue in effect in accordance with its
terms.
2 The
purpose of the Plan is to promote the long-term success of the Company and the
creation of Stockholder value by offering Key Service Providers an opportunity
to share in such long-term success by acquiring a proprietary interest in the
Company.
3 The
Plan seeks to achieve this purpose by providing for discretionary long-term
incentive Awards in the form of Options (which may constitute Incentive Stock
Options or Nonstatutory Stock Options), Stock Appreciation Rights, Stock Grants
and Stock Units.
4 The
Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware (except its choice-of-law provisions), and with the applicable
requirements of the stock exchanges or other trading systems on which the Stock
is listed or entered for trading, in each case as determined by the Committee.
Capitalized terms shall have the meaning provided in Section 2 unless
otherwise provided in this Plan or any related Stock Option Agreement, SAR
Agreement, Stock Grant Agreement or Stock Unit Agreement.
SECTION 2.
DEFINITIONS.
(a)
“Affiliate” means any entity other than a Subsidiary if the Company and/or one
or more Subsidiaries have a controlling interest in such entity. For purposes of
the preceding sentence, except as the Committee may otherwise determine subject
to the requirements of Treas. Reg. §1.409A-1(b)(5)(iii)(E)(1), the term
“controlling interest” has the same meaning as provided in Treas. Reg.
§1.414(c)-2(b)(2)(i), provided that the words “at least 50 percent” are used
instead of the words “at least 80 percent” each place such words appear in
Treas. Reg. §1.414(c)-2(b)(2)(i). The Company may at any time by amendment
provide that different ownership thresholds (consistent with Section 409A of the
Code) apply but any such change shall not be effective for twelve (12) months.
In addition, any Affiliate must also meet the requirements of subsection (c)
under Rule 701 of the Securities Act.
(b)
“Award” means any award of an Option, SAR, Stock Grant or Stock Unit under the
Plan.
(c)
“Board” means the Board of Directors of the Company, as constituted from time to
time.
(d)
“Cashless Exercise” means, to the extent that a Stock Option Agreement so
provides and as permitted by applicable law, (i) a program approved by the
Committee in which payment may be made all or in part by delivery (on a form
prescribed by the Committee) of an irrevocable direction to a securities broker
to sell Shares and to deliver all or part of the sale proceeds to the Company in
payment of the aggregate Exercise Price and any applicable tax withholding
obligations relating to the Option or (ii) the withholding of that number of
Shares otherwise deliverable upon exercise of the Option whose aggregate Fair
Market Value is equal to the aggregate exercise price of the
Option.
(e) “Cause”
means, except as may otherwise be provided in a Participant’s employment
agreement or Award agreement, any of the following events: (i) Participant’s
willful failure substantially to perform his or her duties and responsibilities
to the Company or deliberate violation of a Company policy; (ii) Participant’s
commission of any act of fraud, embezzlement, dishonesty or any other willful
misconduct that has caused or is reasonably expected to result in material
injury to the Company; (iii) unauthorized use or disclosure by Participant of
any proprietary information or trade secrets of the Company or any other party
to whom the Participant owes an obligation of nondisclosure as a result of his
or her relationship with the Company; or (iv) Participant’s willful breach of
any of his or her obligations under any written agreement or covenant with the
Company. The determination as to whether a Participant is being terminated for
Cause shall be made in good faith by the Committee and shall be conclusive and
binding on the Participant. The foregoing definition does not in any way limit
the Company’s ability to terminate a Participant’s Service at any time as
provided in Section 12(a), and the term “Company” will be interpreted to
include any Subsidiary, Parent, Affiliate, or any successor thereto, if
appropriate.
(f)
“Change In Control” except as may otherwise be provided in a Participant’s
employment agreement or Award agreement, means the occurrence of any of the
following: (i) the consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization if more than 50% of
the combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such transaction is owned by persons who were not
stockholders of the Company immediately prior to such transaction; (ii) the
sale, transfer or other disposition of all or substantially all of the Company’s
assets; (iii) the direct or indirect sale or exchange in a single transaction or
series of related transactions by the stockholders of the Company of more than
50% of the voting stock of the Company to an unrelated person or entity if more
than 50% of the combined voting power of the surviving entity’s securities
outstanding immediately after such transaction is owned by persons who were not
stockholders of the Company immediately prior to such transaction; or (iv) a
complete liquidation or dissolution of the Company.
A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transactions.
(g)
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
and interpretations promulgated thereunder.
(h)
“Committee” means the Compensation Committee of the Board or a subcommittee
thereof or such other committee as may be designated by the Board to administer
the Plan.
(i)
“Common Stock” means the common stock, of the Company.
(j)
“Company” means Landec Corporation, a Delaware corporation.
(k)
“Consultant” means an individual who provides bona fide services to the Company,
a Parent, a Subsidiary or an Affiliate, other than as an Employee or Director or
Non-Employee Director.
(l)
“Covered Employees” means those persons who are subject to the limitations of
Section 162(m) of the Code.
(m)
“Director” means a member of the Board who is also an Employee.
(n)
“Disability” means that the Participant is classified as disabled under a
long-term disability policy of the Company or, if no such policy applies, the
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
(o)
“Employee” means any individual who is a common law employee of the Company, a
Parent, a Subsidiary or an Affiliate.
(p)
“Exchange Act” means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the Exchange Act or
regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.
(q)
“Exercise Price” means, in the case of an Option, the amount for which a Share
may be purchased upon exercise of such Option, as specified in the applicable
Stock Option Agreement. “Exercise Price,” in the case of a SAR, means an amount,
as specified in the applicable SAR Agreement, which is subtracted from the Fair
Market Value in determining the amount payable upon exercise of such
SAR.
(r)
“Existing Equity Plan” means the Company’s 2005 Stock Incentive
Plan.
(s) “Fair
Market Value” means the market price of a Share as determined in good faith by
the Committee. Such determination shall be conclusive and binding on all
persons. The Fair Market Value shall be determined by the following: (i) if the
Shares are admitted to trading on any established national stock exchange or
market system, including without limitation the NASDAQ Global Market System, on
the date in question, then the Fair Market Value shall be equal to the closing
sales price for such Shares as quoted on such national exchange or system on
such date; or (ii) if the Shares are admitted to quotation on NASDAQ or are
regularly quoted by a recognized securities dealer but selling prices are not
reported on the date in question, then the Fair Market Value shall be equal to
the mean between the bid and asked prices of the Shares reported for such
date.
In each
case, the applicable price shall be the price reported in The Wall Street
Journal or such other source as the Committee deems reliable; provided, however,
that if there is no such reported price for the Shares for the date in question,
then the Fair Market Value shall be equal to the price reported on the last
preceding date for which such price exists. If neither (i) or (ii) are
applicable, then the Fair Market Value shall be determined by the Committee in
good faith on such basis as it deems appropriate, consistent with the
requirements of Section 409A or Section 422 of the Code, to the extent
applicable.
(t)
“Fiscal Year” means the Company’s fiscal year.
(u)
“Grant” means any grant of an Award under the Plan.
(v)
“Incentive Stock Option” or “ISO” means an incentive stock option described in
Section 422 of the Code.
(w) “Key
Service Provider” means an Employee, Director, Non-Employee Director or
Consultant who has been selected by the Committee to receive an Award under the
Plan.
(x)
“Non-Employee Director” means a member of the Board who is not an
Employee.
(y)
“Nonstatutory Stock Option” or “NSO” means a stock option that is not an
ISO.
(z)
“Option” means an ISO or NSO granted under the Plan entitling the Optionee to
purchase Shares.
(aa)
“Optionee” means an individual, estate or other entity that holds an
Option.
(bb)
“Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.
(cc)
“Participant” means an individual or estate or other entity that holds an Award
under the Plan.
(dd)
“Performance Goals” means one or more objective measurable performance factors
as determined by the Committee with respect to each Performance Period based
upon one or more factors, including, but not limited to: (i) operating
income; (ii) earnings before interest, taxes, depreciation and amortization
(“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share;
(vi) sales or revenue; (vii) expenses; (viii) cost of goods sold;
(ix) profit/loss or profit margin; (x) working capital; (xi) return on
equity or assets; (xii) earnings per share; (xiii) economic value added
(“EVA”); (xiv) price/earnings ratio; (xv) debt or debt-to-equity;
(xvi) accounts receivable; (xvii) writeoffs; (xviii) cash; (xix)
assets; (xx) liquidity; (xxi) operations; (xxii) intellectual
property (e.g., patents); (xxiii) product development;
(xxiv) regulatory activity; (xxv) manufacturing, production or
inventory; (xxvi) mergers and acquisitions or divestitures; and/or
(xxvii) financings, each with respect to the Company and/or one or more of
its Parent, Subsidiaries, Affiliates or operating units. Awards issued to
persons who are not Covered Employees may take into account other factors. To
the extent consistent with the requirements for satisfying the performance-based
compensation exception under Section 162(m) of the Code, the Committee may
provide in the case of any Award intended to qualify for such exception that one
or more of the Performance Goals applicable to such Award will be adjusted in an
objectively determinable manner to reflect events (for example, but without
limitation, acquisitions or dispositions) occurring during the Performance
Period that affect the applicable Performance Goals.
(ee)
“Performance Period” means any period not exceeding 36 months as determined
by the Committee, in its sole discretion. The Committee may establish different
Performance Periods for different Participants, and the Committee may establish
concurrent or overlapping Performance Periods.
(ff)
“Plan” means this Landec Corporation 2009 Stock Incentive Plan as it may be
amended from time to time.
(gg)
“Re-Price” means that the Company has lowered or reduced the Exercise Price of
outstanding Options and/or outstanding SARs for any Participant(s) in a manner
described by Item 402(i)(1) of SEC Regulation S-K (or its successor
provision).
(hh) “SAR
Agreement” means the agreement described in Section 7 evidencing each Award
of a Stock Appreciation Right.
(ii)
“SEC” means the Securities and Exchange Commission.
(jj)
“Section 16 Persons” means those officers, directors or other persons who
are subject to Section 16 of the Exchange Act.
(kk)
“Securities Act” means the Securities Act of 1933, as
amended. Reference to a specific section of the Securities Act or
regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.
(ll)
“Service” means service as an Employee, Director, Non-Employee Director or
Consultant. A Participant’s Service does not terminate if he or she is an
Employee and goes on a bona fide leave of absence that was approved by the
Company in writing and the terms of the leave provide for continued service
crediting, or when continued service crediting is required by applicable law.
However, for purposes of determining whether an Option is entitled to continuing
ISO status, an Employee’s Service will be treated as terminating 90 days after
such Employee went on leave, unless such Employee’s right to return to active
work is guaranteed by law or by a contract. Service terminates in any event when
the approved leave ends, unless such Employee immediately returns to active
work. The Committee determines which leaves count toward Service, and when
Service terminates for all purposes under the Plan. Further, unless otherwise
determined by the Committee, a Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
provides service to the Company, a Parent, Subsidiary or Affiliate, or a
transfer between entities (the Company or any Parent, Subsidiary, or Affiliate);
provided that there is no interruption or other termination of
Service.
(mm)
“Share” means one share of Common Stock.
(nn)
“Stock Appreciation Right” or “SAR” means a stock appreciation right awarded
under the Plan.
(oo)
“Stock Grant” means Shares awarded pursuant to Section 8 of the
Plan.
(pp)
“Stock Grant Agreement” means the agreement described in Section 8
evidencing each Award of a Stock Grant.
(qq)
“Stock Option Agreement” means the agreement described in Section 6
evidencing each Award of an Option.
(rr)
“Stock Unit” means a bookkeeping entry representing the equivalent of one Share,
as awarded pursuant to Section 9 of the Plan.
(ss)
“Stock Unit Agreement” means the agreement described in Section 9
evidencing each Award of a Stock Unit.
(tt)
“Subsidiary” means any corporation (other than the Company) or other entity in a
chain of corporations or other entities in which each corporation or other
entity has a controlling interest in another corporation or other entity in the
chain, beginning with the Company and ending with such corporation or other
entity. For purposes of the preceding sentence, except as the Committee may
otherwise determine subject to the requirements of Treas. Reg.
§1.409A-1(b)(5)(iii)(E)(1), the term “controlling interest” has the same meaning
as provided in Treas. Reg. §1.414(c)-2(b)(2)(i), provided that the words “at
least 50 percent” are used instead of the words “at least 80 percent” each place
such words appear in Treas. Reg. §1.414(c)-2(b)(2)(i). The Company may at any
time by amendment provide that different ownership thresholds (consistent with
Section 409A of the Code) apply but any such change shall not be effective for
twelve (12) months. In addition, any Subsidiary must also meet the requirements
of subsection (c) under Rule 701 of the Securities Act. A corporation or other
entity that attains the status of a Subsidiary on a date after the adoption of
the Plan shall be considered a Subsidiary commencing as of such
date.
(uu)
“10-Percent Stockholder” means an individual who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company, its
Parent or any of its Subsidiaries. In determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be applied.
SECTION 3.
ADMINISTRATION
.
(a) The
Committee. The Committee shall administer the Plan.
(b)
Delegation by the Committee. The Committee, on such terms and
conditions as it may provide, may delegate all or any part of its authority and
powers under the Plan to one or more Directors or officers of the Company.
Notwithstanding the foregoing, with respect to Awards that are intended to
qualify as performance-based compensation under Section 162(m) of the Code, the
Committee may not delegate its authority and powers with respect to such Awards
if such delegation would cause the Awards to fail to so qualify. The Committee
may delegate its authority and power under the Plan to one or more officers of
the Company, subject to guidelines prescribed by the Committee, but only with
respect to Participants who are not Section 16 Persons.
(c)
Authority of the Committee. Subject to the provisions of the Plan, the Committee
shall have full authority and sole discretion to take any actions it deems
necessary or advisable for the administration of the Plan. Such actions shall
include, without limitation: (i) selecting Key Service Providers who are to
receive Awards under the Plan; (ii) determining the type, number, vesting
requirements and other features and conditions of such Awards and amending such
Awards; (iii) correcting any defect, supplying any omission, or reconciling any
inconsistency in the Plan or any Award agreement; (iv) accelerating the vesting,
or extending the post-termination exercise term, of Awards at any time and under
such terms and conditions as it deems appropriate; (v) interpreting the Plan;
(vi) making all other decisions relating to the operation of the Plan; and (vii)
adopting such plans or subplans as may be deemed necessary or appropriate to
provide for the participation by employees of the Company and its Subsidiaries
and Affiliates who reside outside the U.S., which plans and/or subplans shall be
attached hereto as Appendices.
The
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. In the case of any Award intended to be eligible for the
performance-based compensation exception under Section 162(m) of the Code, the
Committee will exercise its discretion consistent with qualifying the Award from
that exception. The Committee’s determinations under the Plan shall be final and
binding on all persons.
(d)
Indemnification. To the maximum extent permitted by applicable law, each member
of the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (i) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding 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 judgment in any such
claim, action, suit, or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of
law, or otherwise, or under any power that the Company may have to indemnify
them or hold them harmless.
SECTION 4.
GENERAL
.
(a)
General Eligibility. Only Employees, Directors, Non-Employee Directors and
Consultants shall be eligible to participate in the Plan. Eligibility shall be
further limited, subject to such express exceptions, if any, as the Committee
may establish, to those persons as to whom the use of a Form S-8 registration
statement is permissible.
(b)
Incentive Stock Options. Only Key Service Providers who are Employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In
addition, a Key Service Provider who is a 10-Percent Stockholder shall not be
eligible for the grant of an ISO unless the requirements set forth in
Section 422(c)(5) of the Code are satisfied.
(c)
Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject
to such rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine, in its sole discretion. Such
restrictions shall apply in addition to any restrictions that may apply to
holders of Shares generally and shall also comply to the extent necessary with
applicable law. In no event shall the Company be required to issue fractional
Shares under this Plan.
(d)
Beneficiaries. Unless stated otherwise in an Award agreement, a Participant may
designate one or more beneficiaries to whom any vested Award shall be paid or
issued in the event of the Participant’s death by timely filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Participant’s
death. Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. If no beneficiary was designated or if
no designated beneficiary survives the Participant, then after a Participant’s
death any vested Award(s) shall be transferred or distributed to the
Participant’s estate.
(e)
Performance Conditions. The Committee may, in its discretion, include
performance conditions in an Award. If performance conditions are included in
Awards to Covered Employees, then such Awards will be subject to the achievement
of Performance Goals established by the Committee. Such Performance Goals shall
be established and administered pursuant to the requirements of
Section 162(m) of the Code. Before any Shares underlying an Award or any
Award payments are released to a Covered Employee with respect to a Performance
Period, the Committee shall certify in writing that the Performance Goals for
such Performance Period have been satisfied. Awards with performance conditions
that are granted to Key Service Providers who are not Covered Employees need not
comply with the requirements of Section 162(m) of the Code.
(f) No
Rights as a Stockholder. Except as set forth in Section 8(f), a Participant, or
a transferee of a Participant, shall have no rights as a Stockholder with
respect to any Common Stock covered by an Award until such person has satisfied
all of the terms and conditions to receive such Common Stock, has satisfied any
applicable withholding or tax obligations relating to the Award and the Shares
have been issued (as evidenced by an appropriate entry on the books of the
Company or a duly authorized transfer agent of the Company).
(g)
Termination of Service. Unless the applicable Award agreement or, with respect
to Participants who reside in the U.S., the applicable employment agreement
provides otherwise, the following rules shall govern the vesting, exercisability
and term of outstanding Awards held by a Participant in the event of termination
of such Participant’s Service (in all cases subject to the term of the Option
and/or SAR as applicable): (i) upon termination of Service for any reason,
all unvested portions of any outstanding Awards shall be immediately forfeited
without consideration and the vested portions of any outstanding Stock Units
shall be settled upon termination; (ii) if the Service of a Participant is
terminated for Cause, then all unexercised Options and/or SARs, unvested
portions of Stock Units and unvested portions of Stock Grants shall terminate
and be forfeited immediately without consideration; (iii) if the Service of
Participant is terminated for any reason other than for Cause, death, or
Disability, then the vested portion of his or her then-outstanding Options
and/or SARs may be exercised by such Participant or his or her personal
representative within six months after the date of such termination; or (iv) if
the Service of a Participant is terminated due to death or Disability, the
vested portion of his or her then-outstanding Options and/or SARs may be
exercised within six months after the date of termination of
Service.
SECTION 5.
SHARES SUBJECT TO PLAN AND
SHARE LIMITS
.
(a) Basic
Limitation. The stock issuable under the Plan shall be authorized but unissued
Shares. The aggregate number of Shares reserved for Awards under the Plan shall
not exceed 1,900,000 Shares, subject to adjustment pursuant to
Section 10.
(b)
Additional Shares. If Options or SARs are forfeited or are terminated for any
reason before being exercised, then the Shares underlying such Awards shall
again become available for Awards under the Plan. SARs to be settled in Shares
shall be counted in full against the number of Shares available for issuance
under the Plan, regardless of the number of Shares issued upon settlement of the
SARs. Shares withheld in satisfaction of tax obligations
pursuant to Section 13 as well as the Shares that represent payment of the
Exercise Price shall cease to be available under the Plan. Shares that have
actually been issued under the Plan under any Award shall not be returned to the
Plan and shall not become available for future distribution under the Plan;
provided, however, that if unvested Shares of Stock Grants or Stock Units are
repurchased by the Company or are forfeited to the Company, such Shares shall
become available for future grant under the Plan. To the extent an Award under
the Plan is paid out in cash rather than Shares, such cash payment shall not
result in a reduction of the number of Shares available for issuance under the
Plan.
(c)
Dividend Equivalents. Any dividend equivalents distributed as a Share equivalent
under the Plan shall be applied against the number of Shares available for
Awards.
(d) Share
Limits.
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(i)
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Limits
on Options. No Key Service Provider shall receive Options to purchase
Shares during any Fiscal Year covering in excess of 500,000 Shares. The
aggregate maximum number of Shares that may be issued in connection with
ISOs shall be 1,900,000 Shares.
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(ii)
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Limits
on SARs. The aggregate maximum number of Shares that may be issued in
connection with SARs shall be 1,900,000 Shares. No Key Service Provider
shall receive Awards of SARs during any Fiscal Year covering in excess of
500,000 Shares.
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(iii)
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Limits
on Stock Grants and Stock Units. The aggregate maximum number of Shares
that may be issued as Stock Grants or Stock Units shall in the aggregate
be 1,900,000 Shares. No Key Service Provider shall receive Stock Grants or
Stock Units during any Fiscal Year covering, in the aggregate, in excess
of 250,000 Shares.
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(iv)
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Limits
on Awards to Non-Employee Directors. Awards to Non-Employee Directors
shall be determined by the Committee provided, however that no
Non-Employee Directors shall receive Awards during any Fiscal Year
covering, in the aggregate, in excess of 30,000
Shares.
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(v)
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The
foregoing share limits will be construed in a manner consistent with
Section 162(m) of the Code.
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SECTION 6.
TERMS AND CONDITIONS OF
OPTIONS.
(a) Stock
Option Agreement. Each Grant of an Option under the Plan shall be evidenced and
governed exclusively by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions that are not
inconsistent with the Plan and that the Committee deems appropriate for
inclusion in a Stock Option Agreement (including without limitation any
performance conditions). The provisions of the various Stock Option Agreements
entered into under the Plan need not be identical. The Stock Option Agreement
shall also specify whether the Option is an ISO or an NSO.
(b)
Number of Shares. Each Stock Option Agreement shall specify the number of Shares
that are subject to the Option and shall be subject to adjustment of such number
in accordance with Section 10.
(c)
Exercise Price. An Option’s Exercise Price shall be established by the Committee
and set forth in a Stock Option Agreement. The Exercise Price of an Option shall
not be less than 100% of the Fair Market Value (110% for ISO grants to
10-Percent Stockholders) on the date of Grant. No such Award, once granted, may
be repriced other than in accordance with the applicable stockholder approval
requirements of NASDAQ.
(d)
Exercisability and Term. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable. The Stock Option
Agreement shall also specify the term of the Option; provided that the term of
an Option shall in no event exceed seven years from the date of Grant. A Stock
Option Agreement may provide for accelerated vesting in the event of the
Participant’s death, Disability, or other events. Notwithstanding any other
provision of the Plan, no Option can be exercised after the expiration date
provided in the applicable Stock Option Agreement.
(e)
Payment for Option Shares. The Exercise Price of Shares issued upon exercise of
Options shall be payable in cash at the time when such Shares are purchased,
except as follows and if so provided for in an applicable Stock Option
Agreement:
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(i)
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Surrender
of Stock. Payment for all or any part of the Exercise Price may be made
with Shares which have already been owned by the Optionee; provided that
the Committee may, in its sole discretion, require that Shares tendered
for payment be previously held by the Optionee for a minimum duration
(e.g., to avoid financial accounting charges to the Company’s earnings).
Such Shares shall be valued at their Fair Market
Value.
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(ii)
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Cashless
Exercise. Payment for all or a part of the Exercise Price may be made
through Cashless Exercise.
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(iii)
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Other
Forms of Payment. Payment may be made in any other form that is consistent
with applicable laws, regulations and rules and approved by the
Committee.
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In the
case of an ISO granted under the Plan, payment shall be made only pursuant to
the express provisions of the applicable Stock Option Agreement. The Stock
Option Agreement may specify that payment may be made in any form(s) described
in this Section 6(e). In the case of an NSO granted under the Plan, the
Committee may, in its discretion at any time, accept payment in any form(s)
described in this Section 6(e).
(f)
Modifications or Assumption of Options. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding options or may accept the
cancellation of outstanding options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same or a
different number of Shares and at the same or a different Exercise Price.
Notwithstanding the preceding sentence or anything to the contrary, no
modification of an Option shall, without the consent of the Optionee, impair his
or her rights or obligations under such Option and, unless there is approval by
the Company stockholders, the Committee may not Re-Price outstanding
Options.
(g)
Assignment or Transfer of Options. Except as otherwise provided in the
applicable Stock Option Agreement and then only to the extent permitted by
applicable law, no Option shall be transferable by the Optionee other than by
will or by the laws of descent and distribution. Except as otherwise provided in
the applicable Stock Option Agreement, an Option may be exercised during the
lifetime of the Optionee only or by the guardian or legal representative of the
Optionee. No Option or interest therein may be assigned, pledged or hypothecated
by the Optionee during his or her lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar
process.
SECTION 7.
TERMS AND CONDITIONS OF
STOCK APPRECIATION RIGHTS
.
(a) SAR
Agreement. Each Award of a SAR under the Plan shall be evidenced by a SAR
Agreement between the Participant and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan (including without limitation any performance
conditions). A SAR Agreement may provide for a maximum limit on the amount of
any payout notwithstanding the Fair Market Value on the date of exercise of the
SAR. The provisions of the various SAR Agreements entered into under the Plan
need not be identical. SARs may be granted in consideration of a reduction in
the Participant’s compensation.
(b)
Number of Shares. Each SAR Agreement shall specify the number of Shares to which
the SAR pertains and is subject to adjustment of such number in accordance with
Section 10.
(c)
Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding. The Exercise Price of a SAR
shall not be less than 100% of the Fair Market Value on the date of
Grant.
(d)
Exercisability and Term. Each SAR Agreement shall specify the date when all or
any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR which shall not exceed seven years from the
date of Grant. A SAR Agreement may provide for accelerated exercisability in the
event of the Participant’s death, Disability, or other events and may provide
for expiration prior to the end of its term in the event of the termination of
the Participant’s Service. SARs may be awarded in combination with Options or
Stock Grants, and such an Award shall provide that the SARs will not be
exercisable unless the related Options or Stock Grants are forfeited. A SAR may
be included in an ISO only at the time of Grant but may be included in an NSO at
the time of Grant or at any subsequent time, but not later than six months
before the expiration of such NSO.
(e)
Exercise of SARs. If, on the date when a SAR expires, the Exercise Price under
such SAR is less than the Fair Market Value on such date but any portion of such
SAR has not been exercised or surrendered, then such SAR shall automatically be
deemed to be exercised as of such date with respect to such portion. Upon
exercise of a SAR, the Participant (or any person having the right to exercise
the SAR after Participant’s death) shall receive from the Company
(i) Shares, (ii) cash or (iii) any combination of Shares and
cash, as the Committee shall determine at the time of grant of the SAR, in its
sole discretion. The amount of cash and/or the Fair Market Value of Shares
received upon exercise of SARs shall, in the aggregate, be equal to the amount
by which the Fair Market Value (on the date of surrender) of the Shares subject
to the SARs exceeds the Exercise Price of the Shares.
(f)
Modification or Assumption of SARs. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding SARs or may accept the
cancellation of outstanding SARs (including stock appreciation rights granted by
another issuer) in return for the grant of new SARs for the same or a different
number of Shares and at the same or a different Exercise Price. Notwithstanding
the preceding sentence or anything to the contrary, no modification of a SAR
shall, without the consent of the Participant, impair his or her rights or
obligations under such SAR and, unless there is approval by the Company
stockholders, the Committee may not Re-Price outstanding SARs.
(g)
Assignment or Transfer of SARs. Except as otherwise provided in the applicable
SAR Agreement and then only to the extent permitted by applicable law, no SAR
shall be transferable by the Participant other than by will or by the laws of
descent and distribution. Except as otherwise provided in the applicable SAR
Agreement, a SAR may be exercised during the lifetime of the Participant only or
by the guardian or legal representative of the Participant. No SAR or interest
therein may be assigned, pledged or hypothecated by the Participant during his
or her lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
SECTION 8.
TERMS AND CONDITIONS FOR
STOCK GRANTS
.
(a) Time,
Amount and Form of Awards. Awards made pursuant to this Section 8 shall be
granted in the form of a Stock Grant. A Stock Grant may also be awarded in
combination with NSOs, and such an Award may provide that the Stock Grant will
be forfeited in the event that the related NSOs are exercised.
(b) Stock
Grant Agreement. Each Stock Grant awarded under the Plan shall be evidenced and
governed exclusively by a Stock Grant Agreement between the Participant and the
Company. Each Stock Grant shall be subject to a period of
restriction as determined by the Committee during which Shares subject to such
Stock Grant are forfeitable to the Company upon such conditions as are set forth
in the applicable Stock Grant Agreement. Each Stock Grant shall also
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan that
the Committee deems appropriate for inclusion in the applicable Stock Grant
Agreement (including without limitation any performance conditions). The
provisions of the Stock Grant Agreements entered into under the Plan need not be
identical.
(c)
Payment for Stock Grants. Stock Grants may be issued with or without cash
consideration under the Plan.
(d)
Vesting Conditions. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Stock Grant Agreement which
may include Performance Goals pursuant to Section 4(e). A Stock Grant
Agreement may provide for accelerated vesting in the event of the Participant’s
death, Disability, or other events.
(e)
Assignment or Transfer of Stock Grants. Except as provided in the applicable
Stock Grant Agreement and then only to the extent permitted by applicable law, a
Stock Grant awarded under the Plan shall not be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any creditor’s process,
whether voluntarily, involuntarily or by operation of law. Any act in violation
of this Section 8(e) shall be void. However, this Section 8(e) shall not
preclude a Participant from designating a beneficiary who will receive any
vested outstanding Stock Grant Awards in the event of the Participant’s death,
nor shall it preclude a transfer of vested Stock Grant Awards by will or by the
laws of descent and distribution.
(f)
Voting and Dividend Rights. The holder of a Stock Grant awarded under the Plan
shall have the same voting, dividend and other rights as the Company’s other
stockholders. A Stock Grant Agreement, however, may require that the holder of
such Stock Grant invest any cash dividends received in additional Shares subject
to the Stock Grant. Such additional Shares subject to the Stock Grant shall be
subject to the same conditions and restrictions as the Stock Grant with respect
to which the dividends were paid. Such additional Shares subject to the Stock
Grant shall not reduce the number of Shares available for issuance under
Section 5.
(g)
Modification or Assumption of Stock Grants. Within the limitations of the Plan,
the Committee may modify or assume outstanding Stock Grants or may accept the
cancellation of outstanding Stock Grants (including stock granted by another
issuer) in return for the grant of new Stock Grants for the same or a different
number of Shares. Notwithstanding the preceding sentence or anything to the
contrary, no modification of a Stock Grant shall, without the consent of the
Participant, impair his or her rights or obligations under such Stock
Grant.
SECTION 9.
TERMS AND CONDITIONS OF
STOCK UNITS
.
(a) Stock
Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a
Stock Unit Agreement between the Participant and the Company. Such Stock Units
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan (including without
limitation any performance conditions). The provisions of the various Stock Unit
Agreements entered into under the Plan need not be identical. Stock Units may be
granted in consideration of a reduction in the Participant’s other
compensation.
(b)
Number of Shares. Each Stock Unit Agreement shall specify the number of Shares
to which the Stock Unit Grant pertains and is subject to adjustment of such
number in accordance with Section 10.
(c)
Payment for Awards. To the extent that an Award is granted in the form of Stock
Units, no cash consideration shall be required of the Award
recipients.
(d)
Vesting Conditions. Each Award of Stock Units shall be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the
conditions specified in the Stock Unit Agreement which may include Performance
Goals pursuant to Section 4(e). A Stock Unit Agreement may provide for
accelerated vesting in the event of the Participant’s death, Disability, or
other events.
(e)
Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions as the
Stock Units to which they attach. Any entitlement to dividend equivalents or
similar entitlements shall be established and administered consistent either
with exemption from, or compliance with, the requirements of Section 409A of the
Code.
(f) Form
and Time of Settlement of Stock Units. Settlement of vested Stock Units may be
made in the form of (a) cash, (b) Shares or (c) any combination
of both, as determined by the Committee at the time of the grant of the Stock
Units, in its sole discretion. Methods of converting Stock Units into cash may
include (without limitation) a method based on the average Fair Market Value of
Shares over a series of trading days. Vested Stock Units may be settled in a
lump sum or in installments. The distribution may occur or commence when the
vesting conditions applicable to the Stock Units have been satisfied or have
lapsed, or it may be deferred, in accordance with applicable law, to any later
date. The amount of a deferred distribution may be increased by an interest
factor or by dividend equivalents. Until an Award of Stock Units is settled, the
number of such Stock Units shall be subject to adjustment pursuant to
Section 10.
(g)
Creditors’ Rights. A holder of Stock Units shall have no rights other than those
of a general creditor of the Company. Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of the
applicable Stock Unit Agreement.
(h)
Modification or Assumption of Stock Units. Within the limitations of the Plan,
the Committee may modify or assume outstanding Stock Units or may accept the
cancellation of outstanding Stock Units (including stock units granted by
another issuer) in return for the grant of new Stock Units for the same or a
different number of Shares. Notwithstanding the preceding sentence or anything
to the contrary, no modification of a Stock Unit shall, without the consent of
the Participant, impair his or her rights or obligations under such Stock
Unit.
(i)
Assignment or Transfer of Stock Units. Except as provided in the applicable
Stock Unit Agreement and then only to the extent permitted by applicable law,
Stock Units shall not be anticipated, assigned, attached, garnished, optioned,
transferred or made subject to any creditor’s process, whether voluntarily,
involuntarily or by operation of law. Any act in violation of this Section 9(i)
shall be void. However, this Section 9(i) shall not preclude a Participant from
designating a beneficiary who will receive any outstanding vested Stock Units in
the event of the Participant’s death, nor shall it preclude a transfer of vested
Stock Units by will or by the laws of descent and distribution.
SECTION 10.
PROTECTION AGAINST
DILUTION
.
(a) Basic
Adjustments. In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of: (i) the number of Shares and the kind of shares or securities available for
future Awards under Section 5; (ii) the limits on Awards specified in
Section 5; (iii) the number of Shares and the kind of shares or securities
covered by each outstanding Award; or (iv) the Exercise Price under each
outstanding SAR or Option.
References
in the Plan to Shares will be construed to include any stock or securities
resulting from an adjustment pursuant to this Section 10. Unless the Committee
determines otherwise, any adjustments hereunder shall be done on terms and
conditions consistent with Section 409A of the Code.
(b)
Certain Other Adjustments. The Committee may also make adjustments of the type
described in Section 10(a) above to take into account distributions to
stockholders other than those provided for in Section 10(a), or any other event,
if the Committee determines that adjustments are appropriate to avoid distortion
in the operation of the Plan and to preserve the value of Awards made hereunder,
having due regard for the qualification of ISOs under Section 422 of the Code,
the requirements of Section 409A of the Code, and for the performance-based
compensation rules of Section 162(m) of the Code, where
applicable.
(c)
Participant Rights. Except as provided in this Section 10, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class.
If by reason of an adjustment pursuant to this Section 10 a Participant’s
Award covers additional or different shares of stock or securities, then such
additional or different shares and the Award in respect thereof shall be subject
to all of the terms, conditions and restrictions which were applicable to the
Award and the Shares subject to the Award prior to such adjustment.
(d)
Fractional Shares. Any adjustment of Shares pursuant to this Section 10
shall be rounded down to the nearest whole number of Shares. Under no
circumstances shall the Company be required to authorize or issue fractional
shares and no consideration shall be provided as a result of any fractional
shares not being issued or authorized.
SECTION 11.
EFFECT OF A CHANGE IN
CONTROL
.
(a)
Change in Control. In the event that the Company is a party to a Change in
Control, outstanding Awards shall be subject to the applicable agreement of
merger or reorganization. Such agreement may provide, without limitation, for
the assumption of outstanding Awards by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting or for their cancellation with or without
consideration, in all cases without the consent of the Participant.
(b)
Acceleration. In the event that a Change in Control occurs with respect to the
Company and there is no assumption or continuation of outstanding Options, SARs
or Stock Units pursuant to Section 11(a), the Committee may determine, in
its sole discretion, that all such outstanding Options, SARs and Stock Units
shall fully vest and be fully exercisable immediately prior to such Change in
Control. The Committee may determine, at the time of granting an Award or
thereafter, that such Award shall become fully vested as to all Shares subject
to such Award in the event that a Change in Control occurs with respect to the
Company. To the extent acceleration pursuant to this Section 10(b) of an Award
subject to Section 409A of the Code would cause the Award to fail to satisfy the
requirements of Section 409A of the Code, the Award shall not be accelerated and
the Committee in lieu thereof shall take such steps as are necessary to ensure
that payment of the Award is made in a medium other than Shares and on terms
that as nearly as possible, but taking into account adjustments required or
permitted by this Section 10, replicate the prior terms of the
Award.
(c)
Additional Limitations: Any Shares and any cash or other property delivered
pursuant to Section 10(b) above with respect to an Award may, in the discretion
of the Committee, contain such restrictions, if any, as the Committee deems
appropriate to reflect any performance or other vesting conditions to which the
Award was subject and that did not lapse (and were not satisfied) in connection
with the Change in Control. In the case of Stock Grants that do not vest in
connection with the Change in Control, the Committee may require that any
amounts delivered, exchanged or otherwise paid in respect of such Stock Grants
in connection with the Change in Control be placed in escrow or otherwise made
subject to such restrictions as the Committee deems appropriate to carry out the
intent of the Plan.
(d)
Dissolution. To the extent not previously exercised or settled, Options, SARs
and Stock Units shall terminate immediately prior to the dissolution or
liquidation of the Company.
SECTION 12.
LIMITATIONS ON
RIGHTS
.
(a)
Participant Rights. A Participant’s rights, if any, in respect of or in
connection with any Award is derived solely from the discretionary decision of
the Company to permit the individual to participate in the Plan and to benefit
from a discretionary Award. By accepting an Award under the Plan, a Participant
expressly acknowledges that there is no obligation on the part of the Company to
continue the Plan and/or grant any additional Awards. Any Award granted
hereunder is not intended to be compensation of a continuing or recurring
nature, or part of a Participant’s normal or expected compensation, and in no
way represents any portion of a Participant’s salary, compensation, or other
remuneration for purposes of pension benefits, severance, redundancy,
resignation or any other purpose. The existence of the Plan or the grant of any
Award will not in any way affect the Company's right to Award a person bonuses
or other compensation in addition to Awards under the Plan.
Neither
the Plan nor any Award granted under the Plan shall be deemed to give any
individual a right to remain an employee, consultant or director of the Company,
a Parent, a Subsidiary or an Affiliate. The Company and its Parents and
Subsidiaries and Affiliates reserve the right to terminate the Service of any
person at any time, and for any reason, subject to applicable laws, the
Company’s Articles of Incorporation and Bylaws and a written employment
agreement (if any), and such terminated person shall be deemed irrevocably to
have waived any claim to damages or specific performance for breach of contract
or dismissal, compensation for loss of office, tort or otherwise with respect to
the Plan or any outstanding Award that is forfeited and/or is terminated by its
terms or to any future Award. The loss of existing or potential profit in Awards
will not constitute an element of damages in the event of termination of Service
for any reason, even if the termination is in violation of an obligation of the
Company or any Affiliate to the Participant.
(b)
Stockholders’ Rights. Except with as set forth in Section 8(f), a Participant
shall have no dividend rights, voting rights or other rights as a Stockholder
with respect to any Shares covered by his or her Award prior to the issuance of
such Shares (as evidenced by an appropriate entry on the books of the Company or
a duly authorized transfer agent of the Company). No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date when such Shares are issued, except as expressly provided in
Section 10.
(c)
Regulatory Requirements. Any other provision of the Plan notwithstanding, the
obligation of the Company to issue Shares or other securities under the Plan
shall be subject to all applicable laws, rules and regulations and such approval
by any regulatory body as may be required. The Company reserves the right to
restrict, in whole or in part, the delivery of Shares or other securities
pursuant to any Award prior to the satisfaction of all legal requirements
relating to the issuance of such Shares or other securities, to their
registration, qualification or listing or to an exemption from registration,
qualification or listing.
(d)
Section 409A. Awards under the Plan are intended either to be exempt from the
rules of Section 409A of the Code or to satisfy those rules, and the Plan and
such Awards shall be construed accordingly. Granted Awards may be modified at
any time, in the Committee’s discretion, so as to increase the likelihood of
exemption from or compliance with the rules of Section 409A of the Code, so long
as such modification does not result in a reduction in value to the applicable
Participant (unless the Participant consents in writing to such modification).
Notwithstanding anything to the contrary in the Plan, neither the Company, any
Subsidiary, nor the Board, nor any person acting on behalf of the Company, any
Subsidiary, or the Board, shall be liable to any participant or to the estate or
beneficiary of any participant or to any other holder of an option by reason of
any acceleration of income, or any additional tax, asserted by reason of the
failure of an option to satisfy the requirements of Section 409A of the
Code.
SECTION 13.
WITHHOLDING
TAXES
.
(a)
General. A Participant shall make arrangements satisfactory to the Company for
the satisfaction of any withholding tax obligations that arise in connection
with his or her Award. The Company shall not be required to issue any Shares or
make any cash payment under the Plan until such obligations are
satisfied.
(b) Share
Withholding. If a public market for the Company’s Shares exists, the Committee
may permit a Participant to have the Company withhold all or a portion of any
Shares that otherwise would be issued to him or her or by surrendering all or a
portion of any Shares that he or she previously acquired in satisfaction of all
or a part of his or her withholding or income tax obligations (but not in excess
of the minimum withholding required by law). Such Shares shall be valued based
on the value of the actual trade or, if there is none, the Fair Market Value as
of the previous day. Any payment of taxes by assigning Shares to the Company may
be subject to restrictions, including, but not limited to, any restrictions
required by rules of the SEC. The Committee may, in its discretion, also permit
a Participant to satisfy withholding or income tax obligations related to an
Award through Cashless Exercise or through a sale of Shares underlying the
Award.
SECTION 14.
DURATION AND
AMENDMENTS
.
(a) Term
of the Plan. The Plan shall become effective upon its approval by Company
stockholders. The Plan shall terminate on the seventh anniversary of the
Effective Date and may be terminated on any earlier date pursuant to this
Section 14, but previously granted Awards may continue beyond that date in
accordance with their terms.
(b) Right
to Amend or Terminate the Plan. The Board may amend or terminate the Plan at any
time and for any reason. Any such termination of the Plan, or any amendment
thereof, shall not impair any Award previously granted under the Plan. No Awards
shall be granted under the Plan after the Plan’s termination. An amendment of
the Plan shall be subject to the approval of the Company’s stockholders only to
the extent such approval is required by applicable laws, regulations or rules
(including the Code and applicable stock exchange
requirements).