CELCUITY INC.
AMENDED AND RESTATED
2017 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
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Page
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1
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Purpose of Plan
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1
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2
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Definitions
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1
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3
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Effective Date and Duration of the Plan
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3
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3.1
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Effective Date and Duration
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3
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3.2
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Stockholder Approval
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3
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4
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Shares Available for Issuance
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3
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4.1
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Plan Reserve
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3
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4.2
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Accounting for Incentive Awards
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3
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4.3
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Incentive Award Limitations Under the Plan
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3
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4.4
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Adjustments to Shares and Incentive Awards
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3
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5
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Plan Administration
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4
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5.1
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The Committee
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4
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5.2
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Authority of the Committee
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4
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6
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Participation
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4
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7
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Options
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4
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7.1
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Grant
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4
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7.2
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Exercise Price
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5
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7.3
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Exercisability and Duration
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5
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7.4
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Payment of Exercise Price
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5
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7.5
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Manner of Exercise
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5
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7.6
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Aggregate Limitation of Stock Subject to Incentive Stock
Options
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5
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8
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Stock Appreciation Rights
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5
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8.1
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Grant
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5
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8.2
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Exercisability and Duration
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5
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9
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Restricted Stock Awards and Restricted Stock Unit
Awards
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5
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9.1
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Grant
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5
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9.2
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Rights as a Stockholder; Transferability
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5
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9.3
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Dividends and Distributions
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6
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9.4
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Enforcement of Restrictions
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6
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10
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Performance Awards
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6
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10.1
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Grant
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6
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10.2
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Performance Goals
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6
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10.3
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Form of Payment
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6
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11
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Stock Bonuses
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6
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12
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Effect of Termination of Employment or Other Service
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6
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12.1
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Termination Due to Death, Disability or Retirement
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6
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12.2
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Termination for Reasons Other than Death, Disability or
Retirement
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7
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12.3
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Modification of Rights Upon Termination
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7
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12.4
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Exercise of Incentive Stock Options Following
Termination
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7
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12.5
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Date of Termination of Employment or Other Service
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7
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13
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Payment of Withholding Taxes
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7
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13.1
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General Rules
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7
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13.2
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Special Rules
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7
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14
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Action upon Change in Control
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8
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15
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Rights of Eligible Recipients and Participants;
Transferability
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8
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15.1
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Employment or Service
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8
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15.2
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Rights as a Stockholder
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8
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15.3
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Restrictions on Transfer
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8
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15.4
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Breach of Confidentiality or Non-Compete Agreements
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8
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15.5
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Non-Exclusivity of the Plan
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8
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16
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Securities Law and Other Restrictions
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9
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17
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Plan Amendment, Modification and Termination
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9
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18
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Miscellaneous
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9
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18.1
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Successors and Assigns
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9
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18.2
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Governing Law
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9
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CELCUITY INC.
AMENDED AND RESTATED
2017 STOCK INCENTIVE PLAN
1. Purpose of Plan.
The
purpose of the Celcuity Inc. Amended and Restated 2017 Stock
Incentive Plan (the “Plan”) is to advance the
interests of Celcuity Inc. (the “Company”) and its
stockholders by enabling the Company and its Subsidiaries to
attract and retain persons of skill and ability to perform services
for the Company and its Subsidiaries by providing an incentive to
such individuals through equity participation in the Company and by
rewarding such individuals who contribute to the achievement by the
Company of its economic objectives.
2. Definitions.
The
following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1. “Board”
means the Board of Directors of the Company.
2.2. “Broker
Exercise Notice” means a written notice pursuant to
which a Participant, upon exercise of an Option, irrevocably
instructs a broker or dealer to sell a sufficient number of shares
or lend a sufficient amount of money to pay all or a portion of the
exercise price of the Option and/or any related withholding tax
obligations and remit such sums to the Company and directs the
Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.
2.3. “Cause”
means:
(a) “Cause”
as defined in any employment or other agreement or policy
applicable to the Participant; or
(b) If no such
agreement or policy exists, (i) dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted
injury, in each case related to the Company or any Subsidiary, (ii)
substantial failure on the part of the Participant to perform his
or her duties to the Company or any Subsidiary or gross negligence
on the part of the Participant in the performance of such duties,
(iii) any unlawful or criminal activity of a serious nature, or
(iv) any material breach of any employment, service,
confidentiality or non-compete agreement entered into with the
Company or any Subsidiary.
2.4. “Change
in Control” of the Company means the occurrence of any
of the following events:
(a) the sale, lease,
exchange or other transfer of all or substantially all of the
assets of the Company (in one transaction or in a series of related
transactions) except where such sale, lease, exchange or other
transfer is to an entity controlled by the Company;
(b) the approval by the
stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company; or
(c) any person becomes
after the Effective Date the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the combined voting
power of the Company’s outstanding securities ordinarily
having the right to vote at elections of directors; or
(d) a merger or
consolidation to which the Company is a party if the persons who
are the stockholders of the Company immediately prior to effective
date of such merger or consolidation have “beneficial
ownership” (as defined in Rule l3d-3 under the Exchange Act),
immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation
representing 50% or less of the combined voting power of the
surviving corporation’s then outstanding securities
ordinarily having the right to vote at elections of
directors.
2.5. “Code”
means the Internal Revenue Code of 1986, as amended.
2.6. “Committee”
means the group of individuals administering the Plan, as provided
in Section 5 of the
Plan.
2.7. “Common
Stock” means the common stock of the Company, $0.001
par value, or the number and kind of shares of stock or other
securities into which such common stock may be changed in
accordance with Section 4.4 of
the Plan.
2.8. “Disability”
means the disability of the Participant such as would entitle the
Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then
covering the Participant or, if no such plan exists or is
applicable to the Participant, the permanent and total disability
of the Participant within the meaning of Section 22(e)(3) of the
Code.
2.9. “Effective
Date” means September 18, 2017.
2.10. “Eligible
Recipient” means any employee of the Company or any
Subsidiary and any non-employee director, consultant or independent
contractor of the Company or any Subsidiary.
2.11. “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
2.12. “Fair
Market Value” means, with respect to the Common Stock,
as of any date: (i) the last reported sale price of a share of
Common Stock as of such date during the regular daily trading
session on the Nasdaq Capital Market or on any other national
exchange (or, if no shares were traded or quoted on such date, as
of the next preceding date on which there was such a trade or
quote); or (ii) if the Common Stock is publicly traded but is
not so listed, the average of the closing bid and asked prices on
such date, as reported by The Wall Street Journal, in the over-the-
counter market (or, if no shares were quoted on such date, as of
the next preceding date on which there was such a quote); or
(iii) if the Common Stock is not so listed or reported, such
price as the Committee determines in good faith in the exercise of
its reasonable discretion, taking into account all available
information material to the value of the Common Stock, and
consistent with the definition of “fair market value”
under Section 409A of the Code.
2.13. “Incentive
Award” means an Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Performance
Award or Stock Bonus granted to an Eligible Recipient pursuant to
the Plan.
2.14. “Incentive
Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 7 of the Plan that qualifies as an
“incentive stock option” within the meaning of Section
422 of the Code.
2.15. “Non-Statutory
Stock Option” means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 7 of the Plan that does not qualify as an
Incentive Stock Option.
2.16. “Option”
means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.17. “Participant”
means an Eligible Recipient who receives one or more Incentive
Awards under the Plan.
2.18. “Performance
Award” means a right granted to an Eligible Recipient
pursuant to Section 10 of the
Plan to receive a payment from the Company, in the form of stock,
cash or a combination of both, upon the achievement of established
employment, service, performance or other goals.
2.19. “Performance
Goal” means one or more of the following performance
goals, either individually, alternatively or in any combination,
applied on a Company, Subsidiary or business unit basis: revenue,
cash flow, gross profit, earnings before interest and taxes,
earnings before interest, taxes, depreciation and amortization and
net earnings, earnings per share, margins (including one or more of
gross, operating and· net income margins), returns (including
one or more of return on assets, equity, investment, capital and
revenue and total stockholder return), stock price, working
capital, market share, cost reductions, workforce satisfaction and
diversity goals, employee retention, customer satisfaction,
completion of key projects and strategic plan development and
implementation. Such goals may reflect absolute entity or business
unit performance or a relative comparison to the performance of a
peer group of entities, prior periods of performance, or other
external measures of the selected performance
criteria.
Pursuant to rules
and conditions adopted by the Committee on or before the earlier of
the expiration of twenty-five percent (25%) of the applicable
performance period or the 90th day of the applicable performance
period for which Performance Goals are established, the Committee
may appropriately adjust any evaluation of performance under such
goals to exclude the effect of certain events, including any of the
following events: asset write-downs; litigation or claim judgments
or settlements; changes in tax law, accounting principles or other
such laws or provisions affecting reported results; severance,
contract termination and other costs related to exiting certain
business activities; and gains or losses from the disposition of
businesses or assets or from the early extinguishment of debt.
Performance Goals may include individual objectives or other
subjective criteria.
2.20. “Previously
Acquired Shares” means shares of Common Stock that are
already owned by the Participant.
2.21. “Restricted
Stock Award” means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 9 of the Plan that is subject to the
restrictions on transferability and the risk of forfeiture imposed
by the provisions of such Section 9.
2.22. “Restricted
Stock Unit Award” means an award granted to an
Eligible Recipient pursuant to Section 9 of the Plan evidencing the right to receive
a Share (or a cash payment equal to the Fair Market Value of a
Share) at some future date.
2.23. “Retirement”
means termination of employment or service pursuant to and in
accordance with the regular (or, if approved by the Board for
purposes of the Plan, early) retirement/pension plan or practice of
the Company or Subsidiary then covering the Participant,
provided that if the
Participant is not covered by any such plan or practice, the
Participant will be deemed to be covered by the Company’s
plan or practice for purposes of this determination.
2.24. “Securities
Act” means the Securities Act of 1933, as
amended.
2.25. “Share”
means a share of Common Stock.
2.26. “Stock
Appreciation Right” means a right granted to an
Eligible Recipient pursuant to Section 8 of the Plan to receive a payment from the
Company at the time of exercise, in the form of stock, cash or a
combination of both, equal to the difference between the Fair
Market Value of one or more shares of Common Stock and the exercise
price of such shares under the terms of such Stock Appreciation
Right.
2.27. “Stock
Bonus” means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 11 of the Plan.
2.28. “Subsidiary”
means any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant equity
interest, as determined by the Committee.
3. Effective Date and Duration of the
Plan.
3.1. Effective
Date and Duration. The Plan is effective as of the Effective
Date. The Plan will terminate at midnight on September 6, 2027 and
may be terminated prior to such time by Board action, and no
Incentive Award may be granted after such termination. Incentive
Awards outstanding upon termination of the Plan may continue to be
exercised, or become free of restrictions, in accordance with their
terms.
3.2. Stockholder
Approval. The Plan shall be submitted to the stockholders of
the Company for approval within twelve (12) months before or after
the Effective Date. Incentive Awards may be granted prior to the
date this Plan is approved by the stockholders of the Company;
provided, however, that any
Incentive Stock Options granted after adoption of the Plan by the
Board shall be treated as Non-Statutory stock options if
stockholder approval is not obtained within such twelve-month
period.
4. Shares Available for
Issuance.
4.1. Plan
Reserve. Subject to adjustment as provided in
Section 4.4 of the Plan, an
aggregate of Eight Hundred Forty-Four Thousand Two Hundred
Eighty-Two (844,282) Shares are reserved for issuance under the
Plan. On January 1 of each year commencing in 2021 and ending on
(and including) January 1, 2027, an additional number of Shares
shall become available for issuance under the Plan equal to the
lesser of: (i) one percent (1%) of the number of Shares issued
and outstanding as of the immediately preceding December 31, and
(ii) another amount determined by the Board. Notwithstanding
the foregoing, the number of Shares available under the Plan to be
issued as Incentive Stock Options shall not exceed Seven Hundred
Fifty Thousand (750,000) Shares, subject to adjustment as provided
in the Plan and Section 422 or 424 of the Code or any successor
provisions.
4.2. Accounting
for Incentive Awards. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Incentive Awards
will be applied to reduce the maximum number of shares of Common
Stock remaining available for issuance under the Plan. Any shares
of Common Stock that are subject to an Incentive Award that lapses,
expires, is forfeited or for any reason is terminated unexercised
or unvested and any shares of Common Stock that are subject to an
Incentive Award that is settled or paid in cash or any form other
than shares of Common Stock will automatically again become
available for issuance under the Plan. Any shares of Common Stock
that constitute the forfeited portion of a Restricted Stock Award,
however, will not become available for re-issuance under the Plan
after they have been so forfeited. Any shares of Common Stock
withheld to satisfy tax withholding obligations on an Incentive
Award or shares of Common Stock withheld to pay the exercise price
of an Option will not become available for re-issuance under the
Plan after they have been withheld for such purposes.
4.3. Incentive
Award Limitations Under the Plan. Notwithstanding any
provision in the Plan to the contrary, the number of Shares subject
to an Incentive Award or Awards granted under the Plan in any
calendar year to any one Eligible Recipient shall not, in the
aggregate, be more than 250,000 Shares; provided, however, that
such limitation shall be 500,000 Shares in the case of Incentive
Awards granted to an Eligible Recipient in the calendar year in
which such Eligible Recipient commences employment with the Company
or a Subsidiary. Such annual Incentive Award limitations shall be
subject to adjustment as provided in Section 4.4 of the Plan. For purposes of applying such
annual Incentive Award limitations to Incentive Awards denominated
in a form other than Shares, the number of Shares subject to such
Incentive Award shall be determined by dividing the maximum amount
payable under such Incentive Award by the Fair Market Value of a
Share at the date of grant
4.4. Adjustments to Shares and Incentive
Awards. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification,
stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a
spin-off) or any other similar change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of
directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the
number and kind of securities or other property (including cash)
available for issuance or payment under the Plan and, in order to
prevent dilution or enlargement of the rights of Participants, (a)
the number and kind of securities or other property (including
cash) subject to outstanding Options, and (b) the exercise price of
outstanding Options.
5.1. The
Committee. The Plan will be administered by the Board or by
a committee of the Board. So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act,
any committee administering the Plan will consist solely of two or
more members of the Board who are “non-employee
directors” within the meaning of Rule 16b-3 under the
Exchange Act. Such a committee, if established, will act by
majority approval of the members (but may also take action with the
written consent of a majority of the members of such committee),
and a majority of the members of such a committee will constitute a
quorum. As used in the Plan “Committee” will refer to
the Board or to such a committee, if established. To the extent
consistent with corporate law, the Committee may delegate to any
officers of the Company the duties, power and authority of the
Committee under the Plan pursuant to such conditions or limitations
as the Committee may establish; provided, however, that only the Committee may
exercise such duties, power and authority with respect to Eligible
Recipients who are subject to Section 16 of the Exchange Act. The
Committee may exercise its duties, power and authority under the
Plan in its sole and absolute discretion without the consent of any
Participant or other party, unless the Plan specifically provides
otherwise. Each determination, interpretation or other action made
or taken by the Committee pursuant to the provisions of the Plan
will be final, conclusive and binding for all purposes and on all
persons, including, without limitation, the Company, the
stockholders of the Company, the Participants and their respective
successors-in-interest. No member of the Committee will be liable
for any action or determination made in good faith with respect to
the Plan or any Incentive Award granted under the
Plan.
5.2. Authority of the
Committee.
(a) In accordance with
and subject to the provisions of the Plan, the Committee will have
the authority to determine all provisions of Incentive Awards as
the Committee may deem necessary or desirable and as consistent
with the terms of the Plan, including, without limitation, the
following: (i) the Eligible Recipients to be selected as
Participants; (ii) the nature and extent of the Incentive Awards to
be made to each Participant (including the number of shares of
Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become
exercisable and whether Incentive Awards will be granted in tandem
with other Incentive Awards) and the form of written agreement, if
any, evidencing such Incentive Award; (iii) the time or times when
Incentive Awards will be granted; (iv) the duration of each
Incentive Award; and (v) the restrictions and other conditions to
which the payment or vesting of Incentive Awards may be subject. In
addition, the Committee will have the authority under the Plan in
its sole discretion to pay the economic value of any Incentive
Award in the form of cash, Common Stock or any combination of
both.
(b) The Committee will
have the authority under the Plan to amend or modify the terms of
any outstanding Incentive Award in any manner, including, without
limitation, the authority to reduce the exercise price of any
outstanding Option, modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive
Award, accelerate the exercisability or vesting or otherwise
terminate any restrictions relating to an Incentive Award, accept
the surrender of any outstanding Incentive Award or, to the extent
not previously exercised or vested, authorize the grant of new
Incentive Awards in substitution for surrendered Incentive Awards;
provided, however, that the amended or modified
terms are permitted by the Plan as then in effect, that such
amendment or modification does not cause the Incentive Award to
become subject to Section 409A of the Code, and that any
Participant adversely affected by such amended or modified terms
has consented to such amendment or modification. No amendment or
modification to an Incentive Award, however, whether pursuant to
this Section 5.2 or any other
provisions of the Plan, will be deemed to be a re-grant of such
Incentive Award for purposes of the Plan.
(c) In the event of (i)
any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other similar change in
corporate structure or shares, (ii) any purchase, acquisition, sale
or disposition of a significant amount of assets or a significant
business, (iii) any change in accounting principles or practices,
or (iv) any other similar change, in each case with respect to the
Company or any other entity whose performance is relevant to the
grant or vesting of an Incentive Award, the Committee (or, if the
Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) may, without
the consent of any affected Participant, amend or modify the
vesting criteria of any outstanding Incentive Award that is based
in whole or in part on the financial performance of the Company (or
any Subsidiary or division thereof) or such other entity so as
equitably to reflect such event, with the desired result that the
criteria for evaluating such financial performance of the Company
or such other entity will be substantially the same (in the sole
discretion of the Committee or the board of directors of the
surviving corporation) following such event as prior to such event;
provided, however, that the amended or modified
terms are permitted by the Plan as then in effect.
6. Participation.
Participants in the
Plan will be those Eligible Recipients who, in the judgment of the
Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company
or its Subsidiaries. Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination or
in tandem with other Incentive Awards, as may be determined by the
Committee in its sole discretion. Incentive Awards will be deemed
to be granted as of the date specified in the grant resolution of
the Committee, which date will be the date of any related agreement
with the Participant.
7.1. Grant.
An Eligible Recipient may be granted one or more Options under the
Plan, and such Options will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee in its sole discretion. The
Committee may designate whether an Option is to be considered an
Incentive Stock Option or a Non-Statutory Stock Option. To the
extent that any Incentive Stock Option granted under the Plan
ceases for any reason to qualify as an “incentive stock
option” for purposes of Section 422 of the Code, such
Incentive Stock Option will continue to be outstanding for purposes
of the Plan but will thereafter be deemed to be a Non-Statutory
Stock Option.
7.2. Exercise
Price. The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its
discretion at the time of the Option grant; provided, however, that such price will not be
less than one hundred percent (100%) of the Fair Market Value of
one share of Common Stock on the date of grant (or, with respect to
an Incentive Stock Option, one hundred ten percent (110%) of the
Fair Market Value if, at the time the Incentive Stock Option is
granted, the Participant owns, directly or indirectly, more than
ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any parent or subsidiary corporation of
the Company).
7.3. Exercisability
and Duration. An Option will become exercisable at such
times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided, however, that no Incentive Stock Option
may be exercisable after ten (10) years from its date of grant
(five (5) years from its date of grant if, at the time the
Incentive Stock Option is granted, the Participant owns, directly
or indirectly, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any parent
or subsidiary corporation of the Company).
7.4. Payment of Exercise Price. The
total purchase price of the shares to be purchased upon exercise of
an Option will be paid entirely in cash (including check, bank
draft or money order); provided, however, that the Committee, in its
sole discretion and upon terms and conditions established by the
Committee, may allow such payments to be made, in whole or in part,
by tender of a Broker Exercise Notice, of Previously Acquired
Shares, or of a promissory note (on terms acceptable to the
Committee in its sole discretion), through the withholding of
shares of Common Stock from the number of shares of Common Stock
otherwise issuable upon the exercise of the Option, or by a
combination of such methods, or by any other form of payment the
Committee may authorize.
7.5. Manner of Exercise. An Option
may be exercised by a Participant in whole or in part from time to
time, subject to the conditions contained in the Plan and in the
agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written
notice of exercise to the Company (Attention: Chief Financial
Officer) at its principal executive office, and by paying in full
the total exercise price for the shares of Common Stock to be
purchased in accordance with Section 7.4 of the Plan.
7.6. Aggregate
Limitation of Stock Subject to Incentive Stock Options. To
the extent that the aggregate Fair Market Value (determined as of
the date an Incentive Stock Option is granted) of the shares of
Common Stock with respect to which incentive stock options (within
the meaning of Section 422 of the Code) are exercisable for the
first time by a Participant during any calendar year (under the
Plan and any other incentive stock option plans of the Company or
any subsidiary or parent corporation of the Company (within the
meaning of the Code)) exceeds $100,000 (or such other amount as may
be prescribed by the Code from time to time), such excess Options
will be treated as Non-Statutory Stock Options. The determination
will be made by taking Incentive Stock Options into account in the
order in which they were granted. If such excess only applies to a
portion of an Incentive Stock Option, the Committee, in its
discretion, will designate which shares will be treated as shares
to be acquired upon exercise of an Incentive Stock
Option.
8. Stock Appreciation
Rights.
8.1. Grant.
An Eligible Recipient may be granted one or more Stock Appreciation
Rights under the Plan, and such Stock Appreciation Rights will be
subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in
its sole discretion. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one
Share on the date of exercise (or, if the Committee shall so
determine, at any time during a specified period before or after
the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as determined by the Committee, which grant
price shall not be less than one hundred percent (100%) of the Fair
Market Value of one Share on the date of grant of the Stock
Appreciation Right. The Committee will have the sole discretion to
determine the form in which payment of the economic value of Stock
Appreciation Rights will be made to a Participant (i.e., cash,
Common Stock or any combination thereof) or to consent to or
disapprove the election by a Participant of the form of such
payment.
8.2. Exercisability
and Duration. A Stock Appreciation Right will become
exercisable at such time and in such installments as may be
determined by the Committee in its sole discretion at the time of
grant; provided,
however, that no Stock
Appreciation Right may be exercisable after ten (10) years from its
date of grant. A Stock Appreciation Right will be exercised by
giving notice in the same manner as for Options, as set forth in
Section 7.5 of the
Plan.
9. Restricted Stock Awards and Restricted
Stock Unit Awards.
9.1. Grant. An Eligible Recipient
may be granted one or more Restricted Stock Awards or Restricted
Stock Unit Awards under the Plan, and such Restricted Stock Awards
or Restricted Stock Unit Awards will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee in its sole discretion. The
Committee may impose such restrictions or conditions, such as
forfeiture or a repurchase option, not inconsistent with the
provisions of the Plan, to the vesting of or the lapse of
restrictions or conditions for any such Restricted Stock Award or
Restricted Stock Unit Award as it deems appropriate, including,
without limitation, that the Participant remain in the continuous
employ or service of the Company or a Subsidiary for a certain
period or that the Participant or the Company (or any Subsidiary or
division thereof) satisfy certain performance goals or
criteria.
9.2. Rights
as a Stockholder; Transferability. Except as provided in
Sections 9.1, 9.3 and 15.3 of
the Plan, a Participant will have all voting, dividend, liquidation
and other rights with respect to shares of Common Stock issued to
the Participant as a Restricted Stock Award under this
Section 9 upon the Participant
becoming the holder of record of such shares as if such Participant
were a holder of record of shares of unrestricted Common Stock. In
the case of Restricted Stock Unit Awards, no Shares shall be issued
at the time such Restricted Stock Awards are granted. Upon the
lapse or waiver of restrictions and the restricted period relating
to Restricted Stock Unit Awards evidencing the right to receive
Shares, such Shares shall be issued and delivered to the holder of
the Restricted Stock Unit Award.
9.3. Dividends and Distributions.
Unless the Committee determines otherwise in its sole discretion
(either in the agreement evidencing the Restricted Stock Award at
the time of grant or at any time after the grant of the Restricted
Stock Award), any dividends or distributions (including regular
quarterly cash dividends, if any) paid with respect to shares of
Common Stock subject to the unvested portion of a Restricted Stock
Award will be subject to the same restrictions as the shares to
which such dividends or distributions relate. In the event the
Committee determines not to pay dividends or distributions
currently, the Committee will determine in its sole discretion
whether any interest will be paid on such dividends or
distributions. In addition, the Committee in its sole discretion
may require such dividends and distributions to be reinvested (and
in such case the Participant consents to such reinvestment) in
shares of Common Stock that will be subject to the same
restrictions as the shares to which such dividends or distributions
relate.
9.4. Enforcement
of Restrictions. To enforce the restrictions referred to in
this Section 9, the Committee may
place a legend on the stock certificates referring to such
restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates, together
with duly endorsed stock powers, in the custody of the Company or
its transfer agent or to maintain evidence of stock ownership,
together with duly endorsed stock powers, in a certificateless
book-entry stock account with the Company’s transfer
agent.
10.1. Grant.
An Eligible Recipient may be granted one or more Performance Awards
under the Plan, and such Performance Awards will be subject to such
terms and conditions, consistent with the other provisions of the
Plan, as may be determined by the Committee in its sole
discretion.
10.2. Performance
Goals. The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to
the vesting of such Performance Awards as it deems appropriate,
including, without limitation, that the Participant remain in the
continuous employ or service of the Company or any Subsidiary for a
certain period or that the Participant or the Company (or any
Subsidiary or division thereof) satisfy certain Performance Goals.
Subject to the terms of the Plan and any applicable Performance
Award agreement, the Committee will have the sole discretion to
determine the Performance Goals to be achieved during any
performance period, the length of any performance period, the
amount of any Performance Award granted, the amount of any payment
or transfer to be made pursuant to any Performance Award, and any
other terms and conditions of any Performance Award.
10.3. Form
of Payment. A Performance Award granted under the Plan may
be payable in cash or in Shares (including, without limitation,
Restricted Stock Awards). The Committee will have the sole
discretion to determine the form in which payment of the economic
value of Performance Awards will be made to a Participant (i.e.,
cash, Common Stock or any combination thereof) or to consent to or
disapprove the election by a Participant of the form of such
payment.
An
Eligible Recipient may be granted one or more Stock Bonuses under
the Plan, and such Stock Bonuses will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee. The Participant will have all
voting, dividend, liquidation and other rights with respect to the
shares of Common Stock issued to a Participant as a Stock Bonus
under this Section 11 upon the
Participant becoming the holder of record of such shares;
provided, however, that the Committee may impose
such restrictions on the assignment or transfer of a Stock Bonus as
it deems appropriate.
12. Effect of Termination of Employment or
Other Service.
12.1. Termination
Due to Death, Disability or Retirement. Unless otherwise
provided by the Committee in its sole discretion in the agreement
evidencing an Incentive Award:
(a) In the event a
Participant’s employment or other service with the Company
and all Subsidiaries is terminated by reason of death or
Disability:
(i) all outstanding
Options and Stock Appreciation Rights then held by the Participant
will become immediately exercisable in full and remain exercisable
for a period of twelve (12) months after such termination (but in
no event after the expiration date of any such Option or Stock
Appreciation Right);
(ii) all
Restricted Stock Awards and Restricted Stock Unit Awards then held
by the Participant will become fully vested; and
(iii) all
Performance Awards and Stock Bonuses then held by the Participant
will vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such
Performance Awards or Stock Bonuses.
(b) In the event a
Participant’s employment or other service with the Company
and all Subsidiaries is terminated by reason of
Retirement:
(i) all outstanding
Options and Stock Appreciation Rights then held by the Participant
will remain exercisable, to the extent exercisable as of the date
of such termination, for a period of six (6) months after such
termination (but in no event after the expiration date of any such
Option or Stock Appreciation Right);
(ii) all
Restricted Stock Awards and Restricted Stock Unit Awards then held
by the Participant that have not vested as of such termination will
be terminated and forfeited; and
(iii) all
Performance Awards and Stock Bonuses then held by the Participant
will vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such
Performance Awards or Stock Bonuses.
12.2. Termination
for Reasons Other than Death, Disability or Retirement.
Unless otherwise provided by the Committee in its sole discretion
in the agreement evidencing an Incentive Award, in the event a
Participant’s employment or other service with the Company
and all Subsidiaries is terminated for any reason other than death,
Disability or Retirement, or a Participant is in the employ or
service of a Subsidiary and the Subsidiary ceases to be a
Subsidiary of the Company (unless the Participant continues in the
employ or service of the Company or another Subsidiary), all rights
of the Participant under the Plan and any agreements evidencing an
Incentive Award will immediately terminate without notice of any
kind, and no Options or Stock Appreciation Rights then held by the
Participant will thereafter be exercisable, all Restricted Stock
Awards and Restricted Stock Unit Awards then held by the
Participant that have not vested will be terminated and forfeited,
and all Performance Awards and Stock Bonuses then held by the
Participant will vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement
evidencing such Performance Awards or Stock Bonuses; provided, however, that if such termination is
due to any reason other than voluntary termination by the
Participant or termination by the Company or any Subsidiary for
“Cause,” all outstanding Options and Stock Appreciation
Rights then held by such Participant will remain exercisable, to
the extent exercisable as of such termination, for a period of
three (3) months after such termination (but in no event after the
expiration date of any such Option or Stock Appreciation
Right).
12.3. Modification
of Rights Upon Termination. Notwithstanding the other
provisions of this Section 12,
upon a Participant’s termination of employment or other
service with the Company and all Subsidiaries, the Committee may,
in its sole discretion (which may be exercised at any time on or
after the date of grant, including following such termination),
cause Options and Stock Appreciation Rights (or any part thereof)
then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of
employment or service and Restricted Stock Awards, Restricted Stock
Unit Awards, Performance Awards and Stock Bonuses then held by such
Participant to vest and/or continue to vest or become free of
transfer restrictions, as the case may be, following such
termination of employment or service, in each case in the manner
determined by the Committee; provided, however, that no Incentive Award may
remain exercisable or continue to vest beyond its expiration date.
Notwithstanding the foregoing, no extension to exercise will be
permitted if such extension would cause the Incentive Award to
become subject to Section 409A of the Code.
12.4. Exercise
of Incentive Stock Options Following Termination. Any
Incentive Stock Option that remains exercisable pursuant to an
agreement with the Company following termination of employment and
is unexercised more than one (1) year following termination of
employment by reason of death or Disability or more than three (3)
months following termination for any reason other than death or
Disability will thereafter be deemed to be a Non-Statutory Stock
Option.
12.5. Date
of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a
Participant’s employment or other service will, for purposes
of the Plan, be deemed to have terminated on the date recorded on
the personnel or other records of the Company or the Subsidiary for
which the Participant provides employment or other service, as
determined by the Committee in its sole discretion based upon such
records. For purposes of the Plan, no termination of employment or
other service by a Participant shall be deemed to result from
either (a) a transfer of employment to the Company from a
Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another, or (b) an approved leave of absence for
military service or sickness, or for any other purpose approved by
the Company, if the Participant’s right to reemployment or
continuation of service is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in writing,
in either case, except to the extent inconsistent with Section 409A
of the Code if the applicable Incentive Award is subject
thereto.
13. Payment of Withholding
Taxes.
13.1. General Rules. The Company is
entitled to (a) withhold and deduct from future wages of the
Participant (or from other amounts that may be due and owing to the
Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts
necessary to satisfy any and all foreign, federal, state and local
withholding and employment-related tax requirements attributable to
an Incentive Award, including, without limitation, the grant,
exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) require the
Participant promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of
Common Stock, with respect to an Incentive Award.
13.2. Special
Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or
require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in
Section 13.1 of the Plan by
electing to tender a Broker Exercise Notice, Previously Acquired
Shares, or a promissory note (on terms acceptable to the Committee
in its sole discretion), to have the Company withhold shares of
Common Stock from the number of shares of Common Stock otherwise
issuable to the Participant, or by a combination of such
methods.
14. Action upon Change in
Control.
If a
Change in Control of the Company occurs or is about to occur, the
Committee, in its sole discretion, may provide for one or more of
the following:
(a) the partial or full
acceleration of the exercisability of outstanding Incentive Awards
held by some or all Participants, provided that the Committee, in its
sole discretion, may condition such acceleration (or the
Participant’s receipt of any securities or payments with
respect to such acceleration) upon the Participant’s
continued service to the Company or to the successor person in the
Change in Control;
(b) the complete
termination of the Plan and cancellation of outstanding Incentive
Awards not exercised prior to a date specified by the
Committee;
(c) the continuance of
the Plan with respect to outstanding Incentive Awards;
(d) replacement or
exchange of the Incentive Awards for options to purchase similar
securities of the successor person in the Change in
Control;
(e) the substitution
for outstanding Incentive Awards of shares of common stock of the
person acquiring control of the Company or a related corporation;
or
(f) the receipt by some
or all Participants holding outstanding Incentive Awards with
respect to some or all of the shares of Common Stock subject to
such Incentive Awards, as of the effective date of any such Change
in Control of the Company, of cash in an amount equal to the excess
of the per share price paid in connection with the Change in
Control of the Company over the exercise price per share of such
Incentive Awards, multiplied by the number of shares subject to
such Incentive Awards.
15. Rights of Eligible Recipients and
Participants; Transferability.
15.1. Employment
or Service. Nothing in the Plan will interfere with or limit
in any way the right of the Company or any Subsidiary to terminate
the employment or service of any Eligible Recipient or Participant
at any time, nor confer upon any Eligible Recipient or Participant
any right to continue in the employ or service of the Company or
any Subsidiary.
15.2. Rights
as a Stockholder. As a holder of Incentive Awards (other
than Restricted Stock Awards and Stock Bonuses), a Participant will
have no rights as a stockholder unless and until such Incentive
Awards are exercised for, or paid in the form of, shares of Common
Stock and the Participant becomes the holder of record of such
shares. Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to such
Incentive Awards as to which there is a record date preceding the
date the Participant becomes the holder of record of such shares,
except as the Committee may determine in its
discretion.
15.3. Restrictions on Transfer.
Except pursuant to testamentary will or the laws of descent and
distribution or as otherwise expressly permitted by the Plan,
unless approved by the Committee in its sole discretion, no right
or interest of any Participant in an Incentive Award prior to the
exercise or vesting of such Incentive Award will be assignable or
transferable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise. A Participant will,
however, be entitled to designate a beneficiary to receive an
Incentive Award upon such Participant’s death, and in the
event of a Participant’s death, payment of any amounts due
under the Plan will be made to, and exercise of any Options (to the
extent permitted pursuant to Section 12 of the Plan) may be made by, the
Participant’s legal representatives, heirs and
legatees.
15.4. Breach
of Confidentiality, Assignment of Inventions or Non-Compete
Agreements. Notwithstanding anything in the Plan to the
contrary, in the event that a Participant materially breaches the
terms of any confidentiality, assignment of inventions or
non-compete agreement entered into with the Company or any
Subsidiary, whether such breach occurs before or after termination
of such Participant’s employment or other service with the
Company or any Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Participant under the Plan
and any agreements evidencing an Incentive Award then held by the
Participant without notice of any kind.
15.5. Non-Exclusivity
of the Plan. Nothing contained in the Plan is intended to
modify or rescind any previously or subsequently approved
compensation plans or programs of the Company or create any
limitations on the power or authority of the Board to adopt such
additional or other compensation arrangements as the Board may deem
necessary or desirable.
16. Securities Law and Other
Restrictions.
Notwithstanding any
other provision of the Plan or any agreements entered into pursuant
to the Plan, the Company will not be required to issue any shares
of Common Stock under the Plan, and a Participant may not sell,
assign, transfer or otherwise dispose of shares of Common Stock
issued pursuant to Incentive Awards granted under the Plan, unless
(a) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable state or
foreign securities laws or an exemption from such registration
under the Securities Act and applicable state or foreign securities
laws, and (b) there has been obtained any other consent, approval
or permit from any other regulatory body which the Committee, in
its sole discretion, deems necessary or advisable. The Company may
condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of
Common Stock, as may be deemed necessary or advisable by the
Company in order to comply with such securities law or other
restrictions.
17. Plan Amendment, Modification and
Termination.
The
Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the Plan from time to time in such respects
as the Board may deem advisable in order that Incentive Awards
under the Plan will conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the
best interests of the Company; provided, however, that no amendments to the Plan
will be effective without approval of the stockholders of the
Company if stockholder approval of the amendment is then required
pursuant to Section 422 of the Code or the rules of any stock
exchange or Nasdaq or similar regulatory body. No termination,
suspension or amendment of the Plan may adversely affect any
outstanding Incentive Award without the consent of the affected
Participant; provided,
however, that this sentence
will not impair the right of the Committee to take whatever action
it deems appropriate under Sections 5.2, 4.4 and
14 of the Plan.
18. Miscellaneous.
18.1. Successors
and Assigns. The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and
the Participants.
18.2. Governing
Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations
and actions relating to the Plan will be governed by and construed
exclusively in accordance with the laws of the State of Minnesota,
without regard to the conflicts of laws principles of any
jurisdictions.