EXHIBIT 10.1: EMCORE 2000 STOCK OPTION PLAN
Published on May 6, 2009
Exhibit
10.1
EMCORE
CORPORATION
AMENDED
AND RESTATED 2000 STOCK OPTION PLAN
Revised
April 30, 2009
1. Purposes.
The purposes of the EMCORE Corporation 2000 Stock Option Plan are to give
officers and other employees, consultants and non-employee directors of the
Company and its Affiliates an opportunity to acquire shares of Stock, to provide
an incentive for such employees, consultants and directors to continue to
promote the best interests of the Company and its Affiliates and enhance its
long-term performance and to provide an incentive for such employees,
consultants and directors to join or remain with the Company and its Affiliates.
Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the
Plan.
2. Definitions.
As used in the Plan, the following capitalized terms shall have the meanings set
forth below:
(a) “Affiliate”
- - other than the Company, (i) any corporation or limited liability company in an
unbroken chain of corporations or limited liability companies ending with the
Company if each corporation or limited liability company owns stock or
membership interests (as applicable) possessing more than fifty percent (50%) of
the total combined voting power of all classes of stock in one of the other
corporations or limited liability companies in such chain; (ii) any corporation,
trade or business (including, without limitation, a partnership or limited
liability company) which is more than fifty percent (50%) controlled (whether by
ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Company or one of its Affiliates; or (iii) any other entity,
approved by the Committee as an Affiliate under the Plan, in which the Company
or any of its Affiliates has a material equity interest.
(b) “Agreement”
- - a written stock option award agreement evidencing an Option, as described in
Section 3(e).
(c) “Award
Limit” - 300,000 shares of Stock (as adjusted in accordance with Section
10).
(d) “Beneficial
Ownership” - (including correlative terms) shall have the same meaning
given such term in Rule 13d-3 promulgated under the Exchange Act.
(e) “Board”
- - the Board of Directors of the Company.
(f) “Change
in Control” - the occurrence of any of the following:
(i)
an acquisition in one transaction or a series of related transactions (other
than directly from the Company or pursuant to Options granted under the Plan or
other similar awards granted by the Company) of any Voting Securities by any
Person, immediately after which such Person has Beneficial Ownership of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding Voting Securities; provided,
however,
in determining whether a Change in Control has occurred pursuant to this Section
2(f), Voting Securities which are acquired in a Non-Control Acquisition shall
not constitute an acquisition that would cause a Change in
Control;
(ii)
the individuals who, immediately prior to the Effective Date, are members of the
Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the
members of the Board; provided,
however,
that if the election, or nomination for election, by the Company’s common
stockholders, of any new director was approved by a vote of at least a majority
of the Incumbent Board, such new director shall, for purposes of the Plan, be
considered as a member of the Incumbent Board; provided
further, however,
that no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a “Proxy
Contest”) including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(iii)
the consummation of:
(A)
a merger, consolidation or reorganization involving the Company unless:
(1)
the stockholders of the Company, immediately before such merger, consolidation
or reorganization, own, directly or indirectly, immediately following such
merger, consolidation or reorganization, more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the corporation
resulting from such merger or consolidation or reorganization (the “Surviving
Corporation”) in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation or
reorganization,
(2)
the individuals who were members of the Incumbent Board immediately prior to the
execution of the agreement providing for such merger, consolidation or
reorganization constitute at least a majority of the members of the board of
directors of the Surviving Corporation, or a corporation Beneficially Owning,
directly or indirectly, a majority of the voting securities of the Surviving
Corporation, and
(3)
no Person, other
than (i) the Company, (ii) any Related Entity (as defined in Section
2(p)), (iii) any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to such merger, consolidation or reorganization, was
maintained by the Company, the Surviving Corporation, or any Related Entity or
(iv) any Person who, together with its Affiliates, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership of fifty
percent (50%) or more of the then outstanding Voting Securities, owns, together
with its Affiliates, Beneficial Ownership of fifty percent (50%) or more of the
combined voting power of the Surviving Corporation’s then outstanding voting
securities (a transaction described in clauses (1) through (3) above is
referred to herein as a “Non-Control
Transaction”);
(B)
a complete liquidation or dissolution of the Company;
or
(C)
an agreement for the sale or other disposition of all or substantially all of
the assets or business of the Company to any Person (other than a transfer to a
Related Entity or the distribution to the Company’s stockholders of the stock of
a Related Entity or any other assets).
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the “Subject
Person”) acquired Beneficial Ownership of fifty percent (50%) or more of
the combined voting power of the then outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities then outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Persons, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and (1)
before such share acquisition by the Company the Subject Person becomes the
Beneficial Owner of any new or additional Voting Securities in a related
transaction or (2) after such share acquisition by the Company the Subject
Person becomes the Beneficial Owner of any new or additional Voting Securities
which in either case increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall be deemed to occur. Solely for purposes of this Section 2(f), (x)
“Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person; (y) any “Relative” (for this purpose, “Relative” means a
spouse, child, parent, parent of spouse, sibling or grandchild) of an individual
shall be deemed to be an Affiliate of such individual for this purpose; and (z)
neither the Company nor any Person controlled by the Company shall be deemed to
be an Affiliate of any holder of Common Stock.
(g) “Code”
- - the Internal Revenue Code of 1986, as it may be amended from time to time,
including regulations and rules thereunder and successor provisions and
regulations and rules thereto.
(h) “Committee”
- - the Compensation Committee of the Board, or such other Board committee as may
be designated by the Board to administer the Plan.
(i) “Company”
- - EMCORE Corporation, a New Jersey corporation, or any successor
entity.
(j) “Disqualified
Option” - the meaning given such term in Section 10(d).
(k) “Disqualifying
Disposition” - the meaning given such term in Section 10(d).
(l) “Effective
Date” - the date on which the Plan is effective, as determined pursuant
to Section 15.
(m) “Exchange
Act” - the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(n) “Fair
Market Value” - of a share of Stock as of a given date shall be: (i) if
the Stock is listed or admitted to trading on an established stock exchange
(including, for this purpose, the Nasdaq National Market), the mean of the
highest and lowest sale prices for a share of Stock on the composite tape or in
Nasdaq National Market trading as reported in The
Wall Street Journal (or, if not so reported, such other nationally
recognized reporting source as the Committee shall select) for such date, or, if
no such prices are reported for such date, the most recent day for which such
prices are available shall be used; (ii) if the Stock is not then listed or
admitted to trading on such a stock exchange, the mean of the closing
representative bid and asked prices for the Stock on such date as reported by
the Nasdaq Small Cap Market or, if not so reported, by the OTC Bulletin Board
(or any successor or similar quotation system regularly reporting the market
value of the Stock in the over-the-counter market), or, if no such prices are
reported for such date, the most recent day for which such prices are available
shall be used; or (iii) in the event neither of the valuation methods provided
for in clauses (i) and (ii) above are practicable, the fair market value of a
share of Stock determined by such other reasonable valuation method as the
Committee shall, in its discretion, select and apply in good faith as of the
given date; provided,
however,
that for purposes of paragraphs (a) and (h) of Section 6, such fair market value
shall be determined subject to Section 422(c)(7) of the Code.
(o) “ISO”
or “Incentive
Stock Option” - a right to purchase Stock granted to an Optionee under
the Plan in accordance with the terms and conditions set forth in Section 6 and
which conforms to the applicable provisions of Section 422 of the
Code.
(p) “Non-Control
Acquisition” - an acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) the Company or (B) any corporation or
other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by the Company
(a “Related
Entity”), (ii) the Company or any Related Entity, (iii) any of Thomas
Russell, The AER Trust 1997, Robert Louis-Dreyfus, Gallium Enterprises, Inc. and
Reuben Richards or (iv) any Person in connection with a Non-Control
Transaction.
(q) “Notice”
- - written notice actually received by the Company at its executive offices on
the day of such receipt, if received on or before 1:30 p.m., on a day when the
Company’s executive offices are open for business, or, if received after such
time, such notice shall be deemed received on the next such day, which notice
may be delivered in person to the Company’s Secretary or sent by facsimile to
the Company at (732) 271-9686, or sent by certified or registered mail or
overnight courier, prepaid, addressed to the Company at 394 Elizabeth Avenue,
Somerset, New Jersey 08873, Attention: Secretary.
(r) “Option”
- - a right to purchase Stock granted to an Optionee under the Plan in accordance
with the terms and conditions set forth in Section 6. Options may be either ISOs
or stock options other than ISOs.
(s) “Optionee”
- - an individual who is eligible, pursuant to Section 5, and who has been
selected, pursuant to Section 3(c), to participate in the Plan, and who holds an
outstanding Option granted to such individual under the Plan in accordance with
the terms and conditions set forth in Section 6.
(t) “Person”
- - “person” as such term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act, including, without limitation, any individual, corporation,
limited liability company, partnership, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other entity
or any group of Persons.
(u) “Plan”
- - this EMCORE Corporation 2000 Stock Option Plan.
(v) “Predecessor
Plan” - the Company’s 1995 Incentive and Non-Statutory Stock Option
Plan.
(w) “Securities
Act” - the Securities Act of 1933, as it may be amended from time to
time, including the regulations and rules promulgated thereunder and successor
provisions and regulations and rules thereto.
(x) “Stock”
- - the common stock of the Company, without par value.
(y) “Subsidiary”
- - any present or future corporation which is or would be a “subsidiary
corporation” of the Company as the term is defined in Section 424(f) of the
Code.
(z) “Voting
Securities” - all the outstanding voting securities of the Company
entitled to vote generally in the election of the Board.
3. Administration
of the Plan.
(a) The
Committee shall have exclusive authority to operate, manage and administer the
Plan in accordance with its terms and conditions. Notwithstanding the foregoing,
in its absolute discretion, the Board may at any time and from time to time
exercise any and all rights, duties and responsibilities of the Committee under
the Plan, including, but not limited to, establishing procedures to be followed
by the Committee, but excluding matters which under any applicable law,
regulation or rule, including, without limitation, any exemptive rule under
Section 16 of the Exchange Act (including Rule 16b-3, or any successor rule, as
the same may be amended from time to time) or Section 162(m) of the Code, are
required to be determined in the sole discretion of the Committee. If and to the
extent that no Committee exists which has the authority to administer the Plan,
the functions of the Committee shall be exercised by the Board.
(b) The
Committee shall be appointed from time to time by the Board, and the Committee
shall consist of not less than three members of the Board. Appointment of
Committee members shall be effective upon their acceptance of such appointment.
Committee members may be removed by the Board at any time either with or without
cause, and such members may resign at any time by delivering notice thereof to
the Board. Any vacancy on the Committee, whether due to action of the Board or
any other reason, shall be filled by the Board.
(c) The
Committee shall have full authority to grant, pursuant to the terms of the Plan,
Options to those individuals who are eligible to receive Options under the Plan.
In particular, the Committee shall have discretionary authority, in accordance
with the terms of the Plan, to: determine eligibility for participation in the
Plan; select, from time to time, from among those eligible, the employees,
directors and consultants to whom Options shall be granted under the Plan, which
selection may be based upon information furnished to the Committee by the
Company’s or an Affiliate’s management; determine whether an Option shall take
the form of an ISO or an Option other than an ISO; determine the number of
shares of Stock to be included in any Option and the periods for which Options
will be outstanding; establish and administer any terms, conditions, performance
criteria, restrictions, limitations, forfeiture, vesting or exercise schedule,
and other provisions of or relating to any Option; grant waivers of terms,
conditions, restrictions and limitations under the Plan or applicable to any
Option, or accelerate the vesting or exercisability of any Option; amend or
adjust the terms and conditions of any outstanding Option and/or adjust the
number and/or class of shares of Stock subject to any outstanding Option; at any
time and from time to time after the granting of an Option, specify such
additional terms, conditions and restrictions with respect to any such Option as
may be deemed necessary or appropriate to ensure compliance with any and all
applicable laws or rules, including, but not limited to, terms, restrictions and
conditions for compliance with applicable securities laws, regarding an
Optionee’s exercise of Options by tendering shares of Stock or under any
“cashless exercise” program established by the Committee, and methods of
withholding or providing for the payment of required taxes; and, to the extent
permitted under the applicable Agreement, permit the transfer of an Option or
the exercise of an Option by one other than the Optionee who received the grant
of such Option (other than any such a transfer or exercise which would cause any
ISO to fail to qualify as an “incentive stock option” under Section 422 of the
Code).
(d) The
Committee shall have all authority that may be necessary or helpful to enable it
to discharge its responsibilities with respect to the Plan. Without limiting the
generality of the foregoing sentence or Section 3(a), and in addition to the
powers otherwise expressly designated to the Committee in the Plan, the
Committee shall have the exclusive right and discretionary authority to
interpret the Plan and the Agreements; construe any ambiguous provision of the
Plan and/or the Agreements and decide all questions concerning eligibility for
and the amount of Options granted under the Plan. The Committee may establish,
amend, waive and/or rescind rules and regulations and administrative guidelines
for carrying out the Plan and may correct any errors, supply any omissions or
reconcile any inconsistencies in the Plan and/or any Agreement or any other
instrument relating to any Options. The Committee shall have the authority to
adopt such procedures and subplans and grant Options on such terms and
conditions as the Committee determines necessary or appropriate to permit
participation in the Plan by individuals otherwise eligible to so participate
who are foreign nationals or employed outside of the United States, or otherwise
to conform to applicable requirements or practices of jurisdictions outside of
the United States; and take any and all such other actions it deems necessary or
advisable for the proper operation and/or administration of the Plan. The
Committee shall have full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority under the
Plan. Decisions and actions by the Committee with respect to the Plan and any
Agreement shall be final, conclusive and binding on all persons having or
claiming to have any right or interest in or under the Plan and/or any
Agreement.
(e) Each
Option shall be evidenced by an Agreement, which shall be executed by the
Company and the Optionee to whom such Option has been granted, unless the
Agreement provides otherwise; two or more Options granted to a single Optionee
may, however, be combined in a single Agreement. An Agreement shall not be a
precondition to the granting of an Option; no person shall have any rights under
any Option, however, unless and until the Optionee to whom the Option shall have
been granted (i) shall have executed and delivered to the Company an Agreement
or other instrument evidencing the Option, unless such Agreement provides
otherwise, and (ii) has otherwise complied with the applicable terms and
conditions of the Option. The Committee shall prescribe the form of all
Agreements, and, subject to the terms and conditions of the Plan, shall
determine the content of all Agreements. Any Agreement may be supplemented or
amended in writing from time to time as approved by the Committee; provided
that the terms and conditions of any such Agreement as supplemented or amended
are not inconsistent with the provisions of the Plan.
(f) A
majority of the members of the entire Committee shall constitute a quorum and
the actions of a majority of the members of the Committee in attendance at a
meeting at which a quorum is present, or actions by a written instrument signed
by all members of the Committee, shall be the actions of the
Committee.
(g) The
Committee may consult with counsel who may be counsel to the Company. The
Committee may, with the approval of the Board, employ such other attorneys
and/or consultants, accountants, appraisers, brokers and other persons as it
deems necessary or appropriate. In accordance with Section 12, the Committee
shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel or other persons.
(h) In
serving on the Committee, the members thereof shall be entitled to
indemnification as directors of the Company, and to any limitation of liability
and reimbursement as directors with respect to their services as members of the
Committee.
(i) Except
to the extent prohibited by applicable law, including, without limitation, the
requirements applicable under Section 162(m) of the Code to any Option intended
to be “qualified performance-based compensation,” or the requirements for any
Option granted to an officer or director to be covered by any exemptive rule
under Section 16 of the Exchange Act (including Rule 16b-3, or any successor
rule, as the same may be amended from time to time), or the applicable rules of
a stock exchange, the Committee may, in its discretion, allocate all or any
portion of its responsibilities and powers under this Section 3 to any one or
more of its members and/or delegate all or any part of its responsibilities and
powers under this Section 3 to any person or persons selected by it; provided,
however,
that the Committee may not delegate its authority to correct errors, omissions
or inconsistencies in the Plan. Any such authority delegated or allocated by the
Committee under this paragraph (i) of Section 3 shall be exercised in accordance
with the terms and conditions of the Plan and any rules, regulations or
administrative guidelines that may from time to time be established by the
Committee, and any such allocation or delegation may be revoked by the Committee
at any time.
4. Shares
of Stock Subject to the Plan.
(a) The
shares of stock subject to Options granted under the Plan shall be shares of
Stock. Such shares of Stock subject to the Plan may be either authorized and
unissued shares (which will not be subject to preemptive rights) or previously
issued shares acquired by the Company or any Subsidiary. The total number of
shares of Stock that may be delivered pursuant to Options granted under the Plan
is 15,850,000, plus any shares of Stock subject to a stock option granted under
the Predecessor Plan which for any reason expires or is terminated or canceled
without having been fully exercised by delivery of shares of Stock; provided,
however,
that the total number of shares of Stock that may be delivered pursuant to
Incentive Stock Options under the Plan is 15,850,000, without application of
paragraph (d) of this Section 4.
(b) Notwithstanding
any of the foregoing limitations set forth in this Section 4, the numbers of
shares of Stock specified in this Section 4 shall be adjusted as provided in
Section 10.
(c) Any
shares of Stock subject to an Option which for any reason expires or is
terminated or canceled without having been fully exercised by delivery of shares
of Stock may again be granted pursuant to an Option under the Plan, subject to
the limitations of this Section 4.
(d) If
the option exercise price of an Option granted under the Plan or a stock option
granted under the Predecessor Plan is paid by tendering to the Company shares of
Stock already owned by the holder of such option (or such holder and his or her
spouse jointly), only the number of shares of Stock issued net of the shares of
Stock so tendered shall be deemed delivered for purposes of determining the
total number of shares of Stock that may be delivered under the
Plan.
(e) Any
shares of Stock delivered under the Plan in assumption or substitution of
outstanding stock options, or obligations to grant future stock options, under
plans or arrangements of an entity other than the Company or an Affiliate in
connection with the Company or an Affiliate acquiring such another entity, or an
interest in such an entity, or a transaction otherwise described in Section
6(j), shall not reduce the maximum number of shares of Stock available for
delivery under the Plan.
5. Eligibility.
Executive employees and other employees, including officers, of the Company and
the Affiliates, directors (whether or not also employees), and consultants of
the Company and the Affiliates, shall be eligible to become Optionees and
receive Options in accordance with the terms and conditions of the Plan, subject
to the limitations on the granting of ISOs set forth in Section
6(h).
6. Terms
and Conditions of Stock Options. All Options to purchase Stock granted
under the Plan shall be either ISOs or Options other than ISOs. To the extent
that any Option does not qualify as an Incentive Stock Option (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option, or the portion thereof which does not so qualify, shall constitute a
separate Option other than an Incentive Stock Option. Each Option shall be
subject to all the applicable provisions of the Plan, including the following
terms and conditions, and to such other terms and conditions not inconsistent
therewith as the Committee shall determine and which are set forth in the
applicable Agreement. Options need not be uniform as to all grants and
recipients thereof.
(a) The
option exercise price per share of shares of Stock subject to each Option shall
be determined by the Committee and stated in the Agreement; provided,
however,
that, subject to paragraph (h)(iii) and/or (j) of this Section 6, if applicable,
such price applicable to any ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a share of Stock at the time that the Option
is granted.
(b) Each
Option shall be exercisable in whole or in such installments, at such times and
under such conditions as may be determined by the Committee, in its discretion
in accordance with the Plan, and stated in the Agreement, and, in any event,
over a period of time ending not later than ten (10) years from the date such
Option was granted, subject to paragraph (h)(iii) of this Section
6.
(c) An
Option shall not be exercisable with respect to a fractional share of Stock or
the lesser of one hundred (100) shares and the full number of shares of Stock
then subject to the Option. No fractional shares of Stock shall be issued upon
the exercise of an Option.
(d) Each
Option may be exercised by giving Notice to the Company specifying the number of
shares of Stock to be purchased, which shall be accompanied by payment in full
including applicable taxes, if any, in accordance with Section 9. Payment shall
be in any manner permitted by applicable law and prescribed by the Committee, in
its discretion, and set forth in the Agreement, including, in the Committee’s
discretion, and subject to such terms, conditions and limitations as the
Committee may prescribe, payment in accordance with a “cashless exercise”
arrangement established by the Committee and/or in Stock owned by the Optionee
or by the Optionee and his or her spouse jointly and acquired more than six (6)
months prior to such tender.
(e) No
Optionee or other person shall become the beneficial owner of any shares of
Stock subject to an Option, nor have any rights to dividends or other rights of
a shareholder with respect to any such shares until he or she has exercised his
or her Option in accordance with the provisions of the Plan and the applicable
Agreement.
(f) An
Option may be exercised only if at all times during the period beginning with
the date of the granting of the Option and ending on the date of such exercise,
the Optionee was an employee, director or consultant of the Company or an
Affiliate, as applicable. Notwithstanding the preceding sentence, the Committee
may determine in its discretion that an Option may be exercised prior to
expiration of such Option following termination of such continuous employment,
directorship or consultancy, whether or not exercisable at the time of such
termination, to the extent provided in the applicable
Agreement.
(g) Subject
to the terms and conditions and within the limitations of the Plan, the
Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
(h) (i)
Each Agreement relating to an Option shall state whether such Option will or
will not be treated as an ISO. No ISO shall be granted unless such Option, when
granted, qualifies as an “incentive stock option” under Section 422 of the Code.
No ISO shall be granted to any individual otherwise eligible to participate in
the Plan who is not an employee of the Company or a Subsidiary on the date of
granting of such Option. Any ISO granted under the Plan shall contain such terms
and conditions, consistent with the Plan, as the Committee may determine to be
necessary to qualify such Option as an “incentive stock option” under Section
422 of the Code. Any ISO granted under the Plan may be modified by the Committee
to disqualify such Option from treatment as an “incentive stock option” under
Section 422 of the Code.
(ii)
Notwithstanding any intent to grant ISOs, an Option granted under the Plan will
not be considered an ISO to the extent that it, together with any other
“incentive stock options” (within the meaning of Section 422 of the Code, but
without regard to subsection (d) of such Section) under the Plan and any other
“incentive stock option” plans of the Company, any Subsidiary and any “parent
corporation” of the Company within the meaning of Section 424(e) of the Code,
are exercisable for the first time by any Optionee during any calendar year with
respect to Stock having an aggregate Fair Market Value in excess of $100,000 (or
such other limit as may be required by the Code) as of the time the Option with
respect to such Stock is granted. The rule set forth in the preceding sentence
shall be applied by taking Options into account in the order in which they were
granted.
(iii)
No ISO shall be granted to an individual otherwise eligible to participate in
the Plan who owns (within the meaning of Section 424(d) of the Code), at the
time the Option is granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or a Subsidiary or any
“parent corporation” of the Company within the meaning of Section 424(e) of the
Code. This restriction does not apply if at the time such ISO is granted the
Option exercise price per share of Stock subject to the Option is at least 110%
of the Fair Market Value of a share of Stock on the date such ISO is granted,
and the ISO by its terms is not exercisable after the expiration of five years
from such date of grant.
(i) An
Option and any shares of Stock received upon the exercise of an Option shall be
subject to such other transfer and/or ownership restrictions and/or legending
requirements as the Committee may establish in its discretion and which are
specified in the Agreement and may be referred to on the certificates evidencing
such shares of Stock. The Committee may require an Optionee to give prompt
Notice to the Company concerning any disposition of shares of Stock received
upon the exercise of an ISO within: (i) two (2) years from the date of granting
such ISO to such Optionee or (ii) one (1) year from the transfer of such shares
of Stock to such Optionee or (iii) such other period as the Committee may from
time to time determine. The Committee may direct that an Optionee with respect
to an ISO undertake in the applicable Agreement to give such Notice described in
the preceding sentence, at such time and containing such information as the
Committee may prescribe, and/or that the certificates evidencing shares of Stock
acquired by exercise of an ISO refer to such requirement to give such
Notice.
(j) In
the event that a transaction described in Section 424(a) of the Code involving
the Company or a Subsidiary is consummated, such as the acquisition of property
or stock from an unrelated corporation, individuals who become eligible to
participate in the Plan in connection with such transaction, as determined by
the Committee, may be granted Options in substitution for stock options granted
by another corporation that is a party to such transaction. If such substitute
Options are granted, the Committee, in its discretion and consistent with
Section 424(a) of the Code, if applicable, and the terms of the Plan, though
notwithstanding paragraph (a) of this Section 6, shall determine the option
exercise price and other terms and conditions of such substitute
Options.
(k) Notwithstanding
any other provision contained in the Plan to the contrary, the maximum number of
shares of Stock which may be subject to Options granted under the Plan to any
Optionee in any twelve (12) month period shall not exceed the Award Limit. To
the extent required by Section 162(m) of the Code, shares of Stock subject to
Options which are canceled shall continue to be counted against the Award Limit
and if, after the grant of an Option, the price of shares subject to such Option
is reduced and the transaction is treated as a cancellation of the Option and a
grant of a new Option, both the Option deemed to be canceled and the Option
deemed to be granted shall be counted against the Award
Limit.
7. Transfer,
Leave of Absence. A transfer of an employee from the Company to an
Affiliate (or, for purposes of any ISO granted under the Plan, a Subsidiary), or
vice versa, or from one Affiliate to another (or in the case of an ISO, from one
Subsidiary to another), and a leave of absence, duly authorized in writing by
the Company or a Subsidiary or Affiliate, shall not be deemed a termination of
employment of the employee for purposes of the Plan or with respect to any
Option (in the case of ISOs, to the extent permitted by the Code).
8. Rights
of Employees and Other Persons.
(a) No
person shall have any rights or claims under the Plan except in accordance with
the provisions of the Plan and the applicable Agreement.
(b) Nothing
contained in the Plan or in any Agreement shall be deemed to (i) give any
employee or director the right to be retained in the service of the Company or
any Affiliate nor restrict in any way the right of the Company or any Affiliate
to terminate any employee’s employment or any director’s directorship at any
time with or without cause or (ii) confer on any consultant any right of
continued relationship with the Company or any Affiliate, or alter any
relationship between them, including any right of the Company or an Affiliate to
terminate its relationship with such consultant.
(c) The
adoption of the Plan shall not be deemed to give any employee of the Company or
any Affiliate or any other person any right to be selected to participate in the
Plan or to be granted an Option.
(d) Nothing
contained in the Plan or in any Agreement shall be deemed to give any employee
the right to receive any bonus, whether payable in cash or in Stock, or in any
combination thereof, from the Company or any Affiliate, nor be construed as
limiting in any way the right of the Company or any Affiliate to determine, in
its sole discretion, whether or not it shall pay any employee bonuses, and, if
so paid, the amount thereof and the manner of such payment.
9. Tax
Withholding Obligations.
(a) The
Company and/or any Affiliate are authorized to take whatever actions are
necessary and proper to satisfy all obligations of Optionees (including, for
purposes of this Section 9, any other person entitled to exercise an Option
pursuant to the Plan or an Agreement) for the payment of all Federal, state,
local and foreign taxes in connection with any Options (including, but not
limited to, actions pursuant to the following paragraph (b) of this Section
9).
(b) Each
Optionee shall (and in no event shall Stock be delivered to such Optionee with
respect to an Option until), no later than the date as of which the value of the
Option first becomes includible in the gross income of the Optionee for income
tax purposes, pay to the Company in cash, or make arrangements satisfactory to
the Company, as determined in the Committee’s discretion, regarding payment to
the Company of, any taxes of any kind required by law to be withheld with
respect to the Stock or other property subject to such Option, and the Company
and any Affiliate shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to such
Optionee. Notwithstanding the above, the Committee may, in its discretion and
pursuant to procedures approved by the Committee, permit the Optionee to (i)
elect withholding by the Company of Stock otherwise deliverable to such Optionee
pursuant to his or her Option (provided,
however,
that the amount of any Stock so withheld shall not exceed the amount necessary
to satisfy required Federal, state, local and foreign withholding obligations
using the minimum statutory rate) and/or (ii) tender to the Company Stock owned
by such Optionee (or by such Optionee and his or her spouse jointly) and
acquired more than six (6) months prior to such tender in full or partial
satisfaction of such tax obligations, based, in each case, on the Fair Market
Value of the Stock on the payment date as determined by the
Committee.
10. Changes
in Capital.
(a) The
existence of the Plan and any Options granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of
the Company or an Affiliate, any issue of debt, preferred or prior preference
stock ahead of or affecting Stock, the authorization or issuance of additional
shares of Stock, the dissolution or liquidation of the Company or its
Affiliates, any sale or transfer of all or part of its assets or business or any
other corporate act or proceeding.
(b) (i)
Upon changes in the outstanding Stock by reason of a stock dividend, stock
split, reverse stock split, subdivision, recapitalization, reclassification,
merger, consolidation (whether or not the Company is a surviving corporation),
combination or exchange of shares of Stock, separation, or reorganization, or in
the event of an extraordinary dividend, “spin-off,” liquidation, other
substantial distribution of assets of the Company or acquisition of property or
stock or other change in capital of the Company, or the issuance by the Company
of shares of its capital stock without receipt of full consideration therefor,
or rights or securities exercisable, convertible or exchangeable for shares of
such capital stock, or any similar change affecting the Company’s capital
structure, the aggregate number, class and kind of shares of stock available
under the Plan as to which Options may be granted, the Award Limit, and the
number, class and kind of shares under each outstanding Option and the exercise
price per share applicable to any such Options shall be appropriately adjusted
by the Committee in its discretion to preserve the benefits or potential
benefits intended to be made available under the Plan or with respect to any
outstanding Options or otherwise necessary to reflect any such
change.
(ii) Fractional
shares of Stock resulting from any adjustment in Options pursuant to Section
10(b)(i) shall be aggregated until, and eliminated at, the time of exercise of
the affected Options. Notice of any adjustment shall be given by the Committee
to each Optionee whose Option has been adjusted and such adjustment (whether or
not such Notice is given) shall be effective and binding for all purposes of the
Plan.
(c) In
the event of a Change in Control:
(i) Immediately
prior thereto, all outstanding Options shall be accelerated and become
immediately exercisable as to all of the shares of Stock covered thereby,
notwithstanding anything to the contrary in the Plan or the
Agreement.
(ii) In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the Agreement applicable to any
Option or by resolution adopted prior to the occurrence of the Change in
Control, that any outstanding Option shall be adjusted by substituting for Stock
subject to such Option stock or other securities of the surviving corporation or
any successor corporation to the Company, or a parent or subsidiary thereof, or
that may be issuable by another corporation that is a party to the transaction
resulting in the Change in Control, whether or not such stock or other
securities are publicly traded, in which event the aggregate exercise price
shall remain the same and the amount of shares or other securities subject to
the Option shall be the amount of shares or other securities which could have
been purchased on the closing date or expiration date of such transaction with
the proceeds which would have been received by the Optionee if the Option had
been exercised in full (or with respect to a portion of such Option, as
determined by the Committee, in its discretion) prior to such transaction or
expiration date and the Optionee exchanged all of such shares in the
transaction.
(iii) In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the Agreement applicable to any
Option or by resolution adopted prior to the occurrence of the Change in
Control, that any outstanding Option shall be converted into a right to receive
cash on or following the closing date or expiration date of the transaction
resulting in the Change in Control in an amount equal to the highest value of
the consideration to be received in connection with such transaction for one
share of Stock, or, if higher, the highest Fair Market Value of the Stock during
the thirty (30) consecutive business days immediately prior to the closing date
or expiration date of such transaction, less the per share exercise price of
such Option, multiplied by the number of shares of Stock subject to such Option,
or a portion thereof.
(iv) The
Committee may, in its discretion, provide that an Option cannot be exercised
after such a Change in Control, to the extent that such Option is or becomes
fully exercisable on or before such Change in Control or is subject to any
acceleration, adjustment or conversion in accordance with the foregoing
paragraphs (i), (ii) or (iii) of this Section 10.
No
Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a “modification” (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.
(d) If,
as a result of a Change in Control transaction, an ISO fails to qualify as an
“incentive stock option,” within the meaning of Section 422 of the Code, either
because of the failure of the Optionee to meet the holding period requirements
of Code Section 422(a)(1) (a “Disqualifying Disposition”) or the exercisability
of such Option is accelerated pursuant to Section 10(c)(i), or any similar
provision of the applicable Agreement, in connection with such Change in Control
and such acceleration causes the aggregate Fair Market Value (determined at the
time the Option is granted) of the shares of Stock with respect to which such
Option, together with any other “incentive stock options,” as provided in
Section 6(h)(ii), are exercisable for the first time by such Optionee during the
calendar year in which such accelerated exercisability occurs to exceed the
limitations set forth in Section 6(h)(ii) (a “Disqualified Option”); or any
other exercise, payment, acceleration, adjustment or conversion of an Option in
connection with a Change in Control transaction results in any additional taxes
imposed on an Optionee, then the Company may, in the discretion of the
Committee, make a cash payment to or on behalf of the Optionee who holds any
such Option equal to the amount that will, after taking into account all taxes
imposed on the Disqualifying Disposition or other exercise, payment,
acceleration, adjustment or conversion of the Option, as the case may be, and
the receipt of such payment, leave such Optionee in the same after-tax position
the Optionee would have been in had the Code Section 422(a)(1) holding period
requirements been met at the time of the Disqualifying Disposition or had the
Disqualified Option continued to qualify as an “incentive stock option,” within
the meaning of Code Section 422 on the date of such exercise or otherwise
equalize the Optionee for any such taxes; provided,
however,
that the amount, timing and recipients of any such payment or payments shall be
subject to such terms, conditions and limitations as the Committee shall, in its
discretion, determine. Without limiting the generality of the proviso
contained in the immediately preceding sentence, in determining the amount of
any such payment or payments referred to therein, the Committee may adopt such
methods and assumptions as it considers appropriate, and the Committee shall not
be required to examine or take into account the individual tax liability of any
Optionee.
11. Prohibition
on Repricing and Reload Grants.
Other than in connection with a change in the Company’s capitalization
(e.g., stock splits, recapitalizations, etc., as described in Section 10 of the
Plan), without stockholder approval (i) the exercise price of an Option may not
be reduced, (ii) no Option may be amended or cancelled for the purpose of
repricing, replacing or regranting such Option with an exercise price that is
less than the original exercise price of such Option, and (iii) the Committee
shall not offer to buy out an Option previously granted for cash or other
consideration.
12. Miscellaneous
Provisions.
(a) The
Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the issuance of shares of Stock or the payment of cash upon exercise or payment
of any Option. Proceeds from the sale of shares of Stock pursuant to Options
granted under the Plan shall constitute general funds of the
Company.
(b) Except
as otherwise provided in this paragraph (b) of Section 12 or by the Committee,
an Option by its terms shall be personal and may not be sold, transferred,
pledged, assigned, encumbered or otherwise alienated or hypothecated otherwise
than by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of an Optionee only by him or her. An Agreement may permit
the exercise or payment of an Optionee’s Option (or any portion thereof) after
his or her death by or to the beneficiary most recently named by such Optionee
in a written designation thereof filed with the Company, or, in lieu of any such
surviving beneficiary, as designated by the Optionee by will or by the laws of
descent and distribution. In the event any Option is exercised by the executors,
administrators, heirs or distributees of the estate of a deceased Optionee, or
such an Optionee’s beneficiary, or the transferee of an Option, in any such case
pursuant to the terms and conditions of the Plan and the applicable Agreement
and in accordance with such terms and conditions as may be specified from time
to time by the Committee, the Company shall be under no obligation to issue
Stock thereunder unless and until the Committee is satisfied that the person or
persons exercising such Option is the duly appointed legal representative of the
deceased Optionee’s estate or the proper legatee or distributee thereof or the
named beneficiary of such Optionee, or the valid transferee of such Option, as
applicable.
(c) (i)
If at any time the Committee shall determine, in its discretion, that the
listing, registration and/or qualification of shares of Stock upon any
securities exchange or under any state, Federal or foreign law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of shares of Stock
hereunder, no Option may be granted, exercised or paid in whole or in part
unless and until such listing, registration, qualification, consent and/or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Committee.
(ii) If
at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Stock pursuant to an Option is or may be in the
circumstances unlawful or result in the imposition of excise taxes on the
Company or any Affiliate under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation to make such sale
or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise with
respect to shares of Stock or Options and the right to exercise any Option shall
be suspended until, in the opinion of such counsel, such sale or delivery shall
be lawful or will not result in the imposition of excise taxes on the Company or
any Affiliate.
(iii) Upon
termination of any period of suspension under this Section 12(c), any Option
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
the shares which would otherwise have become available during the period of such
suspension, but no suspension shall extend the term of any
Option.
(d) The
Committee may require each person receiving Stock in connection with any Option
under the Plan to represent and agree with the Company in writing that such
person is acquiring the shares of Stock for investment without a view to the
distribution thereof. The Committee, in its absolute discretion, may impose such
restrictions on the ownership and transferability of the shares of Stock
purchasable or otherwise receivable by any person under any Option as it deems
appropriate. Any such restrictions shall be set forth in the applicable
Agreement, and the certificates evidencing such shares may include any legend
that the Committee deems appropriate to reflect any such
restrictions.
(e) By
accepting any benefit under the Plan, each Optionee and each person claiming
under or through such Optionee shall be conclusively deemed to have indicated
their acceptance and ratification of, and consent to, all of the terms and
conditions of the Plan and any action taken under the Plan by the Committee, the
Company or the Board, in any case in accordance with the terms and conditions of
the Plan.
(f) In
the discretion of the Committee, an Optionee may elect irrevocably (at a time
and in a manner determined by the Committee) prior to exercising an Option that
delivery of shares of Stock upon such exercise shall be deferred until a future
date and/or the occurrence of a future event or events, specified in such
election. Upon the exercise of any such Option and until the delivery of any
deferred shares, the number of shares otherwise issuable to the Optionee shall
be credited to a memorandum account in the records of the Company or its
designee and any dividends or other distributions payable on such shares shall
be deemed reinvested in additional shares of Stock, in a manner determined by
the Committee, until all shares of Stock credited to such Optionee’s memorandum
account shall become issuable pursuant to the Optionee’s election.
(g) The
Committee may, in its discretion, extend one or more loans to Optionees who are
directors, key employees or consultants of the Company or an Affiliate in
connection with the exercise or receipt of an Option granted to any such
individual. The terms and conditions of any such loan shall be established by
the Committee.
(h) Except
with respect to Incentive Stock Options granted under the Predecessor Plan
(within the meaning of the Predecessor Plan) and outstanding on the Effective
Date, subject to approval of the Plan by the Company’s shareholders, in
accordance with Section 15, the provisions of the Plan shall apply to and govern
all stock options granted under the Predecessor Plan and, unless otherwise
determined by the Committee, such stock options granted under the Predecessor
Plan shall be deemed to be amended to provide any additional rights applicable
to Options hereunder, subject to the right of any affected participant in the
Predecessor Plan to refuse to consent to such amendment pursuant to the terms
and conditions of the Predecessor Plan and the applicable option or award
agreement between the Company and such participant.
(i) Neither
the adoption of the Plan nor anything contained herein shall affect any other
compensation or incentive plans or arrangements of the Company or any Affiliate
(other than the Predecessor Plan, as provided in paragraph (h) of this Section
12), or prevent or limit the right of the Company or any Affiliate to establish
any other forms of incentives or compensation for their directors, employees or
consultants or grant or assume options or other rights otherwise than under the
Plan.
(j) The
Plan shall be governed by and construed in accordance with the laws of the State
of New Jersey, without regard to such state’s conflict of law provisions, and,
in any event, except as superseded by applicable Federal law.
(k) The
words “Section,” “subsection” and “paragraph” herein shall refer to provisions
of the Plan, unless expressly indicated otherwise. Wherever any words are used
in the Plan or any Agreement in the masculine gender they shall be construed as
though they were also used in the feminine gender in all cases where they would
so apply, and wherever any words are used herein in the singular form they shall
be construed as though they were also used in the plural form in all cases where
they would so apply.
(l) The
Company shall bear all costs and expenses incurred in administering the Plan,
including expenses of issuing Stock pursuant to any Options granted
hereunder.
13. Limits
of Liability.
(a) Any
liability of the Company or an Affiliate to any Optionee with respect to any
Option shall be based solely upon contractual obligations created by the Plan
and the Agreement.
(b) None
of the Company, any Affiliate, any member of the Committee or the Board or any
other person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan, shall have
any liability, in the absence of bad faith, to any party for any action taken or
not taken in connection with the Plan, except as may expressly be provided by
statute.
14. Limitations
Applicable to Certain Options Subject to Exchange Act Section 16 and Code
Section 162(m). Unless stated otherwise in the Agreement, notwithstanding
any other provision of the Plan, any Option granted to an officer or director of
the Company who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including Rule 16b-3, or any successor
rule, as the same may be amended from time to time) that are requirements for
the application of such exemptive rule, and the Plan and applicable Agreement
shall be deemed amended to the extent necessary to conform to such limitations.
Furthermore, unless stated otherwise in the Agreement, notwithstanding any other
provision of the Plan, any Option granted to an employee of the Company or an
Affiliate intended to qualify as “other performance-based compensation” as
described in Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code or any regulations or
rulings issued thereunder (including any amendment to any of the foregoing) that
are requirements for qualification as “other performance-based compensation” as
described in Section 162(m)(4)(C) of the Code, and the Plan and applicable
Agreement shall be deemed amended to the extent necessary to conform to such
requirements.
15. Amendments
and Termination. The Board may, at any time and with or without prior
notice, amend, alter, suspend or terminate the Plan, retroactively or otherwise;
provided,
however,
unless otherwise required by law or specifically provided herein, no such
amendment, alteration, suspension or termination shall be made which would
impair the previously accrued rights of any holder of an Option theretofore
granted without his or her written consent, or which, without first obtaining
approval of the stockholders of the Company (where such approval is necessary to
satisfy (i) any applicable requirements under the Code relating to ISOs or for
exemption from Section 162(m) of the Code; (ii) the then-applicable requirements
of Rule 16b-3 promulgated under the Exchange Act, or any successor rule, as the
same may be amended from time to time; or (iii) any other applicable law,
regulation or rule), would:
(a) except as
is provided in Section 10, increase the maximum number of shares of Stock which
may be sold or awarded under the Plan or increase the limitations set forth in
Section 6(k) on the maximum of shares of Stock that may be subject to Options
granted to an Optionee;
(b) except as
is provided in Section 10, decrease the minimum option exercise price
requirements of Section 6(a);
(c) change
the class of persons eligible to receive Options under the
Plan;
(d) extend
the duration of the Plan or the period during which Options may be exercised
under Section 6(b); or
(e) other
than in connection with a change in the Company’s capitalization (e.g., stock
splits, recapitalizations, etc., as described in Section 10 of the Plan), (i)
reduce the exercise price of an Option, (ii) amend or cancel any Option for the
purpose of repricing, replacing or regranting such Option with an exercise price
that is less than the original exercise price of such Option or (iii) permit the
Committee to buy out an Option previously granted for cash or other
consideration.
The
Committee may amend the terms of any Option theretofore granted, including any
Agreement, retroactively or prospectively, but no such amendment shall
materially impair the previously accrued rights of any Optionee without his or
her written consent.
16. Duration.
Following the adoption of the Plan by the Board, the Plan shall become effective
as of the date on which it is approved by the holders of a majority of the
Company's outstanding Stock which is present and voted at a meeting, or by
written consent in lieu of a meeting (the “Effective Date”), which approval must
occur within the period ending twelve (12) months after the date the Plan is
adopted by the Board. The Plan shall terminate upon the earliest to occur
of:
(a) the
effective date of a resolution adopted by the Board terminating the
Plan;
(b) the date
all shares of Stock subject to the Plan are delivered pursuant to the Plan's
provisions; or
(c) ten (10)
years from the Effective Date.
No Option may be
granted under the Plan after the earliest to occur of the events or dates
described in the foregoing paragraphs (a) through (c) of this Section 15; however,
Options theretofore granted may extend beyond such
date.
No such termination
of the Plan shall affect the previously accrued rights of any Optionee hereunder
and all Options previously granted hereunder shall continue in force and in
operation after the termination of the Plan, except as they may be otherwise
terminated in accordance with the terms of the Plan or the
Agreement.