2000 STOCK OPTION PLAN
Published on May 11, 2001
Exhibit 4.2
EMCORE CORPORATION
2000 STOCK OPTION PLAN
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
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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).
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(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.
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(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
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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; offer to
buy out an Option previously granted, based on such terms and conditions as the
Committee shall establish with and communicate to the Optionee at the time such
offer is made; 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
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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
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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 4,750,000, 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
number of shares of Stock that may be delivered pursuant to Incentive Stock
Options under the Plan is 4,750,000, without application of paragraph 4(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).
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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
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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.
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(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).
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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
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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
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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
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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. 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 11 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.
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(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 11(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
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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 11), 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.
12. 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.
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(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.
13. 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.
14. 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; or
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(d) extend the duration of the Plan or the period during which
Options may be exercised under Section 6(b).
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.
15. 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.
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