VITESSE SEMICONDUCTOR CORPORATION
2001 STOCK INCENTIVE PLAN
1. Purposes of Plan. The purposes of this 2001 Stock Incentive Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Consultants and
Directors of the Company and its Subsidiaries and to promote the success of the
Company's business. Awards granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code and the
regulations promulgated thereunder, and any other awards selected by the
Administrator to be granted under the plan from time to time.
2. Definitions. As used herein, the following definitions shall apply:
"Administrator" means the Board or any Committee selected to administer
the Plan, in accordance with Section 4 of the Plan.
"Award" means an Option or any other award selected by the Committee to be
granted under this Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
"Committee" means a Committee, if any, appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan.
"Common Stock" means the Common Stock, no par value per share, of the
"Company" means Vitesse Semiconductor Corporation, a
"Consultant" means any person, including an advisor, who is engaged by the
Company or any Parent or Subsidiary to render services and is compensated for
such services, provided the term Consultant shall not include Directors who are
not compensated for their services or are paid only a Director's fee by the
"Continuous Status as an Employee or Consultant" means the absence of any
interruption or termination of service as an Employee or Consultant. Continuous
Status as an Employee or Consultant shall not be considered interrupted in the
case of: (i) any leave of absence approved by the Administrator, including sick
leave, military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options any such leave may not exceed ninety (90)
days, unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; or (ii) transfers
between locations of the Company or between the Company, its Parent, its
Subsidiaries, or its successor.
"Director" shall mean a member of the Board.
"Disability" means total and permanent disability, as defined in Section
22(e)(3) of the Code.
"Employee" means any person, including Officers and Directors, employed by
the Company, Parent or any Subsidiary. The payment of Directors' fees by the
Company shall not be sufficient to constitute "employment" by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, as of any date the value of Common Stock
determined as follows:
(a) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange (or, if listed on more than one exchange,
the exchange with the greatest volume of trading in Common Stock) or system on
the last market trading day prior to the day of determination, as reported in
the Wall Street Journal or such other source as the Administrator deems
(b) If the Common Stock is quoted on the NASDAQ System (but not on the
National market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the bid and asked prices for the Common
Stock on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Administrator
(c) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator.
"Incentive Stock Option" means an Option that satisfies the provisions of
Section 422 of the Code.
"Issued Shares" means, for any fiscal year, the number of shares of the
Company's Common Stock outstanding on the last day of the fiscal year, plus any
shares reacquired by the Company during the preceding fiscal year.
"Nonstatutory Stock Option" means an Option that is not an Incentive Stock
"Officer" means an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.
"Option" means a stock option granted pursuant to the Plan.
"Optioned Stock" means the Common Stock subject to an Option.
"Optionee" means an Employee, Director or Consultant who holds an Option.
"Outside Director" means a Director who is not an Employee.
"Parent" corporation shall have the meaning defined in Section 424(e) of
"Participant" means a holder of an Award under this Plan.
"Plan" means this 2001 Stock Option Plan.
"Share" means a share of the Common Stock, as adjusted in accordance with
Section 10 of the Plan.
"Substitute Awards" shall mean awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired
by the Company or with which the Company combines.
"Subsidiary" corporation shall have the meaning defined in Section 424(f)
of the Code.
In addition, the terms "Rule 16b-3" and "Applicable Laws," the term "10%
Stockholder," and the term "Tax Date" shall have the meanings set forth,
respectively, in Sections 4, 7 and 8 below.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 of the Plan, the maximum
aggregate number of Shares which may be subject to Awards under the Plan is
Nine Million (9,000,000) shares, plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 2002 by the lesser of (i) a
number of shares equal to 5.0% of the Issued Shares on the last day of the
fiscal year immediately preceding the year in which such adjustment is made,
and (ii) Fifteen Million (15,000,000) shares, plus shares issued or subject to
issuance on exercise or settlement of Awards pursuant to the Incentive Plan
that are forfeited to the Company under award terms or conditions.
(b) The Shares may be authorized, but unissued, or reacquired Common
(c) If an Award should expire or become unexercisable or otherwise
forfeited for any reason without having been exercised in full or settled in
stock, the unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for other Awards under the Plan.
If the Company reacquires Shares which were issued pursuant to the exercise of
an Option, such Shares shall not become available for future grant under the
Plan; provided, however, that if Shares of restricted stock issued pursuant to
Section 7(d) hereof are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.
(e) Shares underlying Substitute Awards shall not reduce the number of
Shares remaining available for issuance under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Administration With Respect to Directors. With respect to
grants of Awards to Outside Directors of the Company, the Plan shall be
administered by the Board.
(ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Awards to Employees or Consultants of the
Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board intended to satisfy the requirements of Rule 16b-3 of
the Exchange Act and Section 162(m) of the Code, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.
(iii) Multiple Administrative Bodies. If permitted by Rule 16b-3
and by the Applicable Laws, the Plan may (but need not) be administered by
different administrative bodies with respect to Directors, non-Director
Officers, and Employees and Consultants who are neither Directors nor Officers.
(iv) General. Once a Committee has been appointed pursuant to
subsection (i) or (ii) of this Section 4(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefore, fill vacancies (however caused) or
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws, and, in the case of a
Committee appointed under subsection (i) hereof, to the extent permitted by
Rule 16b-3 as it applies to a plan intended to qualify thereunder as a
(b) Powers of the Administrator with respect to Employees and Consultants.
Subject to the provisions of the Plan, and, in the case of a Committee, subject
to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(m) of the Plan;
(ii) to select the Officers, Consultant and Employees to whom
Awards may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are granted
(iv) to determine the number of shares of Common Stock to be
covered by each such Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder (including, but not
limited to, whether such Option is an Incentive Stock Option or a Nonstatutory
Stock Option, the exercise price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any Option
or other award and/or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator shall determine, in its sole
discretion) and to provide for the grant of Awards other than Options on terms
determined in their discretion; provided, however, that in the event of a
merger or asset sale, the applicable provisions of Section 10 of the Plan shall
govern vesting acceleration;
(vii) to determine whether and under what circumstances an Option
may be settled in cash under subsection 7(a)(vii) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(ix) to interpret the Plan;
(x) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(xi) with the consent of the holder thereof, to modify or amend
each Option; and
(xii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Powers of the Board with respect to Directors. Subject to the
provisions and restrictions of the Plan, the Board shall have the authority, in
its discretion: (i) to determine, upon review of relevant information and in
accordance with Section 2(m) of the Plan, the Fair Market Value of the Common
Stock; (ii) to interpret the Plan; (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan; (iv) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of an
Award previously granted hereunder; and (v) to make all other determinations
deemed necessary or advisable for the administration of the Board.
(d) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
(a) Eligibility for Employees and Consultants. Nonstatutory Stock Options
and other Awards may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Optionee who has been granted an
Option may, if he or she is otherwise eligible, be granted additional Options.
(b) Eligibility for Outside Directors. Awards may be granted to Outside
Directors. All Options shall be automatically granted in accordance with the
terms set forth in Section 7 hereof. An Outside Director who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option or Options in accordance with such provisions.
(c) No Employment Agreement. Neither the Plan nor any Option agreement
shall confer upon any Optionee any right with respect to continuation of
employment by or service as a Director or Consultant to the Company, no shall
it interfere in any way with the Optionee's right or the Company's right to
terminate the Optionee's employment or other relationship at any time.
(d) Limitation on Grants. No Employee shall be granted, in any fiscal year
of the ompany, Options to purchase more than 2,500,000 Shares.
6. Term of Plan. Subject to Section 15 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its
approval by the stockholders of the Company as described in Section 15. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 12 of the Plan.
(a) Grants with respect to Outside Directors. All grants of Options to
Outside Directors hereunder shall be automatic and non-discretionary and shall
be made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) During the term of the Plan, each Outside Director shall
automatically receive an Option to purchase 40,000 Shares (except in the case
of the Chairman of the Board, who shall receive an Option to purchase 60,000
shares) (the "Annual Option") on each January 1 following the approval of this
(iii) Unless otherwise provided for by the Board, each Outside
Director who is nominated or elected to the Board during the term of the Plan
shall receive an Option to purchase 40,000 Shares (except in the case of the
Chairman of the Board, who shall receive an Option to purchase 60,000 Shares)
on the date of such election or nomination (the "New Director Grant").
Notwithstanding the foregoing, the Board shall have the authority to grant a
pro rata portion of the New Director Grant to reflect the portion of the year
served or to determine that the New Director Grant is not necessary.
(iv) The terms of each Option granted hereunder shall be as
(A) the term of the Option shall be ten (10) years; and
(B) the Option shall be exercisable only while the Outside
Director remains a Directors of the Company, except as set forth in Section
7(c) hereof; and
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option; and
(D) the Option shall be exercisable in installments
cumulatively as to 2% of the Optioned Stock for each full month that expires
following the date of grant that the Optionee remains a Director.
(v) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased upon exercise of Options to exceed the number of
authorized Shares under Section 3 hereof, then each such automatic grant shall
be for that number of Shares determined by dividing the total number of Shares
remaining available for grant by the number of Outside Directors on the
automatic grant date. No further grants shall be made until such time, if any,
as additional Shares become available for grant under the Plan through action
of the stockholders to increase the number of Shares which may be issued under
the Plan or through cancellation or expiration of Options previously granted
(b) Grants with respect to Employees and Consultants. The Administrator,
in its discretion, may grant Options to eligible participants and shall
determine whether such Options shall be Incentive Stock Options or Nonstatutory
Stock Options. Each Option shall be evidenced by a written Option agreement
which shall expressly identify the Options as Incentive Stock Options or as
Nonstatutory Stock Options, and be in such form and contain such provisions as
the Administrator shall from time to time deem appropriate. Without limiting
the foregoing, the Administrator may, at any time, or from time to time,
authorize the Company, with the consent of the respective recipients, to issue
Options in exchange for the surrender and cancellation of any or all
outstanding Options. Option agreements shall contain the following terms and
(i) Exercise Price; Number of Shares. The per Share exercise
price for the Shares issuable upon exercise an Option shall be such price as is
determined by the Administrator. The Option agreement shall specify the number
of Shares to which it pertains.
(ii) Waiting Period; Exercisability; Term. At the time an
Option is granted, the Administrator will determine the terms and conditions to
be satisfied before Shares may be purchased, including the dates on which
Shares subject to the Option may first be purchased or the conditions which
must be satisfied prior to the purchase. The Administrator may specify that an
Option may not be exercised until the completion of the service period
specified at the time of grant. (Any such period is referred to herein as the
"waiting period.") At the time an Option is granted, the Administrator shall
fix the period within which the Option may be exercised, which shall not be
less than the waiting period, if any, nor more than ten (10) years from the
date of grant.
(iii) Form of Payment. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price, (6) any combination of the foregoing methods of payment, or (7)
such other consideration and method of payment for the issuance of Shares to
the extent permitted under Applicable Laws.
(iv) Special Incentive Stock Option Provisions. In addition
to the foregoing, Options granted under the Plan which are intended to be
Incentive Stock Options under Section 422 of the Code shall be subject to the
following terms and conditions:
(A) Exercise Price. The per share exercise price for
the Shares issuable upon exercise of the Option shall be no less than 100% of
the Fair Market Value of Common Stock, determined as of the date of the grant
of the Option.
(B) Dollar Limitation. To the extent that the aggregate
Fair Market Value of (i) the Shares with respect to which Options designated as
Incentive Stock Options plus (ii) the shares of stock of the Company, Parent
and any Subsidiary with respect to which other incentive stock options are
exercisable for the first time by an Optionee during any calendar year under
all plans of the Company and any Parent and Subsidiary exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of the
preceding sentence, (i) Options shall be taken into account in the order in
which they were granted, and (ii) the Fair Market Value of the Shares shall be
determined as of the time the Option or other incentive stock option is
(C) General. Except as modified by the preceding
provisions of this subsection 7(a)(iv) and except as otherwise limited by
Section 422 of the Code, all of the provisions of the Plan shall be applicable
to the Incentive Stock Options granted hereunder.
(v) 10% Stockholder. If any Optionee to whom an Incentive
Stock Option is to be granted pursuant to the provisions of the Plan is, on the
date of grant, the owner of Common Stock (as determined under Section 424(d) of
the Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary (a "10% Stockholder"), then
the following special provisions shall be applicable to the Option granted to
(A) The per Share Option price of Shares subject to
such Incentive Stock Option shall not be less than 110% of the Fair Market
Value of Common Stock on the date of grant; and
(B) The Option shall not have a term in excess of five
(5) years from the date of grant.
(vi) Rule 16b-3. Grants of options to Directors, Officers
and 10% Stockholders must comply with the applicable provisions of Rule 16b-3
and such Options shall contain such additional conditions or restrictions, if
any, as may be required by Rule 16b-3 to be in the written Option Agreement in
order to qualify for the maximum exemption from Section 16 of the Exchange Act
with respect to Plan transactions.
(vii) Other Provisions. Each Option granted under the Plan
may contain such other terms, provisions, and conditions not inconsistent with
the Plan as may be determined by the Administrator.
(viii) Buyout Provisions. The Administrator may at any time
offer to buy out, for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer is made.
Any such cash offer made to an Officer or Director shall comply with the
provisions of Rule 16b-3 relating to cash settlement of stock appreciation
rights. This provision is intended only to clarify the powers of the
Administrator and shall not in any way be deemed to create any rights on the
part of Optionees to buyout offers or payments.
(c) Method of Exercise.
(i) Exercisability. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator and as shall be permissible under the terms of the Plan.
(ii) No Fractional Shares. An Option may not be exercised for a
fraction of a Share.
(iii) Procedure for Exercise; Rights as a Stockholder. An Option
shall be deemed to be exercised when the Company receives: (i) written notice
of such exercise in accordance with the terms of the Option from the person
entitled to exercise the Option and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment allowable under subsection 7(a)(iii) of the
Plan, as authorized by the Administrator (and, in the case of an Incentive
Stock Option, determined at the time of grant) and permitted by the Option
Agreement. Shares issued upon exercise of an Option shall be issued in the name
of the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.
(iv) Effect of Exercise. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter shall be
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(d) Effect of Termination.
(i) Termination of Status as a Director. If an Outside Director
ceases to serve as a Director, he or she may, but only within three (3) months
after the date he or she ceases to be a Director of the Company, exercise his
or her Option to the extent that he or she was entitled to exercise it at the
date of such termination. Notwithstanding the foregoing, in no event may the
Option be exercised after its ten year term has expired. To the extent that he
or she was not entitled to exercise an Option at the date of such termination,
of if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.
(ii) Termination of Employment or Consulting Relationship. In the
event an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or disability), the Optionee may exercise
his or her Option, but only within such period of time not to exceed six months
as is determined by the Administrator (with such determination being made at
the time of grant and not exceeding ninety (90) days in the case of an
Incentive Stock Option) from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall be returned to the
Plan as of the termination date. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and all remaining Shares covered by such Option shall be returned to
the Plan at the end of such period.
(iii) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option, but only
within six months from the date of such termination, and only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). If, at the date of termination due to
Disability, the Optionee is not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall be returned
to the Plan as of the date of Disability. If, after such termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and all remaining Shares covered by such Option
shall be returned to the Plan at the end of such period.
(iv) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but only
within six months following the date of death, and only to the extent that the
Optionee was entitled to exercise it at the date of death (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the Shares covered by the unexercisable portion of
the Option shall be returned to the Plan as of the date of death. If, after
death, the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance does not exercise the Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall be returned to the Plan at the end of such period.
(d) Early Exercise. Options may, but need not, include a provision
whereby the Optionee may elect at any time before the Optionee's Continuous
Service terminates to exercise the Option as to any part of all of the shares
of Common Stock subject to the Option prior to the full vesting of the Option.
Any unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.
8. Stock Withholding to Satisfy Withholding Tax Obligations.
(a) Ability to Use Stock for Withholding. At the discretion of the
Administrator, Optionees may satisfy withholding obligations as provided in
this Section 8. When an Optionee incurs tax liability in connection with the
exercise of an Option, which tax liability is subject to tax withholding under
applicable tax laws, and the Optionee is obligated to pay the Company an amount
required to be withheld under applicable tax laws, the Optionee may satisfy the
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued upon exercise of the Option that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined ("Tax Date").
(b) Election to Have Stock Withheld. All elections by an Optionee to
have Shares withheld for this purpose shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
(i) the election must be made on or prior to the applicable Tax
(ii) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made (unless
otherwise permitted by applicable tax regulations under the Code);
(iii) all elections shall be subject to the consent or
disapproval of the Administrator; and
(iv) if the Optionee is a Director, Officer or 10% Stockholder,
the election must comply with the applicable provisions of Rule 16b-3 and shall
be subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
(c) Section 83(b) Election. In the event the election to have Shares
withheld is made by an Optionee, no election is filed under Section 83(b) of
the Code and the Tax Date is deferred under Section 83 of the Code, the
Optionee shall receive the full number of Shares with respect to which the
Option is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
9. Limitations on Transfer. Options granted under this Plan, and any
interest therein, shall not be transferable or assignable by the Optionee, and
may not be subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. The designation of a
beneficiary by an Optionee does not constitute a transfer. An Option shall be
exercisable during the lifetime of the Optionee only by the Optionee; provided,
however, that Nonstatutory Stock Options held by an Optionee may be transferred
to such family members, trusts and charitable institutions as the
Administrator, in its sole discretion, shall approve, unless otherwise
restricted from such transfer under the terms of the grant.
10. Adjustments Upon Changes in Capitalization or Merger.
(a) Stock Splits and Similar Events. Subject to any required action by
the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the aggregate number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed for this purpose
to have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all outstanding Awards will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board. The Board may, in the exercise of its sole discretion in
such instances, declare that any Award shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his or her Award as to
all or any part of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable.
(c) Sale of Assets or Merger. In the event of a merger of the Company
with or into another corporation, the Award shall be assumed or an equivalent
option or award shall be substituted by the successor corporation or a Parent
or Subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the Award or to substitute an equivalent
option or award, the Board shall, in lieu of such assumption or substitution,
provide for the Optionee to have the right to exercise the Award as to all of
the Optioned Stock, including Shares as to which the Option or Stock Purchase
Right would not otherwise be exercisable. If the Board makes an Award fully
exercisable (or vested) in lieu of assumption or substitution in the event of a
merger, the Board shall notify the Participant that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the assumed option confers the right to purchase, for
each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger
or sale of assets was not solely common stock of the successor corporation or
its Parent, the Board may, with the consent of the successor corporation and
the participant, provide for the consideration to be received upon the exercise
of the Option, for each Share of Optioned Stock subject to the Option, to be
solely common stock of the successor corporation or its Parent equal in Fair
Market Value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.
(d) No Other Adjustments. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Award.
11. Time of Granting Options. The date of grant of an Award shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the
Administrator. Notice of the determination shall be given to each Employee or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
12. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend, or terminate the Plan. The Company shall obtain stockholder approval
of any Plan amendment in such a manner and to such a degree as is to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act or
Section 422 of the Code (or any other applicable law or regulation, including
the requirements of any exchange or quotation system on which the Common Stock
is) in such a manner and to such a degree as is listed or quoted in such a
manner and to such a degree as is required by such law or regulation.
(b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Participant with respect to Awards already granted unless mutually agreed
otherwise between the Participant and the Administrator, which agreement must
be in writing signed by the Participant and the Company.
13. Conditions Upon Issuance of Shares.
(a) Compliance with Laws. Shares shall not be issued upon exercise of
an Option or the vesting of an Award unless such exercise and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws and the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted, and shall be further
subject to the approval of counsel for the Company with respect to such
(b) Investment Intent. As a condition to the exercise of an Option or
the issuance of Shares upon exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.
(c) No Company Liability. Inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the
non-issuance or sale of such Shares as to which such requisite authority shall
not have been obtained.
(d) Grants Exceeding Allotted Shares. If the Stock covered by an Award
exceeds, as of the date of grant, the number of Shares which may be issued
under the Plan without additional stockholder approval, such Option shall be
void with respect to such excess stock, unless stockholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan to
permit full exercise or settlement of the Award is timely obtained in
accordance with Section 15 of the Plan.
14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan and the Awards granted
15. Stockholder Approval.
(a) Requirement. Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted as provided in Section 6 and at or prior to the
first annual meeting of stockholders held subsequent to the first granting of
an Option hereunder. Such stockholder approval shall be obtained in the manner
and to the degree that is required under applicable federal and state laws.
(b) Manner of Solicitation. Approval of the Plan by the stockholders
of the Company shall be solicited substantially in accordance with Section
14(a) of the Exchange Act and the rules and regulation promulgated thereunder.