EXHIBIT 10.12
 
 
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
2009 STOCK OPTION AND COMPENSATION PLAN
 
Section 1. Purpose of the Plan; Effect on Prior Plans. The purpose of the Plan
is to aid National American University Holdings, Inc. (the “Company”) in
recruiting and retaining employees, officers, Directors, and other Consultants
capable of assuring the future success of the Company through the grant of
Awards to such persons under the Plan. The Company expects that Awards of
stock-based compensation and opportunities for stock ownership in the Company
will provide incentives to Plan participants to exert their best efforts for the
success of the Company’s business and thereby align the interests of Plan
Participants with those of the Company’s stockholders.
 
Section 2. Definitions
 
The following capitalized terms used in the Plan have the meanings set forth in
this Section 2:
 
(a) “Affiliate” means (i) any entity that, directly or indirectly through one or
more intermediaries, is controlled by the Company and (ii) any entity in which
the Company has a significant equity interest, in each case as determined by the
Committee.
 
(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Dividend Equivalent, Performance Award, Stock Award,
Other Stock-Based Award, or Cash Award granted under the Plan.
 
(c) “Award Agreement” means any written agreement, contract or other instrument
or document evidencing an Award granted under the Plan. Each Award Agreement
shall be subject to the applicable terms and conditions of the Plan and any
other terms and conditions (not inconsistent with the Plan) determined by the
Committee.
 
(d) “Board” means the Board of Directors of the Company.
 
(e) “Cash Award” means any Award granted under Section 7(d) of the Plan that is
payable in cash and denominated as a “Cash Award.”
 
(f) “Change in Control” means the occurrence of any of the following:
 

(a) A “change in ownership,” as described in Section 1.409A-3(i)(5)(v) of the
Treasury Regulations.

() A “change in effective control,” as described in Section 1.409A-3(i)(5)(vi)
of the Treasury Regulations, but substituting “50 percent” for “30 percent” in
the first sentence of Section 1.409A-3(i)(5)(vi)(A)(1).

(c) A “change in ownership of a substantial portion of the assets,” as described
in Section 1.409A-3(i)(5)(vii) of the Treasury Regulations, but substituting “50
percent” for “40 percent” in the first sentence thereof.

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.
 
(h) “Committee” means the Compensation Committee of the Board or any successor
committee of the Board designated by the Board to administer the Plan. The
Committee shall be comprised of not less than such number of Directors as shall
be required to permit Awards granted under the Plan to qualify under Rule 16b-3,
and each member of the Committee shall be a “Non-Employee Director” within the
meaning of Rule 16b-3 and an “outside director” within the meaning of Section
162(m) of the Code. The Company expects to have the Plan administered in
accordance with the requirements of the “qualified performance-based
compensation” exception under Section 162(m) of the Code, to the extent
applicable.
 

 

--------------------------------------------------------------------------------

 
 
 
(i) “Company” means National American University Holdings, Inc., a Delaware
corporation.
 
(j) “Consultant” means an individual who renders services to the Company in a
non-employee capacity, including a Non-employee Director.
 
(k) “Director” means a member of the Board.
 
(l) “Dividend Equivalent” means any right granted under Section 7(e) of the
Plan.
 
(m) “Eligible Person” means any employee, officer or Consultant of the Company
or any Affiliate whom the Committee determines to be an Eligible Person.
 
(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
(o) “Fair Market Value” means, with respect to any property (including, without
limitation, any Shares or other securities), the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee. Notwithstanding the foregoing, unless otherwise
determined by the Committee, the Fair Market Value of Shares on a given date for
purposes of the Plan shall be the closing sale price of the Shares on the
principal United States Securities Exchange registered under the Exchange Act on
which the Shares are listed (the “Exchange”) on the applicable date. If the
Exchange is closed for trading on such date, then the last sale price used shall
be the one on the date the Shares last traded on the Exchange.
 
(p) “Incentive Stock Option” means an option granted under Section 6(a) of the
Plan that is intended to meet the requirements of Section 422 of the Code or any
successor provision, as set forth in part in Section 6(a)(iv).
 
(q) “Non-employee Director” means a Director who is not an employee of the
Company or an Affiliate.
 
(r) “Non-Qualified Stock Option” means an option granted under Section 6(a) of
the Plan that is not intended to be an Incentive Stock Option.
 
(s) “Option” means an Incentive Stock Option or a Non-Qualified Stock Option.
 
(t) “Other Stock-Based Award” means any stock-based right granted under Section
7(d) of the Plan.
 
(u) “Participant” means an Eligible Person who is designated by the Committee to
be granted an Award under the Plan.
 
(v) “Performance Award” means any right granted under Section 7(b) of the Plan.
 
(w) “Performance Goals” means the goals established by the Committee, which
shall be satisfied or met as a condition to the exercisability, vesting or
receipt of all or a portion of an Award. Such goals shall be based exclusively
on one or more of the following corporate-wide or subsidiary, division or
operating unit financial measures: (1) pre-tax or after-tax income (before or
after allocation of corporate overhead and bonus), (2) net income (before or
after taxes), (3) reduction in expenses, (4) pre-tax or after-tax operating
income, (5) earnings (including earnings before taxes, earnings before interest
and taxes, or earnings before interest, taxes, depreciation and amortization,
(6) gross revenue, (7) working capital, (8) profit margin or gross profits, (9)
Share price, (10) cash flow or cash flow per Share (before or after dividends),
(11) cash flow return on investment, (12) return on capital (including return on
total capital or return on invested capital), (13) return on assets or net
assets, (14) market share, (15) pre-tax or after-tax earnings per Share, (16)
pre-tax or after-tax operating earnings per Share, (17) total stockholder
return, (18) growth measures, including revenue growth, as compared with a peer
group or other benchmark, (19) economic value-added models or equivalent
metrics, (20) comparisons with various stock market indices, (21) improvement in
or attainment of expense levels or working capital levels, (22) operating
margins, gross margins or cash margins, (23) year-end cash, (24) debt
reductions, (25) stockholder equity, (26) regulatory achievements, (27)
implementation, completion or attainment of measurable objectives with respect
to research, development, products or projects, production volume levels,
acquisitions and divestitures and recruiting and maintaining personnel, (28)
customer satisfaction, (29) operating efficiency, productivity ratios, or (30)
strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals (including accomplishing regulatory approval for projects), cost or cost
savings
 

 

--------------------------------------------------------------------------------

 
 
 
targets, accomplishing critical milestones for projects, and goals relating to
acquisitions or divestitures, or any combination thereof (in each case before or
after such objective income and expense allocations or adjustments as the
Committee may specify within the applicable period). Each such goal may be
expressed on an absolute and/or relative basis, may be based on or otherwise
employ comparisons based on current internal targets, the past performance of
the Company (including the performance of one or more subsidiaries, divisions
and/or operating units) and/or the past or current performance of other
companies, and in the case of earnings-based measures, may use or employ
comparisons relating to capital (including, but limited to, the cost of
capital), stockholders’ equity and/or shares outstanding, or to assets or net
assets. In all cases, the performance goals shall be such that they satisfy any
applicable requirements under Treas. Reg. Sec. 1.162-27(e)(2) (as amended from
time to time) that the achievement of such goals be “substantially uncertain” at
the time that they are established, and that the award opportunity be defined in
such a way that a third party with knowledge of the relevant facts could
determine whether and to what extent the performance goal has been met, and,
subject to the Committee’s right to apply negative discretion (within the
meaning of Treas. Reg. Sec. 1.162-27(d)(iii)), the amount of the Award payable
as a result of such performance. To the extent applicable, the measures used in
setting performance goals set under the Plan for any given performance period
shall be determined in accordance with GAAP and in a manner consistent with the
methods used in the Company’s audited financial statements, without regard to:
(i) extraordinary items as determined by the Company’s independent public
accountants in accordance with GAAP; (ii) changes in accounting, unless, in each
case, the Committee decides otherwise within the applicable period; or (iii)
non-recurring acquisition expenses and restructuring charges. Notwithstanding
the foregoing, in calculating operating earnings or operating income (including
on a per Share basis), the Committee may, within the applicable period for a
given performance period, provide that such calculation shall be made on the
same basis as reflected in a release of the Company’s earnings for a previously
completed period as specified by the Committee. For purposes hereof, the
“applicable period,” with respect to any performance period, is the period
commencing on or before the first day of the performance period and ending no
later than the earlier of (x) the ninetieth (90th) day of the performance
period, or (y) the date on which twenty-five percent (25%) of the performance
period has been completed.
 
(x) “Person” means any individual, corporation, partnership, association or
trust.
 
(y) “Plan” means the the Company 2009 Stock Option and Compensation Plan, as may
be amended from time to time.
 
(z) “Restricted Stock” means any Share granted under Section 7(a) of the Plan.
 
(aa) “Restricted Stock Unit” means any unit granted under Section 7(a) of the
Plan evidencing the right to receive a Share (or a cash payment equal to the
Fair Market Value of a Share) at some future date.
 
(bb) “Rule 16b-3” means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act or any successor rule or regulation.
 
(cc) “Section 162(m)” means Section 162(m) of the Code, or any successor
provision, and the applicable Treasury Regulations promulgated thereunder.
 
(dd) “Shares” means shares of common stock, par value of $0.0001 per share, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c)of the Plan.
 
(ee) “Stock Appreciation Right” means any right granted under Section 6(b) of
the Plan.
 
(ff) “Stock Award” means any Share granted under Section 7(c) of the Plan.
 
Section 3. Administration
 
(a) Power and Authority of the Committee. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan and to applicable law,
the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of
 

 

--------------------------------------------------------------------------------

 
 
 
any Award or Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement, provided, however, that, except as otherwise provided in
Section 4(c) hereof, the Committee shall not, without receiving prior approval
of the Company’s stockholders, reprice, adjust or amend the exercise price of
Options or the grant price of Stock Appreciation Rights previously awarded to
any Participant, whether through amendment, cancellation and replacement grant,
or any other means; (vi) accelerate the exercisability of any Award or the lapse
of restrictions relating to any Award; (vii) determine whether, to what extent
and under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended;
(viii) determine whether, to what extent and under what circumstances cash,
Shares, other securities, other Awards, other property and other amounts payable
to a Participant with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder of the Award or the
Committee; (ix) interpret and administer the Plan and any instrument or
agreement, including any Award Agreement, relating to the Plan; (x) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (xi) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award or Award Agreement shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award or Award Agreement, and any
employee or Consultant of the Company or any Affiliate.
 
(b) Action of the Committee. A majority of the Committee shall constitute a
quorum. The acts of the Committee shall be either: (a) acts of a majority of the
members of the Committee present at any meeting at which a quorum is present; or
(b) acts approved in writing by all of the members of the Committee without a
meeting. The Committee may appoint a chairman or a secretary as it deems
appropriate.
 
(c) Delegation. The Committee may delegate its powers and duties under the Plan
to one or more Directors or executive officers of the Company, or a committee of
Directors or executive officers, subject to such terms, conditions and
limitations as the Committee may establish in its sole discretion; provided,
however, that the Committee may not delegate its power and authority with regard
to: (a) the grant of an Award to any person who is a “covered employee” within
the meaning of Section 162(m) of the Code or who, in the Committee’s judgment,
is likely to be a covered employee at any time during the period an Award
hereunder to such employee would be outstanding; or (b) the selection for
participation in the Plan of an officer or other person subject to Section 16 of
the Exchange Act or decisions concerning the timing, pricing or amount of an
Award to such an officer or other person.
 
(d) Power and Authority of the Board of Directors. Notwithstanding anything to
the contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan, unless the exercise of such powers and duties by
the Board would cause the Plan not to comply with the requirements of Section
162(m) of the Code.
 
(e) Liability and Indemnification of Plan Administrators. No member of the Board
or Committee, nor any executive officer to whom the Committee delegates any of
its power and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection with the Plan
in good faith, and the members of the Board, the Committee and the executive
officers shall be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including attorneys’ fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company’s Certificate of Incorporation, Bylaws, and under any
directors’ and officers’ liability insurance that may be in effect from time to
time.
 
Section 4. Shares Available for Awards
 
(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the
Plan, the aggregate number of Shares that may be issued under all Awards under
the Plan shall be 1,300,000. Shares to be issued under the Plan will be
authorized but unissued Shares or Shares that have been reacquired by the
Company and designated as treasury shares. Shares that are subject to Awards
that terminate, lapse or are cancelled or forfeited shall be available again for
grant under the Plan. If the purchase price of any Shares with respect to an
Option is satisfied by delivering Shares to the Company (by either actual
delivery or attestation), only the
 

 

--------------------------------------------------------------------------------

 
 
 
number of Shares delivered to the Participant, net of the Shares delivered to
the Company or attested to, shall be deemed delivered for purposes of
determining the number of Shares available for further Awards. Shares that are
tendered by a Participant or withheld by the Company as full or partial payment
to the Company of the purchase or exercise price relating to an Award or to
satisfy tax withholding obligations relating to an Award shall not be available
for future grants under the Plan. In addition, if Stock Appreciation Rights are
settled in Shares upon exercise, the aggregate number of Shares subject to the
Award rather than the number of Shares actually issued upon exercise shall be
counted against the number of Shares authorized under the Plan.
 
(b) Accounting for Awards. For purposes of this Section 4, if an Award entitles
the holder thereof to receive or purchase Shares, the number of Shares covered
by such Award or to which such Award relates shall be counted on the date of
grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.
 
(c) Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate
transaction or event affects the Shares such that an adjustment is required to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of: (a) the number and type of Shares
(or other securities or other property) that thereafter may be made the subject
of Awards; (b) the number and type of Shares (or other securities or other
property) subject to outstanding Awards; and (c) the purchase or exercise price
with respect to any Award.
 
Additionally, in the event that a company acquired by the Company or any
Affiliate or with which the Company or any Affiliate combines has shares
available under a pre-existing plan approved by stockholders and not adopted in
contemplation of such acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to such acquisition
or combination) may be used for Awards under the Plan and shall not reduce the
Shares authorized for grant under the Plan; provided that Awards using such
available shares shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not employees or
Directors of the Company or any Affiliate prior to such acquisition or
combination.
 
(d) Award Limitations
 
(i) 162(m) Limitation. No Participant may be granted an Award or Awards under
the Plan for more than 50,000 Shares (subject to adjustment as provided in
Section 4(c) of the Plan) in the aggregate in any calendar year, or, in the case
of a Cash Award pursuant to Section 7(d) of the Plan, for more than $1,500,000
in any calendar year.
 
(ii) Incentive Stock Option Limitation. The aggregate number of Shares which may
be issued under the Plan as Incentive Stock Options is 100,000 (subject to
adjustment as provided in Section 4(c) of the Plan).
 
(iii) Limitation on Full Value Awards. The aggregate number of Shares which may
be issued under the Plan as Restricted Stock, Restricted Stock Units, Stock
Awards, Dividend Equivalents, or any other award for which the employee is
entitled to receive the full value of the share upon satisfaction of the
performance goal or goals, is 400,000 (subject to adjustment as provided in
Section 4(c) of the Plan).
 
Section 5. Eligibility
 
Any Eligible Person may be designated to be a Participant. In determining which
Eligible Persons shall receive an Award and the terms of any Award, the
Committee may take into account the nature of the services provided by the
respective Eligible Persons, their present and potential contributions to the
success of the
 

 

--------------------------------------------------------------------------------

 
 
 
Company or such other factors as the Committee, in its discretion, shall deem
relevant. The Committee’s selection of an Eligible Person to be a Participant
with respect to an Award shall not require the Committee to select such Eligible
Person to receive any other Award at any time.
 
An Incentive Stock Option may be granted to full-time or part-time employees
(which term as used herein includes, without limitation, officers and Directors
who are also employees) only, and an Incentive Stock Option shall not be granted
to an employee of an Affiliate unless such Affiliate is also a “subsidiary
corporation” of the Company within the meaning of Section 424(f) of the Code or
any successor provision.
 
Section 6. Options and Stock Appreciation Rights
 
(a) Options. The Committee may grant Options with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
 
(i) Exercise Price. The purchase price per Share purchasable under an Option
shall be determined by the Committee and shall not be less than 100% of the Fair
Market Value of a Share on the date of grant of such Option; provided, however,
that the Committee may designate a per share exercise price below Fair Market
Value on the date of grant if the Option is granted in substitution for a stock
option previously granted by an entity that is acquired by or merged with the
Company or an Affiliate.
 
(ii) Option Term. The term of each Option shall be fixed by the Committee but
shall not be longer than 10 years from the date of grant.
 
(iii) Time and Method of Exercise. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part and the method or
methods by which, and the form or forms in which, payment of the exercise price
with respect thereto may be made or deemed to have been made. The Committee may
permit net settlement of any Option.
 
(iv) Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, the following additional provisions shall apply to the grant of
Options that are intended to qualify as Incentive Stock Options:
 
(A) The aggregate Fair Market Value (determined as of date the Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year
(under all of the Company’s plans) shall not exceed $100,000.
 
(B) Any Award Agreement granting Incentive Stock Options under the Plan shall
contain such other provisions as the Committee shall deem advisable, but shall
in all events be consistent with and contain all provisions required in order
for the Award to qualify as an Incentive Stock Option.
 
(C) All Incentive Stock Options must be granted within ten (10) years from the
earlier of the date on which the Plan is adopted by the Board or the date the
Plan is approved by the stockholders of the Company.
 
(D) No Incentive Stock Option shall be granted to a Participant who, at the time
of grant would own (within the meaning of Section 422 of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of the
Company (within the meaning of Section 422 of the Code).
 
(b) Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights
subject to the terms of the Plan and such additional terms and conditions not
inconsistent with the provision of the Plan as the Committee shall determine. A
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive in cash or Shares (as specified by the Committee)
upon exercise thereof the excess of (i) the Fair Market Value of one Share on
the date of exercise over (ii) the grant price of the Stock Appreciation Right
as specified by the Committee, which price shall not be less than 100% of the
Fair Market Value of one Share on the date of grant of the Stock Appreciation
Right; provided, however, that the Committee may designate a per share grant
price below Fair Market Value on the date of grant if the Stock Appreciation
Right is granted in substitution for a stock appreciation right previously
granted by an entity that is acquired by or merged with the Company or an
Affiliate.
 

 

--------------------------------------------------------------------------------

 
 
 
Section 7. Restricted Stock, Restricted Stock Units, Performance Awards, Stock
Awards, Other Stock-Based Awards and Cash Awards, Dividend Equivalents
 
(a) Restricted Stock and Restricted Stock Units. The Committee may grant Awards
of Restricted Stock and Restricted Stock Units with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
 
(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be
subject to such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of Restricted Stock or
the right to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee may deem
appropriate. The minimum vesting period of such Awards shall be one year from
the date of grant. Notwithstanding the foregoing, the Committee may permit
acceleration of vesting of such Awards in the event of the Participant’s death,
disability or retirement.
 
(ii) Issuance and Delivery of Shares. Any Restricted Stock granted under the
Plan shall be issued at the time such Awards are granted and may be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of a stock certificate or certificates, which
certificate or certificates shall be held by the Company. Such certificate or
certificates shall be registered in the name of the Participant and shall bear
an appropriate legend referring to the restrictions applicable to such
Restricted Stock. Shares representing Restricted Stock that is no longer subject
to restrictions shall be delivered to the Participant promptly after the
applicable restrictions lapse or are waived. In the case of Restricted Stock
Units, no Shares shall be issued at the time such Awards are granted. Upon the
lapse or waiver of restrictions and the restricted period relating to Restricted
Stock Units evidencing the right to receive Shares, such Shares shall be issued
and delivered to the holder of the Restricted Stock Units.
 
(iii) Forfeiture. Except as otherwise determined by the Committee, upon a
Participant’s termination of employment or cessation of services as a
Consultant, including resignation or removal as a Director (in either case, as
determined under criteria established by the Committee) during the applicable
restriction period, all Shares of Restricted Stock and all Restricted Stock
Units held by the Participant at such time shall be forfeited and reacquired by
the Company; provided, however, that the Committee may, when it finds that a
waiver would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to Shares of Restricted Stock or
Restricted Stock Units.
 
(b) Performance Awards. The Committee may grant Performance Awards denominated
in Shares that may be settled or payable in Shares (including, without
limitation, Restricted Stock or Restricted Stock Units) or cash. Performance
Awards granted to Participants who may be “covered employees” under Section
162(m) of the Code are intended to be “qualified performance-based compensation”
within the meaning of Section 162(m). Performance Awards shall, to the extent
required by Section 162(m), be conditioned solely on the achievement of one or
more objective Performance Goals, and such Performance Goals shall be
established by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m). Subject to the terms
of the Plan and any applicable Award Agreement, the Performance Goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award, and any other terms and
conditions of any Performance Award shall be determined by the Committee. The
Committee shall also certify in writing that such Performance Goals have been
met prior to payment of the Performance Awards to the extent required by Section
162(m).
 
(c) Stock Awards. The Committee may grant Shares without restrictions thereon in
its discretion. Subject to the terms of the Plan, Stock Awards may have such
terms and conditions as the Committee shall determine.
 
(d) Other Stock-Based Awards and Cash Awards. The Committee may grant such other
Awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as are deemed by the Committee
to be consistent with the purpose of the Plan. The Committee shall determine the
terms and conditions of such
 

 

--------------------------------------------------------------------------------

 
 
 
Awards, subject to the terms of the Plan. Shares, or other securities delivered
pursuant to a purchase right granted under this Section 7(d), shall be purchased
for consideration having a value equal to at least 100% of the Fair Market Value
of such Shares or other securities on the date the purchase right is granted. In
addition the Committee may, in its discretion, grant Cash Awards to Eligible
Employees according to such terms and conditions as the Committee may establish,
subject to the terms of the Plan and the Award Agreement.
 
(e) Dividend Equivalents. The Committee may grant Dividend Equivalents under
which the Participant shall be entitled to receive payments (in cash, Shares,
other securities, other Awards or other property as determined in the discretion
of the Committee) equivalent to the amount of any cash dividends paid by the
Company to holders of Shares with respect to a number of Shares determined by
the Committee. Subject to the terms of the Plan, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
 
Section 8. General Rules Applicable to Awards
 
(a) Consideration for Awards. Awards may be granted for no cash consideration or
for any cash or other consideration as may be determined by the Committee or
required by applicable law.
 
(b) Awards May Be Granted Separately or Together. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with or
in substitution for any other Award or any award granted under any other plan of
the Company or any Affiliate. Awards granted in addition to or in tandem with
other Awards or in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.
 
(c) Forms of Payment under Awards. Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Company or
an Affiliate upon the grant, exercise or payment of an Award may be made in such
form or forms as the Committee shall determine (including, without limitation,
cash, Shares, other securities, other Awards or other property, withholding
Shares otherwise issuable under the Award, or any combination thereof), and may
be made in a single payment or transfer, in installments or on a deferred basis,
in each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation, provisions
for the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.
 
(d) Term of Awards. The term of each Award shall be for a period not longer than
10 years from the date of grant.
 
(e) Limits on Transfer of Awards. Except as otherwise provided by the Committee
or the terms of this Plan, no Award and no right under any such Award shall be
transferable by a Participant other than by will or by the laws of descent and
distribution. The Committee may establish procedures as it deems appropriate for
a Participant to designate a Person or Persons, as beneficiary or beneficiaries,
to exercise the rights of the Participant and receive any property distributable
with respect to any Award in the event of the Participant’s death. The
Committee, in its discretion and subject to such additional terms and conditions
as it determines, may permit a Participant to transfer a Non-Qualified Stock
Option to any “family member” (as such term is defined in the General
Instructions to Form S-8 (or any successor to such Instructions or such Form)
under the Securities Act of 1933, as amended) at any time that such Participant
holds such Option, provided that such transfers may not be for value (i.e., the
transferor may not receive any consideration therefor) and the family member may
not make any subsequent transfers other than by will or by the laws of descent
and distribution. Each Award under the Plan or right under any such Award shall
be exercisable during the Participant’s lifetime only by the Participant (except
as provided herein or in an Award Agreement or amendment thereto relating to a
Non-Qualified Stock Option) or, if permissible under applicable law, by the
Participant’s guardian or legal representative. No Award or right under any such
Award may be pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance thereof shall be void
and unenforceable against the Company or any Affiliate.
 
(f) Restrictions; Securities Exchange Listing. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such restrictions as the Committee may deem
 

 

--------------------------------------------------------------------------------

 
 
 
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to be
made or legends to be placed on the certificates for such Shares or other
securities to reflect such restrictions. If the Shares or other securities are
traded on a securities exchange, the Company shall not be required to deliver
any Shares or other securities covered by an Award unless and until such Shares
or other securities have been admitted for trading on such securities exchange.
 
Section 9. Change in Control
 
In the event that the Company is a party to a merger, exchange or
reorganization, outstanding Awards shall be subject to the terms and conditions
of the agreement of merger, exchange or reorganization, which may include,
without limitation, accelerating the vesting or exercise date of Awards and the
cancellation of outstanding Awards in exchange for the immediate distribution of
a cash payment equal to: (a) in the case of Options and Stock Appreciation
Rights, the difference between the Fair Market Value on the date of the Change
in Control and the exercise price multiplied by the number of Shares subject to
the Option or Stock Appreciation Right, and (b) in the case of Restricted Stock,
Restricted Stock Units, and Performance Stock Awards, the Fair Market Value of a
Share on the date of the Change in Control multiplied by the number of Shares
then subject to the Award.
 
Section 10. Amendment and Termination; Corrections
 
(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue or
terminate the Plan; provided, however, that, notwithstanding any other provision
of the Plan or any Award Agreement, prior approval of the stockholders of the
Company shall be required for any amendment to the Plan that:
 
(i) requires stockholder approval under the rules or regulations of the
Securities and Exchange Commission, the NASDAQ Stock Market LLC, or any other
securities exchange that are applicable to the Company;
 
(ii) increases the number of shares authorized under the Plan as specified in
Section 4(a) of the Plan;
 
(iii) increases the number of Shares subject to the limitations contained in
Section 4(d) of the Plan;
 
(iv) permits repricing of Options or Stock Appreciation Rights without prior
shareholder approval;
 
(v) permits the award of Options or Stock Appreciation Rights at a price less
than 100% of the Fair Market Value of a Share on the date of grant of such
Option or Stock Appreciation Right, contrary to the provisions of Sections
6(a)(i) and 6(b)(ii) of the Plan; or
 
(vi) would cause Section 162(m) of the Code to become unavailable with respect
to the Plan.
 
(b) Amendments to Awards. Subject to the provisions of the Plan, the Committee
may waive any conditions of or rights of the Company under any outstanding
Award, prospectively or retroactively. Except as otherwise provided in the Plan,
the Committee may amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, but no such action may
adversely affect the rights of the holder of such Award without the consent of
the Participant or holder or beneficiary thereof.
 
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any Award or Award Agreement in the manner and to the extent it shall
deem desirable to implement or maintain the effectiveness of the Plan.
 
Section 11. Tax Withholding
 
The Company may take such action as it deems appropriate to withhold or collect
from a Participant the applicable federal, state, local or foreign payroll,
withholding, income or other taxes that are required to be withheld or collected
by the Company upon the grant, exercise, vesting or payment of an Award. The
Committee may require the Company to withhold Shares having a Fair Market Value
equal to the amount necessary to satisfy the Company’s minimum statutory
withholding requirements upon the grant, exercise, vesting or payment of an
Award from Shares that otherwise would have been delivered to a Participant. The
Committee may, subject to any terms and conditions that the Committee may adopt,
permit a Participant to elect to pay all or a portion of the minimum statutory
withholding taxes by: (a) having the Company withhold Shares otherwise to be
delivered upon the grant, exercise, vesting or payment of an Award with a Fair
Market
 

 

--------------------------------------------------------------------------------

 
 
 
Value equal to the amount of such taxes; (b) delivering to the Company Shares
other than Shares issuable upon the grant, exercise, vesting or payment of an
Award with a Fair Market Value equal to the amount of such taxes; or (c) paying
cash. Any such election must be made on or before the date that the amount of
tax to be withheld is determined.
 
Section 12. General Provisions.
 
(a) No Rights to Awards. No Eligible Person, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
 
(b) Award Agreements. No Participant shall have rights under an Award granted to
such Participant unless and until an Award Agreement shall have been duly
executed on behalf of the Company and, if requested by the Company, signed by
the Participant.
 
(c) No Rights of Stockholders. Except with respect to Restricted Stock and Stock
Awards, neither a Participant nor the Participant’s legal representative shall
be, or have any of the rights and privileges of, a stockholder of the Company
with respect to any Shares issuable upon the exercise or payment of any Award,
in whole or in part, unless and until the Shares have been issued.
 
(d) No Limit on Other Compensation Plans or Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation plans or arrangements.
 
(e) No Right to Employment, Directorship, or to Provide Other Services. The
grant of an Award shall not be construed as giving a Participant the right to be
retained as an employee of the Company or any Affiliate, or a Director to be
retained as a Director, nor any other service provider to be retained by the
Company, nor will it affect in any way the right of the Company or an Affiliate
to terminate a Participant’s employment or other services at any time, with or
without cause. In addition, the Company or an Affiliate may at any time dismiss
a Participant from employment or other services for the Company free from any
liability or any claim under the Plan or any Award, unless otherwise expressly
provided in the Plan or in any Award Agreement.
 
(f) Governing Law. The internal law, and not the law of conflicts, of the State
of Delaware, shall govern all questions concerning the validity, construction
and effect of the Plan or any Award, and any rules and regulations relating to
the Plan or any Award.
 
(g) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
 
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
 
(i) Securities Matters. The Company shall not be required to deliver any Shares
until the requirements of any federal or state securities or other laws, rules
or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
 
(j) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Share or whether such fractional
Share or any rights thereto shall be canceled, terminated or otherwise
eliminated.
 

 

--------------------------------------------------------------------------------

 
 
 
(k) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
 
Section 13. Effective Date of the Plan
 
The Plan shall be subject to and be effective upon approval by the stockholders
of the Company.
 
Section 14. Term of the Plan
 
The Plan shall terminate at midnight on December 1, 2019, unless terminated
before then by the Board. Awards may be granted under the Plan until the Plan
terminates or until all Shares available for Awards under the Plan have been
purchased or acquired; provided, however, that Incentive Stock Options may not
be granted following the 10-year anniversary of the Board’s adoption of the
Plan. The Plan shall remain in effect as long as any Awards are outstanding.
 

 

--------------------------------------------------------------------------------