Document:

Exhibit 10.1

 

Axcelis Technologies, Inc.

Non-Employee Director Compensation effective July 1, 2005

 

Stephen R. Hardis, the lead director, receives an annual retainer of
$100,000, payable quarterly. Mr. Hardis’ annual retainer will decrease to
$50,000 effective July 1, 2006, and on July 1, 2007, his retainer
will be reduced further in light of benchmarking for lead director compensation
at that time.

 

Each other non-employee director receives an annual retainer of $30,000
payable quarterly.

 

Non-employee directors also receive additional committee chairman
retainers and meeting fees.  Each
director assuming responsibility as Chairman of a committee of the Board of
Directors receives an annual retainer of $7,500.  Non-employee directors also receive cash fees
for attendance at Board and committee meetings. 
Currently, the meeting fees are: (1) $2,000 for attendance in
person at a meeting of the Board of Directors; (2) $1,000 for attendance
at a meeting of any committee of the Board of Directors; and (3) $1,000 for
participation in a telephonic meeting of the Board of Directors or committee of
the Board of Directors.   Mr. Hardis
will not receive meeting fees until after July 1, 2006.  Fees are paid only to committee members with
respect to attendance at a committee meeting. 
Non-employee directors also receive reimbursement of out-of-pocket
expenses incurred in attending Board and committee meetings.

 

Non-employee directors also receive automatic grants of options upon
election and may be eligible for discretionary grants under the 2000 Stock
Plan, as amended through June 24, 2005. The 2000 Stock Plan is
filed as Exhibit 10.2 to this Form 8-K.Exhibit 10.2

 

AXCELIS
TECHNOLOGIES, INC.

2000 STOCK  PLAN

 

Adopted
by the Board of Directors and Stockholders on June 9, 2000

Amended by the Board of Directors on October 25, 2000 and

July 31, 2001 and

Approved by the Stockholders on May 1, 2002 and

Further amended by the Board of Directors on December 18, 2003, May 12,
2005
 and June 23, 2005

 

ARTICLE I

 

PURPOSE
AND ADOPTION OF THE PLAN

 

1.01
Purpose.  The
purpose of the Axcelis Technologies, Inc. 2000 Stock Plan (hereinafter
referred to as the “Plan”) is to assist in attracting and retaining highly
competent employees, directors and consultants and to act as an incentive in
motivating selected employees, directors and consultants of Axcelis
Technologies, Inc. and its Subsidiaries (as defined below) to achieve long-term
corporate objectives.

 

1.02
Adoption and Term. 
The Plan has been approved by the Board of Directors of Axcelis
Technologies, Inc. and its stockholders to be effective as of July 14,
2000 (the “Effective Date”).  The Plan
shall remain in effect until May 1, 2012 (the 10th anniversary
of the last shareholder approval of the Plan) unless earlier terminated by
action of the Board.

 

ARTICLE II

 

DEFINITIONS

 

For the purposes of this
Plan, capitalized terms shall have the following meanings:

 

2.01
Award means any grant to a Participant of one or a
combination of Non-Qualified Stock Options or Incentive Stock Options described
in Article VI, Stock Appreciation Rights described in Article VI,
Restricted Shares or Restricted Stock Units described in Article VII and
Performance Awards described in Article VIII.

 

2.02
Award Agreement means a written agreement between the
Company and a Participant or a written notice from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.

 

2.03
Award Period means, with respect to an Award, the period
of time set forth in the Award Agreement during which specified target
performance goals must be achieved or other

 

 

conditions set forth in
the Award Agreement must be satisfied.

 

2.04
Beneficiary means an individual, trust or estate who or
which, by a written designation of the Participant filed with the Company or by
operation of law, succeeds to the rights and obligations of the Participant
under the Plan and an Award Agreement upon the Participant’s death.

 

2.05
Board means the Board of Directors of the Company.

 

2.06
Change in Control means, and shall be deemed to have
occurred upon the occurrence of any one of the following events:

 

(a)                                  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either (i) the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control:  (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, or (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company; or

 

(b)                                 Individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or

 

(c)                                  Consummation
by the Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the acquisition
of assets of another corporation (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then

 

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outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

 

(d)                                 Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

 

2.07
Code means the Internal Revenue Code of 1986, as
amended.  References to a section of
the Code include that section and any comparable section or sections
of any future legislation that amends, supplements or supersedes said section.

 

2.08
Company means Axcelis Technologies, Inc., a Delaware
corporation, and its successors.

 

2.09
Common Stock means Common Stock of the Company, par value
$0.001 per share.

 

2.10
Company Voting Securities means the combined voting power
of all outstanding securities of the Company entitled to vote generally in the
election of directors of the Company.

 

2.11
Date of Grant means the date designated by the Board as
the date as of which it grants an Award, which shall not be earlier than the
date on which the Board approves the granting of such Award.

 

2.12
Disability means a total and permanent disability such
that, due to physical or mental illness, injury or disease, a Participant is
unable to perform any services for the Company and its Subsidiaries and, in the
opinion of a qualified physician designated by the Board, such disability will
be permanent and continuous during the remainder of the Participant’s life.

 

2.13
Effective Date shall have the meaning given to such term
in Section 1.02.

 

2.14
Exchange Act means the Securities Exchange Act of 1934,
as amended.

 

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2.15
Exercise Price means, with respect to a Stock
Appreciation Right, the amount established by the Board in the related Award
Agreement as the amount to be subtracted from the Fair Market Value on the date
of exercise in order to determine the amount of the payment to be made to the
Participant, as further described in Section 6.02(b).

 

2.16
Fair Market Value means, as of any applicable date, the
closing price of a share of the Common Stock on the Nasdaq National Market
System (“NMS”) or, if not then authorized for trading on the NMS but traded on
a nationally recognized exchange, the closing price of a share of the Common on
such exchange or, if not then authorized or traded on any nationally recognized
exchange, the fair market value of the Common Stock as determined in good faith
under procedures established by the Board.

 

2.17
Incentive Stock Option means a stock option within the
meaning of Section 422 of the Code.

 

2.18
Merger means any merger, reorganization, consolidation, share
exchange, transfer of assets or other transaction having similar effect
involving the Company.

 

2.19
Non-Employee Director means a member of the Board who is
not also a common law employee of Company. 
A member of the Board who is a common law employee of the Company shall
become a Non-Employee Director as of the date he or she ceases to be an active
employee of the Company.  For purposes of
this Plan, a member of the Board who receives deferred compensation or benefits,
whether through a qualified plan or other arrangement, will not be deemed to be
an active employee of the Company solely on account of the receipt of such
deferred compensation or benefits.

 

2.20
Non-Qualified Stock Option means a stock option which is
not an Incentive Stock Option.

 

2.21
Options means all Non-Qualified Stock Options and
Incentive Stock Options granted at any time under the Plan.

 

2.22
Participant means a person designated to receive an Award
under the Plan in accordance with Section 5.01.

 

2.23
Performance Awards means Awards granted in accordance
with Article VIII.

 

2.24
Plan means the Axcelis Technologies, Inc. 2000 Stock
Plan as described herein, as the same may be amended from time to time.

 

2.25
Purchase Price, with respect to Options, shall have the
meaning set forth in Section 6.01(c).

 

2.26
Restricted Shares means Common Stock subject to
restrictions imposed in connection with Awards granted under Sections 7.01-7.03.

 

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2.27
Restricted Stock Unit means the right granted to a
Participant pursuant to Section 7.04 to receive shares of Common Stock (or
the equivalent value in cash or other property if the Board so provides) in the
future that may be subject to certain terms, conditions and restrictions.

 

2.28
Retirement means a Participant’s voluntary Termination of
Employment with the consent of the Board.

 

2.29
Stock Appreciation Rights means Awards granted in
accordance with Article VI.

 

2.30
Subsidiary means a subsidiary of the Company within the
meaning of Section 424(f) of the Code.

 

2.31
Termination of Employment means the voluntary or
involuntary termination of a Participant’s employment with the Company or a
Subsidiary for any reason, including death, Disability, Retirement or as the
result of the divestiture of the Participant’s employer or any similar
transaction in which the Participant’s employer ceases to be the Company or one
of its Subsidiaries.  Whether entering
military or other government service shall constitute Termination of
Employment, or whether a Termination of Employment shall occur as a result of
Disability, shall be determined in each case by the Board in its sole
discretion.  In the case of a Member of
the Board or consultant who is not an employee of the Company or a Subsidiary,
Termination of Employment shall mean voluntary or involuntary termination of
Board service or the consulting relationship, as the case may be, for any
reason.

 

ARTICLE III

 

ADMINISTRATION

 

3.01
Administration. 
The Plan shall be administered by the Board, except (i) awards to
Non-Employee Directors under Section 6.01(b) shall be automatic and
granted under the terms set forth for Non-Employee Directors under the Plan
without power or authority of the Board (or if applicable a committee) to alter
or amend the number, terms or conditions of such awards and (ii) awards
intended to qualify as exempt from the limitations on deductible compensation
imposed by Section 162(m) of the Code shall be granted and administered by
a committee appointed by the Board consisting of no fewer than two members of
the Board who meet each and all requirements to serve as outside directors
within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder (the “162(m) Committee”).  Except to the extent of matters reserved for
the 162(m) Committee, the Board (or its designee, as described below) shall
have exclusive and final authority in each determination, interpretation or
other action affecting the Plan and its Participants.  The Board (or its designee, as described
below) shall have the sole discretionary authority to interpret the Plan, to
establish and modify administrative rules for the Plan, to impose such
conditions and restrictions on Awards as it determines appropriate, and to take
such steps in connection with the Plan and Awards granted hereunder as it may
deem necessary or advisable.  The Board
may, subject to compliance with applicable legal requirements, delegate to a
person or a committee, none of whom need be 

 

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members of the Board of
the Company, such of its powers and authority under the Plan as it deems
appropriate.  The Board may appoint such
person or committee to exercise any of the authority conferred upon the Board hereunder
and, if a person or committee is designated to so serve, the term “Board” as
used in this Plan shall include such committee. 
In the event of any such delegation of authority or exercise of
authority by a person or committee so designated, references in the Plan to the
Board shall be deemed to refer to the delegate of the Board or such committee,
as the case may be.

 

ARTICLE IV

 

SHARES

 

4.01
Number of Shares Issuable.  The total number of shares authorized to be
issued under the Plan shall be the initial reserve of 18,500,000 shares of
Common Stock, plus such amounts as may have been added to such reserve under
this Section 4.01, as in effect prior to May 12, 2005, for a total of
33,173,367 shares as of such date.  The
number of shares available for issuance under the Plan shall be subject to
adjustment in accordance with Section 9.07.  The shares to be offered under the Plan shall
be authorized and unissued shares of Common Stock, or issued shares of Common
Stock that will have been reacquired by the Company.

 

4.02
Shares Subject to Terminated Awards.  Shares of Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted
under Article VI, shares of Common Stock forfeited as provided in Section 7.02(a) and
shares of Common Stock subject to any Award that are otherwise surrendered or
forfeited by a Participant may be subject to new Awards under the Plan.  Shares of Common Stock subject to Options, or
portions thereof, that have been surrendered in connection with the exercise of
Stock Appreciation Rights shall not be available for subsequent Awards under
the Plan, but shares of Common Stock issued in payment of such Stock
Appreciation Rights shall not be charged against the number of shares of Common
Stock available for the grant of Awards hereunder.

 

ARTICLE V

 

PARTICIPATION

 

Participants in the Plan
shall be such employees, directors and consultants of the Company and its
Subsidiaries as the Board, in its sole discretion, may designate from time to
time.  The Board’s designation of a
Participant in any year shall not require the Board to designate such person to
receive Awards in any other year.  The
designation of a Participant to receive an Award under one portion of the Plan
does not require the Board to include such Participant under other portions of
the Plan.  The Board shall consider such
factors as it deems pertinent in selecting Participants and in determining the
types and amounts of their respective Awards.

 

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ARTICLE VI

 

STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS

 

6.01
Option Awards.

 

(a) Grant
of Options.  The
Board may grant, to such Participants as the Board may select, Options
entitling the Participants to purchase shares of Common Stock from the Company
in such numbers, at such prices, and on such terms and subject to such
conditions, not inconsistent with the terms of the Plan, as may be established
by the Board.  The terms of any Option
granted under the Plan shall be set forth in an Award Agreement. No Participant
may be granted an Option to purchase more than 1,250,000 shares of Common Stock
in any fiscal year of the Company, except that in his or her initial year of
service, a Participant may be granted an Option to purchase up to 1,250,000
shares of Common Stock.

 

(b) Non-Employee
Director Options.

 

(i) Initial Grants.  When a member of the Board of Directors first
becomes a Non-Employee Director, he or she shall automatically be granted a
Non-Qualified Option to purchase up to 40,000 shares of Common Stock as of the
date he or she first becomes a Non-Employee Director.  Each such option shall be evidenced by a
written Award Agreement that shall set forth the following terms:

 

(1)          The per share Purchase
Price shall be equal to the Fair Market Value of a share of Common Stock on the
date of grant, unless then Board determines otherwise in accordance with Section 6.01(c);

 

(2)          The Option shall expire
on the 10th anniversary of the date of grant;

 

(3)          The Option shall be
fully vested on the 181st day after the date of grant; and

 

(4)          The Option shall be
exercisable in accordance with Section 6.04 of this Plan.

 

(ii) Non-Exclusive.  Nothing set forth in this section shall
prevent the Board from considering Non-Employee Directors for other awards
under this Plan and from making any Awards to Non-Employee Directors.

 

(c) Purchase
Price of Options. 
Subject to Section 6.01(e) with respect to certain Incentive
Stock Options, the Purchase Price of each share of Common Stock which may be
purchased upon exercise of any Option granted under the Plan shall be
determined by the Board; provided, however,
that the Purchase Price shall in all cases be equal to or greater than the Fair
Market Value on the Date of Grant.

 

7

 

(d) Designation
of Options.  Except
as otherwise expressly provided in the Plan, the Board may designate, at the
time of the grant of an Option, such Option as an Incentive Stock Option or a
Non-Qualified Stock Option; provided, however,
that an Option may be designated as an Incentive Stock Option only if the
applicable Participant is an employee of the Company or a Subsidiary on the
Date of Grant.

 

(e) Special
Incentive Stock Option Rules.  No Participant may be granted Incentive Stock
Options under the Plan (or any other plans of the Company and its Subsidiaries)
that would result in Incentive Stock Options to purchase shares of Common Stock
with an aggregate Fair Market Value (measured on the Date of Grant) of more
than $100,000 first becoming exercisable by such Participant in any one
calendar year.  Notwithstanding any other
provision of the Plan to the contrary, no Incentive Stock Option shall be
granted to any person who, at the time the Option is granted, owns stock
(including stock owned by application of the constructive ownership rules in
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,
unless at the time the Incentive Stock Option is granted the Option price is at
least 110% of the Fair Market Value of the Common Stock subject to the
Incentive Stock Option and the Incentive Stock Option by its terms is not
exercisable for more than five (5) years from the Date of Grant.

 

(f) Rights
as a Shareholder. 
A Participant or a transferee of an Option pursuant to Section 9.04
shall have no rights as a shareholder with respect to the shares of Common
Stock covered by an Option until that Participant or transferee shall have
become the holder of record of any such shares, and no adjustment shall be made
with respect to any such shares of Common Stock for dividends in cash or other
property or distributions of other rights on the Common Stock for which the
record date is prior to the date on which that Participant or transferee shall
have become the holder of record of any shares covered by such Option; provided, however, that Participants are entitled to share
adjustments to reflect capital changes under Section 9.07.

 

6.02
Stock Appreciation Rights.

 

(a) Stock
Appreciation Right Awards.  The Board is authorized to grant to any
Participant one or more Stock Appreciation Rights.  Such Stock Appreciation Rights may be granted
either independent of or in tandem with Options granted to the same
Participant.  Stock Appreciation Rights
granted in tandem with Options may be granted simultaneously with, or, in the
case of Non-Qualified Stock Options, subsequent to, the grant to such
Participant of the related Options; provided, however,
that:  (i) any Option covering any
share of Common Stock shall expire and not be exercisable upon the exercise of
any Stock Appreciation Right with respect to the same share, (ii) any
Stock Appreciation Right covering any share of Common Stock shall expire and
not be exercisable upon the exercise of any Option with respect to the same
share, and (iii) an Option and a Stock Appreciation Right covering the
same share of Common Stock may not be exercised simultaneously.  Upon exercise of a Stock Appreciation Right
with respect to a share of Common Stock, the Participant shall be entitled to
receive an amount equal to the excess, if any, of (A) the Fair Market
Value of a share of Common Stock on the date of exercise over (B) the
Exercise Price of such Stock Appreciation Right established in the Award
Agreement, which amount shall be payable as provided in Section 6.02(c).

 

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(b) Exercise
Price.  The
Exercise Price established for any Stock Appreciation Right granted under this
Plan shall be determined by the Board, but in the case of Stock Appreciation
Rights granted in tandem with Options shall not be less than the Purchase Price
of the related Options.  Upon exercise of
Stock Appreciation Rights, the number of shares issuable upon exercise under
any related Options shall automatically be reduced by the number of shares of
Common Stock represented by such Options which are surrendered as a result of
the exercise of such Stock Appreciation Rights.

 

(c) Payment
of Incremental Value. 
Any payment that may become due from the Company by reason of a
Participant’s exercise of a Stock Appreciation Right may be paid to the
Participant as determined by the Board (i) all in cash, (ii) all in
Common Stock, or (iii) in any combination of cash and Common Stock.  In the event that all or a portion of the
payment is to be made in Common Stock, the number of shares of Common Stock to
be delivered in satisfaction of such payment shall be determined by dividing
the amount of such payment or portion thereof by the Fair Market Value on the
date of exercise.  No fractional share of
Common Stock shall be issued to make any payment in respect of Stock
Appreciation Rights; if any fractional share would otherwise be issuable, the
combination of cash and Common Stock payable to a Participant shall be adjusted
as directed by the Board to avoid the issuance of any fractional share.

 

6.03
Terms of Stock Options and Stock Appreciation Rights.

 

(a) Conditions on Exercise.  An
Award Agreement with respect to Options and/or Stock Appreciation Rights may
contain such waiting periods, exercise dates and restrictions on exercise
(including, but not limited to, periodic installments) as may be determined by
the Board at the time of grant.

 

(b) Duration
of Options and Stock Appreciation Rights.  Options and Stock Appreciation Rights shall
terminate after the first to occur of the following events:

 

(i) Expiration
of the Option or Stock Appreciation Right as provided in the related Award
Agreement; or

 

(ii) Termination
of the Award as provided in Section 6.03(e), following the applicable
Participant’s Termination of Employment; or

 

(iii) In
the case of an Incentive Stock Option, ten years from the Date of Grant (five
years in certain cases, as described in Section 6.01(e)) Non-Qualified
Stock Options may, if so approved by the Board, have a stated term in excess of
ten years, but such Options shall in all events be subject to termination in
accordance with clauses (i) and (ii) above); or

 

(iv) Solely
in the case of a Stock Appreciation Right granted in tandem with an Option, upon
the expiration of the related Option.

 

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(c) Acceleration
of Exercise Time. 
The Board, in its sole discretion, shall have the right (but shall not
in any case be obligated), exercisable at any time after the Date of Grant, to
permit the exercise of any Option or Stock Appreciation Right prior to the time
such Option or Stock Appreciation Right would otherwise become exercisable
under the terms of the related Award Agreement.

 

(d) Extension
of Exercise Time. 
In addition to the extensions permitted under Section 6.03(e) in
the event of Termination of Employment, the Board, in its sole discretion,
shall have the right (but shall not in any case be obligated), exercisable on
or at any time after the Date of Grant, to permit the exercise of any Option or
Stock Appreciation Right after its expiration date described in Section 6.03(e),
subject, however, to the limitations described in Sections 6.03(b)(i), (iii) and
(iv).

 

(e) Exercise
of Options or Stock Appreciation Rights Upon Termination of Employment.  Unless an Optionee’s
Award Agreement provides otherwise, the following rules shall govern the
treatment of Options and Stock Appreciation Rights upon Termination of
Employment:

 

(i) Termination
of Vested Options and Stock Appreciation Rights Upon Termination of Employment.

 

(A) Reasons Other Than Death, Disability or Retirement.  In the event of a Participant’s voluntary or
involuntary Termination of Employment for any reason other than death,
Disability or Retirement, the right of the Participant to exercise any Option
or Stock Appreciation Right shall terminate on the date of such Termination of
Employment, unless the exercise period is extended by the Board in accordance
with Section 6.03(d).

 

(B) Death, Disability or Retirement.  In the event of a Participant’s Termination
of Employment by reason of death, Disability or Retirement, the right of the
Participant to exercise any Option or Stock Appreciation Right which he or she
was entitled to exercise upon Termination of Employment (or which became
exercisable pursuant to Section 6.03(e)(ii)) shall, unless the exercise
period is extended by the Board in accordance with Section 6.03(d),
terminate upon the earlier of (i) the later to occur of (A) first
anniversary of the date of such Termination of Employment and (B) the
first anniversary of the date of consummation of a public offering of the
Common Stock and (ii) the date of expiration of the Option determined
pursuant to Section 6.03(b)(i), (iii) or (iv).

 

(ii) Termination
of Unvested Options or Stock Appreciation Rights Upon Termination of
Employment. 
Subject to Section 6.03(c), to the extent the right to exercise an
Option or a Stock Appreciation Right, or any portion thereof, has not accrued
as of the date of Termination of Employment, such right shall expire at the
date of such Termination of Employment regardless of the reason for such
Termination of Employment. 
Notwithstanding the foregoing, the Board, in its sole discretion and
under such terms as it deems appropriate, may permit, for a Participant who
terminates employment by reason of Retirement and who will

 

10

 

continue to render
significant services to the Company or one of its Subsidiaries after his or her
Termination of Employment, the continued vesting of his or her Options and
Stock Appreciation Rights during the period in which that individual continues
to render such services.

 

6.04
Exercise Procedures. 
Each Option and Stock Appreciation Right granted under the Plan shall be
exercised by written notice to the Company which must be received by the
officer or employee of the Company designated in the Award Agreement at or
before the close of business on the expiration date of the Award.  The Purchase Price of shares purchased upon
exercise of an Option granted under the Plan shall be paid in full in cash by
the Participant pursuant to the Award Agreement; provided,
however, that the Board may (but shall not be required to) permit
payment to be made by delivery to the Company of either (a) shares of
Common Stock held by the Participant for at least six months (which may include
Restricted Shares, subject to such rules as the Board deems appropriate)
or (b) any combination of cash and Common Stock or (c) such other
consideration as the Board deems appropriate and in compliance with applicable
law (including payment in accordance with a cashless exercise program under
which, if so instructed by a Participant, shares of Common Stock may be issued
directly to the Participant’s broker or dealer upon receipt of an irrevocable
written notice of exercise from the Participant).  In the event that any shares of Common Stock
shall be transferred to the Company to satisfy all or any part of the Purchase
Price, the part of the Purchase Price deemed to have been satisfied by such
transfer of shares of Common Stock shall be equal to the product derived by
multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Company.  The Participant may not transfer to the
Company in satisfaction of the Purchase Price any fractional share of Common
Stock.  Any part of the Purchase Price
paid in cash upon the exercise of any Option shall be added to the general
funds of the Company and may be used for any proper corporate purpose.  Unless the Board shall otherwise determine,
any shares of Common Stock transferred to the Company as payment of all or part
of the Purchase Price upon the exercise of any Option shall be held as treasury
shares.

 

6.05
Change in Control. 
Unless otherwise provided by the Board in the applicable Award
Agreement, in the event of a Change in Control, all Options and Stock
Appreciation Rights outstanding on the date of such Change in Control shall
become immediately and fully exercisable. 
The provisions of this Section 6.05 shall not be applicable to any
Options or Stock Appreciation Rights granted to a Participant if any Change in
Control results from such Participant’s beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of Company Voting
Securities.

 

ARTICLE VII

 

RESTRICTED
SHARES AND RESTRICTED STOCK UNITS

 

7.01
Restricted Share Awards. 
The Board may grant to any Participant an Award of such number of shares
of Common Stock on such terms, conditions and restrictions, whether based on
performance standards, periods of service, retention by the Participant of
ownership of purchased or designated shares of Common Stock or other criteria,
as the Board shall establish.

 

11

 

The terms of any
Restricted Share Award granted under this Plan shall be set forth in an Award
Agreement which shall contain provisions determined by the Board and not
inconsistent with this Plan.

 

(a) Issuance of Restricted Shares.  As soon as practicable after the Date of
Grant of a Restricted Share Award by the Board, the Company shall cause to be
transferred on the books of the Company or its agent, shares of Common Stock,
registered on behalf of the Participant, evidencing the Restricted Shares
covered by the Award, subject to forfeiture to the Company as of the Date of
Grant if an Award Agreement with respect to the Restricted Shares covered by
the Award is not duly executed by the Participant and timely returned to the
Company.  All shares of Common Stock
covered by Restricted Share Awards under this Article VII shall be subject
to the restrictions, terms and conditions contained in the Plan and the
applicable Award Agreements entered into by the appropriate Participants.  Until the lapse or release of all
restrictions applicable to an Award of Restricted Shares the share certificates
representing such Restricted Shares may be held in custody by the Company, its
designee, or, if the certificates bear a restrictive legend, by the
Participant.  Upon the lapse or release
of all restrictions with respect to an Award as described in Section 7.01(d),
one or more share certificates, registered in the name of the Participant, for
an appropriate number of shares as provided in Section 7.01(d), free of
any restrictions set forth in the Plan and the related Award Agreement shall be
delivered to the Participant.

 

(b) Shareholder Rights.  Beginning on the Date of Grant of a
Restricted Share Award and subject to execution of the related Award Agreement
as provided in Section 7.01(a), and except as otherwise provided in such
Award Agreement, the Participant shall become a shareholder of the Company with
respect to all shares subject to the Award Agreement and shall have all of the
rights of a shareholder, including, but not limited to, the right to vote such
shares and the right to receive dividends; provided, however,
that any shares of Common Stock distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have not yet
lapsed, shall be subject to the same restrictions as such Restricted Shares and
held or restricted as provided in Section 7.01(a).

 

(c) Restriction on Transferability.  None of the Restricted Shares may be assigned
or transferred (other than by will or the laws of descent and distribution or
to an inter vivos trust with respect to which
the Participant is treated as the owner under Sections 671 through 677 of the
Code), pledged or sold prior to the lapse of the restrictions applicable
thereto.

 

(d) Delivery of Shares Upon Vesting.  Upon expiration or earlier termination of the
forfeiture period without a forfeiture and the satisfaction of or release from
any other conditions prescribed by the Board, or at such earlier time as
provided under the provisions of Section 7.03, the restrictions applicable
to the Restricted Shares shall lapse.  As
promptly as administratively feasible thereafter, subject to the requirements
of Section 9.05, the Company shall deliver to the Participant or, in case
of the Participant’s death, to the Participant’s Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any

 

12

 

restrictions that may be
imposed by law.

 

7.02
Terms of Restricted Shares.

 

(a) Forfeiture of Restricted Shares.  Subject to Sections 7.02(b) and 7.03,
Restricted Shares shall be forfeited and returned to the Company and all rights
of the Participant with respect to such Restricted Shares shall terminate
unless the Participant continues in the service of the Company or a Subsidiary
as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Award Agreement.  The Board shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect to any
Restricted Share Award.

 

(b) Waiver of Forfeiture Period.  Notwithstanding anything contained in this Article VII
to the contrary, the Board may, in its sole discretion, waive the forfeiture
period and any other conditions set forth in any Restricted Share Award
Agreement under appropriate circumstances (including the death, Disability or
Retirement of the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and conditions (including
forfeiture of a proportionate number of the Restricted Shares) as the Board
shall deem appropriate.

 

(c) Repurchase Rights. The Board may, but
shall not be required to, grant to Participants who promptly inform the Board
of their intention to elect federal income taxation under Section 83(b) of
the Code, the right to require the Company to repurchase upon their termination
of employment for any reason other than cause the shares for which federal
income tax treatment under Section 83(b) of the Code was
elected.  Such repurchase right, if
granted, may be exercised by the Participant at any time after his or her
termination of employment at a price to be determined by the Board at the date
of grant but in no event greater than the fair market value of such shares at
the time federal income tax treatment under Section 83(b) of the Code
was elected.

 

7.03
Change in Control. 
Unless otherwise provided by the Board in the applicable Award
Agreement, in the event of a Change in Control, all restrictions applicable to
the Restricted Share Award shall terminate fully and the Participant shall
immediately have the right to the delivery of share certificates for such
shares in accordance with Section 7.01(d).

 

7.04
Restricted Stock Unit Awards.

 

(a) Restricted Stock Units.  Subject to the provisions of this Plan, the
Board may grant Restricted Stock Units to a Participant.

 

(b) Terms and Conditions.  The Board shall determine the number of
shares of Common Stock subject to each Restricted Stock Unit Award and the
purchase price (if any) for each unit. 
Restricted Stock Units may be issued for no cash consideration, or such
minimum consideration as may be required by applicable law.  The Board may grant Restricted Stock Units on
such other terms and with such conditions and restrictions the Board shall
establish (including, without limitation, vesting and forfeiture

 

13

 

provisions and conditions
relating to applicable laws).  The terms
of any Restricted Stock Unit Award granted under this Plan shall be set forth
in an Award Agreement which shall contain provisions determined by the Board
and not inconsistent with this Plan.

 

(c) Acceleration of Vesting.  Notwithstanding anything contained in this Article VII
to the contrary, the Board may, in its sole discretion, accelerate the vesting
of Restricted Stock Units for conversion into shares of Common Stock under
appropriate circumstances and subject to such terms and conditions, if any, as
the Board shall deem appropriate.

 

(d) Unfunded Obligation.  A Restricted Stock Unit Award shall constitute
an unfunded and unsecured obligation of the Company, and shall be settled in
shares of Common Stock or cash, as determined by the Board at the time of grant
or thereafter.  Each unit shall represent
the equivalent of one share of Common Stock.

 

ARTICLE VIII

 

PERFORMANCE
AWARDS

 

8.01                        Performance
Awards.

 

(a) Award Periods and Calculations of Potential Incentive Amounts.  The Board may grant Performance Awards to
Participants.  A Performance Award shall
consist of the right to receive a payment (measured by the Fair Market Value of
a specified number of shares of Common Stock, increases in such Fair Market
Value during the Award Period and/or a fixed cash amount) contingent upon the
extent to which certain predetermined performance targets have been met during
an Award Period.  Performance Awards may
be made in conjunction with, or in addition to, any other Awards made under
this Plan.  The Award Period shall be two
or more fiscal or calendar years as determined by the Board.  The Board, in its discretion and under such
terms as it deems appropriate, may permit newly eligible employees, such as
those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced.

 

(b) Performance Targets.  The performance targets may include such
goals related to the performance of the Company and/or the performance of a
Participant as may be established by the Board in its discretion. The
performance targets established by the Board may vary for different Award
Periods and need not be the same for each Participant receiving a Performance
Award in an Award Period. The Board, in its discretion, but only under
extraordinary circumstances as determined by the Board, may change any prior
determination of performance targets for any Award Period at any time prior to
the final determination of the value of a related Performance Award when events
or transactions occur to cause such performance targets to be an inappropriate
measure of achievement.

 

(c) Earning Performance Awards.  The Board, on or as soon as practicable after
the Date of Grant, shall prescribe a formula to determine the percentage of the
applicable

 

14

 

Performance Award to be
earned based upon the degree of attainment of performance targets.

 

(d) Payment of Earned Performance Awards.  Payments of earned Performance Awards shall
be made in cash or shares of Common Stock or a combination of cash and shares
of Common Stock, in the discretion of the Board.  The Board, in its sole discretion, may
provide such terms and conditions with respect to the payment of earned
Performance Awards as it may deem desirable.

 

8.02
Terms of Performance Awards.

 

(a) Termination of Employment.  Unless otherwise provided below or in Section 8.03,
in the case of a Participant’s Termination of Employment prior to the end of an
Award Period, the Participant will not have earned any Performance Awards for
that Award Period.

 

(b) Retirement.  If a Participant’s Termination of Employment
is because of Retirement prior to the end of an Award Period, the Participant
will not be paid any Performance Award, unless the Board, in its sole and
exclusive discretion, determines that an Award should be paid.  In such a case, the Participant shall be
entitled to receive a pro-rata portion of his or her Award as determined under
subsection (d).

 

(c) Death or Disability.  If a Participant’s Termination of Employment
is due to death or to Disability (as determined in the sole and exclusive
discretion of the Board) prior to the end of an Award Period, the Participant
or the Participant’s personal representative shall be entitled to receive a pro-rata
share of his or her Award as determined under subsection (d).

 

(d) Pro-Rata Payment.  The amount of any payment to be made to a
Participant whose employment is terminated by Retirement, death or Disability
(under the circumstances described in subsections (b) and (c)) will be the
amount determined by multiplying (i) the amount of the Performance Award
that would have been earned through the end of the Award Period had such
employment not been terminated by (ii) a fraction, the numerator of which
is the number of whole months such Participant was employed during the Award
Period, and the denominator of which is the total number of months of the Award
Period.  Any such payment made to a
Participant whose employment is terminated prior to the end of an Award Period
shall be made at the end of such Award Period, unless otherwise determined by
the Board in its sole discretion.  Any
partial payment previously made or credited to a deferred account for the
benefit of a Participant in accordance with Section 8.01(d) of the
Plan shall be subtracted from the amount otherwise determined as payable as
provided in this Section 8.02(d).

 

(e) Other Events.  Notwithstanding anything to the contrary in
this Article VIII, the Board may, in its sole and exclusive discretion,
determine to pay all or any portion of a Performance Award to a Participant who
has terminated employment prior to the end of an Award Period under certain
circumstances (including the death, Disability or

 

15

 

Retirement of the
Participant or a material change in circumstances arising after the Date of
Grant), subject to such terms and conditions as the Board shall deem
appropriate.

 

8.03
Change in Control. 
Unless otherwise provided by the Board in the applicable Award
Agreement, in the event of a Change in Control, all Performance Awards for all
Award Periods shall immediately become fully vested and payable to all
Participants and shall be paid to Participants within 30 days after such Change
in Control.

 

ARTICLE IX

 

TERMS
APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN

 

9.01
Plan Provisions Control Award Terms.  The terms of the Plan shall govern all Awards
granted under the Plan, and in no event shall the Board have the power to grant
any Award under the Plan the terms of which are contrary to any of the
provisions of the Plan.  In the event any
provision of any Award granted under the Plan shall conflict with any term in
the Plan as constituted on the Date of Grant of such Award, the term in the
Plan as constituted on the Date of Grant of such Award shall control.  Except as provided in Section 9.03 and Section 9.07,
the terms of any Award granted under the Plan may not be changed after the Date
of Grant of such Award so as to materially decrease the value of the Award
without the express written approval of the holder.

 

9.02
Award Agreement. 
No person shall have any rights under any Award granted under the Plan
unless and until the Company and the Participant to whom such Award shall have
been granted shall have executed and delivered an Award Agreement or the
Participant shall have received and acknowledged notice of the Award authorized
by the Board expressly granting the Award to such person and containing
provisions setting forth the terms of the Award.

 

9.03
Modification of Award After Grant.  No Award granted under the Plan to a
Participant may be modified (unless such modification does not materially
decrease the value of that Award) after its Date of Grant except by express
written agreement between the Company and such Participant, provided that any
such change (a) may not be inconsistent with the terms of the Plan, and (b) shall
be approved by the Board.

 

9.04
Limitation on Transfer. 
Except as provided in Section 7.01(c) in the case of
Restricted Shares, a Participant’s rights and interest under the Plan may not
be assigned or transferred other than by will or the laws of descent and
distribution and, during the lifetime of a Participant, only the Participant
personally (or the Participant’s personal representative) may exercise rights
under the Plan.  The Participant’s
Beneficiary may exercise the Participant’s rights to the extent they are
exercisable under the Plan following the death of the Participant.  Notwithstanding the foregoing, the Board may
grant Non-Qualified Stock Options that are transferable, without payment of
consideration, to such persons, including, but not limited to, immediate family
members of the Participant or to trusts or partnerships for such family
members, and the Board may also amend outstanding Non-Qualified Stock Options
to provide for such transferability.

 

16

 

9.05
Taxes.  The Company
shall be entitled, if the Board deems it necessary or desirable, to withhold
(or secure payment from the Participant in lieu of withholding) the amount of
any withholding or other tax required by law to be withheld or paid by the
Company with respect to any amount payable and/or shares issuable under such
Participant’s Award or with respect to any income recognized upon a
disqualifying disposition (i.e. a disposition prior to the expiration of the
requisite holding periods) of shares received pursuant to the exercise of an
Incentive Stock Option, and the Company may defer payment of cash or issuance
of shares upon exercise or vesting of an Award unless indemnified to its
satisfaction against any liability for any such tax.  The amount of such withholding or tax payment
shall be determined by the Board and shall be payable by the Participant in
cash at such time as the Board determines; provided, however,
that with the approval of the Board, the Participant may elect to meet his or
her withholding requirement, in whole or in part, by having withheld from such
Award at the appropriate time that number of shares of Common Stock, rounded up
to the next whole share, the Fair Market Value of which is equal to the amount
of withholding taxes due.

 

9.06
Intentionally Omitted

 

9.07
Adjustments to Reflect Capital Changes.

 

(a) Recapitalization.  The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares, the
number and kind of shares available for Awards subsequently granted under the
Plan and the maximum number of shares in respect of which Awards can be made to
any Participant in any calendar year shall be appropriately adjusted to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan.  The Board shall have the power and sole
discretion to determine the amount of the adjustment to be made in each case.

 

(b) Merger. 
After any Merger in which the Company is the surviving corporation, each
Participant shall, at no additional cost, be entitled upon any exercise of an
Option or receipt of any other Award to receive (subject to any required action
by shareholders), in lieu of the number of shares of Common Stock receivable or
exercisable pursuant to such Award prior to such Merger, the number and class
of shares or other securities to which such Participant would have been entitled
pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares of Common Stock
equal to the number of shares of Common Stock receivable or exercisable
pursuant to such Award.  Comparable
rights shall accrue to each Participant in the event of successive Mergers of
the character described above.  In the
event of a Merger in which the Company is not the surviving corporation, the
surviving, continuing, successor or purchasing corporation, as the case may be
(the “Acquiring Corporation”), will either assume the Company’s rights and
obligations under outstanding Award Agreements or substitute awards in respect
of the Acquiring Corporation’s stock for outstanding Awards, provided, however, that
if the Acquiring Corporation does not assume or substitute for such outstanding
Awards, the Board shall

 

17

 

provide prior to the
Merger that any unexercisable and/or unvested portion of the outstanding Awards
shall be immediately exercisable and vested as of a date prior to such Merger,
as the Board so determines.  The exercise
and/or vesting of any Award that was permissible solely by reason of this Section 9.07(b) shall
be conditioned upon the consummation of the Merger.  Any Options which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall
terminate effective as of the effective date of the Merger.

 

(c) Options to Purchase Shares or Stock of Acquired Companies.  After any merger in which the Company or a
Subsidiary shall be a surviving corporation, the Board may grant substituted
options under the provisions of the Plan, pursuant to Section 424 of the
Code, replacing old options granted under a plan of another party to the merger
whose shares of stock subject to the old options may no longer be issued
following the merger.  The manner of
application of the foregoing provisions to such options and any appropriate
adjustments shall be determined by the Board in its sole discretion.  Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject to
any Options.

 

9.08
Certain Conditions on Awards.  The
Board may cancel any unexpired Awards at any time the Participant is not in
compliance with any agreement between the Company and the Participant or any
other legal obligation of the Participant relating to non-competition,
confidentiality or proprietary interests and failure to comply with such
agreements or obligations prior to, or during the twelve (12) months after, any
exercise of an Option or Stock Appreciation Right shall result in the
rescission of the exercise and the difference between the Fair Market Value on
the date of exercise of the subject shares of Common Stock and the Purchase
Price or Exercise Price, as the case may be, shall be returned to the Company
by the Participant in cash within ten (10) days after notice of the
rescission has been given to the Participant by the Company.  Such notice may be given at any time within
two years of the date of exercise.

 

9.09
Initial Public Offering. 
As a condition of participation under this Plan, each Participant shall
be obligated to cooperate with the Company and the underwriters in connection
with any public offering of the Company’s securities and any transactions
relating thereto and shall execute and deliver such agreements and documents,
including without limitation, a lock-up agreement, as may be requested by the
Company or the underwriters.  The Participants’
obligations under this Section 9.09 shall apply to any shares of Common
Stock issued under the Plan as well as to any and all other securities of the
Company or its successor for which such Common Stock may be exchanged or into
which such Common Stock may be converted.

 

9.10
No Right to Employment. 
No employee or other person shall have any claim of right to be granted
an Award under the Plan.  Neither the
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or any of its
Subsidiaries.

 

9.11
Awards Not Includable for Benefit Purposes.  Payments received by a Participant pursuant
to the provisions of the Plan shall not be included in the determination of
benefits under any pension, group insurance or other benefit plan applicable to
the Participant which is

 

18

 

maintained by the Company
or any of its Subsidiaries, except as may be provided under the terms of such
plans or determined by the Board.

 

9.12
Governing Law.  All
determinations made and actions taken pursuant to the Plan shall be governed by
the internal laws of the State of Delaware, except for its principles of
conflict of laws, and construed in accordance therewith.

 

9.13
No Strict Construction. 
No rule of strict construction shall be implied against the
Company, the Board or any other person in the interpretation of any of the
terms of the Plan, any Award granted under the Plan or any rule or
procedure established by the Board.

 

9.14
Captions.  The
captions (i.e., all Section headings) used in the Plan are for convenience
only, do not constitute a part of the Plan, and shall not be deemed to limit,
characterize or affect in any way any provisions of the Plan, and all
provisions of the Plan shall be construed as if no captions had been used in
the Plan.

 

9.15
Severability. 
Whenever possible, each provision in the Plan and every Award at any
time granted under the Plan shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan or any Award
at any time granted under the Plan shall be held to be prohibited by or invalid
under applicable law, then (a) such provision shall be deemed amended to
accomplish the objectives of the provision as originally written to the fullest
extent permitted by law and (b) all other provisions of the Plan, such
Award and every other Award at any time granted under the Plan shall remain in
full force and effect.

 

9.16
Amendment and Termination.

 

(a) Amendment.  The Board shall have complete power and
authority to amend the Plan at any time. 
No termination or amendment of the Plan may, without the consent of the
Participant to whom any Award shall theretofore have been granted under the
Plan, materially adversely affect the right of such individual under such
Award.

 

(b) Termination.  The Board shall have the right and the power
to terminate the Plan at any time.  No
Award shall be granted under the Plan after the termination of the Plan, but
the termination of the Plan shall not have any other effect and any Award
outstanding at the time of the termination of the Plan may be exercised after
termination of the Plan at any time prior to the expiration date of such Award
to the same extent such Award would have been exercisable had the Plan not been
terminated.

 

19

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