PFSWEB, INC. 2005 EMPLOYEE STOCK
AND INCENTIVE PLAN
WHEREAS, PFSweb,
Inc., a Delaware corporation (the “Company”) has
adopted that certain 1999 Employee Stock Option Plan (the
“1999 Plan”); and
WHEREAS, the
Company has authorized and adopted the 2005 Employee Stock and
Incentive Plan, as an amendment and restatement of the 1999 Plan
(as so amended and restated, the Plan”); and
WHEREAS, subject
to the requisite approval of the Company’s stockholders at
the Company’s 2009 Annual Meeting of Stockholders, the
Company has authorized and adopted certain amendments to the
Plan;
NOW, THEREFORE, in
order to implement and effectuate said amendments, the Plan, as so
amended, shall read as follows:
1.1.
GENERAL . The PFSweb, Inc. 2005 Employee Stock and Incentive
Plan is designed to focus management on business performance that
creates stockholder value; encourage innovative approaches to the
business of the Company; reward for results; and encourage
ownership of Company common stock by management.
2.1.
DEFINITIONS . As used herein the following words and phrases
shall have the following meanings:
(a) “Affiliate”
means (i) any Subsidiary or Parent, or (ii) any entity of
which the Company owns or controls, directly or indirectly, 10% of
more of the outstanding shares of stock entitled to vote for the
election of directors, or of comparable equity participation and
voting power.
(b) “Award”
means any Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award, Deferred Stock Unit Award, Performance
Award, Dividend Equivalent Award, Other Stock-Based Award,
Performance-Based Cash Awards, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
A “Full-Value Award” means an Award other than in the
form of an Option or Stock Appreciation Right, and which is settled
by the issuance of Shares.
(c) “Award
Certificate” means a written document, in such form as the
Committee prescribes from time to time, setting forth the terms and
conditions of an Award. Award Certificates may be in the form of
individual award agreements or certificates or a program document
describing the terms and provisions of an Awards or series of
Awards under the Plan.
(d) “Board”
means the Board of Directors of the Company.
(e) “Cause”
means, with respect to a Participant’s termination of
employment or termination of consultancy, the following:
(a) in the case where there is no employment agreement,
consulting agreement, change in control agreement or similar
agreement in effect between the Company or an Affiliate and the
Participant at the time of determination (or such an agreement does
not define “cause” (or words of like import)),
(i) a Participant’s gross negligence or willful
misconduct with regard to the Company or an Affiliate or their
assets, (ii) a Participant’s misappropriation or fraud
with regard to the Company or an Affiliate or their assets (other
than good-faith expense account disputes), (iii) a
Participant’s willful and continued failure to substantially
perform the Participant’s duties (other than any such failure
resulting from incapacity due to physical or mental illness), which
is not remedied within 10 days of delivery of notice to the
Participant thereof, (iv) a Participant’s conviction of,
or the pleading of guilty or nolo contendere to, a felony or
criminal offense punishable by a term of imprisonment (other than a
traffic violation), or (v) the Participant’s willful
violation of any written policy of the Company or an Affiliate or
breach of
any
confidentiality or non-competition covenant entered into between
the Participant and the Company or an Affiliate; or (b) in the
case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of
determination that defines “cause” (or words of like
import), “cause” as defined under such agreement;
provided, however, that with regard to any agreement under which
the definition of “cause” only applies on occurrence of
a Change in Control, such definition of “cause” shall
not apply until a Change in Control actually takes place and then
only with regard to a termination thereafter, and prior to a Change
in Control “cause” shall be defined as provided in
subsection (a) above. With respect to a Participant’s
termination of directorship, “cause” means an act or
failure to act that constitutes cause for removal of a director
under applicable Delaware law. The determination of the Committee
as to the existence of “Cause” shall be conclusive on
the Participant and the Company.
(f) “Change
in Control” unless otherwise determined by the Committee in
the applicable Award Certificate, a “Change in Control”
shall be deemed to have occurred after the Effective
Date:
(1) upon any
“person” as such term is used in Sections 13(d) and
14(d) of the 1934 Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Company, or any company owned, directly or indirectly, by all of
the stockholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), becoming
the owner (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities (including, without
limitation, securities owned at the time of any increase in
ownership);
(ii) during
any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director
(other than (x) a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in paragraph (i) or (iii) of this section, or
(y) a director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote
of at least two-thirds of the directors then still in office who
either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so
approved (the “Incumbent Board”), cease for any reason
to constitute at least a majority of the Board;
(iii) upon
the merger or consolidation of the Company with, or the sale of all
or substantially all of the assets of the Company to, any other
corporation or other entity, in each case, unless, following such
merger, consolidation or sale (A) the voting securities of the
Company outstanding immediately prior thereto continue to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving or purchasing entity (the
“Surviving Entity”)) more than fifty percent (50%) of
the combined voting power of the voting securities of the Company
or the Surviving Entity outstanding immediately after such merger,
consolidation or sale; and (B) at least a majority of the
members of the board of directors of the Surviving Entity were
Incumbent Directors at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
merger, consolidation or sale; or
(iv) upon the
approval by the Company’s stockholders of a plan of complete
liquidation or dissolution of the Company.
Notwithstanding
the foregoing, for any Awards that constitute a nonqualified
deferred compensation plan within the meaning of
Section 409A(d) of the Code, Change in Control shall have the
same meaning as set forth in any regulations, revenue procedure or
revenue rulings issued by the Secretary of the United States
Treasury applicable to such plans.
(g) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, and includes a reference to the underlying final
regulations.
(h) “Committee”
means the committee of the Board described in
Article 4.
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(i) “Company”
means PFSweb, Inc., a Delaware corporation, or any successor
corporation.
(j) “Continuous
Status as a Participant” means the absence of any
interruption or termination of service as an employee, officer,
consultant or director of the Company or any Affiliate, as
applicable; provided, however, that for purposes of an Incentive
Stock Option, or a Stock Appreciation Right issued in tandem with
an Incentive Stock Option, “Continuous Status as a
Participant” means the absence of any interruption or
termination of service as an employee of the Company or any Parent
or Subsidiary, as applicable, pursuant to applicable tax
regulations. Continuous Status as a Participant shall continue to
the extent provided in a written severance or employment agreement
during any period for which severance compensation payments are
made to an employee, officer, consultant or director and shall not
be considered interrupted in the case of any short-term disability
or leave of absence authorized in writing by the Company prior to
its commencement; provided, however, that for purposes of Incentive
Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 91st day of
such leave any Incentive Stock Option held by the Participant shall
cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.
Notwithstanding the foregoing, for any Awards that constitute a
nonqualified deferred compensation plan within the meaning of
Section 409A(d) of the Code, Continuous Status as a
Participant shall mean the absence of any “separation from
service” or similar concept as set forth in any regulations,
revenue procedure or revenue rulings issued by the Secretary of the
United States Treasury applicable to such plans.
(k) “Covered
Employee” means a covered employee as defined in Code
Section 162(m)(3).
(l) “Deferred
Stock Unit” means a right granted to a Participant under
Article 11.
(m) “Disability”
or “Disabled” has the same meaning as provided in the
long-term disability plan or policy maintained by the Company or if
applicable, most recently maintained, by the Company or if
applicable, an Affiliate, for the Participant, whether or not such
Participant actually receives disability benefits under such plan
or policy. If no long-term disability plan or policy was ever
maintained on behalf of Participant or if the determination of
Disability relates to an Incentive Stock Option, or a Stock
Appreciation Right issued in tandem with an Incentive Stock Option,
Disability means Permanent and Total Disability as defined in
Section 22(e)(3) of the Code. In the event of a dispute, the
determination whether a Participant is Disabled will be made by the
Committee and may be supported by the advice of a physician
competent in the area to which such Disability relates.
Notwithstanding the foregoing, for any Awards that constitute a
nonqualified deferred compensation plan within the meaning of
Section 409A(d) of the Code, Disability shall have the same
meaning as set forth in any regulations, revenue procedure or
revenue rulings issued by the Secretary of the United States
Treasury applicable to such plans.
(n) “Dividend
Equivalent” means a right granted to a Participant under
Article 12.
(o) “Effective
Date” has the meaning assigned such term in
Section 3.1.
(p) “Eligible
Participant” means an employee, officer, consultant or
director of the Company or any Affiliate.
(q) “Exchange”
means the Nasdaq National Market, Small Cap Market or any other
national securities exchange on which the Stock may from time to
time be listed or traded.
(r) “Fair
Market Value”, on any date, means (i) if the Stock is
listed on a securities exchange or is traded over the Nasdaq
Capital Market, the closing sales price on such exchange or over
such system on such date or, in the absence of reported sales on
such date, the closing sales price on the immediately preceding
date on which sales were reported, or (ii) if the Stock is not
listed on a securities exchange or traded over the Nasdaq Capital
Market, the mean between the bid and offered prices as quoted by
Nasdaq for such date, provided that if it is determined that the
fair market value is not properly reflected by such Nasdaq
quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be
reasonable.
(s) “Good
Reason” means, with respect to a Participant’s
termination of employment or termination of consultancy, the
following: (a) in the case where there is no employment
agreement, consulting agreement, change
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in control
agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of determination (or such
an agreement does not define “good reason” (or words of
like import)), without the Participant’s consent: (i) a
reduction in the Participant’s base salary as then in effect,
or (ii) a material reduction, measured in terms of aggregate
value rather than on an individual benefit basis, of employee
benefits to which the Participant is entitled (other than an
overall reduction in benefits that affects substantially all
full-time employees of the Company and its Affiliates); provided
that any event described in clause (i) or (ii) above
shall constitute Good Reason only if the Company fails to cure such
event within 20 days after receipt from the Participant of
written notice of the event which constitutes Good Reason; and
provided, further, that Good Reason shall cease to exist for an
event on the 60th day following the later of its occurrence or the
Participant’s knowledge thereof, unless the Participant has
given the Company written notice thereof prior to such date; or
(b) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar
agreement in effect between the Company or an Affiliate and the
Participant at the time of determination that defines “good
reason” (or words of like import), “good reason”
as defined under such agreement; provided, however, that with
regard to any agreement under which the definition of “good
reason” only applies on occurrence of a Change in Control,
such definition of “good reason” shall not apply until
a Change in Control actually takes place and then only with regard
to a termination thereafter, and prior to a change in control
“good reason” shall be defined as provided in
subsection (a) above.
(t) “Grant
Date” of an Award means the first date on which all necessary
corporate action has been taken to approve the grant of the Award
as provided in the Plan, or such later date as is determined and
specified as part of that authorization process.
(u) “Incentive
Stock Option” means an Option that is intended to be an
incentive stock option and meets the requirements of
Section 422 of the Code or any successor provision
thereto.
(v) “Non-Employee
Director” means a director of the Company who is not a common
law employee of the Company or an Affiliate.
(w) “Nonstatutory
Stock Option” means an Option that is not an Incentive Stock
Option.
(x) “Option”
means a right granted to a Participant under Article 7 of the
Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.
(y) “Other
Stock-Based Award” means a right, granted to a Participant
under Article 13, that relates to or is valued by reference to
Stock or other Awards relating to Stock.
(z) “Parent”
means a corporation, limited liability company, partnership or
other entity which owns or beneficially owns a majority of the
outstanding voting stock or voting power of the Company.
Notwithstanding the above, with respect to an Incentive Stock
Option, Parent shall have the meaning set forth in Section 424(e)
of the Code.
(aa) “Participant”
means a person who, as an employee, officer, director or consultant
of the Company or any Affiliate, has been granted an Award under
the Plan; provided that in the case of the death of a Participant,
the term “Participant” refers to a beneficiary
designated pursuant to Section 15.5 or the legal guardian or
other legal representative acting in a fiduciary capacity on behalf
of the Participant under applicable state law.
(bb) “Performance
Award” means Performance Shares, Performance Units or
Performance-Based Cash Awards granted pursuant to
Article 9.
(cc) “Performance-Based
Cash Award” means a right granted to a Participant under
Article 9 to a cash award to be paid upon achievement of such
performance goals as the Committee establishes with regard to such
Award.
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(dd) “Performance
Share” means any right granted to a Participant under
Article 9 to a share to be valued by reference to a designated
number of Shares to be paid upon achievement of such performance
goals as the Committee establishes with regard to such Performance
Share.
(ee) “Performance
Unit” means a right granted to a Participant under
Article 9 to a unit valued by reference to a designated amount
of cash or property other than Shares, to be paid to the
Participant upon achievement of such performance goals as the
Committee establishes with regard to such Performance
Unit.
(ff) “Person”
means any individual, entity or group, within the meaning of
Section 3(a)(9) of the 1934 Act and as used in
Section 13(d)(3) or 14(d)(2) of the 1934 Act.
(gg) “Plan”
means this PFSweb, Inc. 2005 Employee Stock and Incentive Plan, as
amended or supplemented from time to time.
(hh) “Qualified
Performance-Based Award” means an Award granted to an officer
of the Company that is either (i) intended to qualify for the
Section 162(m) Exemption and is made subject to performance goals
based on Qualified Business Criteria as set forth in
Section 14.2, or (ii) an Option or SAR having an exercise
price equal to or greater than the Fair Market Value of the
underlying Stock as of the Grant Date.
(ii) “Qualified
Business Criteria” means one or more of the Business Criteria
listed in Section 14.2 upon which performance goals for
certain Qualified Performance-Based Awards may be established by
the Committee.
(jj) “Restricted
Stock Award” means Stock granted to a Participant under
Article 10 that is subject to certain restrictions and to risk
of forfeiture.
(kk) “Restricted
Stock Unit Award” means the right granted to a Participant
under Article 10 to receive Shares (or the equivalent value in
cash or other property) in the future, which right is subject to
certain restrictions and to risk of forfeiture.
(ll) “Retirement”
means a Participant’s voluntary termination of employment or
consultancy at or after age sixty-five (65) or such earlier
retirement date as may be approved by the Committee with regard to
such Participant. With respect to a Participant’s termination
of service as a director, Retirement means the failure to stand for
reelection or other retirement as a director after a Participant
has attained age sixty-five (65) or such earlier retirement
date as may be approved by the Committee with regard to such
Participant.
(mm) “Section 162(m)
Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set
forth in Section 162(m)(4)(C) of the Code or any successor
provision thereto.
(nn) “Shares”
means shares of the Company’s Stock. If there has been an
adjustment or substitution pursuant to Section 16.1, the term
“Shares” shall also include any shares of stock or
other securities that are substituted for Shares or into which
Shares are adjusted pursuant to Section 16.1.
(oo) “Stock”
means the common stock of the Company and such other securities of
the Company as may be substituted for Stock pursuant to
Article 16.
(pp) “Stock
Appreciation Right” or “SAR” means a right
granted to a Participant under Article 8 to receive a payment equal
to the difference between the Fair Market Value of a Share as of
the date of exercise of the SAR over the grant price of the SAR,
all as determined pursuant to Article 8.
(qq) “Subsidiary”
means any corporation, limited liability company, partnership or
other entity of which a majority of the outstanding voting stock or
voting power is beneficially owned directly or indirectly by the
Company. Notwithstanding the above, with respect to an Incentive
Stock Option, Subsidiary shall have the meaning set forth in
Section 424(f) of the Code.
(rr) “1933
Act” means the Securities Act of 1933, as amended from time
to time.
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(ss) “1934
Act” means the Securities Exchange Act of 1934, as amended
from time to time.
3.1 EFFECTIVE
DATE . The Plan shall be effective as of June 10, 2005
(the “Effective Date”). No further grants may be made
under this Plan after December 31, 2014.
4.1.
COMMITTEE . The Plan shall be administered by a Committee
appointed by the Board (which Committee shall consist of at least
two directors) or, at the discretion of the Board from time to
time, the Plan may be administered by the Board. Unless otherwise
designated by the Board, the Compensation Committee of the Board
shall serve as the Committee administering the Plan. The Board may
reserve to itself any or all of the authority and responsibility of
the Committee under the Plan or may act as administrator of the
Plan for any and all purposes. To the extent the Board has reserved
any authority and responsibility or during any time that the Board
is acting as administrator of the Plan, it shall have all the
powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the
Board. To the extent any action of the Board under the Plan
conflicts with actions taken by the Committee, the actions of the
Board shall control.
4.2. ACTION AND
INTERPRETATIONS BY THE COMMITTEE . For purposes of
administering the Plan, the Committee may from time to time adopt
rules, regulations, guidelines and procedures for carrying out the
provisions and purposes of the Plan and make such other
determinations, not inconsistent with the Plan, as the Committee
may deem appropriate. The Committee’s interpretation of the
Plan, any Awards granted under the Plan, any Award Certificate and
all decisions and determinations by the Committee with respect to
the Plan are final, binding, and conclusive on all parties. Each
member of the Committee is entitled to, in good faith, rely or act
upon any report or other information furnished to that member by
any officer or other employee of the Company or any Affiliate, the
Company’s or an Affiliate’s independent certified
public accountants, Company counsel or any executive compensation
consultant or other professional retained by the Company to assist
in the administration of the Plan.
4.3. AUTHORITY
OF COMMITTEE . Except as provided below, the Committee has the
exclusive power, authority and discretion to: (a) grant
Awards; (b) designate Participants; (c) determine the type or
types of Awards to be granted to each Participant;
(d) determine the number of Awards to be granted and the
number of Shares or dollar amount to which an Award will relate;
(e) determine the terms and conditions of any Award granted
under the Plan, including but not limited to, the exercise price,
grant price, or purchase price, any restrictions or limitations on
the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations
or waivers thereof, based in each case on such considerations as
the Committee in its sole discretion determines; (f) determine
whether, to what extent, and under what circumstances an Award may
be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered; (g) prescribe the form of each
Award Certificate, which need not be identical for each
Participant; (h) decide all other matters that must be determined
in connection with an Award; (i) establish, adopt or revise
any rules, regulations, guidelines or procedures as it may deem
necessary or advisable to administer the Plan; (j) make all
other decisions and determinations that may be required under the
Plan or as the Committee deems necessary or advisable to administer
the Plan; (k) amend the Plan or any Award Certificate as
provided herein; and (l) adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with
provisions of the laws of non-U.S. jurisdictions in which the
Company or any Affiliate may operate, in order to assure the
viability of the benefits of Awards granted to participants located
in such other jurisdictions and to meet the objectives of the
Plan.
Notwithstanding
the above, the Board or the Committee may, by resolution, expressly
delegate to a special committee, consisting of one or more
directors who are also officers of the Company, the authority,
within specified parameters, to (i) designate Eligible
Participants to be recipients of Awards under the Plan, and
(ii) to determine the number of such Awards to be granted to
any such Participants; provided that such delegation of duties and
responsibilities to such special committee may not be made with
respect to the grant of Awards to eligible
6
participants
(a) who are subject to Section 16(a) of the 1934 Act at the
Grant Date, or (b) who as of the Grant Date are reasonably
anticipated to be become Covered Employees during the term of the
Award. The acts of such delegates shall be treated hereunder as
acts of the Board and such delegates shall report regularly to the
Board or the Committee regarding the delegated duties and
responsibilities and any Awards so granted.
4.4. AWARD
CERTIFICATES . Each Award shall be evidenced by an Award
Certificate. Each Award Certificate shall include such provisions,
not inconsistent with the Plan, as may be specified by the
Committee.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF
SHARES . Subject to adjustment as provided in Sections 5.2
and 16.1, the aggregate number of Shares reserved and available for
issuance pursuant to Awards granted under the Plan shall be
2,808,580. The maximum number of Shares that may be issued upon
exercise of Incentive Stock Options granted under the Plan shall be
the number determined in the preceding sentence.
(a) To the
extent that an Award is canceled, terminates, expires, is forfeited
or lapses for any reason, any unissued Shares from such Award will
again be available for issuance pursuant to Awards granted under
the Plan.
(b) For
purposes of computing how many Shares remain available for Awards
under the Plan, each Share that is granted in a Full-Value Award
will be counted against the Share limit set forth in
Section 5.1 as 1.14 Shares. To the extent that a Full Value
Award is canceled, terminates, expires, is forfeited or lapses for
any reason, any unissued Shares from such Award will again be
available for issuance pursuant to Awards granted under the Plan at
the rate of 1.14 Shares.
(c) The
following Shares may not again be made available for issuance as
Awards under the Plan: (i) Shares not issued or delivered as a
result of the net settlement of an outstanding Stock Appreciation
right or Option, (ii) Shares used to pay the exercise price or
withholding taxes related to an outstanding Award, or
(iii) Shares repurchased on the open market with the proceeds
of the Option exercise price.
(d) Substitute
Awards granted pursuant to Section 15.13 of the Plan shall not
count against the Shares otherwise available for issuance under the
Plan under Section 5.1.
5.3. STOCK
DISTRIBUTED . Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock or
treasury Stock.
5.4. LIMITATION
ON AWARDS . Notwithstanding any provision in the Plan to the
contrary (but subject to adjustment as provided in
Section 16.1), the maximum number of Shares with respect to
one or more Options and/or SARs that may be granted during any one
calendar year under the Plan to any one Participant shall be
250,000. The maximum aggregate grant with respect to Awards of
Restricted Stock, Restricted Stock Units, Deferred Stock Units,
Performance Shares or other Stock-Based Awards (other than Options
or SARs) granted in any one calendar year to any one Participant
shall be 250,000. The aggregate dollar value of any
Performance-Based Cash Award or other cash-based award that may be
paid to any one Participant during any one calendar year under the
Plan shall be $2,500,000.
6.1.
GENERAL . Awards may be granted only to Eligible
Participants; except as limited for Incentive Stock Options under
Section 7.2 (g).
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7.1.
GENERAL . The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a)
Exercise Price . The exercise price per Share under an
Option shall be determined by the Committee; provided, however,
that the exercise price of an Option (other than an Option issued
as a substitute Award pursuant to Section 15.13) shall not be
less than the Fair Market Value as of the Grant Date.
(b) Time
and Conditions of Exercise . The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part, subject to Section 7.1(d). The Committee shall also
determine the performance or other conditions, if any, that must be
satisfied before all or part of an Option may be exercised or
vested.
(c)
Payment . The Committee shall determine the methods by which
the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, Shares, or other property
(including “cashless exercise” arrangements), and the
methods by which Shares shall be delivered or deemed to be
delivered to Participants, subject, however, to compliance with
applicable law.
(d)
Exercise Term . In no event may any Option be exercisable
for more than ten years from the Grant Date.
7.2. INCENTIVE
STOCK OPTIONS . The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional
rules:
(a)
Exercise Price . The exercise price of an Incentive Stock
Option shall not be less than the Fair Market Value as of the Grant
Date.
(b) Lapse
Of Option . Subject to any earlier termination provision
contained in the Award Certificate, an Incentive Stock Option shall
lapse upon the earliest of the following circumstances; provided,
however, that the Committee may, prior to the lapse of the
Incentive Stock Option under the circumstances described in
subsections (3), (4) or (5) below, provide in writing
that the Option will extend until a later date, but if an Option is
so extended and is exercised after the dates specified in
subsections (3) and (4) below, it will automatically
become a Nonstatutory Stock Option:
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(1)
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The
expiration date set forth in the Award Certificate.
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