Exhibit 10.5
NORTHSTAR NEUROSCIENCE,
INC.
AMENDED AND
RESTATED
1999 STOCK OPTION
PLAN
ARTICLE 1
PURPOSE AND
EFFECTIVENESS
1.1 Purpose
. The purpose of the Amended and
Restated 1999 Stock Option Plan (the “Plan”) is to
provide a method by which selected individuals performing services
for Northstar Neuroscience, Inc., a Washington corporation (the
“Company”), or any of its Affiliates, may be offered an
opportunity to invest in capital stock of the Company, thereby
increasing their personal interest in the growth and success of the
Company and its Affiliates.
1.2 Effective Date; Shareholder Approval
Requirement . The Plan shall be effective at the time specified
in the resolutions of the Board adopting the Plan (the
“Effective Date”). Issuance of Incentive Stock Options
within twelve (12) months after the Effective Date shall be
subject to the approval of the Plan by the shareholders of the
Company at a duly held meeting of shareholders at which a majority
of all outstanding voting stock of the Company is represented in
person or by proxy. The approval required shall be a majority of
the votes cast on the proposal to approve the Plan. Such approval
may also be provided pursuant to a written consent in lieu of such
meeting. No Incentive Stock Option shall be exercisable until this
approval requirement has been satisfied. If this requirement is not
satisfied within twelve (12) months after the Effective Date,
then (a) no Incentive Stock Options may thereafter be granted,
and (b) each Incentive Stock Option granted prior thereto
shall automatically be deemed to be a Nonqualified Stock Option
(except to the extent its Option Agreement expressly provides
otherwise).
ARTICLE 2
DEFINITIONS
Capitalized terms in the Plan shall
have the following meanings (whether used in the singular or
plural):
“Affiliate” of the
Company means any corporation, partnership or other entity which,
through one or more intermediaries, directly or indirectly
controls, is controlled by, or is under common control with the
Company.
“Approved Poolable
Transaction” is defined in Section 7.2(b)(v).
“Approved Transaction”
means any of the following transactions consummated with the
approval, recommendation or authorization of the Board:
(a)
any merger, consolidation, statutory
or contractual share exchange, or other transaction to which the
Company or any of its Affiliates or shareholders is a party if,
immediately following the transaction, the persons who held Common
Stock (or securities convertible into Common Stock) immediately
before the transaction hold less than a majority of:
(i) the combined Common Equity of
the Company; or
(ii) if, pursuant to the
transaction, shares of Common Stock are changed or converted into
or exchanged for, in whole or part, securities of another
corporation or entity, the combined Common Equity of that
corporation or entity; without taking into account any
person’s Common Equity of the Company or the other
corporation or entity that is not directly attributable (through
continued ownership, amendment, reclassification, conversion or
exchange) to the person’s holdings of Common Stock (or
securities convertible into Common Stock) immediately before the
transaction;
(b)
any liquidation or dissolution of
the Company; and
(c)
any sale, lease, exchange or other
transfer not in the ordinary course of business (in one transaction
or a series of related transactions) of all, or substantially all,
of the assets of the Company.
“Board” means the Board
of Directors of the Company.
“Cause” means, in
connection with the termination of the Service of a Holder
(a) repeated failures to carry out directions of the Board or
the Holder’s supervisors with regard to material matters
reasonably consistent with the Holder’s duties;
(b) knowing violation of a state or federal law involving the
commission of a crime against the Company or any of its Affiliates
or a felony; (c) misuse of alcohol or controlled substances;
(d) any misrepresentation, deception, fraud or dishonesty that
is materially injurious to the Company or any of its Affiliates;
and (e) any act or omission in willful disregard of the
interests of the Company or any of its Affiliates that
substantially impairs the goodwill, business or reputation of the
Company or any of its Affiliates.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any
successor statute or statutes thereto. Reference to any specific
section of the Code shall include any successor section.
“Committee” is defined
in Section 3.1.
“Common Equity” means
the capital stock of a corporation (or corresponding securities of
a noncorporate entity) ordinarily, and apart from rights accruing
under special circumstances, having the right to vote in an
election for directors (or for members of the governing body of the
noncorporate entity).
“Common Stock” means the
Common Stock, no par value per share, of the Company.
“Company” is defined in
Section 1.1.
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“Computation Date” is
defined in Section 6.9(a).
“Continuing Option” is
defined in Section 7.2(b)(v)(A)(1).
“Control Purchase” means
any transaction (or series of related transactions), consummated
without the approval, recommendation or authorization of the Board,
in which any person, corporation or other entity (including any
“person” as defined in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) purchases any Common
Stock (or securities convertible into Common Stock), pursuant to a
tender offer or a request or invitation for tenders (as those terms
are defined in Section 14(d)(l) of the Exchange Act) or
otherwise, and thereafter is the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing more than fifty percent (50%) of the
combined Common Equity of the Company (twenty-five percent
(25%) of the combined Common Equity of the Company, if the
Company at the time of the transaction has any class of Equity
Security registered pursuant to Section 12 of the Exchange
Act).
“Disability” means the
inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve
(12) months.
“Effective Date” is
defined in Section 1.2.
“Eligible Person” is
defined in Article 5.
“Equity Securities” has
the meaning given that term in Rule 3a11-l promulgated under the
Exchange Act, as amended from time to time, or any successor rule
thereto.
“Excess Securities” is
defined in Section 6.9(a).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or
any successor statute or statutes thereto. Reference to any
specific section of the Exchange Act shall include any successor
section.
“Executive Officer”
means any employee of the Company who is an “officer”
within the meaning of Rule 16a-l(f) of the Exchange Act, as amended
from time to time, or any successor rule thereto.
“Exercise Date” is
defined in Section 6.10(a).
“Fair Market Value” for
the Common Stock (or any other security) on any day means, if the
Common Stock (or other security) is publicly traded, the last sales
price (or, if no last sales price is reported, the average of the
high bid and low asked prices) for a share of Common Stock (or unit
of the other security) on that day (or, if that day is not a
trading day, on the next preceding trading day), as reported by the
principal exchange on which the Common Stock (or other security) is
listed, or, if the Common Stock (or other security) is publicly
traded but not listed on an exchange, as reported by The Nasdaq
Stock Market, or, if such prices or quotations are not reported by
The Nasdaq Stock Market, as reported by any other available source
of prices
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or quotations selected by the Committee. If the
Common Stock (or other security) is not publicly traded, or if the
Fair Market Value is not determinable by any of the foregoing
means, the Fair Market Value on any day shall be determined in good
faith by the Committee on the basis of such considerations as the
Committee determines to be appropriate.
“Good Reason” means,
with respect to a Holder, the occurrence in connection with an
Approved Transaction, without the Holder’s express written
consent, of one of the following events or conditions:
(a)
A material reduction in the level of
the Holder’s responsibilities in comparison to the level
thereof at the time of the Approved Transaction;
(b)
The assignment to the Holder of a
job title that is not of comparable prestige and status as the
Holder’s job title at the time of the Approved
Transactions;
(c)
The assignment to the Holder of any
duties inconsistent with the Holder’s position at the time of
the Approved Transaction, other than pursuant to the Holder’s
promotion;
(d)
A material reduction in the
Holder’s salary level;
(e)
A material reduction in the overall
level of employee benefits or perquisites available to the Holder
at the time of the Approved Transaction, or the Holder’s
right to participate therein, unless such reduction is
nondiscriminatory as to the Holder;
(f)
Requiring the Holder to be based
anywhere more than fifty (50) miles from the business location
to which the Holder normally reported for work at the time of the
Approved Transaction, other than for required business travel not
significantly greater than the Holder’s business travel
obligations at the time of the Approved Transaction; or
(g)
Any of the foregoing events and
conditions occurring before the Approved Transaction which the
Holder reasonably demonstrates was at the request of a third party
or otherwise arose in connection with or in anticipation of the
Approved Transaction.
“Holder” means an
Eligible Person who has received an Option or, if rights under the
Option continue following the death of the Eligible Person or are
transferred in a manner permitted by Section 6.8, the person
who succeeds to those rights by will or by the laws of descent and
distribution or by such transfer.
“Incentive Stock Option”
means an Option that is an incentive stock option within the
meaning of Section 422 of the Code.
“Nonqualified Stock
Option” means an Option that is not an Incentive Stock
Option.
“Offer” is defined in
Section 6.10(a).
“Option” means an option
with respect to shares of Common Stock awarded pursuant to Article
6.
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“Option Agreement” is
defined in Section 6.5.
“Option Securities”
means (a) the shares of Common Stock or other securities that
a Holder acquires upon exercise of an Option, and (b) any
other shares of Common Stock or other securities issued or acquired
with respect to the shares or other securities specified in the
preceding clause (a) or this clause (b) in connection
with any stock dividend, stock split, reclassification,
recapitalization, reorganization, split-up, spin-off, combination,
exchange of shares, rights offering, or other transaction or
event.
“Permitted Transferee”
of a Holder means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of the Holder (including any such
relative by adoption); any person sharing the Holder’s
household (other than a tenant or employee); a trust in which these
persons have more than fifty percent (50%) of the beneficial
interest; and any other non-charitable entity in which these
persons (or the Holder) own more than fifty percent (50%) of
the voting interests.
“Plan” is defined in
Section 1.1.
“Replacement Securities”
is defined in Section 7.2(b)(v)(A)(2).
“Securities Act” means
the Securities Act of 1933, as amended from time to time, or any
successor statute or statutes thereto. Reference to any specific
section of the Securities Act shall include any successor
section.
“Service” means the
performance of services on a periodic basis for the Company or any
of its Affiliates in the capacity of an employee, a nonemployee
member of a board of directors or other governing body, or an
independent consultant or advisor.
“Transaction Date” is
defined in Section 7.2(b)(i).
“10% Shareholder” means
a person who owns (or is considered as owning within the meaning of
Section 424 of the Code) stock possessing more than 10% of the
total combined voting power of all classes of capital stock of the
Company.
ARTICLE 3
ADMINISTRATION
3.1 Committee
. The Plan shall be administered by
the Board unless the Board appoints a separate committee of the
Board to administer the Plan pursuant to Section 3.2 (the
Board, or such committee, if it is administering the Plan, will be
referred to as the “Committee”). The Committee shall
select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum and all
determinations shall be made by a majority of that quorum. Any
determination reduced to writing and signed by all of the members
of the Committee shall be as effective as if it had been made by a
majority vote at a meeting duly called and held.
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3.2 Appointment of Committee . The Board may
appoint a committee consisting of two or more of its members to
administer the Plan. Once appointed, the committee shall continue
to serve until otherwise directed by the Board. From time to time
the Board may increase the size of the committee and appoint
additional members, remove members (with or without cause) and
appoint new members in their place, fill vacancies however caused,
and/or remove all members of the committee and thereafter directly
administer the Plan.
3.3 Powers; Regulations . The Committee shall
have full power and authority, subject only to the provisions of
the Plan (a) to administer or supervise the administration of
the Plan; (b) to interpret the provisions of the Plan and the
Option Agreements; (c) to correct any defect, supply any
information and reconcile any inconsistency in such manner and to
such extent as it determines to be necessary or advisable to carry
out the purpose of the Plan; and (d) to take such other
actions in connection with the Plan as it determines to be
necessary or advisable. The Committee is authorized to adopt, amend
and rescind such rules, regulations and procedures not inconsistent
with the provisions of the Plan as it determines to be necessary or
advisable for the proper administration of the Plan, and each
Option shall be subject to all such rules, regulations and
procedures (whether the Option was granted before or after
promulgation thereof). Without limiting the authority of the
Committee to interpret the provisions of the Plan, the Committee
shall have the right to determine that a transaction (or series of
related transactions) is not a Control Purchase, even though
literally included within the definition of that term, if the
Committee determines that the transaction (or series of related
transactions) does not have the effect of significantly changing or
influencing the control of the Company on a permanent
basis.
3.4 Limits on Authority . Exercise by the
Committee of its authority shall be consistent (a) with the
intent that all Incentive Stock Options be qualified under the
terms of Section 422 of the Code, and (b) if the Company
registers any class of Equity Security pursuant to Section 12
of the Exchange Act, with the intent that the Plan be administered
in a manner so that, to the extent possible, the grant of Options
and all other transactions with respect to the Plan, to Options and
to any Common Stock acquired upon exercise of Options, shall be
exempt from the operation of Section 16(b) of the Exchange
Act.
3.5 Exercise of Authority . Each action and
determination made or taken by the Committee, including but not
limited to any interpretation of the Plan and the Option
Agreements, shall be final, conclusive and binding for all purposes
and upon all persons. No member of the Committee shall be liable
for any action or determination made or taken by the member or the
Committee in good faith.
ARTICLE 4
SHARES SUBJECT TO THE
PLAN
4.1 Number of Shares . Subject to the
provisions of this Article 4, the maximum number of shares of
Common Stock for which Options may be granted during the term of
the Plan shall be 4,231,250. Shares of Common Stock will be made
available from the authorized but unissued shares of the Company or
from shares reacquired by the Company. If an Option terminates for
any reason without having been exercised in full, or if Excess
Securities are repurchased by the Company pursuant to
Section 6.9, then the shares of Common Stock for
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which the Option has not been exercised or the
Excess Securities, as the case may be, shall again be available for
purposes of the Plan.
4.2 Adjustments . If the Company subdivides
its outstanding shares of Common Stock into a greater number of
shares (by stock dividend, stock split, reclassification or
otherwise) or combines its outstanding shares of Common Stock into
a smaller number of shares (by reverse stock split,
reclassification or otherwise), or if the Committee determines that
any stock dividend, extraordinary cash dividend, reclassification,
recapitalization, reorganization, split-up, spin-off, combination,
exchange of shares, rights offering, or other transaction or event
that is not an Approved Transaction or Control Purchase affects the
Common Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner
as it determines to be equitable and appropriate, adjust any or all
of (a) the number of shares of Common Stock (or number and
kind of other securities or property) for which, and the time or
times when, outstanding Options may thereafter be exercised;
(b) the purchase price for the shares (or other securities or
property) under outstanding Options; and (c) the number of
shares of Common Stock (or number and kind of other securities or
property) for which Options may thereafter be granted. In
connection with any adjustment made pursuant to this
Section 4.2, the Committee may, if deemed equitable and
appropriate, provide for a cash payment to be made to the Holder of
an Option, in cancellation of the Option, of such amount as the
Committee determines represents the value the Option would then
have if it were exercisable for all of the shares under the
Option.
ARTICLE 5
ELIGIBILITY
The persons eligible to participate
in the Plan and to receive Options (“ Eligible
Persons”) shall be persons who are performing or have been
hired to perform Service for the Company or any of its
Affiliates.
ARTICLE 6
STOCK OPTIONS
6.1 Grant of Options . The Committee shall
from time to time determine (a) the Eligible Persons to whom
Options are to be granted; (b) the number of shares of Common
Stock for which the Options are exercisable and the purchase price
of such shares; (c) whether the Options are Incentive Stock
Options or Nonqualified Stock Options; and (d) all of the
other terms and conditions (which need not be identical) of the
Options; provided, however , that all such
determinations shall be subject to the express limitations of the
Plan.
6.2 Purchase Price . The price at which
shares of Common Stock may be purchased upon exercise of an Option
may be more than, less than or equal to the Fair Market Value of
the shares on the date the Option is granted; provided,
however , that the purchase price of each share of Common
Stock under an Incentive Stock Option shall be (a) at least
110% of the Fair Market Value of such share on the date of grant of
the Option, if it is granted to a 10% Shareholder, and (b) at
least 100% of the Fair Market Value of such share on the date of
grant of the Option, if it is granted to any other Eligible
Person.
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6.3 Limitations on Incentive
Stock Options .
(a)
Grants Only to
Employees . Incentive Stock Options may only be granted to
Eligible Persons who are employees of the Company or an Affiliate
that constitutes a “parent corporation” or a
“subsidiary corporation” within the meaning of
Section 424 of the Code.
(b)
Limitation on Shares .
The aggregate Fair Market Value of the shares of Common Stock for
which, during any calendar year, one or more Incentive Stock
Options under the Plan (and/or one or more options under any other
plan maintained by the Company or any of its Affiliates for the
granting of options intended to qualify under Section 422 of
the Code) become exercisable for the first time by a Holder shall
not exceed $100,000 (said value to be determined as of the
respective dates on which the options are granted to the Holder).
If an Option that would otherwise qualify as an Incentive Stock
Option becomes exercisable for the first time in any calendar year
for shares of Common Stock that would cause such aggregate Fair
Market Value to exceed $100,000, then the portion of the Option in
respect of such shares shall be deemed to be a Nonqualified Stock
Option.
6.4 Term of Options . Subject to the
provisions of the Plan with respect to termination of Options upon
or following death, Disability or other termination of Service, the
Committee shall determine the term of each Option, which term shall
not be more than (a) five (5) years from the date of
grant in the case of an Incentive Stock Option granted to a 10%
Shareholder, and (b) ten (10) years from the date of
grant in the case of any other Incentive Stock Option.
6.5 Option Agreement . Each Option shall be
evidenced by an agreement (the “Option Agreement”)
containing the terms and conditions of the Option as determined by
the Committee. Each grantee of an Option shall be notified promptly
of the grant, an Option Agreement shall be executed and delivered
by the Company to the grantee within sixty (60) days after the
date the Committee approves the grant, and the Committee may
terminate the grant if the Option Agreement is not signed by the
grantee and delivered to the Company within sixty (60) days
after it is delivered to the grantee. An Option Agreement may
contain (but shall not be required to contain) such terms and
conditions as the Committee determines to be necessary or
appropriate to ensure that the penalty provisions of
Section 4999 of the Code will not apply to any stock received
by the Holder from the Company. An Option Agreement may be amended
from time to time pursuant to Section 7.6(c).
6.6 Exercise of
Options .
(a)
Time Exercisable . An
Option shall become and remain exercisable to the extent provided
in its Option Agreement and in the Plan. However, if an Option is
granted prior to the date its Holder first performs Service for the
Company or any of its Affiliates, the Option shall not be
exercisable prior to the date the Holder first performs such
Service. If an Option is scheduled to become exercisable on one or
more dates specified in its Option Agreement, and its Holder has a
leave of absence without pay, such date or dates shall be postponed
for a period equal to the duration of the leave unless the
Committee determines otherwise.
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(b)
Manner of Exercise .
An Option shall be exercised by written notice to the Company in
compliance with the terms and conditions of its Option Agreement
and such procedures for exercise of Options as the Committee may
adopt from time to time. The method or methods of payment of the
purchase price of the shares to be purchased upon exercise of the
Option and of any amounts required by Section 7.8 shall be
determined by the Committee and set forth in the Option Agreement
for the Option. Such method or methods may consist of
(i) check, (ii) promissory note, (iii) whole shares
of Common Stock already owned by the Holder, (iv) the
withholding of shares of Common Stock issuable upon exercise of the
Option, (v) the delivery, together with a properly executed
exercise notice, of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds
required to pay the purchase price, (vi) any combination of
the foregoing methods of payment, or (vii) such other
consideration and method of payment as may be permitted for the
issuance of shares under applicable securities and other laws. The
Committee may specify a minimum number of shares of Common Stock
for which an Option must be exercised, but such minimum shall not
prevent exercise of an Option for the full number of shares for
which it is exercisable.
(c)
Value of Shares .
Shares of Common Stock delivered in payment of all or any part of
the amounts payable upon exercise of an Option, and shares of
Common Stock withheld for such payment, shall be valued at their
Fair Market Value on the exercise date of the Option.
(d)
Issuance of Shares .
The Company shall issue the shares of Common Stock purchased under
an Option as soon as practicable after the Option has been duly
exercised; provided, however , that no fractional
shares shall be issuable under the Plan, and any fractional shares
that would otherwise be issuable shall be disregarded. Following
exercise of an Incentive Stock Option, the Committee shall cause
the information statement required by Section 6039 of the Code
to be furnished to the Holder within the time and in the manner
prescribed by law.
6.7 Legends . Each certificate representing
shares of Common Stock issued upon exercise of an Option shall,
unless the Committee otherwise determines, contain on its face the
notice “SEE TRANSFER RESTRICTIONS ON REVERSE” and on
its reverse a legend in form substantially as follows, together
with any other legends that are required by the provisions of the
Plan or that the Committee determines to be necessary or
appropriate:
NOTICE: TRANSFER AND OTHER
RESTRICTIONS
THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UPON
SATISFACTION OF CERTAIN CONDITIONS. INFORMATION CONCERNING THESE
RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION. ANY OFFER OR
DISPOSITION OF THESE SECURITIES WITHOUT SATISFACTION OF SAID
CONDITIONS WILL BE WRONGFUL AND WILL NOT ENTITLE THE TRANSFEREE TO
REGISTER OWNERSHIP OF THE SECURITIES WITH THE
CORPORATION.
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THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER, AND
MAY BE SUBJECT TO REPURCHASE BY THE CORPORATION OR ONE OR MORE OF
ITS SHAREHOLDERS, OR RIGHTS OF FIRST REFUSAL OR OTHER RESTRICTIONS,
PURSUANT TO THE PROVISIONS OF THE CORPORATION’S 1999 STOCK
OPTION PLAN AND/OR AN AGREEMENT BETWEEN THE HOLDER AND THE
CORPORATION AND/OR AN AGREEMENT AMONG THE SHAREHOLDERS OF THE
CORPORATION. INFORMATION CONCERNING THESE RESTRICTIONS MAY BE
OBTAINED FROM THE CORPORATION.
The Company may cause the transfer agent for the
Common Stock to place a stop transfer order with respect to such
shares.
6.8 Transferability . Except to the extent
the Committee limits this Section 6.8 at the time a
Nonqualified Stock Option is granted, the original Holder of the
Nonqualified Stock Option may transfer the Option to any Permitted
Transferee, so long as the transfer is without value, and the
Permitted Transferee may transfer the Option without value to any
other Permitted Transferee of the original Holder. Neither
(a) a transfer under a domestic relations order in settlement
of marital property rights, nor (b) a transfer to an entity in
which more than fifty percent (50%) of the voting interests
are owned by Permitted Transferees (or the original Holder) in
exchange for an interest in that entity, will constitute a transfer
for value. Except as expressly permitted by this Section 6.8,
an Option will not be transferable by its Holder other than by will
or by the laws of descent and distribution, will not be
involuntarily alienable by legal process or otherwise by operation
of law, and will be exercisable during the Holder’s lifetime
only by the Holder. If the Holder of an Option dies prior to its
full exercise, the Option may be exercised, to the extent it does
not thereby terminate, by the person or persons to whom the rights
of the holder under the Option pass by will or by applicable laws
of descent and distribution.
6.9 Repurchase of
Shares .
(a) Right of
Repurchase .
(i) If, through the effective date
of repurchase described in Section 6.9(b), the Holder has
acquired through exercise of an Option a number of Option
Securities in excess of the product (rounded up to the nearest
whole number) of the applicable percentage, as set forth in the
table below, multiplied by the total number of Option Securities
subject to the Option on the date such Option was granted (the
“Excess Securities”), then the Company shall have the
right, but shall not be required, to repurchase from a Holder (or
the Holder’s transferee) all or any part of the Excess
Securities. Such right of repurchase shall be exercisable at any
time and from time to time during the period of ninety
(90) days commencing on the later of (i) the date of
termination of the Holder’s Service for any reason, including
but not limited to death or Disability, or (ii) as to an
Option that is exercised following termination of the
Holder’s Service, the date of such exercise. The repurchase
price for each of such Excess Securities that the Company elects to
repurchase in the manner provided in Section 6.9(b) below
shall be the price paid by the Holder for each of such Excess
Securities. The applicable percentage shall be calculated as
follows: based on the time elapsed between (A) the
Holder’s initial date of hire, or
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such other date as may be specified
by the Committee at the time the Option is granted to the Holder
(such initial date of hire or other date shall be referred to below
as the “Computation Date”), and (B) the date on
which the employment of the Holder terminates for any reason,
including but not limited to death or Disability:
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Time Elapsed Since Computation
Date
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Applicable Percentage
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Less than 12 months
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0%
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More than 12 months
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2-1/12 per month in
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but less than or equal to 48 months
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excess of 12 months
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If calculation of the “Time Elapsed Since
Computation Date” results in a fractional month, then a
fractional month of .5 or less shall be rounded down, while a
fractional month of more than .5 shall be rounded up.
(ii) The Company may elect to pay
the total amount owed to the Holder (or to the person or entity
holding the Excess Security to be repurchased) either (i) in
cash, in which case the amount shall be paid, without interest,
within thirty (30) days following the effective date of the
repurchase, or (ii) in three equal installments, the first
installment payable on the first anniversary of the effective date
of the repurchase, and the remaining installments payable on the
corresponding date in each of the next two years, with each
installment to include interest on the unpaid principal, computed
at the prime rate published in the Wall Street Journal for the
first business day of the month in which the effective date of the
repurchase occurs, for the period from the effective date of the
repurchase or the date of the most recent installment, as the case
may be, to the due date of the installment being paid.
(iii) In the event of a Control
Purchase or an Approved Transaction following which there are no
Continuing Options, the right of repurchase under this
Section 6.9 shall terminate. In the event of an Approved
Transaction following which there are Continuing Options, the
Computation Date applicable to any calculation of the number of
Excess Securities following such Control Purchase or Approved
Transaction shall be the date of which the Computation Date
immediately prior to such Control Purchase or Approved Transaction
is the first anniversary. For example, if the Computation Date
immediately prior to a Control Purchase or an Approved
Tr
