Amendment by section b 5 of Pub. A , to which such amendment relates, see section of Pub. Amendment by section of Pub. For provisions that nothing in amendment by Pub. Please help us improve our site! No thank you.
Requirements for an Option to Qualify as an Incentive Stock Option
LII U. Code Title Income Taxes Chapter 1. Deferred Compensation, Etc. Part II. Incentive stock options. Code Notes prev next. Such term shall not include any option if as of the time the option is granted the terms of such option provide that it will not be treated as an incentive stock option. Such term shall not include any option if an election is made under section 83 i with respect to the stock received in connection with the exercise of such option. B such disposition is a sale or exchange with respect to which a loss if sustained would be recognized to such individual,.
B the employee has a right to receive property at the time of exercise of the option, or. C the option is subject to any condition not inconsistent with the provisions of subsection b. Subparagraph B shall apply to a transfer of property other than cash only if section 83 applies to the property so transferred. The term of each Option shall be as specified by the Committee at the date of grant, but in no event shall an Option be exercisable after the expiration of 10 years from the date of grant.
An Option shall be exercisable in whole or in such installments and at such times as determined by the Committee. Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including, without limitation, provisions to qualify an Option as an Incentive Stock Option under section of the Code. Each Option Agreement shall specify the effect of termination of i employment, ii the consulting or advisory relationship or iii membership on the Board or the board of directors or analogous governing body of an Affiliate of the Company, as applicable, on the exercisability of the Option.
An Option Agreement may provide for the payment of the option price, in whole or in part, by the delivery of a number of shares of Common Stock plus cash if necessary having a Fair Market Value equal to such option price; provided, however, that such payment, in whole or in part, by. Further, an Option Agreement may provide, on such terms and conditions as the Committee in its sole discretion may prescribe, for the grant of a Stock Appreciation Right in connection with the grant of an Option and, in such case, the exercise of the Stock Appreciation Right shall result in the surrender of the right to purchase a number of shares under the Option equal to the number of shares with respect to which the Stock Appreciation Right is exercised and vice versa.
In the case of any Stock Appreciation Right that is granted in connection with an Incentive Stock Option, such right shall be exercisable only when the Fair Market Value of the Common Stock exceeds the exercise price specified therefor in the Option or the portion thereof to be surrendered. The terms and conditions of the respective Option Agreements need not be identical. The Committee may, in its sole discretion, amend an outstanding Option Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan including, without limitation, an amendment that accelerates the time at which the Option, or a portion thereof, may be exercisable , provided that, except as otherwise provided in the Plan or the applicable Option Agreement, any such amendment shall not materially reduce the rights of a Participant without the consent of such Participant.
The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee but, subject to the special limitations on Incentive Stock Options set forth in Paragraph VII c and to adjustment as provided in Paragraph XVI, such purchase price shall not be less than the Fair Market Value of a share of Common Stock on the date such Option is granted except as otherwise provided in Paragraph XV. The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by the Committee.
The purchase price of the Option or portion thereof shall be paid in full in the manner prescribed by the Committee. Separate stock certificates shall be issued by the Company for those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of any Option that does not constitute an Incentive Stock Option.
A Stock Appreciation Right may be granted independently of an Option; provided, however, that the exercise price per share of Common Stock subject to the Stock Appreciation Right shall be i determined by the Committee but, subject to adjustment as provided in Paragraph XVI, such exercise price shall not be less than the Fair Market Value of a share of Common Stock on the date such Stock Appreciation Right is granted, and ii subject to the restrictions on repricings described in Paragraph VII g in the same manner as applies to Options.
Subject to the provisions of Paragraph XVI, the terms of outstanding Option Agreements may not be amended without the approval of the stockholders of the Company so as to i reduce the option price of any outstanding Options or Stock Appreciation Rights, ii. Subject to Paragraph XVI and the last sentence of Paragraph VII d , the Committee shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Option Agreement to increase the per share exercise price of any outstanding Options or Stock Appreciation Rights or to cancel and replace any outstanding Options or Stock Appreciation Rights with the grant of Options or Stock Appreciation Rights having a per share exercise price that is equal to or greater than the per share exercise price of the original Award.
Except as provided in Paragraph XII, the Committee may not, without approval of the stockholders of the Company, amend any outstanding Option Agreement to lower the option price or cancel and replace any outstanding Option Agreement with Option Agreements having a lower option price. The Participant shall be entitled to all the privileges and rights of a stockholder only with respect to such shares of Common Stock as have been purchased under the Option and for which shares of stock have been delivered to the Participant. Options and Stock Appreciation Rights may be granted under the Plan from time to time in substitution for options and such rights held by individuals providing services to corporations or other entities who become employees, Consultants, or Directors as a result of a merger or consolidation or other business transaction with the Company or any Affiliate.
At the time a Restricted Stock Award is granted, the Committee may, in its sole discretion, prescribe additional terms, conditions, or restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining to the termination of employment or service as a Consultant or Director by retirement, disability, death, or otherwise of a Participant prior to expiration of the Forfeitures Restrictions. Such additional terms, conditions, or restrictions shall be set forth in a Restricted Stock Agreement made in conjunction with the Award. The Committee shall determine the amount and form of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that in the absence of such a determination, a Participant shall not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law.
Subject to any limitations imposed under section m of the Code, the Committee may, in its discretion and as of a date determined by the Committee, fully vest any or all Common Stock awarded to a Participant pursuant to a Restricted Stock Award and, upon such vesting, all Forfeiture Restrictions applicable to such Restricted Stock Award shall terminate as of such date.
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Any action by the Committee pursuant to this Subparagraph may vary among individual Participants and may vary among the Restricted Stock Awards held by any individual Participant. At the time any Award is made under this Paragraph VIII, the Company and the Participant shall enter into a Restricted Stock Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate.
The terms and provisions of the respective Restricted Stock Agreements need not be identical. Subject to the restriction. If the Committee grants one or more Performance Awards to a Participant, the Committee shall establish, with respect to and at the time each such Performance Award is granted, the number of shares of Common Stock subject to, or the maximum value of, such Performance Award and the performance period over which the performance applicable to such Performance Award shall be measured. A Performance Award shall be awarded to a Participant contingent upon future performance of the Company or any Affiliate, division, or department thereof under a Performance Measure during the performance period.
The Committee, in its sole discretion, may provide for an adjustable Performance Award value based upon the level of achievement of Performance Measures. Following the end of the performance period, the holder of a Performance Award shall be entitled to receive payment of an amount not exceeding the number of shares of Common Stock subject to, or the maximum value of, the Performance Award, based on the achievement of the Performance Measures for such performance period, as determined and certified in writing by the Committee.
Payment of a Performance Award may be made in cash, Common Stock, or a combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in installments as prescribed by the Committee.
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If a Performance Award covering shares of Common Stock is to be paid in cash, such payment shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Performance Award Agreement. A Participant shall not be entitled to the privileges and rights of a stockholder with respect to a Performance Award covering shares of Common Stock until payment has been determined by the Committee and such shares have been delivered to the Participant. A Performance Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable performance period through the payment date, except as may be determined by the Committee.
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At the time any Award is made under this Paragraph IX, the Company and the Participant shall enter into a Performance Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate, including, in the discretion of the Committee, the payment of Dividend Equivalents on any shares of Common Stock at the time of payment of the Performance Award or at such other time designated by the Committee for the period beginning on the date of grant and ending on the date of payment of the Performance Award or for such other period designated by the Committee.
The terms and provisions of the respective Performance Award Agreements need not be identical. Restricted Stock Unit Awards are rights to receive shares of Common Stock or the Fair Market Value thereof , or rights to receive an amount equal to any appreciation or increase in the Fair Market Value of Common Stock over a specified period of time, which vest over a period of time as established by the Committee, without satisfaction of any performance criteria or objectives that are based on one or more Performance Measures.
The Committee may, in its discretion, require payment or other conditions of the Participant respecting any Restricted Stock Unit Award. The Committee shall establish, with respect to and at the time of each Restricted Stock Unit Award, a period over which the Award shall vest with respect to the Participant. Following the end of the vesting period for a Restricted Stock Unit Award or at such other time as the applicable Restricted Stock Unit Award Agreement may provide , the holder of a Restricted Stock Unit Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Restricted Stock Unit Award, based on the then vested value of the Award.
Payment shall be made in a lump sum or in installments.
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Any payment to be made in cash shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Restricted Stock Unit Award Agreement. Dividend Equivalents may be paid during or after the vesting period with respect to a Restricted Stock Unit Award, as determined by the Committee. A Participant shall not be entitled to the privileges and rights of a stockholder with respect to a Restricted Stock Unit Award until the shares of Common Stock, if any, have been delivered to the Participant.
A Restricted Stock Unit Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee. At the time any Award is made under this Paragraph X, the Company and the Participant shall enter into a Restricted Stock Unit Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate.
The terms and provisions of the respective Restricted Stock Unit Award Agreements need not be identical. Each Bonus Stock Award granted to a Participant shall constitute a transfer of unrestricted shares of Common Stock on such terms and conditions as the Committee shall determine. Bonus Stock Awards shall be made in shares of Common Stock and need not be subject to performance criteria or objectives or to forfeiture.
The purchase price, if any, for shares of Common Stock issued in connection with a Bonus Stock Award shall be determined by the Committee in its sole discretion. Dividend Equivalents granted to a Participant shall entitle the Participant to receive cash, Common Stock, other Awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of Common Stock. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award other than an Award of Restricted Stock or a Bonus Stock Award.
The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or at a later specified date and, if distributed at a later date, may be deemed to have been reinvested in additional Common Stock, Awards, or other investment vehicles or accrued in a bookkeeping account without interest, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.
With respect to Dividend Equivalents granted in connection with another Award, absent a contrary provision in the Award Agreement, such Dividend Equivalents shall be subject to the same restrictions and risk of forfeiture as the Award with respect to which the dividends accrue and shall not be paid unless and until such Award has vested and been earned. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Common Stock or the value of securities of, or the performance of, specified Affiliates of the Company.
C Corporations
Common Stock delivered pursuant to an Other Stock-Based Award in the nature of a purchase right granted under this Paragraph XIII shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Common Stock, other Awards, or other property, as the Committee shall determine. The Committee is authorized to grant Cash Awards, on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Participants in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate.
Awards may be granted in substitution or exchange for any other Award granted under the Plan or under another plan of the Company or an Affiliate or any other right of a person to receive payment from the Company or an Affiliate. Awards may also be granted under the Plan in substitution for awards held by individuals who become Participants as a result of a merger, consolidation or acquisition of another entity or the assets of another entity by or with the Company or an Affiliate.