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This excerpt taken from the XIDE DEF 14A filed Jul 27, 2006. Types of
Awards Available under the 2004 Plan
The type of awards available under the 2004 Plan include stock
options, restricted shares and performance awards.
Stock
Options
Stock options granted under the 2004 Plan may be either
non-qualified stock options or incentive stock options
qualifying under Section 422 of the Internal Revenue Code
of 1986, as amended. Incentive stock options may be granted only
to employees of our company and its affiliates. Stock options
granted under the 2004 Plan will vest on the schedule determined
by the Committee. The Committee may accelerate the vesting of
stock options under certain circumstances. Most of the awards
which have been granted under the 2004 Plan to date have a
three-year vesting schedule, all of which are subject to
shareholder approval. To the extent that the aggregate fair
market value of shares of common stock underlying incentive
stock options exceeds $100,000 when those options first become
exercisable by a participant in any calendar year, the options
in excess of $100,000 will be treated as non-qualified stock
options.
The exercise price of any stock option granted under the 2004
Plan may not be less than the fair market value of our common
stock on the date the option is granted. However, with respect
to incentive stock options granted to employees who own stock
representing more than 10% of the combined voting power of all
classes of stock of our company or any affiliate, the exercise
price may not be less than 110% of the fair market value of our
common stock on the date the option is granted. The Committee
may allow the exercise price to be paid in cash or check, with
other shares of our common stock or through a cashless exercise
program using a broker-dealer.
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The Committee will determine the term of each stock option
granted under the 2004 Plan. The Committee has discretion to
provide for a term of up to ten years. However, for incentive
stock options granted to employees who own stock representing
more than 10% of the combined voting power of all classes of
stock of our company or any affiliate, the term of the option
may not exceed five years.
To the extent the award agreement governing a grant does not
specify the terms and conditions upon which a stock option will
terminate in the event of the termination of a participant:
(1) if a termination results from “disability”
within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended, the participant may exercise
the option at any time within one year following the
termination, to the extent the participant was entitled to
exercise the option at the date of termination; (2) if a
termination results from the participant’s death, or if
death of the participant occurs within thirty days following the
termination, the participant’s estate or person with rights
to exercise the option may exercise the option at any time
within one year following the date of the participant’s
death, to the extent the option had vested at the date of the
participant’s death or termination, as applicable;
(3) if the participant is terminated for cause, the right
to exercise the option is immediately forfeited and considered
null and void; and (4) if a termination occurs for any
other reason, the participant may exercise the option at any
time within 90 days following the termination, to the
extent the participant was entitled to exercise the option at
the date of termination.
No stock option granted under the 2004 Plan may be re-priced or
surrendered in exchange for a replacement option having a lower
exercise price except in connection with a stock split, stock
dividend or similar event in order to prevent dilution or
enlargement of benefits intended to be made available under the
2004 Plan.
Restricted
Shares
Restricted shares represent shares of our common stock. The
Committee determines the terms and conditions under which
restricted shares vest. Prior to the lapse of any restrictions
with respect to restricted shares, we issue stock certificates
evidencing the shares that bear a legend referencing the
applicable restrictions. These restricted shares and any
dividends that accrue on the shares are held by our company or a
third party designated by our company until the restricted
shares vest. Upon the vesting of restricted shares and the
participant’s satisfaction of any applicable tax
withholding requirements, we release to the participant, free of
any restrictions, one share of our common stock for each
restricted share, but will pay cash in lieu of fractional
shares. Subject to the Committee’s discretion, following
the vesting of restricted shares, the participant may be
eligible to receive cash dividends, simple interest and any
stock dividends with respect to the vested shares which were
declared and paid between the grant date and the vesting date.
Performance
Awards
Performance awards may be granted in the discretion of the
Committee and such awards may be designated by the Committee as
“performance compensation awards” which constitute
“qualified performance-based compensation” under
Section 162(m) of the Internal Revenue Code of 1986, as
amended. With respect to each performance compensation award,
the Committee establishes: (1) a performance period (of not
less than one fiscal year) over which the attainment of the
selected performance measure is measured; (2) a performance
measure to gauge the performance of our company or a business
unit, which, whether in absolute or relative terms including,
without limitation, terms relative to a peer group or index, may
be based on basic, diluted, or adjusted earnings per share;
sales or revenue; earnings before interest, taxes, and other
adjustments (in total or on a per share basis); basic or
adjusted net income; returns on equity, assets, capital, revenue
or similar measure; economic value added; working capital; total
shareholder return; and product development, product market
share, research, licensing, litigation, human resources,
information services, mergers, acquisitions, sales of assets of
affiliates or business units. Each such measure shall be to the
extent applicable, determined in accordance with generally
accepted accounting principles as consistently applied by our
company (or such other standard applied by the Committee) and,
if so determined by the Committee, and in the case of a
performance compensation award, to the extent permitted under
Internal Revenue Code Section 162(m), adjusted to omit the
effects of extraordinary items, gain or loss on the disposal of
a business segment, unusual or infrequently occurring events and
transactions and cumulative effects of changes in
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accounting principles. Performance measures may vary from
performance period to performance period and from participant to
participant, and may be established on a stand-alone basis, in
tandem or in the alternative; or (3) a performance formula
for purposes of determining whether an award has been earned
based on the level of performance attached with respect to a
performance measure. The participant will be eligible to receive
payment on a performance compensation award to the extent the
performance measures are achieved and the performance formula as
applied against the performance measures determine that the
award has been earned for the relevant performance period.
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