This excerpt taken from the ISTA DEF 14A filed Oct 30, 2009.
Description of the Amendments
General. The purpose of the Amendments are to enable us to attract, retain and motivate our employees and consultants, as well as our non-employee directors, by providing for or increasing the proprietary interests of such employees, consultants or non-employee directors in the Company. The maximum number of shares of common stock that may be issued pursuant to awards under the 2004 Plan is currently 6,153,107, subject to certain adjustments to prevent dilution. It is proposed that, through the adoption of the Amendments, the maximum number of shares of common stock that may be issued pursuant to awards under the 2004 Plan be increased by 6,000,000 shares, or from 6,153,107 to 12,153,107 shares, subject to certain adjustments to prevent dilution. The Amendments also propose to increase correspondingly the maximum limitation on the number of shares subject to incentive options from 5,453,107 to 10,703107 shares and subject to restricted stock and performance shares from 700,000 to 1,450,000 shares, subject to certain adjustments to prevent dilution. The above increases in the number of authorized shares and the corresponding increases in the maximum limitation on inventive stock options and restricted and performance shares are the only proposed changes to the 2004 Plan currently in effect included in the Amendments.
Shares Reserved for Issuance. Stockholder approval of the Amendments will authorize us to grant options and/or rights to purchase or otherwise acquire up to an additional 6,000,000 shares, or an aggregate of 12,153,107 shares of common stock, of which up to 1,450,000 shares may only be issued in connection with restricted stock and performance-share awards.
In the event that all or any portion of any option, restricted stock or performance shares granted or offered under the 2004 Plan can no longer under any circumstances be exercised or, with respect to restricted stock or performance shares solely, is reacquired by us, the shares of common stock allocable to the unexercised portion of such option or such stock purchase agreement, or, with respect to restricted stock or performance shares solely, the shares so reacquired, will become available for grant or issuance under the 2004 Plan. Additionally, the number of shares available for issuance under the 2004 Plan will be subject to adjustment in the event of stock splits, stock dividends or certain other similar changes in our capital structure.
Administration. The 2004 Plan is administered by an Administrator, which, under the Amendments, shall be either the Board of Directors or a committee appointed by the Board of Directors. The Compensation Committee of the Board of Directors currently administers the 2004 Plan. Subject to the provisions of the 2004 Plan, the Administrator has full authority to implement, administer and make all determinations necessary under the 2004 Plan.
The Board of Directors may from time to time alter, amend, suspend or terminate the 2004 Plan in such respects as the Board of Directors may deem advisable; provided, however, that no such alteration, amendment, suspension or termination shall be made that would substantially affect or impair the rights of any person under any incentive option, nonqualified option, restricted share or performance share theretofore granted to such person without his or her consent. Unless previously terminated by the Board of Directors, the 2004 Plan will terminate on June 10, 2014.
Eligibility. The 2004 Plan provides that awards may be granted to employees, officers, directors, consultants, independent contractors and advisors of the Company or of any parent or subsidiary corporation of the Company, whether now existing or hereafter created or acquired, or an Affiliated Company, as defined in the 2004 Plan, as may be determined by the Administrator. In no event may any employee be granted options under the 2004 Plan for more than 400,000 shares of our common stock in any one calendar year. However, in connection with his or her initial service to the Company, an employee may be eligible to be granted options for up to 800,000 shares of our common stock during the calendar year which includes such individuals initial service to the Company.
Terms of Stock Options. As discussed above, the Administrator determines many of the terms and conditions of awards granted under the 2004 Plan, including whether an option will be an incentive stock option, or an ISO, or a non-qualified stock option, or an NQSO. Each option is evidenced by any agreement in such form as the Administrator approves and is subject to the following conditions (as described in further detail in the 2004 Plan):
Terms of Restricted Stock Awards. Each restricted stock award is evidenced by a restricted stock purchase agreement in such form as the Administrator approves and is subject to the following conditions (as described in further detail in the 2004 Plan):
Terms of Performance Shares. The 2004 Plan provides for the grant of performance shares, or Performance Shares, subject to such conditions and the attainment of such performance goals over such periods as the Administrator determines in writing and sets forth in a written agreement. Performance Shares are unfunded bookkeeping entries generally having initial values equal to the fair market value determined on the grant date of a share of common stock. A predetermined amount of Performance Shares that may be earned by the participant to the extent that one or more predetermined performance goals are attained within a predetermined performance period will be specified. To the extent earned, Performance Shares are settled in shares of common stock (including shares of restricted stock). Following completion of the applicable performance period, the Administrator will certify in writing the extent to which the applicable performance goals have been attained and the resulting number of shares credited to the participant. If a participants service terminates due to the participants death, disability or retirement prior to completion of the applicable performance period, the Administrator may apply for full or partial credit as the Administrator may determine consistent with the 2004 Plan. No Performance Shares may be sold or transferred other than by will or the laws of descent and distribution prior to the end of the applicable performance period.