Exhibit 99.1
QUALCOMM Incorporated
2006 Long-Term Incentive Plan
TABLE OF CONTENTS
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Establishment, Purpose and Term of Plan |
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1.1 |
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Establishment
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1 |
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1.2 |
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Purpose
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1.3 |
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Term of Plan
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1 |
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2. |
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Definitions and Construction |
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2.1 |
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Definitions
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2.2 |
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Construction
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6 |
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3. |
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Administration |
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6 |
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3.1 |
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Administration by the Committee
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6 |
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3.2 |
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Authority of Officers
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6 |
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3.3 |
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Administration with Respect to Insiders
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6 |
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3.4 |
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Committee Complying with Section 162(m)
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6 |
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3.5 |
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Powers of the Committee
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6 |
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3.6 |
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Indemnification
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7 |
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3.7 |
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Arbitration
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8 |
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3.8 |
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Repricing Prohibited
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8 |
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4. |
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Shares Subject to Plan |
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8 |
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4.1 |
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Maximum Number of Shares Issuable
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8 |
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4.2 |
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Adjustments for Changes in Capital Structure
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8 |
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5. |
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Eligibility and Award Limitations |
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9 |
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5.1 |
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Persons Eligible for Awards
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9 |
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5.2 |
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Participation
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9 |
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5.3 |
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Incentive Stock Option Limitations
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9 |
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5.4 |
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Award Limits
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10 |
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6. |
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Terms and Conditions of Options |
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10 |
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6.1 |
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Exercise Price
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10 |
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6.2 |
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Exercisability and Term of Options
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11 |
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6.3 |
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Payment of Exercise Price
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11 |
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6.4 |
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Effect of Termination of Service
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12 |
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6.5 |
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Transferability of Options
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12 |
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7. |
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Terms and Conditions of Stock Appreciation Rights |
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12 |
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7.1 |
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Types of SARs Authorized
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12 |
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7.2 |
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Exercise Price
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13 |
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7.3 |
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Exercisability and Term of SARs
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13 |
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7.4 |
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Deemed Exercise of SARs
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13 |
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7.5 |
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Effect of Termination of Service
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13 |
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7.6 |
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Nontransferability of SARs
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13 |
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8. |
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Terms and Conditions of Restricted Stock Awards |
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13 |
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8.1 |
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Types of Restricted Stock Awards Authorized
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13 |
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8.2 |
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Purchase Price
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14 |
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8.3 |
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Purchase Period
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14 |
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8.4 |
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Vesting and Restrictions on Transfer
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14 |
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8.5 |
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Voting Rights; Dividends and Distributions
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14 |
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8.6 |
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Effect of Termination of Service
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14 |
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8.7 |
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Nontransferability of Restricted Stock Award Rights
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14 |
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9. |
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Terms and Conditions of Performance Awards |
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14 |
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9.1 |
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Types of Performance Awards Authorized
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14 |
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9.2 |
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Initial Value of Performance Shares and Performance Units
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15 |
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9.3 |
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Establishment of Performance Period, Performance Goals and Performance Award Formula
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15 |
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9.4 |
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Measurement of Performance Goals
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15 |
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9.5 |
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Settlement of Performance Awards
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16 |
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9.6 |
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Voting Rights; Dividend Equivalent Rights and Distributions
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16 |
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9.7 |
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Effect of Termination of Service
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16 |
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9.8 |
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Nontransferability of Performance Awards
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17 |
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10. |
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Terms and Conditions of Restricted Stock Unit Awards |
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17 |
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10.1 |
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Grant of Restricted Stock Unit Awards
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17 |
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10.2 |
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Vesting
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17 |
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10.3 |
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Voting Rights, Dividend Equivalent Rights and Distributions
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17 |
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10.4 |
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Effect of Termination of Service
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18 |
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10.5 |
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Settlement of Restricted Stock Unit Awards
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18 |
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10.6 |
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Nontransferability of Restricted Stock Unit Awards
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18 |
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11. |
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Deferred Compensation Awards |
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18 |
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11.1 |
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Establishment of Deferred Compensation Award Programs
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18 |
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11.2 |
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Terms and Conditions of Deferred Compensation Awards
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19 |
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12. |
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Other Stock-Based Awards |
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19 |
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13. |
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Effect of Change in Control on Options and SARs |
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20 |
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13.1 |
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Accelerated Vesting
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20 |
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13.2 |
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Assumption or Substitution
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20 |
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13.3 |
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Effect of Change in Control on Restricted Stock and Other Type of Awards
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20 |
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14. |
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Compliance with Securities Law |
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20 |
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15. |
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Tax Withholding |
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21 |
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15.1 |
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Tax Withholding in General |
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21 |
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ii
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TABLE OF CONTENTS
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15.2 |
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Withholding in Shares
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21 |
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16. |
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Amendment or Termination of Plan |
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21 |
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17. |
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Miscellaneous Provisions |
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21 |
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17.1 |
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Repurchase Rights
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21 |
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17.2 |
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Provision of Information
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21 |
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17.3 |
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Rights as Employee, Consultant or Director
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21 |
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17.4 |
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Rights as a Stockholder
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22 |
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17.5 |
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Fractional Shares
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22 |
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17.6 |
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Severability
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22 |
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17.7 |
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Beneficiary Designation
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22 |
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17.8 |
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Unfunded Obligation
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22 |
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iii
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QUALCOMM Incorporated
2006 Long-Term Incentive Plan
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1
Establishment. The QUALCOMM Incorporated 2006 Long-Term
Incentive Plan (the Plan) is
hereby adopted December 5, 2005, subject to approval by the stockholders of the Company (the date
of such approval, the Effective Date). The Plan is a restatement of the Companys 2001 Stock
Option Plan. The Plan is also a successor to the Companys 1991 Stock Option Plan and the
Companys 2001 Non-Employee Directors Stock Option Plan
and its predecessor plan (the Prior
Plans) and the source of shares for the Companys Executive Retirement Matching Contribution Plan
(ERMCP).
1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract and retain the best qualified
personnel to perform services for the Participating Company Group, by motivating such persons to
contribute to the growth and profitability of the Participating Company Group, by aligning their
interests with interests of the Companys stockholders, and by rewarding such persons for their
services by tying a significant portion of their total compensation package to the success of the
Company. The Plan seeks to achieve this purpose by providing for Awards in the form of Options,
Stock Appreciation Rights, Restricted Stock Awards, Performance Shares, Performance Units,
Restricted Stock Units, Deferred Compensation Awards and other Stock-Based Awards as described
below. The Plan is also a source for the issuance of shares pursuant to the ERMCP.
1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by
the Board or the date on which all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan and the agreements
evidencing Awards granted under the Plan have lapsed. However, Awards shall not be granted later
than ten (10) years from the Effective Date. The Company intends that the Plan comply with Section
409A of the Code (including any amendments to or replacements of such section), and the Plan shall
be so construed.
2. DEFINITIONS AND CONSTRUCTION.
2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) Affiliate means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities. For this purpose, the term control (including the term
controlled by) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether through the ownership of
voting securities, by contract or otherwise; or shall have such other meaning assigned such term
for the purposes of registration on Form S-8 under the Securities Act.
(b) Award means any Option, SAR, Restricted Stock Award, Performance Share, Performance
Unit, Restricted Stock Unit or Deferred Compensation Award or other Stock-Based Award granted under
the Plan or an award of shares pursuant to the ERMCP.
(c) Award Agreement means a written agreement between the Company and a Participant setting
forth the terms, conditions and restrictions of the Award granted to the Participant.
(d) Board means the Board of Directors of the Company.
(e) A Change in Control shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a "Transaction") wherein the stockholders of the Company
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immediately before the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the Companys voting stock
immediately before the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting securities of the
Company or, in the case of a Transaction described in Section 2.1(z)(iii), the corporation or other
business entity to which the assets of the Company were transferred (the "Transferee"), as the case
may be. The Board shall determine in its discretion whether multiple sales or exchanges of the
voting securities of the Company or multiple Ownership Change Events are related. Notwithstanding
the preceding sentence, a Change in Control shall not include a Spinoff Transaction.
(f) Code means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(g) Committee means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. If no
committee of the Board has been appointed to administer the Plan, the Board shall exercise all of
the powers of the Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers. The Committee shall have the exclusive authority to administer
the Plan and shall have all of the powers granted herein, including, without limitation, the power
to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.
(h) Company means QUALCOMM Incorporated, a Delaware corporation, or any Successor.
(i) Consultant means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company.
(j) Deferred Compensation Award means an award of Stock Units granted to a Participant
pursuant to Section 11 of the Plan.
(k) Director means a member of the Board or of the board of directors of any Participating
Company.
(l) Disability means the Participant has been determined by the long-term disability insurer
of the Participating Company Group as eligible for disability benefits under the long-term
disability plan of the Participating Company Group or the Participant has been determined eligible
for Supplemental Security Income benefits by the Social Security Administration of the United
States of America; provided, however that with respect to Nonemployee Director Awards, Disability
means the Participant has been determined eligible for supplemental Security Income benefits by the
Social Security Administration of the United States of America and also means the inability of the
Participant, in the opinion of a qualified physician acceptable to the Company, to perform the
duties of the Participants position with the Participating Company Group because of sickness or
other physical or mental incapacity.
(m) Dividend Equivalent means a credit, made at the discretion of the Committee or as
otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an Award held by such
Participant.
(n) Employee means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a directors fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individuals
employment or termination of employment, as the case may be. For purposes of an individuals
rights, if any, under the Plan as of the time of the Companys determination,
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all such determinations by the Company shall be final, binding and conclusive, notwithstanding
that the Company or any court of law or governmental agency subsequently makes a contrary
determination.
(o) Exchange Act means the Securities Exchange Act of 1934, as amended.
(p) Fair Market Value means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:
(i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed
on a national or regional securities exchange or market system, the Fair Market Value of a share
of Stock shall be the closing price of a share of Stock as quoted on such national or regional
securities exchange or market system constituting the primary market for the Stock on the last
trading day prior to the day of determination, as reported in The Wall Street Journal or such
other source as the Company deems reliable.
(ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value on the basis of the closing, high, low or average sale price of a share of Stock or
the actual sale price of a share of Stock received by a Participant, on such date, the preceding
trading day, the next succeeding trading day or an average determined over a period of trading
days; provided, however, that the Fair Market Value shall not be less that the Fair Market Value
determined under Section 2.1(p)(i). The Committee may vary its method of determination of the
Fair Market Value as provided in this Section for different purposes under the Plan.
(iii) If, on such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be as determined by
the Committee in good faith without regard to any restriction other than a restriction which, by
its terms, will never lapse.
(q) Incentive Stock Option means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.
(r) Insider means an Officer, a Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.
(s)
Non-Control Affiliate means any entity in which any Participating Company has an
ownership interest and which the Committee shall designate as a Non-Control Affiliate.
(t) Nonemployee Director means a Director who is not an Employee.
(u) Nonstatutory Stock Option means an Option not intended to be (as set forth in the Award
Agreement) an incentive stock option within the meaning of Section 422(b) of the Code.
(v)
Normal Retirement Age means the date on which a Participant has attained the age of
sixty (60) years and has completed ten years of continuous Service; provided, however, that with
respect to Nonemployee Director Awards, Normal Retirement Age means the date on which a
Participant has attained the age of seventy (70) years and has completed nine years of continuous
Service.
(w) Officer means any person designated by the Board as an officer of the Company.
(x) Option means the right to purchase Stock at a stated price for a specified period of
time granted to a Participant pursuant to Section 6 of the Plan. An Option may be either an
Incentive Stock Option or a Nonstatutory Stock Option.
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(y) Option Expiration Date means the date of expiration of the Options term as set forth in
the Award Agreement.
(z) An Ownership Change Event shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all, as determined by the Board in
its discretion, of the assets of the Company; or (iv) a liquidation or dissolution of the Company.
(aa) Parent Corporation means any present or future parent corporation of the Company, as
defined in Section 424(e) of the Code.
(bb) Participant means any eligible person who has been granted one or more Awards.
(cc) Participating Company means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.
(dd) Participating Company Group means, at any point in time, all entities collectively
which are then Participating Companies.
(ee) Performance Award means an Award of Performance Shares or Performance Units.
(ff) Performance Award Formula means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 9.3 of the Plan which provides the basis for
computing the value of a Performance Award at one or more threshold levels of attainment of the
applicable Performance Goal(s) measured as of the end of the applicable Performance Period.
(gg) Performance Goal means a performance goal established by the Committee pursuant to
Section 9.3 of the Plan.
(hh) Performance Period means a period established by the Committee pursuant to Section 9.3
of the Plan at the end of which one or more Performance Goals are to be measured.
(ii) Performance Share means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Share, as determined by the Committee, based on performance.
(jj) Performance Unit means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a
Performance Unit, as determined by the Committee, based upon performance.
(kk) Restricted Stock Award means an Award of Restricted Stock.
(ll) Restricted Stock Unit or Stock Unit means a bookkeeping entry representing a right
granted to a Participant pursuant to Section 10 or Section 11 of the Plan, respectively, to receive
a share of Stock on a date determined in accordance with the provisions of Section 10 or Section
11, as applicable, and the Participants Award Agreement.
(mm) Restriction Period means the period established in accordance with Section 8.4 of the
Plan during which shares subject to a Restricted Stock Award are subject to Vesting Conditions.
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(nn) Rule 16b-3 means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.
(oo) SAR or Stock Appreciation Right means a bookkeeping entry representing, for each
share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 of the
Plan to receive payment in any combination of shares of Stock or cash of an amount equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price.
(pp) Section 162(m) means Section 162(m) of the Code.
(qq) Securities Act means the Securities Act of 1933, as amended.
(rr) Service means
(i) a Participants employment or service with the Participating Company Group, whether in
the capacity of an Employee, a Director or a Consultant. A Participants Service shall not be
deemed to have terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the Participating Company for
which the Participant renders such Service, provided that there is no interruption or termination
of the Participants Service. Furthermore, only to such extent as may be provided by the
Companys leave policy, a Participants Service with the Participating Company Group shall not be
deemed to have terminated if the Participant takes any military leave, sick leave, or other leave
of absence approved by the Company. Notwithstanding the foregoing, a leave of absence shall be
treated as Service for purposes of vesting only to such extent as may be provided by the
Companys leave policy. The Participants Service shall be deemed to have terminated either upon
an actual termination of Service or upon the entity for which the Participant performs Service
ceasing to be a Participating Company; except that if the entity for which Participant performs
Service is a Subsidiary Corporation and ceases to be a Participating Company as a result of the
distribution of the voting stock of such Subsidiary Corporation to the shareholders of the
Company, Service shall not be deemed to have terminated as a result of such distribution.
Subject to the foregoing, the Company, in its discretion, shall determine whether the
Participants Service has terminated and the effective date of such termination.
(ii) Notwithstanding any other provision of this Section, a Participants Service shall not
be deemed to have terminated merely because the Participating Company for which the Participant
renders Service ceases to be a member of the Participating Company Group by reason of a Spinoff
Transaction, nor shall Service be deemed to have terminated upon resumption of Service from the
Spinoff Company to a Participating Company. For all purposes under this Plan, a Participants
Service shall include Service, whether in the capacity of an Employee, Director or a Consultant,
for the Spinoff Company provided a Participant was employed by the Participating Company Group
immediately prior to the Spinoff Transaction. Notwithstanding the foregoing, if the Companys
auditors determine that the provisions or operation of the preceding two sentences would cause
the Company to incur a compensation expense and provided further that in the absence of the
preceding two sentences no such compensation expense would be incurred, then the two preceding
sentences shall be without force or effect, and the vesting and exercisability of each
outstanding Option and any shares acquired upon the exercise thereof shall be determined under
any other applicable provision of the Plan or the Option Agreement evidencing such Option.
(ss) Spinoff Company means a Participating Company which ceases to be such as a result of a
Spinoff Transaction.
(tt) Spinoff Transaction means a transaction in which the voting stock of an entity in the
Participating Company Group is distributed to the shareholders of a parent corporation as defined
by Section 424(e) of the Code, of such entity.
(uu) Stock means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2 of the Plan.
5
(vv) Stock-Based Awards means any award that is valued in whole or in part by reference to,
or is otherwise based on, the Stock, including dividends on the Stock, but not limited to those
Awards described in Sections 6 through 11 of the Plan.
(ww) Subsidiary Corporation means any present or future subsidiary corporation of the
Company, as defined in Section 424(f) of the Code.
(xx) Successor means a corporation into or with which the Company is merged or consolidated
or which acquires all or substantially all of the assets of the Company and which is designated by
the Board as a Successor for purposes of the Plan.
(yy) Ten Percent Owner means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.
(zz) Vesting Conditions mean those conditions established in accordance with Section 8.4 or
Section 10.2 of the Plan prior to the satisfaction of which shares subject to a Restricted Stock
Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participants termination of Service.
2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term or is not intended to be exclusive, unless the context clearly requires
otherwise.
3. ADMINISTRATION.
3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan or of any Award shall be determined by the Committee, and
such determinations shall be final and binding upon all persons having an interest in the Plan or
such Award.
3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or election.
3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.
3.4 Committee Complying with Section 162(m). While the Company is a publicly held
corporation within the meaning of Section 162(m), the Board may establish a Committee of outside
directors within the meaning of Section 162(m) to approve the grant of any Award which might
reasonably be anticipated to result in the payment of employee remuneration that would otherwise
exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section
162(m).
3.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:
(a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock or units to be subject to each Award;
(b) to determine the type of Award granted and to designate Options as Incentive Stock Options
or Nonstatutory Stock Options;
6
(c) to determine the Fair Market Value of shares of Stock or other property;
(d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares purchased pursuant to any Award, (ii) the method of payment
for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with Award, including by the withholding or delivery
of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any
Award or any shares acquired pursuant thereto, (v) the Performance Award Formula and Performance
Goals applicable to any Award and the extent to which such Performance Goals have been attained,
(vi) the time of the expiration of any Award, (vii) the effect of the Participants termination of
Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable
to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;
(e) to determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;
(f) to approve one or more forms of Award Agreement;
(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;
(h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participants
termination of Service;
(i) without the consent of the affected Participant and notwithstanding the provisions of any
Award Agreement to the contrary, to unilaterally substitute at any time a Stock Appreciation Right
providing for settlement solely in shares of Stock in place of any outstanding Option, provided
that such Stock Appreciation Right covers the same number of shares of Stock and provides for the
same exercise price (subject in each case to adjustment in accordance with Section 4.2) as the
replaced Option and otherwise provides substantially equivalent terms and conditions as the
replaced Option, as determined by the Committee;
(j) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the laws or regulations of
or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose
citizens may be granted Awards;
(k) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law; and
(l) to delegate to any proper Officer the authority to grant one or more Awards, without
further approval of the Committee, to any person eligible pursuant to Section 5, other than a
person who, at the time of such grant, is an Insider; provided, however, that (i) the exercise
price per share of each such Option shall be equal to the Fair Market Value per share of the Stock
on the effective date of grant, and (ii) each such Award shall be subject to the terms and
conditions of the appropriate standard form of Award Agreement approved by the Committee and shall
conform to the provisions of the Plan and such other guidelines as shall be established from time
to time by the Committee.
3.6 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, members of the Board or the Committee and any officers or employees of the Participating
Company Group to whom authority to act for the Board, the Committee or the Company is delegated
shall be
7
indemnified by the Company against all reasonable expenses, including attorneys fees,
actually and necessarily incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad
faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.
3.7 Arbitration. Any dispute or claim concerning any Awards granted (or not granted) pursuant
to this Plan and any other disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding arbitration conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association in San Diego, California. By accepting
an Award, Participants and the Company waive their respective rights to have any such disputes or
claims tried by a judge or jury.
3.8 Repricing Prohibited. Without the affirmative vote of holders of a majority of the shares
of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Stock is present or represented by
proxy, the Committee shall not approve a program providing for either (a) the cancellation of
outstanding Options or SARs and the grant in substitution therefore of new Options or SARs having a
lower exercise price or (b) the amendment of outstanding Options or SARs to reduce the exercise
price thereof. This paragraph shall not be construed to apply to the issuance or assumption of an
Award in a transaction to which Code section 424(a) applies, within the meaning of Section 424 of
the Code.
4. SHARES SUBJECT TO PLAN.
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan shall be 226,239,821
and shall consist of authorized but unissued or reacquired shares of Stock or any combination
thereof. The share reserve, determined at any time, shall be reduced by the number of shares
subject to Prior Plan Options and shares issued under the ERMCP. Any shares of Stock subject to
Prior Plan Option shall again be available for issuance under the Plan only if the Prior Plan
Option is terminated or cancelled but not if it expires. Any shares of Stock that are subject to
Awards of Options or SARs without a related Dividend Equivalent shall be counted against the limit
as one (1) share for every one (1) share granted. Any shares of Stock that are subject to Awards
(other than Options or SARs without a related Dividend Equivalent) shall be counted against this
limit as two (2) shares for every one (1) share granted. If an outstanding Award, excluding Prior
Plan Options, for any reason expires or is terminated or canceled without having been exercised or
settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or
repurchase, and shares issued under the ERMCP, are forfeited to the Company, the shares of Stock
allocable to the terminated portion of such Award or such forfeited shares of Stock shall again be
available for issuance under the Plan. Any shares of Stock that again become available for shares
pursuant to this Section 4.1 shall be added back as one (1) share if such shares were subject to
Options without a Dividend Equivalent or SARs granted under the Plan or under a Prior Plan and as
two (2) shares if such shares were subject to Awards (other than Options without a Dividend
Equivalent or SARs) granted under the Plan or a Prior Plan. Notwithstanding anything to the
contrary contained herein: (i) shares of Stock tendered in payment of an Option shall not be added
to the aggregate plan limit described above; (ii) shares of Stock withheld by the Company to
satisfy any tax withholding obligation shall not be added to the aggregate plan limit described
above; (iii) shares of Stock that are repurchased by the Company with Option proceeds shall not be
added to the aggregate plan limit described above; and (iv) all shares of Stock covered by an SAR,
to the extent that it is exercised and settled in shares of Stock, and whether or not shares of
Stock are actually issued to the Participant upon exercise of the SAR, shall be considered issued
or transferred pursuant to the Plan.
4.2 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company, in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation, reorganization,
reincorporation,
8
recapitalization, reclassification, stock dividend, stock split, reverse stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the
capital structure of the Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a
material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be made
in the number and kind of shares subject to the Plan and to any outstanding Awards, in the Award
limits set forth in Section 5.4, and in connection with the ERMCP, and in the exercise or purchase
price per share under any outstanding Award in order to prevent dilution or enlargement of
Participants rights under the Plan. For purposes of the foregoing, conversion of any convertible
securities of the Company shall not be treated as effected without receipt of consideration by the
Company. If a majority of the shares which are of the same class as the shares that are subject
to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation (the New Shares"), the
Committee may unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of shares subject to,
and the exercise price per share of, the outstanding Awards shall be adjusted in a fair and
equitable manner as determined by the Board, in its discretion. Any fractional share resulting
from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number.
The Committee in its sole discretion, may also make such adjustments in the terms of any Award to
reflect, or related to, such changes in the capital structure of the Company or distributions as it
deems appropriate, including modification of Performance Goals, Performance Award Formulas and
Performance Periods. The adjustments determined by the Committee pursuant to this Section 4.2
shall be final, binding and conclusive.
5. ELIGIBILITY AND AWARD LIMITATIONS.
5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and
Directors. For purposes of the foregoing sentence, Employees, Consultantsand Directors shall
include prospective Employees, prospective Consultants and prospective Directors to whom Awards are
offered to be granted in connection with written offers of an employment or other service
relationship with the Participating Company Group; provided, however, that no Stock subject to any
such Award shall vest, become exercisable or be issued prior to the date on which such person
commences Service.
5.2 Participation. Awards other than Nonemployee Director Awards are granted solely at the
discretion of the Committee. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be granted an Award,
or, having been granted an Award, to be granted an additional Award.
5.3 Incentive Stock Option Limitations.
(a) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an ISO-Qualifying Corporation). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee of an ISO-Qualifying Corporation
shall be deemed granted effective on the date such person commences Service with an ISO-Qualifying
Corporation, with an exercise price determined as of such date in accordance with Section 6.1.
(b) Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section, options designated as Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of stock shall be determined as
of the time the option with respect to such stock is granted. If the Code is amended to provide
for a limitation different from that set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section, the
9
Participant may designate which portion of such Option the Participant is exercising. In the
absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock
Option portion of the Option first. Upon exercise, shares issued pursuant to each such portion
shall be separately identified.
5.4 Award Limits.
(a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed
226,239,821 the maximum aggregate number of shares of Stock that may be issued under the Plan
pursuant to all Awards other than Incentive Stock Options shall be the number of shares determined
in accordance with Section 4.1, subject to adjustment as provided in Section 4.2 and further
subject to the limitation set forth in Section 5.4(b) below.
(b) Limits on Full Value Awards. Except for shares granted under the Executive Retirement
Matching Contribution Plan, any Restricted Stock Awards, Restricted Stock Unit Awards and
Performance Awards (Full Value Awards") which vest on the basis of the Participants continued
Service shall not provide for vesting which is any more rapid than annual pro rata vesting over a
three (3) year period and any Full Value Awards which vest upon the attainment of Performance Goals
shall provide for a Performance Period of at least twelve (12) months. There shall be no
acceleration of vesting of such Full Value Awards except in connection with death, Disability or a
Change in Control.
(c) Section 162(m) Award Limits. The following limits shall apply to the grant of any Award
if, at the time of grant, the Company is a publicly held corporation within the meaning of
Section 162(m).
(i) Options and SARs. Subject to adjustment as provided in Section 4.2, no Employee shall
be granted within any fiscal year of the Company one or more Options or Freestanding SARs which
in the aggregate are for more than 3,000,000 shares of Stock reserved for issuance under the
Plan.
(ii) Restricted Stock and Restricted Stock Unit Awards. Subject to adjustment as provided
in Section 4.2, no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Unit Awards, subject to Vesting Conditions based on
the attainment of Performance Goals, for more than 1,000,000 shares of Stock reserved for
issuance under the Plan.
(iii) Performance Awards. Subject to adjustment as provided in Section 4.2, no Employee
shall be granted (1) Performance Shares which could result in such Employee receiving more than
1,000,000 shares of Stock reserved for issuance under the Plan for each full fiscal year of the
Company contained in the Performance Period for such Award, or (2) Performance Units which could
result in such Employee receiving more than $1,000,000 for each full fiscal year of the Company
contained in the Performance Period for such Award. No Participant may be granted more than one
Performance Award for the same Performance Period.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. No Option or
purported Option shall be a valid and binding obligation of the Company unless evidenced by a
fully executed Award Agreement. Award Agreements evidencing Options may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to the following
terms and conditions:
6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock
10
Option granted to a Ten Percent Owner shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of
grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option
or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner qualifying under the provisions of Section 424(a) of the Code.
6.2 Exercisability and Term of Options.
(a) Option Vesting and Exercisability. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option, (c) no Option shall become fully vested in
a period of less than three (3) years from the date of grant, other than in connection with a
termination of Service or a Change in Control or in the case of an Option granted to a Nonemployee
Director, and (d) no Option offered or be granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the date on which such person commences
Service. Subject to the foregoing, unless otherwise specified by the Committee in the grant of an
Option, any Option granted hereunder shall terminate ten (10) years after the effective date of
grant of the Option, unless earlier terminated in accordance with its provisions, or the terms of
the Plan.
(b) Participant Responsibility for Exercise of Option. Each Participant is responsible for
taking any and all actions as may be required to exercise any Option in a timely manner, and for
properly executing any documents as may be required for the exercise of an Option in accordance
with such rules and procedures as may be established from time to time. By signing an Option
Agreement each Participant acknowledges that information regarding the procedures and requirements
for the exercise of any Option is available upon such Participants request. The Company shall
have no duty or obligation to notify any Participant of the expiration date of any Option.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to
the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than
the exercise price, (iii) provided that the Participant is an Employee, and not an Officer or
Director (unless otherwise not prohibited by law, including, without limitation, any regulation
promulgated by the Board of Governors of the Federal Reserve System) and in the Companys sole and
absolute discretion at the time the Option is exercised, by delivery of the Participants
promissory note in a form approved by the Company for the aggregate exercise price, provided that,
if the Company is incorporated in the State of Delaware, the Participant shall pay in cash that
portion of the aggregate exercise price not less than the par value of the shares being acquired,
(iv) by such other consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The Committee may at any
time or from time to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.
(b) Limitations on Forms of Consideration.
(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by
tender to the Company, or attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Companys stock.
11
(ii) Payment by Promissory Note. No promissory note shall be permitted if the exercise of
an Option using a promissory note would be a violation of any law. Any permitted promissory note
shall be on such terms as the Committee shall determine. The Committee shall have the authority
to permit or require the Participant to secure any promissory note used to exercise an Option
with the shares of Stock acquired upon the exercise of the Option or with other collateral
acceptable to the Company. Unless otherwise provided by the Committee, if the Company at any
time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in connection with the
Companys securities, any promissory note shall comply with such applicable regulations, and the
Participant shall pay the unpaid principal and accrued interest, if any, to the extent necessary
to comply with such applicable regulations.
6.4 Effect of Termination of Service.
(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Committee, an Option shall be exercisable after a
Participants termination of Service only during the applicable time periods provided in the Award
Agreement.
(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, unless the
Committee provides otherwise in the Award Agreement, if the exercise of an Option within the
applicable time periods is prevented by the provisions of Section 14 below, the Option shall remain
exercisable until three (3) months (or such longer period of time as determined by the Committee,
in its discretion) after the date the Participant is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.
(c) Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing, if a
sale within the applicable time periods of shares acquired upon the exercise of the Option would
subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a
sale of such shares by the Participant would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Participants termination of Service, or (iii) the
Option Expiration Date.
6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participants guardian or legal representative. Prior
to the issuance of shares of Stock upon the exercise of an Option, the Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary,
except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing,
to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to
the applicable limitations, if any, described in the General Instructions to Form S-8 Registration
Statement under the Securities Act.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. No SAR or purported SAR shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement. Award Agreements evidencing SARs may
incorporate all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a Tandem SAR) or may
be granted independently of any Option (a Freestanding
SAR). A Tandem SAR may be granted either concurrently with the grant of the related Option or
at any time thereafter prior to the complete exercise, termination, expiration or cancellation
of such related Option.
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7.2 Exercise Price. The exercise price for each SAR shall be established in the
discretion of the Committee; provided, however, that (a) the exercise price per share subject
to a Tandem SAR shall be the exercise price per share under the related Option and (b) the
exercise price per share subject to a Freestanding SAR shall be not less than the Fair Market
Value of a share of Stock on the effective date of grant of the SAR.
7.3 Exercisability and Term of SARs.
(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option.
(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.
No SAR shall become fully vested in a period of less than three (3) years from the date of grant,
other than in connection with a termination of Service or a Change in Control or the case of an SAR
granted to a Nonemployee Director.
7.4 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such termination or
expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.
7.5 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee in the grant of an SAR and set forth
in the Award Agreement, an SAR shall be exercisable after a Participants termination of Service
only as provided in the Award Agreement.
7.6 Nontransferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participants guardian or legal representative. Prior
to the exercise of an SAR, the SAR shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participants beneficiary, except transfer by will or by the laws of descent and
distribution.
8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
Restricted Stock Awards shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. No Restricted Stock Award or purported Restricted Stock Award shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms and conditions:
8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may or may not
require the payment of cash compensation for the stock. Restricted Stock Awards may be granted
upon such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Award or the lapsing of the Restriction Period is to be contingent upon the
attainment of one or more Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5(a).
13
8.2 Purchase Price. The purchase price, if any, for shares of Stock issuable under each
Restricted Stock Award and the means of payment shall be established by the Committee in its
discretion.
8.3 Purchase Period. A Restricted Stock Award requiring the payment of cash consideration
shall be exercisable within a period established by the Committee; provided, however, that no
Restricted Stock Award granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences Service.
8.4 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may or may not be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 9.4, as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award. During any Restriction Period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other
than as provided in the Award Agreement or as provided in Section 8.7. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer restrictions prior
to the receipt of shares of Stock hereunder.
8.5 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section
8.4 and any Award Agreement, during the Restriction Period applicable to shares subject to a
Restricted Stock Award, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, any and all new, substituted or
additional securities or other property (other than normal cash dividends) to which the Participant
is entitled by reason of the Participants Restricted Stock Award shall be immediately subject to
the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to
which such dividends or distributions were paid or adjustments were made.
8.6 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Restricted Stock Award and set forth in the Award Agreement, if a Participants Service
terminates for any reason, whether voluntary or involuntary (including the Participants death or
disability), then the Participant shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted Stock Award which remain subject to Vesting Conditions as of
the date of the Participants termination of Service in exchange for the payment of the purchase
price, if any, paid by the Participant. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company.
8.7 Nontransferability of Restricted Stock Award Rights. Prior to the issuance of shares of
Stock pursuant to a Restricted Stock Award, rights to acquire such shares shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance
or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by
will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award
granted to a Participant hereunder shall be exercisable during his or her lifetime only by such
Participant or the Participants guardian or legal representative.
9. TERMS AND CONDITIONS OF PERFORMANCE AWARDS.
Performance Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish. No Performance Award or purported Performance Award shall
be a valid and binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing Performance Awards may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:
9.1 Types of Performance Awards Authorized. Performance Awards may be in the form of either
Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall
specify the number of Performance Shares or Performance Units subject thereto, the
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Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the
Award, and the other terms, conditions and restrictions of the Award.
9.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall have an initial value
equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in
Section 4.2, on the effective date of grant of the Performance Share. Each Performance Unit shall
have an initial value determined by the Committee. The final value payable to the Participant in
settlement of a Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the Committee are
attained within the applicable Performance Period established by the Committee.
9.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. To the
extent compliance with the requirements under Section 162(m) with respect to performance-based
compensation is desired, the Committee shall establish the Performance Goal(s) and Performance
Award Formula applicable to each Performance Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the Performance Goals and
Performance Award Formula shall not be changed during the Performance Period. The Company shall
notify each Participant granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award Formula.
9.4 Measurement of Performance Goals. Performance Goals shall be established by the Committee
on the basis of targets to be attained (Performance
Targets) with respect to one or more measures
of business or financial performance (each, a
Performance Measure), subject to the following:
(a) Performance Measures. Performance Measures shall have the same meanings as used in the
Companys financial statements, or, if such terms are not used in the Companys financial
statements, they shall have the meaning applied pursuant to generally accepted accounting
principles, or as used generally in the Companys industry. Performance Measures shall be
calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for
financial reporting purposes or such division or other business unit as may be selected by the
Committee. For purposes of the Plan, the Performance Measures applicable to a Performance Award
shall be calculated in accordance with generally accepted accounting principles, but prior to the
accrual or payment of any Performance Award for the same Performance Period and excluding the
effect (whether positive or negative) of any change in accounting standards or any extraordinary,
unusual or nonrecurring item, as determined by the Committee, occurring after the establishment of
the Performance Goals applicable to the Performance Award. Each such adjustment, if any, shall be
made solely for the purpose of providing a consistent basis from period to period for the
calculation of Performance Measures in order to prevent the dilution or enlargement of the
Participants rights with respect to a Performance Award. Performance Measures may be one or more
of the following, as determined by the Committee: (i) sales revenue; (ii) gross margin; (iii)
operating margin; (iv) operating income; (v) pre-tax profit; (vi) earnings before interest, taxes
and depreciation and amortization; (vii) net income; (viii) expenses; (ix) the market price of the
Stock; (x) earnings per share; (xi) return on stockholder equity; (xii) return on capital; (xiii)
return on net assets; (xiv) economic value added; (xv) market share; (xvi) customer service; (xvii)
customer satisfaction; (xviii) safety; (xix) total stockholder return; (xx) free cash flow; or
(xxi) such other measures as determined by the Committee consistent with this Section 9.4(a).
(b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value or as a value determined relative
to a standard selected by the Committee.
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9.5 Settlement of Performance Awards.
(a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.
(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award that is not
intended to constitute qualified performance based compensation to a covered employee within
the meaning of Section 162(m) (a Covered Employee) to reflect such Participants individual
performance in his or her position with the Company or such other factors as the Committee may
determine. With respect to a Performance Award intended to constitute qualified performance-based
compensation to a Covered Employee, the Committee shall have the discretion to reduce some or all
of the value of the Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the resulting value of the
Performance Award determined in accordance with the Performance Award Formula.
(c) Payment in Settlement of Performance Awards. As soon as practicable following the
Committees determination and certification in accordance with Sections 9.5(a) and (b), payment
shall be made to each eligible Participant (or such Participants legal representative or other
person who acquired the right to receive such payment by reason of the Participants death) of the
final value of the Participants Performance Award. Payment of such amount shall be made in cash,
shares of Stock, or a combination thereof as determined by the Committee.
9.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to the date on which the Performance Shares are
settled or forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in
the form of additional whole Performance Shares as of the date of payment of such cash dividends on
Stock. The number of additional Performance Shares (rounded to the nearest whole number) to be so
credited shall be determined by dividing (a) the amount of cash dividends paid on such date with
respect to the number of shares of Stock represented by the Performance Shares previously credited
to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend
Equivalents may be paid currently or may be accumulated and paid to the extent that Performance
Shares become nonforfeitable, as determined by the Committee. Settlement of Dividend Equivalents
may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and
may be paid on the same basis as settlement of the related Performance Share as provided in Section
9.5. Dividend Equivalents shall not be paid with respect to Performance Units. In the event of a
dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.2, appropriate adjustments shall be made
in the Participants Performance Share Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant would entitled by reason of the shares of Stock
issuable upon settlement of the Performance Share Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same Performance Goals
as are applicable to the Award.
9.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the grant
of a Performance Award and set forth in the Award Agreement, the effect of a Participants
termination of Service on the Performance Award shall be as follows:
16
(a) Death or Disability. If the Participants Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participants Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participants Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 9.5.
(b) Other Termination of Service. If the Participants Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participants Service, the Committee, in its sole
discretion, may waive the automatic forfeiture of all or any portion of any such Award.
9.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participants beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participants guardian or legal representative.
10. TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARDS.
Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. No Restricted Stock Unit Award or purported Restricted Stock Unit Award shall be a
valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms and conditions:
10.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 9.3 through 9.5(a).
10.2 Vesting. Restricted Stock Units may or may not be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions, restrictions or performance
criteria, including, without limitation, Performance Goals as described in Section 9.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing such Award.
10.3 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on
Stock having a record date prior to the date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by crediting the
Participant with additional whole Restricted Stock Units as of the date of payment of such cash
dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the Restricted Stock Units
previously credited to the Participant by (b) the Fair Market Value per share of Stock on such
date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as
the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of
a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in
17
the capital structure of the Company as described in Section 4.2, appropriate adjustments
shall be made in the Participants Restricted Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities or other property
(other than normal cash dividends) to which the Participant would entitled by reason of the shares
of Stock issuable upon settlement of the Award, and all such new, substituted or additional
securities or other property shall be immediately subject to the same Vesting Conditions as are
applicable to the Award.
10.4 Effect of Termination of Service. Unless otherwise provided by the Committee in the
grant of a Restricted Stock Unit Award and set forth in the Award Agreement, if a Participants
Service terminates for any reason, whether voluntary or involuntary (including the Participants
death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units
pursuant to the Award which remain subject to Vesting Conditions as of the date of the
Participants termination of Service.
10.5 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participants Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 10.3) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes. Notwithstanding the foregoing, if permitted by the Committee and set forth in
the Award Agreement, the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or other property otherwise
issuable to the Participant pursuant to this Section.
10.6 Nontransferability of Restricted Stock Unit Awards. Prior to the issuance of shares of
Stock in settlement of a Restricted Stock Unit Award, the Award shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participants beneficiary, except transfer by
will or by the laws of descent and distribution. All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participants guardian or legal representative.
11. DEFERRED COMPENSATION AWARDS.
11.1 Establishment of Deferred Compensation Award Programs. This Section 11 shall not be
effective unless and until the Committee determines to establish a program pursuant to this
Section. The Committee, in its discretion and upon such terms and conditions as it may determine,
may establish one or more programs pursuant to the Plan under which:
(a) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to reduce such Participants compensation otherwise payable in cash (subject to any
minimum or maximum reductions imposed by the Committee) and to be granted automatically at such
time or times as specified by the Committee one or more Awards of Stock Units with respect to such
numbers of shares of Stock as determined in accordance with the rules of the program established by
the Committee and having such other terms and conditions as established by the Committee.
(b) Participants designated by the Committee who are Insiders or otherwise among a select
group of highly compensated Employees may irrevocably elect, prior to a date specified by the
Committee, to be granted automatically an Award of Stock Units with respect to such number of
shares of Stock and upon such other terms and conditions as established by the Committee in lieu
of:
(i) shares of Stock otherwise issuable to such Participant upon the exercise of an
Option;
(ii) cash or shares of Stock otherwise issuable to such Participant upon the exercise of
an SAR; or
18
(iii) cash or shares of Stock otherwise issuable to such Participant upon the settlement
of a Performance Award or Performance Unit.
11.2 Terms and Conditions of Deferred Compensation Awards. Deferred Compensation Awards
granted pursuant to this Section 11 shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No such Deferred Compensation Award or purported
Deferred Compensation Award shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Award Agreement. Award Agreements evidencing Deferred Compensation Awards may
incorporate all or any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
(a) Vesting Conditions. Deferred Compensation Awards shall not be subject to any vesting
conditions.
(b) Terms and Conditions of Stock Units.
(i) Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Stock Units until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). However, a Participant shall be entitled to
receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a
record date prior to date on which Stock Units held by such Participant are settled. Such
Dividend Equivalents shall be paid by crediting the Participant with additional whole and/or
fractional Stock Units as of the date of payment of such cash dividends on Stock. The method of
determining the number of additional Stock Units to be so credited shall be specified by the
Committee and set forth in the Award Agreement. Such additional Stock Units shall be subject to
the same terms and conditions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the Stock Units originally subject to the Stock Unit Award.
In the event of a dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participants Stock Unit Award so that it represent the right to
receive upon settlement any and all new, substituted or additional securities or other property
(other than normal cash dividends) to which the Participant would be entitled by reason of the
shares of Stock issuable upon settlement of the Award.
(ii) Settlement of Stock Unit Awards. A Participant electing to receive an Award of Stock
Units pursuant to this Section 11 shall specify at the time of such election a settlement date
with respect to such Award. The Company shall issue to the Participant as soon as practicable
following the earlier of the settlement date elected by the Participant or the date of
termination of the Participants Service, a number of whole shares of Stock equal to the number
of whole Stock Units subject to the Stock Unit Award. Such shares of Stock shall be fully
vested, and the Participant shall not be required to pay any additional consideration (other than
applicable tax withholding) to acquire such shares. Any fractional Stock Unit subject to the
Stock Unit Award shall be settled by the Company by payment in cash of an amount equal to the
Fair Market Value as of the payment date of such fractional share.
(iii) Nontransferability of Stock Unit Awards. Prior to their settlement in accordance with
the provision of the Plan, no Stock Unit Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participants beneficiary, except transfer by will or by the
laws of descent and distribution. All rights with respect to a Stock Unit Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by such Participant or
the Participants guardian or legal representative.
12. OTHER STOCK-BASED AWARDS.
In addition to the Awards set forth in Sections 6 through 11 above, the Committee, in its sole
discretion, may carry out the purpose of this Plan by awarding Stock-Based Awards as it determines
to be
19
in the best interests of the Company and subject to such other terms and conditions as it
deems necessary and appropriate.
13. EFFECT OF CHANGE IN CONTROL ON OPTIONS AND SARS.
13.1 Accelerated Vesting. The Committee, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting in connection with such Change in
Control of any or all outstanding Options and SARs and shares acquired upon the exercise of such
Options and SARs upon such conditions and to such extent as the Committee shall determine. The
previous sentence notwithstanding such acceleration shall not occur to the extent an Option or SAR
is assumed or substituted with a substantially similar Award in connection with a Change in
Control.
13.2 Assumption or Substitution. In the event of a Change in Control, the surviving,
continuing, successor, or purchasing corporation or other business entity or parent thereof, as the
case may be (the Acquiring
Corporation), may, without the consent of the Participant, either
assume the Companys rights and obligations under outstanding Options and SARs or substitute for
outstanding Options and SARs substantially equivalent options or stock appreciation rights for the
Acquiring Corporations stock. Any Options or SARs which are neither assumed or substituted for by
the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of
the Change in Control shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option or
SAR prior to the Change in Control and any consideration received pursuant to the Change in Control
with respect to such shares shall continue to be subject to all applicable provisions of the Award
Agreement evidencing such Award except as otherwise provided in such Award Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding
Options or SARs immediately prior to an Ownership Change Event described in Section 2.1(z)(i)
constituting a Change in Control is the surviving or continuing corporation and immediately after
such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions
of Section 1504(b) of the Code, the outstanding Options and SARs shall not terminate unless the
Board otherwise provides in its discretion.
13.3 Effect of Change in Control on Restricted Stock and Other Type of Awards. The Committee
may, in its discretion, provide in any Award Agreement evidencing a Restricted Stock or Other Type
of Award that, in the event of a Change in Control, the lapsing of any applicable Vesting
Condition, Restriction Period or Performance Goal applicable to the shares subject to such Award
held by a Participant whose Service has not terminated prior to the Change in Control shall be
accelerated and/or waived effective immediately prior to the consummation of the Change in Control
to such extent as specified in such Award Agreement; provided, however, that such acceleration or
waiver shall not occur to the extent an Award is assumed or substituted with a substantially
equivalent Award in connection with the Change in Control. Any acceleration, waiver or the lapsing
of any restriction that was permissible solely by reason of this Section 13.3 and the provisions of
such Award Agreement shall be conditioned upon the consummation of the Change in Control.
14. COMPLIANCE WITH SECURITIES LAW.
The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be
subject to compliance with all applicable requirements of federal, state and foreign law with
respect to such securities and the requirements of any stock exchange or market system upon which
the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to
an Award unless (a) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (b)
in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be
issued in accordance with the terms of an applicable exemption from the registration requirements
of the Securities Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Companys legal counsel to be necessary to the
lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in
20
respect of the failure to issue or sell such shares as to which such requisite authority
shall not have been obtained. As a condition to issuance of any Stock, the Company may require
the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
15. TAX WITHHOLDING.
15.1 Tax Withholding in General. The Company shall have the right to deduct from any and
all payments made under the Plan, or to require the Participant, through payroll
withholding, cash payment or otherwise, including by means of a Cashless Exercise or Net
Exercise of an Option, to make adequate provision for, the federal, state, local and
foreign taxes, if any, required by law to be withheld by the Participating Company Group
with respect to an Award or the shares acquired pursuant thereto. The Company shall have
no obligation to deliver shares of Stock, to release shares of Stock from an escrow
established pursuant to an Award Agreement, or to make any payment in cash under the Plan
until the Participating Company Groups tax withholding obligations have been satisfied by
the Participant.
15.2 Withholding in Shares. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an
Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a
Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates.
16. AMENDMENT OR TERMINATION OF PLAN.
The Board or the Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Companys stockholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive
Stock Options, and (c) no other amendment of the Plan that would require approval of the Companys
stockholders under any applicable law, regulation or rule. No amendment, suspension or termination
of the Plan shall affect any then outstanding Award unless expressly provided by the Board or the
Committee. In any event, no amendment, suspension or termination of the Plan may adversely affect
any then outstanding Award without the consent of the Participant unless necessary to comply with
any applicable law, regulation or rule.
17. MISCELLANEOUS PROVISIONS.
17.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.
17.2 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Companys
common stockholders.
17.3 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right
21
to remain an Employee, Consultant or Director or interfere with or limit in any way any right
of a Participating Company to terminate the Participants Service at any time. To the extent that
an Employee of a Participating Company other than the Company receives an Award under the Plan,
that Award shall in no event be understood or interpreted to mean that the Company is the
Employees employer or that the Employee has an employment relationship with the Company.
17.4 Rights as a Stockholder. A Participant shall have no rights as a stockholder with
respect to any shares covered by an Award until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date such shares are issued, except as provided in
Section 4.2 or another provision of the Plan.
17.5 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.
17.6 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.
17.7 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participants death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participants lifetime. If a
married Participant designates a beneficiary other than the Participants spouse, the effectiveness
of such designation may be subject to the consent of the Participants spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participants death, the Company will pay any remaining unpaid benefits to the Participants legal
representative.
17.8 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and
unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any special accounts with
respect to such obligations. The Company shall retain at all times beneficial ownership of any
investments, including trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary relationship between the
Committee or any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participants creditors in any assets of any
Participating Company. The Participants shall have no claim against any Participating Company for
any changes in the value of any assets which may be invested or reinvested by the Company with
respect to the Plan. Each Participating Company shall be responsible for making benefit payments
pursuant to the Plan on behalf of its Participants or for reimbursing the Company for the cost of
such payments, as determined by the Company in its sole discretion. In the event the respective
Participating Company fails to make such payment or reimbursement, a Participants (or other
individuals) sole recourse shall be against the respective Participating Company, and not against
the Company. A Participants acceptance of an Award pursuant to the Plan shall constitute
agreement with this provision.
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