Attached files
file | filename |
---|---|
10-Q - FORM 10-Q - KB HOME | c99038e10vq.htm |
EX-31.1 - EXHIBIT 31.1 - KB HOME | c99038exv31w1.htm |
EX-32.1 - EXHIBIT 32.1 - KB HOME | c99038exv32w1.htm |
EX-31.2 - EXHIBIT 31.2 - KB HOME | c99038exv31w2.htm |
EX-32.2 - EXHIBIT 32.2 - KB HOME | c99038exv32w2.htm |
Exhibit 10.56
KB HOME
2010 EQUITY INCENTIVE PLAN
Effective April 1, 2010
TABLE OF CONTENTS
Page | ||||
ARTICLE 1. PURPOSE |
1 | |||
ARTICLE 2. DEFINITIONS AND CONSTRUCTION |
1 | |||
ARTICLE 3. SHARES SUBJECT TO THE PLAN |
8 | |||
3.1 Number of Shares |
8 | |||
3.2 Stock Distributed |
9 | |||
ARTICLE 4. GRANTING OF AWARDS |
9 | |||
4.1 Participation |
9 | |||
4.2 Award Agreement |
9 | |||
4.3 Programs |
9 | |||
4.4 Limitations Applicable to Section 16 Persons |
9 | |||
4.5 Fiscal Year Award Limit |
9 | |||
4.6 Minimum Vesting |
9 | |||
4.7 At-Will Employment |
10 | |||
4.8 Stand-Alone and Tandem Awards |
10 | |||
ARTICLE 5. PERFORMANCE-BASED COMPENSATION |
10 | |||
5.1 Purpose |
10 | |||
5.2 Applicability |
10 | |||
5.3 Types of Awards |
10 | |||
5.4 Procedures with Respect to Performance-Based Awards |
11 | |||
5.5 Payment of Performance-Based Awards |
11 | |||
5.6 Additional Limitations |
11 | |||
ARTICLE 6. GRANTING OF OPTIONS |
11 | |||
6.1 Granting of Options to Eligible Individuals |
11 | |||
6.2 Qualification of Incentive Stock Options |
11 | |||
6.3 Option Exercise Price |
12 | |||
6.4 Option Term |
12 | |||
6.5 Option Vesting |
12 | |||
6.6 Substitute Awards |
12 | |||
6.7 Substitution of Stock Appreciation Rights |
13 |
-i-
TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
ARTICLE 7. EXERCISE OF OPTIONS |
13 | |||
7.1 Partial Exercise |
13 | |||
7.2 Manner of Exercise |
13 | |||
7.3 Notification Regarding Disposition |
13 | |||
ARTICLE 8. AWARD OF RESTRICTED STOCK |
14 | |||
8.1 Award of Restricted Stock |
14 | |||
8.2 Rights as Stockholders |
14 | |||
8.3 Restrictions |
14 | |||
8.4 Repurchase or Forfeiture of Restricted Stock |
15 | |||
8.5 Certificates for Restricted Stock |
15 | |||
8.6 Section 83(b) Election |
15 | |||
ARTICLE 9. AWARD OF PERFORMANCE AWARDS, STOCK PAYMENTS AND RESTRICTED
STOCK UNITS |
15 | |||
9.1 Performance Awards |
15 | |||
9.2 Stock Payments |
16 | |||
9.3 Restricted Stock Units |
16 | |||
9.4 Term |
16 | |||
9.5 Exercise or Purchase Price |
16 | |||
ARTICLE 10. AWARD OF STOCK APPRECIATION RIGHTS |
16 | |||
10.1 Grant of Stock Appreciation Rights |
16 | |||
10.2 Stock Appreciation Right Term |
17 | |||
10.3 Stock Appreciation Right Vesting |
17 | |||
10.4 Manner of Exercise |
17 | |||
10.5 Payment |
18 | |||
ARTICLE 11. ADDITIONAL TERMS OF AWARDS |
18 | |||
11.1 Payment |
18 | |||
11.2 Tax Withholding |
18 | |||
11.3 Transferability of Awards |
19 | |||
11.4 Conditions to Issuance of Shares |
20 | |||
11.5 Forfeiture Provisions |
21 |
-ii-
TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
11.6 Prohibition on Repricing |
21 | |||
11.7 Permitted Replacement Awards |
21 | |||
11.8 Shareholder Approval of Certain Accelerations |
21 | |||
ARTICLE 12. ADMINISTRATION |
21 | |||
12.1 Committee |
21 | |||
12.2 Duties and Powers of Committee |
21 | |||
12.3 Action by the Committee |
22 | |||
12.4 Authority of Committee |
22 | |||
12.5 Decisions Binding |
23 | |||
12.6 Delegation of Authority |
23 | |||
ARTICLE 13. MISCELLANEOUS PROVISIONS |
23 | |||
13.1 Amendment, Suspension or Termination of the Plan |
23 | |||
13.2 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events |
24 | |||
13.3 No Stockholder Rights |
26 | |||
13.4 Paperless Administration |
26 | |||
13.5 Effect of Plan upon Other Compensation Plans |
27 | |||
13.6 Compliance with Laws |
27 | |||
13.7 Titles and Headings, References to Sections of the Code, the Securities
Act or Exchange Act |
27 | |||
13.8 Governing Law |
27 | |||
13.9 Section 409A |
27 | |||
13.10 No Rights to Awards |
28 | |||
13.11 Unfunded Status of Awards |
28 | |||
13.12 Indemnification |
28 | |||
13.13 Term |
29 |
-iii-
KB HOME
2010 EQUITY INCENTIVE PLAN
2010 EQUITY INCENTIVE PLAN
ARTICLE 1.
PURPOSE
PURPOSE
The purpose of the KB Home 2010 Equity Incentive Plan (the Plan) is to attract, motivate and
retain the services of Employees, Non-Employee Directors and Consultants by enabling them to
participate in the growth and financial success of KB Home (the Company) and to align their
individual interests to those of the Companys stockholders.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified
below:
1. Affiliate shall mean a person or entity that directly or indirectly controls or is
controlled by, or is under common control with, the Company.
2. Award shall mean, as the case may be, a grant under the Plan of Options, Restricted
Stock, Restricted Stock Units, Performance Awards, Stock Payments or Stock Appreciation Rights.
3. Award Agreement shall mean any written notice, terms and conditions, contract or other
instrument or document evidencing an Award, including in electronic form, which shall contain any
terms and conditions with respect to the Award as the Committee shall determine consistent with the
Plan and any applicable Program.
4. Award Limit shall mean with respect to Awards payable in Shares or in cash, as the case
may be, the respective limit set forth in Section 4.5.
5. Board shall mean the Board of Directors of the Company.
6. A Change of Ownership shall be deemed to have occurred if any of the following has
occurred: (a) any one person, or more than one person acting as a group, acquires ownership of
stock of the Company that, together with stock held by such person or group, constitutes more than
50% of the total fair market value or total voting power of the stock of the Company, as determined
in accordance with Section 1.409A-3(i)(5)(v) of the Treasury Regulations; provided, that if a
person or group is considered either to own more than 50% of the total fair market value or total
voting power of the stock of the Company, or to own more than the market value or total voting
power specified in (b) below, and such person or group acquires additional stock of the Company,
the acquisition of additional stock by such person or group shall not be considered to cause a
Change of Ownership; (b) any one person, or more than one person acting as a group, acquires (or
has acquired during the 12-month period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Company possessing 30% or more of the total voting
power of the stock of the Company, as determined in accordance with Section 1.409A-3(i)(5)(vi) of
the Treasury Regulations; provided,
1
that if a person or group is considered to possess 30% or more of the total voting power of
the stock of the Company, and such person or group acquires additional stock of the Company, the
acquisition of additional stock by such person or group shall not be considered to cause a Change
of Ownership; (c) a majority of the members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the members of the Board
before the date of the appointment or election, as determined in accordance with Section
1.409A-3(i)(5)(vi) of the Treasury Regulations; or (d) any one person, or more than one person
acting as a group, acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that have a total gross
fair market value equal to or more than 40% of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or acquisitions, as determined in
accordance with Section 1.409A-3(i)(5)(vii) of the Treasury Regulations; provided, that a transfer
of assets shall not be treated as a Change of Ownership when such transfer is made to an entity
that is controlled by the stockholders of the Company, as determined in accordance with Section
1.409A-3(i)(5)(vii)(B) of the Treasury Regulations.
7. Code shall mean the Internal Revenue Code of 1986, as amended from time to time, together
with the Treasury Regulations and official guidance promulgated by the U.S. Department of Treasury.
8. Committee shall mean the Management Development and Compensation Committee of the Board
or another committee of the Board designated by the Board that consists solely of Directors meeting
the qualifications described in Section 12.1.
9. Common Stock shall mean the common stock of the Company, par value $1.00 per share.
10. Company Stock Administrator shall mean the stock administrator of the Company, or such
other person or entity designated by the Committee, or his, her or its office, as applicable,
whether or not employed by the Company.
11. Consultant shall mean any consultant or advisor engaged to provide services to the
Company or any Affiliate that qualifies as a consultant or advisor under the instructions for use
of a Form S-8 Registration Statement.
12. Covered Employee shall mean any Employee who is, or who the Committee believes may
become, a covered employee within the meaning of Section 162(m) of the Code.
13. Director shall mean a member of the Board.
14. Effective Date shall mean the date the Plan is first approved by the Companys
stockholders in accordance with the requirements of the Companys by-laws, the applicable
Securities Exchange and Sections 162(m) and 422 of the Code.
15. Eligible Individual shall mean any person who is an Employee, a Consultant or a
Non-Employee Director, as determined by the Committee or the Board.
2
16. Employee shall mean any officer or other employee (as determined in accordance with
Section 3401(c) of the Code) of the Company or of any Affiliate.
17. Equity Restructuring shall mean a nonreciprocal transaction between the Company and its
stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization
through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the
Company) or the Share price (or the price of other securities), and results upon its implementation
in a change in the per-Share value of the Shares underlying outstanding Awards.
18. Exchange Act shall mean the Securities Exchange Act of 1934.
19. Fair Market Value shall mean, as of any given date, the value of a Share determined as
follows:
(1) If the Common Stock is listed on any Securities Exchange, its Fair Market Value shall be
the closing sales price for a Share as quoted on such Securities Exchange for such date or, if
there is no closing sales price for a Share on the date in question, the closing sales price for a
Share on the last preceding date for which such quotation exists, as reported by The Wall Street
Journal or such other source (whether in print or electronic) as the Committee deems reliable;
(2) If the Common Stock is not listed on any Securities Exchange, but the Common Stock is
regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the
high bid and low asked prices for such date or, if there are no high bid and low asked prices for a
Share on such date, the high bid and low asked prices for a Share on the last preceding date for
which such information exists, as reported by The Wall Street Journal or such other source (whether
in print or electronic) as the Committee deems reliable; or
(3) If the Common Stock is neither listed on any Securities Exchange nor regularly quoted by a
recognized securities dealer, its Fair Market Value shall be established by the Committee in good
faith.
20. Full Value Award shall mean any Award other than (i) an Option, (ii) a Stock
Appreciation Right or (iii) any other Award for which the Holder must pay the intrinsic value
existing as of the date of grant (whether directly or by forgoing a right to receive a payment from
the Company or any Affiliate) as a condition to exercising or receiving payment under it.
21. Greater Than 10% Stockholder shall mean an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or
parent corporation (as defined in Section 424(e) of the Code) thereof.
22. Holder shall mean a person who has been granted an Award.
23. Incentive Stock Option shall mean an Option that is intended to qualify as an incentive
stock option and conforms to the applicable provisions of Section 422 of the Code.
3
24. Non-Employee Director shall mean a Director of the Company who is not an Employee.
25. Non-Qualified Stock Option shall mean an Option that is not an Incentive Stock Option.
26. Option shall mean a right to purchase Shares at a specified exercise price, granted
under Article 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall
only be Non-Qualified Stock Options.
27. Performance Award shall mean a cash bonus award, stock bonus award, performance award or
incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1.
28. Performance-Based Compensation shall mean any compensation that is intended to qualify
as performance-based compensation as described in Section 162(m)(4)(C) of the Code.
29. Performance Criteria shall mean the criteria that the Committee selects for an Award for
purposes of establishing the Performance Goal or Performance Goals for a Performance Period. The
Performance Criteria that shall be used to establish Performance Goals are limited to the
following: (i) income/loss (e.g., operating income/loss, EBIT or similar measures, net
income/loss, earnings/loss per share, residual or economic earnings), (ii) cash flow (e.g.,
operating cash flow, total cash flow, EBITDA, cash flow in excess of cost of capital or residual
cash flow, cash flow return on investment and cash flow sufficient to achieve financial ratios or a
specified cash balance), (iii) returns (e.g., on revenues, investments, assets, capital and
equity), (iv) working capital (e.g., working capital divided by revenues), (v) margins (e.g.,
variable margin, profits divided by revenues, gross margins and margins divided by revenues), (vi)
liquidity (e.g., total or net debt, debt reduction, debt-to-capital, debt-to-EBITDA and other
liquidity ratios), (vii) revenues, cost initiative and stock price metrics (e.g., revenues, stock
price, total shareholder return, expenses, cost structure improvements and costs divided by
revenues or other metrics) and (viii) strategic metrics (e.g., market share, customer satisfaction,
employee satisfaction, service quality, unit volume, orders, backlog, traffic, deliveries,
cancellation rates, productivity, operating efficiency, inventory management, community count,
goals related to acquisitions, divestitures or other transactions and goals related to KBnxt
operational business model principles, including goals based on a per-employee, per-delivery or
other basis).
30. Performance Goals shall mean, for a Performance Period, one or more goals established in
writing by the Committee for the Performance Period based upon one or more Performance Criteria.
Depending on the Performance Criteria used to establish such Performance Goals, the Performance
Goals may be expressed in terms of overall Company performance, either independently or as compared
to one or more companies, performance of specific subsidiaries or business units, either
independently or as compared to one or more companies subsidiaries or business units, or otherwise
as determined by the Committee. If the Committee believes, in its sole discretion, that an
equitable adjustment to any Performance Goal is advisable
4
in light of new developments or circumstances, the Committee may provide for one or more
objectively determinable adjustments. Such adjustments may include or arise from one or more of the
following: (i) items related to a change in accounting principle; (ii) items relating to financing
activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating
items; (v) items related to acquisitions; (vi) items attributable to the business operations of any
entity acquired by the Company during the Performance Period; (vii) items related to the disposal
of a business or segment of a business; (viii) items related to discontinued operations that do not
qualify as a segment of a business under applicable accounting standards; (ix) items attributable
to any stock dividend, stock split, combination or exchange of stock occurring during the
Performance Period; (x) any other items of significant income or expense which are determined to be
appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions,
events or developments, (xii) items related to amortization of acquired intangible assets; (xiii)
items that are outside the scope of the Companys core, on-going business activities; (xiv) items
related to acquired in-process research and development; (xv) items relating to changes in tax
laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to
asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and
contractual settlements; or (xix) items relating to any other unusual or nonrecurring events or
changes in applicable laws or business conditions. For all Awards intended to qualify as
Performance-Based Compensation, such determinations shall be made within the time prescribed by,
and otherwise in compliance with, Section 162(m) of the Code.
31. Performance Period shall mean one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Holders right to, and the
payment of, a Performance Award.
32. Permitted Transferee shall mean, with respect to a Holder, any person entitled to use a
Form S-8 Registration Statement to exercise Awards originally granted to the Holder and to sell
Shares issued pursuant to Awards originally granted to the Holder.
33. Program shall mean any program adopted by the Committee pursuant to the Plan containing
terms and conditions intended to govern one or more specific types of Awards and/or the manner in
which they may be granted.
34. QDRO shall mean a domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended from time to time, or the regulations
or official guidance promulgated thereunder.
35. Restricted Stock shall mean Shares awarded under Article 8 that are subject to certain
restrictions and may be subject to risk of forfeiture or repurchase.
36. Restricted Stock Units shall mean the right to receive Shares or the value of Shares
awarded under Section 9.3.
37. Retirement shall mean an Employees severance from employment with the Company and its
Affiliates for any reason other than a leave of absence, termination for cause,
5
death or disability, at such time as the Employees age and years of service with the Company
and its Affiliates equals at least 65 or more, provided that the Employee is then at least 55 years
of age. The Company shall have the sole right to determine whether an Employees severance from
employment constitutes a Retirement.
38. Securities Act shall mean the Securities Act of 1933.
39. Securities Exchange shall mean the New York Stock Exchange or any other securities
exchange, national market system or automated quotation system on which the Shares are listed,
quoted or traded.
40. Shares shall mean shares of Common Stock.
41. Stock Appreciation Right shall mean a stock appreciation right as described and granted
under Article 10.
42. Stock Payment shall mean (a) a payment in the form of Shares or (b) a right to purchase
Shares, however denominated or described, as part of a bonus, deferred compensation or other
arrangement, in any such case awarded under Section 9.2.
43. Substitute Award shall mean an Award granted under the Plan upon the assumption of, or
in substitution for, outstanding equity awards previously granted by a company or other entity, in
connection with a corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; provided, however, that in no event shall the term Substitute
Award be construed to refer to an Award made in connection with the cancellation and repricing of
an Option or Stock Appreciation Right.
44. Termination of Service shall mean,
(1) As to a Consultant, the time when the engagement of a Holder as a Consultant to the
Company or an Affiliate is terminated for any reason, with or without cause, including, without
limitation, by resignation, discharge, death or retirement, but excluding terminations where the
Consultant simultaneously commences or remains in employment or service with the Company or any
Affiliate.
(2) As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director
ceases to be a Director for any reason, with or without cause, including, without limitation, a
termination by resignation, failure to be elected, death or retirement, but excluding terminations
where the Holder simultaneously commences employment or service with the Company or any Affiliate.
(3) As to an Employee, the time when the employee-employer relationship between a Holder and
the Company or any Affiliate is terminated for any reason, with or without cause, including,
without limitation, a termination by resignation, discharge, death, disability or retirement; but
excluding terminations where the Holder simultaneously commences or remains in employment or
service with the Company or any Affiliate.
6
The Committee, in its sole discretion, shall determine the effect of all matters and questions
relating to Terminations of Service, including, without limitation, the question of whether a
Termination of Service resulted from a discharge for cause and all questions of whether particular
leaves of absence constitute a Termination of Service; provided, however, that, with respect to
Incentive Stock Options, unless the Committee otherwise provides in the terms of the Program, Award
Agreement or otherwise, a leave of absence, change in status from an employee to an independent
contractor or other change in the employee-employer relationship shall constitute a Termination of
Service only if and to the extent that any such event interrupts employment for the purposes of
Section 422(a)(2) of the Code. For purposes of the Plan, a Holders employee-employer relationship
or consultancy relationship shall be deemed to be terminated in the event that the Affiliate
employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale
of stock or other corporate transaction or event (including, without limitation, a spin-off).
Notwithstanding the foregoing, with respect to any Award that constitutes deferred
compensation subject to the requirements of Section 409A of the Code, a Termination of Service
shall not be deemed to have occurred until there also has been a separation from service within
the meaning of Section 409A of the Code, as determined in accordance with Section 1.409A-1(h) of
the Treasury Regulations; provided that (i) for a Holder who provides services to the Company as an
Employee, a separation from service shall be deemed to occur when the Holder has experienced a
termination of employment with the Company and the facts and circumstances indicate that the Holder
and the Company reasonably anticipate that either (A) no further services will be performed by the
Holder for the Company after a certain date or (B) the level of bona fide services the Holder will
perform for the Company after a certain date (whether as an Employee or as an independent
contractor) will permanently decrease to no more than 20% of the average level of bona fide
services performed by the Holder (whether as an Employee or an independent contractor) over the
immediately preceding 36-month period (or the full period of services performed for the Company if
the Holder has been performing services for less than 36 months); and (ii) for a Holder who
provides services to the Company as an independent contractor, a separation from service shall be
deemed to occur upon expiration or termination of all contracts under which services are performed
by the Holder for the Company, provided that such expiration or termination constitutes a
good-faith and complete severing of the contractual relationship between the Holder and the
Company, and provided, further, that for a Holder who provides services to the Company as both an
Employee and an independent contractor, a separation from service shall generally not occur until
the Holder has ceased providing services for the Company as both an Employee and an independent
contractor pursuant to clauses (i) and (ii) of this sentence. For purposes of determining whether
a separation from service has occurred, services performed for the Company shall include services
performed both for the Company and for any other corporation that is a member of the same
controlled group as the Company under Section 414(b) of the Code or any other trade or business
(such as a partnership) that is under common control with the Company as determined under Section
414(c) of the Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations
and substituting at least 50 percent for at least 80 percent each place it appears in Section
1563(a) of the Code or Section 1.414(c)-2 of the Treasury Regulations.
7
45. Treasury Regulations shall mean the final, temporary and proposed regulations
promulgated by the U.S. Department of the Treasury under the Code, as such regulations may be
amended from time to time.
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to adjustment as provided in Section 3.1(b) and Section 13.2, a total of Three
Million Five Hundred Thousand (3,500,000) Shares shall be authorized for grant under the Plan. This
limit includes Shares that were authorized for grant under the Companys 2001 Stock Incentive Plan
but that were not issued or subject to outstanding awards as of the Effective Date. Any Share that
is subject to an Award that could be settled with Shares and is not a Full Value Award shall be
deducted from this limit at the ratio of one (1) Share for every one (1) Share subject to the
Award. Any Share that is subject to a Full Value Award that could be settled with Shares shall be
deducted from this limit at the ratio of 1.78 Shares for every one (1) Share subject to the Award.
After the Effective Date, no new awards may be granted under the 2001 Stock Incentive Plan, but any
awards under the 2001 Stock Incentive Plan that are outstanding as of the Effective Date shall
continue to be subject to the terms and conditions of the 2001 Stock Incentive Plan.
(b) If an Award expires or is canceled, forfeited or settled for cash (in whole or in part),
the Shares subject to such Award shall, to the extent of such expiration, cancellation, forfeiture
or cash settlement, again be available as Shares authorized for grant under the Plan, in accordance
with Section 3.1(d) below. Notwithstanding anything to the contrary contained herein, Shares
tendered by a Holder or withheld by the Company in payment of the exercise price of an Award or to
satisfy any tax withholding obligation with respect to an Award shall not be available as Shares
authorized for grant under the Plan.
(c) Substitute Awards shall not reduce the Shares authorized for grant under the Plan.
Additionally, in the event that a company acquired by the Company or any Affiliate or with which
the Company or any Affiliate combines has shares available under a pre-existing plan approved by
stockholders and not adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for Awards under the
Plan and shall not reduce the Shares authorized for grant under the Plan; provided, that Awards
using such available shares shall not be made after the date awards could have been made under the
terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to
individuals who were not employed by or providing services to the Company or its Affiliates
immediately prior to such acquisition or combination.
(d) Each Share that again becomes available for grant pursuant to this Section 3.1 shall be
added back as (i) one (1) Share if such Share was subject to an Award other than a Full Value
Award, and (ii) as 1.78 Share if such Share was subject to a Full Value Award.
8
3.2 Stock Distributed. Any Shares distributed pursuant to an Award may consist, in whole or
in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased
on the open market.
ARTICLE 4.
GRANTING OF AWARDS
GRANTING OF AWARDS
4.1 Participation. The Committee may, from time to time, select from among all Eligible
Individuals, those to whom an Award shall be granted.
4.2 Award Agreement. Each Award shall be evidenced by an Award Agreement. Award Agreements
shall contain such terms and conditions as may be determined by the Committee that are not
inconsistent with the Plan, including any terms and conditions that are necessary for Awards to
comply with, or be exempt from, the requirements of Section 409A of the Code. Award Agreements
evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.
Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may
be necessary to meet the applicable provisions of Section 422 of the Code.
4.3 Programs. The Board or the Committee may from time to time establish Programs pursuant to
the Plan. An Award Agreement evidencing an Award granted pursuant to any Program shall comply with
the terms and conditions of such Program and the Plan.
4.4 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the
Plan, the Plan, any Award granted to any individual who is then subject to Section 16 of the
Exchange Act, and any applicable Program, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the
Exchange Act and any amendments thereto) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan and each Program and Award
shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
4.5 Fiscal Year Award Limit. Notwithstanding any provision in the Plan to the contrary, and
subject to Section 13.2, the maximum aggregate number of Shares with respect to one or more Awards
that may be granted to any one person during any fiscal year of the Company shall be One Million
(1,000,000) and the maximum aggregate amount of cash that may be paid to any one person during any
fiscal year of the Company with respect to one or more Performance Awards payable in cash shall be
Five Million Dollars ($5,000,000). To the extent required by Section 162(m) of the Code, Shares
subject to Awards that are canceled shall continue to be counted against the Award Limit specified
in the preceding sentence.
4.6 Minimum Vesting. The minimum time-based vesting period for an Award that is subject to
the satisfaction of one or more Performance Goals or other performance-based criteria shall be one
(1) year. With the exception of Stock Payments that are not subject to vesting, each other Award
shall be subject to a minimum three (3) year time-based vesting period; provided, however, the
Committee may provide for (a) an equal portion of each such Award to vest in
9
annual installments during such three (3) year period, (b) a longer (but not shorter)
time-based vesting period for an Award so long as the vesting schedule is not more favorable to the
Holder than the default schedule specified above or (c) the acceleration of vesting to the extent
permitted by Section 11.8.
4.7 At-Will Employment. Nothing in the Plan, any Program or any Award Agreement shall confer
upon any Holder any right to be employed by or to serve as a Director or Consultant for the Company
or any Affiliate, or to continue in such employment or service, or shall interfere with or restrict
in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or
without notice, or to terminate or change all other terms and conditions of employment or
engagement, except to the extent expressly provided otherwise in a written agreement between the
Holder and the Company or any Affiliate.
4.8 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the sole
discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other
Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards
may be granted either at the same time as or (subject to the requirements of Section 409A of the
Code) at a different time from the grant of such other Awards.
ARTICLE 5.
PERFORMANCE-BASED COMPENSATION
PERFORMANCE-BASED COMPENSATION
5.1 Purpose. The Committee, in its sole discretion, may determine at the time an Award is
granted whether such Award is intended to qualify as Performance-Based Compensation. If the
Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is
intended to qualify as Performance-Based Compensation, then the provisions of this Article 5 shall
control over any contrary provision contained in the Plan. The Committee may in its sole
discretion grant Awards to other Eligible Individuals that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 5 and that are not
intended to qualify as Performance-Based Compensation.
5.2 Applicability. The grant of an Award to an Eligible Individual for a particular
Performance Period shall not require the grant of an Award to such Eligible Individual in any
subsequent Performance Period (or entitle such Eligible Individual to any such grant) and the grant
of an Award to any one Eligible Individual shall not require the grant of an Award to any other
Eligible Individual in such period or in any other period (or entitle any such other Eligible
Individual to any such grant).
5.3 Types of Awards. Notwithstanding anything in the Plan to the contrary, the Committee may
grant any Award to a Covered Employee in a manner intended to qualify as Performance-Based
Compensation, including, without limitation, Restricted Stock for which the restrictions lapse upon
the attainment of specified Performance Goals, and any Performance Awards described in Article 9
that vest or become exercisable or payable upon the attainment of one or more specified Performance
Goals.
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5.4 Procedures with Respect to Performance-Based Awards. To the extent necessary to comply
with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted one or
more Covered Employees and that is intended to qualify as Performance-Based Compensation, no later
than 90 days following the commencement of any Performance Period (or such earlier time as may be
required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or
more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish objective Performance Goals, and amounts of such Awards, as applicable, which
may be earned for such Performance Period based on the Performance Criteria, and (d) specify an
objective relationship between the Performance Criteria and the Performance Goals and the amounts
of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period.
Following the completion of each Performance Period, the Committee shall certify in writing whether
and the extent to which the applicable Performance Goals have been achieved for such Performance
Period. In determining the amount earned or payable under such Awards, to the extent provided under
any applicable Program or Award Agreement, the Committee shall have the right to reduce or
eliminate (but not to increase) the amount earned or payable at a given level of performance to
take into account additional factors that the Committee may deem relevant, including, without
limitation, the assessment of individual or Company performance for the Performance Period.
5.5 Payment of Performance-Based Awards. Unless otherwise provided in the applicable Program
or Award Agreement, as to an Award that is intended to qualify as Performance-Based Compensation,
the Holder must be employed by the Company or an Affiliate throughout the Performance Period.
Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder
shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and
to the extent the Performance Goals for such period are achieved.
5.6 Additional Limitations. Notwithstanding any other provision of the Plan and except as
otherwise determined by the Committee, any Award that is granted to a Covered Employee and is
intended to qualify as Performance-Based Compensation shall be subject to any additional
limitations set forth in Section 162(m) of the Code that are requirements for qualification as
Performance-Based Compensation, and the Plan, any applicable Program and the Award Agreement shall
be deemed amended to the extent necessary to conform to such requirements.
ARTICLE 6.
GRANTING OF OPTIONS
GRANTING OF OPTIONS
6.1 Granting of Options to Eligible Individuals. The Committee is authorized to grant Options
to Eligible Individuals on such terms and conditions as it may determine that are not inconsistent
with the Plan; provided, however, that no Option shall be granted to any Employee or Consultant of
an Affiliate unless the Company is an eligible issuer of service recipient stock with respect to
such person within the meaning of Section 409A of the Code.
6.2 Qualification of Incentive Stock Options. No Incentive Stock Option shall be granted to
any person who is not an Employee of the Company or any subsidiary corporation of the Company (as
defined in Section 424(f) of the Code). No person who is a Greater Than 10%
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Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code. Any Incentive Stock Option
granted under the Plan may be modified by the Committee, with the consent of the Holder, to
disqualify such Option from treatment as an incentive stock option under Section 422 of the Code.
To the extent that the aggregate Fair Market Value of Shares with respect to which incentive stock
options (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code) are exercisable for the first time by a Holder during any calendar year under the Plan,
and all other plans of the Company and any subsidiary or parent corporation thereof (each as
defined in Section 424(f) and (e) of the Code, respectively), exceeds $100,000, the Options shall
be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The
requirements set forth in the preceding sentence shall be applied by taking Options and other
incentive stock options into account in the order in which they were granted and the Fair Market
Value of Shares shall be determined as of the time the respective instruments were granted. Subject
to adjustment as provided in Section 3.1(b) and Section 13.2, no more than One Million Seven
Hundred and Fifty Thousand (1,750,000) Shares may be issued pursuant to the exercise of Incentive
Stock Options granted under the Plan.
6.3 Option Exercise Price. The exercise price per Share subject to each Option shall be set
by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date
the Option is granted (or on the date the Option is modified, extended or renewed for purposes of
Section 409A of the Code or, as to an Incentive Stock Option, Section 424(h) of the Code). In
addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such
price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is
granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of
the Code).
6.4 Option Term. The term of each Option shall be set by the Committee in its sole
discretion; provided, however, that the term shall not be more than ten (10) years from the date
the Option is granted, or five (5) years from the date an Incentive Stock Option is granted to a
Greater Than 10% Stockholder. The Committee shall determine the time period, including the time
period following a Termination of Service, during which a Holder has the right to exercise the
vested Options, which time period may not extend beyond the term of the Option.
6.5 Option Vesting. Subject to Section 4.6, the Committee shall determine the period of time
and other conditions that must be satisfied before the Holders right to exercise an Option, in
whole or in part, shall vest. Such vesting may be based on service with the Company or an
Affiliate, any of the Performance Criteria, or any other criterion or condition determined by the
Committee. No portion of an Option that cannot be exercised at the Holders Termination of Service
shall thereafter become exercisable.
6.6 Substitute Awards. Notwithstanding the foregoing provisions of this Article 6 to the
contrary, in the case of an Option that is a Substitute Award, the price per share of the shares
subject to such Option may be less than the Fair Market Value per share on the date of grant;
provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise
price thereof does not exceed the excess of: (x) the aggregate Fair Market Value (as of the time
immediately preceding the transaction giving rise to the Substitute Award, such Fair Market
12
Value to be determined by the Committee) of the shares of the predecessor entity that were
subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise
price of such shares, and that the grant of the Substitute Award otherwise satisfies the
requirements of Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations or, in the case of an
Incentive Stock Option, Section 1.424-1(a) of the Treasury Regulations.
6.7 Substitution of Stock Appreciation Rights. The Committee may provide in the applicable
Program or the Award Agreement evidencing the grant of an Option that the Committee, in its sole
discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any
time prior to or upon exercise of such Option; provided, that such Stock Appreciation Right shall
be exercisable with respect to the same number of Shares for which such substituted Option would
have been exercisable and such Stock Appreciation Right shall have the same exercise price and the
same remaining vesting schedule and term as such Option.
ARTICLE 7.
EXERCISE OF OPTIONS
EXERCISE OF OPTIONS
7.1 Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the Committee may require
that, by the terms of the Option, a partial exercise must be with respect to a minimum number of
Shares.
7.2 Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Company Stock Administrator:
(a) A written or electronic notice complying with the applicable rules established by the
Company Stock Administrator stating that the Option, or a portion thereof, is exercised. The
notice must be signed in writing or electronically by the Holder or other person then entitled to
exercise the Option or such portion of the Option;
(b) Such representations and documents as the Company Stock Administrator, in its sole
discretion, deems necessary or advisable to effect compliance with all applicable laws and
regulations, and the rules of any applicable Securities Exchange. The Company Stock Administrator
may, in its sole discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised by any person other than the Holder who is
permitted to exercise the Option in accordance with Section 11.3, appropriate proof of the right of
such person to exercise the Option, as determined in the sole discretion of the Company Stock
Administrator; and
(d) Full payment of the exercise price and applicable withholding taxes to the Company for the
Shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by
Section 11.1 and 11.2.
7.3 Notification Regarding Disposition. The Holder shall give the Company Stock Administrator
prompt written or electronic notice of any disposition of Shares acquired by
13
exercise of an Incentive Stock Option which occurs within (a) two years from the date of
granting (including the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares
to such Holder.
ARTICLE 8.
AWARD OF RESTRICTED STOCK
AWARD OF RESTRICTED STOCK
8.1 Award of Restricted Stock.
(a) The Committee is authorized to grant Restricted Stock to Eligible Individuals, and shall
determine such terms and conditions, including the restrictions applicable to each Award of
Restricted Stock, that are not inconsistent with the Plan, and may impose such conditions on the
issuance of such Restricted Stock, as it deems appropriate.
(b) The Committee shall establish the purchase price, if any, and form of payment for
Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall
be no less than the par value of the Shares to be purchased, unless otherwise permitted by
applicable state law. In all cases, legal consideration shall be required for each issuance of
Restricted Stock.
8.2 Rights as Stockholders. Subject to Section 8.4, upon the grant of a Restricted Stock
Award, the Holder shall have, unless otherwise provided in the terms of the applicable Award
Agreement, all the rights of a stockholder with respect to the Shares subject to the Award, subject
to the restrictions in the applicable Program or in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made with respect to the Shares; provided,
however, that if the lifting or lapsing of the restrictions on an Award of Restricted Stock is
subject to satisfaction of one or more Performance Goals, the Holder shall not be entitled to
receive dividends or other distributions with respect to the Shares subject to the Award unless and
until each of the applicable Performance Goals has been satisfied, at which time declared and
accrued but unpaid dividends and distributions from and after the date of grant of the Award shall
become payable to the Holder as soon as practicable. Notwithstanding anything in the foregoing to
the contrary, dividends and other distributions made with respect to the Shares subject to an Award
shall only be payable to the Holder of the Award to the extent provided by the Committee under the
applicable Program or Award Agreement.
8.3 Restrictions. All Shares of Restricted Stock (including any Shares received by Holders
thereof with respect to Shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, under the terms of the applicable Program or Award
Agreement, be subject to such restrictions and vesting requirements as the Committee shall provide.
Such restrictions may include, without limitation, restrictions concerning voting rights and
transferability and such restrictions may lapse separately or in combination at such times and
pursuant to such circumstances or based on such criteria as selected by the Committee, including,
without limitation, criteria based on the Holders duration of employment or service with the
Company or its Affiliates, applicable Performance Criteria, Company performance or individual
performance. Restricted Stock may not be sold or encumbered until all applicable restrictions are
satisfied, terminated or expire.
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8.4 Repurchase or Forfeiture of Restricted Stock. If no purchase price was paid by a Holder
in cash or property for a grant of Restricted Stock, upon a Termination of Service the Holders
rights in any Shares of Restricted Stock then subject to restrictions shall terminate, and such
Shares of Restricted Stock shall be surrendered to the Company and cancelled without consideration.
If a purchase price was paid by a Holder in cash or property for a grant of Restricted Stock, upon
a Termination of Service the Company shall have the right to repurchase from the Holder the Shares
of Restricted Stock then subject to restrictions at a cash price per Share equal to the purchase
price paid by the Holder in cash or property for such Shares of Restricted Stock or such other
amount as may be specified under the applicable Program or in the applicable Award Agreement.
8.5 Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be
evidenced in such manner as the Company Stock Administrator shall determine. Certificates, book
entries or electronic registration evidencing shares of Restricted Stock must include an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, in it sole discretion, retain physical possession of any
stock certificate until such time as all applicable restrictions lapse.
8.6 Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to
be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock
rather than as of the date or dates upon which the Holder would otherwise be taxable under Section
83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company
promptly after filing such election with the Internal Revenue Service.
ARTICLE 9.
AWARD OF PERFORMANCE AWARDS, STOCK
PAYMENTS AND RESTRICTED STOCK UNITS
AWARD OF PERFORMANCE AWARDS, STOCK
PAYMENTS AND RESTRICTED STOCK UNITS
9.1 Performance Awards.
(a) The Committee is authorized to grant Performance Awards to any Eligible Individual and to
determine whether such Performance Awards shall be Performance-Based Compensation. The number of
Shares subject to a Performance Award and the value of a Performance Award may be linked to any one
or more of the Performance Criteria or other specific criteria determined by the Committee, in each
case on a specified date or dates or over any period or periods determined by the Committee.
Performance Awards may be paid in cash, Shares, or both, as determined by the Committee.
(b) Without limiting Section 9.1(a), the Committee may grant Performance Awards to any
Eligible Individual in the form of a cash bonus payable upon the attainment of objective
Performance Goals, or such other criteria, whether or not objective, which are established by the
Committee, in each case on a specified date or dates or over any period or periods determined by
the Committee. Any such bonuses paid to a Holder that are intended to be Performance-Based
Compensation shall be based upon objectively determinable bonus formulas established in accordance
with the provisions of Article 5.
15
9.2 Stock Payments. The Committee is authorized to make Stock Payments to any Eligible
Individual. The number or value of Shares of any Stock Payment shall be determined by the
Committee and may be based upon one or more Performance Criteria or any other specific criteria,
including service to the Company or any Affiliate, determined by the Committee. Shares underlying a
Stock Payment that is subject to a vesting schedule or other restrictions, conditions or criteria
set by the Committee will not be issued until the restrictions, conditions or criteria have been
satisfied. Unless otherwise provided in the applicable Award Agreement, a Holder of a Stock Payment
shall have no rights as a Company stockholder with respect to such Stock Payment until such time as
the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder.
Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other
cash compensation otherwise payable to such Eligible Individual.
9.3 Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to
any Eligible Individual. The number and terms and conditions of Restricted Stock Units shall be
determined by the Committee. The Committee shall specify the date or dates on which the Restricted
Stock Units shall become fully vested and nonforfeitable, and may specify such vesting
restrictions, conditions or criteria as it deems appropriate, including, without limitation,
conditions based on one or more Performance Criteria or other specific criteria, including service
to the Company or any Affiliate, in each case on a specified date or dates or over any period or
periods, as the Committee determines. The Company Stock Administrator shall specify, or permit the
Holder to elect, the conditions and dates upon which the Shares underlying the Restricted Stock
Units that shall be issued, if applicable, subject to the requirements of Section 409A of the Code.
Restricted Stock Units may be paid in cash, Shares, or both, as determined by the Committee. On the
distribution dates, the Company shall issue to the Holder one unrestricted, fully transferable
Share (or the Fair Market Value of one such Share in cash) for each vested and nonforfeitable
Restricted Stock Unit.
9.4 Term. The term of a Performance Award, Stock Payment award and/or Restricted Stock Unit
award shall be set by the Committee in its sole discretion.
9.5 Exercise or Purchase Price. The Committee may establish an exercise or purchase price for
a Performance Award, Shares distributed as a part of a Stock Payment or Shares distributed pursuant
to a Restricted Stock Unit Award.
ARTICLE 10.
AWARD OF STOCK APPRECIATION RIGHTS
AWARD OF STOCK APPRECIATION RIGHTS
10.1 Grant of Stock Appreciation Rights.
(a) The Committee is authorized to grant Stock Appreciation Rights to Eligible Individuals on
such terms and conditions as it may determine that are not inconsistent with the Plan; provided,
however, that no Stock Appreciation Right shall be granted to any Employee or Consultant of an
Affiliate unless the Company is an eligible issuer of service recipient stock with respect to
such person within the meaning of Section 409A of the Code.
16
(b) A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise
the Stock Appreciation Right) to exercise all or a specified portion of the Stock Appreciation
Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an
amount determined by multiplying the difference obtained by subtracting the exercise price of the
Stock Appreciation Right from the Fair Market Value of a Share on the date of exercise of the Stock
Appreciation Right, and multiplying the difference, if positive, by the number of Shares with
respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations
the Committee may impose. Except as described in Section 10.1(c) below, the exercise price of each
Stock Appreciation Right shall be set by the Committee, but shall not be less than 100% of the Fair
Market Value of a Share on the date the Stock Appreciation Right is granted (or on the date the
Stock Appreciation Right is modified, extended or renewed for purposes of Section 409A of the
Code).
(c) Notwithstanding the foregoing provisions of Section 10.1(b) to the contrary, in the case
of a Stock Appreciation Right that is a Substitute Award, the exercise price of such Stock
Appreciation Right may be less than 100% of the Fair Market Value of a Share on the date of grant;
provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the Shares subject to the Substitute Award, over (b) the aggregate exercise
price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute Award, such fair market value
to be determined by the Committee) of the shares of the predecessor entity that were subject to the
grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such
shares, and that the grant of the Substitute Award otherwise satisfies the requirements of Section
1.409A-1(b)(5)(v)(D) of the Treasury Regulations.
10.2 Stock Appreciation Right Term. The term of each Stock Appreciation Right shall be set by
the Committee in its sole discretion; provided, however, that the term shall not be more than ten
(10) years from the date the Stock Appreciation Right is granted. The Committee shall determine
the time period, including the time period following a Termination of Service, during which the
Holder has the right to exercise a vested Stock Appreciation Right, which time period may not
extend beyond the term of the Stock Appreciation Right.
10.3 Stock Appreciation Right Vesting. Subject to Section 4.6, the Committee shall determine
the period of time and other conditions that must be satisfied before the Holders right to
exercise a Stock Appreciation Right, in whole or in part, shall vest. Such vesting may be based on
service with the Company or an Affiliate, any of the Performance Criteria, or any other criterion
or condition determined by the Committee. No portion of a Stock Appreciation Right that cannot be
exercised at the Holders Termination of Service shall thereafter become exercisable.
10.4 Manner of Exercise. All or a portion of an exercisable Stock Appreciation Right shall be
deemed exercised upon delivery of all of the following to the Company Stock Administrator, or such
other person or entity designated by the Committee, or his, her or its office, as applicable:
(a) A written or electronic notice complying with the applicable rules established by the
Company Stock Administrator stating that the Stock Appreciation Right, or a
17
portion thereof, is exercised. The notice must be signed in writing or electronically by the
Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of
the Stock Appreciation Right;
(b) Such representations and documents as the Company Stock Administrator, in its sole
discretion, deems necessary or advisable to effect compliance with applicable laws and regulations.
The Company Stock Administrator may, in its sole discretion, also take whatever additional actions
it deems appropriate to effect such compliance; and
(c) In the event that the Stock Appreciation Right shall be exercised pursuant to this Section
10.4 by any person or persons other than the Holder, appropriate proof of the right of such person
or persons to exercise the Stock Appreciation Right.
10.5 Payment. Payment of the amounts payable with respect to Stock Appreciation Rights
pursuant to this Article 10 shall be in cash, Shares (based on their Fair Market Value as of the
date the Stock Appreciation Right is exercised), or a combination of both, as determined by the
Committee.
ARTICLE 11.
ADDITIONAL TERMS OF AWARDS
ADDITIONAL TERMS OF AWARDS
11.1 Payment. The Committee shall determine the methods by which payments by any Holder with
respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash
or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares
issuable pursuant to the exercise of the Award) or Shares not subject to any pledge or security
interest and held for such period of time as may be required by the Committee, in each case, having
a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery
of a written or electronic notice that the Holder has placed a market sell order with a broker with
respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction
of the aggregate payments required; provided, that payment of such proceeds is then made to the
Company upon settlement of such sale, or (d) other property or legal consideration acceptable to
the Committee. The Committee shall also determine the methods by which Shares shall be delivered
or deemed to be delivered to Holders. Notwithstanding any other provision of the Plan to the
contrary, no Holder who is a Director or an executive officer of the Company within the meaning
of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards
granted under the Plan, or continue any extension of credit with respect to such payment, with a
loan from the Company or a loan arranged by the Company to the extent it would violate Section
13(k) of the Exchange Act.
11.2 Tax Withholding. The Company and any Affiliate shall have the authority and the right to
deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy
federal, state, local and foreign taxes (including the Holders FICA or employment tax obligation)
required by law to be withheld with respect to any taxable event concerning a Holder arising as a
result of the Plan. The Committee may, in its sole discretion and in satisfaction of the foregoing
requirement, allow a Holder to elect to have the Company withhold Shares
18
otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares
which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate amount of such
liabilities not to exceed the minimum statutory withholding rates for federal, state, local and
foreign income tax and payroll tax purposes that are applicable to such supplemental taxable
income. The Company Stock Administrator shall determine the Fair Market Value of the Shares,
consistent with applicable provisions of the Code, for tax withholding obligations due in
connection with a broker-assisted cashless Option exercise or a Stock Appreciation Right exercise
involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any
tax withholding obligation.
11.3 Transferability of Awards.
(a) Except as otherwise provided in Section 11.3(b):
(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other
than to a Permitted Transferee by will or the laws of descent and distribution or, subject to the
consent of the Committee, pursuant to a QDRO, unless and until and to the extent such Award has
been exercised, or the Shares underlying such Award have been issued, and all restrictions
applicable to such Shares have lapsed;
(ii) No Award or interest or right therein shall be liable for the debts, contracts or
engagements of the Holder or the Holders successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted imposition of liability thereon or disposition thereof shall be null and void and
of no effect, except to the extent that such disposition is permitted hereunder; and
(iii) During the lifetime of the Holder, only the Holder (or the personal representative of an
incompetent Holder) may exercise an Award (or any portion thereof) granted to such Holder under the
Plan, unless it has been disposed of pursuant to a QDRO, in which case the beneficiary of the QDRO
may exercise the Award; after the death of the Holder, any exercisable portion of an Award may be
exercised by a Permitted Transferee, but only prior to the time when such portion expires or
becomes unexercisable under the Plan or the applicable Program or Award Agreement.
(b) Notwithstanding Section 11.3(a), the Committee, in its sole discretion and subject to such
terms and conditions as it may impose, may permit a Holder to transfer an Award other than an
Incentive Stock Option to any one or more Permitted Transferees, subject to any state, federal,
local or foreign tax and securities laws applicable to transferable Awards.
(c) A Holder may, in the manner determined by the Committee, designate a Permitted Transferee
to exercise the rights of the Holder as his or her beneficiary and to receive any distribution with
respect to any Award upon the Holders death. Such person shall be subject to all terms and
conditions of the Plan and any Program or Award Agreement applicable to the
19
Holder, except to the extent the Plan, the Program, the Award Agreement or applicable law
otherwise provide, and to any additional restrictions deemed necessary or appropriate by the
Committee. If the Holder is married and resides in a community property state, a designation of a
person other than the Holders spouse as his or her beneficiary with respect to more than 50% of
the Holders interest in the Award shall not be effective without the prior written or electronic
consent of the Holders spouse. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Holder at any time provided the change or revocation is filed with the Committee
prior to the Holders death. If no beneficiary has been designated in this manner or the
beneficiary does not survive the Holder, the rights of the Holder shall be exercisable by the
Holders executor or administrator.
11.4 Conditions to Issuance of Shares.
(a) Notwithstanding anything herein to the contrary, the Company shall not be required to
issue or deliver any certificates or make any book entries evidencing Shares pursuant to the
exercise or vesting of any Award, unless and until the Board or the Committee has determined, with
advice of counsel, that the issuance of such Shares is in compliance with all applicable laws and
regulations and, if applicable, the requirements of any Securities Exchange, and the Shares are
covered by an effective registration statement or applicable exemption from registration. In
addition to the terms and conditions provided herein, the Board or the Committee may require that a
Holder make such reasonable covenants, agreements, and representations as the Board or the
Committee, in its discretion, deems advisable in order to comply with any such laws, regulations,
or requirements.
(b) All certificates evidencing Shares delivered pursuant to the Plan and all Shares issued
pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as
the Committee or the Company Stock Administrator deems necessary or advisable to comply with
applicable laws and regulations and the rules of any Securities Exchange.
(c) The Company Stock Administrator shall have the right to require any Holder to comply with
any timing or other restrictions with respect to the settlement, vesting, distribution or exercise
of any Award, including a window-period limitation, as may be imposed in the sole discretion of the
Company Stock Administrator, or because of any other requirement arising from compliance with any
applicable laws or regulations, as determined by the Company Stock Administrator, in its sole
discretion.
(d) No fractional Shares shall be issued and the Company Stock Administrator shall determine,
in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such
fractional Shares shall be eliminated by rounding.
(e) Notwithstanding any other provision of the Plan, unless otherwise determined by the
Company Stock Administrator or required by any applicable laws or regulations, the Company shall
not deliver to any Holder certificates evidencing Shares issued in connection with any Award and
instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer
agent or the Company Stock Administrator).
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11.5 Forfeiture Provisions. Pursuant to its general authority to determine the terms and
conditions applicable to Awards under the Plan, the Committee shall have the right to provide, in
the terms or conditions of Programs or Awards made under the Plan or in any policy with respect to
the recovery or recoupment of compensation or benefits in the event of financial restatements or
the occurrence of other events that are inconsistent with the payment of compensation, as
determined by the Committee, or to require a Holder to agree by separate written or electronic
instrument, that: (a)(i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of
any Shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate
and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (b)(i) a
Termination of Service occurs prior to a specified date, or within a specified time period
following receipt or exercise of the Award, (ii) the Holder at any time, or during a specified time
period, engages in any activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee, (iii) the Holder
incurs a Termination of Service for cause (as such term is defined in the sole discretion of the
Committee, or as set forth in a written agreement relating to such Award between the Company and
the Holder) or (iv) the Companys financial results are restated and such proceeds, gains or other
economic benefit actually or constructively received by the Holder would have been lower had they
been calculated based on such restated results.
11.6 Prohibition on Repricing. Except as provided in Section 13.2, the Committee shall not,
without the approval of the stockholders of the Company, (i) authorize the amendment of any
outstanding Option or Stock Appreciation Right to reduce its exercise price, except with respect to
any Substitute Award, or (ii) cancel any outstanding Option or Stock Appreciation Right in exchange
for cash or another Award that has a lower exercise price or that provides additional value to the
Holder, except with respect to any Substitute Award.
11.7 Permitted Replacement Awards. The Committee shall have the authority, without the
approval of the stockholders of the Company, to amend any outstanding Award (or any award granted
under another Company plan, subject to the terms of such other plan) to increase the exercise price
or to cancel and replace an Award (or any award granted under another Company plan, subject to the
terms of such other plan) with the grant of an Award having an exercise price that is greater than
or equal to the original price per share and having vesting schedule and term equal to the
remaining vesting schedule and term of the Award (or award granted under another Company plan)
being replaced.
11.8 Shareholder Approval of Certain Accelerations. The Committee shall not, without the
approval of the stockholders of the Company, accelerate the vesting of any Awards except (a) in
connection with the death or disability of a Holder or the Retirement of a Holder who is an
Employee, or (b) in accordance with Section 13.2(h).
ARTICLE 12.
ADMINISTRATION
ADMINISTRATION
12.1 Committee. The Committee shall administer the Plan (except as otherwise permitted
herein) and shall consist solely of two or more Non-Employee Directors appointed by and holding
office at the pleasure of the Board, each of whom is intended to qualify as a
non-
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employee director as defined by Rule 16b-3 of the Exchange Act or any successor rule, an
outside director for purposes of Section 162(m) of the Code and an independent director under
the rules of any Securities Exchange; provided, that any action taken by the Committee shall be
valid and effective, whether or not members of the Committee at the time of such action are later
determined not to have satisfied the requirements for membership set forth in this Section 12.1 or
otherwise provided in any charter of the Committee.
12.2 Duties and Powers of Committee. It shall be the duty of the Committee to conduct the
general administration of the Plan in accordance with its provisions, subject to the Committees
power to delegate duties under Section 12.6. The Committee shall have the power to interpret the
Plan, the Program and any Award Agreement, and to adopt such rules for the administration,
interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend
or revoke any such rules and to amend any Program or Award Agreement in any manner not inconsistent
with the Plan; provided that the rights of the Holder of an Award that is the subject of any such
Program or Award Agreement are not affected adversely by such amendment, unless the consent of the
Holder is obtained or such amendment is otherwise permitted under Section 13.9. Any such Award
under the Plan need not be the same with respect to each Holder. Any such interpretations and
rules with respect to Incentive Stock Options shall be consistent with the provisions of Section
422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan except with respect to matters which
under Rule 16b-3 under the Exchange Act, Section 162(m) of the Code or the rules of any Securities
Exchange require otherwise.
12.3 Action by the Committee. Unless otherwise established by the Board or in any charter of
the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of
the members present at any meeting at which a quorum is present, and acts approved in writing by
all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee for
purposes of the Plan. Each member of the Committee is entitled to, in good faith, rely or act upon
any report or other information furnished to that member by any officer or other employee of the
Company or any Affiliate, the Companys independent certified public accountants, or any
compensation consultant, attorney or other professional retained by the Company to assist in the
administration of the Plan.
12.4 Authority of Committee. Subject to any specific designation in the Plan or any
applicable Program, the Committee has the exclusive power, authority and sole discretion to:
(a) Designate Eligible Individuals to receive Awards;
(b) Determine the type or types of Awards to be granted to each Eligible Individual;
(c) Determine the number of Awards to be granted and the number of Shares to which an Award
will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including,
but not limited to: the exercise price, grant price, or purchase price; any Performance Criteria;
any restrictions or limitations on the Award; any schedule for vesting;
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lapse of forfeiture restrictions or restrictions on the exercisability of an Award and
accelerations or waivers thereof; and any provisions related to non-competition and recapture of
gain on an Award, based in each case on such considerations as the Committee in its sole discretion
determines;
(e) Determine whether, to what extent, and pursuant to what circumstances (i) an Award may be
settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other
property (subject to the requirements of Section 409A of the Code), or (ii) an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for each Holder;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any
Award Agreement; and
(j) Make all other decisions and determinations that may be required pursuant to the Plan or
as the Committee deems necessary or advisable to administer the Plan.
12.5 Decisions Binding. The Committees interpretation of the Plan, any Awards granted
pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all parties.
12.6 Delegation of Authority. The Board or Committee may from time to time delegate (a) to a
committee of one or more members of the Board the authority to grant or amend Awards and (b) to a
committee of one or more members of the Board or to one or more officers of the Company the
authority to take administrative actions pursuant to Article 12; provided that any delegation of
authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code,
applicable securities laws, the rules of any applicable Securities Exchange and any Company policy
governing the grant of equity-based awards. Any delegation hereunder shall be subject to the
restrictions and limits that the Board or Committee specifies at the time of such delegation, and
the Board may at any time rescind the authority so delegated or appoint a new delegate. At all
times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure
of the Board and the Committee.
ARTICLE 13.
MISCELLANEOUS PROVISIONS
MISCELLANEOUS PROVISIONS
13.1 Amendment, Suspension or Termination of the Plan. Except as otherwise provided in this
Section 13.1, the Plan and any Award Agreement may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
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Board or the Committee. However, without approval of the Companys stockholders, no action of
the Committee may, except as provided in Section 13.2, (i) increase the limits imposed in Section
3.1 on the maximum number of Shares that may be issued under the Plan, (ii) take any action
described in Section 11.6 above, (iii) materially modify the requirements for eligibility to
participate in the Plan, (iv) materially increase the benefits accruing to participants in the
Plan, or (v) take any other action that requires the approval of the Companys stockholders under
the rules of any applicable Securities Exchange. Except as provided in Section 13.9, no amendment,
suspension or termination of the Plan shall, without the consent of the Holder, adversely affect
the rights of the Holder under any Award theretofore granted to such Holder, unless the Award
itself otherwise expressly so provides.
13.2 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the
Company and Other Corporate Events.
(a) In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the Shares or the Share price other than an Equity
Restructuring, the Committee shall make equitable adjustments, if any, to reflect such change with
respect to (i) the aggregate number and kind of securities that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number
and kind of securities that may be issued under the Plan, adjustments of the Award Limit, and
adjustments of the manner in which securities subject to Full Value Awards will be counted); (ii)
the number and kind of securities (or other property) subject to outstanding Awards; (iii) the
terms and conditions of any outstanding Awards (including, without limitation, any applicable
performance targets or criteria with respect thereto); and (iv) the grant or exercise price per
share for any outstanding Awards under the Plan.
(b) In the event of any transaction or event described in Section 13.2(a) or any unusual or
nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the
financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations
or accounting principles, the Committee, in its sole discretion, and on such terms and conditions
as it deems appropriate, either by the terms of the Award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the Holders request, is
hereby authorized to take any one or more of the following actions whenever the Committee
determines that such action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or with respect to any
Award under the Plan, to facilitate such transactions or events or to give effect to such changes
in laws, regulations or principles:
(i) To provide for either (A) termination of any such Award in exchange for an amount of cash,
if any, equal to the amount that would have been attained upon the exercise of such Award or
realization of the Holders rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 13.2 the Committee determines in
good faith that no amount would have been attained upon the exercise of such Award or realization
of the Holders rights, then such Award may be terminated by the Company without payment) or (B)
the replacement of such Award with other rights or property selected by the Committee in its sole
discretion having an aggregate value not exceeding the
24
amount that could have been attained upon the exercise of such Award or realization of the
Holders rights had such Award been currently exercisable or payable or fully vested;
(ii) To provide that such Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;
(iii) To make adjustments in the number and type of securities (or other property) subject to
outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or in the terms
and conditions of (including the grant or exercise price), and the criteria included in,
outstanding Awards and Awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or payable or fully vested with respect
to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the
applicable Program or Award Agreement; and/or
(v) To provide that the Award cannot vest, be exercised or become payable after such event.
(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding
anything to the contrary in Sections 13.2(a) and 13.2(b):
(i) The number and type of securities subject to each outstanding Award and the exercise price
or grant price thereof, if applicable, shall be equitably adjusted; and/or
(ii) The number and kind of securities that may be issued under the Plan pursuant to new
Awards shall be equitably adjusted.
(d) The Committee may, in its sole discretion, include such further provisions and limitations
in any Award, Program, Award Agreement or certificate or book-entry evidencing Shares, as it may
deem equitable and in the best interests of the Company that are not inconsistent with the
provisions of the Plan.
(e) No adjustment or action described in this Section 13.2 or in any other provision of the
Plan, any applicable Program or the Award Agreement shall be authorized to the extent that such
adjustment or action would cause such Award to violate the requirements of Section 409A of the
Code. With respect to any Award which is granted to a Covered Employee and is intended to qualify
as Performance-Based Compensation, no adjustment or action described in this Section 13.2 or in any
other provision of the Plan, any applicable Program or the Award Agreement shall be authorized to
the extent that such adjustment or action would cause such Award to fail to so qualify as
Performance-Based Compensation, unless the Committee determines that the Award should not so
qualify. No adjustment or action described in this Section 13.2 or in any other provision of the
Plan shall be authorized to the extent that such adjustment or action would cause the Plan to
violate Section 422(b)(1) of the Code, unless the Committee determines that Options granted under
the Plan are not to qualify as incentive
25
stock options. Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action could result in short-swing profits liability under Section 16 or violate
the exemptive conditions of Rule 16b-3 unless the Committee determines that the Award is not to
comply with such exemptive conditions.
(f) The existence of the Plan, any Program, any Award Agreement and any Awards granted
hereunder shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Companys capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or affect the Common
Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
(g) In the event of any pending stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (other than normal cash dividends) of Company
assets to stockholders, or any other change affecting the Shares or the Share price, including any
Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion
may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the
consummation of any such transaction.
(h) Without limiting the generality of the foregoing, the vesting of an Award will not
automatically accelerate upon the occurrence of a Change of Ownership; provided, however, the
Committee may determine that upon the occurrence of a Change of Ownership, (i) the acquirer or
surviving entity shall be required to assume an Award or substitute a comparable award with respect
to the equity of the acquirer or surviving entity, (ii) the vesting of all or any portion of the
Award will accelerate to the time immediately prior to the consummation of the Change of Ownership,
or, in the case of an Option or Stock Appreciation Right, all or any portion of the Award shall
become immediately exercisable so that the Holder will have the opportunity to exercise the Award
(or portion thereof) immediately prior to consummation of the Change of Ownership, and/or (iii) all
or any portion of the Award, including any unvested portion should the Committee so determine,
shall be purchased for (x) in the case of an Option or Stock Appreciation Right, cash in an amount
equal to the excess of the aggregate Fair Market Value of the Shares subject to the Award to be
purchased over the aggregate exercise price for such Shares, net of tax withholding, and (y) in the
case of any other Award, such consideration as the Committee may in good faith determine to be
equitable under the circumstances; provided, further, that any determination of the Committee in
this regard shall comply with Sections 409A and 424 of the Code.
13.3 No Stockholder Rights. Except as otherwise provided herein, a Holder shall have none of
the rights of a stockholder with respect to Shares subject to any Award until the Holder becomes
the record owner of such Shares.
13.4 Paperless Administration. In the event that the Company Stock Administrator establishes,
for the Company or using the services of a third party, an automated system for the
26
documentation, granting or exercise of Awards, such as a system using an internet website or
interactive voice response, then the paperless documentation, granting or exercise of Awards by a
Holder may be permitted through the use of such an automated system.
13.5 Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect
any other compensation or incentive plans in effect for the Company or any Affiliate, except as
described in Section 3.1(a) above with respect to the Companys 2001 Stock Incentive Plan. Nothing
in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish
any other forms of incentives or compensation for Employees, Directors or Consultants of the
Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise
than under the Plan in connection with any proper corporate purpose including without limitation,
the grant or assumption of options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.
13.6 Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and
the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted
or awarded under the Plan are subject to compliance with all applicable laws and regulations, the
rules of any Securities Exchange, and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under the Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent permitted by applicable
law, the Plan, any Program and any Awards granted or awarded hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
13.7 Titles and Headings, References to Sections of the Code, the Securities Act or Exchange
Act. The titles and headings of the Sections in the Plan are for convenience of reference only
and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall
control. References to sections of the Code, the Securities Act or the Exchange Act shall include
any amendment or successor thereto.
13.8 Governing Law. The Plan, any Program and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Delaware without regard to
conflicts of laws thereof.
13.9 Section 409A.
(a) To the extent that the Committee determines that any Award granted under the Plan is
subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the
Award Agreement evidencing such Award shall incorporate the terms and conditions required by
Section 409A of the Code. To the extent applicable, the Plan, the Program and any Award Agreements
shall be interpreted in accordance with Section 409A of the Code. Notwithstanding any provision of
the Plan or the applicable Program or Award Agreement to the contrary, in the event that following
the Effective Date the Committee
27
determines that any Award may be subject to Section 409A of the Code, the Committee may adopt
such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies
and procedures (including amendments, policies and procedures with retroactive effect), or take any
other actions, that the Administrator determines are necessary or appropriate to (i) exempt the
Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits
provided with respect to the Award, or (ii) comply with the requirements of Section 409A of the
Code and related Department of Treasury guidance and thereby avoid the application of any penalty
taxes under such Section.
(b) If, at the time of a Holders separation from service (within the meaning of Section
409A of the Code), (i) such Holder is a specified employee (within the meaning of Section 409A of
the Code as determined annually by the Committee in accordance with the methodology specified by
resolution of the Board or the Committee and in accordance with Section 1.409A-1(i) of the Treasury
Regulations) and (ii) the Committee shall make a good-faith determination that an amount payable
pursuant to an Option or Award constitutes deferred compensation (within the meaning of Section
409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay
rule set forth in Section 409A of the Code in order to preserve the tax treatment intended for such
payment or to avoid additional tax, interest, or penalties under Section 409A of the Code, then the
Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it
on the first business day after such six-month period. Such amount shall be paid without interest,
unless otherwise determined by the Committee, in its sole discretion, or as otherwise provided in
any applicable agreement between the Company and the relevant Holder.
(c) The Holder shall be solely responsible and liable for the satisfaction of all taxes,
interest, and penalties that may be imposed on such Holder or for such Holders account in
connection with any Award (including any taxes, interest, and penalties under Section 409A of the
Code), and neither the Company nor its Affiliates shall have any obligation to reimburse, indemnify
or otherwise hold such Holder harmless from any or all of such taxes, interest, or penalties.
13.10 No Rights to Awards. No Eligible Individual or other person shall have any claim to be
granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to
treat Eligible Individuals, Holders or any other persons uniformly.
13.11 Unfunded Status of Awards. The Plan is intended to be an unfunded plan for incentive
compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing
contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are
greater than those of a general creditor of the Company or any Affiliate.
13.12 Indemnification. To the extent allowable pursuant to applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless by the Company from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure to act pursuant to
the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in
such action, suit, or proceeding against him or her. The
28
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled pursuant to the Companys Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
13.13 Term. The ability to grant new awards under this Plan shall terminate on the tenth
(10th) anniversary of the Effective Date.
# # #
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