Attached files
file | filename |
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EX-14 - EX-14 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv14.htm |
EX-10.4 - EX-10.4 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv10w4.htm |
EX-32.1 - EX-32.1 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv32w1.htm |
EX-31.2 - EX-31.2 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv31w2.htm |
EX-3.1.2 - EX-3.1.2 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv3w1w2.htm |
EX-3.1.1 - EX-3.1.1 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv3w1w1.htm |
10-K - FORM 10-K - SPECTRUM GROUP INTERNATIONAL, INC. | v57293e10vk.htm |
EX-21 - EX-21 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv21.htm |
EX-31.1 - EX-31.1 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv31w1.htm |
EX-10.3 - EX-10.3 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv10w3.htm |
EX-32.2 - EX-32.2 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv32w2.htm |
EX-10.7 - EX-10.7 - SPECTRUM GROUP INTERNATIONAL, INC. | v57293exv10w7.htm |
EXHIBIT 10.5
APPROVED 5/27/2010
Spectrum Group International, Inc.
Non-Employee Directors Compensation Program
Effective May 27, 2010
Effective May 27, 2010
1. Purpose and Scope of the Program.
(a) Purpose. The purpose of this Non-Employee Directors Compensation Program (the Program)
of Spectrum Group International, Inc. (the Company) is to advance the interests of the Company
and its stockholders by providing for fair and adequate equity compensation of non-employee
directors and an opportunity for deferral of compensation in order to attract and retain high
quality persons to serve as directors and to enable such persons to increase their proprietary
interest in the Company. In furtherance of this purpose, the Program provides for grants of equity
awards in the form of Stock Options and/or Restricted Stock Units, as elected by the director, and,
if authorized by the Board for a given fiscal year, the opportunity for a director to elect
deferred and alternative forms of compensation in lieu of cash fees for service as a director,
including Deferred Shares, deferred cash or non-deferred Shares.
(b) Status as Sub-Plan Under 1997 Stock Incentive Plan. The Program constitutes a sub-plan
under the Companys 1997 Stock Incentive Plan (the 1997 Plan). Accordingly, equity awards
granted under the Program and shares issued or delivered hereunder shall be deemed to be granted
under and drawn from the 1997 Plan.
(c) Relation of Program to Other Director Compensation. The amount, timing, and other terms
of cash compensation that may be paid by the Company to non-employee directors are not governed by
this Program, except to the extent that opportunities for deferral of cash compensation otherwise
payable to a director, or receipt of such cash compensation in alternative forms, may be made
available to a director under this Program. In addition, adoption of the Program does not limit
the authority of the Board of Directors in adopting other compensation programs in which directors
may participate.
2. Definitions. In addition to the terms defined in Section 1 and defined terms under the
1997 Plan, the following terms shall be defined as set forth below:
(a) Account means the account established and maintained by the Company for RSUs granted
under Section 5 and Deferred Shares and deferred cash credited under Section 6. A subaccount for
RSUs and a subaccount for such Deferred Shares and deferred cash may be designated within the
Account. The Account and RSUs, Deferred Shares and deferred cash credited to the Account will be
maintained solely as bookkeeping entries by the Company to evidence unfunded obligations of the
Company.
(b) Administrator means the individual or committee specified in Section 3(b) to whom the
Board has delegated authority to administer the Program.
(c) Beneficiary means the person(s) or trust(s) which have been designated by a Participant
in his or her most recent written beneficiary designation filed with the Administrator to receive
the
benefits specified under the Program upon such Participants death. If, upon a Participants
death, there is no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person(s) or trust(s) entitled by will or the laws of descent and
distribution to receive such benefits.
(d) Board means the Board of Directors of the Company. The Compensation Committee of the
Board is authorized to perform any or all of the Boards functions hereunder, in which case
references to the Board shall be deemed to include such Committee.
(e) Change in Control is defined in Section 3.7 of the 1997 Plan, except that a Change in
Control shall be triggered under Section 3.7.1(b) only if the tender offer is completed or under
Section 3.7.1(c) only if the merger or other transaction is completed.
(f) Code means the Internal Revenue Code as amended, including regulations and
interpretations thereunder and successor provisions and regulations thereto.
(g) Deferred Shares means a Share Unit credited to a Participants Account under Section 6
as a result of deferral of cash Director Compensation.
(h) Director Compensation means annual retainer fees payable to a director in his or her
capacity as such for service on the Board and service as chairman of any Board committee, and any
other fees payable to a director in his or her capacity as such for attending meetings and other
service on the Board and Board committees; provided, however, that the Administrator may determine
(in advance of any relevant election by a director) that specific fees or other payments will not
be deemed Director Compensation. Reimbursement of expenses does not constitute Director
Compensation.
(i) Disability means a Participants Termination due to a physical or mental incapacity of
long duration which renders the Participant unable to perform the duties of a director of the
Company, as determined by the Board.
(j) Exchange Act means the Securities Exchange Act of 1934, as amended, including rules
thereunder and successor provisions and rules thereto.
(k) Participant means any person who has been granted a Stock Option which remains
outstanding, has RSUs, Deferred Shares or deferred cash credited to his or her Account, or has
validly elected to defer receipt of Director Compensation in the form of Deferred Shares or
deferred cash or receive Director Compensation in the form of non-deferred Shares under the
Program.
(l) Plan Year means a fiscal year of the Company.
(m) RSU or Restricted Stock Unit means a Share Unit credited to a Participants Account as
a grant under Section 5, which is subject to a risk of forfeiture for a specified period.
(n) Shares means shares of Common Stock of the Company and such other securities as may be
substituted or resubstituted for Shares pursuant to Section 9(b).
(o) Share Unit means a right to receive, at a specified settlement date, delivery of one
Share, subject to the terms and conditions of the Program. Share Units in the form of RSUs shall
be subject to a risk of forfeiture, but Share Units in the form of Deferred Shares will be at all
times non-forfeitable.
(p) Stock Option means an option to purchase a specified number of Shares at a specified
exercise price, granted under Section 5.
(p) Termination means the Participant ceasing to serve as a director, provided that if the
Participant has become an employee of the Company it shall mean the later of ceasing to serve as a
director and separation from service as an employee within the meaning of Treasury Regulation §
1.409A-1(h)).
(q) Valuation Date shall mean the close of business on the last business day of each
calendar quarter and, in the case of any final distribution of deferred cash from a Participants
Account, the day as of which such distribution is made; provided, however, that the Administrator
may specify a different Valuation Date in order to coordinate the Participants deferred cash
balance with any actual investment by which the deferred cash balance is to be measured.
3. Administration.
(a) Authority. Both the Board and the Administrator (subject to the ability of the Board to
direct the Administrator) shall administer the Program in accordance with its terms, and shall have
all powers necessary to accomplish such purpose, including the power and authority to construe and
interpret the Program, to define the terms used herein, to prescribe, amend and rescind rules and
regulations, agreements, forms, and notices relating to the administration of the Program, and to
make all other determinations necessary or advisable for the administration of the Program.
However, the Board shall approve the form and amount of compensation to directors under any
provision of the Program. The Administrator may perform any function of the Board under the
Program, except for establishing the form and amount of compensation under any provision, adopting
material amendments to the Program under Section 9(e), and any other function from time to time
specifically reserved by the Board to itself. Any actions of the Board or the Administrator with
respect to the Program shall be final, conclusive, and binding upon all persons interested in the
Program, subject to the ability of the Board to direct the Administrator. The Board and
Administrator may each appoint agents and delegate thereto powers and duties under the Program,
except as otherwise limited by the Program. Any function of the Board hereunder may be performed by
the Compensation Committee of the Board (or other designated Board committee) under authority
delegated by the Board.
(b) Administrator. The Administrator shall be the General Counsel and Chief Administrative
Officer of the Company, or, if that officer is unavailable, the Chief Financial Officer and
Executive Vice President; provided, however, that the Board may designate a different individual or
committee to serve as Administrator. No director shall act on or decide any matter relating solely
to himself or herself or any of his or her rights or benefits under the Program.
(c) Limitation of Liability. Each member of the Board and the Administrator shall be entitled
to, in good faith, rely or act upon any report or other information furnished to him or her by any
officer or other employee of the Company or any subsidiary, the Companys independent registered
public accounting firm, or any executive compensation consultant, legal counsel, or other
professional retained by the Company to assist in the administration of the Program. No member of
the Board or the Administrator, nor any person to whom ministerial duties under the Program have
been delegated, shall be personally liable for any action, determination, or interpretation taken
or made in good faith with respect to the Program, and any such person shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect to any such
action, determination, or interpretation.
4. Eligibility. Each director of the Company who is not an employee of the Company or a
subsidiary may participate in the Program, subject to the terms hereof. No person other than those
specified in this Section 4 will be eligible to participate in the Program. The Administrator
will notify each person of his or her eligibility to participate in an elective feature of the
Program prior to any deadline for filing an election form.
5. Grants of RSUs or Stock Options. An eligible director will receive a grant of equity
awards under this Section 5 for each Plan Year, unless otherwise determined by the Board. The
grant date for grants under this Section 5 will be the first business day on or after August 15 of
each Plan Year, unless a different grant date is specified in advance by the Board; provided,
however, that the grant date for fiscal 2010 shall be May 27, 2010.
(a) Equity Award Value for Plan Year. For each Plan Year, the Board will establish an equity
award value, which will be a dollar value for equity awards to be granted under this Section 5 to
each eligible director. The equity award value for fiscal 2010 will be $38,000, which equity award
value will remain in effect for subsequent fiscal years unless modified by the Board.
(b) Election as to Form of Award. Each eligible director will be permitted to elect to
receive a grant of RSUs or Stock Options, or a combination, with an aggregate grant-date value
equal to the equity award value. If the election is filed in the calendar year before the grant
date, or such election otherwise is filed at a time that meets the applicable requirements of Code
Section 409A, the election may specify that the RSUs will be deferred as to settlement until a
fixed date or the Participants Termination, subject to accelerated or delayed settlement as
specified below in Section 8. Elections intended to provide for such deferral shall be subject to
the terms of Section 6(a). A validly deferred RSU will remain forfeitable until the risk of
forfeiture lapses (although it may continue to be referred to as an RSU during any subsequent
deferral period in which it is no longer subject to a risk of forfeiture).
(c) Valuation of RSUs and Stock Options. For purposes of determining their equity award value,
each RSU shall be valued at 100% of its Fair Market Value at the grant date, and each Stock Option
shall be valued at 100% of its fair value at the grant date. Fair value shall be determined in
accordance with Statement of Financial Accounting Standards No. 123R (FAS 123R) in the same
manner as fair value of the Stock Options would be calculated for purposes of determining expense
for financial reporting purposes, but disregarding estimated forfeitures.
(d) Forfeiture and Vesting of RSUs and Stock Options. Unless otherwise determined by the
Board, (i) a Participants RSUs and Stock Options will be forfeited in the event that he or she
voluntarily resigns as a director before the end of the fiscal year in respect of which the award
was granted and (ii) a pro rata portion of a Participants RSUs and Stock Options will be forfeited
in the event that he or she is not reelected as a director (whether or not the director agreed to
be nominated for reelection) at a meeting of shareholders before the end of the fiscal year in
respect of which the award was granted, with the forfeited portion equal to the number of RSUs
granted and the number of Stock Options granted each multiplied by the number of days from the date
of such meeting of shareholders until the end of the fiscal year in respect of which the award was
granted, divided by 365. At the end of the fiscal year in respect of which the award was granted,
if the RSUs or Stock Options have not been forfeited they will be deemed vested (or earlier at such
time as the RSUs or Stock Options are no longer forfeitable). The foregoing notwithstanding, RSUs
and Stock Options will become fully vested and non-forfeitable in the event of the Participants
death, Termination due to Disability, or mandatory retirement, or upon a Change in Control.
(e) Other Terms of RSUs. RSUs will be credited with dividend equivalents in accordance with
Section 7(a). Dividend equivalents will be payable at the time of settlement of the RSUs, without
interest, unless otherwise determined by the Board or the Administrator. Dividend equivalents
(whether in cash, RSUs or other property) will be forfeitable to the same extent as the RSUs with
respect to which they are credited. Except as otherwise determined by the Board, RSUs shall be
settled as follows:
(i) | RSUs that have not been electively deferred shall be settled within 75 days following vesting (and otherwise within the shortest applicable short-term deferral period under Code Section 409A). | ||
(ii) | RSUs that have been electively deferred shall be settled at the applicable date under the deferral election, except that settlement shall occur on an accelerated or delayed basis the same as for Deferred Shares under Section 8. |
(f) Other Terms of Stock Options. Stock Options shall become exercisable at the time of
vesting, and shall expire at the earlier of seven years after the date of grant or three years
after Termination. The exercise price per share purchasable under a Stock Option will be equal to
100% of the Fair Market Value of a share on the date of grant of the Stock Option. The exercise
price of a Stock Option shall be paid to the Company either in cash or by the surrender of shares
owned separately by the Participant or by the Company withholding shares from those deliverable
upon exercise of the Stock Option (a net exercise), or any combination thereof, as elected by the
Participant, provided that the Administrator may limit the availability of such non-cash exercise
methods or may make available other lawful forms of payment of the exercise price, in its
discretion. At the expiration date of a Stock Option, if the Participant has not exercised the
Stock Option and the exercise price per Share is less than the then Fair Market Value per Share,
the Stock Option shall be automatically exercised by means of a net exercise.
6. Deferral of Director Compensation In Deferred Shares and Deferred Cash; Receipt of Director
Compensation in Non-Deferred Shares. Each eligible director may elect, in accordance with Section
6(a), to defer receipt of Director Compensation in the form of Deferred Shares under Section 6(b)
or deferred cash under Section 6(c) for any Plan Year (or portion thereof) with respect to which
the Board has authorized deferral of cash fees hereunder. In the alternative, an eligible director
may elect, in accordance with Section 6(d), to receive Director Compensation in the form of
non-deferred Shares under Section 6(d) for any Plan Year (or portion thereof) with respect to which
the Board has authorized payment of cash fees in the form of Shares hereunder.
(a) Elections. A director shall elect to participate in the deferral feature under this
Section 6 and the terms of such participation by filing an election with the Company prior to the
beginning of a calendar year (or, in the case of a new director, upon initial appointment) or at
such other date as may be specified by the Administrator, provided that any date so specified shall
ensure effective deferral of taxation and otherwise comply with Code Section 409A and other
applicable laws and regulations; and provided further, that an election for the current Plan Year
may be filed within ten days after the effective date of this Program, such election to be
applicable only to Director Compensation payable after the filing of such election.
(i) | Effect and Irrevocability of Elections. Unless otherwise determined by the Administrator in advance of a relevant Plan Year, elections shall be deemed continuing, and therefore applicable to Plan Years after the initial Plan Year covered by the election, until the election is modified or superseded by the Participant. Elections (other than those relating to investment alternatives) shall become irrevocable immediately before the commencement of the Plan Year to which an election relates, unless the Administrator specifies an earlier date of irrevocability, provided that elections that are permitted to be filed with effect during the then-current Plan Year shall be irrevocable upon filing with the Company. Elections may be modified or revoked by filing a new election prior to the time the election to be modified or revoked has become irrevocable. The latest election |
filed with the Administrator shall be deemed to revoke all prior inconsistent elections that remain revocable at the time of filing of the latest election. |
(ii) | Matters To Be Elected. The Administrator will provide a form or forms of election which will permit a director to make appropriate elections with respect to all relevant matters under this Section 6 and Section 7. | ||
(iii) | Time of Filing Elections. An election must be received by the Administrator prior to the applicable deadline (specified by the Administrator and compliant with Code Section 409A). Under no circumstances may a Participant defer compensation to which the Participant has attained, at the time of deferral, a legally enforceable right to current receipt of such compensation. |
(b) Deferral of Director Compensation in the Form of Deferred Shares. If a Participant has
elected to defer receipt of a specified amount of Director Compensation in the form of Deferred
Shares, a number of Deferred Shares shall be credited to the Participants Account equal to (i)
such amount otherwise payable divided by (ii) the Fair Market Value of a Share at the crediting
date. The crediting date will be the date on which annual retainers are paid and the date of each
regularly scheduled meeting of the Board of Directors at which separate meeting fees are paid; if
any Director Compensation to be deferred in Deferred Shares is payable at dates other than such
regular meeting dates, such amounts shall be deferred without interest until the next regularly
scheduled meeting of the Board at which time it will be applied to the crediting of Deferred
Shares. Deferred Shares credited under this Section 6(b) shall be subject to the terms and
conditions of Deferred Shares specified in Section 7. The right and interest of each Participant
in Deferred Shares credited to the Participants Account under this Section 6(b) at all times will
be nonforfeitable.
(c) Deferral of Director Compensation in the Form of Deferred Cash. If a Participant has
elected to defer receipt of a specified amount of Director Compensation in the form of deferred
cash, an amount equal to such specified amount shall be credited to the Participants Account as of
the date such Director Compensation otherwise would have been payable to the Participant but for
such election to defer. Deferred cash credited to a Participants Account may be invested in such
investment vehicles, other than an investment vehicle relating to the Companys stock, as may be
designated from time-to-time by the Board. The terms of any such investment (including relating to
timing, crediting of earnings and losses, and reallocation among investment vehicles) shall be
subject to such rules, regulations and determinations as may be adopted by the Administrator.
Unless otherwise determined by the Board, one investment alternative will provide that interest may
be credited with respect to cash balances in a Participants Account at each Valuation Date in an
amount equal to the average daily cash balance in such Account since the last Valuation Date
multiplied by the interest rate as specified by the Board and applicable to the period since the
preceding Valuation Date. The initial policy with respect to the interest rate under this Section
6(c), effective as of the effective date of the Program and continuing until modified or revoked by
the Board, shall be to credit interest at 120% of the applicable federal long-term rate, with
annual compounding (as prescribed under Code Section 1274(d)), as in effect for the first month of
the fiscal year. The Company may link the earnings and losses under designated investment vehicles
to the returns of actual investments in such vehicles, which investments may be made directly by
the Company or through a rabbi trust or other intermediary; provided, however, that the Participant
shall have no rights with respect to any specific assets that would cause the Participant to be
other than an unsecured creditor of the Company or to be otherwise in constructive receipt of any
cash or property. The right and interest of each Participant relating to deferred cash credited to
his or her Account at all times will be nonforfeitable.
(d) Receipt of Director Compensation in the Form of Non-Deferred Shares. If a Participant has
elected to receive a specified amount of Director Compensation in the form of non-deferred Shares,
a number of Shares shall be issued to the Participants Account equal to (i) such amount otherwise
payable divided by (ii) the Fair Market Value of a Share at the payment date. The payment date
will be the date on which retainers are paid and the date of each regularly scheduled meeting of
the Board of Directors at which separate meeting fees are paid; if any Director Compensation to be
paid in non-deferred Shares is payable at dates other than such regular meeting dates, such amounts
shall be deferred without interest until the next regularly scheduled meeting of the Board at which
time it will be paid by delivery of non-deferred Shares. Shares issued under this Section 6(d)
will be nonforfeitable. An election to receive payment of Director Compensation in the form of
non-deferred Shares may be made at any time, with effect on Director Compensation earned
thereafter, provided that no such election may have the effect of modifying an irrevocable election
to defer Director Compensation.
7. Other Terms of Accounts.
(a) Dividend Equivalents on Share Units. Dividend equivalents will be credited on Share Units
(i.e., RSUs and Deferred Shares) credited to a Participants Account as follows (dividend
equivalents on RSUs are subject also to Section 5(e)):
(i) | Cash Dividends. If the Company declares and pays a dividend on Shares in the form of cash, then the cash amount of the dividend shall be credited to a Participants Account as of the designated crediting date for such dividend. If no elective cash deferrals have been authorized under this Program, these cash amounts will not be credited with interest (unless otherwise determined by the Board). If elective cash deferrals have been authorized under the Program, such cash amounts shall be credited with interest as would apply to an interest-bearing cash deferral in the Account. In all cases the cash dividend equivalents and earnings thereon will be settled at the same time as the related Share Units are settled. | ||
(ii) | Non-Cash, Non-Share Dividends. If the Company declares and pays a dividend on Shares in the form of property other than Shares, then a number of additional Share Units shall be credited to a Participants Account as of the designated crediting date for such dividend equal to (i) the number of Share Units credited to the Account as of the record date for such dividend, multiplied by (ii) the Fair Market Value of any property other than Shares actually paid as a dividend on each Share at such payment date, divided by (iii) the Fair Market Value of a Share at such designated crediting date; provided, however, that the Board may vary this treatment by making an adjustment under Section 9(b). | ||
(iii) | Share Dividends and Splits. If the Company declares and pays a dividend on Shares in the form of additional Shares, or there occurs a forward split of Shares, then a number of additional Share Units shall be credited to the Participants Account as of the payment date for such dividend or forward Share split equal to (i) the number of Share Units credited to the Account as of the record date for such dividend or split multiplied by (ii) the number of additional Shares actually paid as a dividend or issued in such split in respect of each Share. |
(b) Reallocation of Accounts. A Participant shall have no right to have amounts credited as
cash in his or her Account reallocated or switched to Share Units in such Account or amounts
credited as Share Units in such Account reallocated or switched to deferred cash in such Account,
unless otherwise determined by the Board. The foregoing notwithstanding, in the event of a Change
in Control which
results in the Companys Common Stock ceasing to be a publicly traded security, the
Participants Share Unit balance in his or her Account shall be automatically converted into
deferred cash based on the Fair Market Value of Shares as of the close of business on the day of
the Change in Control. If and to the extent authorized by the Board under Section 6(c), amounts of
deferred cash may be reallocated among investment alternatives made available for cash deferrals
under the Program, if any.
(c) Elections as to Settlement. In electing to defer Director Compensation under this
Program, each Participants election shall specify the time or times at which the Participants
Account will be settled, following the Participants Termination, and whether distribution of a
cash Account balance (but not Share Units) will be in a single lump sum or in a number of annual
installments not exceeding ten; provided, however, that, if no valid election has been filed as to
the time of settlement of a Participants Account or any portion thereof, such Account or portion
thereof shall be distributed in a single lump sum 15 days after the Participants Termination
(subject to Section 8(d)). If installments are elected, such installments must be annual
installments commencing 15 days after the Participants Termination, payable on the anniversaries
of such commencement date and extending over a period not to exceed ten years.
(i) | Matters Covered by Election. Subject to the terms of the Program, the Administrator shall determine whether all deferrals under the Program must be subject to a single election as to the time or times of settlement, or whether settlement elections may relate to deferrals relating to a specified Plan Year. If the Administrator permits elections to relate to a specified Plan Year, such election shall apply to the amounts originally credited in respect of such Plan Year and to any additional amounts credited as dividend equivalents or interest or earnings (or losses) in respect of such originally credited amounts and previously credited additional amounts. | ||
(ii) | Modifying Elections. A Participant may modify a prior election as to the time at which a Participants Account (or portion thereof) will be settled at any time prior to the time the Participant ceases to serve as a director of the Company, but only in compliance with Treasury Regulation § 1.409A-2(b) (including any requirement that the settlement be delayed by at least five years) and subject to such additional requirements as may be specified by the Administrator. Such modification shall be made by filing a new election with the Administrator. |
(d) Statements. The Administrator will furnish statements to each Participant reflecting the
amounts credited to a Participants Account, transactions therein, and other related information no
less frequently than once each calendar year; provided that statements shall not be required if
deferrals of Director Compensation have not been authorized hereunder. Statements may be combined
with other information, including information with respect to other compensation plans, being
provided to the Participant.
(e) Fractional Shares. The amount of Share Units credited to an Account shall include
fractional Shares calculated to at least three decimal places, unless the Administrator determines
such crediting of fractional shares to be administratively impracticable and specifies an
alternative treatment. In no event will any fractional share be actually delivered in settlement
of Share Units.
8. Settlement of Accounts. The Company will settle a Participants Account by making one or
more distributions to the Participant (or his or her Beneficiary, following Participants death) at
the time or times, in a lump sum or installments, as specified in the Participants election(s)
filed in accordance with Sections 5, 6 and 7; provided, however, that an Account will be settled at
times earlier than those specified in such election in accordance with Sections 8(b), 8(c), 8(d) or
8(e); and provided
further, that RSUs as to which no valid election to defer has been filed will be settled at
the applicable settlement date under Section 5.
(a) Form of Distribution. Distributions in settlement of a Participants Account shall be
made only in cash with respect to deferred cash and only in Shares with respect to Share Units.
(b) Death. If a Participant has a Termination due to death or dies prior to distribution of
all amounts from his or her Account, the Company shall make a single lump-sum distribution to the
Participant or his or her Beneficiary. Any such distribution shall be made 30 days after the
Participants death.
(c) Financial Emergency and Other Payments. Other provisions of the Program notwithstanding,
if, upon the written application of a Participant, the Board determines that the Participant has a
financial emergency of such a substantial nature and beyond the Participants control that payment
of amounts previously deferred under the Program is warranted, the Board may direct the payment to
the Participant of all or a portion of the balance of an Account and the time and manner of such
payment; provided, however, that such distribution will be made only in accordance with Treasury
Regulation § 1.409A-3(i)(3).
(d) Six-Month Delay Rule. If, at the time of Termination (excluding a Termination due to
death), a Participant is a specified employee for purposes of Code Section 409A, and an amount to
be settled within six months of such Termination is a deferral of compensation under Treasury
Regulation § 1.409A-1(b), the distribution will be delayed until the first business day that is
more than six months after the Participants Termination.
(e) Distribution Upon a Change in Control. Upon a Change in Control, the Company shall make a
single lump-sum distribution to the Participant in settlement of his or her Account as promptly as
practicable following the Change in Control, provided, however, that no distribution shall be made
of an amount that constitutes a deferral of compensation under Treasury Regulation § 1.409A-1(b)
unless the Change in Control constituted (or there occurred a transaction related to the Change in
Control immediately before or within 90 days after the Change in Control which transaction
constituted) a change in the ownership of the Company, a change in effective control of the
Company, or a change in the ownership of a substantial portion of the assets of the Company as
defined in Treasury Regulation § 1.409A-3(i)(10) (a 409A Change in Control).
9. General Provisions.
(a) Limits on Transferability. Stock Options, RSUs, Deferred Shares, deferred cash, and all
other rights under the Program will not be transferable by a Participant except by will or the laws
of descent and distribution, or to a Beneficiary, in the event of a Participants death and will
not otherwise be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy,
execution or other legal or equitable process, nor subject to the debts, contracts, liabilities or
engagements, or torts of any Participant or his or her Beneficiary. Any attempt to alienate, sell,
transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable
process or encumber or dispose of any interest in the Program shall be void. The foregoing
notwithstanding, the Administrator may permit a Participant to transfer Stock Options and related
rights to one or more trusts, partnerships, or family members during the lifetime of the
Participant solely for estate planning purposes and not for value, but only if and to the extent
then consistent with the registration of any offer and sale of shares related thereto on Form S-8,
Form S-3, or such other registration form of the Securities and Exchange Commission as may then be
permitted to be filed with respect to the 1997 Plan and the Program. The Company may rely upon the
beneficiary designation last filed in accordance with this Section 9(a). Non-deferred Shares
are not subject to any restriction on transferability under this Program.
(b) Adjustments. In the event that any large, special and non-recurring dividend or other
distribution in the form of cash or other property, recapitalization, forward or reverse split,
Share dividend, reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Board to be appropriate in order to prevent
dilution or enlargement of a Participants rights under the Program, then the Board shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and kind of shares deliverable
upon exercise of outstanding Stock Options, and the exercise price per share thereof (provided that
no fractional shares will be delivered upon exercise of any Option), and (ii) the number and kind
of shares then credited as RSUs and Deferred Shares (taking into account any Share Units credited
as dividend equivalents under Section 7(a)) and by reference to which RSUs and Deferred Shares are
valued under the Program. Any other adjustments authorized under the 1997 Plan may be made with
respect to the Program.
(c) Receipt and Release. Payments (in any form) to any Participant or Beneficiary in
accordance with the provisions of the Program shall, to the extent thereof, be in full satisfaction
of all claims for the compensation deferred and relating to the Account to which the payments
relate against the Company, the Board, or the Administrator, and the Administrator may require such
Participant or Beneficiary, as a condition to such payments, to execute a receipt and release to
such effect. In the case of any payment under the Program of less than all amounts then credited
to an Account in the form of RSUs or Deferred Shares, the amounts paid shall be deemed to relate to
the RSUs or Deferred Shares credited to the Account at the earliest time.
(d) Compliance. The Company shall have no obligation to settle any Account of a Participant
(in any form) until all legal and contractual obligations of the Company relating to establishment
of the Program and such settlement shall have been complied with in full. In addition, the Company
shall impose such restrictions on Shares delivered to a Participant hereunder and any other
interest constituting a security as it may deem advisable in order to comply with the Securities
Act of 1933, as amended, any applicable requirements of the Nasdaq National Market or any other
stock exchange or automated quotation system upon which the Shares are then listed or quoted, any
state securities laws applicable to such a transfer, any provision of the Companys Certificate of
Incorporation or By-Laws, or any other law, regulation, or binding contract to which the Company is
a party.
(e) Changes to the Program and Awards. The Board may amend, suspend, discontinue, or
terminate the Program, the authority to grant awards under the Program, or may amend any
outstanding award (and any agreement relating thereto), without the consent of any other party,
including stockholders or Participants; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant under any award
theretofore granted. The foregoing notwithstanding, the Board, in its sole discretion, may
terminate the Program (in whole or in part) and may distribute to any Participant (in whole or in
part, and whether or not in connection with a termination of the Program) the amounts credited to
the Participants Account, but only in compliance with Code Section 409A.
(f) Unfunded Status of Plan; Creation of Trusts. The Program is intended to constitute an
unfunded Plan for deferred compensation and Participants shall rely solely on the unsecured
promise of the Company for payment hereunder. With respect to any payment not yet made to a
Participant under the Program, nothing contained in the Program shall give a Participant any rights
that are greater than those of a general unsecured creditor of the Company; provided, however, that
the Board may authorize the creation of trusts or make other arrangements to meet the Companys
obligations under the Program,
which trusts or other arrangements shall be consistent with the unfunded status of the
Program unless the Board otherwise determines with the consent of each affected Participant. The
establishment and maintenance of, or allocations and credits to, the Account of any Participant
shall not vest in any Participant any right, title or interest in and to any Plan assets or
benefits except at the time or times and upon the terms and conditions and to the extent expressly
set forth in the Program and in accordance with the terms of any trust.
(g) Other Participant Rights. No Participant shall have any of the rights or privileges of a
stockholder of the Company under the Program, including as a result of the grant of a Stock Option
or crediting of RSUs, Deferred Shares or other amounts to an Account, or the creation of any Trust
and deposit of Shares therein, except at such time as such Stock Option may have been duly
exercised or Shares may be actually delivered in settlement of an Account (in whole or in part) or
non-deferred Shares delivered in payment of Director Compensation; provided, however, that the
terms of any such Trust may provide for pass-through voting of shares held in the Trust to
directors participating in this Program. No provision of the Program, document relating to the
Program, or transaction hereunder shall confer upon any Participant any right to continue to serve
as a director of the Company or in any other capacity with the Company or a subsidiary or to be
nominated for reelection as a director, or interfere in any way with the right of the Company to
increase or decrease the amount of any compensation payable to such Participant. Subject to the
limitations set forth in Section 9(a), the Program shall inure to the benefit of, and be binding
upon, the parties hereto and their successors and assigns.
(h) Governing Law. The validity, construction, and effect of the Program, any rules and
regulations under the Program, and any agreement under the Program shall be determined in
accordance with the Delaware General Corporation Law, to the extent applicable, other laws
(including those governing contracts) of the State of California, without giving effect to
principles of conflicts of laws, and applicable federal law.
(j) Limitation. A Participant and his or her Beneficiary shall assume all risk in connection
with any decrease in value of Stock Options, RSUs, Deferred Shares or non-deferred Shares, and
other investment vehicles (if any) permitted for cash deferrals, and neither the Company, the Board
nor the Administrator shall be liable or responsible therefor.
(k) Severability. In the event that any provision of the Program shall be declared illegal or
invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of
the Program but shall be fully severable, and the Program shall be construed and enforced as if
said illegal or invalid provision had never been inserted herein.
(l) Effective Date and Plan Termination. The Program shall be effective as of May 27, 2010.
Unless earlier terminated by action of the Board, the Program will remain in effect until the later
of the fifth anniversary of such effective date or such time as Company has no further rights or
obligations under the Program with respect to outstanding awards or Accounts under the Program.