Attached files
file | filename |
---|---|
8-K - 8-K - TD AMERITRADE HOLDING CORP | c63133e8vk.htm |
EX-10.2 - EX-10.2 - TD AMERITRADE HOLDING CORP | c63133exv10w2.htm |
Exhibit
10.1
TD
AMERITRADE HOLDING CORPORATION
LONG-TERM INCENTIVE PLAN
LONG-TERM INCENTIVE PLAN
1. History, Purpose and Term of Plan.
1.1. History. The Plan was
originally adopted by the Ameritrade Holding Corporation
(Old Ameritrade) effective as of October 1,
1996 (the Original Effective Date). Pursuant to an
agreement and plan of merger, Old Ameritrade became a subsidiary
of the Company, a newly formed corporation, effective as of
September 9, 2002, and thereafter the Company assumed the
Plan, and all outstanding obligations under the Plan. The Board
approved an amendment and restatement of the Plan on
September 7, 2005, and Company stockholders approved such
amendment and restatement on January 4, 2006. The Board
subsequently approved this amendment and restatement of the Plan
on January 19, 2006 (the 2006 Restatement
Date), and Company stockholders approved this amendment
and restatement of the Plan on March 9, 2006. The Board
approved an additional amendment and restatement of the Plan,
subject to Company stockholder approval, on November 9,
2009, and stockholders approved the Plan on February 25,
2010. The HR & Compensation Committee approved additional
amendments on February 24, 2010.
1.2. Purpose. The purposes
of this Plan are to attract, retain and reward Service Providers
and to promote the success of the Companys business. The
Plan seeks to achieve this purpose by providing for Awards in
the form of Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares and
Performance Units.
1.3. Term. The Plan shall
continue in effect until the earlier of its termination by the
Board or the date on which all of the shares of Stock available
for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed.
However, all Incentive Stock Options shall be granted, if at
all, within ten (10) years from the 2006 Restatement Date.
2. Definitions and Construction.
2.1. Definitions. Whenever
used herein, the following terms shall their respective meanings
set forth below:
(a) Administrator means the Board or any
of its Committees as will be administering the Plan, in
accordance with Section 3 of the Plan.
(b) Applicable Laws means the
requirements relating to the administration of stock-based
awards or equity compensation programs under U.S. state
corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Stock
is listed or quoted and the applicable laws of any foreign
country or jurisdiction where Awards are, or will be, granted
under the Plan.
(c) Award means, individually or
collectively, a grant under the Plan of Options, SARs,
Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units.
(d) Award Agreement means the written or
electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan. The Award
Agreement is subject to the terms and conditions of the Plan.
(e) Board means the Board of Directors
of the Company.
(f) Change in Control means the
occurrence of any of the following events after the 2006
Restatement Date:
(i) A change in the ownership of the Company. A change in
the ownership of the Company will occur on the date that any one
person, or more than one person acting as a group, acquires
ownership of the Stock of the Company that, together with the
Stock held by such person or group, constitutes more
1
than fifty percent (50%) of the total fair market value or total
voting power of the Stock of the Company; provided, however,
that for purposes of this subsection (i), the acquisition of
additional Stock by any one person, or more than one person
acting as a group, who is considered to own more than fifty
percent (50%) of the total fair market value or total voting
power of the Stock of the Company shall not be considered a
Change of Control; or
(ii) A change in the effective control of the Company. A
change in the effective control of the Company shall occur on
the date that: (1) the Board determines, in its sole and
absolute discretion, that 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 the Stock of the Company
possessing up to fifty percent (50%) or more of the total voting
power of the Stock of the Company, in each case whether such
acquisition is by means of a tender offer, exchange offer,
merger, business combination or otherwise; or (2) a
majority of members of the Board of Directors 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 of Directors
prior to the date of the appointment or election. For purposes
of this subsection (ii), if any one person, or more than one
person acting as a group, is considered to effectively control
the Company, the acquisition of additional control of the
Company by the same person or persons shall not be considered a
Change of Control; or
(iii) A change in the ownership of a substantial portion of
the Companys assets. A change in the ownership of a
substantial portion of the Companys assets shall occur on
the date that 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 fifty percent
(50%) of the total fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions;
provided, however, that for purposes of this subsection (iii),
the following shall not constitute a change in the ownership of
a substantial portion of the Companys assets: (1) a
transfer to an entity that is controlled by the Companys
stockholders immediately after the transfer; or (2) a
transfer of assets by the Company to: (A) a stockholder of
the Company (immediately before the asset transfer) in exchange
for or with respect to the Companys Stock; (B) an
entity, fifty percent (50%) or more of the total value or voting
power of which is owned, directly or indirectly, by the Company;
(C) a person, or more than one person acting as a group,
that owns, directly or indirectly, fifty percent (50%) or more
of the total value or voting power of all the outstanding Stock
of the Company; or (D) an entity, at least fifty percent
(50%) of the total value or voting power of which is owned,
directly or indirectly, by a person described in this subsection
2.1(f)(iii)(2)(C). For purposes of this subsection (iii), gross
fair market value means the value of the assets of the Company,
or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.
For purposes of this Section 2.1(f), persons will be
considered to be acting as a group if they are owners of a
corporation that enters into a merger, consolidation, purchase
or acquisition of stock, or similar business transaction with
the Company.
Additionally, for purposes of this Section 2.1(f),
notwithstanding any public disclosure to the contrary, TD and
the R Parties (as such terms are defined in the Stockholders
Agreement) together will not be considered to have formed a
group solely as a result of being parties or bound by the
Stockholders Agreement and any future actions, agreements or
arrangements between TD and the R Parties outside of the rights
and obligations set forth in the Stockholders Agreement shall be
taken into account when considering whether TD and the R Parties
shall have formed a group in the future.
(g) Consultant means any person,
including an advisor, engaged by the Company or a Related Entity
to render services to such entity.
(h) Code means the Internal Revenue Code
of 1986, as amended. Any reference to a section of the Code
herein will be a reference to any successor or amended section
of the Code.
2
(i) Committee means a committee of
Directors or other individuals satisfying Applicable Laws
appointed by the Board in accordance with Section 3 of the
Plan.
(j) Committee Designate means any
committee comprised of (1) one or more individual (or
individuals) who are then serving as a member(s) of the Board or
(2) one or more Officer (or Officers).
(k) Company means TD Ameritrade Holding
Corporation, a Delaware corporation, or any successor thereto.
(l) Covered Employee means an Employee
who is, or could be, a covered employee within the
meaning of Section 162(m) of the Code.
(m) Director means a member of the Board.
(n) Disability means, by reason of any
medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months,
receipt by the Employee of income replacement benefits for a
period of not less than three (3) months under an
applicable disability benefit plan of the Company.
(o) Dividend Right means a credit, made
at the discretion of the Committee, to the account of a
Participant in an amount equal to the cash dividends paid on one
Share for each Share represented by an Award held by such
Participant.
(p) Employee means any person, including
Officers and Directors, who are employed by the Company or a
Related Entity. Neither service as a Director nor payment of a
directors fee by the Company or Related Entity will be
sufficient to constitute employment by the Company
or Related Entity.
(q) Exchange Act means the Securities
Exchange Act of 1934, as amended.
(r) Fair Market Value means, as of any
date and unless the Committee determines otherwise, the value of
Stock determined as follows:
(i) If the Stock is listed on any established stock
exchange or a national market system, including without
limitation the Nasdaq Global Select Market, the Nasdaq Global
Market or the Nasdaq Capital Market of The Nasdaq Stock Market,
its Fair Market Value will be the closing market composite price
for such Stock as quoted on such exchange or system for the day
of determination, as reported in The Wall Street Journal
or such other source as the Committee deems reliable;
(ii) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Stock will be the mean between the
high bid and low asked prices for the Stock for the day of
determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or
(iii) In the absence of an established market for the
Stock, the Fair Market Value will be determined in good faith by
the Committee.
(iv) Notwithstanding the preceding, for federal, state, and
local income tax reporting purposes and for such other purposes
as the Committee deems appropriate, the Fair Market Value shall
be determined by the Committee in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.
(s) Incentive Stock Option means an
Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(t) Non-Qualified Stock Option means an
Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option.
(u) Officer means a person who is an
officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
3
(v) Option means an Incentive Stock
Option or a Non-Qualified Stock Option granted pursuant to
Section 6 of the Plan.
(w) Option Price means the price at
which Shares may be purchased upon the exercise of an Option
pursuant to Section 6.3.
(x) Parent means a parent
corporation, whether now or hereafter existing, as defined
in Section 424(e) of the Code.
(y) Participant means the holder of an
outstanding Award.
(z) Performance-Based Award means any
Award granted to selected Service Providers pursuant to this
Plan, but which are subject to the terms and conditions set
forth in Section 12. All Performance-Based Awards granted
to Covered Employees are, unless specifically noted to the
contrary by the Committee, intended to qualify as
performance-based compensation under Section 162(m) of the
Code.
(aa) Performance Goals means the goal(s)
determined by the Committee (in its discretion) to be applicable
to a Participant with respect to an Award. As determined by the
Committee, the Performance Goals applicable to an Award may
provide for a targeted level or levels of achievement using one
or more of the following measures: (i) revenue,
(ii) gross margin, (iii) operating margin,
(iv) operating income, (v) pre-tax profit,
(vi) pre-tax margin, (vii) earnings before interest,
taxes, depreciation and amortization, (viii) net income,
(ix) cash flow, (x) operating expenses, (xi) the
market price of the Share, (xii) earnings per share,
(xiii) earnings yield, (xiv) earnings yield spread,
(xv) gross and net client asset growth, (xvi) gross
and net account growth, (xvii) total stockholder return,
(xviii) return on capital, (xix) return on assets,
(xx) product quality, (xxi) economic value added,
(xxii) number of customers, (xxiii) market share,
(xxiv) return on investments, (xxv) profit after
taxes, (xxvi) client satisfaction, (xxvii) business
divestitures and acquisitions, (xxviii) supplier awards
from significant customers, (xxix) new product development,
(xxx) working capital, (xxxi) individual objectives,
(xxxii) time to market, (xxxiii) return on net assets,
and (xxxiv) sales. The Performance Goals may differ from
Participant to Participant and from Award to Award. Any criteria
used may be measured, as applicable, (i) in absolute terms,
(ii) in relative terms (including, but not limited to,
passage of time
and/or
against another company or companies), (iii) on a per-share
basis, (iv) against the performance of the Company as a
whole or a segment of the Company, and (v) on a pre-tax or
after-tax basis.
(bb) Performance Period means a period
established by the Committee pursuant to Section 12 of the
Plan at the end of which one or more Performance Goals are to be
measured.
(cc) Performance Share means an Award
granted to a Service Provider pursuant to Section 10 of the
Plan.
(dd) Performance Unit means an Award
granted to a Service Provider pursuant to Section 10 of the
Plan.
(ee) Period of Restriction means the
period during which the transfer of Restricted Stock or
Restricted Stock Units are subject to restrictions and
therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of
time, continued service, the achievement of Performance Goals,
and/or the
occurrence of other events as determined by the Committee.
(ff) Plan means this TD Ameritrade
Holding Corporation Long-Term Incentive Plan.
(gg) Related Entity means any Parent,
Subsidiary and any business, corporation, partnership, limited
liability company or other entity in which the Company, a Parent
or a Subsidiary holds a substantial ownership interest, directly
or indirectly.
(hh) Restricted Stock means an Award
granted to a Service Provider pursuant Section 8 of the
Plan.
(ii) Restricted Stock Unit means a
bookkeeping entry representing a right granted to a Participant
pursuant to Section 9 of the Plan to receive the value
associated with a share of Stock on a date determined in
accordance with the provisions of the Plan and the
Participants Award Agreement.
4
(jj) Rule 16b-3
means
Rule 16b-3
of the Exchange Act or any successor to
Rule 16b-3,
as in effect when discretion is being exercised with respect to
the Plan.
(kk) Section 16(b) means
Section 16(b) of the Exchange Act.
(ll) Service Provider means an Employee,
Director or Consultant.
(mm) Share means a share of Stock, as
adjusted in accordance with Section 5.3 of the Plan.
(nn) Stock means the common stock of the
Company, or in the case of certain Stock Appreciation Rights or
Performance Units, the cash equivalent thereof.
(oo) Stock Appreciation Right or
SAR means an Award, granted alone or in
connection with an Option, that pursuant to Section 7 of
the Plan is designated as SAR.
(pp) Stockholders Agreement means that
certain Stockholders Agreement among TD Ameritrade Holding
Corporation, the stockholders listed on Exhibit A thereto
and The Toronto-Dominion Bank dated as of June 22, 2005,
and as most recently amended as of August 3, 2009.
(qq) Subsidiary means a subsidiary
corporation, whether now or hereafter existing, as defined
in Section 424(f) of the Code.
3. Administration.
3.1. Administration. The
Plan shall be administered by the Administrator. Notwithstanding
the foregoing, the Administrator, subject to the terms and
conditions of the Plan, may delegate to any Committee Designate
the authority to act as a subcommittee of the Board or
Committee, as applicable, for purposes of making grants or
awards under the Plan to Service Providers of the Company who
are not subject to Section 16(a) of the Exchange Act as the
Committee Designate shall determine in his or her sole
discretion and the Committee Designate shall have the authority
and duties of the Administrator with respect to such grants or
awards, provided, however, that (a) such Awards shall not
be granted for shares in excess of the maximum aggregate number
of shares of Stock authorized for issuance pursuant to
Section 5, (b) the exercise price per share of each
Option shall be not less than the Fair Market Value per share of
the Stock on the effective date of grant, and (c) each such
Award shall be subject to the terms and conditions of the
appropriate standard form of Award Agreement approved by the
Administrator and shall conform to the provisions of the Plan
and such other guidelines as shall be established from time to
time by the Administrator.
3.2. Authority of the
Administrator. In addition to any other
powers set forth in the Plan and subject to the provisions of
the Plan, the Administrator shall have the full and final power
and authority, in its discretion:
(a) to determine the Fair Market Value;
(b) to select the Service Providers to whom Awards may be
granted hereunder;
(c) to determine the number of shares of Stock to be
covered by each Award granted hereunder;
(d) to approve forms of Award Agreements for use under the
Plan;
(e) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the Option
Price, the time or times when Awards may be exercised (which may
be based on performance criteria), any vesting acceleration or
waiver of forfeiture or repurchase restrictions, and any
restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the
Committee, in its sole discretion, will determine;
(f) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan;
(g) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating
to sub-plans
established for the purpose of satisfying applicable foreign
laws including qualifying for preferred tax treatment under such
applicable foreign tax laws;
5
(h) to modify or amend each Award, including the
discretionary acceleration of vesting and the authority to
extend the post-termination exercisability period of Awards
longer than is otherwise provided for in an applicable Award
Agreement;
(i) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the
Shares or cash to be issued upon exercise, settlement or vesting
of an Award that number of Shares or cash having a Fair Market
Value equal to the minimum amount required to be withheld. The
Fair Market Value of any Shares to be withheld will be
determined on the date that the amount of tax to be withheld is
to be determined by the applicable closing price of the Shares
as reported on the applicable stock exchange or a national
market system, including without limitation the Nasdaq Global
Select Market, the Nasdaq Global Market or the Nasdaq Capital
Market of The Nasdaq Stock Market, which the Stock is listed and
as reported in The Wall Street Journal or such other
source as the Committee deems reliable. All elections by a
Participant to have Shares or cash withheld for this purpose
will be made in such form and under such conditions as the
Committee may deem necessary or advisable;
(j) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award
previously granted by the Committee;
(k) to allow a Participant, subject to compliance with all
Applicable Laws, to defer the receipt of the payment of cash or
the delivery of Shares that would otherwise be due to such
Participant under an Award;
(l) to determine whether Awards will be settled in Shares,
cash or in any combination thereof;
(m) to determine whether Awards will be adjusted for
Dividend Rights;
(n) to establish a program whereby Service Providers
designated by the Committee can, subject to compliance with all
Applicable Laws, reduce compensation otherwise payable in cash
in exchange for Awards under the Plan;
(o) to issue Awards in satisfaction of obligations owed to
any Participant under any other Company incentive or deferred
compensation plan;
(p) to impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the
Participant of any Shares issued as a result of or under an
Award, including without limitation, (A) restrictions under
an insider trading policy, and (B) restrictions as to the
use of a specified brokerage firm for such resales or other
transfers;
(q) in accordance with Section 14 of the Plan, to
specify in an Award Agreement at the time of the Award, or later
pursuant to an amendment of an outstanding Award, that the
Participants rights, payments and benefits with respect to
an Award (including amounts received upon the settlement or
exercise of an Award) shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of
certain specified events, in addition to any otherwise
applicable vesting or performance conditions of an
Award; and
(r) to make all other determinations deemed necessary or
advisable for administering the Plan.
3.3. Effect of Decisions and Determinations
under Plan. The decisions, determinations and
interpretations of the Administrator will be final and binding
on all Participants and any other holders of Awards.
3.4. Administration with Respect to
Officers. With respect to participation by
Officers in the Plan, at any time that any class of equity
security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be
administered in compliance with the requirements, if any, of
Rule 16b-3.
3.5. No
Repricing. Notwithstanding anything in the
Plan to the contrary, without the affirmative vote of holders of
a majority of the shares of Stock cast in person or by proxy at
a meeting of the stockholders of the Company at which a quorom
representing a majority of all outstanding shares of Stock is
present or represented by proxy, the Administrator shall not
approve a program providing for either (a) the cancellation
of outstanding Options
and/or SARs
and the grant in substitution therefore of any new Awards,
including specifically, without limitation, any new Options
and/or SARS
having a lower exercise price or (b) the amendment of
outstanding Options
and/or SARs
to reduce the exercise price thereof. This Section 3.5
shall not be construed to apply to
6
issuing or assuming a stock option in a transaction to
which Section 424(a) applies within the meaning of
Section 424 of the Code.
3.6. Indemnification. In
addition to such other rights of indemnification as they may
have as members of the Board, Officers or Employees of the
Company, members of the Board and any Officers or Employees of
the Company to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against
all reasonable expenses, including attorneys fees,
actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person
shall offer to the Company, in writing, the opportunity at its
own expense to handle and defend the same.
4. Participation. Subject to the terms
and conditions of the Plan, the Administrator shall determine
and designate, from time to time, from among the Service
Providers those who will be granted one or more Awards under the
Plan. In the discretion of the Administrator, and subject to the
terms of the Plan, a Service Provider may be granted any Award
permitted under the provisions of the Plan, and more than one
Award may be granted to a Service Provider. Except as otherwise
agreed by the Administrator and the Participant, or except as
otherwise provided in the Plan, an Award under the Plan shall
not affect any previous Award under the Plan or an award under
any other plan maintained by the Company.
5. Shares Subject to the Plan.
5.1. Number of
Shares Reserved. The shares of Stock
with respect to which Awards may be made under the Plan shall be
shares currently authorized but unissued or currently held or
subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private
transactions. Subject to the provisions of subsection 5.4, the
number of shares of Stock which may be issued with respect to
Awards under the Plan shall not exceed 42,104,174 shares in
the aggregate.
5.2. Reusage of Shares.
(a) In the event of the exercise or termination (by reason
of forfeiture, expiration, cancellation, surrender or otherwise)
of any Award under the Plan, that number of shares of Stock that
was subject to the Award but not delivered shall again be
available for Awards under the Plan.
(b) In the event that shares of Stock are delivered under
the Plan as Restricted Stock or Restricted Stock Units and are
thereafter forfeited or reacquired by the Company pursuant to
rights reserved in the Award Agreement, such forfeited or
reacquired shares of Stock shall again be available for Awards
under the Plan.
(c) Notwithstanding the provisions of Sections 5.2(a)
or (b), the following shares of Stock shall not be available for
reissuance under the Plan: (i) shares of Stock with respect
to which the Participant has received the benefits of ownership
(other than voting rights), either in the form of dividends or
otherwise; (ii) shares of Stock which are withheld from any
Award or payment under the Plan to satisfy tax withholding
obligations; (iii) shares of Stock which are surrendered to
fulfill tax obligations; (iv) shares of Stock which are
surrendered in payment of the Option Price upon the exercise of
an Option; and (v) shares of Stock subject to the grant of
SAR which are not issued upon settlement of the SAR.
5.3. Adjustments to
Shares Reserved. In the event of any
merger, consolidation, reorganization, recapitalization,
spinoff, stock dividend, stock split, reverse stock split,
exchange or other distribution with respect to shares of Stock
or other change in the corporate structure or capitalization
affecting the Stock, the type and number of shares of stock
which are or may be subject to awards under the Plan and the
terms of any Awards (including the price at which shares of
stock may be issued pursuant to an Award) shall be equitably
adjusted by the Administrator, in its sole discretion, to
preserve the value of benefits awarded or to be awarded to
Participants under the Plan.
7
5.4. Individual Limits on
Awards. Notwithstanding any other provision
of the Plan to the contrary, the following limitations shall
apply to Awards under the Plan:
(a) No Service Provider shall be granted, in any fiscal
year of the Company (1) an Option or SAR to purchase more
than 4,000,000 Shares, (2) Restricted Stock or
Restricted Stock Units covering more than 2,000,000 Shares,
(3) Performance Shares covering more than
2,000,000 Shares or (4) Performance Units which could
result in such Service Provider receiving more than $6,000,000.
(b) In connection with her or her initial employment
and/or
service with the Company, a Service Provider may be granted
Options or SARs to purchase up to an additional
2,000,000 Shares, which shall not count against the limit
set forth in subsection (a) above.
(c) The foregoing limitations shall be adjusted
proportionately in connection with any change in the
Companys capitalization as described in Section 5.3.
(d) If an Award is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a
Change in Control), the cancelled Award will also be counted
against the limits set forth in subsections (a) and
(b) above.
(e) The determination made under this Section 5.4
shall be based on the shares subject to the Awards at the time
of grant, regardless of when the Awards become exercisable
and/or are
settled.
6. Options.
6.1. Term of Option. The
term of each Option will be stated in the Award Agreement. In
the case of an Incentive Stock Option, the term will be ten
(10) years from the date of grant or such shorter term as
may be provided in the Award Agreement. Moreover, in the case of
an Incentive Stock Option granted to a Participant who, at the
time of the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or a Related
Entity, the term of the Incentive Stock Option will be five
(5) years from the date of grant or such shorter term as
may be provided in the Award Agreement.
6.2. Restrictions Relating to Incentive Stock
Options. To the extent that the aggregate
fair market value of Stock with respect to which Incentive Stock
Options are exercisable for the first time by any individual
during any calendar year (under all plans of the Company)
exceeds $100,000, such options shall be treated as Non-Qualified
Stock Options, to the extent required by Section 422 of the
Code.
6.3. Option Price. The
Option Price shall be established by the Administrator or shall
be determined by a method established by the Administrator at
the time the Option is granted; provided, however, that in no
event shall such price be less than 100% of the Fair Market
Value of a share of Stock as of the date on which the Option is
granted. Notwithstanding the foregoing, any Incentive Stock
Option granted to an Employee who, at the time of grant, owns
Stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or a Related
Entity, the Option Price will be no less than 110% of the Fair
Market Value on the date of grant.
6.4. Waiting Period and Exercise
Dates. At the time an Option is granted, the
Committee will fix the period within which the Option may be
exercised and will determine any conditions that must be
satisfied before the Option may be exercised. The Administrator,
in its discretion, may impose such restrictions on shares of
Stock acquired pursuant to the exercise of an Option (including
stock acquired pursuant to the exercise of a tandem Stock
Appreciation Right) as it determines to be desirable, including,
without limitation, restrictions relating to disposition of the
shares and forfeiture restrictions based on service,
performance, Stock ownership by the Participant, and such other
factors as the Administrator determines to be appropriate.
6.5. Form of
Consideration. The Committee will determine
the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive
Stock Option, the Committee will determine the acceptable form
of consideration at the time of grant. Such consideration to the
extent permitted by Applicable Laws may consist entirely of:
(a) cash; (b) check; (c) other shares of Stock
which meet the conditions established by the Committee to avoid
any adverse financial accounting consequences (as determined
solely by the
8
Committee); (d) consideration received by the Company under
a cashless exercise program implemented by the Company in
connection with the Plan; (e) consideration received by the
Company under a net exercise program implemented by the Company
in connection with the Plan, (f) any combination of the
foregoing methods of payment; or (g) such other
consideration and method of payment for the issuance of shares
of Stock to the extent permitted by Applicable Laws.
6.6. Exercise of Option.
(a) Procedure for Exercise; Rights as a
Stockholder. Any Option granted hereunder will be
exercisable according to the terms of the Plan and at such times
and under such conditions as determined by the Committee and set
forth in the Award Agreement. An Option may not be exercised for
a fraction of a Share.
An Option will be deemed exercised when the Company receives:
(x) written or electronic notice of exercise (in accordance
with the Award Agreement) from the person entitled to exercise
the Option, and (y) full payment for the Shares with
respect to which the Option is exercised (together with any
applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the Committee
and permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option will be issued in the name of the
Participant or, if requested by the Participant, in the name of
the Participant and his or her spouse. Until the Shares are
issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to the shares of
Stock underlying such Option, notwithstanding the exercise of
the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record
date is prior to the date the Shares are issued, except as
provided in the applicable Award Agreement.
Exercising an Option in any manner will decrease the number of
Shares thereafter available for sale under the Option, by the
number of Shares as to which the Option is exercised. In
addition, the exercise of an Option will result in the surrender
of the corresponding rights under a tandem Stock Appreciation
Right, if any.
(b) Termination of Service Provider
Relationship. If a Participant ceases to be an
Service Provider, other than upon the Participants death
or Disability, the Participant may exercise his or her Option
within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement). In the
absence of a specified time in the Award Agreement, and except
to the extent terminated earlier pursuant to the Award
Agreement, the Option will remain exercisable for three
(3) months following the Participants termination.
Unless otherwise provided by the Committee, if on the date of
termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time
specified by the Committee, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.
(c) Disability of Participant. If a
Participant ceases to be a Service Provider as a result of the
Participants Disability, the Participant may exercise his
or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date
of termination (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement). In the
absence of a specified time in the Award Agreement, the Option
will remain exercisable for twelve (12) months following
the Participants termination as a result of Disability.
Unless otherwise provided by the Committee, if on the date of
termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time
specified herein, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.
(d) Death of Participant. If a
Participant dies while a Service Provider, the Option may be
exercised following the Participants death within such
period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of death (but in no
event may the option be exercised later than the expiration of
the term of such Option as set forth in the Award Agreement), by
the Participants designated beneficiary, provided such
beneficiary has been designated prior to Participants
death in a form acceptable to the Committee. If no such
beneficiary has been designated by the Participant, then such
Option may be exercised by the personal
9
representative of the Participants estate or by the
person(s) to whom the Option is transferred pursuant to the
Participants will or in accordance with the laws of
descent and distribution. In the absence of a specified time in
the Award Agreement, the Option will remain exercisable for
twelve (12) months following Participants death.
Unless otherwise provided by the Committee, if at the time of
death Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will
immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to
the Plan.
6.7. Reload Provision. In
the event the Participant exercises an Option that was granted
on or prior to the 2006 Restatement Date and pays all or a
portion of the Option Price in Stock, such Participant (either
pursuant to the terms of the Option Award, or pursuant to the
exercise of Committee discretion at the time the Option is
exercised) may be issued a new Option to purchase additional
shares of Stock equal to the number of shares of Stock
surrendered to the Company in such payment. Such new Option
shall have an exercise price equal to the Fair Market Value per
share on the date such new Option is granted, shall first be
exercisable six months from the date of grant of the new Option
and shall expire on the same date as the expiration date of the
original Option so exercised by payment of the Option Price in
shares of Stock. Options granted after the 2006 Restatement Date
will not be subject to this reload provision in this
Section 6.7.
7. Stock Appreciation Rights.
7.1. Types of SARs
Authorized. SARs may be granted in tandem
with all or any portion of a related Option or may be granted
independently of any Option.
7.2. Exercise Price and Other
Terms. The Administrator, subject to the
provisions of the plan, will have complete discretion to
determine the terms and conditions of each SAR granted under the
Plan; provided, however, that (a) the exercise price per
share subject to a tandem SAR shall be the exercise price per
share under the related Option and (b) the exercise price
per share subject to an independently granted SAR shall not be
less than the Fair Market Value of a share of Stock on the
effective date of grant of the SAR.
7.3. Exercise. If a SAR is
not in tandem with an Option, then the SAR shall be exercisable
in accordance with the terms established by the Administrator at
the time of grant and set forth in the Award Agreement. If a SAR
is granted in tandem with an Option, then the SAR shall be
exercisable at the time the tandem Option is exercisable. The
exercise of a tandem SAR will result in the surrender of the
corresponding rights under the related Option.
7.4. Settlement of
Award. Upon the exercise of a SAR, a
Participant will be entitled to receive payment from the Company
in an amount determined by multiplying: (a) the difference
between the Fair Market Value of a Share on the date of exercise
over the exercise price; times (b) the number of shares of
Stock with respect to which the SAR is exercised. At the
discretion of the Administrator, the payment upon SAR exercise
may be in cash, in shares of Stock of equivalent value, or in
some combination thereof.
7.5. Terms and Expiration of
SARs. The Administrator, in its discretion,
may impose such restrictions on shares of Stock acquired
pursuant to the exercise of a SAR as it determines to be
desirable, including, without limitation, restrictions relating
to disposition of the shares and forfeiture restrictions based
on service, performance, ownership of Stock by the Participant,
and such other factors as the Administrator determines to be
appropriate. Each SAR grant under the Plan will expire upon the
date determined by the Administrator, in its sole discretion,
and set forth in the Award Agreement. Notwithstanding the
foregoing, the requirements of Section 6.6 also will apply
to SARs.
8. Restricted Stock.
8.1. Grant of Restricted
Stock. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may
grant Restricted Stock to Service Providers in such amounts as
the Committee, in its sole discretion, will determine.
8.2. Restricted Stock
Agreement. Each Award of Restricted Stock
will be evidenced by an Award Agreement that will specify the
Period of Restriction, the number of Shares granted, and such
other terms and conditions as the Committee, in its sole
discretion, will determine. Unless the Committee determines
otherwise, Restricted Stock will be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.
10
8.3. Other Restrictions. The
Committee, in its sole discretion, may impose such other
restrictions on Restricted Stock as it may deem advisable or
appropriate, including granting such an Award of Restricted
Stock subject to Performance Goals or to the requirements of
Section 12.
8.4. Removal of
Restrictions. Except as otherwise provided in
the Plan or the applicable Award Agreement, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan
will be released from escrow as soon as practicable after the
last day of the Period of Restriction. The Committee, in its
discretion, may accelerate the time at which any restrictions
will lapse or be removed.
8.5. Voting Rights. During
the Period of Restriction, Service Providers holding Shares of
Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Committee
determines otherwise and as set forth in the Award Agreement.
8.6. Dividend Rights. During
the Period of Restriction, Service Providers holding Shares of
Restricted Stock may be entitled to Dividend Rights with respect
to such Shares to the extent provided in the Award Agreement. If
any such Dividend Rights are paid in shares of Stock, the shares
of Stock will be subject to the same restrictions on
transferability and forfeitability as the Restricted Stock with
respect to which they were paid. Dividend Rights shall be
settled in cash or in shares of Stock, as determined by the
Administrator, shall be payable at the time and in the form
determined by the Administrator, and shall be subject to such
other terms and conditions as the Administrator may determine.
8.7. Return of Restricted Stock to
Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not
lapsed will revert to the Company and again will become
available for grant under the Plan.
9. Restricted Stock Units.
9.1. Grant of Restricted Stock
Units. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may
grant Restricted Stock Units to Service Providers in such
amounts as the Committee, in its sole discretion, will determine.
9.2. Restricted Stock Unit
Agreement. Each Award of Restricted Stock
Units will be evidenced by an Award Agreement that will specify
the Period of Restriction, the number of Shares to be issued in
settlement of the Award, and such other terms and conditions as
the Committee, in its sole discretion, will determine.
9.3. Other Restrictions. The
Committee, in its sole discretion, may impose such other
restrictions on Restricted Stock Units as it may deem advisable
or appropriate, including granting such an Award of Restricted
Stock Units subject to Performance Goals or to the requirements
of Section 12.
9.4. Settlement of Restricted Stock
Units. At the time of grant of any Restricted
Stock Unit, the Committee will specify the settlement date
applicable to each grant of Restricted Stock Units which will be
no earlier than the vesting date or dates of the Award and may
be determined at the election of the Participant. On the
settlement date, the Company will transfer to the Participant
either (a) one share of Stock or (ii) cash equal to
the value of one such share of Stock for each Restricted Stock
Unit scheduled to be paid out on such date and which was not
previously forfeited.
9.5. Voting Rights. Service
Providers holding Restricted Stock Units will not have any right
to exercise voting rights with respect to the shares of Stock
underlying such Restricted Stock Unit.
9.6. Dividend Rights. During
the Period of Restriction, Service Providers holding Shares of
Restricted Stock Units may be entitled to Dividend Rights with
respect to such Shares to the extent and in the manner provided
in the Award Agreement. Dividend Rights shall be settled in cash
or in shares of Stock, as determined by the Administrator, shall
be payable at the time and in the form determined by the
Administrator, and shall be subject to such other terms and
conditions as the Administrator may determine.
9.7. Return of Restricted Stock Units to
Company. On the date set forth in the Award
Agreement, the Restricted Stock Units for which restrictions
have not lapsed, and for which shares of Stock have not been
issued in settlement of the Award, will revert to the Company
and again will become available for grant under the Plan.
11
10. Performance Units and Performance Shares.
10.1. Grant of Performance
Units/Shares. Subject to the terms and
conditions of the Plan, Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to
time, as will be determined by the Administrator, in its sole
discretion. The Administrator will have complete discretion in
determining the number of Performance Units and Performance
Shares granted to each Participant.
10.2. Value of Performance
Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or
before the date of grant. Each Performance Share will have an
initial value equal to the Fair Market Value of a Share on the
date of grant.
10.3. Performance Objectives and Other
Terms. The Administrator will set performance
objectives or other vesting provisions (including, without
limitation, continued status as a Participant) in its discretion
which, depending on the extent to which they are met, will
determine the number or value of Performance Units/Shares that
will be paid out to the Participants. The time period during
which the performance objectives must be met will be called the
Performance Period. Each Award of Performance
Units/Shares will be evidenced by an Award Agreement that will
specify the Performance Period, and such other terms and
conditions as the Administrator, in its sole discretion, will
determine. The Administrator may set Performance Goals based
upon the achievement of Company-wide, divisional, or individual
goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.
10.4. Earning of Performance
Units/Shares. After the applicable
Performance Period has ended, the holder of Performance
Units/Shares will be entitled to receive a payout of the number
of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent
to which the corresponding performance objectives have been
achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any
performance objectives for such Performance Unit/Share.
10.5. Form and Timing of Payment of Performance
Units/Shares. Payment of earned Performance
Units/Shares will be made as soon after the expiration of the
applicable Performance Period at the time determined by the
Administrator. The Administrator, in its sole discretion, may
pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares at the close of the
applicable Performance Period) or in a combination thereof.
10.6. Cancellation of Performance
Units/Shares. On the date set forth in the
Award Agreement, all unearned or unvested Performance
Units/Shares will be forfeited to the Company, and again will be
available for grant under the Plan.
11. Replacement Awards. Each holder of an
Award related to the common stock of Old Ameritrade which was
granted pursuant to the Plan prior to the Assumption Date and
which was outstanding as of the Assumption Date after giving
effect to the transactions contemplated by the Merger Agreement
(the Existing Awards), will, as of the Assumption
Date, be automatically granted a Replacement Award
under the Plan and the Existing Awards shall be cancelled in
exchange for the Replacement Awards. The number of shares of
Stock and, if applicable, the Option Price per share of Stock,
subject to a Replacement Award shall be equal to the same number
of shares of common stock of Old Ameritrade and, if applicable,
the same Option Price per share, subject to corresponding
Existing Award. Except as provided in the preceding sentence,
the Replacement Awards granted pursuant to this Section 11
shall be subject to the same terms and conditions as the
corresponding Existing Awards.
12. Terms and Conditions of Any Performance-Based
Award.
12.1. Purpose. The purpose
of this Section 12 is to provide the Committee the ability
to qualify Awards (other than Options and SARs) that are granted
pursuant to the Plan as qualified performance-based compensation
under Section 162(m) of the Code. If the Committee, in its
discretion, decides to grant a Performance-Based Award subject
to Performance Goals to a Covered Employee, the provisions of
this Section 12 will control over any contrary provision in
the Plan; provided, however, that the Committee may in its
discretion grant Awards to such Covered Employees that are based
on Performance Goals or other specific criteria or goals but
that do not satisfy the requirements of this Section 12.
12
12.2. Applicability. This
Section 12 will apply to those Covered Employees which are
selected by the Committee to receive any Award subject to
Performance Goals. The designation of a Covered Employee as
being subject to Section 162(m) of the Code will not in any
manner entitle the Covered Employee to receive an Award under
the Plan. Moreover, designation of a Covered Employee subject to
Section 162(m) of the Code for a particular Performance
Period will not require designation of such Covered Employee in
any subsequent Performance Period and designation of one Covered
Employee will not require designation of any other Covered
Employee in such period or in any other period.
12.3. Procedures with Respect to Performance
Based Awards. To the extent necessary to
comply with the performance-based compensation of
Section 162(m) of the Code, with respect to any Award
granted subject to Performance Goals, no later than ninety
(90) days following the commencement of any fiscal year in
question or any other designated period of time or period of
service (or such other time as may be required or permitted by
Section 162(m)), the Committee will, in writing,
(a) designate one or more Participants who are Covered
Employees, (b) select the Performance Goals applicable to
the Performance Period, (c) establish the Performance
Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the
relationship between 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 will certify in writing
whether the applicable Performance Goals have been achieved for
such Performance Period. In determining the amounts earned by a
Covered Employee, the Committee will have the right to reduce or
eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors
that the Committee may deem relevant to the assessment of
individual or corporate performance for the Performance Period.
Unless specifically provided otherwise by the Committee when
establishing any Performance Goal, and only to the extent
applicable to each particular Performance Goal, such Performance
Goals shall be automatically adjusted to (a) the reflect
the impact of any change in accounting standards that may be
required by the Financial Accounting Standards Board after the
adoption of the Performance Goal and (b) reflect the impact
of any restatement of the Companys financial statements as
result of such a change in the accounting standards.
12.4. Payment of Performance Based
Awards. Unless otherwise provided in the
applicable Award Agreement, a Covered Employee must be employed
by the Company or a Related Entity on the day a
Performance-Based Award for such Performance Period is paid to
the Covered Employee. Furthermore, a Covered Employee will be
eligible to receive payment pursuant to a Performance-Based
Award for a Performance Period only if the Performance Goals for
such period are achieved.
12.5. Additional
Limitations. Notwithstanding any other
provision of the Plan, any Award which is granted to a Covered
Employee and is intended to constitute qualified performance
based compensation under Section 162(m) of the Code will be
subject to any additional limitations set forth in the Code
(including any amendment to Section 162(m)) or any
regulations and ruling issued thereunder that are requirements
for qualification as qualified performance-based compensation as
described in Section 162(m) of the Code, and the Plan will
be deemed amended to the extent necessary to conform to such
requirements.
13. Change in Control.
13.1. Options and SARs. In
the event of a Change in Control, an outstanding Option or SAR
that was granted on or after the 2006 Restatement Date may be
(i) assumed or substituted with an equivalent option or SAR
of the successor corporation or a Parent or Subsidiary of the
successor corporation, (ii) replaced with a cash incentive
program of the successor corporation or a Parent or Subsidiary
of the successor corporation, or (iii) terminated. Unless
determined otherwise by the Committee, in the event that the
successor corporation does not assume, substitute or replace a
Participants Option or SAR that was granted on or after
the 2006 Restatement Date, the Participant shall, immediately
prior to the Change in Control, fully vest in and have the right
to exercise such Option or SAR that was granted on or after the
2006 Restatement Date and which is not assumed, substituted or
replaced as to all of the Stock underlying the Award, including
Shares as to which it would not otherwise be vested or
exercisable. If an Option or SAR that was granted on or after
the 2006 Restatement Date is not assumed, substituted or
replaced in the event of a Change in Control, the Committee
shall notify the Participant in writing or electronically that
the Option or SAR that was granted on or after the 2006
Restatement Date shall be exercisable, to
13
the extent vested, for a period of up to fifteen (15) days
from the date of such notice, and the Option or SAR that was
granted on or after the 2006 Restatement Date shall terminate
upon the expiration of such period. For the purposes of this
paragraph, the Option or SAR that was granted on or after the
2006 Restatement Date shall be considered assumed if, following
the Change in Control, the option or stock appreciation right
confers the right to purchase or receive, for each Share of
Stock subject to such Option or SAR immediately prior to the
Change in Control, the consideration (whether stock, cash, or
other securities or property) received in the Change in Control
by holders of Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders
of a majority of the outstanding Shares); provided, however,
that if such consideration received in the Change in Control is
not solely common stock of the successor corporation or its
Parent, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon
the exercise of the Option or SAR that was granted on or after
the 2006 Restatement Date, for each Share of Stock subject to
the Option or SAR that was granted on or after the 2006
Restatement Date, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per
share consideration received by holders of Stock in the Change
in Control. Notwithstanding anything herein to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of
one or more Performance Goals will not be considered assumed if
the Company or its successor modifies any of such Performance
Goals without the Participants consent; provided, however,
a modification to such Performance Goals only to reflect the
successor corporations post-merger or post-Change in
Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.
13.2. Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units. In
the event of a Change in Control, an outstanding Award of
Restricted Stock, Restricted Stock Unit, Performance Share or
Performance Unit that was granted on or after the 2006
Restatement Date may be (i) assumed or substituted with an
equivalent restricted stock, restricted stock unit, performance
share or performance unit award of the successor corporation or
a Parent or Subsidiary of the successor corporation,
(ii) replaced with a cash incentive program of the
successor corporation or a Parent or Subsidiary of the successor
corporation, or (iii) terminated. Unless determined
otherwise by the Committee, in the event that the successor
corporation refuses to assume, substitute or replace a
Participants Restricted Stock, Restricted Stock Unit,
Performance Share or Performance Unit that was granted on or
after the 2006 Restatement Date, the Participant shall,
immediately prior to the Change in Control, fully vest in such
Restricted Stock, Restricted Stock Unit, Performance Share or
Performance Unit that was granted on or after the 2006
Restatement Date including as to Shares which would not
otherwise be vested. For the purposes of this paragraph, a
Restricted Stock, Restricted Stock Unit, Performance Share or
Performance Unit award that was granted on or after the 2006
Restatement Date shall be considered assumed if, following the
Change in Control, the award confers the right to purchase or
receive, for each Share subject to the Award immediately prior
to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the Change in
Control by holders of Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders
of a majority of the outstanding Shares); provided, however,
that if such consideration received in the Change in Control is
not solely common stock of the successor corporation or its
Parent, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received, for
each Share and each unit/right to acquire a Share subject to the
Award, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share
consideration received by holders of Stock in the Change in
Control. Notwithstanding anything herein to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of
one or more Performance Goals will not be considered assumed if
the Company or its successor modifies any of such Performance
Goals without the Participants consent; provided, however,
a modification to such Performance Goals only to reflect the
successor corporations post-merger or post-Change in
Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.
14. Forfeiture Events. The Administrator
may specify in an Award Agreement that the Participants
rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment
upon the occurrence of certain specified events, in addition to
any otherwise applicable vesting or performance conditions of an
Award. Such events may include, but shall not be limited to,
fraud, breach of a fiduciary duty, restatement of financial
statements as a result of fraud or willful errors or omissions,
termination of employment for cause, violation of material
Company
and/or
Subsidiary policies, breach of non-competition,
14
confidentiality, or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is
detrimental to the business or reputation of the Company
and/or its
Subsidiaries.
15. Miscellaneous.
15.1. Limit on
Distribution. Distribution of shares of Stock
or other amounts under the Plan shall be subject to the
following:
(a) Notwithstanding any other provision of the Plan, the
Company shall have no liability to deliver any shares of Stock
under the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply with
all applicable laws and the applicable requirements of any
securities exchange or similar entity.
(b) In the case of a Participant who is subject to
Section 16(a) and 16(b) of the Exchange Act, the
Administrator may, at any time, add such conditions and
limitations to any Award to such Participant, or any feature of
any such Award, as the Administrator, in its sole discretion,
deems necessary or desirable to comply with Section 16(a)
or 16(b) of the Exchange Act and the rules and regulations
thereunder or to obtain any exemption therefrom.
(c) To the extent that the Plan provides for issuance of
certificates to reflect the transfer of shares of Stock, the
transfer of such shares may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the
rules of any stock exchange.
15.2. Withholding. All
Awards and other payments under the Plan are subject to
withholding of all applicable taxes, which withholding
obligations may be satisfied, with the consent of the
Administrator, through the surrender of shares of Stock which
the Participant already owns, or to which a Participant is
otherwise entitled under the Plan; provided, however, that in no
event shall the Fair Market Value of the number of shares
withheld from any Award to satisfy tax withholding obligations
exceed the amount necessary to meet the required Federal, state
and local withholding tax rates then in effect that are
applicable to the participant and to the particular transaction.
15.3. Transferability. Awards
under the Plan are not transferable except as designated by a
Participant by will or by the laws of descent and distribution.
To the extent that the Participant who receives an Award under
the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the
Participant.
15.4. Notices. Any notice or
document required to be filed with the Administrator under the
Plan will be properly filed if delivered or mailed by registered
mail, postage prepaid, to the Administrator, in care of the
Company, at its principal executive offices. The Administrator
may, by advance written notice to affected persons, revise such
notice procedure from time to time. Any notice required under
the Plan (other than a notice of election) may be waived by the
person entitled to notice.
15.5. Form and Time of
Elections. Unless otherwise specified herein,
each election required or permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification or revocation thereof, shall be
in writing filed with the Administrator at such times, in such
form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Administrator
shall require.
15.6. Agreement With
Company. At the time of an Award to a
Participant under the Plan, the Administrator may require a
Participant to enter into an Award Agreement with the Company in
a form specified by the Administrator, agreeing to the terms and
conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Administrator
may, in its sole discretion, prescribe.
15.7. Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by
reason of the Plan, acquire any right in or title to any assets,
funds or property of the Company whatsoever, including, without
limitation, any specific funds, assets, or other property which
the Company, in its sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the amounts, if any, payable
under the Plan, unsecured by any assets of the Company. Nothing
contained in the Plan shall constitute a guarantee by the
Company that the assets of such companies shall be sufficient to
pay any benefits to any person.
15
(b) The Plan does not constitute a contract of employment,
and selection as a Participant will not give any employee the
right to be retained in the employ of the Company, nor any right
or claim to any benefit under the Plan, unless such right or
claim has specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no Award under the
Plan shall confer upon the holder thereof any right as a
shareholder of the Company prior to the date on which he
fulfills all service requirements and other conditions for
receipt of such rights.
15.8. Evidence. Evidence
required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
15.9. Gender and
Number. Where the context admits, words in
one gender shall include the other gender, words in the singular
shall include the plural and the plural shall include the
singular.
15.10. Severability. Notwithstanding
any contrary provision of the Plan or an Award to the contrary,
if any one or more of the provisions (or any part thereof) of
this Plan or the Awards shall be held invalid, illegal or
unenforceable in any respect, such provision shall be modified
so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any
part thereof) of the Plan or Award, as applicable, shall not in
any way be affected or impaired thereby.
15.11. Date of Grant. The
date of grant of an Award will be, for all purposes, the date on
which the Committee makes the determination granting such Award,
or such other later date as is determined by the Committee.
Notice of the determination will be provided to each Participant
within a reasonable time after the date of such grant.
16. Amendment and Termination.
16.1. Amendment and
Termination. The Administrator may at any
time amend, alter, suspend or terminate the Plan.
16.2. Stockholder
Approval. The Company will obtain stockholder
approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws. Other than pursuant to
Section 13, the Company also will obtain stockholder
approval before implementing a program to reduce the exercise
price of outstanding Options
and/or SARs
through a repricing or Award exchange.
16.3. Effect of Amendment or
Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of
any Participant, unless mutually agreed otherwise between the
Participant and the Company, which agreement must be in writing
and signed by the Participant and the Company. Termination of
the Plan will not affect the Committees ability to
exercise the powers granted to it hereunder with respect to
Awards granted under the Plan prior to the date of such
termination.
16