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EX-31.1 - EXHIBIT 31.1 - SYNAPTICS Inc | c05866exv31w1.htm |
EX-32.1 - EXHIBIT 32.1 - SYNAPTICS Inc | c05866exv32w1.htm |
EX-31.2 - EXHIBIT 31.2 - SYNAPTICS Inc | c05866exv31w2.htm |
EX-32.2 - EXHIBIT 32.2 - SYNAPTICS Inc | c05866exv32w2.htm |
EXCEL - IDEA: XBRL DOCUMENT - SYNAPTICS Inc | Financial_Report.xls |
10-Q - FORM 10-Q - SYNAPTICS Inc | c05866e10vq.htm |
Exhibit 10.24(a)
SYNAPTICS INCORPORATED
2010 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this PLAN (the Plan) is to assist SYNAPTICS INCORPORATED, a
Delaware corporation (the Company) and its Related Entities in attracting, motivating, retaining
and rewarding high-quality executives and other Employees, officers, Directors and Consultants by
enabling such persons to acquire or increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the Companys stockholders, and
providing such persons with annual and long term performance incentives to expend their maximum
efforts in the creation of stockholder value. The Plan is intended to qualify certain
compensation awarded under the Plan for tax deductibility under Section 162(m) of the Code (as
hereafter defined) to the extent deemed appropriate by the Committee.
2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof.
(a) Annual Incentive Award means a conditional right granted to a Participant under Section
7(c) hereof to receive a cash payment, Stock or other Award, unless otherwise determined by the
Committee, after the end of a specified fiscal year.
(b) Award means any Option, Stock Appreciation Right, Restricted Stock, Deferred Stock Unit,
Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award,
Performance Award or Annual Incentive Award, together with any other right or interest, granted to
a Participant under the Plan.
(c) Beneficiary means the person, persons, trust or trusts which have been designated by a
Participant in his or her most recent written beneficiary designation filed with the Committee to
receive the benefits specified under the Plan upon such Participants death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a
Participants death, there is no designated Beneficiary or surviving designated Beneficiary, then
the term Beneficiary means the person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
(d) Beneficial Owner, Beneficially Owning and Beneficial Ownership shall have the
meanings ascribed to such terms in Rule 13d-3 under the Exchange Act and any successor to such
Rule.
(e) Board means the Companys Board of Directors.
(f) Cause shall, with respect to any Participant, have the equivalent meaning (or the same
meaning as cause or for cause) set forth in any employment, consulting, change in control or
other agreement for the performance of services between the Participant and the Company or a
Related Entity or, in the absence of any such agreement or any such definition in such agreement,
such term shall mean (i) the failure by the Participant to perform his or her duties as assigned by
the Company (or a Related Entity) in a reasonable manner, (ii) any violation or breach by the
Participant of his or her employment, consulting or other similar agreement with the Company (or a
Related Entity), if any, (iii) any violation or breach by the Participant of his or her
non-competition and/or non-disclosure agreement with the Company (or a Related Entity), if any,
(iv) any act by the Participant of dishonesty or bad faith with respect to the Company (or a
Related Entity), (v) chronic addiction to alcohol, drugs or other similar substances affecting the
Participants work performance, or (vi) the commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant or the Company or any Related Entity. The
good faith determination by the Committee of whether the Participants Continuous Service was
terminated by the Company for Cause shall be final and binding for all purposes hereunder.
(g) Change in Control means a Change in Control as defined with related terms in Section 9
of the Plan.
(h) Code means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto.
(i) Committee means a committee designated by the Board to administer the Plan; provided,
however, that the Committee shall consist of at least two directors, and each member of which shall
be (i) a non-employee director within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by non-employee directors is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, and (ii) an outside director within the
meaning of Section 162(m) of the Code, unless administration of the Plan by outside directors is
not then required in order to qualify for tax deductibility under Section 162(m) of the Code.
(j) Consultant means any person (other than an Employee or a Director, solely with respect
to rendering services in such persons capacity as a director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to the Company or such Related Entity.
(k) Continuous Service means uninterrupted provision of services to the Company in any
capacity of Employee, Director, or Consultant. Continuous Service shall not be considered to be
interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any
Related Entities, or any successor entities, in any capacity of Employee Director, or Consultant,
or (iii) any change in status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director, or Consultant (except as otherwise provided
in the Option Agreement). An approved leave of absence shall include sick leave, military leave,
or any other authorized personal leave.
(l) Corporate Transaction means a Corporate Transaction as defined in Section 9(b)(i) of the
Plan.
(m) Covered Employee means an Eligible Person who is a Covered Employee as specified in
Section 7(e) of the Plan.
(n) Deferred Stock Unit means a right, granted to a Participant under Section 6(e) hereof,
to receive Stock, cash or a combination thereof at the end of a specified deferral period.
(o) Director means a member of the Board or the board of directors of any Related Entity.
(p) Disability means a permanent and total disability (within the meaning of Section 22(e)
of the Code), as determined by a medical doctor satisfactory to the Committee.
(q) Dividend Equivalent means a right, granted to a Participant under Section 6(g) hereof,
to receive cash, Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.
(r) Effective Date means the effective date of the Plan, which shall be the date of
stockholder approval of this Plan.
(s) Eligible Person means each Executive Officer of the Company (as defined under the
Exchange Act) and other officers, Directors and Employees of the Company or of any Related Entity,
and Consultants with the Company or any Related Entity. The foregoing notwithstanding, only
employees of the Company, the Parent, or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An Employee on leave of absence may be considered as still
in the employ of the Company or a Related Entity for purposes of eligibility for participation in
the Plan.
(t) Employee means any person, including an officer or Director, who is an employee of the
Company or any Related Entity. The Payment of a directors fee by the Company or a Related Entity
shall not be sufficient to constitute employment by the Company.
(u) Exchange Act means the Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.
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(v) Executive Officer means an executive officer of the Company as defined under the
Exchange Act.
(w) Fair Market Value means the fair market value of Stock, Awards or other property as
determined by the Committee, or under procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock as of any given date shall be the
closing sale price per share reported on a consolidated basis for stock listed on the principal
stock exchange or market on which Stock is traded on the date as of which such value is being
determined or, if there is no sale on that date, then on the last previous day on which a sale was
reported.
(x) Good Reason shall, with respect to any Participant, have the equivalent meaning (or the
same meaning as good reason or for good reason) set forth in any employment, consulting, change
in control or other agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement, such term shall mean (i) the
assignment to the Participant of any duties inconsistent in any respect with the Participants
position (including status, offices, titles and reporting requirements), authority, duties or
responsibilities as assigned by the Company (or a Related Entity), or any other action by the
Company (or a Related Entity) which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (ii) any failure by the Company (or a Related
Entity) to comply with its obligations to the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the
Company (or a Related Entity) promptly after receipt of notice thereof given by the Participant;
(iii) the Companys (or Related Entitys) requiring the Participant to be based at any office or
location outside of fifty miles from the location of employment as of the date of Award, except for
travel reasonably required in the performance of the Participants responsibilities; (iv) any
purported termination by the Company (or a Related Entity) of the Participants Continuous Service
otherwise than for Cause as defined in Section 2(f), or by reason of the Participants Disability
as defined in Section 2(q). For purposes of this Section 2(y), any good faith determination of
Good Reason made by the Committee shall be conclusive.
(y) Incentive Stock Option means any Option intended to be designated as an incentive stock
option within the meaning of Section 422 of the Code or any successor provision thereto.
(z) Incumbent Board means the Incumbent Board as defined in Section 9(b)(ii) of the Plan.
(aa) Option means a right granted to a Participant under Section 6(b) hereof, to purchase
Stock or other Awards at a specified price during specified time periods.
(bb) Optionee means a person to whom an Option is granted under this Plan or any person who
succeeds to the rights of such person under this Plan.
(cc) Other Stock-Based Awards means Awards granted to a Participant under Section 6(h)
hereof.
(dd) Parent means a parent corporation, whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(ee) Participant means a person who has been granted an Award under the Plan which remains
outstanding, including a person who is no longer an Eligible Person.
(ff) Performance Award means a right, granted to an Eligible Person under Section 7 hereof,
to receive Awards based upon performance criteria specified by the Committee.
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(gg) Person shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a group as defined in Section
13(d) thereof.
(hh) Related Entity means any Parent, Subsidiary, and any business, corporation,
partnership, limited liability company, or other entity designated by the Committee in which the
Company, a Parent, or a Subsidiary, directly or indirectly, holds a substantial ownership interest.
(ii) Restricted Stock means Stock granted to a Participant under Section 6(d) hereof, that
is subject to certain restrictions and to a risk of forfeiture.
(jj) Rule 16b-3 and Rule 16a-1(c)(3) means Rule 16b-3 and Rule 16a-1(c)(3), as from time
to time in effect and applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(kk) Stock means the Companys Common Stock, and such other securities as may be substituted
(or resubstituted) for Stock pursuant to Section 10(c) hereof.
(ll) Stock Appreciation Right means a right granted to a Participant under Section 6(c)
hereof.
(mm) Subsidiary means a subsidiary corporation whether now or hereafter existing, as
defined in Section 424(f) of the Code.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the Committee. The
Committee shall have full and final authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make
all other decisions and determinations as the Committee may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the Committee under the Plan
or pursuant to any Award, the Committee shall not be required to follow past practices, act in a
manner consistent with past practices, or treat any Eligible Person in a manner consistent with the
treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Related Entities, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers of the Company or
any Related Entity, or committees thereof, the authority, subject to such terms as the Committee
shall determine, (i) to perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions as the Committee may
determine, and (iii) with respect to Participants subject to Section 16, to perform such other
functions of the Committee as the Committee may determine to the extent performance of such
functions will not result in the loss of an exemption under Rule 16b-3 otherwise available for
transactions by such persons, in each case to the extent permitted under applicable law and subject
to the requirements set forth in Section 7(d). The Committee may appoint agents to assist it in
administering the Plan.
(c) Limitation of Liability. The Committee, and each member thereof, shall be entitled to, in
good faith, rely or act upon any report or other information furnished to him or her by any
Executive Officer, other officer or Employee, the Companys independent auditors, Consultants or
any other agents assisting in the administration of the Plan. Members of the Committee, and any
officer or Employee acting at the direction or on
behalf of the Committee, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or determination.
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4. Stock Subject to Plan.
(a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment as
provided in Section 10(c) hereof, the total number of shares of Stock reserved and available for
delivery in connection with Awards under the Plan shall be the number of shares of Stock available
for issuance under the Companys Amended and Restated 2001 Incentive Compensation Plan (the 2001
Plan) that are not subject to an outstanding award under the 2001 Plan as of the date of
stockholder approval of this Plan (and such shares shall no longer be available for issuance under
the 2001 Plan). Any shares of Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
(b) Availability of Shares Not Issued pursuant to Awards. In the event that any Option or
other Award granted hereunder is exercised through the withholding of shares of Stock from the
Award by the Company or withholding tax liabilities arising from such Option or other Award are
satisfied by the withholding of shares of Stock from the Award by the Company, then only the number
of shares of Stock issued net of the shares of Stock withheld shall be counted as issued for
purposes of determining the maximum number of shares of Stock available for grant under the Plan,
subject to Section 4(c) below.
(c) Limitation on Number of Incentive Stock Option Shares. Subject to adjustment as provided
in Section 10(c) hereof, the number of shares of Stock which may be issued pursuant to Incentive
Stock Options shall be the lesser of (i) the number of shares of Stock that may be subject to
Awards under Section 4(a), or (ii) 15,000,000.
(d) Application of Limitations. The limitation contained in this Section 4 shall apply not
only to Awards that are settled by the delivery of shares of Stock but also to Awards relating to
shares of Stock but settled only in cash (such as cash-only Stock Appreciation Rights). The
Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares previously counted
in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to
Eligible Persons. In each fiscal year during any part of which the Plan is in effect, an Eligible
Person may not be granted Awards relating to more than 1,000,000 shares of Stock, subject to
adjustment as provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g),
6(h), 7(b) and 7(c). In addition, the maximum amount that may be earned as an Annual Incentive
Award or other cash Award in any fiscal year by any one Participant shall be $2,000,000, and the
maximum amount that may be earned as a Performance Award or other cash Award in respect of a
performance period by any one Participant shall be $5,000,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 6.
In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of Continuous Service by the Participant and terms permitting
a Participant to make elections relating to his or her Award. The Committee shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. Except in cases in which the Committee is authorized to
require other forms of consideration under the Plan, or to the extent other forms of consideration
must be paid to satisfy the requirements of Delaware law, no consideration other than services may
be required for the grant (but not the exercise) of any Award.
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(b) Options. The Committee is authorized to grant Options to Participants on the following
terms and conditions:
(i) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a
Stock Option Agreement. Such Stock Option Agreement shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered into under the
Plan need not be identical.
(ii) Number of Shares. Each Stock Option Agreement shall specify the number of shares of
Stock that are subject to the Option and shall provide for the adjustment of such number in
accordance with Section 10(c) hereof. The Stock Option Agreement shall also specify whether the
Option is an Incentive Stock Option or a Non-Qualified Stock Option.
(iii) Exercise Price.
(A) In General. Each Stock Option Agreement shall state the price at which shares of Stock
subject to the Option may be purchased (the Exercise Price), which shall be not less than 100% of
the Fair Market Value of the Stock on the date of grant.
(B) Ten Percent Stockholder. If an individual owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Related Entity, the Exercise Price of an
Incentive Stock Option must be at least 110% of the Fair Market Value of a share of Stock on the
date of grant and such Incentive Stock Option by its terms is not exercisable after the expiration
of five years from the date of grant.
(iv) Time and Method of Exercise. The Committee shall determine the time or times at which or
the circumstances under which an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), provided that in the case of
an Optionee who is not an officer, Director, or Consultant of the Company or a Related Entity, his
or her Options shall become exercisable at least as rapidly as 20% per year, over a 5 year period
commencing on the date of the grant, unless a determination is made by counsel for the Company that
such vesting requirements are not required in the circumstances under applicable federal or state
securities laws. The Committee may also determine the time or times at which Options shall cease
to be or become exercisable following termination of Continuous Service or upon other conditions;
provided, however, if the Optionees Continuous Service is terminated for any reason other than
Cause, that portion of the Option that is exercisable as of the date of termination shall remain
exercisable for at least 6 months from the date of termination if by reason of death or Disability,
and for at least 30 days from the date of termination if by reason other than the Optionees death
or Disability. The Committee may determine the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee a cashless exercise procedure), the
form of such payment, including, without limitation, cash, Stock, other Awards or awards granted
under other plans of the Company or a Related Entity, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be delivered to Participants.
(v) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan
shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan
to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including
any Stock Appreciation Rights in tandem therewith) shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be exercised, so as to disqualify either
the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has
first requested the change that will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall
be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than seven years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting
power of all
classes of stock of the Company or any Parent Corporation and the Incentive Stock Option is
granted to such Participant, the term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more than five years from the date of grant;
and
6
(B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is
granted) of the shares of stock with respect to which Incentive Stock Options granted under the
Plan and all other option plans of the Company or its Parent Corporation during any calendar year
are exercisable for the first time by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed $100,000.
(vi) Repurchase Rights. The Committee shall have the discretion to grant Options which are
exercisable for unvested shares of Common Stock. Should the Optionees Continuous Service cease
while holding such unvested shares, the Company shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Committee and set forth in
the document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights
to Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of
one share of stock on the date of exercise, over (B) the grant price of the Stock Appreciation
Right as determined by the Committee. The grant price of a Stock Appreciation Right shall not be
less than the Fair Market Value of a share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a Stock Appreciation Right may be exercised in
whole or in part (including based on achievement of performance goals and/or future service
requirements), the time or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other conditions, the method of
exercise, method of settlement, form of consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to Participants, whether or not a Stock
Appreciation Right shall be in tandem or in combination with any other Award, and any other terms
and conditions of any Stock Appreciation Right. Stock Appreciation Rights may be either
freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants
on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or
as otherwise provided in this Plan. The restrictions may lapse separately or in combination at
such times, under such circumstances (including based on achievement of performance goals and/or
future service requirements), in such installments or otherwise, as the Committee may determine at
the date of grant or thereafter provided that the restrictions shall not lapse in less than three
years or less than one year in the case of performance-based Restricted Stock except that a total
of not more than 400,000 shares of Common Stock may be subject of restricted stock and deferred
stock units without regard to such restriction period. Except to the extent restricted under the
terms of the Plan and any Award agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder, including the right to vote the
Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment
or other requirement imposed by the Committee). During the restricted period applicable to the
Restricted Stock, subject to Section 10(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.
7
(ii) Forfeiture. Except as otherwise determined by the Committee at the time of the Award,
upon termination of a Participants Continuous Service during the applicable restriction period,
the Participants Restricted Stock that is at that time subject to restrictions shall be forfeited
(or, in accordance with
Section 6(b)(vi), reacquired by the Company); provided that the Committee may provide, by rule
or regulation or in any Award agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in
such manner as the Committee shall determine. If certificates representing Restricted Stock are
registered in the name of the Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted
Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the
Committee may require that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards
under the Plan. Unless otherwise determined by the Committee, Stock distributed in connection with
a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.
(e) Deferred Stock Units. The Committee is authorized to grant Deferred Stock Units to
Participants, which are rights to receive Stock, cash, or a combination thereof at the end of a
specified time period, subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred Stock Units shall occur upon
expiration of the time specified for such Deferred Stock Units by the Committee (or, if permitted
by the Committee, as elected by the Participant). In addition, Deferred Stock Units shall be
subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose,
if any, which restrictions may lapse at the expiration of the time period or at earlier specified
times (including based on achievement of performance goals and/or future service requirements),
separately or in combination, in installments or otherwise, as the Committee may determine provided
that the restrictions shall not lapse in less than three years or less than one year in the case of
performance-based Deferred Stock Units except that a total of not more than 400,000 shares of
Common Stock may be the subject of restricted stock and deferred stock units without regard to such
restriction period. The terms of an Award of Deferred Stock Units shall be set forth in a written
Award Agreement that shall contain provisions determined by the Committee and not inconsistent with
the Plan. Deferred Stock Units may be satisfied by delivery of Stock, cash equal to the Fair
Market Value of the specified number of shares of Stock covered by the Deferred Stock Units, or a
combination thereof, as determined by the Committee at the date of grant or thereafter. Prior to
satisfaction of an Award of Deferred Stock Units, an Award of Deferred Stock Units carries no
voting or dividend or other rights associated with share ownership. Notwithstanding the foregoing
or any other provision of the Plan, (A) all grants of Deferred Stock Units shall comply with the
vesting terms of Section 6(b)(iv), and (B) unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Committee, each Award of Deferred Stock Units shall be
structured to avoid the imposition of any excise tax under Section 409A of the Code.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a
Participants Continuous Service during the applicable time period thereof to which forfeiture
conditions apply (as provided in the Award agreement evidencing the Deferred Stock Units), the
Participants Deferred Stock Units (other than those Deferred Stock Units subject to deferral at
the election of the Participant) shall be forfeited; provided that the Committee may provide, by
rule or regulation or in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock Units shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Deferred Stock Units.
(iii) Dividend Equivalents. Unless otherwise determined by the Committee at date of grant,
any Dividend Equivalents that are granted with respect to any Award of Deferred Stock Units shall
be either (A) paid with respect to such Deferred Stock Units at the dividend payment date in cash
or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to
such Deferred Stock Units and the amount or value thereof automatically deemed reinvested in
additional Deferred Stock Units, other Awards or other investment vehicles, as the Committee shall
determine or permit the Participant to elect.
8
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant Stock
as a bonus, or to grant Stock or other Awards in lieu of Company obligations to pay cash or deliver
other property under the Plan or under other plans provided each such Award shall have a restricted
period of not less than three years or not less than one year in the case of performance-based
Awards or compensatory arrangements, provided that, in the case of Participants subject to Section
16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to a
Participant entitling the Participant to receive cash, Stock, other Awards, or other property equal
in value to dividends paid with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions on transferability and risks of forfeiture,
as the Committee may specify. Notwithstanding any other provision of the Plan, unless otherwise
exempt from Section 409A of the Code or otherwise specifically determined by the Committee, each
Dividend Equivalent shall be structured to avoid the imposition of any excise tax under Section
409A of the Code.
(h) Other Stock-Based Awards. The Committee is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed
by the Committee to be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock,
purchase rights for Stock, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Committee, and Awards valued by reference to the book value
of Stock or the value of securities of or the performance of specified Related Entities or business
units. The Committee shall determine the terms and conditions of such Awards provided each such
Award shall have a restricted period of not less than three years or not less than one year in the
case of performance-based Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(h) shall be purchased for such consideration (including without
limitation loans from the Company or a Related Entity), paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards or other property, as
the Committee shall determine. The Committee shall have the discretion to grant such other Awards
which are exercisable for unvested shares of Common Stock. Should the Optionees Continuous
Service cease while holding such unvested shares, the Company shall have the right to repurchase,
at the exercise price paid per share, any or all of those unvested shares. The terms upon which
such repurchase right shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by the Committee and
set forth in the document evidencing such repurchase right. Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).
Notwithstanding any other provision of the Plan, unless otherwise exempt from Section 409A of the
Code or otherwise specifically determined by the Committee, each such Award shall be structured to
avoid the imposition of any excise tax under Section 409A of the Code.
7. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Committee. The Committee may use such business criteria and other measures
of performance as it may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award subject to performance
conditions, except as limited under Sections 7(b) and 7(c) hereof in the case of a Performance
Award or Annual Incentive Award intended to qualify under Code Section 162(m).
9
(b) Performance Awards Granted to Designated Covered Employees. If and to the extent that the
Committee determines that a Performance Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as performance-based
compensation for purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 7(b).
(i) Performance Goals Generally. The performance goals for such Performance Awards shall
consist of one or more business criteria and a targeted level or levels of performance with respect
to each of such criteria, as specified by the Committee consistent with this Section 7(b).
Performance goals shall be objective and shall otherwise meet the requirements of Code Section
162(m) and regulations thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being substantially
uncertain. The Committee may determine that such Performance Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of such Performance
Awards. Performance goals may differ for Performance Awards granted to any one Participant or to
different Participants.
(ii) Business Criteria. One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified Related Entities or business units of the Company (except with
respect to the total stockholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to, the Standard & Poors 500 Stock
Index or the S&P Specialty Retailer Index; (3) net income; (4) pretax earnings; (5) earnings before
interest expense, taxes, depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special items; (7)
operating margin; (8) earnings per share; (9) return on equity; (10) return on capital; (11) return
on investment; (12) operating earnings; (13) working capital or inventory; (14) operating earnings
before the expense for share based awards; and (15) ratio of debt to stockholders equity. One or
more of the foregoing business criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under Section 7(c) hereof that are
intended to qualify as performance-based compensation under Code Section 162(m).
(iii) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a performance period
of up to seven years, as specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for performance-based compensation
under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a Performance Award pool, which
shall be an unfunded pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria set forth in Section
7(b)(ii) hereof during the given performance period, as specified by the Committee in accordance
with Section 7(b)(iii) hereof. The Committee may specify the amount of the Performance Award pool
as a percentage of any of such business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly mathematical relationship to such
business criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards
shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards. The Committee shall specify the circumstances in which
such Performance Awards shall be paid or forfeited in the event of termination of Continuous
Service by the Participant prior to the end of a performance period or settlement of Performance
Awards.
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(c) Annual Incentive Awards Granted to Designated Covered Employees. The Committee may,
within its discretion, grant one or more Annual Incentive Awards to any Eligible Person, subject to
the terms and conditions set forth in this Section 7(c).
(i) Annual Incentive Award Pool. The Committee may establish an Annual Incentive Award pool,
which shall be an unfunded pool, for purposes of measuring Company performance in connection with
Annual Incentive Awards. In the case of Annual Incentive Awards intended to qualify as
performance-based compensation for purposes of Code Section 162(m), the amount of such Annual
Incentive Award pool shall be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 7(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with Section 7(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a percentage of any such
business criteria, a percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the 90th day of each fiscal
year, or at such other date as may be required or permitted in the case of Awards intended to be
performance-based compensation under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and the amounts potentially
payable thereunder, for that fiscal year, either out of an Annual Incentive Award pool established
by such date under Section 7(c)(i) hereof or as individual Annual Incentive Awards. In the case of
individual Annual Incentive Awards intended to qualify under Code Section 162(m), the amount
potentially payable shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 7(b)(ii) hereof in the given performance
year, as specified by the Committee; in other cases, such amount shall be based on such criteria as
shall be established by the Committee. In all cases, the maximum Annual Incentive Award of any
Participant shall be subject to the limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal year, the Committee
shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount
of potential Annual Incentive Award payable to each Participant in the Annual Incentive Award pool,
or (B) the amount of potential Annual Incentive Award otherwise payable to each Participant. The
Committee may, in its discretion, determine that the amount payable to any Participant as an Annual
Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no Award whatsoever. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of
termination of Continuous Service by the Participant prior to the end of a fiscal year or
settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance Awards under Section
7(b), and the amount of any Annual Incentive Award pool or potential individual Annual Incentive
Awards and the amount of final Annual Incentive Awards under Section 7(c), shall be made in writing
in the case of any Award intended to qualify under Code Section 162(m). The Committee may not
delegate any responsibility relating to such Performance Awards or Annual Incentive Awards if and
to the extent required to comply with Code Section 162(m).
(e) Status of Section 7(b) and Section 7(c) Awards Under Code Section 162(m). It is the
intent of the Company that Performance Awards and Annual Incentive Awards under Section 7(b) and
7(c) hereof granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute qualified performance-based compensation within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of Sections
7(b), (c), (d) and (e), including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder.
The foregoing notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive Award, as likely to be
a Covered Employee with respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not
comply or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent necessary to conform
to such requirements.
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8. Certain Provisions Applicable to Awards or Sales.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan
may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,
or in substitution or exchange for, any other Award or any award granted under another plan of the
Company, any Related Entity, or any business entity to be acquired by the Company or a Related
Entity, or any other right of a Participant to receive payment from the Company or any Related
Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If
an Award is granted in substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Related Entity in which the value of Stock subject
to the Award is equivalent in value to the cash compensation.
(b) Term of Awards. The term of each Award shall be for such period as may be determined by
the Committee or the Board; provided that in no event shall the term of any Option or Stock
Appreciation Right exceed a period of seven years (or such shorter term as may be required in
respect of an Incentive Stock Option under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and
any applicable Award agreement, payments to be made by the Company or a Related Entity upon the
exercise of an Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, other Awards or other property, and
may be made in a single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent
necessary to ensure that neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a- I (c)(3) so that such Participant shall avoid liability
under Section 16(b).
(e) Code Section 409A. If and to the extent that the Committee believes that any Awards may
constitute a nonqualified deferred compensation plan under Section 409A of the Code, the terms
and conditions set forth in the Award Agreement for that Award shall be drafted in a manner that is
intended to comply with, and shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, unless otherwise agreed to in writing by the Participant
and the Company.
(f) No Option Repricing. Other than pursuant to Section 10(c), without approval of the
Companys stockholders, the Committee shall not be permitted to (A) lower the exercise price per
share of Stock of an Option after it is granted, (B) cancel an Option when the exercise price per
share of Stock exceeds the Fair Market Value of the underlying share of Stock in exchange for
another Award or cash, or (C) take any other action with respect to an Option that may be treated
as a repricing.
12
9. Change in Control.
(a) Effect of Change in Control. If and to the extent provided in the Award, in the event
of a Change in Control, as defined in Section 9(b):
(i) The Committee may, within its discretion, accelerate the vesting and exercisability of any
Award carrying a right to exercise that was not previously vested and exercisable as of the time of
the Change in Control, subject to applicable restrictions set forth in Section 10(a) hereof;
(ii) The Committee may, within its discretion, accelerate the exercisability of any Stock
Appreciation Rights and provide for the settlement of such Stock Appreciation Rights for amounts,
in cash;
(iii) The Committee may, within its discretion, lapse the restrictions, deferral of
settlement, and forfeiture conditions applicable to any other Award granted under the Plan and such
Awards may be deemed fully vested as of the time of the Change in Control, except to the extent of
any waiver by the Participant and subject to applicable restrictions set forth in Section 10(a)
hereof; and
(iv) With respect to any such outstanding Award subject to achievement of performance goals
and conditions under the Plan, the Committee may, within its discretion, deem such performance
goals and other conditions as having been met as of the date of the Change in Control.
(b) Definition of Change in Control. A Change in Control shall be deemed to have occurred
upon:
(i) Approval by the stockholders of the Company of a reorganization, merger, consolidation or
other form of corporate transaction or series of transactions, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such reorganization, merger
or consolidation or other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of the reorganized,
merged or consolidated companys then outstanding voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets of the Company
(unless such reorganization, merger, consolidation or other corporate transaction, liquidation,
dissolution or sale (any such event being referred to as a Corporate Transaction) is subsequently
abandoned or otherwise does not occur);
(ii) Individuals who, as of the date on which the Award is granted, constitute the Board (the
Incumbent Board) cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date on which the Award was granted whose
election, or nomination for election by the Companys stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the Company) shall be, for
purposes of this Agreement, considered as though such person were a member of the Incumbent Board;
or
(iii) the acquisition (other than from the Company) by any person, entity or group, within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 50% of
either the then outstanding shares of the Companys Common Stock or the combined voting power of
the Companys then outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a Controlling Interest) excluding, for
this purpose, any acquisitions by (1) the Company or a Related Entity, (2) any person, entity or
group that as of the date on which the Award is granted owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest or
(3) any employee benefit plan of the Company or a Related Entity.
13
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed
necessary or advisable by the Committee, postpone the issuance or delivery of Stock or payment of
other benefits under any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation, listing or other
required action with respect to any stock exchange or automated quotation system upon which the
Stock or other Company securities are listed or quoted, or compliance with any other obligation of
the Company, as the Committee, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to such other
conditions as it may consider appropriate in connection with the issuance or delivery of Stock or
payment of other benefits in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any postponement of the
issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other
conditions on such issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the 90th day preceding
the Change in Control.
(b) Limits on Transferability; Beneficiaries.
(i) General. Except as provided herein, a Participant may not assign, sell, transfer, or
otherwise encumber or subject to any lien any Award or other right or interest granted under this
Plan, in whole or in part, including any Award or right which constitutes a derivative security as
generally defined in Rule 16a1(c) under the Exchange Act, other than by will or by operation of the
laws of descent and distribution, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his or her guardian or
legal representative.
(ii) Permitted Transfer of Option. The Committee, in its sole discretion, may permit the
transfer of an Option (but not an Incentive Stock Option, or any other right to purchase Stock
other than an Option) as follows: (A) by gift to a member of the Participants Immediate Family or
(B) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries
upon death of the Optionee. For purposes of this Section 10(b)(ii), Immediate Family shall mean
the Optionees spouse (including a former spouse subject to terms of a domestic relations order);
child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling
and sibling-in-law, and shall include adoptive relationships. If a determination is made by
counsel for the Company that the restrictions contained in this Section 10(b)(ii) are not required
by applicable federal or state securities laws under the circumstances, then the Committee, in its
sole discretion, may permit the transfer of Awards (other than Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) to one or more Beneficiaries or other transferees during
the lifetime of the Participant, which may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent permitted by the Committee pursuant to the
express terms of an Award agreement (subject to any terms and conditions which the Committee may
impose thereon, and further subject to any prohibitions and restrictions on such transfers pursuant
to Rule 16b-3). A Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the Plan and any Award
agreement applicable to such Participant, except as otherwise determined by the Committee, and to
any additional terms and conditions deemed necessary or appropriate by the Committee.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects the Stock and/or
such other securities of the Company or any other issuer such that a substitution, exchange, or
adjustment is determined by the Committee to be appropriate, then the Committee shall, in such
manner as it deems equitable, substitute, exchange, or adjust any or all of (A) the number and kind
of shares of Stock which may be delivered in connection with Awards granted thereafter, (B) the
number and kind of shares of Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (C) the number and kind of shares of Stock subject to or deliverable in respect
of outstanding Awards, (E) the exercise price, grant
price or purchase price relating to any Award and/or make provision for payment of cash or
other property in respect of any outstanding Award, and (F) any other aspect of any Award that the
Committee determines to be appropriate.
14
(ii) Adjustments in Case of Certain Corporate Transactions. In the event of a proposed sale
of all or substantially all of the Companys assets or any reorganization, merger, consolidation,
or other form of corporate transaction in which the Company does not survive, or in which the
shares of Stock are exchanged for or converted into securities issued by another entity, then the
successor or acquiring entity or an affiliate thereof may, with the consent of the Committee,
assume each outstanding Option or substitute an equivalent option or right. If the successor or
acquiring entity or an affiliate thereof, does not cause such an assumption or substitution, then
each Option shall terminate upon the consummation of sale, merger, consolidation, or other
corporate transaction. The Committee shall give written notice of any proposed transaction
referred to in this Section I 0(c)(ii) a reasonable period of time prior to the closing date for
such transaction (which notice may be given either before or after the approval of such
transaction), in order that Optionees may have a reasonable period of time prior to the closing
date of such transaction within which to exercise any Options that are then exercisable (including
any Options that may become exercisable upon the closing date of such transaction). An Optionee
may condition his exercise of any Option upon the consummation of the transaction.
(iii) Other Adjustments. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including Performance Awards and
performance goals, and Annual Incentive Awards and any Annual Incentive Award pool or performance
goals relating thereto) in recognition of unusual or nonrecurring events (including, without
limitation, acquisitions and dispositions of businesses and assets) affecting the Company, any
Related Entity or any business unit, or the financial statements of the Company or any Related
Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates
and regulations or business conditions or in view of the Committees assessment of the business
strategy of the Company, any Related Entity or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be authorized or made
if and to the extent that such authority or the making of such adjustment would cause Options,
Stock Appreciation Rights, Performance Awards granted under Section 8(b) hereof or Annual Incentive
Awards granted under Section 8(c) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as performance-based compensation under Code Section 162(m) and
the regulations thereunder to otherwise fail to qualify as performance-based compensation under
Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Related Entity are authorized to withhold from any Award
granted, any payment relating to an Award under the Plan, including from a distribution of Stock,
or any payroll or other payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participants tax obligations; either on a
mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue or
terminate the Plan, or the Committees authority to grant Awards under the Plan, without the
consent of stockholders or Participants, except that any amendment or alteration to the Plan shall
be subject to the approval of the Companys stockholders not later than the annual meeting next
following such Board action if (i) such stockholder approval is required by any federal or state
law or regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules
of any stock exchange or automated quotation system on which the Stock may then be listed or
quoted, or (ii) the amendment or alternation to the Plan materially increases the benefits accruing
to the participants under the Plan, materially increases the number of securities that may be
issued under the Plan, or materially modifies the requirements for participant in the Plan, and the
Board may otherwise, in its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided that, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any conditions or rights under,
or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award
agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely affect the rights of
such Participant under such Award.
15
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Persons or Participants Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees, or (iv) conferring on a Participant any of the rights of a stockholder
of the Company unless and until the Participant is duly issued or transferred shares of Stock in
accordance with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an
unfunded plan for incentive and deferred compensation. With respect to any payments not yet made
to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation of trusts and
deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the
Companys obligations under the Plan. Such trusts or other arrangements shall be consistent with
the unfunded status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets
and reinvest the proceeds in alternative investments, subject to such terms and conditions as the
Committee may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by
the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid
cash or other consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award agreement shall be determined in accordance with the laws
of the State of Delaware without giving effect to principles of conflicts of laws, and applicable
federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan shall become
effective on the Effective Date, provided the Plan is approved within 12 months of its adoption by
the Board by stockholders of the Company eligible to vote in the election of directors, by a vote
sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3
under the Exchange Act (if applicable), applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. The Plan shall terminate no
later than 10 years from the date the Plan is adopted by the Board or 10 years from the date the
Plan is approved by the stockholders, whichever is earlier.
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