EXHIBIT 10a
RADIOSHACK CORPORATION
1993 INCENTIVE STOCK PLAN
(Includes Directors)
(as Amended May 18, 1995,
February 24, 1998 and
July 21, 2001)
1. Purpose.
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The purpose of this Plan is to strengthen RadioShack Corporation (the
"Company") by providing an incentive to its Eligible Employees (as hereinafter
defined), and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to, Eligible Employees of the Company
and its subsidiaries and to Eligible Directors an added long-term incentive for
high levels of performance and unusual efforts through the grant of Incentive
Stock Options, Nonqualified Stock Options and Restricted Stock (as each term is
hereinafter defined).
2. Definitions.
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For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Apprecia-
tion Right, a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the
term of the Plan of:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any "Person"
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a "Subsidiary"),
(ii) the Company or its Subsidiaries, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(b) The individuals who, as of August 1, 1993, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involging
the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities] has Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) a transaction described in clauses (A)
through (C) shall herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means the Organization and Compensation Committee
of the Board consisting of at least three (3) Disinterested Directors appointed
by the Board to administer the Plan and to perform the functions set forth
herein.
2.10 "Company" means RadioShack Corporation.
2.11 "Director Option" means an Option granted pursuant to Section 5.
2.12 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Grantee or
Optionee, as the case may be, from performing the customary duties of his or her
regular job with the Company.
2.13 "Disinterested Director" means a director of the Company who is
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
2.14 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.15 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options or Awards subject to the conditions set forth
herein.
2.16 "Employee Option" means an Option granted pursuant to Section 6.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the high
and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to trading, or
if such Shares are not so listed or admitted to trading, the arithmetic mean of
the per Share closing bid price and per Share closing asked price on such date
as quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
2.19 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.20 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.21 "Nonemployee Director" means a director of the Company who is
not an employee of the Company or any Subsidiary.
2.22 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.23 "Option" means a Employee Option, a Director Option, or either
or both of them.
2.24 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.25 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.26 "Performance Awards" means Performance Units, Performance Shares
or either or both of them.
2.27 "Performance Cycle" means the time period specified by the
Committee at the time a Performance Award is granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.28 "Performance Shares" means Shares issued or transferred to an
Eligible Employee under Section 10.
2.29 "Performance Unit" means Performance Units granted to an
Eligible Employee under Section 10.
2.30 "Restricted Stock" means Shares issued or transferred to an
Eligible Employee pursuant to Section 9.
2.31 "Retirement" means termination of service as a Director under
circumstances entitling the Director to a retirement benefit under the Company's
Directors Special Compensation Plan.
2.32 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.33 "Plan" means the RadioShack Corporation 1993 Incentive Stock
Plan.
2.34 "Shares" means the common stock, par value $1.00 per share, of
the Company.
2.35 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.36 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.37 "Ten-Percent Stockholder" means an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
3. Administration.
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3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall
be granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) select those Eligible Employees to whom Awards shall be
granted under the Plan and to determine the number of Shares of Restricted Stock
to be granted pursuant to each Award, the terms and conditions of each Award,
and make any amendment or modification to any Agreement consistent with the
terms of the Plan.
3.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and
Awards granted thereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries, the
Optionees and Grantees and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
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4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 12,000,000. Upon a Change in
Capitalization the maximum number of Shares shall be adjusted in number and kind
pursuant to Section 12. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced by the number of Shares in respect of which the Option or Award is
granted or denominated.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled or otherwise terminated
portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.
4.4 Notwithstanding anything contained in this Section 4, the number
of Shares available for Options and Awards at any time under the Plan shall be
reduced to such lesser amount as may be required pursuant to the methods of
calculation necessary so that the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards. In addition, during the period that
any Options and Awards remain outstanding under the Plan, the Committee may make
good faith adjustments with respect to the number of Shares attributable to such
Options and Awards for purposes of calculating the maximum number of Shares
available for the granting of future Options and Awards under the Plan, provided
that following such adjustments the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards.
5. Director Plans.
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5A. Option Grants for Non-employee Directors.
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5A.1 Annual Grant. Director Options shall be granted to each
Nonemployee Director on the first trading day of September of each year that the
Plan is in effect. Each Director Option granted shall be in respect of 16,000
Shares. The purchase price of each Director Option shall be as provided in
Section 5A.3 and such Options shall be evidenced by an Agreement containing such
other terms and conditions not inconsistent with the provisions of this Plan as
determined by the Board; provided, however, that such terms shall not vary the
timing of awards of Director Options, including provisions dealing with
forfeiture or termination of such Director Options.
5A.2 One Time Grant. Director Options shall be granted to each
Nonemployee Director elected by the stockholders on May 18, 1995, provided the
Plan is approved by the stockholders of the Company. Each newly appointed or
elected Nonemployee Director who has not previously received a one-time grant
hereunder, shall be granted an option on the date the Nonemployee Director
attends his or her first Company Board meeting. Each Director Option granted
under this section shall be in respect of 20,000 Shares. The purchase price of
each Director Option shall be as provided in Section 5A.3 and such Options shall
be evidenced by an Agreement containing such other terms and conditions not
inconsistent with the provisions of this Plan as determined by the Board;
provided, however, that such terms shall not vary the timing of awards of
Director Options, including provisions dealing with forfeiture or termination of
such Director Options.
5A.3 Purchase Price. The purchase price for Shares under each
Director Option shall be equal to 100% of the Fair Market Value of such Shares
on the trading date immediately preceding the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall
become exercisable with respect to one third (1/3) of the Shares subject thereto
effective as of each of the first, second and third anniversaries of the grant
date; provided, however, that the Optionee continues to serve as a Director as
of such dates. Notwithstanding the foregoing, if a Director's service terminates
by reason of his death, Disability or Retirement, all Director Options then held
by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date which
is the tenth anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by
reason of the Optionee's Retirement or by resignation or removal from the Board
due to Disability, the Optionee may, for a period of 12 months after such
termination, exercise his or her Option to the extent, and only to the extent
that such Option or portion thereof was vested and exercisable, as of the date
the Optionee's service as Director terminated, after which time the Option shall
automatically terminate in full.
(c) If an Optionee's service as a Director terminates for
Cause, the Option granted to the Optionee hereunder shall immediately terminate
in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) or
(b) of this Section 5A.5, the Option granted to the Optionee may be exercised at
any time within 12 months after the Optionee's death by the person or persons to
whom such rights under the Option shall pass by will, or by the laws of descent
or distribution, after which time the Option shall terminate in full.
5B. Stock Purchase for Director Retainer Fees.
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5B.1 Election to Participate.
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(a) Initial Year Election. Each Nonemployee Director may
participate in this Section 5B by filing an election to participate with the
Company Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to the Nonemployee Director's retainer fees payable to him or her under
the Nonemployee Director compensation plan in respect of each calendar month
commencing with the first calendar month commencing after the receipt of the
Initial Year Election by the Company Secretary and ending the subsequent May 31.
A Nonemployee Director may, pursuant to an Initial Year Election, participate in
this Section 5B only at either a 50% or 100% level and may not change his or her
level of participation except as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Nonemployee Director may, prior to
May 1 of any year, elect to participate (or cease to participate) or change his
or her level of participation in this Section 5B (an "Annual Election"). An
Annual Election shall become effective with respect to the Nonemployee
Director's retainer fees payable to him or her under the Nonemployee Director
compensation plan in respect of the year commencing on June 1 next subsequent to
the receipt of the Annual Election by the Company Secretary and shall continue
for subsequent years unless changed pursuant to this Section 5B.1 (b). A
Nonemployee Director may, pursuant to an Annual Election, participate in this
Section 5B only at either a 50% or 100% level and may not change his or her
level of participation except as provided in this Section 5B.1(b).
5B.2 Payment in Stock.
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(a) For the period commencing on the effective date of a
Nonemployee Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Nonemployee Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Nonemployee Director's annual
retainer divided by twelve (12), then multiplied by the number of calendar
months from the effective date of the Initial Year Election through the next
subsequent May 31; and (ii) Shares will be issued to each Nonemployee Director
participating at the 50% level according to the calculation in clause (i) of
this Section 5B.2 (a) but reduced by one-half. Shares will be issued as of the
effective date of the Initial Year Election.
(b) For each year commencing on June 1 in respect of which a
Nonemployee Director has elected to participate in this Section 5B pursuant to
an Annual Election, (i) Shares will be issued to each Nonemployee Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Nonemployee
Director's annual retainer; and (ii) Shares will be issued to each Nonemployee
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.
(c) The issuance of Shares to a Nonemployee Director
participating in this Section 5B shall represent payment in advance of, and
shall be in lieu of, 50% or 100%, as applicable, of the Nonemployee Director's
annual retainer for the period in respect of which the Initial Year Election or
the Annual Election is in effect.
5B.3 Distribution. Shares will be distributed to the Nonemployee
Director as soon as practicable after issuance. No fractional Share will be
issued to any Nonemployee Director. Any amount not used for the acquisition of a
Share will be paid to the Nonemployee Director in cash.
6. Option Grants for Eligible Employees.
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6.1 Authority of Committee. Subject to the provisions of the Plan
and to Section 4.1 above, the Committee shall have full and final authority to
select those Eligible Employees who will receive Options (each an "Employee
Option"), the terms and conditions of which shall be set forth in an Agreement;
provided, however, that no person shall receive any Incentive Stock Options
unless he or she is an employee of the Company, a Parent or a Subsidiary at the
time the Incentive Stock Option is granted.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option
shall become exercisable in such installments (which need not be equal) and at
such times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised, installments shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its
discretion, modify outstanding Employee Options or accept the surrender of out-
standing Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent, and (ii) no modification or
surrender of an outstanding option and the grant of new options in substitution
for them which results in a Purchase Price (as defined in Section 6.2 hereof)
that is lower than the Purchase Price of the originally issued Option shall be
effective until authorized by the shareholders of the Corporation.
7. Terms and Conditions Applicable to All Options.
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7.1 Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise by any one or a combination of the
following: (i) cash or (ii) transferring Shares to the Company upon such terms
and conditions as determined by the Committee. Notwithstanding the foregoing,
the Committee shall have discretion to determine at the time of grant of each
Employee Option or at any later date (up to and including the date of exercise)
the form of payment acceptable in respect of the exercise of such Employee
Option. The written notice pursuant to this Section 7.2 may also provide
instructions from the Optionee to the Company that upon receipt of the purchase
price in cash from the Optionee's broker or dealer, designated as such on the
written notice, in payment for any Shares purchased pursuant to the exercise of
an Option, the Company shall issue such Shares directly to the designated broker
or dealer. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the Committee,
the Optionee shall deliver the Agreement evidencing the Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee or his designated
broker or dealer and (iii) the Optionee's name or the name of his designated
broker or dealer shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained
in the Plan or an Agreement to the contrary, in the event of a Change in
Control, (i) all Options outstanding on the date of such Change in Control shall
become immediately and fully exercisable and (ii) an Optionee will be permitted
to surrender for cancellation within sixty (60) days after such Change in
Control, any Option or portion of an Option to the extent not yet exercised and
the Optionee will be entitled to receive a cash payment in an amount equal to
the excess, if any, of (x) (A) in the case of a Nonqualified Stock Option, the
greater of (1) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option, the
Fair Market Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered, over (y) the aggregate
purchase price for such Shares under the Option or portion thereof surrendered;
provided, however, that in the case of an Option granted within six (6) months
prior to the Change in Control to any Optionee who may be subject to liability
under Section 16(b) of the Exchange Act, such Optionee shall be entitled to
surrender for cancellation his or her Option during the sixty (60) day period
commencing upon the expiration of six (6) months from the date of grant of any
such Option.
8. Stock Appreciation Rights. The Committee shall have no
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authority to grant to Eligible Employees, or others, Stock Appreciation
Rights.
9. Restricted Stock.
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9.1 Grant. The Committee may grant to Eligible Employees Awards of
Restricted Stock, which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the terms and provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Shares. If a Grantee shall fail to execute the Agreement evidencing a Restricted
Stock Award, the appropriate blank stock powers and, in the discretion of the
Committee, an escrow agreement and any other documents which the Committee may
require within the time period prescribed by the Committee at the time the Award
is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with an escrow agent (which may be the
Company) designated by the Committee. Unless the Committee determines otherwise
and as set forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect to
such Shares, including the right to vote the Shares and to receive all dividends
or other distributions paid or made with respect to the Shares.
9.3 Non-transferability. Until any restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.
9.4 Lapse of Restrictions.
---------------------
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine, which restrictions shall be set forth
in the Agreement evidencing the Award.
(b) Effect of Change in Control. Notwithstanding anything
contained in the Plan, unless the Agreement evidencing the Award provides to the
contrary, in the event of a Change in Control, all restrictions upon any Shares
of Restricted Stock shall lapse immediately and all such Shares shall become
fully vested in the Grantee.
9.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 Treatment of Dividends. At the time the Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions on Shares
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
9.8 Limitation on Restricted Stock Awards. On and after May 17,
2001, Awards of Restricted Stock shall not exceed a total of 700,000 shares in
the aggregate both under this Plan and any other Incentive Stock Plan of the
Company.
10. Performance Awards. The Committee shall have no authority to
-------------------
grant to Eligible Employees, or others, Performance Awards.
11. Effect of a Termination of Employment. The Agreement evidencing
the grant of each Employee Option and each Award shall set forth the terms and
conditions applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), as the Committee may, in its
discretion, determine at the time the Employee Option or Award is granted or
thereafter.
12. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the
(i) maximum number and class of Shares or other stock or securities with respect
to which Options or Awards may be granted under the Plan, (ii) the number and
class of Shares or other stock or securities which are subject to Director
Options issuable under Section 5; and (iii) the number and class of Shares or
other stock or securities which are subject to outstanding Options or Awards
granted under the Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, a Grantee of
an Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. Effect of Certain Transactions. Subject to Sections 7.4 and
9.4(b), in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
14. Termination and Amendment of the Plan. The Plan shall terminate
on the day preceding the tenth anniversary of the date of its adoption by the
Board and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan;
(b) To the extent necessary under Section 16(b) of the
Exchange Act and the rules and regulations promulgated thereunder or other
applicable law, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations;
and
(c) The provisions of Section 5 shall not be amended more
often than once every six (6) months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations promulgated thereunder.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. Limitation of Liability. As illustrative of the limitations
-----------------------
of liability of the Company, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award
other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to terminate
the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
17. Regulations and Other Approvals; Governing Law.
----------------------------------------------
17.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflicts of law
principles.
17.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
17.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
17.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
17.5 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
17.6 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
18. Miscellaneous.
-------------
18.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Employee during the term of the Plan, either in addition to,
or in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.
18.2 Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Director, Optionee or Grantee, an
amount equal to the federal, state and local income taxes and other amounts as
may be required by law to be withheld (the "Withholding Taxes") with respect to
the receipt of any retainer fee, Option or Award. If a Director, Optionee or
Grantee is to experience a taxable event in connection with the receipt of
Shares pursuant to a payment in stock, Option exercise or payment of an Award (a
"Taxable Event"), the Director, Optionee or Grantee shall pay the Withholding
Taxes to the Company prior to the issuance, or release from escrow, of such
Shares. In satisfaction of the obligation to pay Withholding Taxes to the
Company, the Director, Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
or Company Secretary, as applicable, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes, provided
that in respect of a Director, Optionee or Grantee who may be subject to
liability under Section 16(b) of the Exchange Act either: (i) in the case of a
Taxable Event involving a payment in Stock, Option or an Award (A) the Tax
Election is made at least six (6) months prior to the date of the Taxable Event
and (B) the Tax Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; or (ii) in the case of the exercise of an Option
(A) the Optionee makes the Tax Election at least six (6) months after the date
the Option was granted, (B) the Option is exercised during the ten (10) day
period beginning on the third business day and ending on the twelfth business
day following the release for publication of the Company's quarterly or annual
statement of sales and earnings (a "Window Period") and (C) the Tax Election is
made during the Window Period in which the related Option is exercised or prior
to such Window Period and subsequent to the immediately preceding Window Period;
or (iii) in the case of a Taxable Event relating to the payment of an Award (A)
the Grantee makes the Tax Election at least six (6) months after the date the
Award was granted and (B) the Tax Election is made (x) in the case of a Taxable
Event occurring within a Window Period, during the Window Period in which the
Taxable Event occurs, or (y) in the case of a Taxable Event not occurring within
a window period, during the Window Period immediately preceding the Taxable
Event relating to the Award. Notwithstanding the foregoing, the Committee may,
by the adoption of rules or otherwise, (i) modify the provisions of this Section
18.2 (other than as regards Director Options) or impose such other restrictions
or limitations on Tax Elections as may be necessary to ensure that the Tax
Elections will be exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt transactions
under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
(c) The Committee shall have the authority, at the time of
grant of an Employee Option or Award under the Plan or at any time thereafter,
to award tax bonuses to designated Optionees or Grantees, to be paid upon their
exercise of Employee Options or payment in respect of Awards granted hereunder.
The amount of any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to determine the
amount of any such tax bonus and the terms and conditions affecting the vesting
and payment thereof.
19. Effective Date. The effective date of the Plan shall be the
date of its adoption by the Board, subject only to the approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Texas within 12
months of such adoption.
EXHIBIT 10b
RADIOSHACK CORPORATION
1997 INCENTIVE STOCK PLAN
(includes Directors)
(as amended May 15, 1997,
February 24, 1998,
and
July 21, 2001)
1. Purpose.
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The purpose of this Plan is to strengthen RadioShack Corporation (the
"Company") by providing an incentive to its Eligible Employees (as hereinafter
defined), and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to, Eligible Employees of the Company
and its subsidiaries and to Eligible Directors an added long-term incentive for
high levels of performance and unusual efforts through the grant of Incentive
Stock Options, Nonqualified Stock Options and Restricted Stock (as each term is
hereinafter defined).
2. Definitions.
-----------
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the term
of the Plan and during the term of any Option issued under the Plan of:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any "Person"
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a "Subsidiary"),
(ii) the Company or its Subsidiaries, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(b) The individuals who, as of March 1, 1997, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving
the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities has Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) a transaction described in clauses (A)
through (C)shall herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or
dissolution of the Company; or
(iii) An agreement for the sale or
other disposition of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means a committee of the Board consisting of at
least two (2) members, all of who are Disinterested Directors appointed by the
Board to administer the Plan and to perform the functions set forth herein.
2.10 "Company" means RadioShack Corporation, a Delaware Corporation.
2.11 "Director Option" means an Option granted pursuant to Section 5.
2.12 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Grantee or
Optionee, as the case may be, from performing the customary duties of his or her
regular job with the Company.
2.13 "Disinterested Director" means a director of the Company who is
both a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act, and a "Outside Director" within the meaning of Section 162(m) of
the Code.
2.14 "Division" means any of the operating units or divisions of the
Company.
2.15 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options or Awards subject to the conditions set forth
herein.
2.16 "Eligible Director" means a director of the Company who is
not an employee at the time of grant of the Company or any Subsidiary.
2.17 "Employee Option" means an Option granted pursuant to Section 6.
2.18 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.19 "Fair Market Value" on any date means the average of the high
and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to trading, or
if such Shares are not so listed or admitted to trading, the arithmetic mean of
the per Share closing bid price and per Share closing asked price on such date
as quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
2.20 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.21 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.22 "93 ISP" means the RadioShack Corporation 1993 Incentive Stock
Plan.
2.23 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.24 "Option" means a Employee Option, a Director Option, or either
or both of them.
2.25 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.26 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.27 "Performance Awards" means Performance Units, Performance Shares
or either or both of them.
2.28 "Performance Cycle" means the time period specified by the
Committee at the time a Performance Award is granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.29 "Performance Shares" means Shares issued or transferred to an
Eligible Employee under Section 10.
2.30 "Performance Unit" means Performance Units granted to an
Eligible Employee under Section 10.
2.31 "Plan or 97 ISP" means the RadioShack Corporation 1997 Incentive
Stock Plan.
2.32 "Restricted Stock" means Shares issued or transferred to an
Eligible Employee pursuant to Section 9.
2.33 "Retirement" means termination of service as a Director under
circumstances entitling the Director to a retirement benefit under the Company's
Directors Special Compensation Plan.
2.34 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.35 "Shares" means the common stock, par value $1.00 per share, of
the Company.
2.36 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.37 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.38 "Ten-Percent Stockholder" means an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
3. Administration.
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3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall
be granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) select those Eligible Employees to whom Awards shall be
granted under the Plan and to determine the number of Shares of Restricted Stock
to be granted pursuant to each Award, the terms and conditions of each Award,
and make any amendment or modification to any Agreement consistent with the
terms of the Plan.
(c) grant, notwithstanding the provisions of Section 9.4 to
the contrary, Shares to Eligible Employees, that are the subject of Options and
Awards that in the aggregate do not exceed 500,000 upon such terms and
conditions as may be determined by the Committee in its sole and absolute
discretion.
3.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and
Awards granted thereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries, the
Optionees and Grantees and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
3.4 During any calendar year, no Eligible Employee may be granted
Options and Awards in the aggregate in respect of more than 500,000 Shares.
4. Stock Subject to the Plan.
-------------------------
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 11,000,000. Upon a Change in
Capitalization the maximum number of Shares shall be adjusted in number and kind
pursuant to Section 12. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced by the number of Shares in respect of which the Option or Award is
granted or denominated.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled or otherwise terminated
portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.
5. Director Plans.
--------------
5A. Option Grants to Eligible Directors.
-----------------------------------
5A.1 Annual Grant. Subject to the provisions of Section 5C. hereof,
Director Options shall be granted to each Eligible Director on the first trading
day of September of each year the Plan is in effect and Director options under
the 93 ISP are no longer available for grant to such Directors or any one of
them, as the case maybe. Each Director Option granted shall be in respect of
16,000 Shares. The purchase price of each Director Option shall be as provided
in Section 5A.3 and such Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the provisions of this
Plan as determined by the Board; provided, however, that such terms shall not
vary the timing of awards of Director Options, including provisions dealing with
forfeiture or termination of such Director Options, and further such terms may
not provide for a modification of a Director Option and the grant of new
Director Option in substitution for them which results in a Purchase Price (as
defined in Section 5A.3 hereof) that is lower than the Purchase Price of the
originally issued Director Option until authorized by the shareholders of the
Corporation.
5A.2 One Time Grant. Subject to the Provisions of Section 5C. hereof,
each newly appointed or elected Eligible Director who has not previously
received a one-time grant under the 93 ISP or hereunder, shall be granted an
option on the date the Eligible Director attends his or her first Company Board
meeting. Each Director Option granted under this section shall be in respect of
20,000 Shares. The purchase price of each Director Option shall be as provided
in Section 5A.3 and such Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the provisions of this
Plan as determined by the Board; provided, however, that such terms shall not
vary the timing of awards of Director Options, including provisions dealing with
forfeiture or termination of such Director Options.
5A.3 Purchase Price. The purchase price for Shares under each
Director Option shall be equal to 100% of the Fair Market Value of such Shares
on the trading date immediately preceding the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall
become exercisable with respect to one third (1/3) of the Shares subject thereto
effective as of each of the first, second and third annual anniversaries of the
grant date; provided, however, that the Optionee continues to serve as a
Director as of such dates. Notwithstanding the foregoing, if a Director's
service terminates by reason of his death, Disability or Retirement, all
Director Options then held by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date which
is the tenth annual anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by
reason of the Optionee's Retirement or by resignation or removal from the Board
due to Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option to the extent, and only to the extent
that such Option or portion thereof was vested and exercisable, as of the date
the Optionee's service as a Director terminated, after which time the Option
shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates for
Cause, the Option granted to the Optionee hereunder shall immediately terminate
in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) of
this Section 5A.5, or within three (3) years after termination of service as a
Director as described in clause (b) of this Section 5A.5, the Option granted to
the Optionee may be exercised at any time within 12 months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full.
5B. Stock Purchase for Director Retainer Fees.
-----------------------------------------
5B.1 Election to Participate.
-----------------------
(a) Initial Year Election. Each Eligible Director may
participate in this Section 5B by filing an election to participate with the
Company Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to the Eligible Director's retainer fees payable to him or her under the
Eligible Director compensation plan in respect of each calendar month commencing
with the first calendar month commencing after the receipt of the Initial Year
Election by the Company Secretary and ending the subsequent May 31. An Eligible
Director may, pursuant to an Initial Year Election, participate in this Section
5B only at either a 50% or 100% level and may not change his or her level of
participation except as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Eligible Director may, prior to May
1 of any year, elect to participate (or cease to participate) or change his or
her level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to the Eligible Director's retainer
fees payable to him or her under the Eligible Director compensation plan in
respect of the year commencing on June 1 next subsequent to the receipt of the
Annual Election by the Company Secretary and shall continue for subsequent years
unless changed pursuant to this Section 5B.1 (b). An Eligible Director may,
pursuant to an Annual Election, participate in this Section 5B only at either a
50% or 100% level and may not change his or her level of participation except as
provided in this Section 5B.1(b).
5B.2 Payment in Stock.
----------------
(a) For the period commencing on the effective date of a
Eligible Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Eligible Director's annual retainer
divided by twelve (12), then multiplied by the number of calendar months from
the effective date of the Initial Year Election through the next subsequent May
31; and (ii) Shares will be issued to each Eligible Director participating at
the 50% level according to the calculation in clause (i) of this Section 5B.2
(a) but reduced by one-half. Shares will be issued as of the effective date of
the Initial Year Election.
(b) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Eligible
Director's annual retainer; and (ii) Shares will be issued to each Eligible
Director participating in this section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.
(c) The issuance of Shares to an Eligible director
participating in this Section 5B shall represent payment in advance of, and
shall be in lieu of, 50% or 100%, as applicable, of the Eligible Director's
annual retainer for the period in respect of which the Initial Year Election or
the Annual Election is in effect.
5B.3 Distribution. Shares will be distributed to the Eligible
Director as soon as practicable after issuance. No fractional Share will be
issued to any Eligible Director. Any amount not used for the acquisition of a
Share will be paid to the Eligible Director in cash.
5C. Director Option Grants under the 93 ISP and the Plan
----------------------------------------------------
5C.1 No Duplication. Notwithstanding any provision in this Plan to
the contrary, no Director Option shall be granted to any Eligible Director
pursuant to Section 5A of this Plan on any day if such Director is granted an
option pursuant to Section 5A of the 93 ISP on such day. In addition, no Shares
shall be issued pursuant to Section 5B of this Plan in respect of an Eligible
Director's retainer fees if Shares are or will be issued pursuant to Section 5B
of the 93 ISP in respect of such retainer fees.
6. Option Grants for Eligible Employees.
------------------------------------
6.1 Authority of Committee. Subject to the provisions of the Plan
and to Section 4.1 above, the Committee shall have full and final authority to
select those Eligible Employees who will receive Options (each an "Employee
Option"), the terms and conditions of which shall be set forth in an Agreement;
provided, however, that no person shall receive any Incentive Stock Options
unless he or she is an employee of the Company, a Parent or a Subsidiary at the
time the Incentive Stock Option is granted.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option
shall become exercisable in such installments (which need not be equal) and at
such times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised, installments shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its
discretion, modify outstanding Employee Options or accept the surrender of
outstanding Employee Options (to the extent not exercised) and grant new Options
in substitution for them. Notwithstanding the foregoing, (i) no modification of
an Employee Option shall adversely alter or impair any rights or obligations
under the Employee Option without the Optionee's consent, and (ii) no
modification or surrender of an outstanding option and the grant of new options
in substitution for them which results in a purchase price (as defined in
Section 6.2 hereof) that is lower than the purchase price of the originally
issued Option shall be effective until authorized by the shareholders of the
Corporation.
7. Terms and Conditions Applicable to All Options.
----------------------------------------------
7.1 Transferability. Unless otherwise provided by the Committee, no
Option granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise by any one or a combination of the
following: (i) cash or (ii) transferring Shares to the Company upon such terms
and conditions as determined by the Committee. Notwithstanding the foregoing,
the Committee shall have discretion to determine at the time of grant of each
Employee Option or at any later date (up to and including the date of exercise)
the form of payment acceptable in respect of the exercise of such Employee
Option. The written notice pursuant to this Section 7.2 may also provide
instructions from the Optionee to the Company that upon receipt of the purchase
price in cash from the Optionee's broker or dealer, that has been approved by
the Company, designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall issue such
Shares directly to the designated broker or dealer that has been approved by the
Company. Any Shares transferred to the Company as payment of the purchase price
under an Option shall be valued at their Fair Market Value on the day preceding
the date of exercise of such Option. If requested by the Committee, the Optionee
shall deliver the Agreement evidencing the Option to the Secretary of the
Company who shall endorse thereon a notation of such exercise and return such
Agreement to the Optionee. No fractional Shares (or cash in lieu thereof) shall
be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee or his designated
broker or dealer that has been approved by the Company and (iii) the Optionee's
name or the name of his designated broker or dealer that has been approved by
the Company shall have been entered as a stockholder of record on the books of
the Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained
in the Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
portion of the Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(x) (A) in the case of a Nonqualified Stock Option, the greater of (1) the Fair
Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Option or portion thereof surrendered or (B)
in the case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Option or portion thereof surrendered. In the event an Optionee's employment
with, or service as a Director of, the Company terminates following a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain exercisable for
a period ending not before the earlier of (A) the first annual anniversary of
the termination of the Optionee's employment or service or (B) the expiration of
the stated term of the Option.
8. Stock Appreciation Rights. The Committee shall have no
--------------------------
authority to grant to Eligible Employees, or others, Stock Appreciation Rights.
9. Restricted Stock.
----------------
9.1 Grant. The Committee may grant to Eligible Employees Awards of
Restricted Stock, which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the terms and provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder may either be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted or credited in a separate book
account in the Grantee's name maintained for that purpose provided that the
Grantee has executed an Agreement evidencing the Award, and, in the discretion
of the Committee, appropriate blank stock powers, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Shares. If a Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, and, in the discretion of the Committee, appropriate
blank stock powers, an escrow agreement and any other documents which the
Committee may require within the time period prescribed by the Committee at the
time the Award is granted, the Award shall be null and void. At the discretion
of the Committee, Shares issued in connection with a Restricted Stock Award
shall be deposited together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. The Committee shall have the
full and final authority to determine, upon delivery of the Shares to the escrow
agent, or the establishment of a book account in the name of the Grantee, as the
case may be, whether or not the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.
9.3 Transferability. Unless otherwise provided by the Committee,
until any restrictions upon the Shares of Restricted Stock awarded to a Grantee
shall have lapsed in the manner set forth in Section 9.4, such Shares shall not
be sold, transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee.
9.4 Lapse of Restrictions.
---------------------
(a) Generally. During the period of three (3) years commencing
on the date of grant of the Shares of Restricted Stock, or such longer period as
may be set by the Committee, restrictions upon the shares shall not lapse.
Within these limits the Committee may, in its sole discretion, provide for the
lapse of such restrictions in installments and may also accelerate such
restrictions (for any period not less that one (1) year) in whole or in part
based upon performance factors as the Committee may determine, in its sole
discretion.
(b) Effect of Change in Control or a Sale or Disposition of a
Subsidiary or Division. Notwithstanding anything contained in the Plan, unless
the Agreement evidencing the Award provides to the contrary, in the event of a
Change in Control, all restrictions upon any Shares of Restricted Stock shall
lapse immediately and all such Shares shall become fully vested in the Grantee.
In the event of the sale or other disposition of substantially all of the stock
or assets of a Subsidiary or a Division, the Committee shall have the discretion
to determine whether all restrictions upon any Shares of Restricted Stock (held
by a Grantee employed by such Division or Subsidiary) shall lapse immediately
and that all such Shares shall become fully vested in the Grantee.
(c) Employment, Disability, Retirement or Death. Restrictions
upon Shares of Restricted Stock awarded hereunder shall lapse at such time or
times and on such terms and conditions as the Committee may determine in
connection with the initial employment, Disability, retirement, or death of the
Grantee.
9.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 Treatment of Dividends. At the time the Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions on Shares
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
9.8 Limitation on Restricted Stock Awards. On and after May 17,
2001, Awards of Restricted Stock shall not exceed a total of 700,000 shares in
the aggregate both under this Plan and any other Incentive Stock Plan of the
Company.
10. Performance Awards. The Committee shall have no authority to
-------------------
grant to Eligible Employees, or others, Performance Awards.
11. Effect of a Termination of Employment. The Agreement evidencing
the grant of each Employee Option and each Award shall set forth the terms and
conditions applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), as the Committee may, in its
discretion, determine at the time the Employee Option or Award is granted or
thereafter.
12. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the number and class
of Shares or other stock or securities which are subject to Director Options
issuable under Section 5; and (iii) the number and class of Shares or other
stock or securities which are subject to outstanding Options or Awards granted
under the Plan, and the purchase price therefor, if applicable; and (iv) the
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted to any Eligible Employee.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, a Grantee of
an Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. Effect of Certain Transactions. Subject to Sections 7.4 and
9.4(b), in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
14. Termination and Amendment of the Plan. The Plan shall terminate
on the day preceding the tenth annual anniversary of the date of its adoption by
the Board and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards therefore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan;
(b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations; and
(c) The provisions of Section 5 shall not be amended more
often than once every six (6) months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations promulgated thereunder.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. Limitation of Liability. As illustrative of the limitations
-----------------------
of liability of the Company, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award
other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
17. Regulations and Other Approvals; Governing Law.
----------------------------------------------
17.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflict of laws
principles.
17.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
17.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and Section 162 (m) of the Code, and the Committee shall
interpret and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule and Section
162(m) of the Code shall be inoperative and shall not affect the validity of the
Plan.
17.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
17.5 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
17.6 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
18. Pooling Transactions. Notwithstanding anything contained in the
Plan or any Agreement to the contrary, in the event of a Change in Control which
is also intended to constitute a pooling transaction under the Code, the
Committee shall take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent reasonable
necessary in order to assure that the pooling transaction will qualify as such,
including but not limited to (i) deferring the vesting, exercise, payment,
settlement or lapsing of restrictions with respect to any Option or Award, (ii)
providing that the payment or settlement in respect of any Option or Award be
made in the form of cash, Shares or securities of a successor or acquirer of the
Company, or a combination of the foregoing, and (iii) providing for the
extension of the term of any Option or Award to the extent necessary to
accommodate the foregoing, but not beyond the maximum term permitted for any
Option or Award.
19. Miscellaneous.
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19.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Employee during the term of the Plan, either in addition to,
or in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.
19.2 Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Director, Optionee or Grantee, an
amount equal to the federal, state and local income taxes and other amounts as
may be required by law to be withheld (the "Withholding Taxes") with respect to
the receipt of any retainer fee, Option or Award. If a Director, Optionee or
Grantee is to experience a taxable event in connection with the receipt of
Shares pursuant to a payment in stock, Option exercise or payment of an Award (a
"Taxable Event"), the Director, Optionee or Grantee shall pay the Withholding
Taxes to the Company prior to the issuance, or release from escrow, of such
Shares. In satisfaction of the obligation to pay Withholding Taxes to the
Company, the Director, Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
or Company Secretary, as applicable, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes. The
Committee may, by the adoption of rules or otherwise, (i) modify the provisions
of this Section 19.2 (other than as regards Director Options) or impose such
other restrictions or limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under Section 16(b) of the
Exchange Act, and (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
(c) The Committee shall have the authority, at the time of
grant of an Employee Option or Award under the Plan or at any time thereafter,
to award tax bonuses to designated Optionees or Grantees, to be paid upon their
exercise of Employee Options or payment in respect of Awards granted hereunder.
The amount of any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to determine the
amount of any such tax bonus and the terms and conditions affecting the vesting
and payment thereof.
20. Effective Date. The effective date of the Plan shall be May 31,
1997, after the date of its adoption by the Board, and the approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Delaware within 12
months of such adoption.
EXHIBIT 10c
RADIOSHACK CORPORATION
2001 INCENTIVE STOCK PLAN
(includes Directors)
1. Purpose.
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The purpose of this Plan is to strengthen RadioShack Corporation (the "Company")
by providing an incentive to its Eligible Employees (as hereinafter defined),
and directors and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to, Eligible Employees of the Company
and its subsidiaries and to Eligible Directors (as defined below), an added
long-term incentive for high levels of performance and unusual efforts through
the grant of Incentive Stock Options and Nonqualified Stock Options (as each
term is defined below).
2. Definitions.
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For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and
an Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.5 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.6 A "Change in Control" shall mean the occurrence during the term
of the Plan and during the term of any Option issued under the Plan of:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any "Person"
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a "Subsidiary"),
(ii) the Company or its Subsidiaries, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of May 18, 2001, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving
the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities has Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) A transaction described in clauses (A)
through (C) shall herein be referred to as a "Non-Control Transaction ";
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Committee" means a committee of the Board consisting of at
least two (2) members, all of who are Disinterested Directors, appointed by the
Board to administer the Plan and to perform the functions set forth herein.
2.9 "Company" means RadioShack Corporation, a Delaware Corporation.
2.10 "Director Option" means an Option granted pursuant to
Section 5.
2.11 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Optionee from
performing the customary duties of his or her regular job with the Company.
2.12 "Disinterested Director" means a director of the Company who is
both a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act, and a "Outside Director" within the meaning of Section 162(m) of
the Code.
2.13 "Division" means any of the operating units or divisions of the
Company.
2.14 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options subject to the conditions set forth herein.
2.15 "Eligible Director" means a director of the Company who is
not an employee at the time of grant of the Company or any Subsidiary.
2.16 "Employee Option" means an Option granted pursuant to Section 6.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the high
and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to trading, or
if such Shares are not so listed or admitted to trading, the arithmetic mean of
the per Share closing bid price and per Share closing asked price on such date
as quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
2.19 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.20 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.21 "Option" means an Employee Option, a Director Option, or either
or both of them.
2.22 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.23 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.24 "Plan or 2001 ISP" means the RadioShack Corporation 2001
Incentive Stock Plan.
2.25 "Retirement" means a Director must have attained sixty (60)
years of age and served as a Director for sixty (60) consecutive months
preceding his or her resignation or retirement as a Director.
2.26 "Shares" means the common stock, par value $1.00 per share,
of the Company.
2.27 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.28 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.29 "Ten-Percent Stockholder" means an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
3. Administration.
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3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall
be granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) grant Shares to Eligible Employees, that are the subject
of Options upon such terms and conditions as may be determined by the Committee
in its sole and absolute discretion.
3.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and all other
persons having any interest therein;
(b) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
3.4 During any calendar year no Eligible Employee may be granted
Options in the aggregate in respect of more than 500,000 Shares.
4. Stock Subject to the Plan.
-------------------------
4.1 The maximum number of Shares that may be made the subject of
Options granted under the Plan is 9,200,000 Shares. Upon a Change in
Capitalization the maximum number of Shares shall be adjusted in number and kind
pursuant to Section 9. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.
4.2 Upon the granting of an Option, the number of Shares available
under Section 4.1 for the granting of further Options shall be reduced by the
number of Shares in respect of which the Option is granted.
4.3 Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Option, the Shares
allocable to the expired, canceled or otherwise terminated portion of the Option
may again be the subject of Options granted hereunder.
5. Director Plans.
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5A. Option Grants to Eligible Directors.
-----------------------------------
5A.1 Annual Grant. Subject to the provisions of Section 5C.1
hereof, Director Options shall be granted to each Eligible Director on the first
trading day of September of each year the Plan is in effect. Each Director
Option granted shall be in respect of 16,000 Shares. The purchase price of each
Director Option shall be as provided in Section 5A.3 and such Options shall be
evidenced by an Agreement containing such other terms and conditions not
inconsistent with the provisions of this Plan as determined by the Board;
provided, however, that such terms shall not vary the timing of awards of
Director Options, including provisions dealing with forfeiture or termination of
such Director Options, and further such terms may not provide for a modification
of a Director Option and the grant of a new Director Option in substitution for
them which results in a Purchase Price (as defined in Section 5A.3 hereof) that
is lower than the Purchase Price of the originally issued Director Option until
authorized by the stockholders of the Corporation.
5A.2 One Time Grant. Subject to the provisions of Section
5C.1 hereof, each newly appointed or elected Eligible Director who has not
previously received a one-time grant under the Company's 1993 Incentive Stock
Plan, 1997 Incentive Stock Plan, 1999 Incentive Stock Plan or hereunder, shall
be granted an option on the date the Eligible Director attends his or her first
Company Board meeting. Each Director Option granted under this Section shall be
in respect of 20,000 Shares. The Purchase Price of each Director Option shall be
as provided in Section 5A.3 and such Options shall be evidenced by an Agreement
containing such other terms and conditions not inconsistent with the provisions
of this Plan as determined by the Board; provided, however, that such terms
shall not vary the timing of awards of Director Options, including provisions
dealing with forfeiture or termination of such Director Options.
5A.3 Purchase Price. The "Purchase Price" for Shares under
each Director Option shall be equal to 100% of the Fair Market Value of such
Shares on the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option
shall become exercisable with respect to one third (1/3) of the Shares effective
as of each of the first, second and third annual anniversaries of the grant
date; provided, however, that the Optionee continues to serve as a Director as
of such dates. Notwithstanding the foregoing, if a Director's service terminates
by reason of his death, Disability or Retirement, all Director Options then held
by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the
date which is the tenth annual anniversary of the grant date, unless terminated
earlier as follows:
(a) If an Optionee's service as a Director terminates
for any reason other than Retirement, Disability, death or Cause, the Optionee
may, for a period of three (3) months after such termination, exercise his or
her Option to the extent, and only to the extent, that such Option or portion
thereof was vested and exercisable as of the date the Optionee's service as a
Director terminated, after which time the Option shall automatically terminate
in full.
(b) If an Optionee's service as a Director terminates by
reason of the Optionee's Retirement or by resignation or removal from the Board
due to Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option after which time the Option shall
automatically terminate in full.
(c) If an Optionee's service as a Director terminates
for Cause, the Option granted to the Optionee hereunder shall immediately
terminate in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within
three (3) months after termination of service as a Director as described in
clause (a) of this Section 5A.5, or within three (3) years after termination of
service as a Director as described in clause (b) of this Section 5A.5, the
Option granted to the Optionee may be exercised at any time within 12 months
after the Optionee's death by the person or persons to whom such rights under
the Option shall pass by will, or by the laws of descent or distribution, after
which time the Option shall terminate in full.
5B. Stock Purchase for Director Retainer and/or Meeting
----------------------------------------------------
Fees.
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5B.1 Election to Participate.
-----------------------
(a) Initial Year Election. Each Eligible Director may
---------------------
participate in this Section 5B by filing an election to participate with the
Company Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to either or both of the Eligible Director's meeting fees or annual
retainer payable to him or her under the Eligible Director compensation plan in
respect of each calendar month commencing with the first calendar month
commencing after the receipt of the Initial Year Election by the Company
Secretary and ending the subsequent May 31. An Eligible Director may, pursuant
to an Initial Year Election, participate in this Section 5B only at either a 50%
or 100% level and may not change his or her level of participation except as
provided in Section 5B.1 (b) below.
(b) Annual Election. Each Eligible Director may, prior
---------------
to May 1 of any year, elect to participate (or cease to participate) or change
his or her level of participation in this Section 5B (an "Annual Election").
An Annual Election shall become effective with respect to either or both of the
Eligible Director's meeting fees or annual retainer payable to him or her under
the Eligible Director compensation plan in respect of the year commencing on
June 1 next subsequent to the receipt of the Annual Election by the Company
Secretary and shall continue for subsequent years unless changed pursuant to
this Section 5B.1 (b). An Eligible Director may, pursuant to an Annual Election,
participate in this Section 5B only at either a 50% or 100% level and may not
change his or her level of participation except as provided in this Section
5B.1(b).
5B.2 Payment in Stock.
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(a) For the period commencing on the effective date of
an Eligible Director's Initial Year Election through the next subsequent May
31, (i) Shares will be issued to each Eligible Director participating at the
100% level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Eligible Director's annual retainer
divided by twelve (12), then multiplied by the number of calendar months from
the effective date of the Initial Year Election through the subsequent May 31;
and (ii) Shares will be issued to each Eligible Director participating at the
50% level according to the calculation in clause (i) of this Section 5B.2 (a)
but reduced by one-half. Shares will be issued as of the effective date of the
Initial Year Election.
(b) For each year commencing on June 1 in respect of
which an Eligible Director has elected to participate in this Section 5B
pursuant to an Annual Election, (i) Shares will be issued to each Eligible
Director participating at the 100% level having a Fair Market Value (as of the
first trading day immediately preceding the date of issuance) equal to the
Eligible Director's annual retainer; and (ii) Shares will be issued to each
Eligible Director participating in this Section 5B at the 50% level according
to the calculation in clause (i) of this Section 5B.2(b) but reduced by
one-half. Shares will be issued as of June 1.
(c) For the period commencing on the effective date of
an Eligible Director's Initial Year Election through the next subsequent May
31, (i) Shares will be issued to each Eligible Director participating at the
100% level having a Fair Market Value (as of the date of the meeting or if not
a trading day then the first trading day immediately preceding the date of the
meeting) equal to the Eligible Director's fee for attending the meeting; and
(ii) Shares will be issued to each Eligible Director participating at the 50%
level according to the calculation in clause (i) of this Section 5B.2 (c) but
reduced by one-half. Shares will be issued as soon as practicable after the
date of each such meeting.
(d) For each year commencing on June 1 in respect of
which an Eligible Director has elected to participate in this Section 5B
pursuant to an Annual Election, (i) Shares will be issued to each Eligible
Director participating at the 100% level having a Fair Market Value (as of the
date of the meeting or if not a trading day then the first trading day
immediately preceding the date of the meeting) equal to the Eligible Director's
fee for attending the meeting; and (ii) Shares will be issued to each Eligible
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(d) but reduced by one-half.
Shares will be issued as soon as practicable after the date of each such
meeting.
(e) The issuance of Shares to an Eligible Director
participating in this Section 5B shall represent payment in advance of, and
shall be in lieu of, 50% or 100%, as applicable, of the Eligible Director's
annual retainer for the period in respect of which the Initial Year Election or
the Annual Election is in effect.
(f) The issuance of Shares to an Eligible Director
participating in this Section 5B shall represent payment of, and shall be in
lieu of, 50% or 100%, as applicable, of the Eligible Director's meeting fees for
each meeting attended in respect of which the Initial Year Election or the
Annual Election is in effect.
5B.3 Distribution. Shares will be distributed to the Eligible
Director as soon as practicable after issuance. No fractional Share will be
issued to any Eligible Director. Any amount not used for the acquisition of a
Share will be paid to the Eligible Director in cash.
5C.1 No Duplication. Notwithstanding any provision in this
Plan to the contrary, no Director Option shall be granted to any Eligible
Director pursuant to Section 5A, of this Plan on any day if such Director is
granted a Director Option pursuant to Section 5A. of the Company's 1993
Incentive Stock Plan, 1997 Incentive Stock Plan or 1999 Incentive Stock Plan on
such day. In addition, no Shares shall be issued pursuant to Section 5B. of this
Plan in respect of an Eligible Director's meeting or retainer fees if Shares are
or will be issued pursuant to Section 5B. of the Company's 1993 Incentive Stock
Plan, 1997 Incentive Stock Plan or 1999 Incentive Stock Plan in respect of such
meeting or retainer fees.
6. Option Grants for Eligible Employees.
------------------------------------
6.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Employees who will receive Options (each an "Employee Option"), the terms and
conditions of which shall be set forth in an Agreement; provided, however, that
no person shall receive any Incentive Stock Options unless he or she is an
employee of the Company, a Parent or a Subsidiary at the time the Incentive
Stock Option is granted.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option
shall become exercisable in such installments (which need not be equal) and at
such times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised, installments shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its
discretion, modify outstanding Employee Options or accept the surrender of
outstanding Employee Options (to the extent not exercised) and grant new Options
in substitution for them. Notwithstanding the foregoing, (i) no modification of
an Employee Option shall adversely alter or impair any rights or obligations
under the Employee Option without the Optionee's consent, and (ii) no
modification or surrender of an outstanding option and the grant of new Options
in substitution for them which results in a purchase price (as defined in
Section 6.2 hereof) that is lower than the purchase price of the originally
issued Option shall be effective until authorized by the stockholders of the
Corporation.
7. Terms and Conditions Applicable to All Options.
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7.1 Transferability. Unless otherwise provided by the Committee, no
Option granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered in person, by facsimile, electronic means, or by
mail to such person, entity and location as may be designated by the Corporate
Secretary of the Company, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon such
exercise by any one or a combination of the following: (i) cash or (ii)
transferring Shares to the Company upon such terms and conditions as determined
by the Committee. Notwithstanding the foregoing, the Committee shall have
discretion to determine at the time of grant of each Employee Option or at any
later date (up to and including the date of exercise) the form of payment
acceptable in respect of the exercise of such Employee Option. The written
notice pursuant to this Section 7.2 may also provide instructions from the
Optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's broker or dealer, that has been approved by the Company, designated
as such on the written notice, in payment for any Shares purchased pursuant to
the exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer that has been approved by the Company. Any Shares
transferred to the Company as payment of the purchase price under an Option
shall be valued at their Fair Market Value on the day preceding the date of
exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee or his designated
broker or dealer that has been approved by the Company and (iii) the Optionee's
name or the name of his designated broker or dealer that has been approved by
the Company shall have been entered as a stockholder of record on the books of
the Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained
in the Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in Control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
portion of the Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(x) (A) in the case of a Nonqualified Stock Option, the greater of (1) the Fair
Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Option or portion thereof surrendered or (B)
in the case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Option or portion thereof surrendered. In the event an Optionee's employment
with, or service as a Director of, the Company terminates following a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain exercisable for
a period ending not before the earlier of (A) the first annual anniversary of
the termination of the Optionee's employment or service or (B) the expiration of
the stated term of the Option.
8. Effect of a Termination of Employment. The Agreement evidencing
the grant of each Employee Option shall set forth the terms and conditions
applicable to such Employee Option upon a termination or change in the status of
the employment of the Optionee by the Company, a Subsidiary or a Division
(including a termination or change by reason of the sale of a Subsidiary or a
Division), as the Committee may, in its discretion, determine at the time the
Employee Option is granted or thereafter.
9. Adjustment Upon Change in Capitalization.
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(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number and class of Shares or other stock or securities with respect to
which Options may be granted under this Plan; (ii) the number and class of
Shares or other stock or securities which are subject to Director Options
issuable under Section 5; (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options granted under this Plan, and
the purchase price therefor, if applicable; and (iv) the maximum number and
class of Shares or other stock or securities with respect to which Options may
be granted to any Eligible Employee.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, an Optionee
shall be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or different shares
shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Shares subject to the Option
prior to such Change in Capitalization.
10. Effect of Certain Transactions. Subject to Section 7.4, in the
event of (i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), this Plan and the Options issued
hereunder shall continue in effect in accordance with their respective terms and
each Optionee shall be entitled to receive in respect of each Share subject to
any outstanding Options upon exercise of any Option, the same number and kind of
stock, securities, cash, property, or other consideration that each holder of a
Share was entitled to receive immediately prior to the Transaction in respect of
a Share.
11. Termination and Amendment of the Plan. The Plan shall terminate
May 31, 2011 and no Option may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options therefore granted under the Plan,
except with the consent of the Optionee, nor shall any amendment, modification,
suspension or termination deprive any Optionee of any Shares which he or she may
have acquired through or as a result of the Plan;
(b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations;
(c) The provisions of Section 5 shall not be amended more
often than once every six (6) months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations promulgated thereunder; and
(d) Unless theretofore approved by the stockholders of the
Company, no amendment or modification of the Plan shall provide for: (i) the
purchase price per Share of an Option to be less than 100% of the Fair Market
Value of a Share on the date the Option was granted; (ii) the provision for the
awards of restricted stock, stock appreciation rights or performance awards; or
(iii) subject to Section 9. of the Plan, an increase the number of Shares
subject to Option grants under the Plan.
12. Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
13. Limitation of Liability. As illustrative of the limitations of
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liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option other
than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
14. Regulations and Other Approvals; Governing Law.
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14.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflict of laws
principles.
14.2 The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
14.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and Section 162 (m) of the Code, and the Committee shall
interpret and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule and Section
162(m) of the Code shall be inoperative and shall not affect the validity of the
Plan.
14.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
14.5 Each Option is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option, no Options shall be
granted, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
14.6 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately legended to reflect their status as restricted
securities as aforesaid.
15. Pooling Transactions. Notwithstanding anything contained in the
Plan or any Agreement to the contrary, in the event of a Change in Control which
is also intended to constitute a pooling transaction under the Code, the
Committee shall take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent reasonably
necessary to assure that the pooling transaction will qualify as such, including
but not limited to (i) deferring the vesting, exercise, payment, settlement or
lapsing of restrictions with respect to any Option, (ii) providing that the
payment or settlement in respect of any Option be made in the form of cash,
Shares or securities of a successor or acquirer of the Company, or a combination
of the foregoing, and (iii) providing for the extension of the term of any
Option to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option.
16. Miscellaneous.
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16.1 Multiple Agreements. The terms of each Option may differ from
other Options granted under this Plan at the same time, or at some other time.
The Committee may also grant more than one Option to a given Eligible Employee
during the term of this Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Employee.
16.2 Withholding of Taxes.
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(a) The Company shall have the right to deduct from any
distribution of cash to any Director or Optionee, an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to the receipt of any
retainer fee or Option. If a Director or Optionee is to experience a taxable
event in connection with the receipt of Shares pursuant to a payment in stock or
Option exercise (a "Taxable Event"), the Director or Optionee shall pay the
Withholding Taxes to the Company prior to the issuance, or release from escrow,
of such Shares. In satisfaction of the obligation to pay Withholding Taxes to
the Company, the Director or Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
or Company Secretary, as applicable, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes. The
Committee may, by the adoption of rules or otherwise, (i) modify the provisions
of this Section 16.2 (other than as regards Director Options) or impose such
other restrictions or limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under Section 16(b) of the
Exchange Act, and (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Secretary of the Company at the
Company's principal executive office.
(c) The Committee shall have the authority, at the time of
grant of an Employee Option under the Plan or at any time thereafter, to award
tax bonuses to designated Optionees, to be paid upon their exercise of Employee
Options granted hereunder. The amount of any such payments shall be determined
by the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereof.
17. Effective Date. The effective date of the Plan shall be
June 1, 2001, after the date of its adoption by the Board, and the approval by
the affirmative vote of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at the meeting of
stockholders duly held in accordance with the applicable laws of the State of
Delaware on May 17, 2001.