Exhibit 10.2
THERMO ELECTRON CORPORATION
2005 STOCK INCENTIVE PLAN, AS AMENDED
1. Purpose
The purpose of this 2005 Stock Incentive Plan (the "Plan") of Thermo
Electron Corporation, a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's and its
Subsidiaries' (as defined below) ability to attract, retain and motivate persons
who are expected to make important contributions to the Company or a Subsidiary
and by providing such persons with equity ownership opportunities and
performance-based incentives that are intended to align their interests with
those of the Company's stockholders. "Subsidiaries" means the present or future
subsidiary corporations of the Company as defined in Sections 424(f) of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code") and any other business ventures (including, without
limitation, joint venture or limited liability company) in which the Company has
a controlling interest.
2. Eligibility
All of the employees, officers, directors, consultants and advisors of the
Company and its Subsidiaries are eligible to receive options, stock appreciation
rights, restricted stock and other stock-based awards (each, an "Award") under
the Plan. Each person who receives an Award under the Plan is deemed a
"Participant".
3. Administration and Delegation
(a) Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
officers referred to in Section 3(c) to the extent that the Board's powers or
authority under the Plan have been delegated to such Committee or officers.
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(c) Delegation to Officers. To the extent permitted by applicable law, the
Board may delegate to one or more officers of the Company the power to grant
Awards to employees or officers of the Company or any of its Subsidiaries and to
exercise such other powers under the Plan as the Board may determine, provided
that the Board shall fix the terms of the Awards to be granted by such officers
(including the exercise price of such Awards, which may include a formula by
which the exercise price will be determined) and the maximum number of shares
subject to Awards that the officers may grant; provided further, however, that
no officer shall be authorized to grant Awards to any "executive officer" of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or to any "officer" of the Company (as defined by
Rule 16a-1 under the Exchange Act).
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 9, Awards may be
made under the Plan for up to 11,000,000 shares of common stock, $1.00 par value
per share, of the Company (the "Common Stock"). Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares. For purposes of counting the number of shares available for the grant of
Awards under the Plan, (i) shares of Common Stock covered by Independent SARs
(as defined in Section 6(b)(2)) shall be counted against the number of shares
available for the grant of Awards under the Plan; provided, however, that
Independent SARs which may be settled in cash only shall not be so counted; (ii)
if any Award (A) expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant to a contractual repurchase
right) or (B) results in any Common Stock not being issued (including as a
result of an Independent SAR that was settleable either in cash or in stock
actually being settled in cash), the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan; provided,
however, in the case of Incentive Stock Options (as hereinafter defined), the
foregoing sentence shall be subject to any limitations under the Code; and (iii)
shares of Common Stock tendered to the Company by a Participant to (A) purchase
shares of Common Stock upon the exercise of an Award or (B) satisfy tax
withholding obligations (including shares retained from the Award creating the
tax obligation) shall not be added back to the number of shares available for
the future grant of Awards under the Plan.
(b) Sub-limits. Subject to adjustment under Section 9, the following
sub-limits on the number of shares subject to Awards shall apply:
(1) Section 162(m) Per-Participant Limit. The maximum number of shares
of Common Stock with respect to which Awards may be granted to any Participant
under the Plan shall be 1,500,000 per calendar year. For purposes of the
foregoing limit, the combination of an Option in tandem with a SAR (as each is
hereafter defined) shall be treated as a single Award. The per-Participant limit
described in this Section 4(b)(1) shall be construed and applied consistently
with Section 162(m) of the Code or any successor provision thereto, and the
regulations thereunder ("Section 162(m)").
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(2) Limit on Awards other than Options and SARS. The maximum number of
shares with respect to which Awards other than Options and SARs may be granted
shall be 3,000,000.
(3) Limit on Awards to Directors. The maximum number of shares with
respect to which Awards may be granted to directors who are not employees of the
Company or a Subsidiary at the time of grant shall be 500,000.
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company, any of the
Company's present or future subsidiary corporations as defined in Sections
424(f) of the Code, and any other entities the employees of which are eligible
to receive Incentive Stock Options under the Code, and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) that is intended to be an Incentive Stock
Option is not an Incentive Stock Option or for any action taken by the Board
pursuant to Section 10(f), including without limitation the conversion of an
Incentive Stock Option to a Nonstatutory Stock Option.
(c) Exercise Price.
(1) Establishment of Exercise Price. The Board shall establish the
exercise price of each Option and specify such exercise price in the applicable
option agreement; provided, however, that the exercise price shall be not less
than 100% of the fair market value per share of Common Stock as determined by
(or in a manner approved by) the Board ("Fair Market Value") as of the date the
Option is granted.
(2) Limitation on Repricing. Unless such action is approved by the
Company's stockholders: (A) no outstanding Option granted under the Plan may be
amended to provide an exercise price per share that is lower than the
then-current exercise price per share of such outstanding Option (other than
adjustments pursuant to Section 9) and (B) the Board may not cancel any
outstanding Option and grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common Stock and having an
exercise price per share lower than the then-current exercise price per share of
the cancelled Option.
(d) Duration of Options. Each Option shall be exercisable at such time or
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement; provided, however, that no Option will be granted
for a term in excess of 10 years.
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(e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Company together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised. Shares of Common Stock subject to the Option will be
delivered by the Company following exercise either as soon as practicable or,
subject to such conditions as the Board shall specify, on a deferred basis (with
the Company's obligation to be evidenced by an instrument providing for future
delivery of the deferred shares at the time or times specified by the Board).
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an option agreement,
by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;
(3) when the Common Stock is registered under the Securities Exchange
Act of 1934 (the "Exchange Act"), by delivery of shares of Common Stock owned by
the Participant valued at their Fair Market Value as of the date the shares of
Common Stock are so delivered, provided (i) such method of payment is then
permitted under applicable law, (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant for such minimum period of time,
if any, as may be established by the Board in its discretion and (iii) such
Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements;
(4) to the extent permitted by applicable law and by the Board, by (i)
delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2. Substitute
Options shall not count against the overall share limit set forth in Section
4(a), except as may be required by reason of Section 422 and related provisions
of the Code.
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6. Stock Appreciation Rights.
(a) General. A Stock Appreciation Right, or SAR, is an Award entitling the
holder, upon exercise, to receive an amount in cash or Common Stock or a
combination thereof (such form to be determined by the Board) determined in
whole or in part by reference to appreciation, from and after the date of grant,
in the fair market value of a share of Common Stock. SARs may be based solely on
appreciation in the fair market value of Common Stock or on a comparison of such
appreciation with some other measure of market growth such as (but not limited
to) appreciation in a recognized market index. The date as of which such
appreciation or other measure is determined shall be the exercise date unless
another date is specified by the Board in the SAR Award.
(b) Grants. Stock Appreciation Rights may be granted in tandem with, or
independently of, Options granted under the Plan.
(1) Tandem Awards. When Stock Appreciation Rights are expressly
granted in tandem with Options, (i) the Stock Appreciation Right will be
exercisable only at such time or times, and to the extent, that the related
Option is exercisable (except to the extent designated by the Board in
connection with a Reorganization Event or a Change in Control Event) and will be
exercisable in accordance with the procedure required for exercise of the
related Option; (ii) the Stock Appreciation Right will terminate and no longer
be exercisable upon the termination or exercise of the related Option, except to
the extent designated by the Board in connection with a Reorganization Event or
a Change in Control Event and except that a Stock Appreciation Right granted
with respect to less than the full number of shares covered by an Option will
not be reduced until the number of shares as to which the related Option has
been exercised or has terminated exceeds the number of shares not covered by the
Stock Appreciation Right; (iii) the Option will terminate and no longer be
exercisable upon the exercise of the related Stock Appreciation Right; and (iv)
the Stock Appreciation Right will be transferable only with the related Option.
(2) Independent SARs. A Stock Appreciation Right not expressly granted
in tandem with an Option ("Independent SAR") will become exercisable at such
time or times, and on such conditions, as the Board may specify in the SAR
Award.
(c) Exercise. Stock Appreciation Rights may be exercised by delivery to the
Company (or its designee) of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Company, together with any other documents required by the Company.
7. Restricted Stock.
(a) General. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
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(b) Terms and Conditions. The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for repurchase
(or forfeiture) and the issue price, if any.
(c) Limitations on Vesting.
(1) Except as set forth in subsection (c)(2) below, Restricted Stock
Awards that vest based on the passage of time alone shall be zero percent vested
prior to the first anniversary of the date of grant, no more than 33-1/3% vested
prior to the second anniversary of the date of grant, and no more than 66-2/3%
vested prior to the third anniversary of the date of grant. Restricted Stock
Awards that vest upon the passage of time and provide for accelerated vesting
based on performance shall not vest prior to the first anniversary of the date
of grant.
(2) Subsection (c)(1) above shall not apply to (i) Awards granted
pursuant to Section 10(i) or (ii) to a maximum of 500,000 shares of Common Stock
with respect to which Restricted Stock Awards may be granted. With respect to
Restricted Stock Awards that are subject to subsection (c)(1) above, the Board
may waive its rights to repurchase shares of Common Stock (or waive forfeiture
thereof) or remove or modify any part or all of the restrictions (or vesting
thereof) applicable to the Restricted Stock Award (x) in exercise of the
authority granted to the Board in Section 10(d), at the time a Restricted Stock
Award is granted and (y) pursuant to Section 9 or in such other extraordinary
circumstances (as determined by the Board) affecting the Company, a Participant
or the Plan after the Restricted Stock Award has been granted.
(d) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Company, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, "Designated Beneficiary" shall mean the Participant's estate.
(e) Deferred Delivery of Shares. The Board may, at the time any Restricted
Stock Award is granted, provide that, at the time Common Stock would otherwise
be delivered pursuant to the Award, the Participant shall instead receive an
instrument evidencing the right to future delivery of Common Stock at such time
or times, and on such conditions, as the Board shall specify. The Board may at
any time accelerate the time at which delivery of all or any part of the Common
Stock shall take place. The Board may also permit an exchange of unvested shares
of Common Stock that have already been delivered to a Participant for an
instrument evidencing the right to future delivery of Common Stock at such time
or times, and on such conditions, as the Board shall specify.
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8. Other Stock-Based Awards.
(a) General.
Other Awards of shares of Common Stock, and other Awards that are valued in
whole or in part by reference to, or are otherwise based on, shares of Common
Stock or other property, may be granted hereunder to Participants ("Other Stock
Unit Awards"), including without limitation Awards entitling recipients to
receive shares of Common Stock to be delivered in the future. Such Other Stock
Unit Awards shall also be available as a form of payment in the settlement of
other Awards granted under the Plan or as payment in lieu of compensation to
which a Participant is otherwise entitled. Other Stock Unit Awards may be paid
in shares of Common Stock or cash, as the Board shall determine. Subject to the
provisions of the Plan, the Board shall determine the conditions of each Other
Stock Unit Awards, including any purchase price applicable thereto. At the time
any Award is granted, the Board may provide that, at the time Common Stock would
otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participant's right to future delivery of
the Common Stock.
(b) Limitations on Vesting.
(1) Except as set froth in subsection (b)(2) below, Other Stock Unit
Awards that vest based on the passage of time along shall be zero percent vested
prior to the first anniversary of the date of grant, no more that 33-1/3% vested
prior to the second anniversary of the date of grant, and no more than 66-2/3%
vested prior to the third anniversary of the date of grant. Other Stock Unit
Awards that vest upon the passage of time and provide for accelerated vesting
based on performance shall not vest prior to the first anniversary of the date
of grant.
(2) Subsection (b)(1) above shall not apply to (i) Awards granted
pursuant to Section 10(i) or (ii) to a maximum of 500,000 shares of Common Stock
with respect to which Restricted Stock Awards or Other Stock Unit Awards may be
granted. With respect to Other Stock Unit Awards that are subject to subsection
(b)(1) above, the Board may waive forfeiture thereof or remove or modify any
part or all of the restrictions (or vesting thereof) applicable to the Other
Stock Unit Award (x) in exercise of the authority granted to the Board in
Section 9 or Section 10(d), at the time an Other Stock Unit Award is granted and
(y) in such other extraordinary circumstances (as determined by the Board)
affecting the Company, a Participant or the Plan after the Other Stock Unit
Award has been granted.
9. Adjustments for Changes in Common Stock and Certain Other Events.
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than an ordinary
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the sub-limits set forth in Sections 4(b), 7(c)(2) and 8(b), (iii) the
number and class of securities and exercise price per share of each outstanding
Option, (iv) the share- and per-share provisions of each Stock Appreciation
Right, (v) the repurchase price per share subject to each outstanding Restricted
Stock Award and (vi) the share- and per-share-related provisions of each
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outstanding Other Stock Unit Award, shall be appropriately adjusted by the
Company (or substituted Awards may be made, if applicable) to the extent
determined by the Board.
(b) Reorganization and Change in Control Events
(1) Definitions
(A) A "Reorganization Event" shall mean:
(i) any merger or consolidation of the Company with or into
another entity as a result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash, securities or other
property or is cancelled;
(ii) any exchange of all of the Common Stock of the Company
for cash, securities or other property pursuant to a share exchange transaction;
or
(iii) any complete liquidation or dissolution of the
Company.
(B) A "Change in Control Event" shall mean:
(i) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership of any capital stock of the Company if, after
such acquisition, such Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) 40% or more of either (x) the
then-outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control Event: (A) any acquisition directly by the
Company, (B) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (C) any acquisition by any corporation pursuant to a Business
Combination (as defined below) which complies with clauses (x) and (y) of
subsection (iii) of this definition; or
(ii) such time as the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if applicable, the Board
of Directors of a successor corporation to the Company), where the term
"Continuing Director" means at any date a member of the Board (x) who was a
member of the Board on the date of the initial adoption of this Plan by the
Board or (y) who was nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (y) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Board; or
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(iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of the
Company in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (x) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively, immediately prior to such Business Combination and (y) no Person
(excluding any employee benefit plan (or related trust) maintained or sponsored
by the Company or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 40% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election of
directors; or
(iv) the approval by the stockholders of the Company of the
complete liquidation or dissolution of the Company.
(2) Effect on Options
(A) Reorganization Event. Upon the occurrence of a Reorganization
Event (regardless of whether such event also constitutes a Change in Control
Event), or the execution by the Company of any agreement with respect to a
Reorganization Event (regardless of whether such event will result in a Change
in Control Event), the Board shall provide that all outstanding Options shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof); provided that if such
Reorganization Event also constitutes a Change in Control Event, except to the
extent specifically provided to the contrary in the instrument evidencing any
Option or any other agreement between a Participant and the Company, such
assumed or substituted options shall be immediately exercisable in full upon the
occurrence of such Reorganization Event. For purposes hereof, an Option shall be
considered to be assumed if, following consummation of the Reorganization Event,
the Option confers the right to purchase, for each share of Common Stock subject
to the Option immediately prior to the consummation of the Reorganization Event,
the consideration (whether cash, securities or other property) received as a
result of the Reorganization Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the Reorganization
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a result
of the Reorganization Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
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consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Reorganization Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, or in the event of a liquidation or dissolution of the
Company, the Board shall, upon written notice to the Participants, provide that
all then unexercised Options will become exercisable in full as of a specified
time prior to the Reorganization Event and will terminate immediately prior to
the consummation of such Reorganization Event, except to the extent exercised by
the Participants before the consummation of such Reorganization Event; provided,
however, in the event of a Reorganization Event under the terms of which holders
of Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Reorganization Event (the
"Acquisition Price"), then the Board may instead provide that all outstanding
Options shall terminate upon consummation of such Reorganization Event and that
each Participant shall receive, in exchange therefor, a cash payment equal to
the amount (if any) by which (A) the Acquisition Price multiplied by the number
of shares of Common Stock subject to such outstanding Options (whether or not
then exercisable), exceeds (B) the aggregate exercise price of such Options. In
the event of a Reorganization Event that does not also constitute a Change in
Control Event, then to the extent all or any portion of an Option becomes
exercisable solely as a result of the first sentence of this paragraph, upon
exercise of such Option the Participant shall receive shares subject to a right
of repurchase by the Company or its successor at the Option exercise price. Such
repurchase right (1) shall lapse at the same rate as the Option would have
become exercisable under its terms and (2) shall not apply to any shares subject
to the Option that were exercisable under its terms without regard to the first
sentence of this paragraph.
(B) Change in Control Event that is not a Reorganization Event.
Upon the occurrence of a Change in Control Event that does not also constitute a
Reorganization Event, except to the extent specifically provided to the contrary
in the instrument evidencing any Option or any other agreement between a
Participant and the Company, all Options then-outstanding shall automatically
become immediately exercisable in full.
(3) Effect on Restricted Stock Awards
(A) Reorganization Event that is not a Change in Control Event.
Upon the occurrence of a Reorganization Event that is not a Change in Control
Event, the repurchase and other rights of the Company under each outstanding
Restricted Stock Award shall inure to the benefit of the Company's successor and
shall apply to the cash, securities or other property which the Common Stock was
converted into or exchanged for pursuant to such Reorganization Event in the
same manner and to the same extent as they applied to the Common Stock subject
to such Restricted Stock Award.
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(B) Change in Control Event. Upon the occurrence of a Change in
Control Event (regardless of whether such event also constitutes a
Reorganization Event), except to the extent specifically provided to the
contrary in the instrument evidencing any Restricted Stock Award or any other
agreement between a Participant and the Company, all restrictions and conditions
on all Restricted Stock Awards then-outstanding shall automatically be deemed
terminated or satisfied.
(4) Effect on Stock Appreciation Rights and Other Stock Unit Awards.
The Board may specify in an Award at the time of the grant the effect of a
Reorganization Event and Change in Control Event on any SAR and Other Stock Unit
Award.
10. General Provisions Applicable to Awards
(a) Transferability of Awards. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution or, other than in the case of an Incentive Stock
Option, pursuant to a qualified domestic relations order, and, during the life
of the Participant, shall be exercisable only by the Participant; except that
the Board may permit or provide in an Award for the gratuitous transfer of the
Award by the Participant to or for the benefit of any immediate family member,
family trust or family partnership established solely for the benefit of the
Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a Form S-8 for the
registration of the sale of the Common Stock subject to such option under the
Securities Act of 1933, as amended; provided that the Company shall not be
required to recognize any such transfer until such time as the Participant and
such permitted transferee shall, as a condition to such transfer, deliver to the
Company a written instrument in form and substance satisfactory to the Company
confirming that such transferee shall be bound by all of the terms and
conditions of the Award. References to a Participant, to the extent relevant in
the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, or the Participant's legal
representative, conservator, guardian or Designated Beneficiary, may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld in connection with an Award to such Participant. If provided for
in an Award or approved by the Company, in its sole discretion, a Participant
may satisfy such tax obligations in whole or in part
12
by delivery of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value; provided,
however, except as otherwise provided by the Board, that the total tax
withholding where stock is being used to satisfy such tax obligations cannot
exceed the Company's minimum statutory withholding obligations (based on minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable income). Shares
surrendered to satisfy tax withholding requirements cannot be subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements. The
Company may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to a Participant.
(f) Amendment of Award. Except as set forth in Sections 5(c)(2), 7(c) and
8(b), the Board may amend, modify or terminate any outstanding Award, including
but not limited to, substituting therefor another Award of the same or a
different type, changing the date of exercise or realization, and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) Acceleration. Except as otherwise provided in Section 7(c) and Section
8(b), the Board may at any time provide that any Award shall become immediately
exercisable in full or in part, free of some or all restrictions or conditions,
or otherwise realizable in full or in part, as the case may be.
(i) Performance Conditions.
(1) This Section 10(i) shall be administered by a Committee approved
by the Board, all of the members of which are "outside directors" as defined by
Section 162(m) (the "Section 162(m) Committee").
(2) Notwithstanding any other provision of the Plan, if the Section
162(m) Committee determines, at the time a Restricted Stock Award or Other Stock
Unit Award is granted to a Participant, that such Participant is, or is likely
to be as of the end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee (as defined in
Section 162(m)), then the Section 162(m) Committee may provide that this Section
10(i) is applicable to such Award.
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(3) If a Restricted Stock Award or Other Stock Unit Award is subject
to this Section 10(i), then the lapsing of restrictions thereon and the
distribution of cash or Shares pursuant thereto, as applicable, shall be subject
to the achievement of one or more objective performance goals established by the
Section 162(m) Committee, which shall be based on the relative or absolute
attainment of specified levels of one or any combination of the following: (a)
earnings per share, (b) return on average equity or average assets in relation
to a peer group of companies designated by the Company, (c) earnings, (d)
earnings growth, (e) earnings before interest, taxes and amortization (EBITA),
(f) operating income, (g) operating margins, (h) revenues, (i) expenses, (j)
stock price, (k) market share, (l) chargeoffs, (m) reductions in non-performing
assets, (n) return on sales, assets, equity or investment, (o) regulatory
compliance, (p) satisfactory internal or external audits, (q) improvement of
financial ratings, (r) achievement of balance sheet or income statement
objectives, (s) net cash provided from continuing operations, (t) stock price
appreciation, (u) total shareholder return, (v) cost control, (w) strategic
initiatives, (x) net operating profit after tax, (y) pre-tax or after-tax
income, (z) cash flow, or (aa) such other objective goals established by the
162(m) Committee, and may be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or otherwise situated.
Such performance goals may be adjusted to exclude any one or more of (i)
extraordinary items and other unusual or non-recurring items, (ii) discontinued
operations, (iii) gains or losses on the dispositions of discontinued
operations, (iv) the cumulative effects of changes in accounting principles, (v)
the writedown of any asset, and (vi) charges for restructuring and
rationalization programs. Such performance goals may vary by Participant and may
be different for different Awards. Such performance goals may be particular to a
Participant or the department, branch, line of business, subsidiary or other
unit in which the Participant works and may cover such period as may be
specified by the Section 162(m) Committee. Such performance goals shall be set
by the Section 162(m) Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m).
(4) Notwithstanding any provision of the Plan, with respect to any
Restricted Stock Award or Other Stock Unit Award that is subject to this Section
10(i), the Section 162(m) Committee may adjust downwards, but not upwards, the
cash or number of Shares payable pursuant to such Award, and the Section 162(m)
Committee may not waive the achievement of the applicable performance goals
except in the case of the death or disability of the Participant.
(5) The Section 162(m) Committee shall have the power to impose such
other restrictions on Awards subject to this Section 10(i) as it may deem
necessary or appropriate to ensure that such Awards satisfy all requirements for
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code, or any successor provision thereto.
11. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a
14
Participant free from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award may be granted unless and
until the Plan has been approved by the Company's stockholders. No Awards shall
be granted under the Plan after the completion of 10 years from the earlier of
(i) the date on which the Plan was adopted by the Board or (ii) the date the
Plan was approved by the Company's stockholders, but Awards previously granted
may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time; provided that (i) to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders if required by
Section 162(m) (including the vote required under Section 162(m)); (ii) no
amendment that would require stockholder approval under the rules of the New
York Stock Exchange ("NYSE") may be made effective unless and until such
amendment shall have been approved by the Company's stockholders, and (iii) if
the NYSE amends its corporate governance rules so that such rules no longer
require stockholder approval of "material revisions" to equity compensation
plans, then, from and after the effective date of such amendment to the NYSE
rules, no amendment to the Plan (A) materially increasing the number of shares
authorized under the Plan, (B) expanding the types of Awards that may be granted
under the Plan, (C) materially expanding the class of participants eligible to
participate in the Plan, or (D) deleting or limiting any provisions prohibiting
repricing of options shall be effective unless stockholder approval is obtained.
In addition, if at any time the approval of the Company's stockholders is
required as to any other modification or amendment under Section 422 of the Code
or any successor provision with respect to Incentive Stock Options, the Board
may not effect such modification or amendment without such approval.
(e) Provisions for Foreign Participants. The Board may modify Awards
granted to Participants who are foreign nationals or employed outside the United
States or establish subplans or procedures under the Plan to recognize
differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.
15
(f) Compliance With Code Section 409A. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the
Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code.
(g) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.