Exhibit 10.251
THE CHARLES SCHWAB CORPORATION
2001 STOCK INCENTIVE PLAN
as Amended May 9, 2003
Article 1. Introduction.
The Plan was adopted by the Board of Directors on February 28, 2001.
The purpose of this Plan is to promote the long-term success of the Company and
the creation of incremental stockholder value by (a) encouraging Non-Employee
Directors and Key Employees to focus on long-range objectives, (b) encouraging
the attraction and retention of Non-Employee Directors and Key Employees with
exceptional qualifications and (c) linking Non-Employee Directors and Key
Employees directly to stockholder interests. The Plan seeks to achieve this
purpose by providing for Awards in the form of Restricted Shares, Performance
Share Awards or Options, which may constitute incentive stock options or
nonstatutory stock options. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
Article 2. Administration.
2.1 The Committee. The Plan shall be administered by the Committee.
The Committee shall consist of two or more Directors, who shall be appointed by
the Board.
2.2 Committee Responsibilities. The Committee shall select the Key
Employees who are to receive Awards under the Plan, determine the amount,
vesting requirements and other conditions of such Awards, may interpret the
Plan, and make all other decisions relating to the operation of the Plan. The
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
Article 3. Limitations on Awards.
The aggregate number of Restricted Shares, Performance Share Awards
and Options awarded under the Plan shall not exceed 70,000,000. If any
Restricted Shares, Performance Share Awards or Options are forfeited, or if any
Performance Share Awards terminate for any other reason without the associated
Common Shares being issued, or if any Options terminate for any other reason
before being exercised, then such Restricted Shares, Performance Share Awards or
Options shall again become available for Awards under the Plan.
Subject to the overall limit on the aggregate shares set forth above,
the following limitations shall apply: (a) The maximum number of Common Shares
which may be granted subject to an Option to any one Participant in any one
fiscal year shall be 5,000,000; and (b) The maximum number of Restricted Shares
or Performance Share Awards which may be granted to any one Participant in any
one fiscal year shall be 1,000,000. The limitations set forth in the preceding
sentence shall be subject to adjustment pursuant to Article 10; and
The limitations of this Article 3 shall each be subject to adjustment
pursuant to Article 10. Any Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares.
Article 4. Eligibility.
4.1 General Rule. Key Employees and Non-Employee Directors shall be
eligible for designation as Participants by the Committee.
4.2 Non-Employee Directors. In addition to any awards pursuant to
Section 4.1, Non-Employee Directors shall be entitled to receive the automatic
Awards described in this Section 4.2.
(a) Each Non-Employee Director shall receive a NQSO covering 5,000
Common Shares for each Award Year with respect to which he or she
serves as a Non-Employee Director on the grant date described in
subsection (d) below and subject to the other conditions set forth in
subsection (d); and
(b) Each Non-Employee Director shall receive an automatic award of
Restricted Shares covering a number of Shares for each Award Year with
respect to which he or she serves as a Non-Employee Director on the
grant date described in subsection (d) below, to be calculated by
dividing $50,000 by the Fair Market Value of the Restricted Shares on
the grant date described in subsection (d) below; and
(c) Upon joining the Board, each Non-Employee Director shall become
entitled to receive a NQSO covering 5,000 Common Shares. Such NQSO
shall be granted on the date of the first meeting of the Board of
Directors following the date such individual becomes a Director, shall
be exercisable in full at all times during its term, and shall be
subject to the conditions (other than date of grant) set forth in
subsection (d).
(d) The Awards described in subsections (a) and (b) for a particular
Award Year shall be granted to each Non-Employee Director as of May 15
of each Award Year, and if May 15 is not a business day, then the
Award shall be granted on and as of the next succeeding business day.
Each NQSO shall be subject to the following terms and conditions:
(1) The term of each NQSO shall be 10 years; provided,
however, that any unexercised NQSO shall expire on the
earlier of the date 10 years after the date of grant or
three (3) months following the date that the Optionee ceases
to be a Non-Employee Director or a Key Employee for any
reason other than retirement, death or disability. If an
Optionee ceases to be a Non-Employee Director or Key
Employee on account of death or disability, any unexercised
NQSO shall expire on the earlier of the date 10 years after
the date of grant or one year after the date of death or
disability of such Director, and if an Optionee ceases to be
a Non-Employee Director or Key Employee on account of
retirement, any unexercised NQSO shall expire on the earlier
of the date 10 years after the date of grant or two years
after the date of retirement of such Director; and
(2) The Exercise Price under each NQSO shall be equal to the
Fair Market Value on the date of grant and shall be payable
in any of the forms described in Article 6.
(e) The Awards described in subsections (a) and (b) shall become
vested and exercisable in accordance with the following schedule:
1st anniversary of grant date: 25%
2nd anniversary of grant date: 50%
3rd anniversary of grant date: 100%
Provided that Awards will become 100% vested on a Director's death,
disability or retirement from the Board. For purposes of this Section
4.2, retirement shall mean a Director's resignation or removal from
the Board at any time after the Director has either attained age 70 or
completed five years of service as a Director.
4.3 Ten-Percent Stockholders. A Key Employee who owns more than 10
percent of the total combined voting power of all classes of outstanding stock
of the Company or any of its Subsidiaries shall not be eligible for the grant of
an ISO unless (a) the Exercise price under such ISO is at least 110 percent of
the Fair Market Value of a Common Share on the date of grant and (b) such ISO by
its terms is not exercisable after the expiration of five years from the date of
grant.
4.4 Attribution Rules. For purposes of Section 4.3, in determining
stock ownership, a Key Employee shall be deemed to own the stock owned, directly
or indirectly, by or for his or her brothers, sisters, spouse, ancestors or
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which the Key Employee holds an option shall not be counted.
4.5 Outstanding Stock. For purposes of Section 4.3, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the ISO to the Key Employee. "Outstanding stock" shall not include
treasury shares or shares authorized for issuance under outstanding options held
by the Key Employee or by any other person.
4.6 Options Issued To Non-Employee Directors In Lieu of Fee Deferrals.
In addition to any awards pursuant to Sections 4.1 and 4.2, a Non-Employee
Director who elects to defer the receipt of amounts pursuant to Section 5.1 of
The Charles Schwab Corporation Directors' Deferred Compensation Plan (the
"Directors Deferred Compensation Plan") and elects to receive stock options in
lieu of a Deferral Account balance pursuant to Section 5.4(2) of the Directors
Deferred Compensation Plan, shall be entitled to receive a grant of NQSOs
hereunder on the date the amounts would have been payable to the Non-Employee
Director if the Non-Employee Director had not made such deferral election. Any
NQSOs issued pursuant to this Section shall be issued pursuant to the terms set
forth in subsections (c), (d) and (e) of Section 4.2 hereof.
4.7 Performance Shares Issued To Non-Employee Directors Pursuant to
Fee Deferrals. In addition to any awards pursuant to Sections 4.1 and 4.2, a
Non-Employee Director who elects to defer the receipt of amounts pursuant to
Section 5.1 of The Directors' Deferred Compensation Plan and elects to receive
payment in Shares pursuant to Section 5.4(1) of the Directors Deferred
Compensation Plan, shall be entitled to receive a grant of Performance Shares
hereunder on the date the amounts would have been payable to the Non-Employee
Director if the Non-Employee Director had not made such deferral election. For
purposes of this section, the term Non-Employee Director shall also include
non-employee directors of any Subsidiary, if the Committee has approved
participation in the Directors Deferred Compensation Plan for such Subsidiary's
non-employee directors.
Article 5. Options.
5.1 Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan, and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical. The
Committee may designate all or any part of an Option as an ISO (or, in the case
of a Key Employee who is subject to the tax laws of a foreign jurisdiction, as
an option qualifying for favorable tax treatment under the laws of such foreign
jurisdiction), except for Options granted to Non-Employee Directors.
5.2 Options Nontransferability. Subject to the provisions of Section
14.2, no Option granted under the Plan shall be transferable by the Optionee
other than by will or the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or her. No Option or
interest therein may be transferred, assigned, pledged or hypothecated by the
Optionee during his or her lifetime, whether by operation of law or otherwise,
or be made subject to execution, attachment or similar process.
5.3 Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10. Each Stock Option
Agreement shall also specify whether the Option is an ISO or an NQSO.
5.4 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price under an Option shall not be less than 100
percent of the Fair Market Value of a Common Share on the date of grant, except
as otherwise provided in Section 4.3. Subject to the preceding sentence, the
Exercise Price under any Option shall be determined by the Committee. The
Exercise Price shall be payable in accordance with Article 6.
5.5 Exercisability and Term. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option. The term of an
ISO shall in no event exceed 10 years from the date of grant, and Section 4.3
may require a shorter term. Subject to the preceding sentence, the Committee
shall determine when all or any part of an Option is to become exercisable and
when such Option is to expire; provided that, in appropriate cases, the Company
shall have the discretion to extend the term of an Option or the time within
which, following termination of employment, an Option may be exercised, or to
accelerate the exercisability of an Option. A Stock Option Agreement may provide
for expiration prior to the end of its term in the event of the termination of
the Optionee's employment and shall provide for the suspension of vesting when
an employee is on a leave of absence for a period in excess of six months in
appropriate cases, as determined by the Company; provided that, except to the
extent otherwise specified by the Committee at the time of grant, (i) the
exercisability of Options shall be accelerated in the event of the Participant's
death or Disability; (ii) in the case of Retirement, the exercisability of all
outstanding Options shall be accelerated, other than any Options that had been
granted within two years of the date of the Optionee's Retirement; and (iii)
vesting shall be suspended when an employee is on a leave of absence for a
period in excess of six months in appropriate cases, as determined by the
Company. Except as provided in Section 4.2, NQSOs may also be awarded in
combination with Restricted Shares, and such an Award may provide that the NQSOs
will not be exercisable unless the related Restricted Shares are forfeited. In
addition, NQSOs granted under this Section 5 may be granted subject to
forfeiture provisions which provide for forfeiture of the Option upon the
exercise of tandem awards, the terms of which are established in other programs
of the Company.
5.6 Limitation on Amount of ISOs. The aggregate fair market value
(determined at the time the ISO is granted) of the Common Shares with respect to
which ISOs are exercisable for the first time by the Optionee during any
calendar year (under all incentive stock option plans of the Company) shall not
exceed $100,000; provided, however, that all or any portion of an Option which
cannot be exercised as an ISO because of such limitation shall be treated as an
NQSO.
5.7 Effect of Change in Control. The Committee (in its sole
discretion) may determine, at the time of granting an Option, that such Option
shall become fully exercisable as to all Common Shares subject to such Option
immediately preceding any Change in Control with respect to the Company.
5.8 Restrictions on Transfer of Common Shares. Any Common Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions shall be set
forth in the applicable Stock Option Agreement and shall apply in addition to
any general restrictions that may apply to all holders of Common Shares.
5.9 Authorization of Replacement Options. Concurrently with the grant
of any Option to a Participant (other than NQSOs granted pursuant to Section
4.2), the Committee may authorize the grant of Replacement Options. If
Replacement Options have been authorized by the Committee with respect to a
particular award of Options (the "Underlying Options"), the Option Agreement
with respect to the Underlying Options shall so state, and the terms and
conditions of the Replacement Options shall be provided therein. The grant of
any Replacement Options shall be effective only upon the exercise of the
Underlying Options through the use of Common Shares pursuant to Section 6.2 or
Section 6.3. The number of Replacement Options shall equal the number of Common
Shares used to exercise the Underlying Options, and, if the Option Agreement so
provides, the number of Common Shares used to satisfy any tax withholding
requirements incident to the exercise of the Underlying Options in accordance
with Section 13.2. Upon the exercise of the Underlying Options, the Replacement
Options shall be evidenced by an amendment to the Underlying Option Agreement.
Notwithstanding the fact that the Underlying Option may be an ISO, a Replacement
Option is not intended to qualify as an ISO. The Exercise Price of a Replacement
Option shall be no less than the Fair Market Value of a Common Share on the date
the grant of the Replacement Option becomes effective. The term of each
Replacement Option shall be equal to the remaining term of the Underlying
Option. No Replacement Options shall be granted to Optionees when Underlying
Options are exercised pursuant to the terms of the Plan and the Underlying
Option Agreement following termination of the Optionee's employment. The
Committee, in its sole discretion, may establish such other terms and conditions
for Replacement Options as it deems appropriate.
5.10 Options Granted to Non-United States Key Employees. In the case
of Key Employees who are subject to the tax laws of a foreign jurisdiction, the
Company may issue Options to such Key Employees that contain terms required to
conform with any requirements for favorable tax treatment imposed by the laws of
such foreign jurisdiction, or as otherwise may be required by the laws of such
foreign jurisdiction. The terms of any such Options shall be governed by the
Plan, subject to the terms of any Addendum to the Plan specifically applicable
to such Options.
5.11 Effect of Job Elimination. Notwithstanding anything to the
contrary contained in the Plan or in any Stock Option Agreement or Stock Award
Agreement entered into with respect to an Award pursuant to the Plan, in the
case of a Participant who is an Officer, and who becomes entitled to receive
payments with respect to a Severance Period pursuant to the Charles Schwab
Severance Pay Plan (the "Severance Plan") on account of a Job Elimination, the
terms of the Plan and any Stock Option Agreement or Stock Award Agreement
entered into with respect to an Award shall be applied by treating the
Participant as if the Participant had terminated employment on the Participant's
Termination Date. For purposes of applying this Section, the terms Officer,
Severance Period, Termination Date, and Job Elimination shall have the meanings
set forth in the Severance Plan.
Article 6. Payment for Option Shares.
6.1 General Rule. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash at the time when such Common
Shares are purchased, except that the Company may at any time accept payment
pursuant to Section 6.2 or 6.3.
6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which are surrendered to the Company. Such Common Shares shall be
valued at their Fair Market Value on the date when the new Common Shares are
purchased under the Plan. In the event that the Common Shares being surrendered
are Restricted Shares that have not yet become vested, the same restrictions
shall be imposed upon the new Common Shares being purchased.
6.3 Exercise/Sale. To the extent this Section 6.3 is applicable,
payment may be made by the delivery (in a manner prescribed by the Company) of
an irrevocable direction to Charles Schwab & Co., Inc. to sell Common Shares
(including the Common Shares to be issued upon exercise of the Options) and to
deliver all or part of the sales proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.
Article 7. Restricted Shares and Performance Share Awards.
7.1 Time, Amount and Form of Awards. The Committee may grant
Restricted Shares or Performance Share Awards with respect to an Award Year
during such Award Year or at any time thereafter. Each such Award shall be
evidenced by a Stock Award Agreement between the Award recipient and the
Company. The amount of each Award of Restricted Shares or Performance Share
Awards shall be determined by the Committee. Awards under the Plan may be
granted in the form of Restricted Shares or Performance Share Awards or in any
combination thereof, as the Committee shall determine at its sole discretion at
the time of the grant. Restricted Shares or Performance Share Awards may also be
awarded in combination with NQSOs, and such an Award may provide that the
Restricted Shares or Performance Share Awards will be forfeited in the event
that the related NQSOs are exercised.
7.2 Payment for Restricted Share Awards. To the extent that an Award
is granted in the form of Restricted Shares, the Award recipient, as a condition
to the grant of such Award, shall be required to pay the Company in cash an
amount equal to the par value of such Restricted Shares.
7.3 Vesting or Issuance Conditions. Each Award of Restricted Shares
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. Common Shares shall be issued
pursuant to Performance Share Awards in full or in installments upon
satisfaction of the issuance conditions specified in the Stock Award Agreement.
The Committee shall select the vesting conditions in the case of Restricted
Shares, or issuance conditions in the case of Performance Share Awards, which
may be based upon the Participant's service, the Participant's performance, the
Company's performance or such other criteria as the Committee may adopt;
provided that, in the case of an Award of Restricted Shares where vesting is
based entirely on the Participant's service (except to the extent otherwise
specified by the Committee at the time of grant), (i) vesting shall be
accelerated in the event of the Participant's death or Disability; (ii) in the
case of Retirement, vesting shall be accelerated for all Restricted Shares that
had been granted more than two years prior to the date of the Participant's
Retirement; and (iii) vesting shall be suspended when an employee is on a leave
of absence for a period in excess of six months in appropriate cases, as
determined by the Company. The Committee, in its sole discretion, may determine,
at the time of making an Award of Restricted Shares, that such Award shall
become fully vested in the event that a Change in Control occurs with respect to
the Company. The Committee, in its sole discretion, may determine, at the time
of making a Performance Share Award, that the issuance conditions set forth in
such Award shall be waived in the event that a Change in Control occurs with
respect to the Company.
7.4 Form of Settlement of Performance Share Awards. Settlement of
Performance Share Awards shall only be made in the form of Common Shares. Until
a Performance Share Award is settled, the number of Performance Share Awards
shall be subject to adjustment pursuant to Article 10.
7.5 Death of Recipient. Any Common Shares that are to be issued
pursuant to a Performance Share Award after the recipient's death shall be
delivered or distributed to the recipient's beneficiary or beneficiaries. Each
recipient of a Performance Share Award under the Plan shall designate one or
more beneficiaries for this purpose by filing the prescribed form with the
Company. A beneficiary designation may be changed by filing the prescribed form
with the Company at any time before the Award recipient's death. If no
beneficiary was designated or if no designated beneficiary survives the Award
recipient, then any Common Shares that are to be issued pursuant to a
Performance Share Award after the recipient's death shall be delivered or
distributed to the recipient's estate. The Committee, in its sole discretion,
shall determine the form and time of any distribution(s) to a recipient's
beneficiary or estate.
Article 8. Claims Procedures.
Claims for benefits under the Plan shall be filed in writing with the
Committee on forms supplied by the Committee. Written notice of the disposition
of a claim shall be furnished to the claimant within 90 days after the claim is
filed. If the claim is denied, the notice of disposition shall set forth the
specific reasons for the denial, citations to the pertinent provisions of the
Plan, and, where appropriate, an explanation as to how the claimant can perfect
the claim. If the claimant wishes further consideration of his or her claim, the
claimant may appeal a denied claim to the Committee (or to a person designated
by the Committee) for further review. Such appeal shall be filed in writing with
the Committee on a form supplied by the Committee, together with a written
statement of the claimant's position, no later than 90 days following receipt by
the claimant of written notice of the denial of his or her claim. If the
claimant so requests, the Committee shall schedule a hearing. A decision on
review shall be made after a full and fair review of the claim and shall be
delivered in writing to the claimant no later than 60 days after the Committee's
receipt of the notice of appeal, unless special circumstances (including the
need to hold a hearing) require an extension of time for processing the appeal,
in which case a written decision on review shall be delivered to the claimant as
soon as possible but not later than 120 days after the Committee's receipt of
the appeal notice. The claimant shall be notified in writing of any such
extension of time. The written decision on review shall include specific reasons
for the decision, written in a manner calculated to be understood by the
claimant, and shall specifically refer to the pertinent Plan provisions on which
it is based. All determinations of the Committee shall be final and binding on
Participants and their beneficiaries.
Article 9. Voting Rights and Dividends.
9.1 Restricted Shares. All holders of Restricted Shares shall have the
same voting, dividend, and other rights as the Company's other stockholders.
9.2 Performance Share Awards. The holders of Performance Share Awards
shall have no voting or dividend rights until such time as any Common Shares are
issued pursuant thereto, at which time they shall have the same voting, dividend
and other rights as the Company's other stockholders.
Article 10. Protection Against Dilution; Adjustment of Awards.
10.1 General. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares, a combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a spinoff
or a similar occurrence, the Committee shall make appropriate adjustments in one
or more of (a) the number of Options, Restricted Shares and Performance Share
Awards available for future Awards under Article 3, (b) the maximum number of
Common Shares which may be granted under Article 3 to any one Participant in any
one fiscal year either subject to an Option or as Restricted Shares or
Performance Share Awards, (c) the number of Performance Share Awards included in
any prior Award which has not yet been settled, (d) the number of Common Shares
covered by each outstanding Option or (e) the Exercise Price under each
outstanding Option.
10.2 Reorganizations. Subject to the provisions of Section 5.7, in the
event that the Company is a party to a merger or other reorganization,
outstanding Options, Restricted Shares and Performance Share Awards shall be
subject to the agreement of merger or reorganization. Such agreement may
provide, without limitation, for the assumption of outstanding Awards by the
surviving corporation or its parent, for their continuation by the Company (if
the Company is a surviving corporation), for accelerated vesting or for
settlement in cash.
10.3 Reservation of Rights. Except as provided in this Article 10, a
Participant shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class. Any issue by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Common
Shares subject to an Option. The grant of an Award pursuant to the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
Article 11. Limitation of Rights.
11.1 Employment Rights. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain employed by
the Company or any Subsidiary. The Company and its Subsidiaries reserve the
right to terminate the employment of any employee at any time, with or without
cause, subject only to a written employment agreement (if any).
11.2 Stockholders' Rights. A Participant shall have no dividend
rights, voting or other rights as a stockholder with respect to any Common
Shares covered by his or her Award prior to the issuance of such Common Shares,
whether by issuance of a certificate, book entry or other procedure. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date when such certificate is issued, except as expressly
provided in Articles 7, 9 and 10.
11.3 Creditors' Rights. A holder of Performance Share Awards shall
have no rights other than those of a general creditor of the Company.
Performance Share Awards represent unfunded and unsecured obligations of the
Company, subject to the terms and conditions of the applicable Stock Award
Agreement.
11.4 Government Regulations. Any other provision of the Plan
notwithstanding, the obligations of the Company with respect to Common Shares to
be issued pursuant to the Plan shall be subject to all applicable laws, rules
and regulations, and such approvals by any governmental agencies as may be
required. The Company reserves the right to restrict, in whole or in part, the
delivery of Common Shares pursuant to any Award until such time as:
(a) Any legal requirements or regulations have been met relating to
the issuance of such Common Shares or to their registration,
qualification or exemption from registration or qualification under
the Securities Act of 1933, as amended, or any applicable state
securities laws; and
(b) Satisfactory assurances have been received that such Common
Shares, when issued, will be duly listed on the New York Stock
Exchange or any other securities exchange on which Common Shares are
then listed.
Article 12. Limitation of Payments.
12.1 Basic Rule. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer in
the nature of compensation to or for the benefit of a Participant, whether paid
or payable (or transferred or transferable) pursuant to the terms of this Plan
or otherwise (a "Payment"), would be nondeductible for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount; provided, however, that
the Committee, at the time of making an Award under this Plan or at any time
thereafter, may specify in writing that such Award shall not be so reduced and
shall not be subject to this Article 12. For purposes of this Article 12, the
"Reduced Amount" shall be the amount, expressed as a present value, which
maximizes the aggregate present value of the Payments without causing any
Payment to be nondeductible by the Company because of section 280G of the Code.
12.2 Reduction of Payments. If the Auditors determine that any Payment
would be nondeductible because of section 280G of the Code, then the Company
shall promptly give the Participant notice to that effect and a copy of the
detailed calculation thereof and of the Reduced Amount, and the Participant may
then elect, in his or her sole discretion, which and how much of the Payments
shall be eliminated or reduced (as long as after such election, the aggregate
present value of the Payments equals the Reduced Amount) and shall advise the
Company in writing of his or her election within 10 days of receipt of notice.
If no such election is made by the Participant within such 10-day period, then
the Company may elect which and how much of the Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Payments equals the Reduced Amount) and shall notify the Participant promptly of
such election. For purposes of this Article 12, present value shall be
determined in accordance with section 280G(d)(4) of the Code. All determinations
made by the Auditors under this Article 12 shall be binding upon the Company and
the Participant and shall be made within 60 days of the date when a Payment
becomes payable or transferable. As promptly as practicable following such
determination and the elections hereunder, the Company shall pay or transfer to
or for the benefit of the Participant such amounts as are then due to him or her
under the Plan, and shall promptly pay or transfer to or for the benefit of the
Participant in the future such amounts as become due to him or her under the
Plan.
12.3 Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company on demand, together with interest at the applicable federal rate
provided in section 7872(f)(2) of the Code; provided, however, that no amount
shall be payable by the Participant to the Company if and to the extent that
such payment would not reduce the amount which is subject to taxation under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in section 7872(f)(2) of
the Code.
12.4 Related Corporations. For purposes of this Article 12, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
Article 13. Withholding Taxes.
13.1 General. To the extent required by applicable federal, state,
local or foreign law, the recipient of any payment or distribution under the
Plan shall make arrangements satisfactory to the Company for the satisfaction of
any withholding tax obligations that arise by reason of such payment or
distribution. The Company shall not be required to make such payment or
distribution until such obligations are satisfied.
13.2 Nonstatutory Options, Restricted Shares or Performance Share
Awards. The Committee may permit an Optionee who exercises NQSOs, or who
receives Awards of Restricted Shares, or who receives Common Shares pursuant to
the terms of a Performance Share Award, to satisfy all or part of his or her
withholding tax obligations by having the Company withhold a portion of the
Common Shares that otherwise would be issued to him or her under such Awards.
Such Common Shares shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash. The payment of withholding taxes by
surrendering Common Shares to the Company, if permitted by the Committee, shall
be subject to such restrictions as the Committee may impose, including any
restrictions required by rules of the Securities and Exchange Commission.
Article 14. Assignment or Transfer of Award.
14.1 General Rule. Any Award granted under the Plan shall not be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor's process, whether voluntarily, involuntarily or by
operation of law, except to the extent specifically permitted by Section 14.2.
14.2 Exceptions to General Rule. Notwithstanding Section 14.1, this
Plan shall not preclude (i) a Participant from designating a beneficiary to
succeed, after the Participant's death, to those of the Participant's Awards
(including without limitation, the right to exercise any unexercised Options) as
may be determined by the Company from time to time in its sole discretion, (ii)
a transfer of any Award hereunder by will or the laws of descent or
distribution, or (iii) a voluntary transfer of an Award (other than an ISO) to a
trust, partnership or limited liability company for the benefit of one or more
members of the Participant's family, subject to the prior approval of the
Committee or its designee; provided that, in the case of an Award granted prior
to September 25, 2002, such approval shall not be required for a transfer to a
trust or partnership if the Participant has sole investment control over such
trust or partnership
Article 15. Future of Plans.
15.1 Term of the Plan. The Plan, as set forth herein, shall become
effective on May 7, 2001. The Plan shall remain in effect until it is terminated
under Section 15.2, except that no ISOs shall be granted after May 6, 2011.
15.2 Amendment or Termination. The Committee may, at any time and for
any reason, amend or terminate the Plan; provided, however, that any amendment
of the Plan shall be subject to the approval of the Company's stockholders to
the extent required by applicable laws, regulations or rules.
15.3 Effect of Amendment or Termination. No Award shall be made under
the Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not affect any Option, Restricted Share or Performance
Share Award previously granted under the Plan.
Article 16. Definitions.
16.1 "Award" means any award of an Option, a Restricted Share or a
Performance Share Award under the Plan.
16.2 "Award Year" means a fiscal year beginning January 1 and ending
December 31 with respect to which an Award may be granted.
16.3 "Board" means the Company's Board of Directors, as constituted
from time to time.
16.4 "Change in Control" means the occurrence of any of the following
events after the effective date of the Plan as set out in Section 15.1:
(a) A change in control required to be reported pursuant to Item 6(e)
of Schedule 14A of Regulation 14A under the Exchange Act;
(b) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who
either (i) had been directors of the Company 24 months prior to such
change or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the directors who
had been directors of the Company 24 months prior to such change and
who were still in office at the time of the election or nomination;
(c) Any "person" (as such term is used in sections 13(d) and 14(d) of
the Exchange Act) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20 percent or
more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the
"Base Capital Stock"); provided, however, that any change in the
relative beneficial ownership of securities of any person resulting
solely from a reduction in the aggregate number of outstanding shares
of Base Capital Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until such person
increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company.
16.5 "Code" means the Internal Revenue Code of 1986, as amended.
16.6 "Committee" means the Compensation Committee of the Board, as
constituted from time to time.
16.7 "Common Share" means one share of the common stock of the
Company.
16.8 "Company" means The Charles Schwab Corporation, a Delaware
corporation.
16.9 "Disability" means the inability to engage in any substantial
gainful activity considering the Participant's age, education and work
experience by reason of any medically determined physical or mental impairment
that has continued without interruption for a period of at least six months and
that can be expected to be of long, continued and indefinite duration. All
determinations as to whether a Participant has incurred a Disability shall be
made by the Employee Benefits Administration Committee of the Company, the
findings of which shall be final, binding and conclusive.
16.10 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
16.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
16.12 "Exercise Price" means the amount for which one Common Share may
be purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
16.13 "Fair Market Value" means the market price of a Common Share,
determined by the committee as follows:
(a) If the Common Share was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing
price reported by the applicable composite-transactions report for
such date;
(b) If the Common Share was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair
Market Value shall be equal to the last transaction price quoted by
the NASDAQ system for such date;
(c) If the Common Share was traded over-the-counter on the date in
question but was not classified as a national market issue, then the
Fair Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for
such date; and
(d) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
16.14 "ISO" means an incentive stock option described in section
422(b) of the Code.
16.15 "Key Employee" means (1) a key common-law employee of the
Company or any Subsidiary, as determined by the Committee, or (2) a non-employee
director of any Subsidiary, as determined by the Committee.
16.16 "Named Executive Officer" means a Participant who, as of the
date of vesting of an Award is one of a group of "covered employees," as defined
in the Regulations promulgated under Code Section 162(m), or any successor
statute.
16.17 "Non-Employee Director" means a member of the Board who is not a
common-law employee.
16.18 "NQSO" means an employee stock option not described in sections
422 through 424 of the Code.
16.19 "Option" means an ISO or NQSO or, in the case of a Key Employee
who is subject to the tax laws of a foreign jurisdiction, an option qualifying
for favorable tax treatment under the laws of such jurisdiction, including a
Replacement Option, granted under the Plan and entitling the holder to purchase
one Common Share.
16.20 "Optionee" means an individual, or his or her estate, legatee or
heirs at law that holds an Option.
16.21 "Participant" means a Non-Employee Director or Key Employee who
has received an Award.
16.22 "Performance Share Award" means the conditional right to receive
in the future one Common Share, awarded to a Participant under the Plan.
16.23 "Plan" means this 1992 Stock Incentive Plan of The Charles
Schwab Corporation, as it may be amended from time to time.
16.24 "Replacement Option" means an Option that is granted when a
Participant uses a Common Share held or to be acquired by the Participant to
exercise an Option and/or to satisfy tax withholding requirements incident to
the exercise of an Option.
16.25 "Restricted Share" means a Common Share awarded to a Participant
under the Plan.
16.26 "Retirement" shall mean any termination of employment of an
Optionee for any reason other than death at any time after the Optionee has
attained Retirement Age. For this purpose, Retirement Age shall mean age fifty
(50), but only if, at the time of such termination, the Participant has been
credited with at least seven (7) Years of Service under the SchwabPlan
Retirement Savings and Investment Plan; provided, however, that if at the time
of grant of an Option an Optionee is a Participant in a qualified retirement
plan maintained by a Subsidiary (other than the SchwabPlan Retirement Savings
and Investment Plan), then Retirement Age shall have the same meaning as the
Normal Retirement Date as defined in such plan.
16.27 "Stock Award Agreement" means the agreement between the Company
and the recipient of a Restricted Share or Performance Share Award which
contains the terms, conditions and restrictions pertaining to such Restricted
Share or Performance Share Award.
16.28 "Stock Option Agreement" means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her option.
16.29 "Subsidiary" means any corporation or other entity, if the
Company and/or one or more other Subsidiaries own not less than 50 percent of
the total combined voting power of all classes of outstanding stock of such
corporation (or ownership interest of such other entity). A corporation or other
entity that attains the status of a Subsidiary on a date after the adoption of
the Plan shall be considered a Subsidiary commencing as of such date.
ADDENDUM
THE UNITED KINGDOM 2001 OFFICER SHARE OPTION SCHEME
OF THE CHARLES SCHWAB CORPORATION
This Addendum to The Charles Schwab Corporation 2001 Stock Incentive Plan (the
"2001 Plan") shall constitute the rules of the United Kingdom 2001 Officer Share
Option Scheme ("Scheme") of The Charles Schwab Corporation (the "Company"), as
approved by the United Kingdom's Board of Inland Revenue ("Inland Revenue")
under Schedule 9 to the United Kingdom's Income and Corporation Taxes Act 1988
(the "Act").
Definitions
1 Except as specifically set forth in this Addendum, the terms and conditions
of the 2001 Plan shall apply to the scheme. In addition, the following
definitions will apply to this Scheme:
1.1 References to the "Act" are to the United Kingdom's Income and
Corporation Taxes Act 1998.
1.2 The expression "New Option" means an Option over shares in the
Acquiring Company (as defined in rule 5.2) or some other company
falling within paragraph 10(b) or 10(c) of Schedule 9 to the Act,
meeting the requirements of sub-paragraphs 15(3)(a) to (d) of Schedule
9 to the Act, granted in consideration of the release of a subsisting
Option within the "appropriate period" (as defined by paragraph 15(2)
of Schedule 9 to the Act).
1.3 The expression "Option-holder" means the person to whom an option has
been granted under this Scheme and references to "Optionee" in the
2001 Plan shall be construed accordingly.
1.4 The expression "Participating Company" means the Company and any
company which is under the control of the Company, within the meaning
of section 840 of the Act, and to which the Committee shall have
resolved that this Scheme shall for the time being extend.
1.5 References to "Qualifying Shares" in this Addendum are references to
Shares which satisfy the requirements of paragraphs 10 to 14 of
Schedule 9 to the Act.
1.6 References to "Shares" in this addendum are references to shares or
shares of Common Stock in the Company.
Eligibility and Grant
2.1 Options may only be granted under the Scheme to a Key Employee who is an
employee (other than one who is a director) or a full-time director of a
Participating Company, and for this purpose a person shall be treated as a
full-time director of a Participating Company if he is obliged to devote
not less than 25 hours a week, excluding meal breaks, to the performance of
the duties of his office or employment with that company (or with that
company and any other company which is a Participating Company). References
in the 2001 Plan to "employee" shall be construed accordingly.
2.2 No Options under this Scheme may be granted to, or exercised by, a person
who is not eligible to participate by virtue of paragraph 8 of Schedule 9
to the Act, as modified by section 187 (3) (a) of the Act.
2.3 No Option may be granted at a time when the Shares over which it is granted
are not Qualifying Shares.
2.4 For the purposes of Article 5.4 of the 2001 Plan, the Fair Market Value, as
determined by the Committee in respect of any Option under this Scheme,
shall be as defined in Article16.13(a) of the 2001 Plan if the Stock
Exchange referred to in that Article is the New York Stock Exchange and the
closing price referred to in that Article is the closing price on the New
York Stock Exchange and in any other case shall be not less than the market
value of the shares on the date of grant(or such earlier date as may be
agreed with the Board of the Inland Revenue) and agreed in advance with the
United Kingdom Inland Revenue Shares Valuation Division.
2.5 Only Options (as defined in the 2001 Plan) shall be granted under this
Scheme and no Replacement Options, Restricted Shares or Performance Share
Awards as outlined in Articles 5.9 and 7 of the 2001 Plan shall be granted
under this Scheme. Articles 5.9, 7, 9 and 12 of the 2001 Plan shall not
apply for the purposes of this Scheme and an Option granted under the
Scheme need not comply with the requirement in the second sentence of
Article 5.3. No Options shall be granted under this Scheme pursuant to
Articles 4.6 or 4.7 of the 2001 Plan.
2.6 No Option granted under this Scheme shall be exercisable more than ten
years after the date the Option is granted.
Limitation on Awards
3. For the purposes of Article 3 of the 2001 Plan, any Option granted under
this Scheme to any person shall be limited and take effect so that the
sterling equivalent of the amount payable on the exercise of such Option,
when added to the aggregate sterling equivalent of amounts payable on the
exercise of options over Shares which are capable of being acquired under
subsisting rights obtained by the Participant under this Scheme or any
other share option scheme established by the Company or any associated
company (within the meaning contained in section 416 of the Act) of the
Company and approved under Schedule 9 to the Act (but excluding any rights
obtained under a savings related share option scheme) shall not exceed the
limit set out in paragraph 28 of Schedule 9 to the Act.
For the purposes of this Scheme, the sterling equivalent of any amount
payable on the exercise of an option shall be the amount converted into
pounds sterling at the highest buying rate shown in the day's spread as
published in the Financial Times for the date of grant of such option or at
such other rate as may be agreed from time to time with the United Kingdom
Inland Revenue Shares Valuation Division.
Exercise
4.1 No Option may be exercised whilst this Scheme is and is intended to remain
approved by the Inland Revenue unless the Shares which would be acquired
are Qualifying Shares.
4.2 Any terms and conditions imposed by the Committee under Article 5.1 of the
2001 Plan for the exercise of Options granted under this Scheme shall be
factual and objective and laid down at the time of grant. Any such terms or
conditions shall not be amended or waived after the time of grant unless
they relate to performance targets and event or events have occurred such
that the Committee reasonably believes that the original conditions as
amended or waived will be a fairer measure and would not be more difficult
to satisfy than the original condition. Any other terms determined by the
Company may only be imposed if they otherwise comply with the requirements
set out in Schedule 9 to the Act.
4.3 Notwithstanding Article 5.2 of the 2001 Plan, no Option may be transferred
by will, and on the death of the Option-holder any subsisting Option may be
exercised by his personal representatives not later than one year after the
date of his death. Article 14.2 of the 2001 Plan shall not apply.
4.4 Article 5.5 of the 2001 Plan shall not apply to this Scheme. Each Stock
Option Agreement shall specify when issued on grant the date when all or
any installment of the Option is to become exercisable including whether
there shall be any acceleration of vesting on certain events (the vesting
of the Option). The Stock Option Agreement shall also specify the term of
the Option. Any subsisting Options may be exercised by the Participant or,
if deceased, by his personal representatives in whole or in part (including
any unvested part) at the time of or, subject to rule 4.5, at any time
following the occurrence of the earliest of the following events:
(i) the death of the Participant; and
(ii) upon the Participant ceasing to be a director or employee of a
Participating Company or the Company or any Subsidiary as defined in
Article 16.29 of the 2001 Plan where that cessation was by reason of
Disability or injury (in the latter case on the production of such
evidence as the Committee shall reasonably require to show the
Option-holder has ceased to exercise by reason of injury and is
incapable of exercising that employment and is likely to remain so
incapable for the foreseeable future) or redundancy as defined in the
Employment Rights Act 1996 or Retirement.
4.5 An Option shall lapse and become thereafter incapable of exercise on the
earliest of the following events:
(i) the tenth anniversary of the date the Option is granted;
(ii) where a Participant ceases to be a director or employee of a
Participating Company or the Company or any Subsidiary as defined in
Article 16.29 of the 2001 Plan by reason of death or Disability, or
injury the first anniversary following such cessation;
(iii)where a Participant ceases to be a director or employee of a
Participating Company or the Company or any Subsidiary as defined in
Article 16.29 of the 2001 Plan by reason of Retirement, the second
anniversary following such cessation; and
(iv) where a Participant ceases to be a director or employee of a
Participating Company or the Company or any Subsidiary as defined in
Article 16.29 of the 2001 Plan for any reason other than those set out
above, including redundancy, three months following such cessation;
and
(v) the end of the period of exercisability determined in accordance with
rule 5.
4.6 Payment for Shares on the exercise of Options granted under this Scheme
shall be in cash and not through the delivery of Shares of Common Stock or
otherwise as described in Articles 6.2 and 6.3 of the 2001 Plan.
4.7 Shares shall be issued and the Option-holder registered as a shareholder
within 30 days of receipt of a valid exercise notice.
4.8 Notwithstanding the provisions of Article 5.8 or 6.2 of the 2001 Plan, any
Shares issued upon the exercise of an Option under this Scheme shall not be
subject to any forfeiture conditions, rights of repurchase, rights of first
refusal or any other transfer restrictions that do not apply to all holders
of Shares.
4.9 Article 13 shall apply so that it is a condition of exercise that the
obligations are satisfied.
4.10 The Company shall keep available sufficient unissued Shares or Shares in
the Treasury to satisfy the exercise in full of all Options granted under
this Scheme and for the time being remaining capable of being exercised.
Takeover, Change of Control
5.1 If any person obtains control of the Company (within the meaning of section
840 of the Act) as a result of making:
(i) a general offer to acquire the whole of the issued share capital of
the Company (other than that which is already owned by him) which is
unconditional or which is made on a condition such that if it is
satisfied the person making the offer will have control of the
Company; or
(ii) a general offer to acquire all the shares (other than shares which are
already owned by him) in the Company which are of the same class as
Shares subject to a subsisting Option,
then the Committee shall notify all Participants as soon as is practicable
after the change of control. Any subsisting Option may be exercised from
the date of the receipt of that notification up to the expiry of a period
ending six months from the time when the person making the offer has
obtained control of the Company and any condition subject to which the
offer is made has been satisfied.
5.2 If as a result of the events specified in rule 5.1 an "Acquiring Company"
(as defined in paragraph 15 of Schedule 9 to the Act) has obtained control
of the Company, the Participant may, if the Acquiring Company so agrees,
release any subsisting Option he holds in consideration for the grant of a
New Option.
5.3 Where the circumstances noted in rule 5.2 apply, New Options may be granted
within the terms of paragraph 15(1) of Schedule 9 to the Act in
consideration for the release of Options previously granted under this
Scheme. Such New Options are deemed to be equivalent to the old Options and
to have been granted within the terms of this Scheme, provided the New
Options satisfy the conditions in paragraph 15(3) of Schedule 9 to the Act
and the release of the Option takes place within six months of the date the
Acquiring Company obtains control of the Company. A New Option issued in
consideration of the release of an Option shall be evidenced by an option
certificate or agreement which shall import the relevant provisions of this
Scheme.
5.4 A New Option shall, for all other purposes of this Scheme, be treated as
having been acquired at the same time as the corresponding released Option.
5.5 If any person obtains control of the Company other than as a result of the
events specified in rule 5.1, then the Committee shall notify all
Participants as soon as practicable after the change of control. Any
subsisting Option may be exercised from the date of the receipt of that
notification up to the expiry of a period ending six months from the time
when the person obtains control of the Company.
5.6 If, as a result of the events specified in rules 5.1 or 5.3, a company has
obtained control of the Company, the Committee shall be entitled at any
time to require all holders of subsisting Options to exercise those Options
within 30 days by notice in writing to the Participant to this effect.
5.7 The periods of exercisability under this rule 5 and the date of lapse under
rule 4.5 are those of whichever of the pre-conditions of rules 5.1, 5.3 or
5.4 are first achieved. The subsequent achievement of any other
pre-conditions will not cause a period of exercisability to begin nor a
date of lapse to arise.
5.8 For the purpose of this rule 5 other than rule 5.2, a person shall be
deemed to have obtained control of the Company if he and others acting in
concert with him have together obtained control of it.
5.9 The exercise of an Option pursuant to the preceding provisions of this rule
5 shall not be subject to any conditions imposed pursuant to Article 5.1 of
the 2001 Plan as amended by rule 4.2.
Employment Relationship
6. With respect to Options granted pursuant to the Scheme, Article 11 of the
2001 Plan shall be subject to the following: "Any Participant or Employee
shall waive any and all rights to compensation or damages on the
termination of his office or employment with any past or present
Participating Company or Subsidiary for any reason whatsoever insofar as
those rights arise or may arise from his ceasing to have rights under or to
be entitled to exercise any Option under this Scheme as a result of the
termination. Neither the grant of an Option nor any benefit which may
accrue to a Participant on the exercise of an Option shall form part of
that Participant's remuneration entitlement from his office or employment,
nor shall the grant of an Option create any right or entitlement on the
Participant to have any further Options granted to him under this Scheme if
at all."
Protection Against Dilution: Variation of Share Capital
7.1 With respect to Options granted pursuant to the Scheme, Article 10.1 of the
2001 Plan shall apply, but (i) with the omission of the following words and
phrases : "a declaration of a dividend payable in Common Shares", "a
declaration of a dividend payable in a form other than Common Shares", "a
spin-off or similar occurrence;" and (ii) as if the following words were
added "or any other variation of the issued Common Shares" before the words
"the Committee". Adjustments to Options, as described in Article 10 of the
2001 Plan, shall be at the discretion of the Committee and shall not be
effective under this Scheme until approved by the United Kingdom Inland
Revenue.
7.2 Article 10.2 of the 2001 Plan shall apply for the purposes of this Scheme
with the exclusion of the words "for accelerated vesting or for settlement
in cash".
Withholding Taxes
7.3 Article 13.1 of the 2001 Plan shall apply for the purposes of this scheme
with the exclusion of the last sentence.
Alteration of Scheme rules
8. The Committee may make such alterations to the provisions of this Scheme as
may be permitted by Article 15.2 of the 2001 Plan, provided that any such
alteration made at a time when this Scheme is to remain approved by the
United Kingdom Inland Revenue shall not have effect unless and until the
alteration has the prior approval in writing of the United Kingdom Inland
Revenue.