EXHIBIT 10.1
KLA-TENCOR CORPORATION
2004 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Equity Incentive Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Service Providers, and
- to promote the success of the Company's business.
Awards granted under the Plan may be Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Shares,
Performance Units or Deferred Stock Units, as determined by the Administrator at
the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Annual Revenue" means the Company's or a business unit's net
sales for the Fiscal Year, determined in accordance with generally accepted
accounting principles.
(c) "Applicable Laws" means the requirements relating to the
administration of equity compensation plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Shares are listed or quoted and the applicable
laws of any other country or jurisdiction where Awards are granted under the
Plan.
(d) "Award" means, individually or collectively, a grant under the
Plan of Options, Restricted Stock, Stock Appreciation Rights, Performance
Shares, Performance Units or Deferred Stock Units.
(e) "Award Agreement" means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan. The Award Agreement is subject to the terms and conditions of the
Plan.
(f) "Awarded Stock" means the Common Stock subject to an Award.
(g) "Board" means the Board of Directors of the Company.
(h) "Cash Position" means the Company's level of cash and cash
equivalents.
(i) "Change of Control" means the occurrence of any of the following
events, in one or a series of related transactions:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act, other than the Company, a subsidiary of the Company
or a Company employee benefit plan, including any trustee of such plan acting as
trustee, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally in the election
of directors; or
(ii) a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iii) the sale or disposition by the Company of all or
substantially all the Company's assets; or
(iv) a change in the composition of the Board, as a result of
which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are Directors as of the date this
Plan is approved by the Board, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the Incumbent
Directors and whose election or nomination was not in connection with any
transaction described in (i) or (ii) above or in connection with an actual or
threatened proxy contest relating to the election of directors of the Company.
(j) "Code" means the Internal Revenue Code of 1986, as amended.
(k) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(l) "Common Stock" means the Common Stock of the Company.
(m) "Company" means KLA-Tencor Corporation.
(n) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services.
(o) "Deferred Stock Unit" means a deferred stock unit Award granted
to a Participant pursuant to Section 14.
(p) "Director" means a member of the Board.
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(q) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(r) "Earnings Per Share" means as to any Fiscal Year, the Company's
or a business unit's Net Income, divided by a weighted average number of common
shares outstanding and dilutive common equivalent shares deemed outstanding,
determined in accordance with generally accepted accounting principles.
(s) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three (3) months following the 91st day of
such leave any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.
(t) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(u) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq System (but
not on the Nasdaq National Market thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(v) "Fiscal Year" means a fiscal year of the Company.
(w) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
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(x) "Net Income" means as to any Fiscal Year, the income after taxes
of the Company for the Fiscal Year determined in accordance with generally
accepted accounting principles.
(y) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(z) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Award. The Notice of
Grant is part of the Option Agreement.
(aa) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(bb) "Operating Cash Flow" means the Company's or a business unit's
sum of Net Income plus depreciation and amortization less capital expenditures
plus changes in working capital comprised of accounts receivable, inventories,
other current assets, trade accounts payable, accrued expenses, product
warranty, advance payments from customers and long-term accrued expenses,
determined in accordance with generally acceptable accounting principles.
(cc) "Operating Income" means the Company's or a business unit's
income from operations but excluding any unusual items, determined in accordance
with generally accepted accounting principles.
(dd) "Option" means a stock option granted pursuant to the Plan.
(ee) "Option Agreement" means a written or electronic agreement
between the Company and a Participant evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(ff) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(gg) "Participant" means the holder of an outstanding Award granted
under the Plan.
(hh) "Performance Goals" means the goal(s) (or combined goal(s))
determined by the Administrator (in its discretion) to be applicable to a
Participant with respect to an Award. As determined by the Administrator, the
Performance Goals applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following measures: (a) Annual
Revenue, (b) Cash Position, (c) Earnings Per Share, (d) Net Income, (e)
Operating Cash Flow, (f) Operating Income, (g) Return on Assets, (h) Return on
Equity, (i) Return on Sales, and (j) Total Stockholder Return. The Performance
Goals may differ from Participant to Participant and from Award to Award.
(ii) "Performance Share" means a performance share Award granted to
a Participant pursuant to Section 12.
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(jj) "Performance Unit" means a performance unit Award granted to a
Participant pursuant to Section 13.
(kk) "Plan" means this 2004 Equity Incentive Plan.
(ll) "Restricted Stock" means Shares granted pursuant to Section 11
of the Plan.
(mm) "Return on Assets" means the percentage equal to the Company's
or a business unit's Operating Income before incentive compensation, divided by
average net Company or business unit, as applicable, assets, determined in
accordance with generally accepted accounting principles.
(nn) "Return on Equity" means the percentage equal to the Company's
Net Income divided by average stockholder's equity, determined in accordance
with generally accepted accounting principles.
(oo) "Return on Sales" means the percentage equal to the Company's
or a business unit's Operating Income before incentive compensation, divided by
the Company's or the business unit's, as applicable, revenue, determined in
accordance with generally accepted accounting principles.
(pp) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(qq) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(rr) "Service Provider" means an Employee, Consultant or Director.
(ss) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 18 of the Plan.
(tt) "Stock Appreciation Right" or "SAR" means an Award granted
pursuant to Section 10 hereof.
(uu) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(vv) "Total Stockholder Return" means the total return (change in
share price plus reinvestment of any dividends) of a Share.
3. Stock Subject to the Plan. Subject to the provisions of Section 18 of
the Plan, the maximum aggregate number of Shares which may be issued under the
Plan is 11,000,000 Shares plus any shares subject to any outstanding options
under the Company's 1982 Stock Option Plan and the Company's 2000 Nonstatutory
Stock Option Plan that subsequently expire unexercised, up to a maximum of an
additional 1,500,000 Shares.
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Any Shares subject to Options or SARs shall be counted against the
numerical limits of this Section 3 as one share for every share subject thereto.
Any Shares or units subject to Restricted Stock, Performance Shares, Performance
Units or Deferred Stock Unit Awards with a per share or unit purchase price
lower than 100% of Fair Market Value on the date of grant shall be counted
against the numerical limits of this Section 3 as 1.8 shares for every one share
subject thereto.
The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Award expires or becomes unexercisable without having been exercised
in full, or, with respect to Restricted Stock, Performance Shares, Performance
Units or Deferred Stock Units, is forfeited to or repurchased by the Company,
the unpurchased Shares (or for Awards other than Options and SARs, the forfeited
or repurchased shares) which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated). With
respect to SARs, only shares actually issued pursuant to an SAR shall cease to
be available under the Plan; all remaining shares under SARs shall remain
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan under
any Award shall not be returned to the Plan and shall not become available for
future distribution under the Plan; provided, however, that if Shares of
Restricted Stock, Performance Shares, Performance Units or Deferred Stock Units
are repurchased by the Company at their original purchase price or are forfeited
to the Company, such Shares shall become available for future grant under the
Plan. Shares used to pay the exercise price of an Option or Stock Purchase Right
shall become available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than stock, such cash payment
shall not result in reducing the number of Shares available for issuance under
the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
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(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(u) of the Plan;
(ii) to select the Service Providers to whom Awards may be
granted hereunder;
(iii) to determine whether and to what extent Awards or any
combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock or
equivalent units to be covered by each Award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or SARs may be exercised or other Awards vest (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Award or the
shares of Common Stock relating thereto, based in each case on such factors as
the Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan and
Awards;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(ix) to modify or amend each Award (subject to Section 20(c)
of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options and SARs longer than is
otherwise provided for in the Plan;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award previously
granted by the Administrator;
(xi) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares or cash to
be issued upon exercise or vesting of an Award (or distribution of a Deferred
Stock Unit) that number of Shares or cash having a Fair Market Value equal to
the minimum amount required to be withheld (but no more). The Fair Market Value
of any Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by a Participant to have
Shares or cash withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable;
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(xii) to determine the terms and restrictions applicable to
Awards; and
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Participants and any other holders of Awards.
5. Eligibility. Restricted Stock, Performance Shares, Performance Units,
Stock Appreciation Rights, Deferred Stock Units and Nonstatutory Stock Options
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
6. No Employment Rights. Neither the Plan nor any Award shall confer upon
a Participant any right with respect to continuing the Participant's employment
with the Company or its Subsidiaries, nor shall they interfere in any way with
the Participant's right or the Company's or Subsidiary's right, as the case may
be, to terminate such employment at any time, with or without cause or notice.
7. Code Section 162(m) Provisions.
(a) Option and SAR Annual Share Limit. No Participant shall be
granted, in any Fiscal Year, Options and Stock Appreciation Rights to purchase
more than 400,000 Shares; provided, however, that such limit shall be 1,200,000
Shares in the Participant's first Fiscal Year of Company service.
(b) Restricted Stock and Performance Share Annual Limit. No
Participant shall be granted, in any Fiscal Year, more than 200,000 Shares of
Restricted Stock or Performance Shares; provided, however, that such limit shall
be 600,000 Shares in the Participant's first Fiscal Year of Company service.
(c) Performance Units Annual Limit. No Participant shall receive
Performance Units, in any Fiscal Year, having an initial value greater than
$1,000,000, provided, however, that such limit shall be $3,000,000 in the
Participant's first Fiscal Year of Company service.
(d) Section 162(m) Performance Restrictions. For purposes of
qualifying grants of Restricted Stock, Performance Shares or Performance Units
as "performance-based compensation" under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable the Restricted
Stock, Performance Shares or Performance Units to qualify as "performance-based
compensation" under Section 162(m) of the Code. In granting Restricted Stock,
Performance Shares or Performance Units which are intended to qualify under
Section 162(m) of the Code, the Administrator shall follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).
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(e) Changes in Capitalization. The numerical limitations in Sections
7(a) and (b) shall be adjusted proportionately in connection with any change in
the Company's capitalization as described in Section 18(a).
8. Term of Plan. The Plan shall continue in effect for a term of ten (10)
years following the date upon which the Board approved the Plan in 2004.
9. Stock Options.
(a) Term . The term of each Option shall be stated in the Notice of
Grant; provided, however, that the term shall be ten (10) years from the date of
grant or such shorter term as may be provided in the Notice of Grant. Moreover,
in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the term of the Incentive Stock Option shall be five
(5) years from the date of grant or such shorter term as may be provided in the
Notice of Grant.
(b) Option Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator and shall be no less than 100% of the Fair Market Value per share
on the date of grant; provided, however, that in the case of an Incentive Stock
Option granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(c) No Repricing. The exercise price for an Option may not be
reduced without the consent of the Company's stockholders. This shall include,
without limitation, a repricing of the Option as well as an Option exchange
program whereby the Participant agrees to cancel an existing Option in exchange
for an Option, SAR or other Award.
(d) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period or until
performance milestones are satisfied.
(e) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Subject to
Applicable Laws, such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Participant for more than six
months on the date of surrender, and
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(B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised;
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale proceeds required to pay the exercise price;
(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
(f) Exercise of Option; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Participant. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the optioned stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 18 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available for sale under the Option, by the number of Shares as to
which the Option is exercised.
(g) Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant's
death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). In
the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three months following the Participant's termination. If, on the
date of termination, the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Participant does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
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(h) Disability. If a Participant ceases to be a Service Provider as
a result of the Participant's Disability, the Participant may exercise his or
her Option within such period of time as is specified in the Option Agreement to
the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the
Participant's termination. If, on the date of termination, the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(i) Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant's death within
such period of time as is specified in the Option Agreement (but in no event may
the option be exercised later than the expiration of the term of such Option as
set forth in the Option Agreement), by the Participant's designated beneficiary,
provided such beneficiary has been designated prior to Participant's death in a
form acceptable to the Administrator. If no such beneficiary has been designated
by the Participant, then such Option may be exercised by the personal
representative of the Participant's estate or by the person(s) to whom the
Option is transferred pursuant to the Participant's will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following Participant's death. If the Option is not so exercised within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(j) ISO $100,000 Rule. Each Option shall be designated in the Notice
of Grant as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value:
(i) of Shares subject to a Participant's Incentive Stock
Options granted by the Company, any Parent or Subsidiary, which
(ii) become exercisable for the first time during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 9(j), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time of grant.
10. Stock Appreciation Rights.
(a) Grant of SARs. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Administrator, in its sole discretion. The Administrator
shall have complete discretion to determine the number of SARs granted to any
Participant.
(b) Exercise Price and other Terms. Subject to Section 7(a) of the
Plan, the Administrator, subject to the provisions of the Plan, shall have
complete discretion to determine the
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terms and conditions of SARs granted under the Plan; provided, however, that no
SAR may have a term of more than ten (10) years from the date of grant. The
exercise price for the Shares or cash to be issued pursuant to an already
granted SAR may not be changed without the consent of the Company's
stockholders. This shall include, without limitation, a repricing of the SAR as
well as an SAR exchange program whereby the Participant agrees to cancel an
existing SAR in exchange for an Option, SAR or other Award.
(c) Payment of SAR Amount. Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(i) The difference between the Fair Market Value of a Share on
the date of exercise over the exercise price; times
(ii) the number of Shares with respect to which the SAR is
exercised.
(d) Payment upon Exercise of SAR. At the discretion of the
Administrator, payment for a SAR may be in cash, Shares or a combination
thereof.
(e) SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
(f) Expiration of SARs. A SAR granted under the Plan shall expire
upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement.
(g) Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant's
death or Disability termination, the Participant may exercise his or her SAR
within such period of time as is specified in the SAR Agreement to the extent
that the SAR is vested on the date of termination (but in no event later than
the expiration of the term of such SAR as set forth in the SAR Agreement). In
the absence of a specified time in the SAR Agreement, the SAR shall remain
exercisable for three months following the Participant's termination. If, on the
date of termination, the Participant is not vested as to his or her entire SAR,
the Shares covered by the unvested portion of the SAR shall revert to the Plan.
If, after termination, the Participant does not exercise his or her SAR within
the time specified by the Administrator, the SAR shall terminate, and the Shares
covered by such SAR shall revert to the Plan.
(h) Disability. If a Participant ceases to be a Service Provider as
a result of the Participant's Disability, the Participant may exercise his or
her SAR within such period of time as is specified in the SAR Agreement to the
extent the SAR is vested on the date of termination (but in no event later than
the expiration of the term of such SAR as set forth in the SAR Agreement). In
the absence of a specified time in the SAR Agreement, the SAR shall remain
exercisable for twelve (12) months following the Participant's termination. If,
on the date of termination, the Participant is not vested as to his or her
entire SAR, the Shares covered by the unvested portion of the SAR shall revert
to the Plan. If, after termination, the Participant does not exercise his or her
SAR within the time specified herein, the SAR shall terminate, and the Shares
covered by such SAR shall revert to the Plan.
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(i) Death of Participant. If a Participant dies while a
Service Provider, the SAR may be exercised following the Participant's death
within such period of time as is specified in the SAR Agreement (but in no event
may the SAR be exercised later than the expiration of the term of such SAR as
set forth in the SAR Agreement), by the Participant's designated beneficiary,
provided such beneficiary has been designated prior to Participant's death in a
form acceptable to the Administrator. If no such beneficiary has been designated
by the Participant, then such SAR may be exercised by the personal
representative of the Participant's estate or by the person(s) to whom the SAR
is transferred pursuant to the Participant's will or in accordance with the laws
of descent and distribution. In the absence of a specified time in the SAR
Agreement, the SAR shall remain exercisable for twelve (12) months following
Participant's death. If the SAR is not so exercised within the time specified
herein, the SAR shall terminate, and the Shares covered by such SAR shall revert
to the Plan.
11. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and conditions
of the Plan, Restricted Stock may be granted to Participants at any time as
shall be determined by the Administrator, in its sole discretion. Subject to
Section 7(b) hereof, the Administrator shall have complete discretion to
determine (i) the number of Shares subject to a Restricted Stock award granted
to any Participant, and (ii) the conditions that must be satisfied, which
typically will be based principally or solely on continued provision of services
but may include a performance-based component, upon which is conditioned the
grant, vesting or issuance of Restricted Stock. Restricted Stock shall be
granted in the form of units to acquire Shares. Each such unit shall be the
equivalent of one Share for purposes of determining the number of Shares subject
to an Award. Restricted Stock may be granted in the form of restricted stock
units that are not issued until the vesting conditions are satisfied. Until the
Shares are issued, no right to vote or receive dividends or any other rights as
a stockholder shall exist with respect to the units to acquire Shares.
(b) Other Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Restricted Stock granted under the Plan. Restricted Stock grants shall be
subject to the terms, conditions, and restrictions determined by the
Administrator at the time the stock or the restricted stock unit is awarded. The
Administrator may require the recipient to sign a Restricted Stock Award
agreement as a condition of the award. Any certificates representing the Shares
of stock awarded shall bear such legends as shall be determined by the
Administrator.
(c) Restricted Stock Award Agreement. Each Restricted Stock grant
shall be evidenced by an agreement that shall specify the purchase price (if
any) and such other terms and conditions as the Administrator, in its sole
discretion, shall determine; provided; however, that if the Restricted Stock
grant has a purchase price, such purchase price must be paid no more than ten
(10) years following the date of grant.
12. Performance Shares.
(a) Grant of Performance Shares. Subject to the terms and conditions
of the Plan, Performance Shares may be granted to Participants at any time as
shall be determined by the
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Administrator, in its sole discretion. Subject to Section 7(b) hereof, the
Administrator shall have complete discretion to determine (i) the number of
Shares subject to a Performance Share award granted to any Participant, and (ii)
the conditions that must be satisfied, which typically will be based principally
or solely on achievement of performance milestones but may include a
service-based component, upon which is conditioned the grant or vesting of
Performance Shares. Performance Shares shall be granted in the form of units to
acquire Shares. Each such unit shall be the equivalent of one Share for purposes
of determining the number of Shares subject to an Award. Until the Shares are
issued, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the units to acquire Shares.
(b) Other Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Performance Shares granted under the Plan. Performance Share grants shall be
subject to the terms, conditions, and restrictions determined by the
Administrator at the time the stock is awarded, which may include such
performance-based milestones as are determined appropriate by the Administrator.
The Administrator may require the recipient to sign a Performance Shares
agreement as a condition of the award. Any certificates representing the Shares
of stock awarded shall bear such legends as shall be determined by the
Administrator.
(c) Performance Share Award Agreement. Each Performance Share grant
shall be evidenced by an agreement that shall specify such other terms and
conditions as the Administrator, in its sole discretion, shall determine.
13. Performance Units.
(a) Grant of Performance Units. Performance Units are similar to
Performance Shares, except that they shall be settled in a cash equivalent to
the Fair Market Value of the underlying Shares, determined as of the vesting
date. Subject to the terms and conditions of the Plan, Performance Units may be
granted to Participants at any time and from time to time as shall be determined
by the Administrator, in its sole discretion. The Administrator shall have
complete discretion to determine the conditions that must be satisfied, which
typically will be based principally or solely on achievement of performance
milestones but may include a service-based component, upon which is conditioned
the grant or vesting of Performance Units. Performance Units shall be granted in
the form of units to acquire Shares. Each such unit shall be the cash equivalent
of one Share of Common Stock. No right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to Performance Units or the
cash payable thereunder.
(b) Number of Performance Units. Subject to Section 7(c) hereof, the
Administrator will have complete discretion in determining the number of
Performance Units granted to any Participant.
(c) Other Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Performance Units granted under the Plan. Performance Unit grants shall be
subject to the terms, conditions, and restrictions determined by the
Administrator at the time the grant is awarded, which may include such
performance-based milestones as are determined appropriate by the Administrator.
The
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Administrator may require the recipient to sign a Performance Unit agreement as
a condition of the award. Any certificates representing the units awarded shall
bear such legends as shall be determined by the Administrator.
(d) Performance Unit Award Agreement. Each Performance Unit grant
shall be evidenced by an agreement that shall specify such terms and conditions
as the Administrator, in its sole discretion, shall determine.
14. Deferred Stock Units.
(a) Description. Deferred Stock Units shall consist of a Restricted
Stock, Performance Share or Performance Unit Award that the Administrator, in
its sole discretion permits to be paid out in installments or on a deferred
basis, in accordance with rules and procedures established by the Administrator.
Deferred Stock Units shall remain subject to the claims of the Company's general
creditors until distributed to the Participant.
(b) 162(m) Limits. Deferred Stock Units shall be subject to the
annual 162(m) limits applicable to the underlying Restricted Stock, Performance
Share or Performance Unit Award as set forth in Section 7 hereof.
15. Leaves of Absence. Unless the Administrator provides otherwise or
except as otherwise required by Applicable Laws, vesting of Awards granted
hereunder shall cease commencing on the first day of any unpaid leave of absence
and shall only recommence upon return to active service.
16. Part-Time Service. Unless the Administrator provides otherwise or
except as otherwise required by Applicable Laws, any service-based vesting of
Awards granted hereunder shall be extended on a proportionate basis in the event
an Employee transitions to a work schedule under which they are customarily
scheduled to work on less than a full-time basis, or if not on a full-time work
schedule, to a schedule requiring fewer hours of service. Such vesting shall be
proportionately re-adjusted prospectively in the event that the Employee
subsequently becomes regularly scheduled to work additional hours of service.
17. Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
recipient, only by the recipient. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as
the Administrator deems appropriate.
18. Adjustments Upon Changes in Capitalization, Dissolution or Liquidation
or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Award, the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon
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cancellation or expiration of an Award, as well as the price per share of Common
Stock covered by each such outstanding Award and the 162(m) fiscal year share
issuance limits under Sections 7(a) and (b) hereof shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Compensation Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Award.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for a Participant
to have the right to exercise his or her Option or SAR until ten (10) days prior
to such transaction as to all of the Awarded Stock covered thereby, including
Shares as to which the Award would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting
shall accelerate 100%, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised (with respect to Options and SARs) or vested (with respect
to other Awards), an Award will terminate immediately prior to the consummation
of such proposed action.
(c) Change of Control.
(i) Stock Options and SARs. In the event of a Change of
Control, each outstanding Option and SAR shall be assumed or an equivalent
option or SAR substituted by the successor corporation or a Parent or Subsidiary
of the successor corporation. In the event that the successor corporation
refuses to assume or substitute for the Option or SAR, the Participant shall
fully vest in and have the right to exercise the Option or SAR as to all of the
Awarded Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or SAR becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a Change of Control, the
Administrator shall notify the Participant in writing or electronically that the
Option or SAR shall be fully vested and exercisable for a period of fifteen (15)
days from the date of such notice, and the Option or SAR shall terminate upon
the expiration of such period. For the purposes of this paragraph, the Option or
SAR shall be considered assumed if, following the Change of Control, the option
or stock appreciation right confers the right to purchase or receive, for each
Share of Awarded Stock subject to the Option or SAR immediately prior to the
Change of Control, the consideration (whether stock, cash, or other securities
or property) received in the Change of Control by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Change of Control is not solely common stock
of the successor corporation or its Parent, the
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Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or SAR, for
each Share of Awarded Stock subject to the Option or SAR, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the Change of
Control.
(ii) Restricted Stock, Performance Shares, Performance Units
and Deferred Stock Units. In the event of a Change of Control, each outstanding
Restricted Stock, Performance Share, Performance Unit and Deferred Stock Unit
award shall be assumed or an equivalent Restricted Stock, Performance Share,
Performance Unit and Deferred Stock Unit award substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the
Restricted Stock, Performance Share, Performance Unit or Deferred Stock Unit
award, the Participant shall fully vest in the Restricted Stock, Performance
Share, Performance Unit or Deferred Stock Unit including as to Shares (or with
respect to Performance Units, the cash equivalent thereof) which would not
otherwise be vested. For the purposes of this paragraph, a Restricted Stock,
Performance Share, Performance Unit and Deferred Stock Unit award shall be
considered assumed if, following the Change of Control, the award confers the
right to purchase or receive, for each Share (or with respect to Performance
Units, the cash equivalent thereof) subject to the Award immediately prior to
the Change of Control, the consideration (whether stock, cash, or other
securities or property) received in the Change of Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the Change of Control is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received, for each Share and each unit/right to acquire a Share subject to the
Award, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of
Common Stock in the Change of Control.
19. Date of Grant. The date of grant of an Award shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Participant within a
reasonable time after the date of such grant.
20. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan; provided, however, that the Board
may not materially amend the Stock Plan without obtaining stockholder approval.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
Section 422 of the Code (or any successor rule or statute or other applicable
law, rule or regulation, including the requirements of any exchange or quotation
system on which the Common Stock is listed or quoted). Such
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stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing (or electronic format) and
signed by the Participant and the Company.
21. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of the Award or the issuance and
delivery of such Shares (or with respect to Performance Units, the cash
equivalent thereof) shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise or
receipt of an Award, the Company may require the person exercising or receiving
such Award to represent and warrant at the time of any such exercise or receipt
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.
22. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Awarded Stock covered
by an Award exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional stockholder approval, such Award shall
be void with respect to such excess Awarded Stock, unless stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 20(b) of the Plan.
23. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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