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Exhibit 99.1
NETSPEED INC.
1996 LONG TERM EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, Netspeed Inc. (the "Company") or any
Subsidiary or Affiliate of the Company, an opportunity to participate in the
Company's future by offering them long-term performance-based and other
incentives and equity interests in the Company so as to retain, attract and
motivate management personnel.
(b) Definitions. For purposes of the Plan, the following terms
have the following meanings:
(i) "Affiliate" means a parent or subsidiary
corporation, as defined in the applicable provisions (currently Section 424) of
the Code.
(ii) "Award" means any award under the Plan, including
any Option, Stock Appreciation Right, Restricted Stock, Stock Purchase Right, or
Performance Share Award.
(iii) "Award Agreement" means, with respect to each
Award, the signed written agreement between the Company and the Plan participant
setting forth the terms and conditions of the Award.
(iv) "Award Limit" means 10,000 shares of Stock.
(v) "Board" means the Board of Directors of the
Company.
(vi) "Change in Control" has the meaning set forth in
Section 10(a).
(vii) "Change in Control Price" has the meaning set
forth in Section 10(c).
(viii) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, and any successor law.
(ix) "Commission" means the Securities and Exchange
Commission and any successor agency.
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(x) "Committee" means the Committee referred to in
Section 2.
(xi) "Company" means Netspeed Inc.
(xii) "Disability" means permanent and total
disability as determined by the Committee for purposes of the Plan.
(xiii) "Disinterested Person" has the meaning set forth
in Rule 16b-3(c) and any successor definition adopted by the Commission.
(xiv) "Exchange Act" means the Securities and Exchange
Act of 1934, as amended from time to time, and any successor law.
(xv) "Fair Market Value" means as of any given date:
(A) If the Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market, the closing sales price for the Stock or the closing bid
if no sales were reported, as quoted on such system or exchange (or the largest
such exchange) for the date the value is to be determined (or if there are no
sales for such date, then for the last preceding business day on which there
were sales), as reported in the Wall Street Journal or similar publication.
(B) If the Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the mean
between the high bid and low asked prices for the Stock on the date the value is
to be determined (or if there are no quoted prices for the date of grant, then
for the last preceding business day on which there were quoted prices).
(C) In the absence of an established market for
the Stock, as determined in good faith by the Committee, with reference to the
Company's net worth, prospective earning power, dividend-paying capacity, and
other relevant factors, including the goodwill of the Company, the economic
outlook in the Company's industry, the Company's position in the industry and
its management, and the values of stock of other corporations in the same or a
similar line of business.
(xvi) "Incentive Stock Option" means any Option
intended to be and designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(xvii) "Non-Qualified Stock Option" means any Option that
is not an Incentive Stock Option.
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(xviii) "Option" means an option granted under Section 5.
(xix) "Performance Share" means the equivalent, as of
any time such assessment is made, of the Fair Market Value of one share of
Stock.
(xx) "Performance Share Award" means an Award under
Section 9.
(xxi) "Plan" means this Netspeed Inc. 1996 Long Term
Equity Incentive Plan, as amended from time to time.
(xxii) "Restricted Stock" means an Award of Stock
subject to restrictions, as more fully described in Section 7.
(xxiii) "Rule 16b-3" means Rule 16b-3 under Section 16(b)
of the Exchange Act, as amended from time to time, and any successor rule.
(xxiv) "Stock" means the Common Stock, $0.01 par value,
of the Company, and any successor security.
(xxv) "Stock Appreciation Right" means an Award granted
under Section 6.
(xxvi) "Stock Purchase Right" means an Award granted
under Section 8.
(xxvii) "Subsidiary" has the meaning set forth in Section
424 of the Code.
(xxviii) "Termination" means, for purposes of the Plan,
with respect to a participant, that the participant has ceased to be, for
any reason, an employee of, or a consultant to, the Company, a Subsidiary or an
Affiliate.
SECTION 2. ADMINISTRATION.
(a) Committee. The Plan shall be administered by a committee
of the Board (the "Committee"), composed of not less than two directors of the
Company appointed by and holding office at the pleasure of the Board, each of
whom is both a disinterested person as defined in Rule 16b-3 ("Disinterested
Person") (unless the Committee determines that Rule 16b-3 is not applicable to
the Plan) and an "outside director" for purposes of Section 162(m) of the Code
("Outside Director"). Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in
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the Committee shall be filled by the Board. The Committee may act only by a
majority of its members, except that the Committee (i) may authorize any one or
more of its members or any officer of the Company to execute and deliver
documents on behalf of the Committee and (ii) so long as not otherwise required
for the Plan to comply with Rule 16b-3 (unless the Committee determines that
Rule 16b-3 is not applicable to the Plan), may delegate to one or more officers
or directors of the Company authority to grant Awards to persons who are not
subject to Section 16 of the Exchange Act with respect to Stock. The Board shall
have no right to exercise any of the rights or duties of the Committee under the
Plan unless (i) each member of the Board is both a Disinterested Person and an
Outside Director or (ii) such right is with respect to matters which, under Rule
16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are not required to be determined in the sole discretion of the
Committee.
(b) Authority. The Committee shall grant Awards to eligible
employees and consultants. In particular and without limitation, the Committee,
subject to the terms of the Plan, shall:
(i) select the officers, other employees and
consultants to whom Awards may be granted;
(ii) determine whether and to what extent Awards are
to be granted under the Plan;
(iii) subject to the Award Limit, determine the number
of shares to be covered by each Award granted under the Plan;
(iv) determine the terms and conditions of any Award
granted consistent with this Plan and any related loans to be made by the
Company, based upon factors determined by the Committee; provided, however, that
the terms and conditions of any Awards intended to qualify as performance-based
compensation as described in Section 162(m) of the Code shall include, but not
be limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code; and
(v) determine to what extent and under what
circumstances any Award payments may be deferred by a participant.
(c) Committee Determinations Binding. The Committee may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, interpret the terms and
provisions of the Plan, any Award and any Award Agreement, and otherwise
supervise the administration of the Plan. Any determination made by the
Committee pursuant to the provisions of the Plan with respect to any Award shall
be made in its sole discretion at the time of the grant of
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the Award or, unless in contravention of any express term of the Plan or Award,
at any later time. All decisions made by the Committee under the Plan shall be
binding on all persons, including the Company and Plan participants.
SECTION 3. SHARES SUBJECT TO PLAN.
(a) Number of Shares. The total number of shares of Stock
reserved and available for issuance pursuant to Awards under the Plan shall be
10,000 shares. Such shares may consist, in whole or in part, of authorized and
unissued shares or shares reacquired in private transactions or open market
purchases, but all shares issued under the Plan regardless of source shall be
counted against the 10,000 share limitation. If any Option terminates or expires
without being exercised in full or if any shares of Stock subject to an Award
are forfeited, or if an Award otherwise terminates without a payment being made
to the participant in the form of Stock, the shares issuable under such Option
or Award shall again be available for issuance in connection with Awards. If any
shares of Stock subject to an Award are repurchased by the Company, the shares
issuable under such Award shall again be available for issuance in connection
with Awards other than Options and Stock Appreciation Rights. To the extent an
Award is paid in cash, the number of shares of Stock representing, at Fair
Market Value on the date of the payment, the value of the cash payment shall not
be available for later grant under the Plan.
(b) Compliance with the Award Limit and Section 162(m) of the
Code. The maximum number of shares which may be subject to options, rights or
other awards granted under the Plan to any individual in any calendar year shall
not exceed the Award Limit. To the extent required by Section 162(m) of the
Code, shares subject to Options which are canceled continue to be counted
against the Award Limit and if, after grant of an Option, the price of shares
subject to such Option is reduced, the transaction is treated as a cancellation
of the Option and a grant of a new Option and both the Option deemed to be
canceled and the Option deemed to be granted are counted against the Award
Limit. Furthermore, to the extent required by Section 162(m) of the Code, if,
after grant of a Stock Appreciation Right, the base amount on which stock
appreciation is calculated is reduced to reflect a reduction in the Fair Market
Value of the Stock, the transaction is treated as a cancellation of the Stock
Appreciation Right and a grant of a new Stock Appreciation Right and both the
Stock Appreciation Right deemed to be canceled and the Stock Appreciation Right
deemed to be granted are counted against the Award Limit.
(c) Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, spin-off, sale of
substantial assets, or other change in corporate structure affecting the Stock,
such substitution or adjustments shall be made in the aggregate number of shares
of Stock reserved for issuance under the Plan, in the Award Limit, in the number
and exercise price of shares
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subject to outstanding Options, in the number and purchase price of shares
subject to outstanding Stock Purchase Rights and in the number of shares subject
to other outstanding Awards, as may be determined to be appropriate by the
Committee, in its sole discretion; provided, that the number of shares subject
to any Award shall always be rounded down to the nearest whole number. Such
adjusted exercise price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right associated with
any Option. With respect to Options and Stock Appreciation Rights intended to
qualify as performance-based compensation under Section 162(m), no adjustments
shall be authorized pursuant to this Section 3(c) or any other provision of the
Plan to the extent that such adjustment would cause the Plan to violate Section
422 of the Code or would cause such option or stock appreciation right to fail
to so qualify under Section 162(m), as the case may be, or any successor
provisions thereto. Furthermore, no such adjustment or action shall be
authorized to the extent such adjustment or action would violate Section 16 of
the Exchange Act or Rule 16b-3.
SECTION 4. ELIGIBILITY.
Awards may be granted to officers and other employees of, and
consultants to, the Company or any Subsidiary or Affiliate of the Company
(excluding any person who serves only as a director).
SECTION 5. STOCK OPTION.
(a) Types. Subject to the Award Limit, any Option granted
under the Plan shall be in such form as the Committee may from time to time
approve. The Committee shall have the authority to grant to any participant
Incentive Stock Options, Non-Qualified Stock Options or any type of Option (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company, its parent (within the meaning
of Section 424 of the Code) or Subsidiaries. Any portion of an Option that does
not qualify as an Incentive Stock Option shall constitute a Non-Qualified Stock
Option.
(b) Terms and Conditions. Options granted under the Plan shall
be subject to the following terms and conditions:
(i) Applicable Award Agreements. Award Agreements
evidencing Options intended to qualify as performance-based compensation as
described in Section 162(m) of the Code shall contain such terms and conditions
as may be necessary to meet the applicable provisions of Section 162(m) of the
Code. Award Agreements evidencing Incentive Stock Options shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 422 of the Code. The grant shall automatically terminate without any
action by the Company in the event that
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an Award Agreement is not executed by the participant within 30 days after
delivery of the Option to the participant.
(ii) Option Term. The term of each Option shall be
fixed by the Committee, but no Incentive Stock Option shall be exercisable more
than 10 years after the date the Option is granted and no Non-Qualified Stock
Option shall be exercisable more than 11 years after the date the Option is
granted. If, at the time the Company grants an Incentive Stock Option the
optionee owns directly or by attribution stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any
Affiliate of the Company, the Incentive Stock Option shall not be exercisable
more than five years after the date of grant.
(iii) Grant Date. The Company may grant Options under
the Plan at any time and from time to time before the Plan terminates. The
Committee shall specify the date of grant or, if it fails to, the date of grant
shall be the date of action taken by the Committee to grant the Option;
provided, that no Option may be exercised prior to execution of the applicable
Award Agreement. However, if an Option is approved in anticipation of
employment, the date of grant shall be the date the intended optionee is first
treated as an employee for payroll purposes.
(iv) Exercise Price. The exercise price per share of
Stock purchasable under a Non-Qualified Stock Option shall be equal to at least
10% (or such other minimum price as may be established by the Internal Revenue
Service as a "safe harbor" against constructive receipt of income upon grant of
the Option by the recipient of the Option), and not more than 100%, of the Fair
Market Value on the date of grant. The exercise price per share of Stock
purchasable under an Incentive Stock Option or a Non-Qualified Stock Option
which is to qualify as performance-based compensation as described in Section
162(m) of the Code shall be equal to at least the Fair Market Value on the date
of grant; provided, that if at the time the Company grants an Incentive Stock
Option, the optionee owns directly or by attribution stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
or any Affiliate of the Company, the exercise price shall be not less than 110%
of the Fair Market Value on the date the Incentive Stock Option is granted.
(v) Exercisability. Subject to the other provisions of
the Plan, an Option shall be exercisable in its entirety at grant or at such
times and in such amounts as are specified in the Award Agreement evidencing the
Option. The Committee, in its absolute discretion, at any time may waive any
limitations respecting the time at which an Option first becomes exercisable in
whole or in part.
(vi) Method of Exercise; Payment. To the extent the
right to purchase shares has accrued, Options may be exercised, in whole or in
part, from time to time, by written notice from the optionee to the Company
stating the number of shares being purchased, accompanied by payment of the
exercise price for the shares.
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The Committee, in its discretion, may elect at the time of Option exercise that
any Non-Qualified Stock Option be settled in cash rather than Stock.
(vii) No Disqualification. Notwithstanding any other
provision in the Plan, no term of the Plan relating to Incentive Stock Options
shall be interpreted, amended or altered nor shall any discretion or authority
granted under the Plan be exercised so as to disqualify the Plan under Section
422 of the Code or, without the consent of the optionee affected, to disqualify
any Incentive Stock Option under such Section 422 of the Code.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Relationship to Options; No Payment by Participant. A
Stock Appreciation Right may be awarded either (i) with respect to Stock subject
to an Option held by a participant, or (ii) without reference to an Option.
Subject to the Award Limit, the Committee, in its discretion, may determine
whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m) of the Code and the Award Agreements
evidencing Stock Appreciation Rights intended to so qualify shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. If an Option is an Incentive Stock Option, a Stock
Appreciation Right granted with respect to such Option may be granted only at
the time of grant of the related Incentive Stock Option, but if the Option is a
Non-Qualified Stock Option, the Stock Appreciation Right may be granted either
simultaneously with the grant of the related Non-Qualified Stock Option or at
any time during the term of such related Non-Qualified Stock Option. No
consideration shall be paid by a participant with respect to a Stock
Appreciation Right.
(b) When Exercisable. A Stock Appreciation Right shall be
exercisable at such times and in whole or in part, each as determined by the
Committee, subject, with respect to participants subject to Section 16(b) of the
Exchange Act, to Rule 16b-3. Unless the Committee determines that Rule 16b-3 is
not applicable to the Plan, any exercise by the participant of a Stock
Appreciation Right for cash shall be made only (i) during the window period
specified in Rule 16b-3(e)(3) and any successor rule (the "Window Period") or
(ii) pursuant to an irrevocable written election by the participant to receive
cash, in whole or in part, upon exercise of his Stock Appreciation Right
(subject to the approval of the Committee) made at least 6 months prior to the
exercise of the Stock Appreciation Right. If a Stock Appreciation Right is
granted with respect to an Option, unless the Award Agreement otherwise
provides, the Stock Appreciation Right may be exercised only to the extent to
which shares covered by the Option are not at the time of exercise subject to
repurchase by the Company.
(c) Effect on Related Right; Termination of Stock Appreciation
Right. If a Stock Appreciation Right granted with respect to an Option is
exercised, the Option
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shall cease to be exercisable and shall be cancelled to the extent of the number
of shares with respect to which the Stock Appreciation Right was exercised. Upon
the exercise or termination of an Option, related Stock Appreciation Rights
shall terminate to the extent of the number of shares as to which the Option was
exercised or terminated, except that, unless otherwise determined by the
Committee at the time of grant, a Stock Appreciation Right granted with respect
to less than the full number of shares covered by a related Option shall not be
reduced until the number of shares covered by exercise or termination of the
related Option exceeds the number of shares not covered by the Stock
Appreciation Right. A Stock Appreciation Right granted independently from an
Option shall terminate and shall be no longer exercisable at the time determined
by the Committee at the time of grant, but not later than 10 years from the date
of grant. Upon the Termination of the participant, a Stock Appreciation Right
granted with respect to an Option shall be exercisable only to the extent to
which the Option is then exercisable.
(d) Form of Payment Upon Exercise. Despite any attempt by a
participant to elect payment in a particular form upon exercise of a Stock
Appreciation Right, the Committee, in its discretion, may elect to cause the
Company to pay cash, Stock, or a combination of cash and Stock upon exercise of
the Stock Appreciation Right.
(e) Amount of Payment Upon Exercise. Upon the exercise of a
Stock Appreciation Right, the participant shall be entitled to receive one of
the following payments, as determined by the Committee under Section 6(d):
(i) Stock. That number of whole shares of Stock equal
to the number computed by dividing (A) an amount (the "Stock Appreciation Right
Spread"), rounded to the nearest whole dollar, equal to the product computed by
multiplying (x) the excess of (1) if the Stock Appreciation Right may only be
exercised during the Window Period, the highest Fair Market Value on any day
during the Window Period, and otherwise, the Fair Market Value on the date the
Stock Appreciation Right is exercised, over (2) the exercise price per share of
Stock of the related Option, or in the case of a Stock Appreciation Right
granted without reference to an Option, such other price as the Committee
establishes at the time the Stock Appreciation Right is granted, by (y) the
number of shares of Stock with respect to which a Stock Appreciation Right is
being exercised by (B) (1) if the Stock Appreciation Right may only be exercised
during the Window Period, the highest Fair Market Value during the Window Period
in which the Stock Appreciation Right was exercised, and (2) otherwise, the Fair
Market Value on the date the Stock Appreciation Right is exercised; plus, if the
foregoing calculation yields a fractional share, an amount of cash equal to the
applicable Fair Market Value multiplied by such fraction (such payment to be the
difference of the fractional share); or
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(ii) Cash. An amount in cash equal to the Stock
Appreciation Right Spread; or
(iii) Cash and Stock. A combination of cash and Stock,
the combined value of which shall equal the Stock Appreciation Right Spread.
SECTION 7. RESTRICTED STOCK.
Shares of Restricted Stock shall be subject to the following
terms and conditions:
(a) Price. Participants awarded Restricted Stock, within 45
days of receipt of the applicable Award Agreement, which in no event shall be
later than 10 days after the Award grant date, shall pay to the Company, if
required by applicable law, an amount at least equal to the par value of the
Stock subject to the Award. If such payment is not made and received by the
Company by such date, the Award of Restricted Stock shall lapse.
(b) Restrictions. Subject to the provisions of the Plan and
the Award Agreement, during a period set by the Committee, commencing with, and
not exceeding 10 years from, the date of such award (the "Restriction Period"),
the participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Committee may in its discretion provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole or in part,
based on service, performance or such other factors or criteria as the Committee
may determine.
(c) Dividends. Unless otherwise determined by the Committee,
cash dividends with respect to shares of Restricted Stock shall be automatically
reinvested in additional Restricted Stock, and dividends payable in Stock shall
be paid in the form of Restricted Stock.
(d) Termination. Except to the extent otherwise provided in
the Award Agreement and pursuant to Section 7(b), upon termination of a
participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the participant.
SECTION 8. STOCK PURCHASE RIGHTS.
(a) Price. The Committee may grant Stock Purchase Rights which
shall enable the recipients to purchase Stock at a price equal to not less than
50%, and not more than 100%, of its Fair Market Value on the date of grant.
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(b) Exercisability. Stock Purchase Rights shall be exercisable
for a period determined by the Committee not exceeding 30 days from the date of
grant.
SECTION 9. PERFORMANCE SHARES.
(a) Awards. The Committee shall determine the nature, length
(which shall in no event exceed 10 years) and starting date of the performance
period (the "Performance Period") for each Performance Share Award. The
consideration payable by a participant with respect to a Performance Share Award
shall be an amount determined by the Committee in the exercise of the
Committee's discretion at the time of the Award; provided, that the amount of
consideration may be zero and may in no event exceed 50% of the Fair Market
Value at the time of grant. The Committee shall determine the performance
objectives to be used in awarding Performance Shares and the extent to which
such Performance Shares have been earned. Performance Periods may overlap and
participants may participate simultaneously with respect to Performance Share
Awards that are subject to different Performance Periods and different
performance factors and criteria. At the beginning of each Performance Period,
the Committee shall determine for each Performance Share Award subject to such
Performance Period the number of shares of Stock (which may constitute
Restricted Stock) to be awarded to the participant at the end of the Performance
Period if and to the extent that the relevant measures of performance for such
Performance Share Award are met. Such number of shares of Stock may be fixed or
may vary in accordance with such performance or other criteria as may be
determined by the Committee. The Committee may provide that amounts equivalent
to interest at such rates as the Committee may determine or amounts equivalent
to dividends paid shall be payable with respect to Performance Share Awards. In
addition to the provisions set forth in Section 11(j), the Committee, in its
discretion, may modify the terms of any Performance Share Award, including the
specification and measurement of performance goals.
(b) Termination of Employment. Except as otherwise provided in
the Award Agreement or determined by the Committee, in the event of Termination,
then the participant shall not be entitled to any payment with respect to the
Performance Shares subject to the Performance Period.
(c) Form of Payment. Payment shall be made in the form of cash
or whole shares of Stock, as the Committee, in its discretion, shall determine.
SECTION 10. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of Section
10(b), a "Change in Control" means the occurrence of either of the following:
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(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, an
Affiliate, 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 (or a successor to the Company) representing 20% or more of the combined
voting power of the then outstanding securities of the Company or such
successor;
(ii) at any time that the Company has registered shares
under the Exchange Act, at least 40% of the directors of the Company constitute
persons who were not at the time of their first election to the Board,
candidates proposed by a majority of the Board in office prior to the time of
such first election; or
(iii) (A) the dissolution of the Company or liquidation
of more than 50% in value of the Company or a sale of assets involving 50% or
more in value of the assets of the Company, (B) any merger or reorganization of
the Company whether or not another entity is the survivor, (C) a transaction
pursuant to which the holders, as a group, of all of the shares of the Company
outstanding prior to the transaction hold, as a group, less than 50% of the
combined voting power of the Company or any successor company outstanding after
the transaction, or (D) any other event which the Board determines, in its
discretion, would materially alter the structure of the Company or its
ownership.
(b) Impact of Event. In the event of a "Change in Control" as
defined in Section 10(a), the following provisions shall apply:
(i) any Stock Appreciation Rights and Options
outstanding as of the date such Change in Control is determined to have occurred
and not then exercisable and vested shall become fully exercisable and vested;
provided, that in the case of the holder of Stock Appreciation Rights who is
actually subject to Section 16(b) of the Exchange Act, such Stock Appreciation
Rights shall have been outstanding for at least six months at the date such
Change in Control is determined to have occurred;
(ii) the restrictions and limitations applicable to
any Restricted Stock and Stock Purchase Rights shall lapse, and such Restricted
Stock shall become fully vested;
(iii) the value (net of any exercise price and required
tax withholdings) of all outstanding Options, Stock Appreciation Rights,
Restricted Stock, and Stock Purchase Rights, unless otherwise determined by the
Committee at or after grant and subject to Rule 16b-3, shall be cashed out on
the basis of the "Change in Control Price," as defined in Section 10(c), as of
the date such Change in Control is
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determined to have occurred or such other date as the Board may determine prior
to the Change in Control; and
(iv) any outstanding Performance Share Awards shall be
vested and paid in full as if all performance criteria had been met;
provided, however, that the foregoing provisions shall only apply, with respect
to the events described Section 10(a)(i), 10(a)(iii)(B), and 10(a)(iii)(D), if
and to the extent so specifically determined by the Board in the exercise of the
Board's discretion, which determination may be amended or reversed only by the
affirmative vote of a majority of the persons who were directors at the time
such determination was made.
(c) Change in Control Price. For purposes of this Section 10,
"Change in Control Price" means the highest price per share paid in any
transaction reported on any established stock exchange, national market system
or other established market for the Stock, or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company at
any time during the preceding 60-day period as determined by the Board, except
that, in the case of Incentive Stock Options and Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.
SECTION 11. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or in
addition to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Committee shall determine the
consideration, if any, payable by the participant for any Award and, in addition
to those set forth in the Plan, any other terms and conditions of the Awards.
The Committee may condition the grant or payment of any Award upon the
attainment of specified performance goals or such other factors or criteria,
including vesting based on continued employment or consulting, as the Committee
shall determine. Performance objectives may vary from participant to participant
and among groups of participants and shall be based upon such Company,
Subsidiary, group or division factors or criteria as the Committee may deem
appropriate, including, but not limited to, earnings per share or return on
equity. The other provisions of Awards also need not be the same with respect to
each recipient. Unless specified otherwise in the Plan or by the Committee, the
date of grant of an Award shall be the date of action by the Committee to grant
the Award. The Committee may also substitute new Options for previously granted
Options, including previously granted Options having higher exercise prices.
(b) Types of Shares. The Committee, in its discretion, may
determine at the time of an Award that in lieu of Stock there shall be issuable
under, or applicable
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to the measurement of, any Award of any (i) Restricted Stock, (ii) shares of any
series of common stock of the Company, other than Stock, and shares of any
series of common stock of any Subsidiary or Affiliate of the Company ("Common
Shares"), or (iii) shares of any series of preferred stock of the Company
("Preferred Shares"); provided, that (A) with respect to shares issuable upon
exercise of Incentive Stock Options, Common Shares and Preferred Shares shall be
limited to shares of any Subsidiary authorized as of the date the Plan is
approved by the Board, and (B) with respect to shares issuable upon exercise of
Non-Qualified Stock Options and Stock Appreciation Rights, Common Shares and
Preferred Shares shall be limited to shares of any Subsidiary or Affiliate of
the Company. In such event the Committee shall determine the number of shares of
Stock equivalent to such Restricted Stock, Common Shares or Preferred Shares for
the purpose of calculating the shares of Stock issued under the Plan; provided,
that a Common Share or a Preferred Share in no event shall be deemed equal to
less than one share of Stock.
(c) Award Agreement. As soon as practicable after the date of
an Award grant, the Company and the participant shall enter into a written Award
Agreement specifying the date of grant, the terms and conditions of the Award.
(d) Certificates. All certificates for shares of Stock or
other securities delivered under the Plan shall be subject to such stock
transfer orders, legends and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Commission,
any stock exchange upon which the Stock is then listed and any applicable
federal, state or foreign securities law.
(e) Termination. In the event of Termination for any reason
other than death or Disability, Awards held at the date of Termination (and only
to the extent then exercisable or payable, as the case may be) may be exercised
in whole or in part at any time within three months after the date of
Termination, or such lesser period specified in the Award Agreement (but in no
event after the expiration date of the Award), but not thereafter. If
Termination is due to death or Disability, or a participant dies or becomes
disabled within the period that the Award remains exercisable or payable, as the
case may be, after Termination, only Awards held at the date of death or
Disability (and only to the extent then exercisable or payable, as the case may
be) may be exercised in whole or in part by the participant in the case of
Disability, by the participant's personal representative or by the person to
whom the Award is transferred by will or the laws of descent and distribution,
at any time within 18 months after the death or one year after the Disability,
as the case may be, of the participant or any lesser period specified in the
Award Agreement (but in no event after the expiration of the Award). In the
event of Termination by reason of the participant's retirement (as determined in
the exercise of the Committee's sole discretion), Awards may be exercised in
whole or in part at any time within two years after the date of Termination, or
such lesser period specified in the Award Agreement; provided, however, that in
no event shall an Award be exercisable after the expiration date of the Award.
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(f) Delivery of Purchase Price. Participants shall make all or
any portion of any payment due to the Company with respect to the consideration
payable for, upon exercise of, or for federal, state, local or foreign tax
payable in connection with, an Award by delivery of cash; and if and only to the
extent authorized by the Committee, all or any portion of such payment may be
made by delivery of any property (including, without limitation, a promissory
note of the participant or shares of Stock or other securities and, in the case
of an option, surrender of shares issuable upon exercise of that option) other
than cash, so long as, if applicable, such property constitutes valid
consideration for the Stock under applicable law. To the extent participants may
make payments due to the Company upon grant or exercise of Awards by the
delivery of shares of Stock or other securities, the Committee, in its
discretion, may permit participants constructively to deliver for any such
payment (A) securities of the Company held by the participant for at least 6
months or (B) subject to the timing requirements of Section 11(z), securities of
the Company issuable to the participant upon exercise of the Award. Constructive
delivery shall be effected by (i) identification by the participant of shares
intended to be delivered constructively, (ii) confirmation by the Company of
participant's ownership of such shares (for example, by reference to the
Company's stock records, or by some other means of verification), and (iii) if
applicable, upon exercise, delivery to the participant of a certificate for that
number of shares equal to the number of shares for which the Award is exercised
less the number of shares constructively delivered.
(g) Tax Withholding. If and to the extent authorized by the
Committee in its discretion, a person who has received an Award or payment under
an Award may, to pay the amount of tax that the Committee in its discretion
determines to be required to be withheld by the Company, make an election to
deliver to the Company or have withheld either (i) a promissory note of the
participant on the terms set forth in Section 11(f) or (ii) (A) securities of
the Company held by the participant for at least 6 months or (B) subject to the
timing requirements of Section 11(z), securities of the Company issuable to the
participant upon exercise of the Award. Any shares or other securities so
withheld or tendered shall be valued by the Committee as of the date they are
withheld or tendered; provided, that Stock shall be valued at the Fair Market
Value on such date. The value of the shares withheld or tendered may not exceed
the required federal, state, local and foreign withholding tax obligations as
computed by the Company. Unless the Committee permits otherwise, the participant
shall pay to the Company in cash, promptly when the amount of such obligations
becomes determinable, all applicable federal, state, local and foreign
withholding taxes that the Committee in its discretion determines to result from
the lapse of restrictions imposed upon an Award or upon exercise of an Award or
from a transfer or other disposition of shares acquired upon exercise or payment
of an Award or otherwise related to the Award or the shares acquired in
connection with an Award.
(h) No Transfer Ability. No Award shall be assignable or
otherwise transferable by the participant other than by will or by the laws of
descent and
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distribution, and during the life of a participant, an Award shall be
exercisable, and any elections with respect to an Award may be made, only by the
participant or participant's guardian or legal representative. Unless otherwise
approved in writing by the Committee, no shares acquired upon exercise of any
Award by any officer of the Company, as defined in Rule 16a-1(f) under the
Exchange Act, may be sold, assigned, pledged, encumbered or otherwise
transferred until at least 6 months have elapsed from (but excluding) the date
that such Award was granted. The Committee may require the participant to give
the Company prompt notice of any disposition of shares of Stock, acquired by
exercise of an Incentive Stock Option within two years from the date of granting
such option or one year after the transfer of such shares to such participant.
The Committee may direct that the certificates evidencing shares acquired by
exercise of an option refer to such requirement to give prompt notice of
disposition.
(i) Right of First Refusal. At the time of grant, the
Committee may provide in connection with any Award that the shares of Stock
received as a result of such Award shall be subject to a right of first refusal
pursuant to which the participant shall be required to offer to the Company any
shares that the participant wishes to sell at the then Fair Market Value of the
Stock or at such other price as may be set forth in the applicable Award
Agreement, subject to such other terms and conditions as the Committee may
specify at the time of grant.
(j) Adjustment of Awards; Waivers. The Committee may adjust
the performance goals and measurements applicable to Awards (i) to take into
account changes in law and accounting and tax rules, (ii) to make such
adjustments as the Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances in order to avoid windfalls or hardships, (iii) to make such
adjustments as the Committee deems necessary or appropriate to reflect any
material changes in business conditions, and (iv) in any other manner determined
in the Committee's discretion. In the event of hardship or other special
circumstances of a participant and otherwise in its discretion, the Committee
may waive in whole or in part any or all restrictions, conditions, vesting, or
forfeiture with respect to any Award granted to such participant.
(k) Election to Defer Payment. To the extent, if any,
permitted by the Committee, a participant may elect, at such time as the
Committee may in its discretion specify, to defer payment of all or a portion of
an Award.
(l) Non-Competition. The Committee may condition the
Committee's discretionary-waiver of a forfeiture or vesting acceleration at the
time of Termination of a participant holding any unexercised or unearned Award
or the waiver of restrictions upon any Award upon a requirement that such
participant agree to and actually (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) be
available, unless such participant shall have died, for consultations at the
request of the Company's management, all on such terms and
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conditions (including conditions in addition to (i) and (ii)) as the Committee
may determine.
(m) Dividends. The reinvestment of dividends in additional
Stock or Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Awards).
(n) Regulatory Compliance. Each Award under the Plan shall be
subject to the condition that, if at any time the Committee shall determine that
(i) the listing, registration or qualification of the shares of Stock, Common
Shares or Preferred Shares upon any securities exchange or under any state or
federal law, (ii) the consent or approval of any government or regulatory body
or (iii) an agreement or representations by the participant with respect
thereto, is necessary or desirable, then such Award shall not be consummated in
whole or in part unless such listing, registration, qualification, consent,
approval, agreement or representations shall have been effected or obtained free
of any conditions not acceptable to the Committee.
(o) Rights as Shareholder. Unless the Plan or the Committee
expressly specifies otherwise, a participant shall have no rights as a
shareholder with respect to any shares covered by an Award until the participant
is entitled, under the terms of the Award, to receive such shares. Subject to
Sections 3(c) and 7(c), no adjustment shall be made for dividends or other
rights for which the record date is prior to the date the certificates are
delivered.
(p) Beneficiary Designation. The Committee, in its discretion,
may establish procedures for a participant to designate a beneficiary to whom
any amounts payable in the event of the participant's death are to be paid.
(q) Additional Plans. Nothing contained in the Plan shall
prevent the Company, a Subsidiary or Affiliate from adopting other or additional
compensation arrangements for its employees.
(r) No Employment Rights. The adoption of the Plan shall not
confer upon any employee any right to continued employment nor shall it
interfere in any way with the right of the Company, a Subsidiary or Affiliate to
terminate the employment of any employee at any time.
(s) Rule 16b-3. Notwithstanding any provision of the Plan, the
Plan shall always be administered, and Awards shall always be granted and
exercised, in such a manner as to conform to the provisions of Rule 16b-3,
unless the Committee determines that Rule 16b-3 is not applicable to the Plan.
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(t) Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, and any Option, Performance Share Award, Stock Appreciation Right or Stock
Purchase Right granted, or Restricted Stock awarded, to any individual who is
then subject to Section 16 of the Exchange Act, shall be subject to any
additional limitations set forth in any applicable exemptive rule under Section
16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange
Act) that are requirements for the application of such exemptive rule. Any such
additional limitation shall be set forth in an annex to this Plan, such annex to
be incorporated herein by this reference and made part of this Plan. To the
extent permitted by applicable law, the Plan, Options, Performance Share Awards,
Stock Appreciation Rights, Stock Purchase Rights and Restricted Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan, any Option or Stock Appreciation Right intended to qualify as
performance-based compensation as described in Section 162(m) of the Code shall
be subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as
performance-based compensation as described in Section 162(m) of the Code, and
this Plan shall be deemed amended to the extent necessary to conform to such
requirements.
(u) Governing Law. The Plan and all Awards shall be governed
by and construed in accordance with the laws of the State of California.
(v) Use of Proceeds. All cash proceeds to the Company under
the Plan shall constitute general funds of the Company.
(w) Unfunded Status of Plan. The Plan shall constitute an
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or arrangements to meet the obligations created
under the Plan to deliver Stock or make payments; provided, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.
(x) Assumption by Successor. The obligations of the Company
under the Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the meaning
of "Company."
(y) Plan Designation and Status. Notwithstanding the
designation of this document as a plan for ease of reference and to standardize
certain provisions applicable to all types of Awards, each type of Award shall
be deemed to be a separate "plan" for purposes of Section 16 of the Exchange Act
and any applicable state securities laws.
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(z) Certain Timing Requirements. Securities of the Company
issuable to the participant upon exercise of an Award may be used to satisfy the
exercise price or the tax withholding consequences of such exercise only (i)
during the period beginning on the third business day following the date of
release of the quarterly or annual summary statement of sales and earnings of
the Company and ending on the twelfth business day following such date or (ii)
pursuant to an irrevocable written election by the participant to use securities
of the Company issuable to the participant upon exercise of the Award to pay all
or part of the exercise price or the withholding taxes (subject to the approval
of the Committee) made at least 6 months prior to the payment of such exercise
price or withholding taxes.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
consent. In addition, to the extent required for the Plan to comply with Rule
16b-3 or, with respect to provisions solely as they relate to Incentive Stock
Options, to the extent required for the Plan to comply with Section 422 of the
Code, the Board may not amend or alter the Plan without the approval of a
majority of the votes cast at a duly held meeting of shareholders at which a
quorum of the voting power of the Company is represented in person or by proxy,
where such amendment or alteration would:
(a) except as expressly provided in the Plan, increase the
total number of shares reserved for issuance pursuant to Awards under the Plan
or modify the Award Limit;
(b) except as expressly provided in the Plan, change the
minimum price terms of Sections 5(b)(iv), 7(a) or 8(a);
(c) change the class of employees and consultants eligible to
participate in the Plan;
(d) extend the maximum Option term under Section 5(b) or the
maximum exercise period under Section 8(b); or
(e) materially increase the benefits accruing to participants
under the Plan.
The Board of Directors may, at any time without shareholder
approval, amend the Plan and the terms of any Award outstanding under the Plan,
provided that such amendment is designed to maximize federal income tax benefits
accorded to Awards or, if the Committee determines that Rule 16b-3 is applicable
to the Plan, to
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comply with Rule 16b-3 and provided further, that with respect to outstanding
Awards, the participant consents to such amendment.
SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the
Board, but all Awards shall be conditioned upon approval of the Plan at a duly
held meeting of shareholders by the affirmative vote of the holders of a
majority of the voting power of the shares of the Company represented in person
or by proxy and entitled to vote at the meeting.
SECTION 14. TERM OF PLAN.
No Award shall be granted on or after May 6, 2006, but Awards
granted prior to May 6, 2006 (including, without limitation, Performance Share
Awards for Performance Periods commencing prior to May 6, 2006) may extend
beyond that date.
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