2001 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AS AMENDED BY THE BOARD ON MARCH 7, 2005
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The QUALCOMM
Incorporated 2001 Non-Employee
Directors' Stock Option Plan (the "PLAN") was originally established effective
as of February 27, 2001 (the "EFFECTIVE DATE"), which was the date the Plan was
approved by Company shareholders. On March 7, 2005, the Board approved this
amended and restated Plan (the "AMENDMENT DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward Non-Employee Directors of the Company by creating
an additional incentive for such persons to contribute to the growth and
profitability of the Participating Company Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan have lapsed.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "AFFILIATE" means (i) an entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities, or (iii) an entity which the Board designates
as an Affiliate. For this purpose, the term "control" (including the term
"controlled by") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.
(b) "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"BOARD" also means such Committee(s).
(c) A "CHANGE IN CONTROL" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, a "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting securities of the Company or, in the case of a
Transaction described in Section 2.1(u)(iii), the corporation or other business
entity to which the assets of the Company were transferred (the "TRANSFEREE"),
as the case may be. The Board shall determine in its sole discretion whether
multiple sales or exchanges of the voting securities of the Company or multiple
Ownership Change Events are related. Notwithstanding the preceding sentence, a
Change in Control shall not include a Spinoff Transaction.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(e) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
(f) "COMPANY" means QUALCOMM
Incorporated, a Delaware
corporation, or any Successor.
(g) "CONSULTANT" means a person engaged to provide consulting
or advisory services (other than as an Employee or a Director) to a
(h) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(i) "DIRECTOR FEES" mean a Non-Employee Director's annual
retainer fee, meeting fees and any other compensation payable with respect to
such individual's Service as a Director.
(j) "DISABILITY" means the Participant has been determined
eligible for supplemental Security Income benefits by the Social Security
Administration of the United States of America and also means the inability of
the Participant, in the opinion of a qualified physician acceptable to the
Company, to perform the duties of the Participant's position with the
Participating Company Group because of sickness or other physical or mental
(k) "EMPLOYEE" means any person treated as an employee
(including an Officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither Service as a
Director nor payment of a Director Fee shall be sufficient to constitute
employment for purposes of the Plan.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
(m) "FAIR MARKET VALUE" means, as of any date, the value of
the Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market system or the Nasdaq
SmallCap Market system of the Nasdaq Stock Market established by the National
Association of Securities Dealers, Inc., 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 exchange or market (or if the
stock is traded on more than one exchange or market, the exchange or market with
the greatest volume of trading in 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 Board deems reliable.
(ii) In the absence of such markets for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.
(n) "NON-CONTROL AFFILIATE" means any entity in which any
Participating Company has an ownership interest and which the Board shall
designate as a Non-Control Affiliate.
(o) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is
not an Employee of a Participating Company Group.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended
to be (as set forth in the Option Agreement) or which does not qualify as an
incentive stock option within the meaning of Section 422(b) of the Code.
(q) "NORMAL RETIREMENT AGE" means the date on which a
Participant has attained the age of seventy (70) years and has completed nine
years of continuous Service.
(r) "OFFICER" means any person designated by the Board as an
officer of the Company.
(s) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
(t) "OPTION AGREEMENT" means an agreement, in such form as the
Board may approve, between the Company and a Participant setting forth the
terms, conditions and restrictions of an Option granted to the Participant and
any shares acquired upon the exercise thereof.
(u) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all, as determined by the Board in its discretion, of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.
(v) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(w) "PARTICIPANT" means any eligible person who has been
granted one or more Options.
(x) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation or Affiliate.
(y) "PARTICIPATING COMPANY GROUP" means, at any point in time,
all entities collectively which are then Participating Companies.
(z) "PRIOR PLAN OPTION" means, any option granted pursuant to
the Company's 1998 Non-Employee Directors' Stock Option Plan which is
outstanding on or after the date on which the Board adopts the Plan or which is
granted thereafter and prior to the Effective Date.
(aa) "RULE 16B-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.
(bb) "SECURITIES ACT" means the Securities Act of 1933, as
(cc) "SERVICE" means
(i) a Participant's employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant's Service. The Participant's
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the entity for which the Participant performs Service ceasing to
be a Participating Company; except that if the entity for which the Participant
performs Service is a Subsidiary Corporation and ceases to be a Participating
Company as a result of the distribution of the voting stock of such Subsidiary
Corporation to the shareholders of the Company or a Parent Corporation, Service
shall not be deemed to have terminated as a result of such distribution. Subject
to the foregoing, the Company, in its discretion, shall determine whether the
Participant's Service has terminated and the effective date of such termination.
(ii) Notwithstanding any other provision of this
Section, a Participant's Service shall not be deemed to have terminated merely
because the Participating Company for which the Participant renders Service
ceases to be a member of the Participating Company Group by reason of a Spinoff
Transaction, nor shall Service be deemed to have terminated upon resumption of
Service from the Spinoff Company to a Participating Company. For all purposes
under this Plan, a Participant's Service shall include Service, whether in the
capacity of an Employee, Director or a Consultant, for the Spinoff Company
provided a Participant was employed by the Participating Company Group
immediately prior to the Spinoff Transaction. Notwithstanding the foregoing, if
the Company's auditors determine that the provisions or operation of the
preceding two sentences would cause the Company to incur a compensation expense
and provided further that in the absence of the preceding two sentences no such
compensation expense would be incurred, then the two preceding sentences shall
force or effect, and the vesting and exercisability of each outstanding Option
and any shares acquired upon the exercise thereof shall be determined under any
other applicable provision of the Plan or the Option Agreement evidencing such
(dd) "SPINOFF COMPANY" means a Participating Company which
ceases to be such as a result of a Spinoff Transacton.
(ee) "SPINOFF TRANSACTION" means a transaction in which the
voting stock of an entity in the Participating Company Group is distributed to
the shareholders of a parent corporation as defined by Section 424(e) of the
Code, of such entity.
(ff) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(gg) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
(hh) "SUCCESSOR" means a corporation into or with which the
Company is merged or consolidated or which acquires all or substantially all of
the assets of the Company and which is designated by the Board as a Successor
for purposes of the Plan.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board and its designees.
3.2 AUTHORITY OF OFFICERS. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has actual authority with respect to
such matter, right, obligation, determination or election. Any decision or
determination of the Company made by an Officer having actual authority with
respect thereto, shall be final, binding and conclusive on the Participating
Company Group, any Participant, and all persons having an interest in the Plan,
or any Option granted hereunder, unless such Officer's decision or determination
is arbitrary or capricious, fraudulent, or made in bad faith.
3.3 POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion:
(a) To construe and interpret the provisions of the Plan and
Options granted under it, in its discretion; to establish, amend and revoke
rules and regulations for its administration, and to take all such actions and
make all such decisions as may be necessary or
appropriate for the operation and administration of the Plan, including, without
limitation, all such decisions and determinations as may be expressly delegated
to the Board by the terms of the Plan. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem, in its discretion,
necessary, desirable, appropriate or expedient to make the Plan fully effective.
(b) To amend the Plan or an Option as provided in Section 11.
(c) Generally, to exercise such powers and to perform such
acts as the Board deems necessary, desirable, appropriate or expedient to
promote the best interests of the Company which are not in conflict with the
provisions of the Plan.
(d) The Board's determination of the construction and
interpretation of any provision of the Plan, and any actions taken, and any
decisions or determinations made pursuant to the terms of the Plan which are
made in good faith shall be final, binding and conclusive on the Participating
Company Group, any Participant, and any person having an interest in the Plan or
any Option granted hereunder.
3.4 POWERS OF THE COMMITTEE. If administration is delegated to the
Committee, then the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board (and references in
this Plan to the Board shall thereafter be deemed to refer also to such
Committee), except as may be expressly limited in the delegation of power or as
provided in the next sentence. Notwithstanding the foregoing, the powers of the
Committee are limited as follows: (i) construction and interpretation of the
Plan by the Committee shall be subject to review by the Board, as determined by
the Board in its sole discretion, (ii) the requirements of the Delaware
Corporation Law shall be complied with at all times, and (iii) the Committee
cannot make a discretionary grant under the Plan, nor amend the terms of an
automatic grant under the Plan unless such grant would still be exempt from the
application of Section 16 of the Exchange Act. The Board may abolish, or limit
the powers of, the Committee at any time and revest in the Board all or some of
the administration of the Plan.
3.5 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or Officers or
Employees of the Participating Company Group, members of the Board and any
Officers or Employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same, and to retain complete control over the litigation and/or
settlement of such suit, action or proceeding.
3.6 ARBITRATION. Any dispute or claim concerning any Options granted
(or not granted) pursuant to this Plan and any other disputes or claims relating
to or arising out of the Plan shall be fully, finally and exclusively resolved
by binding arbitration conducted pursuant to the Commercial Arbitration Rules of
the American Arbitration Association in San Diego, California
. By accepting an
Option, Participants and the Company waive their respective rights to have any
such disputes or claims tried by a judge or jury.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Twelve Million Six Hundred Thousand
(12,600,000) (after adjustment to reflect the Company's stock dividend on August
13, 2004). The share reserve shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. However, the share
reserve, determined at any time, shall be reduced by the number of shares
subject to the Prior Plan Options. If an outstanding Option, including a Prior
Plan Option, for any reason expires or is terminated or canceled or if shares of
Stock are acquired upon the exercise of an Option subject to a Company
repurchase option and are repurchased by the Company at the Participant's
exercise or purchase price, the shares of Stock allocable to the unexercised
portion of such Option or Prior Plan Option or such repurchased shares of Stock
shall again be available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and in the exercise price per share of any outstanding
Options. If a majority of the shares which are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event, as
defined in Section 2.1(u)) shares of another corporation (the "NEW SHARES"), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section shall be
rounded down to the nearest whole number, and in no event may the exercise price
of any Option be decreased to an amount less than the par value, if any, of the
stock subject to the Option.
5. ELIGIBILITY FOR PARTICIPATION.
Only those persons who, at the time of grant, are serving as
Non-Employee Directors shall be eligible to become Participants and to be
granted an Option.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Option Agreements specifying, among
other things, the number of shares of Stock covered thereby, in such form as the
Board shall from time to time
establish. Option Agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
6.1 AUTOMATIC GRANT. Subject to the execution by a Non-Employee
Director of an appropriate Option Agreement, Options shall be granted
automatically and without further action of the Board, as follows:
(a) INITIAL OPTION PRIOR TO AMENDMENT DATE. Each Non-Employee
Director shall be granted an Option to purchase twenty thousand (20,000) shares
of Stock (an "INITIAL OPTION") on the date such person first becomes a
Non-Employee Director after the Effective Date; provided, however, that an
Initial Option shall not be granted to a Director who is an Employee and who
subsequently becomes a Non-Employee Director as a result of the termination of
his or her status as an Employee.
(b) INITIAL OPTION AFTER AMENDMENT DATE. Each Non-Employee
Director shall be granted an Initial Option to purchase forty thousand (40,000)
shares of Stock on the date such person first becomes a Non-Employee Director
after the Amendment Date; provided, however, that an Initial Option shall not be
granted to a Director who is an Employee and who subsequently becomes a
Non-Employee Director as a result of the termination of his or her status as an
(c) ANNUAL OPTION PRIOR TO AMENDMENT DATE. Each Non-Employee
Director (including any Non-Employee Director who previously did not qualify as
a Non-Employee Director because of his or her status as an Employee) was
granted, prior to the Amendment Date, on the date of each annual meeting of the
stockholders of the Company (an "ANNUAL MEETING") immediately following which
such person remains a Non-Employee Director, an Option to purchase ten thousand
(10,000) shares of Stock (an "ANNUAL OPTION"); provided, however, that a
Non-Employee Director granted an Initial Option on, or within a period of 270
days prior to, the date of an Annual Meeting shall not be granted an Annual
Option for such Annual Meeting.
(d) ANNUAL OPTION AFTER AMENDMENT DATE. Each Non-Employee
Director (including any Non-Employee Director who previously did not qualify as
a Non-Employee Director because of his or her status as an Employee) shall be
granted, after the Amendment Date, on the date of each Annual Meeting
immediately following which such person remains a Non-Employee Director, an
Annual Option to purchase eighteen thousand (18,000) shares of Stock; provided,
however, that a Non-Employee Director granted an Initial Option on, or within a
period of 270 days prior to, the date of an Annual Meeting shall not be granted
an Annual Option for such Annual Meeting.
(e) RIGHT TO DECLINE OPTION. Notwithstanding the foregoing,
any person may elect not to receive an Option pursuant to this Section by
delivering written notice of such election to the Board no later than the day
prior to the date such Option would otherwise be granted. A person so declining
an Option shall receive no payment or other consideration in lieu of such
declined Option. A person who has declined an Option may revoke such election by
delivering written notice of such revocation to the Board no later than the day
prior to the date such Option would be granted pursuant to Section 6.1(a), (b),
(c) or (d) as the case may be.
6.2 EXERCISE PRICE. The exercise price per share of Stock subject to
an Option shall be the Fair Market Value of a share of Stock on the date of
grant of the Option.
6.3 EXERCISABILITY AND TERM OF OPTIONS. Each Option shall vest and
become exercisable as set forth below and shall terminate and cease to be
exercisable on the tenth (10) anniversary date of grant of the Option, unless
earlier terminated in accordance with the terms of the Plan or the Option
Agreement evidencing such Option.
(a) INITIAL OPTIONS. Except as otherwise provided in the Plan
or in the Option Agreement evidencing such Option, each Initial Option shall
vest and become exercisable as follows: (i) twenty percent (20%) of the Initial
Option shall vest and become exercisable on the first anniversary of the date of
grant of the Option, and (ii) 1/60th of the Initial Option shall vest and become
exercisable each month, beginning on the date thirteen 13 months after the date
of grant of the Option, provided the Participant's Service has not been
terminated prior to such date.
(b) ANNUAL OPTIONS. Except as otherwise provided in the Plan
or in the Option Agreement evidencing such Option, each Annual Option shall vest
and become exercisable as follows: (i) ten percent (10%) of the Annual Option
shall vest and become exercisable on the date six (6) months after the grant of
the Option, and (ii) 1/60th of the Annual Option shall vest and become
exercisable each month, beginning on the date seven (7) months after the date of
grant of the Option, provided the Participant's Service has not terminated prior
to such date.
6.4 EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time while an Employee,
Director or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased shall be subject to a repurchase right in favor of
the Company, with the repurchase price to be equal to the original purchase
price of the Common Stock, or to any other restriction the Board determines to
be appropriate; provided, however, that (i) the right to repurchase at the
original purchase price shall lapse at the same rate as the Option vests as
described elsewhere in the Plan, and (ii) such right shall be exercisable only
within (A) the ninety (90) day period following the termination of the
Participant's Service or (B) such longer period as may be agreed to by the
Company and the Participant.
6.5 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "CASHLESS EXERCISE"), (iv) by such other consideration as may be
approved by the Board from time to time to the extent permitted by
applicable law, or (v) by any combination thereof. The Board may at any time or
from time to time, by approval of or amendment to the standard form of Option
Agreement, grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.
(b) LIMITATIONS ON FORMS OF CONSIDERATION.
(i) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months (and were not used
for another Option exercise by attestation during such period) or were not
acquired, directly or indirectly, from the Company.
(ii) CASHLESS EXERCISE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.
6.6 TRANSFERABILITY. An Option shall not be transferable in any
manner (including without limitation, sale, alienation, anticipation, pledge,
encumbrance, or assignment) other than, (i) by will or by the laws of descent
and distribution, (ii) by written designation of a beneficiary, in a form
acceptable to the Company, with such designation taking effect upon the death of
a Participant, (iii) by delivering written notice to the Company, in a form
acceptable to the Company (including such representations, warranties and
indemnifications as the Company shall require a Participant to make to protect
the Company's interests and ensure that this Option has been transferred under
the circumstances approved by the Company), by gift to a Participant's spouse,
former spouse, children, stepchildren, grandchildren, parent, stepparent,
grandparent, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, persons having one of the
foregoing types of relationship with a Participant due to adoption, any person
sharing a Participant's household (other than a tenant or employee), a
foundation in which these persons or the Participant control the management of
assets, and any other entity in which these persons (or the Participant) own
more than fifty percent of the voting interests. A transfer to an entity in
which more than fifty percent of the voting interests are owned by these persons
(or the Participant) in exchange for an interest in that entity is specifically
included as a permissible type of transfer. In addition, a transfer to a trust
created solely for the benefit (i.e., a Participant and/or any or all of the
foregoing persons hold more than 50 percent of the beneficial interest in the
trust) of a Participant and/or any or all of the foregoing persons is also a
permissible transferee, or (iv) such other transferees as may be authorized by
the Board in its sole and absolute discretion. During a Participant's life this
Option is exercisable only by the Participant or a transferee satisfying the
above conditions. Except in the event of a Participant's death, upon transfer of
an Option to any or all of the foregoing persons, the Participant, as the
Optionee, is liable for any and all taxes due upon exercise of those transferred
Options. At no time will a transferee who is considered an affiliate under Rule
144(a)(1) be able to sell any or all such Stock without complying with Rule 144.
The right of a transferee to exercise the transferred portion of this Option
shall terminate in
accordance with the Participant' s right of exercise under this Option and is
further subject to such representations, warranties and indemnifications from
the transferee that the Company requires the transferee to make to protect the
Company's interests and ensure that this Option has been transferred under the
circumstances approved by the Company. Once a portion of an Option is
transferred, no further transfer may be made of that portion of the Option.
6.7 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Subject to earlier termination of
the Option as otherwise provided herein and unless otherwise provided by the
Board in the grant of an Option and set forth in the Option Agreement, an Option
shall be exercisable after a Participant's termination of Service only during
the applicable time period determined in accordance with this Section and
thereafter shall terminate.
(i) DISABILITY AND NORMAL RETIREMENT AGE. If a
Participant's Service terminates because of the Participant's Disability or
after the Participant reaches Normal Retirement Age, then except as otherwise
provided in Section 6.7(a)(ii), (A) the Participant's Service shall be deemed to
continue and the exercisability and vesting of the Option and, in the case of an
immediately exercisable option, the shares acquired upon exercise thereof shall
continue under the terms and conditions of the Option Agreement, and (B) the
Option to the extent unexercised and exercisable may be exercised by the
Participant (or, the Participant's guardian or legal representative) at any time
prior to the expiration of the Option's term as set forth in the Option
Agreement evidencing such Option (the "Option Expiration Date").
(ii) DEATH. If the Participant's Service terminates
because of the death of the Participant, or if the Participant dies after
attaining Normal Retirement Age, or after the Disability of the Participant
then, (A) the exercisability and vesting of the Option and any shares acquired
on the exercise thereof shall be accelerated effective as of the date of the
Participant's death, and (B) the Option, to the extent unexercised and
exercisable on the date of the Participant's death, may be exercised by the
Participant's legal representative or other person who acquired the right to
exercise the Option by reason of the Participant's death at any time prior to
the expiration of twelve (12) months after the date of the Participant's death,
but in any event no later than the Option Expiration Date.
(iii) OTHER TERMINATION OF SERVICE. If the Participant's
Service with the Participating Company Group terminates prior to Normal
Retirement Age for any reason except Disability, or death, the Option, to the
extent unexercised and exercisable by the Participant on the date on which the
Participant's Service terminates, may be exercised by the Participant at any
time prior to the expiration of twelve (12) months after the date on which the
Participant's Service terminates, but in any event no later than the Option
(b) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth in Section 6.7(a) is prevented by the provisions of Section 10 below,
the Option shall remain exercisable until three (3) months after the date the
Participant is notified by the Company that the Option is exercisable, but in
any event no later than the Option Expiration Date.
(c) EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.7(a) of shares acquired upon the exercise of the Option would
subject the Participant to suit under Section 16(b) of the Exchange Act, the
Option shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of such shares by the Participant
would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Participant's termination of Service, or (iii) the Option
7. STANDARD FORMS OF AGREEMENTS.
7.1 OPTION AGREEMENT. Unless otherwise provided by the Board at the
time the Option is granted, an Option shall comply with and be subject to the
terms and conditions set forth in the form of Option Agreement approved by the
Board concurrently with its adoption of the Plan and as amended from time to
7.2 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any standard form of agreement described in
this Section 7 either in connection with the grant or amendment of an individual
Option or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of agreement are not inconsistent with the terms
of the Plan.
8. CHANGE IN CONTROL.
In the event of a Change in Control, any unexercisable or unvested
portions of outstanding Options and any shares acquired upon the exercise
thereof held by Participants whose Service has not terminated prior to such date
shall be immediately exercisable and vested in full as of the date ten (10) days
prior to the date of the Change in Control. The exercise or vesting of any
Option and any shares acquired upon the exercise thereof that was permissible
solely by reason of this Section shall be conditioned upon the consummation of
the Change in Control. In addition, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and obligations
under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, if the corporation the stock
of which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 2.1(u)(i) constituting a Change in Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
9. TAX WITHHOLDING.
9.1 TAX WITHHOLDING IN GENERAL. The Company shall have the right to
deduct from any and all payments made under the Plan, or to require the
Participant, through cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Option or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock or to release
shares of Stock from an escrow established pursuant to an Option Agreement until
the Participating Company Group's tax withholding obligations have been
satisfied by the Participant.
9.2 WITHHOLDING IN SHARES. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable to a Participant
upon the exercise of an Option, or to accept from the Participant the tender of,
a number of whole shares of Stock having a Fair Market Value, as determined by
the Company, equal to all or any part of the tax withholding obligations of the
Participating Company Group. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not
exceed the amount determined by the applicable minimum statutory withholding
10. COMPLIANCE WITH SECURITIES LAW.
The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal 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. As a condition to the exercise of any
Option, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty with respect
thereto as may be requested by the Company.
11. TERMINATION OR AMENDMENT OF PLAN.
The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.2),
and (b) no other amendment of the Plan that would require approval of the
Company's stockholders under any applicable law, regulation or rule. No
termination or amendment of the Plan shall affect any then outstanding Option
unless expressly provided by the Board. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Option without
the consent of the Participant, unless such termination or amendment is
necessary to comply with any applicable law, regulation or rule.
12. MISCELLANEOUS PROVISIONS.
12.1 REPURCHASE RIGHTS. Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its sole and absolute discretion
at the time the Option is granted. The Company shall have the right to assign at
any time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Participant shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.
12.2 PROVISION OF INFORMATION. Each Participant shall be given
access to information concerning the Company equivalent to that information
generally made available to the Company's common stockholders.