LSI LOGIC CORPORATION 2003 EQUITY INCENTIVE PLAN (Amended and Restated May 5, 2004)
TABLE OF CONTENTS
| Page | ||
SECTION 1 BACKGROUND AND PURPOSE |
1 | |
1.1 Background and Effective Date |
1 | |
1.2 Purpose of the Plan |
1 | |
SECTION 2 DEFINITIONS |
1 | |
2.1 “1934 Act” |
1 | |
2.2 “Affiliate” |
1 | |
2.3 “Award” |
1 | |
2.4 “Award Agreement” |
1 | |
2.5 “Board” or “Board of Directors” |
1 | |
2.6 “Cash Flow” |
1 | |
2.7 “Code” |
2 | |
2.8 “Committee” |
2 | |
2.9 “Company” |
2 | |
2.10 “Director” |
2 | |
2.11 “Disability” |
2 | |
2.12 “Earnings Per Share” |
2 | |
2.13 “Employee” |
2 | |
2.14 “Exchange Program” |
2 | |
2.15 “Exercise Price” |
2 | |
2.16 “Fair Market Value” |
2 | |
2.17 “Fiscal Year” |
2 | |
2.18 “Grant Date” |
2 | |
2.19 “Incentive Stock Option” |
2 | |
2.20 “Measurement Period” |
3 | |
2.21 “Nonemployee Director” |
3 | |
2.22 “Nonqualified Stock Option” |
3 | |
2.23 “Option” |
3 | |
2.24 “Participant” |
3 | |
2.25 “Performance Goals” |
3 | |
2.26 “Period of Restriction” |
3 | |
2.27 “Plan” |
3 | |
2.28 “Profit After Tax” |
3 | |
2.29 “Profit Before Tax” |
3 | |
2.30 “Restricted Stock” |
3 | |
2.31 “Restricted Stock Unit” |
3 | |
2.32 “Retirement” |
4 | |
2.33 “Return on Capital” |
4 | |
2.34 “Return on Equity” |
4 | |
2.35 “Return on Sales” |
4 | |
2.36 “Revenue” |
4 | |
2.37 “Rule 16b-3” |
4 | |
2.38 “Section 16 Person” |
4 |
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TABLE OF CONTENTS
(continued)
(continued)
| Page | ||
2.39 “Shares” |
4 | |
2.40 “Stock Unit” |
4 | |
2.41 “Subsidiary” |
4 | |
2.42 “Termination of Service” |
4 | |
2.43 “Total Shareholder Return” |
4 | |
SECTION 3 ADMINISTRATION |
5 | |
3.1 The Committee |
5 | |
3.2 Authority of the Committee |
5 | |
3.3 Delegation by the Committee |
5 | |
3.4 Decisions Binding |
5 | |
SECTION 4 SHARES SUBJECT TO THE PLAN |
5 | |
4.1 Number of Shares |
5 | |
4.2 Lapsed Awards |
5 | |
4.3 Adjustments in Awards and Authorized Shares |
5 | |
SECTION 5 STOCK OPTIONS |
6 | |
5.1 Grant of Options |
6 | |
5.2 Award Agreement |
6 | |
5.3 Exercise Price |
6 | |
5.4 Expiration of Options |
7 | |
5.5 Exercisability of Options |
7 | |
5.6 Payment |
7 | |
5.7 Restrictions on Share Transferability |
8 | |
5.8 Certain Additional Provisions for Incentive Stock Options |
8 | |
SECTION 6 RESTRICTED STOCK |
8 | |
6.1 Grant of Restricted Stock |
8 | |
6.2 Restricted Stock Agreement |
8 | |
6.3 Transferability |
9 | |
6.4 Other Restrictions |
9 | |
6.5 Removal of Restrictions |
9 | |
6.6 Voting Rights |
9 | |
6.7 Dividends and Other Distributions |
9 | |
6.8 Return of Restricted Stock to Company |
9 | |
SECTION 7 RESTRICTED STOCK UNITS |
10 | |
7.1 Grant of Restricted Stock Units |
10 | |
7.2 Restricted Stock Unit Agreement |
10 | |
7.3 Transferability |
10 | |
7.4 Other Restrictions |
10 | |
7.5 Award Payout |
10 | |
7.6 Dividends and Other Distributions |
11 | |
7.7 Cancellation |
11 |
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TABLE OF CONTENTS
(continued)
(continued)
| Page | ||
SECTION 8 MISCELLANEOUS |
11 | |
8.1 Deferrals |
11 | |
8.2 No Effect on Employment or Service |
11 | |
8.3 Participation |
11 | |
8.4 Indemnification |
11 | |
8.5 Successors |
11 | |
8.6 Limited Transferability of Awards |
12 | |
8.7 Beneficiary Designations |
12 | |
8.8 No Rights as Stockholder |
12 | |
SECTION 9 AMENDMENT, TERMINATION, AND DURATION |
12 | |
9.1 Amendment, Suspension, or Termination |
12 | |
9.2 Duration of the Plan |
12 | |
SECTION 10 TAX WITHHOLDING |
13 | |
10.1 Withholding Requirements |
13 | |
10.2 Withholding Arrangements |
13 | |
SECTION 11 LEGAL CONSTRUCTION |
13 | |
11.1 Gender and Number |
13 | |
11.2 Severability |
13 | |
11.3 Requirements of Law |
13 | |
11.4 Securities Law Compliance |
13 | |
11.5 Governing Law |
13 | |
11.6 Captions |
13 |
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LSI LOGIC CORPORATION
2003 EQUITY INCENTIVE PLAN
2003 EQUITY INCENTIVE PLAN
SECTION 1
BACKGROUND AND PURPOSE
BACKGROUND AND PURPOSE
1.1 Background and Effective Date. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Restricted Stock and Restricted
Stock Units. The Plan was
effective as of March 20, 2003, and was amended and restated in May
2004.
1.2 Purpose of the Plan. The Plan is intended to attract, motivate, and retain
employees of the Company and its Affiliates. The Plan also is designed to encourage stock
ownership by Participants, thereby aligning their interests with those of the Company’s
shareholders and to permit the payment of compensation that qualifies as performance-based
compensation under section 162(m) of the Code.
SECTION 2
DEFINITIONS
DEFINITIONS
The following words and phrases shall have the following meanings unless a different meaning
is plainly required by the context:
2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a
specific section of the 1934 Act or regulation thereunder shall include such section or regulation,
any valid regulation promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or regulation.
2.2 “Affiliate” means any corporation or any other entity (including, but not limited
to, partnerships and joint ventures) controlling, controlled by, or under common control with the
Company.
2.3 “Award” means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, Restricted Stock and/or Restricted Stock
Units.
2.4 “Award Agreement”
means the written agreement setting forth the terms and provisions applicable to each Award
granted under the Plan.
2.5 “Board” or “Board of Directors” means the Board of Directors of the Company.
2.6 “Cash Flow” means the Company’s or a business unit’s sum of Profit After Tax plus
depreciation and amortization less capital expenditures plus changes in working capital comprised
of accounts receivable, inventories, other current assets, trade accounts payable, accrued
expenses, product warranty, advance payments from customers and long-term accrued expenses,
determined in accordance with generally acceptable accounting principles.
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2.7 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section or regulation, any
valid regulation promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or regulation.
2.8 “Committee” means the committee appointed by the Board (pursuant to Section 3.1)
to administer the Plan.
2.9 “Company” means LSI Logic Corporation, a Delaware corporation, or any successor
thereto.
2.10 “Director” means any individual who is a member of the Board of Directors of the
Company.
2.11 “Disability” means a permanent and total disability determined in accordance
with uniform and nondiscriminatory standards adopted by the Committee from time to time.
2.12 “Earnings Per Share” means the Company’s or a business unit’s Profit After Tax,
divided by a weighted average number of common shares outstanding and dilutive common equivalent
shares deemed outstanding, determined in accordance with generally accepted accounting principles.
2.13 “Employee” means any employee of the Company or of an Affiliate, whether such
employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the
adoption of the Plan.
2.14 “Exchange Program” means a program established by the Committee under which
outstanding Awards are amended to provide for a lower Exercise Price or surrendered or cancelled in
exchange for (a) Awards with a different Exercise Price, (b) a different type of Award, (c) cash,
or (d) a combination of (a), (b) and/or (c).
2.15 “Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.
2.16 “Fair Market Value” means the closing price per Share on the New York Stock
Exchange on the relevant date, or if there were no sales on such date, the closing price per Share
on the nearest day before the relevant date, as determined by the Committee. Notwithstanding the
preceding, for federal, state, and local income tax reporting purposes, fair market value shall be
determined by the Committee (or its delegate) in accordance with uniform and nondiscriminatory
standards adopted by it from time to time.
2.17 “Fiscal Year” means the fiscal year of the Company.
2.18 “Grant Date” means, with respect to an Award, the date that the Award was
granted.
2.19 “Incentive Stock Option” means an Option to purchase Shares that is designated
as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code.
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2.20 “Measurement Period” means the period during which the satisfaction of
performance objectives will be measured to earn a payout of Stock Units. As provided in Section 7,
such performance objectives may be based on the passage of time, the achievement of target levels
of performance, or the occurrence of other events or conditions, as determined by the Committee, in
its discretion.
2.21 “Nonemployee Director” means a Director who is an employee of neither the
Company nor of any Affiliate.
2.22 “Nonqualified Stock Option” means an option to purchase Shares that is not
intended to be an Incentive Stock Option.
2.23 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.
2.24 “Participant” means an Employee or Nonemployee Director who has an outstanding
Award.
2.25 “Performance Goals” means the goal(s) (or combined goal(s)) determined by the
Committee (in its discretion) to be applicable to a Participant with respect to an Award. As
determined by the Committee, the Performance Goals applicable to an Award may provide for a
targeted level or levels of achievement using one or more of the following measures: (a) Cash Flow,
(b) Earnings per Share, (c) Profit After Tax, and (d) Profit Before Tax, (e) Return on Capital, (f)
Return on Equity, (g) Return on Sales, (h) Revenue, (i) Total Shareholder Return. The Performance
Goals may differ from Participant to Participant and from Award to Award. Prior to the
Determination Date, the Committee shall determine whether any significant element(s) shall be
included in or excluded from the calculation of any Performance Goal with respect to any
Participants.
2.26 “Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial
risk of forfeiture. As provided in Section 6, such restrictions may be based on the passage of
time, the achievement of target levels of performance, or the occurrence of other events or
conditions, as determined by the Committee, in its discretion.
2.27 “Plan” means the LSI Logic Corporation 2003 Equity Incentive Plan, as set forth
in this instrument and as hereafter amended from time to time.
2.28 “Profit After Tax” means the Company’s or a business unit’s income after taxes,
determined in accordance with generally accepted accounting principles.
2.29 “Profit Before Tax” means the Company’s or a business unit’s income before
taxes, determined in accordance with generally accepted accounting principles.
2.30 “Restricted Stock” means an Award granted to a Participant pursuant to Section
6.
2.31 “Restricted Stock Unit” means an Award granted to a Participant pursuant to
Section 7.
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2.32 “Retirement” means a Termination of Service occurring on or after the earlier of
(a) age sixty-five (65), or (b) age fifty-five (55) and the completion of ten (10) years of service
with the Company or an Affiliate.
2.33 “Return on Capital” means the Company’s or a business unit’s Profit After Tax
divided by Company’s or business unit’s, as applicable, average invested capital, determined in
accordance with generally accepted accounting principles.
2.34 “Return on Equity” means the percentage equal to the Company’s Profit After Tax
divided by average stockholder’s equity, determined in accordance with generally accepted
accounting principles.
2.35 “Return on Sales” means the percentage equal to the Company’s or a business
unit’s Profit After Tax, divided by the Company’s or the business unit’s, as applicable, Revenue,
determined in accordance with generally accepted accounting principles.
2.36 “Revenue” means the Company’s or business unit’s net sales, determined in
accordance with generally accepted accounting principles.
2.37 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any future
regulation amending, supplementing or superseding such regulation.
2.38 “Section 16 Person” means a person who, with respect to the Shares, is subject
to Section 16 of the 1934 Act.
2.39 “Shares” means the shares of common stock of the Company.
2.40 “Stock Unit” means a bookkeeping entry initially representing any amount
equivalent to the Fair Market Value of one Share. Stock Units represent an unfunded and unsecured
obligation of the Company.
2.41 “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
2.42 “Termination of Service” means (a) in the case of an Employee, a cessation of
the employee-employer relationship between the Employee and the Company or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation, discharge, death,
Disability, Retirement, or the disaffiliation of an Affiliate, but excluding any such termination
where there is a simultaneous reemployment by the Company or an Affiliate; and (b) in the case of a
Nonemployee Director, a cessation of the Director’s service on the Board for any reason, including,
but not by way of limitation, a termination by resignation, death, Disability, Retirement or
non-reelection to the Board.
2.43 “Total Shareholder Return” means the total return (change in share price plus
reinvestment of any dividends) of a Share.
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SECTION 3
ADMINISTRATION
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee. The Committee
shall consist of not less than two (2) Directors who shall be appointed from time to time by, and
shall serve at the pleasure of, the Board of Directors. The Committee shall be comprised solely of
Directors who both are (a) ”non-employee directors” under Rule 16b-3, and (b) “outside directors”
under Section 162(m) of the Code.
3.2 Authority of the Committee. It shall be the duty of the Committee to administer
the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its operation, including,
but not limited to, the power to (a) determine which Employees (including Employees who also are
Directors) shall be granted Awards, (b) prescribe the terms and conditions of the Awards, (c)
interpret the Plan and the Awards,
(d) adopt such procedures and subplans as are necessary or appropriate to permit participation
in the Plan by Employees (including Employees who also are Directors) who are foreign nationals or
employed outside of the United States, (e) adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith and (f) interpret, amend or revoke any such
rules. Notwithstanding any contrary provision of the Plan, the Committee shall not have the
authority to implement an Exchange Program without the approval of the Company’s stockholders.
3.3 Delegation by the Committee. The Committee, in its sole discretion and on such
terms and conditions as it may provide, may delegate all or any part of its authority and powers
under the Plan to one or more Directors or officers of the Company; provided, however, that the
Committee may not delegate its authority and powers (a) with respect to Section 16 Persons, or (b)
in any way which would jeopardize the Plan’s qualification under Section 162(m) of the Code or Rule
16b-3.
3.4 Decisions Binding. All determinations and decisions made by the Committee, the
Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final,
conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.
SECTION 4
SHARES SUBJECT TO THE PLAN
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the total
number of Shares available for grant under the Plan shall not exceed 11,000,000. Shares granted
under the Plan may be either authorized but unissued Shares or treasury Shares.
4.2 Lapsed Awards. If an Award is cancelled, terminates, expires, or lapses for any
reason, any Shares subject to such Award again shall be available to be the subject of an Award,
except as determined by the Committee.
4.3 Adjustments in Awards and Authorized Shares. In the event that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-
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off, combination, repurchase, or exchange of Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting the Shares such that
an adjustment is determined by the Committee (in its sole discretion) to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust the
number and class of Shares and Stock Units that may be delivered under the Plan, the number, class,
and price of Shares and Stock Units subject to outstanding Awards, and the
numerical limits of Sections 5.1, 6.1 and 7.1. Notwithstanding the preceding, the number of
Shares or Stock Units subject to any Award always shall be a whole number.
SECTION 5
STOCK OPTIONS
STOCK OPTIONS
5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be
granted to Employees at any time and from time to time as determined by the Committee in its sole
discretion. The Committee, in its sole discretion, shall determine the number of Shares subject to
each Option, provided that during any Fiscal Year, no Participant shall be granted Options covering
more than 2,000,000 Shares. The Committee may grant Incentive Stock Options, Nonqualified Stock
Options, or a combination thereof.
5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall
specify the Exercise Price, the expiration date of the Option, the number of Shares to which the
Option pertains, any conditions to exercise of the Option, and such other terms and conditions as
the Committee, in its discretion, shall determine. The Award Agreement shall also specify whether
the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.
5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise Price
for each Option shall be determined by the Committee in its sole discretion.
5.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the
Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date.
5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the Exercise
Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the
Grant Date; provided, however, that if on the Grant Date, the Employee (together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d) of the Code) owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or any of its Subsidiaries, the Exercise Price shall be not less than one hundred and ten percent
(110%) of the Fair Market Value of a Share on the Grant Date.
5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1 and 5.3.2,
in the event that the Company or an Affiliate consummates a transaction described in Section 424(a)
of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who
become Employees or Nonemployee Directors on account of such transaction may be granted Options in
substitution for options granted by their former employer. If such substitute Options are granted,
the Committee, in its sole discretion and consistent with Section 424(a) of the
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Code, may determine that such substitute Options shall have an exercise price less than one
hundred percent (100%) of the Fair Market Value of the Shares on the Grant Date.
5.4 Expiration of Options.
5.4.1 Expiration Dates. Each Option shall terminate no later than the first to occur
of the following events:
(a) The date for termination of the Option set forth in the written Award Agreement; or
(b) The expiration of seven (7) years from the Grant Date.
5.4.2 Death of Participant. Notwithstanding Section 5.4.1, if a Participant dies
prior to the expiration of his or her Options, the Committee, in its discretion, may provide that
his or her Options shall be exercisable for up to three (3) years after the date of death.
5.4.3 Committee Discretion. Subject to the limits of Sections 5.4.1 and 5.4.2, the
Committee, in its sole discretion, (a) shall provide in each Award Agreement when each Option
expires and becomes unexercisable, and (b) may, after an Option is granted, extend the maximum term
of the Option (subject to Section 5.8.4 regarding Incentive Stock Options).
5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee shall determine in
its sole discretion. After an Option is granted, the Committee, in its sole discretion, may
accelerate the exercisability of the Option.
5.6 Payment. Options shall be exercised by the Participant’s delivery of a notice of
exercise to the Corporate Secretary of the Company (or its designee), setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full payment for the
Shares. The notice shall be given in the form and manner specified by the Company from time to
time.
Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in
cash or its equivalent. The Committee, in its sole discretion, also may permit exercise (a) by
tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines to both provide legal consideration for the Shares, and to be consistent
with the purposes of the Plan. As soon as practicable after receipt of a written notification of
exercise and full payment for the Shares purchased, the Company shall deliver to the Participant
(or the Participant’s designated broker), Share certificates (which may be in book entry form)
representing such Shares.
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5.7 Restrictions on Share Transferability. The Committee may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including,
but not limited to, restrictions related to applicable federal securities laws, the requirements of
any national securities exchange or system upon which Shares are then listed or traded, or any blue
sky or state securities laws.
5.8 Certain Additional Provisions for Incentive Stock Options.
5.8.1 Exercisability. The aggregate Fair Market Value (determined on the Grant
Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first
time by any Employee during any calendar year (under all plans of the Company and its Subsidiaries)
shall not exceed $100,000.
5.8.2 Termination of Service. No Incentive Stock Option may be exercised more than
three (3) months after the Participant’s Termination of Service for any reason other than
Disability or death, unless (a) the Participant dies during such three-month period, and (b) the
Award Agreement or the Committee permits later exercise. No Incentive Stock Option may be
exercised more than one (1) year after the Participant’s Termination of Service on account of
Disability, unless (a) the Participant dies during such one-year period, and (b) the Award
Agreement or the Committee permit later exercise.
5.8.3 Company and Subsidiaries Only. Incentive Stock Options may be granted only to
persons who are employees of the Company or a Subsidiary on the Grant Date.
5.8.4 Expiration. No Incentive Stock Option may be exercised after the expiration of
seven (7) years from the Grant Date; provided, however, that if the Option is granted to an
Employee who, together with persons whose stock ownership is attributed to the Employee pursuant to
Section 424(d) of the Code, owns stock possessing more than 10% of the total combined voting power
of all classes of the stock of the Company or any of its Subsidiaries, the Option may not be
exercised after the expiration of five (5) years from the Grant Date.
SECTION 6
RESTRICTED STOCK
RESTRICTED STOCK
6.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant shares of Restricted Stock to Employees in
such amounts as the Committee, in its sole discretion, shall determine. The Committee, in its sole
discretion, shall determine the number of Shares to be granted to each Participant as Restricted
Stock, provided that during any Fiscal Year, the sum of the number of Restricted Stock Units and
Shares of Restricted Stock granted to any one Participant shall not exceed 500,000 .
6.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify
the Period of Restriction, the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee determines otherwise,
shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.
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6.3 Transferability. Except as provided in this Section 6, shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.
6.4 Other Restrictions. The Committee, in its sole discretion, may impose such other
restrictions on shares of Restricted Stock as it may deem advisable or appropriate, in accordance
with this Section 6.4.
6.4.1 General Restrictions. The Committee may set restrictions based upon the
achievement of specific performance objectives (Company-wide, divisional, or individual),
applicable federal or state securities laws, or any other basis determined by the Committee in its
discretion.
6.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the
Committee, in its discretion, may set restrictions based upon the achievement of Performance Goals.
The Performance Goals shall be set by the Committee on or before the latest date permissible to
enable the Restricted Stock to qualify as “performance-based compensation” under Section 162(m) of
the Code. In granting Restricted Stock that is intended to qualify under Section 162(m) of the
Code, the Committee shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
6.4.3 Legend on Certificates. The Committee, in its discretion, may legend the
certificates representing Restricted Stock to give appropriate notice of such restrictions.
6.5 Removal of Restrictions. Except as otherwise provided in this Section 6, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan shall be released
from escrow as soon as practicable after the last day of the Period of Restriction. The Committee,
in its discretion, may accelerate the time at which any restrictions shall lapse or be removed.
After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends
under Section 6.4.3 removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant.
6.6 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those Shares, unless the Committee
determines otherwise.
6.7 Dividends and Other Distributions. During the Period of Restriction, Participants
holding Shares of Restricted Stock shall be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.
If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.
6.8 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company
and again shall become available for grant under the Plan.
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SECTION 7
RESTRICTED STOCK UNITS
RESTRICTED STOCK UNITS
7.1 Grant of Restricted Stock Units. Subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may grant Restricted Stock Units to Employees in
such amounts as the Committee, in its sole discretion, shall determine. The Committee, in its sole
discretion, shall determine the number of Restricted Stock Units to be granted to each Participant,
provided that during any Fiscal Year, the sum of the number of Restricted Stock Units and Shares of
Restricted Stock granted to any one Participant shall not exceed 500,000.
7.2 Restricted Stock Unit Agreement. Each Award of Restricted Stock Units shall be
evidenced by an Award Agreement that shall specify the Measurement Period, the number of Restricted
Stock Units granted, and such other terms and conditions as the Committee, in its sole discretion,
shall determine.
7.3 Transferability. Except as provided in this Section 7, Restricted Stock Units may
not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated.
7.4 Other Restrictions. The Committee, in its sole discretion, may impose such other
restrictions on Restricted Stock Units as it may deem advisable or appropriate, in accordance with
this Section 7.4.
7.4.1 General Restrictions. The Committee may set restrictions based upon the
achievement of specific performance objectives (Company-wide, divisional, or individual),
applicable federal or state securities laws, or any other basis determined by the Committee in
its discretion.
7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the
Committee, in its discretion, may set performance objectives based upon the achievement of
Performance Goals. The Performance Goals shall be set by the Committee on or before the latest
date permissible to enable the Restricted Stock Units to qualify as “performance-based
compensation” under Section 162(m) of the Code. In granting Restricted Stock Units that are
intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures
determined by it from time to time to be necessary or appropriate to ensure qualification of the
Restricted Stock Units under Section 162(m) of the Code (e.g., in determining the Performance
Goals).
7.5 Award Payout. After the applicable Measurement Period has ended, the Participant
shall be entitled to receive a payout of the number of Stock Units earned during the Measurement
Period.
7.5.1 Earning Restricted Stock Units. An Employee shall earn Stock Units under a
Restricted Stock Unit Award by meeting the specified performance objectives. The number of Stock
Units earned will depend on the extent to which the performance objectives are met.
7.5.2 Form and Timing of Payment. Except as otherwise provided in this Section 7,
payment of earned Stock Units shall be made as soon as practicable after the expiration of the
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applicable Measurement Period. The Committee, in its sole discretion, may pay such earned Stock
Units in cash, Shares, or a combination thereof.
7.6 Dividends and Other Distributions. During the Measurement Period, Participants
holding Restricted Stock Units shall be entitled to be credited with all dividends and other
distributions paid with respect to the underlying Shares, unless otherwise provided in the Award
Agreement. Such dividends and distributions shall be deemed reinvested in Stock Units, which shall
be subject to the same terms and conditions as the underlying Award.
7.7 Cancellation. On the date set forth in the Award Agreement, all unearned Stock
Units shall be forfeited to the Company, and again shall be available for grant under the Plan.
SECTION 8
MISCELLANEOUS
MISCELLANEOUS
8.1 Deferrals. The Committee, in its sole discretion, may permit a Participant to
defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such
Participant under an
Award. Any such deferral elections shall be subject to such rules and procedures as shall be
determined by the Committee in its sole discretion.
8.2 No Effect on Employment or Service. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant’s employment or service at
any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a
Termination of Service. Employment with the Company and its Affiliates is on an at-will basis
only.
8.3 Participation. No Employee shall have the right to be selected to receive an
Award under this Plan, or, having been so selected, to be selected to receive a future Award.
8.4 Indemnification. Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the Company against and from (a) any
loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or failure to act under
the Plan or any Award Agreement, and (b) from any and all amounts paid by him or her in settlement
thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any
such claim, action, suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a
matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold
them harmless.
8.5 Successors. All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business or assets of the Company.
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8.6 Limited Transferability of Awards. No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the
laws of descent and distribution. All rights with respect to an Award granted to a Participant
shall be available during his or her lifetime only to the Participant. Notwithstanding the
foregoing, after the Plan becomes effective, the Committee (in its sole discretion) may determine
that a Participant may, in a manner specified by the Committee, (a) transfer a Nonqualified Stock
Option to a Participant’s spouse, former spouse or dependent pursuant to a court-approved domestic
relations order which relates to the provision of child support,
alimony payments or marital property rights, and (b) transfer a Nonqualified Stock Option by
bona fide gift and not for any consideration, to (i) a member or members of the Participant’s
immediate family, (ii) a trust established for the exclusive benefit of the Participant and/or
member(s) of the Participant’s immediate family, (iii) a partnership, limited liability company of
other entity whose only partners or members are the Participant and/or member(s) of the
Participant’s immediate family, or (iv) a foundation in which the Participant an/or member(s) of
the Participant’s immediate family control the management of the foundation’s assets. The
transferability provisions provided in the preceding sentence shall be effective only if expressly
determined by the Committee after the effective date of the Plan.
8.7 Beneficiary Designations. Notwithstanding any contrary provisions of Section 8.6,
after the Plan becomes effective, the Committee (in its sole discretion) may determine that a
Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid
Award shall be paid in the event of the Participant’s death. Each such designation shall revoke
all prior designations by the Participant and shall be effective only if given in a form and manner
acceptable to the Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate and, subject to the
terms of the Plan and of the applicable Award Agreement, any unexercised vested Award may be
exercised by the administrator or executor of the Participant’s estate. The provisions of this
Section 8.7 shall be effective only if expressly determined by the Committee after the effective
date of the Plan.
8.8 No Rights as Stockholder. Except to the limited extent provided in Sections 6.6
and 6.7, no Participant (nor any beneficiary) shall have any of the rights or privileges of a
stockholder of the Company with respect to any Shares issuable pursuant to an Award (or exercise
thereof), unless and until certificates representing such Shares shall have been issued, recorded
on the records of the Company or its transfer agents or registrars, and delivered to the
Participant (or beneficiary).
SECTION 9
AMENDMENT, TERMINATION, AND DURATION
AMENDMENT, TERMINATION, AND DURATION
9.1 Amendment, Suspension, or Termination. The Board, in its sole discretion, may
amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason. The
amendment, suspension, or termination of the Plan shall not, without the consent of the
Participant, alter or impair any rights or obligations under any Award theretofore granted to such
Participant. No Award may be granted during any period of suspension or after termination of the
Plan.
9.2 Duration of the Plan. The Plan shall be effective as of March 20, 2003, and
subject to Section 9.1 (regarding the Board’s right to amend or terminate the Plan), shall remain
in effect thereafter. However, without
further stockholder approval, no Incentive Stock Option may be granted under the Plan after
March 19, 2013.
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SECTION 10
TAX WITHHOLDING
TAX WITHHOLDING
10.1 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant
to an Award (or exercise thereof), the Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local taxes (including the Participant’s FICA obligation) required to be
withheld with respect to such Award (or exercise thereof).
10.2 Withholding Arrangements. The Committee, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (a) electing to have the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares having a Fair Market
Value equal to the minimum amount required to be withheld.
SECTION 11
LEGAL CONSTRUCTION
LEGAL CONSTRUCTION
11.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural.
11.2 Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.
11.3 Requirements of Law. The granting of Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
11.4 Securities Law Compliance. With respect to Section 16 Persons, transactions
under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of the Plan, Award
Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
11.5 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California.
11.6 Captions. Captions are provided herein for convenience only, and shall not serve
as a basis for interpretation or construction of the Plan.
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