Exhibit 10.24(a)
SYNAPTICS INCORPORATED
2010 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this PLAN (the “Plan”) is to assist SYNAPTICS
INCORPORATED, a Delaware corporation (the “Company”) and its Related Entities in
attracting, motivating, retaining and rewarding high-quality executives and
other Employees, officers, Directors and Consultants by enabling such persons to
acquire or increase a proprietary interest in the Company in order to strengthen
the mutuality of interests between such persons and the Company’s stockholders,
and providing such persons with annual and long term performance incentives to
expend their maximum efforts in the creation of stockholder value. The Plan is
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Committee.
2. Definitions. For purposes of the Plan, the following terms shall be defined
as set forth below, in addition to such terms defined in Section 1 hereof.
(a) “Annual Incentive Award” means a conditional right granted to a Participant
under Section 7(c) hereof to receive a cash payment, Stock or other Award,
unless otherwise determined by the Committee, after the end of a specified
fiscal year.
(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock,
Deferred Stock Unit, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.
(c) “Beneficiary” means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.
(d) “Beneficial Owner”, “Beneficially Owning” and “Beneficial Ownership” shall
have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act
and any successor to such Rule.
(e) “Board” means the Company’s Board of Directors.
(f) “Cause” shall, with respect to any Participant, have the equivalent meaning
(or the same meaning as “cause” or “for cause”) set forth in any employment,
consulting, change in control or other agreement for the performance of services
between the Participant and the Company or a Related Entity or, in the absence
of any such agreement or any such definition in such agreement, such term shall
mean (i) the failure by the Participant to perform his or her duties as assigned
by the Company (or a Related Entity) in a reasonable manner, (ii) any violation
or breach by the Participant of his or her employment, consulting or other
similar agreement with the Company (or a Related Entity), if any, (iii) any
violation or breach by the Participant of his or her non-competition and/or
non-disclosure agreement with the Company (or a Related Entity), if any,
(iv) any act by the Participant of dishonesty or bad faith with respect to the
Company (or a Related Entity), (v) chronic addiction to alcohol, drugs or other
similar substances affecting the Participant’s work performance, or (vi) the
commission by the Participant of any act, misdemeanor, or crime reflecting
unfavorably upon the Participant or the Company or any Related Entity. The good
faith determination by the Committee of whether the Participant’s Continuous
Service was terminated by the Company for “Cause” shall be final and binding for
all purposes hereunder.
(g) “Change in Control” means a Change in Control as defined with related terms
in Section 9 of the Plan.
(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.

 

 

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(i) “Committee” means a committee designated by the Board to administer the
Plan; provided, however, that the Committee shall consist of at least two
directors, and each member of which shall be (i) a “non-employee director”
within the meaning of Rule 16b-3 under the Exchange Act, unless administration
of the Plan by “non-employee directors” is not then required in order for
exemptions under Rule 16b-3 to apply to transactions under the Plan, and (ii) an
“outside director” within the meaning of Section 162(m) of the Code, unless
administration of the Plan by “outside directors” is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.
(j) “Consultant” means any person (other than an Employee or a Director, solely
with respect to rendering services in such person’s capacity as a director) who
is engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.
(k) “Continuous Service” means uninterrupted provision of services to the
Company in any capacity of Employee, Director, or Consultant. Continuous Service
shall not be considered to be interrupted in the case of (i) any approved leave
of absence, (ii) transfers among the Company, any Related Entities, or any
successor entities, in any capacity of Employee Director, or Consultant, or
(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of Employee, Director, or
Consultant (except as otherwise provided in the Option Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
(l) “Corporate Transaction” means a Corporate Transaction as defined in
Section 9(b)(i) of the Plan.
(m) “Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Section 7(e) of the Plan.
(n) “Deferred Stock Unit” means a right, granted to a Participant under Section
6(e) hereof, to receive Stock, cash or a combination thereof at the end of a
specified deferral period.
(o) “Director” means a member of the Board or the board of directors of any
Related Entity.
(p) “Disability” means a permanent and total disability (within the meaning of
Section 22(e) of the Code), as determined by a medical doctor satisfactory to
the Committee.
(q) “Dividend Equivalent” means a right, granted to a Participant under Section
6(g) hereof, to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.
(r) “Effective Date” means the effective date of the Plan, which shall be the
date of stockholder approval of this Plan.
(s) “Eligible Person” means each Executive Officer of the Company (as defined
under the Exchange Act) and other officers, Directors and Employees of the
Company or of any Related Entity, and Consultants with the Company or any
Related Entity. The foregoing notwithstanding, only employees of the Company,
the Parent, or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An Employee on leave of absence may be
considered as still in the employ of the Company or a Related Entity for
purposes of eligibility for participation in the Plan.
(t) “Employee” means any person, including an officer or Director, who is an
employee of the Company or any Related Entity. The Payment of a director’s fee
by the Company or a Related Entity shall not be sufficient to constitute
“employment” by the Company.
(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.

 

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(v) “Executive Officer” means an executive officer of the Company as defined
under the Exchange Act.
(w) “Fair Market Value” means the fair market value of Stock, Awards or other
property as determined by the Committee, or under procedures established by the
Committee. Unless otherwise determined by the Committee, the Fair Market Value
of Stock as of any given date shall be the closing sale price per share reported
on a consolidated basis for stock listed on the principal stock exchange or
market on which Stock is traded on the date as of which such value is being
determined or, if there is no sale on that date, then on the last previous day
on which a sale was reported.
(x) “Good Reason” shall, with respect to any Participant, have the equivalent
meaning (or the same meaning as “good reason” or “for good reason”) set forth in
any employment, consulting, change in control or other agreement for the
performance of services between the Participant and the Company or a Related
Entity or, in the absence of any such agreement, such term shall mean (i) the
assignment to the Participant of any duties inconsistent in any respect with the
Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned by the Company
(or a Related Entity), or any other action by the Company (or a Related Entity)
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
(or a Related Entity) promptly after receipt of notice thereof given by the
Participant; (ii) any failure by the Company (or a Related Entity) to comply
with its obligations to the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company (or a Related Entity) promptly after receipt of notice
thereof given by the Participant; (iii) the Company’s (or Related Entity’s)
requiring the Participant to be based at any office or location outside of fifty
miles from the location of employment as of the date of Award, except for travel
reasonably required in the performance of the Participant’s responsibilities;
(iv) any purported termination by the Company (or a Related Entity) of the
Participant’s Continuous Service otherwise than for Cause as defined in
Section 2(f), or by reason of the Participant’s Disability as defined in
Section 2(q). For purposes of this Section 2(y), any good faith determination of
“Good Reason” made by the Committee shall be conclusive.
(y) “Incentive Stock Option” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any
successor provision thereto.
(z) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii)
of the Plan.
(aa) “Option” means a right granted to a Participant under Section 6(b) hereof,
to purchase Stock or other Awards at a specified price during specified time
periods.
(bb) “Optionee” means a person to whom an Option is granted under this Plan or
any person who succeeds to the rights of such person under this Plan.
(cc) “Other Stock-Based Awards” means Awards granted to a Participant under
Section 6(h) hereof.
(dd) “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code.
(ee) “Participant” means a person who has been granted an Award under the Plan
which remains outstanding, including a person who is no longer an Eligible
Person.
(ff) “Performance Award” means a right, granted to an Eligible Person under
Section 7 hereof, to receive Awards based upon performance criteria specified by
the Committee.

 

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(gg) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include
a “group” as defined in Section 13(d) thereof.
(hh) “Related Entity” means any Parent, Subsidiary, and any business,
corporation, partnership, limited liability company, or other entity designated
by the Committee in which the Company, a Parent, or a Subsidiary, directly or
indirectly, holds a substantial ownership interest.
(ii) “Restricted Stock” means Stock granted to a Participant under Section 6(d)
hereof, that is subject to certain restrictions and to a risk of forfeiture.
(jj) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3),
as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act.
(kk) “Stock” means the Company’s Common Stock, and such other securities as may
be substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.
(ll) “Stock Appreciation Right” means a right granted to a Participant under
Section 6(c) hereof.
(mm) “Subsidiary” means a “subsidiary corporation” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the Committee.
The Committee shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee may deem necessary or advisable for the administration of the
Plan. In exercising any discretion granted to the Committee under the Plan or
pursuant to any Award, the Committee shall not be required to follow past
practices, act in a manner consistent with past practices, or treat any Eligible
Person in a manner consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. Any action of the Committee shall
be final, conclusive and binding on all persons, including the Company, its
Related Entities, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant, and
stockholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any Related Entity, or committees thereof, the
authority, subject to such terms as the Committee shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not subject
to Section 16 of the Exchange Act, to perform such other functions as the
Committee may determine, and (iii) with respect to Participants subject to
Section 16, to perform such other functions of the Committee as the Committee
may determine to the extent performance of such functions will not result in the
loss of an exemption under Rule 16b-3 otherwise available for transactions by
such persons, in each case to the extent permitted under applicable law and
subject to the requirements set forth in Section 7(d). The Committee may appoint
agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee, and each member thereof, shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any Executive Officer, other officer or Employee, the
Company’s independent auditors, Consultants or any other agents assisting in the
administration of the Plan. Members of the Committee, and any officer or
Employee acting at the direction or on behalf of the Committee, shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.

 

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4. Stock Subject to Plan.
(a) Limitation on Overall Number of Shares Subject to Awards. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be the number of shares of Stock available for issuance under the
Company’s Amended and Restated 2001 Incentive Compensation Plan (the “2001
Plan”) that are not subject to an outstanding award under the 2001 Plan as of
the date of stockholder approval of this Plan (and such shares shall no longer
be available for issuance under the 2001 Plan). Any shares of Stock delivered
under the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
(b) Availability of Shares Not Issued pursuant to Awards. In the event that any
Option or other Award granted hereunder is exercised through the withholding of
shares of Stock from the Award by the Company or withholding tax liabilities
arising from such Option or other Award are satisfied by the withholding of
shares of Stock from the Award by the Company, then only the number of shares of
Stock issued net of the shares of Stock withheld shall be counted as issued for
purposes of determining the maximum number of shares of Stock available for
grant under the Plan, subject to Section 4(c) below.
(c) Limitation on Number of Incentive Stock Option Shares. Subject to adjustment
as provided in Section 10(c) hereof, the number of shares of Stock which may be
issued pursuant to Incentive Stock Options shall be the lesser of (i) the number
of shares of Stock that may be subject to Awards under Section 4(a), or
(ii) 15,000,000.
(d) Application of Limitations. The limitation contained in this Section 4 shall
apply not only to Awards that are settled by the delivery of shares of Stock but
also to Awards relating to shares of Stock but settled only in cash (such as
cash-only Stock Appreciation Rights). The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double counting (as,
for example, in the case of tandem or substitute awards) and make adjustments if
the number of shares of Stock actually delivered differs from the number of
shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under the
Plan only to Eligible Persons. In each fiscal year during any part of which the
Plan is in effect, an Eligible Person may not be granted Awards relating to more
than 1,000,000 shares of Stock, subject to adjustment as provided in
Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h),
7(b) and 7(c). In addition, the maximum amount that may be earned as an Annual
Incentive Award or other cash Award in any fiscal year by any one Participant
shall be $2,000,000, and the maximum amount that may be earned as a Performance
Award or other cash Award in respect of a performance period by any one
Participant shall be $5,000,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(e)), such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of Continuous Service by the Participant and
terms permitting a Participant to make elections relating to his or her Award.
The Committee shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory
under the Plan. Except in cases in which the Committee is authorized to require
other forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Delaware law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.

 

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(b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:
(i) Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement. Such Stock Option Agreement shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Option Agreement.
The provisions of the various Stock Option Agreements entered into under the
Plan need not be identical.
(ii) Number of Shares. Each Stock Option Agreement shall specify the number of
shares of Stock that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 10(c) hereof. The Stock
Option Agreement shall also specify whether the Option is an Incentive Stock
Option or a Non-Qualified Stock Option.
(iii) Exercise Price.
(A) In General. Each Stock Option Agreement shall state the price at which
shares of Stock subject to the Option may be purchased (the “Exercise Price”),
which shall be not less than 100% of the Fair Market Value of the Stock on the
date of grant.
(B) Ten Percent Stockholder. If an individual owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Related Entity, the Exercise Price of an Incentive Stock Option
must be at least 110% of the Fair Market Value of a share of Stock on the date
of grant and such Incentive Stock Option by its terms is not exercisable after
the expiration of five years from the date of grant.
(iv) Time and Method of Exercise. The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), provided that in the case of an Optionee who is
not an officer, Director, or Consultant of the Company or a Related Entity, his
or her Options shall become exercisable at least as rapidly as 20% per year,
over a 5 year period commencing on the date of the grant, unless a determination
is made by counsel for the Company that such vesting requirements are not
required in the circumstances under applicable federal or state securities laws.
The Committee may also determine the time or times at which Options shall cease
to be or become exercisable following termination of Continuous Service or upon
other conditions; provided, however, if the Optionee’s Continuous Service is
terminated for any reason other than Cause, that portion of the Option that is
exercisable as of the date of termination shall remain exercisable for at least
6 months from the date of termination if by reason of death or Disability, and
for at least 30 days from the date of termination if by reason other than the
Optionee’s death or Disability. The Committee may determine the methods by which
such exercise price may be paid or deemed to be paid (including in the
discretion of the Committee a cashless exercise procedure), the form of such
payment, including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Company or a Related Entity, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis), and the methods by or forms in which Stock will be
delivered or deemed to be delivered to Participants.
(v) Incentive Stock Options. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section 422
of the Code. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options (including any Stock Appreciation
Rights in tandem therewith) shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be exercised, so as to
disqualify either the Plan or any Incentive Stock Option under Section 422 of
the Code, unless the Participant has first requested the change that will result
in such disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options shall be
subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than seven years after the date
such Incentive Stock Option is granted; provided, however, that if a Participant
owns or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and the Incentive Stock Option is
granted to such Participant, the term of the Incentive Stock Option shall be (to
the extent required by the Code at the time of the grant) for no more than five
years from the date of grant; and

 

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(B) The aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the shares of stock with respect to which Incentive
Stock Options granted under the Plan and all other option plans of the Company
or its Parent Corporation during any calendar year are exercisable for the first
time by the Participant during any calendar year shall not (to the extent
required by the Code at the time of the grant) exceed $100,000.
(vi) Repurchase Rights. The Committee shall have the discretion to grant Options
which are exercisable for unvested shares of Common Stock. Should the Optionee’s
Continuous Service cease while holding such unvested shares, the Company shall
have the right to repurchase, at the exercise price paid per share, any or all
of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Committee
and set forth in the document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant
to whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of stock on the date of exercise, over
(B) the grant price of the Stock Appreciation Right as determined by the
Committee. The grant price of a Stock Appreciation Right shall not be less than
the Fair Market Value of a share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock
Appreciation Right may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time
or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered or
deemed to be delivered to Participants, whether or not a Stock Appreciation
Right shall be in tandem or in combination with any other Award, and any other
terms and conditions of any Stock Appreciation Right. Stock Appreciation Rights
may be either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, or as otherwise provided in this Plan. The
restrictions may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter provided that the restrictions
shall not lapse in less than three years or less than one year in the case of
performance-based Restricted Stock except that a total of not more than 400,000
shares of Common Stock may be subject of restricted stock and deferred stock
units without regard to such restriction period. Except to the extent restricted
under the terms of the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted period applicable
to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.

 

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(ii) Forfeiture. Except as otherwise determined by the Committee at the time of
the Award, upon termination of a Participant’s Continuous Service during the
applicable restriction period, the Participant’s Restricted Stock that is at
that time subject to restrictions shall be forfeited (or, in accordance with
Section 6(b)(vi), reacquired by the Company); provided that the Committee may
provide, by rule or regulation or in any Award agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Committee may require that any cash dividends paid on a share of
Restricted Stock be automatically reinvested in additional shares of Restricted
Stock or applied to the purchase of additional Awards under the Plan. Unless
otherwise determined by the Committee, Stock distributed in connection with a
Stock split or Stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property has been
distributed.
(e) Deferred Stock Units. The Committee is authorized to grant Deferred Stock
Units to Participants, which are rights to receive Stock, cash, or a combination
thereof at the end of a specified time period, subject to the following terms
and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred Stock Units
shall occur upon expiration of the time specified for such Deferred Stock Units
by the Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, Deferred Stock Units shall be subject to such
restrictions (which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of the time
period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine
provided that the restrictions shall not lapse in less than three years or less
than one year in the case of performance-based Deferred Stock Units except that
a total of not more than 400,000 shares of Common Stock may be the subject of
restricted stock and deferred stock units without regard to such restriction
period. The terms of an Award of Deferred Stock Units shall be set forth in a
written Award Agreement that shall contain provisions determined by the
Committee and not inconsistent with the Plan. Deferred Stock Units may be
satisfied by delivery of Stock, cash equal to the Fair Market Value of the
specified number of shares of Stock covered by the Deferred Stock Units, or a
combination thereof, as determined by the Committee at the date of grant or
thereafter. Prior to satisfaction of an Award of Deferred Stock Units, an Award
of Deferred Stock Units carries no voting or dividend or other rights associated
with share ownership. Notwithstanding the foregoing or any other provision of
the Plan, (A) all grants of Deferred Stock Units shall comply with the vesting
terms of Section 6(b)(iv), and (B) unless otherwise exempt from Section 409A of
the Code or otherwise specifically determined by the Committee, each Award of
Deferred Stock Units shall be structured to avoid the imposition of any excise
tax under Section 409A of the Code.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant’s Continuous Service during the applicable time
period thereof to which forfeiture conditions apply (as provided in the Award
agreement evidencing the Deferred Stock Units), the Participant’s Deferred Stock
Units (other than those Deferred Stock Units subject to deferral at the election
of the Participant) shall be forfeited; provided that the Committee may provide,
by rule or regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to Deferred
Stock Units shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Deferred Stock Units.
(iii) Dividend Equivalents. Unless otherwise determined by the Committee at date
of grant, any Dividend Equivalents that are granted with respect to any Award of
Deferred Stock Units shall be either (A) paid with respect to such Deferred
Stock Units at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such Deferred Stock Units and the amount or value
thereof automatically deemed reinvested in additional Deferred Stock Units,
other Awards or other investment vehicles, as the Committee shall determine or
permit the Participant to elect.

 

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(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized
to grant Stock as a bonus, or to grant Stock or other Awards in lieu of Company
obligations to pay cash or deliver other property under the Plan or under other
plans provided each such Award shall have a restricted period of not less than
three years or not less than one year in the case of performance-based Awards or
compensatory arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such grants remains within the
discretion of the Committee to the extent necessary to ensure that acquisitions
of Stock or other Awards are exempt from liability under Section 16(b) of the
Exchange Act. Stock or Awards granted hereunder shall be subject to such other
terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify. Notwithstanding any other provision of the Plan, unless otherwise
exempt from Section 409A of the Code or otherwise specifically determined by the
Committee, each Dividend Equivalent shall be structured to avoid the imposition
of any excise tax under Section 409A of the Code.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified Related
Entities or business units. The Committee shall determine the terms and
conditions of such Awards provided each such Award shall have a restricted
period of not less than three years or not less than one year in the case of
performance-based Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall be purchased for such
consideration (including without limitation loans from the Company or a Related
Entity), paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Stock, other Awards or other property, as the
Committee shall determine. The Committee shall have the discretion to grant such
other Awards which are exercisable for unvested shares of Common Stock. Should
the Optionee’s Continuous Service cease while holding such unvested shares, the
Company shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Committee and set forth in the document evidencing such repurchase right.
Cash awards, as an element of or supplement to any other Award under the Plan,
may also be granted pursuant to this Section 6(h). Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Committee, each such Award shall be
structured to avoid the imposition of any excise tax under Section 409A of the
Code.
7. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or receive a
grant or settlement of any Award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Committee. The Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any Award subject to performance
conditions, except as limited under Sections 7(b) and 7(c) hereof in the case of
a Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m).

 

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(b) Performance Awards Granted to Designated Covered Employees. If and to the
extent that the Committee determines that a Performance Award to be granted to
an Eligible Person who is designated by the Committee as likely to be a Covered
Employee should qualify as “performance-based compensation” for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Performance Award
shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 7(b).
(i) Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 7(b). Performance goals shall be
objective and shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance
goals being “substantially uncertain.” The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon achievement
of any one performance goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of such Performance
Awards. Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
(ii) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or specified Related Entities or business
units of the Company (except with respect to the total stockholder return and
earnings per share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total
return (on a comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor’s 500 Stock Index or the S&P Specialty Retailer
Index; (3) net income; (4) pretax earnings; (5) earnings before interest
expense, taxes, depreciation and amortization; (6) pretax operating earnings
after interest expense and before bonuses, service fees, and extraordinary or
special items; (7) operating margin; (8) earnings per share; (9) return on
equity; (10) return on capital; (11) return on investment; (12) operating
earnings; (13) working capital or inventory; (14) operating earnings before the
expense for share based awards; and (15) ratio of debt to stockholders’ equity.
One or more of the foregoing business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive Awards granted to a Covered
Employee under Section 7(c) hereof that are intended to qualify as
“performance-based compensation under Code Section 162(m).
(iii) Performance Period; Timing For Establishing Performance Goals. Achievement
of performance goals in respect of such Performance Awards shall be measured
over a performance period of up to seven years, as specified by the Committee.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring Company
performance in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the business criteria set forth in Section
7(b)(ii) hereof during the given performance period, as specified by the
Committee in accordance with Section 7(b)(iii) hereof. The Committee may specify
the amount of the Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such business
criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Stock, other Awards or other property, in
the discretion of the Committee. The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such
Performance Awards. The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of
Continuous Service by the Participant prior to the end of a performance period
or settlement of Performance Awards.

 

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(c) Annual Incentive Awards Granted to Designated Covered Employees. The
Committee may, within its discretion, grant one or more Annual Incentive Awards
to any Eligible Person, subject to the terms and conditions set forth in this
Section 7(c).
(i) Annual Incentive Award Pool. The Committee may establish an Annual Incentive
Award pool, which shall be an unfunded pool, for purposes of measuring Company
performance in connection with Annual Incentive Awards. In the case of Annual
Incentive Awards intended to qualify as “performance-based compensation” for
purposes of Code Section 162(m), the amount of such Annual Incentive Award pool
shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 7(b)(ii) hereof during the
given performance period, as specified by the Committee in accordance with
Section 7(b)(iii) hereof. The Committee may specify the amount of the Annual
Incentive Award pool as a percentage of any such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the 90th day
of each fiscal year, or at such other date as may be required or permitted in
the case of Awards intended to be “performance-based compensation” under Code
Section 162(m), the Committee shall determine the Eligible Persons who will
potentially receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive Award pool
established by such date under Section 7(c)(i) hereof or as individual Annual
Incentive Awards. In the case of individual Annual Incentive Awards intended to
qualify under Code Section 162(m), the amount potentially payable shall be based
upon the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 7(b)(ii) hereof in the given performance
year, as specified by the Committee; in other cases, such amount shall be based
on such criteria as shall be established by the Committee. In all cases, the
maximum Annual Incentive Award of any Participant shall be subject to the
limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal year, the
Committee shall determine the amount, if any, of (A) the Annual Incentive Award
pool, and the maximum amount of potential Annual Incentive Award payable to each
Participant in the Annual Incentive Award pool, or (B) the amount of potential
Annual Incentive Award otherwise payable to each Participant. The Committee may,
in its discretion, determine that the amount payable to any Participant as an
Annual Incentive Award shall be reduced from the amount of his or her potential
Annual Incentive Award, including a determination to make no Award whatsoever.
The Committee shall specify the circumstances in which an Annual Incentive Award
shall be paid or forfeited in the event of termination of Continuous Service by
the Participant prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the achievement of performance
goals relating to Performance Awards under Section 7(b), and the amount of any
Annual Incentive Award pool or potential individual Annual Incentive Awards and
the amount of final Annual Incentive Awards under Section 7(c), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards if and to the extent required to comply with
Code Section 162(m).
(e) Status of Section 7(b) and Section 7(c) Awards Under Code Section 162(m). It
is the intent of the Company that Performance Awards and Annual Incentive Awards
under Section 7(b) and 7(c) hereof granted to persons who are designated by the
Committee as likely to be Covered Employees within the meaning of Code Section
162(m) and regulations thereunder shall, if so designated by the Committee,
constitute “qualified performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of Sections
7(b), (c), (d) and (e), including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to a fiscal year that has
not yet been completed, the term Covered Employee as used herein shall mean only
a person designated by the Committee, at the time of grant of Performance Awards
or an Annual Incentive Award, as likely to be a Covered Employee with respect to
that fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.

 

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8. Certain Provisions Applicable to Awards or Sales.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any Related Entity, or
any business entity to be acquired by the Company or a Related Entity, or any
other right of a Participant to receive payment from the Company or any Related
Entity. Such additional, tandem, and substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or exchange for
another Award or award, the Committee shall require the surrender of such other
Award or award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any Related Entity in which
the value of Stock subject to the Award is equivalent in value to the cash
compensation.
(b) Term of Awards. The term of each Award shall be for such period as may be
determined by the Committee or the Board; provided that in no event shall the
term of any Option or Stock Appreciation Right exceed a period of seven years
(or such shorter term as may be required in respect of an Incentive Stock Option
under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of
the Plan and any applicable Award agreement, payments to be made by the Company
or a Related Entity upon the exercise of an Option or other Award or settlement
of an Award may be made in such forms as the Committee shall determine,
including, without limitation, cash, other Awards or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis.
The settlement of any Award may be accelerated, and cash paid in lieu of Stock
in connection with such settlement, in the discretion of the Committee or upon
occurrence of one or more specified events (in addition to a Change in Control).
Installment or deferred payments may be required by the Committee (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the Company
that this Plan comply in all respects with applicable provisions of Rule 16b-3
or Rule 16a-1(c)(3) to the extent necessary to ensure that neither the grant of
any Awards to nor other transaction by a Participant who is subject to
Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or
Rule 16a-1(c)(3) as then applicable to any such transaction, such provision will
be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a- I (c)(3) so that such
Participant shall avoid liability under Section 16(b).
(e) Code Section 409A. If and to the extent that the Committee believes that any
Awards may constitute a “nonqualified deferred compensation plan” under
Section 409A of the Code, the terms and conditions set forth in the Award
Agreement for that Award shall be drafted in a manner that is intended to comply
with, and shall be interpreted in a manner consistent with, the applicable
requirements of Section 409A of the Code, unless otherwise agreed to in writing
by the Participant and the Company.
(f) No Option Repricing. Other than pursuant to Section 10(c), without approval
of the Company’s stockholders, the Committee shall not be permitted to (A) lower
the exercise price per share of Stock of an Option after it is granted,
(B) cancel an Option when the exercise price per share of Stock exceeds the Fair
Market Value of the underlying share of Stock in exchange for another Award or
cash, or (C) take any other action with respect to an Option that may be treated
as a repricing.

 

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9. Change in Control.
(a) Effect of “Change in Control.” If and to the extent provided in the Award,
in the event of a “Change in Control,” as defined in Section 9(b):
(i) The Committee may, within its discretion, accelerate the vesting and
exercisability of any Award carrying a right to exercise that was not previously
vested and exercisable as of the time of the Change in Control, subject to
applicable restrictions set forth in Section 10(a) hereof;
(ii) The Committee may, within its discretion, accelerate the exercisability of
any Stock Appreciation Rights and provide for the settlement of such Stock
Appreciation Rights for amounts, in cash;
(iii) The Committee may, within its discretion, lapse the restrictions, deferral
of settlement, and forfeiture conditions applicable to any other Award granted
under the Plan and such Awards may be deemed fully vested as of the time of the
Change in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 10(a) hereof; and
(iv) With respect to any such outstanding Award subject to achievement of
performance goals and conditions under the Plan, the Committee may, within its
discretion, deem such performance goals and other conditions as having been met
as of the date of the Change in Control.
(b) Definition of “Change in Control.” A “Change in Control” shall be deemed to
have occurred upon:
(i) Approval by the stockholders of the Company of a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions,
in each case, with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company’s then outstanding voting
securities, or a liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale (any such event being referred to as a “Corporate Transaction”) is
subsequently abandoned or otherwise does not occur);
(ii) Individuals who, as of the date on which the Award is granted, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date on which the Award was granted whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or
(iii) the acquisition (other than from the Company) by any person, entity or
“group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 50% of either the then outstanding shares of the
Company’s Common Stock or the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a “Controlling Interest”)
excluding, for this purpose, any acquisitions by (1) the Company or a Related
Entity, (2) any person, entity or “group” that as of the date on which the Award
is granted owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest or
(3) any employee benefit plan of the Company or a Related Entity.

 

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10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Stock or payment of other benefits under any Award until completion
of such registration or qualification of such Stock or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to any stock exchange or automated quotation system upon
which the Stock or other Company securities are listed or quoted, or compliance
with any other obligation of the Company, as the Committee, may consider
appropriate, and may require any Participant to make such representations,
furnish such information and comply with or be subject to such other conditions
as it may consider appropriate in connection with the issuance or delivery of
Stock or payment of other benefits in compliance with applicable laws, rules,
and regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take
or cause to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any postponement of
the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to the
extent that such postponement or other condition would represent a greater
burden on a Participant than existed on the 90th day preceding the Change in
Control.
(b) Limits on Transferability; Beneficiaries.
(i) General. Except as provided herein, a Participant may not assign, sell,
transfer, or otherwise encumber or subject to any lien any Award or other right
or interest granted under this Plan, in whole or in part, including any Award or
right which constitutes a derivative security as generally defined in
Rule 16a1(c) under the Exchange Act, other than by will or by operation of the
laws of descent and distribution, and such Awards or rights that may be
exercisable shall be exercised during the lifetime of the Participant only by
the Participant or his or her guardian or legal representative.
(ii) Permitted Transfer of Option. The Committee, in its sole discretion, may
permit the transfer of an Option (but not an Incentive Stock Option, or any
other right to purchase Stock other than an Option) as follows: (A) by gift to a
member of the Participant’s Immediate Family or (B) by transfer by instrument to
a trust providing that the Option is to be passed to beneficiaries upon death of
the Optionee. For purposes of this Section 10(b)(ii), “Immediate Family” shall
mean the Optionee’s spouse (including a former spouse subject to terms of a
domestic relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall
include adoptive relationships. If a determination is made by counsel for the
Company that the restrictions contained in this Section 10(b)(ii) are not
required by applicable federal or state securities laws under the circumstances,
then the Committee, in its sole discretion, may permit the transfer of Awards
(other than Incentive Stock Options and Stock Appreciation Rights in tandem
therewith) to one or more Beneficiaries or other transferees during the lifetime
of the Participant, which may be exercised by such transferees in accordance
with the terms of such Award, but only if and to the extent permitted by the
Committee pursuant to the express terms of an Award agreement (subject to any
terms and conditions which the Committee may impose thereon, and further subject
to any prohibitions and restrictions on such transfers pursuant to Rule 16b-3).
A Beneficiary, transferee, or other person claiming any rights under the Plan
from or through any Participant shall be subject to all terms and conditions of
the Plan and any Award agreement applicable to such Participant, except as
otherwise determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the Committee.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock and/or such other
securities of the Company or any other issuer such that a substitution,
exchange, or adjustment is determined by the Committee to be appropriate, then
the Committee shall, in such manner as it deems equitable, substitute, exchange,
or adjust any or all of (A) the number and kind of shares of Stock which may be
delivered in connection with Awards granted thereafter, (B) the number and kind
of shares of Stock by which annual per-person Award limitations are measured
under Section 5 hereof, (C) the number and kind of shares of Stock subject to or
deliverable in respect of outstanding Awards, (E) the exercise price, grant
price or purchase price relating to any Award and/or make provision for payment
of cash or other property in respect of any outstanding Award, and (F) any other
aspect of any Award that the Committee determines to be appropriate.

 

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(ii) Adjustments in Case of Certain Corporate Transactions. In the event of a
proposed sale of all or substantially all of the Company’s assets or any
reorganization, merger, consolidation, or other form of corporate transaction in
which the Company does not survive, or in which the shares of Stock are
exchanged for or converted into securities issued by another entity, then the
successor or acquiring entity or an affiliate thereof may, with the consent of
the Committee, assume each outstanding Option or substitute an equivalent option
or right. If the successor or acquiring entity or an affiliate thereof, does not
cause such an assumption or substitution, then each Option shall terminate upon
the consummation of sale, merger, consolidation, or other corporate transaction.
The Committee shall give written notice of any proposed transaction referred to
in this Section I 0(c)(ii) a reasonable period of time prior to the closing date
for such transaction (which notice may be given either before or after the
approval of such transaction), in order that Optionees may have a reasonable
period of time prior to the closing date of such transaction within which to
exercise any Options that are then exercisable (including any Options that may
become exercisable upon the closing date of such transaction). An Optionee may
condition his exercise of any Option upon the consummation of the transaction.
(iii) Other Adjustments. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
(including Performance Awards and performance goals, and Annual Incentive Awards
and any Annual Incentive Award pool or performance goals relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business unit, or the financial statements of the
Company or any Related Entity, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee’s assessment of the business strategy of
the Company, any Related Entity or business unit thereof, performance of
comparable organizations, economic and business conditions, personal performance
of a Participant, and any other circumstances deemed relevant; provided that no
such adjustment shall be authorized or made if and to the extent that such
authority or the making of such adjustment would cause Options, Stock
Appreciation Rights, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to Participants
designated by the Committee as Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m) and the regulations
thereunder to otherwise fail to qualify as “performance-based compensation”
under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Related Entity are authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Stock, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations; either on a mandatory or
elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan, or the Committee’s authority to grant Awards
under the Plan, without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting next following such
Board action if (i) such stockholder approval is required by any federal or
state law or regulation (including, without limitation, Rule 16b-3 or Code
Section 162(m)) or the rules of any stock exchange or automated quotation system
on which the Stock may then be listed or quoted, or (ii) the amendment or
alternation to the Plan materially increases the benefits accruing to the
participants under the Plan, materially increases the number of securities that
may be issued under the Plan, or materially modifies the requirements for
participant in the Plan, and the Board may otherwise, in its discretion,
determine to submit other such changes to the Plan to stockholders for approval;
provided that, without the consent of an affected Participant, no such Board
action may materially and adversely affect the rights of such Participant under
any previously granted and outstanding Award. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or terminate
any Award theretofore granted and any Award agreement relating thereto, except
as otherwise provided in the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award.

 

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(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ of the Company or a Related Entity; (ii) interfering in any way with the
right of the Company or a Related Entity to terminate any Eligible Person’s or
Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company’s obligations under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board
nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem desirable
including incentive arrangements and awards which do not qualify under Code
Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash or other consideration, the Participant
shall be repaid the amount of such cash or other consideration. No fractional
shares of Stock shall be issued or delivered pursuant to the Plan or any Award.
The Committee shall determine whether cash, other Awards or other property shall
be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any rules
and regulations under the Plan, and any Award agreement shall be determined in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan
shall become effective on the Effective Date, provided the Plan is approved
within 12 months of its adoption by the Board by stockholders of the Company
eligible to vote in the election of directors, by a vote sufficient to meet the
requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under
the Exchange Act (if applicable), applicable NASDAQ requirements, and other
laws, regulations, and obligations of the Company applicable to the Plan. The
Plan shall terminate no later than 10 years from the date the Plan is adopted by
the Board or 10 years from the date the Plan is approved by the stockholders,
whichever is earlier.

 

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