Exhibit 10.A.51


 


APPLE COMPUTER, INC.


2003 Employee Stock Plan


(amended and restated effective as of April
21, 2005)


 


1.               Purposes of the Plan. The
purposes of this Stock Plan are:


 


•                  to attract and retain talented
Employees


 


•                  to further align Employee and
shareholder interests; and


 


•                  to closely link Employee compensation
with Company performance.


 


Awards
granted under the Plan may be Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock subject to Stock Purchase Rights, Stock Appreciation Rights,
Performance Shares or Restricted Stock Units, as determined by the
Administrator at the time of grant.


 


2.               Definitions. As
used herein, the following definitions shall apply:


 


(a)   “Administrator” means the Board or any of
its Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan.


 


(b)   “Annual Revenue” means the Company’s or a
business unit’s net sales for the Fiscal Year, determined in accordance with
generally accepted accounting principles.


 


(c)   “Applicable Laws” means the requirements
relating to the administration of stock plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.


 


(d)   “Award” means, individually or
collectively, a grant under the Plan of Options, Restricted Stock subject to
Stock Purchase Rights, Stock Appreciation Rights, Performance Shares or
Restricted Stock Units.


 


(e)   “Award Agreement” means the written or
electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.


 


(f)    “Awarded Stock” means the Common Stock
subject to an Award.


 


(g)   “Board” means the Board of Directors of the
Company.


 


(h)   “Cash Position” means the Company’s level
of cash and cash equivalents.


 


(i)    “Chairman” means the Chairman of the Board.


 


(j)    “Code” means the Internal Revenue Code of
1986, as amended.


 


(k)   “Committee” means a committee of Directors
appointed by the Board in accordance with Section 4 of the Plan.


 


(l)    “Common Stock” means the common stock of
the Company.


 


(m)  “Company” means Apple Computer, Inc.,
a California corporation.


 


(n)   “Continuous Status as Chairman” unless
determined otherwise by the Administrator, means the absence of any
interruption or termination as Chairman of the Board with the Company.
Continuous Status as Chairman shall not be considered interrupted in the case
of medical leave,


 


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military
leave, family leave, or any other leave of absence approved by the
Administrator, provided, in each case, that such leave does not result in
termination as Chairman with the Company. Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute
status as “Chairman” by the Company.


 


(o)   “Continuous Status as an Employee” means
the absence of any interruption or termination of the employment relationship
with the Company or any Subsidiary. Continuous Status as an Employee shall not
be considered interrupted in the case of (i) medical leave, military
leave, family leave, or any other leave of absence approved by the
Administrator, provided, in each case, that such leave does not result in
termination of the employment relationship with the Company or any Subsidiary,
as the case may be, under the terms of the respective Company policy for such
leave; however, vesting may be tolled while an employee is on an approved leave
of absence under the terms of the respective Company policy for such leave; or
(ii) in the case of transfers between locations of the Company or between
the Company, its Subsidiaries, or its successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 91st day of such leave any Incentive Stock Option held by
the Participant shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Chairman nor as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company.


 


(p)   “Director” means a member of the Board.


 


(q)   “Dividend Equivalent” means a credit,
payable in cash, made at the discretion of the Administrator, to the account of
a Participant in an amount equal to the cash dividends paid on one Share for
each Share represented by an Award held by such Participant.


 


(r)    “Earnings Per Share” means as to any Fiscal
Year, the Company’s or a business unit’s Net Income, divided by a weighted
average number of common shares outstanding and dilutive common equivalent
shares deemed outstanding, determined in accordance with generally accepted
accounting principles.


 


(s)   “Fiscal Year” means a fiscal year of the
Company.


 


(t)    “Individual Performance Objective” means
any individual Company business-related objective that is objectively
determinable within the meaning of Code Section 162(m) and the Treasury
Regulations promulgated thereunder. Individual Performance Objectives shall
include, but not be limited to, improvement in customer satisfaction, opening
of additional retail stores, and similar objectively determinable performance
objectives related to the Participant’s job responsibilities with the Company.


 


(u)   “Employee” means any person employed by the
Company or any Parent or Subsidiary of the Company subject to (k) above.


 


(v)   “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


(w)  “Fair Market Value” means, as of any date,
the value of Common Stock determined as follows:


 


(i)    If the Common
Stock is listed on any established stock exchange or a national market system,
including without limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system, on the date of determination or, if the date
of determination is not a trading day, the immediately preceding trading day;


 


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(ii)   If the Common
Stock is regularly quoted by a recognized securities dealer but selling prices
are not reported, the Fair Market Value of a Share of Common Stock shall be the
mean between the high bid and low asked prices for the Common Stock on the date
of determination or, if there are no quoted prices on the date of
determination, on the last day on which there are quoted prices prior to the
date of determination; or


 


(iii)  In the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.


 


(x)    “Incentive Stock Option” means an Option
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder and is
expressly designated by the Administrator at the time of grant as an incentive
stock option.


 


(y)   “Net Income” means as to any Fiscal Year,
the income after taxes of the Company for the Fiscal Year determined in
accordance with generally accepted accounting principles.


 


(z)    “Operating Cash Flow” means the Company’s
or a business unit’s sum of Net Income plus depreciation and amortization less
capital expenditures plus changes in working capital comprised of accounts
receivable, inventories, other current assets, trade accounts payable, accrued
expenses, product warranty, advance payments from customers and long-term
accrued expenses, determined in accordance with generally acceptable accounting
principles.


 


(aa) “Operating Income” means the Company’s or a
business unit’s income from operations determined in accordance with generally
accepted accounting principles.


 


(bb) “Nonstatutory Stock Option” means an Option
not intended to qualify as an Incentive Stock Option.


 


(cc) “Option” means a stock option granted
pursuant to the Plan.


 


(dd) “Optioned Stock” means the Common Stock
subject to an Option, SAR or Stock Purchase Right.


 


(ee) “Participant” means the holder of an
outstanding Award granted under the Plan.


 


(ff)   “Parent” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of the
Code.


 


(gg) “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) Annual Revenue, (b) Cash Position, (c) Earnings
Per Share, (d) Net Income, (e) Operating Cash Flow,
(f) Operating Income, (g) Return on Assets, (h) Return on
Equity, (i) Return on Sales, (j) Total Stockholder Return, and
(k) Individual Performance Objectives. The Performance Goals may differ
from Participant to Participant and from Award to Award. The Administrator
shall appropriately adjust any evaluation of performance under a Performance
Goal to exclude (i) any extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial conditions and results of operations
appearing in the Company’s annual report to shareholders for the applicable year,
or (ii) the effect of any changes in accounting principles affecting the
Company’s or a business units’ reported results.


 


(hh) “Performance Share” means a performance
share Award granted to a Participant pursuant to Section 14.


 


(ii)   “Plan” means this 2003 Employee Stock Plan.


 


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(jj)   “Restricted Stock” means shares of Common
Stock acquired pursuant to a grant of Stock Purchase Rights under
Section 12 of the Plan.


 


(kk) “Restricted Stock Unit” means a bookkeeping
entry representing an amount equal to the Fair Market Value of one Share,
granted pursuant to Section 13. Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.


 


(ll)   “Return on Assets” means the percentage
equal to the Company’s or a business unit’s Operating Income before incentive
compensation, divided by average net Company or business unit, as applicable,
assets, determined in accordance with generally accepted accounting principles.


 


(mm) “Return on Equity”
means the percentage equal to the Company’s Net Income divided by average
shareholder’s equity, determined in accordance with generally accepted
accounting principles.


 


(nn) “Return on Sales” means the percentage
equal to the Company’s or a business unit’s Operating Income before incentive
compensation, divided by the Company’s or the business unit’s, as applicable,
revenue, determined in accordance with generally accepted accounting
principles.


 


(oo) “Rule 16b-3” means Rule 16b-3 of
the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.


 


(pp) “Stock Appreciation Right” or “SAR” means a
stock appreciation right granted pursuant to Section 10 below.


 


(qq) “Section 16(b)” means
Section 16(b) of the Exchange Act.


 


(rr)   “Share” means a share of the Common Stock,
as adjusted in accordance with Section 17 of the Plan.


 


(ss) “Stock Purchase Right” means the right to
purchase Common Stock pursuant to Section 12 of the Plan, as evidenced by
an Award Agreement.


 


(tt)   “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.


 


(uu) “Total Stockholder Return” means the total
return (change in share price plus reinvestment of any dividends) of a share of
the Company’s common stock.


 


3.               Stock Subject to the Plan. Subject to the provisions of Section 17 of the Plan, the maximum
aggregate number of Shares which may be issued under the Plan is 145,000,000
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.


 


Any
Shares subject to Options or SARs shall be counted against the numerical limits
of this Section 3 as one Share for every Share subject thereto. With
respect to Awards granted on or after the date of receiving shareholder
approval of the amended Plan in 2005, any Shares subject to Stock Purchase
Rights, Performance Shares or Restricted Stock Units with a per share or unit
purchase price lower than 100% of Fair Market Value on the date of grant shall
be counted against the numerical limits of this Section 3 as two Shares
for every one Share subject thereto. To the extent that a Share that was
subject to an Award that counted as two Shares against the Plan reserve
pursuant to the preceding sentence is recycled back into the Plan under the
next paragraph of this Section 3, the Plan shall be credited with two
Shares.


 


If an
Award expires or becomes unexercisable without having been exercised in full,
or, with respect to Restricted Stock, Performance Shares or Restricted Stock
Units, is forfeited to or repurchased by the Company, the unpurchased Shares
(or for Awards other than Options and SARs, the forfeited or repurchased
shares) which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated). With respect to SARs,
when a stock settled SAR is exercised, the Shares subject to a SAR grant
agreement shall be counted against the numerical limits of Section 3
above, as one share for every share subject thereto, regardless of the number
of shares used to settle the SAR 


 


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upon exercise. Shares
that have actually been issued under the Plan under any Award shall not be
returned to the Plan and shall not become available for future distribution
under the Plan; provided, however, that if Shares of Restricted Stock,
Performance Shares or Restricted Stock Units are repurchased by the Company at
their original purchase price or are forfeited to the Company, such Shares
shall become available for future grant under the Plan. Shares used to pay the
exercise price of an Option shall not become available for future grant or sale
under the Plan. Shares used to satisfy tax withholding obligations shall not
become available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than stock, such cash payment
shall not reduce the number of Shares available for issuance under the Plan.
Any payout of Dividend Equivalents, because they are payable only in cash,
shall not reduce the number of Shares available for issuance under the Plan.
Conversely, any forfeiture of Dividend Equivalents shall not increase the
number of Shares available for issuance under the Plan.


 


4.               Administration of the Plan.


 


(a)   Procedure.


 


(i)    Multiple Administrative Bodies.
If permitted by Rule 16b-3 promulgated under the Exchange Act or any
successor rule thereto, as in effect at the time that discretion is being
exercised with respect to the Plan, and by the legal requirements of the
Applicable Laws relating to the administration of stock plans such as the Plan,
if any, the Plan may (but need not) be administered by different administrative
bodies with respect to (a) Directors who are Employees, (b) Officers who
are not Directors, and (c) Employees who are neither Directors nor
Officers.


 


(ii)   Section 162(m).
To the extent that the Administrator determines it to be desirable to qualify
Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more “outside directors” within the meaning of
Section 162(m) of the Code.


 


(iii)  Rule 16b-3. To the extent
desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.


 


(iv)  Other Administration. Other than as
provided above, the Plan shall be administered by (a) the Board or
(b) a Committee, which committee shall be constituted to satisfy
Applicable Laws.


 


(b)   Powers of the Administrator.
Subject to the provisions of the Plan, and in the case of a Committee, subject
to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:


 


(i)    to determine
the Fair Market Value;


 


(ii)   to select the
person(s) to whom Awards may be granted hereunder;


 


(iii)  to determine
the number of shares of Common Stock to be covered by each Award granted
hereunder;


 


(iv)  to approve
forms of Award Agreement for use under the Plan;


 


(v)   to determine
the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited
to, the exercise price, the date of grant, the time or times when Awards may be
exercised (or are earned) (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine; provided, however, that with respect to Shares of
Restricted Stock subject to Stock Purchase Rights, Performance Shares or
Restricted Stock Units vesting solely 


 


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based
on continuing as an Employee or Chairman, they will vest in full no earlier
(except if accelerated pursuant to Sections 17 or 4(b)(ix) hereof) than
the three (3) year anniversary of the grant date; provided, further, that
if vesting is not solely employment- or Chairmanship-based, they
will vest in full no earlier (except if accelerated pursuant to Sections 17 or
4(b)(ix) hereof) than the one (1) year anniversary of the grant date;


 


(vi)  the
Administrator may not “reprice” Options, SARs or Stock Purchase Rights,
including 6-months-plus-1-day option exchange programs, without shareholder
approval.


 


(vii) to construe
and interpret the terms of the Plan and Awards granted pursuant to the Plan;


 


(viii)to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;


 


(ix)   to modify or
amend each Award (subject to Section 19(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options and SARs longer than is otherwise provided for in the Plan; however,
the Administrator may not extend the post-termination exercisability period
beyond the earlier of the date the Award would otherwise expire by its terms
due to the passage of time from the date of grant or seven (7) years;


 


(x)    to allow
Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option, SAR
or Stock Purchase Right or upon vesting or payout of another Award, that number
of Shares or cash having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares or cash withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;


 


(xi)   to determine
whether Awards will be adjusted for Dividend Equivalents;


 


(xii)  to authorize
any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator; and


 


(xiii) to make all
other determinations deemed necessary or advisable for administering the Plan.


 


(c)   Effect of Administrator’s Decision.
The Administrator’s decisions, determinations and interpretations shall be
final and binding on all Participants and any other holders of Awards.


 


5.               Eligibility.
Awards may be granted to Employees and the Chairman. Incentive Stock Options
may be granted only to Employees.


 


6.               No Employment Rights.
Neither the Plan nor any Award shall confer upon a Participant any right with
respect to continuing the Participant’s relationship as an Employee with or
Chairman of the Company, nor shall they interfere in any way with the
Participant’s right or the Company’s right to terminate such relationship at
any time, with or without cause.


 


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7.               Code Section 162(m) Provisions.


 


(a)   Option and SAR Annual Share Limit.
No Participant shall be granted, in any Fiscal Year, Options and Stock
Appreciation Rights to purchase more than 34,000,000 Shares.


 


(b)   Restricted Stock Subject to Stock Purchase
Rights, Performance Share and Restricted Stock Unit Annual Limit. No
Participant shall be granted, in any Fiscal Year, more than 10,000,000 Shares
in the aggregate of the following: (i) Restricted Stock subject to Stock
Purchase Rights, (ii) Performance Shares, or (iii) Restricted Stock
Units.


 


(c)   Section 162(m) Performance Restrictions.
For purposes of qualifying grants of Restricted Stock subject to Stock Purchase
Rights, Performance Shares or Restricted Stock Units as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Administrator on or before the
latest date permissible to enable the Restricted Stock subject to Stock
Purchase Rights, Performance Shares or Restricted Stock Units to qualify as “performance-based
compensation” under Section 162(m) of the Code. In granting Restricted
Stock subject to Stock Purchase Rights, Performance Shares or Restricted Stock
Units which are intended to qualify under Section 162(m) of the Code, the
Administrator shall follow any procedures determined by it from time to time to
be necessary or appropriate to ensure qualification of the Award under
Section 162(m) of the Code (e.g., in determining the Performance Goals).


 


(d)   Changes in Capitalization. The
numerical limitations in Sections 7(a) and (b) shall be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 18(a).


 


8.               Term of Plan.
Subject to Section 23 of the Plan, the Plan shall continue in effect until
February 8, 2015.


 


9.               Stock Options.


 


(a)   Type of Option. Each Option shall
be designated in the Award Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, not withstanding such designation, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 9(a), Incentive Stock Options
shall be taken into account in the order in which they were granted. The Fair
Market Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.


 


(b)   Term. The term of each Option
shall be seven (7) years from the date of grant or such shorter term as
may be provided in the Award Agreement. Moreover, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five
(5) years from the date of grant or such shorter term as may be provided
in the Award Agreement.


 


(c)   Option Exercise Price and Consideration.


 


(i)    Exercise Price. The per share
exercise price for the Shares to be issued pursuant to exercise of an Option
shall be no less than 100% of the Fair Market Value per Share on the date of
grant; provided, however, that in the case of an Incentive Stock Option granted
to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.


 


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(ii)   Waiting Period and Exercise Dates.
At the time an Option is granted, the Administrator shall fix the period within
which the Option may be exercised and shall determine any conditions which must
be satisfied before the Option may be exercised.


 


(iii)  Form of Consideration. The
Administrator shall determine the acceptable form of consideration for
exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form
of consideration at the time of grant. Such consideration may consist entirely
of:


 


(1)   cash;


 


(2)   check;


 


(3)   promissory
note;


 


(4)   other Shares
which have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised (which
may include Shares that would otherwise be issued pursuant to the Option);


 


(5)   consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;


 


(6)   a reduction in
the amount of any Company liability to the Participant, including any liability
attributable to the Participant’s participation in any Company-sponsored
deferred compensation program or arrangement;


 


(7)   any
combination of the foregoing methods of payment; or


 


(8)   such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.


 


10.         Stock Appreciation Rights.


 


(a)   Granted in Connection with Options.
At the sole discretion of the Administrator, SARs may be granted in connection
with all or any part of an Option, either concurrently with the grant of the
Option or at any time thereafter during the term of the Option. The following
provisions apply to SARs that are granted in connection with Options:


 


(i)    The SAR shall
entitle the Participant to exercise the SAR by surrendering to the Company
unexercised a portion of the related Option. The Participant shall receive in
exchange from the Company an amount equal to the excess of (x) the Fair
Market Value on the date of exercise of the SAR of the Common Stock covered by
the surrendered portion of the related Option over (y) the exercise price
of the Common Stock covered by the surrendered portion of the related Option.
Notwithstanding the foregoing, the Administrator may place limits on the amount
that may be paid upon exercise of a SAR; provided, however, that such limit
shall not restrict the exercisability of the related Option;


 


(ii)   When a SAR is
exercised, the related Option, to the extent surrendered, shall no longer be
exercisable;


 


(iii)  A SAR shall
be exercisable only when and to the extent that the related Option is
exercisable and shall expire no later than the date on which the related Option
expires; and


 


(iv)  A SAR may only
be exercised at a time when the Fair Market Value of the Common Stock covered
by the related Option exceeds the exercise price of the Common Stock covered by
the related Option.


 


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(b)   Independent SARs. At the sole
discretion of the Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in connection with
Options:


 


(i)    The SAR shall
entitle the Participant, by exercising the SAR, to receive from the Company an
amount equal to the excess of (x) the Fair Market Value of the Common
Stock covered by exercised portion of the SAR, as of the date of such exercise,
over (y) the Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the date on which the SAR was granted;
provided, however, that the Administrator may place limits on the amount that
may be paid upon exercise of a SAR; and


 


(ii)   SARs shall be
exercisable, in whole or in part, at such times as the Administrator shall
specify in the Participant’s Award Agreement;


 


(iii)  The term of
each SAR shall be seven (7) years from the date of grant or such shorter
term as may be provided in the Award Agreement.


 


(c)   Form of Payment. The Company’s
obligation arising upon the exercise of a SAR may be paid in Common Stock or in
cash, or in any combination of Common Stock and cash, as the Administrator, in
its sole discretion, may determine. Shares issued upon the exercise of a SAR
shall be valued at their Fair Market Value as of the date of exercise.


 


(d)   Rule 16b-3. SARs granted
hereunder shall contain such additional restrictions as may be required to be
contained in the Plan or Award Agreement in order for the SAR to qualify for
the maximum exemption provided by Rule 16b-3.


 


11.         Exercise of Option or SAR.


 


(a)   Procedure for Exercise; Rights as a
Shareholder. Any Option or SAR granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Award
Agreement. An Option may not be exercised for a fraction of a Share.


 


An
Option or SAR shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the terms
of the Option or SAR) from the person entitled to exercise the Option or SAR,
and (ii) full payment for the Shares with respect to which the Option is
exercised. Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Award Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued in the name of
the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the Shares are issued, except as provided in Section 17 of the
Plan.


 


Exercising
an Option in any manner shall decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised. Exercise of a SAR in any
manner shall, to the extent the SAR is exercised, result in a decrease in the
number of Shares which thereafter shall be available for purposes of the Plan,
and the SAR shall cease to be exercisable to the extent it has been exercised.


 


(b)   Termination of Continuous Status as Chairman.
Upon termination of a Participant’s Continuous Status as Chairman (other than
termination by reason of the Participant’s death), the Participant may, but
only within ninety (90) days after the date of such termination, exercise
his or her Option or SAR to the extent that it was exercisable at the date of
such termination. Notwithstanding 


 


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the
foregoing, however, an Option or SAR may not be exercised after the date the
Option or SAR would otherwise expire by its terms due to the passage of time
from the date of grant.


 


(c)   Termination of Continuous Employment.
Upon termination of a Participant’s Continuous Status as Employee (other than
termination by reason of the Participant’s death), the Participant may, but
only within ninety (90) days after the date of such termination, exercise
his or her Option or SAR to the extent that it was exercisable at the date of
such termination. Notwithstanding the foregoing, however, an Option or SAR may
not be exercised after the date the Option or SAR would otherwise expire by its
terms due to the passage of time from the date of grant.


 


(d)   Death of Participant. If a
Participant dies (i) while an Employee or Chairman, the Option or SAR may
be exercised at any time within six (6) months (or such other period of
time not exceeding twelve (12) months as determined by the Administrator)
following the date of death by the Participant’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that would have accrued had the
Participant continued living and terminated his or her employment six
(6) months (or such other period of time not exceeding twelve
(12) months as determined by the Administrator) after the date of death;
or (ii) within ninety (90) days after the termination of Continuous
Status as an Employee or Chairman, the Option or SAR may be exercised, at any
time within six (6) months (or such other period of time not exceeding
twelve (12) months as determined by the Administrator) following the date
of death by the Participant’s estate or by a person who acquired the right to
exercise the Option or SAR by bequest or inheritance, but only to the extent of
the right to exercise that had accrued at the date of termination. If the
Option or SAR is not so exercised within the time specified herein, the Option
or SAR shall terminate, and the Shares covered by such Option or SAR shall
revert to the Plan.


 


Notwithstanding
the foregoing, however, an Option or SAR may not be exercised after the date
the Option or SAR would otherwise expire by its terms due to the passage of
time from the date of grant.


 


(e)   Buyout Provisions. The
Administrator may at any time offer to buy out for a payment in cash or Shares
an Option or SAR previously granted based on such terms and conditions as the
Administrator shall establish and communicate to the Participant at the time
that such offer is made.


 


12.         Stock Purchase Rights.


 


(a)   Rights to Purchase. Stock Purchase
Rights may be issued either alone, in addition to, or in tandem with other
Awards and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the Participant in writing or electronically, of the terms, conditions
and restrictions related to the offer, including the number of Shares that the
Participant shall be entitled to purchase, the price to be paid, and the time
within which the Participant must accept such offer. The offer shall be
accepted by execution of an Award Agreement in the form determined by the
Administrator.


 


(b)   Repurchase Option. Unless the
Administrator determines otherwise, the Award Agreement shall grant the Company
a repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser’s service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the Award
Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate determined by the Administrator.


 


(c)   Other Provisions. The Award
Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its
sole discretion.


 


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(d)   Rights as a Shareholder. Once the
Stock Purchase Right is exercised, the purchaser shall have the rights
equivalent to those of a shareholder, and shall be a shareholder when his or
her purchase is entered upon the records of the duly authorized transfer agent
of the Company. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 17 of the Plan.


 


13.         Restricted Stock Units.


 


(a)   Grant. Restricted Stock Units may
be granted at any time and from time to time as determined by the
Administrator. After the Administrator determines that it will grant Restricted
Stock Units under the Plan, it shall advise the Participant in writing or
electronically of the terms, conditions, and restrictions related to the grant,
including the number of Restricted Stock Units and the form of payout, which,
subject to Section 13(d), may be left to the discretion of the
Administrator.


 


(b)   Vesting Criteria and Other Terms.
The Administrator shall set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant. The
Administrator may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but not limited
to, continued employment), or any other basis determined by the Administrator
in its discretion.


 


(c)   Earning Restricted Stock Units.
Upon meeting the applicable vesting criteria, the Participant shall be entitled
to receive a payout as specified in the Restricted Stock Unit Award Agreement.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock
Units, the Administrator, in its sole discretion, may reduce or waive any
vesting criteria that must be met to receive a payout.


 


(d)   Form and Timing of Payment.
Payment of earned Restricted Stock Units shall be made as soon as practicable
after the date(s) set forth in the Restricted Stock Unit Award Agreement. The
Administrator, in its sole discretion, may pay earned Restricted Stock Units in
cash, Shares, or a combination thereof. Shares represented by Restricted Stock
Units that are fully paid in cash again shall be available for grant under the
Plan.


 


(e)   Cancellation. On the date set
forth in the Restricted Stock Unit Award Agreement, all unearned Restricted
Stock Units shall be forfeited to the Company.


 


14.         Performance Shares.


 


(a)   Grant of Performance Shares.
Subject to the terms and conditions of the Plan, Performance Shares may be
granted to Participants at any time as shall be determined by the
Administrator, in its sole discretion. Subject to Section 7(b) hereof, the
Administrator shall have complete discretion to determine (i) the number
of Shares subject to a Performance Share award granted to any Participant, and
(ii) the conditions that must be satisfied, which typically will be based
principally or solely on achievement of performance milestones but may include
a service-based component, upon which is conditioned the grant or vesting
of Performance Shares. Performance Shares shall be granted in the form of units
to acquire Shares. Each such unit shall be the equivalent of one Share for purposes
of determining the number of Shares subject to an Award. Until the Shares are
issued, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the units to acquire Shares.


 


(b)   Other Terms. The Administrator,
subject to the provisions of the Plan, shall have complete discretion to
determine the terms and conditions of Performance Shares granted under the
Plan. Performance Share grants shall be subject to the terms, conditions, and
restrictions determined by the Administrator at the time the stock is awarded,
which may include such performance-based milestones as are determined
appropriate by the Administrator. The Administrator may require the recipient
to sign a Performance Shares Award Agreement as a condition of the award. Any
certificates 


 


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representing
the Shares of stock awarded shall bear such legends as shall be determined by
the Administrator.


 


(c)   Performance Share Award Agreement.
Each Performance Share grant shall be evidenced by an Award Agreement that
shall specify such other terms and conditions as the Administrator, in its sole
discretion, shall determine.


 


15.         Transferability of Awards.
Unless determined otherwise by the Administrator, an Award may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title 1 of the
Employee Retirement Income Security Act, and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator
makes an Award transferable, such Award shall contain such additional terms and
conditions as the Administrator deems appropriate.


 


16.         Stock Withholding to Satisfy Withholding Tax Obligations. When a Participant incurs tax liability in connection with the
exercise, vesting or payout, as applicable, of an Award, which tax liability is
subject to tax withholding under applicable tax laws, and the Participant is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Participant may satisfy the withholding tax obligation by
electing to have the Company withhold from the Shares to be issued upon
exercise of the Option, SAR or Stock Purchase Right or the Shares to be issued
upon payout or vesting of the other Award, if any, that number of Shares having
a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the “Tax Date”).


 


All
elections by a Participant to have Shares withheld for this purpose shall be
made in writing in a form acceptable to the Administrator and shall be subject
to the following restrictions:


 


(a)   the election
must be made on or prior to the applicable Tax Date; and


 


(b)   all elections
shall be subject to the consent or disapproval of the Administrator.


 


In the
event the election to have Shares subject to an Option, SAR or Stock Purchase
Right withheld is made by a Participant and the Tax Date is deferred under
Section 83 of the Code because no election is filed under
Section 83(b) of the Code, the Participant shall receive the full number
of Shares with respect to which the Option, SAR or Stock Purchase Right is
exercised but such Participant shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax Date.


 


17.         Adjustments Upon Changes in Capitalization, Dissolution,
Merger or Asset Sale.


 


(a)   Changes in Capitalization. Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding Award and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Award, as well as the price per share, if
any, of Common Stock covered by each such outstanding Award and the 162(m)
fiscal year share issuance limits under Sections 7(a) and (b) hereof
shall, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into 


 


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shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Award.


 


(b)   Dissolution or Liquidation. In the
event of the proposed dissolution or liquidation of the Company, all
outstanding Awards will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Administrator. The
Administrator in its discretion may provide for a Participant to have the right
to exercise his or her Option, SAR or Stock Purchase Right until ten
(10) days prior to such transaction as to all of the Awarded Stock covered
thereby, including Shares as to which the Award would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option or forfeiture rights applicable to any Award shall lapse
100%, and that any Award vesting shall accelerate 100%, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised (with respect
to Options, SARs and Stock Purchase Rights) or vested (with respect to other
Awards), an Award will terminate immediately prior to the consummation of such
proposed action.


 


(c)   Merger or Asset Sale. Unless
otherwise determined by the Administrator, in the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Award shall be assumed or an
equivalent award substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Award, the Participant
shall (i) fully vest in and have the right to exercise the Option, SAR or
Stock Purchase Right as to all of the Awarded Stock, including Shares as to
which it would not otherwise be vested or exercisable, and (ii) fully earn
and receive a payout with respect to other Awards. If an Award becomes fully
vested and exercisable (or earned, as applicable) in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Participant in writing or electronically that (i) the
Option, SAR or Stock Purchase Right shall be fully vested and exercisable for a
period of thirty (30) days from the date of such notice, and the Option,
SAR or Stock Purchase Right shall terminate upon the expiration of such period
and (ii) the other Award shall be paid out immediately prior to the merger
or sale of assets. For the purposes of this paragraph, the Award shall be
considered assumed if, following the merger or sale of assets, the assumed
Award confers the right to purchase or receive, for each Share of Awarded Stock
subject to the Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
the exercise (or payout or vesting, as applicable) of the Award, for each Share
of Awarded Stock subject to the Award, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.


 


(d)   Change in Control. In the event of
a “Change in Control” of the Company, as defined in paragraph (e) below,
unless otherwise determined by the Administrator prior to the occurrence of
such Change in Control, the following acceleration and valuation provisions
shall apply:


 


(i)    Any Options,
SARs and Stock Purchase Rights outstanding as of the date such Change in
Control is determined to have occurred that are not yet exercisable and vested
on such date shall become fully exercisable and vested; and


 


(ii)   Any other
Awards outstanding as of the date such Change in Control is determined to have
occurred that are not yet earned on such date shall become fully earned and
vested; and


 


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(iii)  The value of
all outstanding Awards shall, unless otherwise determined by the Administrator
at or after grant, be cashed-out. The amount at which such Options, SARs and
Stock Purchase Rights shall be cashed out shall be equal to the excess of
(x) the Change in Control Price (as defined below) over (y) the
exercise price of the Common Stock covered by the Option, SAR or Stock Purchase
Right, and the amount at which such other Awards shall be cashed out shall be
equal to the Change in Control price (as defined below). The cash-out proceeds
shall be paid to the Participant or, in the event of death of a Participant
prior to payment, to the estate of the Participant or to a person who acquired
the right to exercise the Option, SAR or Stock Purchase Right, or who acquired
the right to receive the payout of the other Award, by bequest or inheritance.


 


(e)   Definition of “Change in Control”.
For purposes of this Section 17, a “Change in Control” means the happening
of any of the following:


 


(i)    When any “person”,
as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other
than the Company, a Subsidiary or a Company employee benefit plan, including
any trustee of such plan acting as trustee) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding securities; or


 


(ii)   The
occurrence of a transaction requiring shareholder approval, and involving the
sale of all or substantially all of the assets of the Company or the merger of
the Company with or into another corporation (other than the Company’s
reincorporation into another jurisdiction).


 


(f)    Change in Control Price. For
purposes of this Section 17, “Change in Control Price” shall be, as
determined by the Administrator, (i) the highest Fair Market Value at any
time within the 60-day period immediately preceding the date of determination
of the Change in Control Price by the Administrator (the “60-Day Period”), or
(ii) the highest price paid or offered, as determined by the
Administrator, in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day Period.


 


18.         Date of Grant. The
date of grant of an Award shall be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Participant within a reasonable time after the date of such
grant.


 


19.         Amendment and Termination of the Plan.


 


(a)   Amendment and Termination. The
Board may at any time amend, alter, suspend or terminate the Plan.


 


(b)   Shareholder Approval. The Company
shall obtain shareholder approval of any Plan amendment to the extent necessary
and desirable to comply with Applicable Laws.


 


(c)   Effect of Amendment or Termination.
No amendment, alteration, suspension or termination of the Plan shall impair
the rights of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. Termination of the Plan shall not
affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.


 


20.         Conditions Upon Issuance of Shares.


 


(a)   Legal Compliance. Shares shall not
be issued pursuant to the exercise or payout, as applicable, of an Award unless
the exercise or payout, as applicable, of such Award and the issuance 


 


14





















 


and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.


 


(b)   Investment Representations. As a
condition to the exercise or payout, as applicable, of an Award, the Company
may require the person exercising such Option, SAR or Stock Purchase Right, or
in the case of another Award, the person receiving the payout, to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


 


21.         Inability to Obtain Authority. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.


 


22.         Reservation of Shares. The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.


 


23.         Shareholder Approval. The
amended and restated Plan shall be subject to approval by the shareholders of
the Company within twelve (12) months after February 8, 2005. Such
shareholder approval shall be obtained in the manner and to the degree required
under Applicable Laws.


 


24.         Non-U.S. Employees.
Notwithstanding anything in the Plan to the contrary, with respect to any
employee who is resident outside of the United States, the Committee may, in
its sole discretion, amend the terms of the Plan in order to conform such terms
with the requirements of local law or to meet the objectives of the Plan. The
Committee may, where appropriate, establish one or more sub-plans for this
purpose.


 


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