EXHIBIT
10.2


 


NATIONAL SEMICONDUCTOR


 


2005
EXECUTIVE OFFICER EQUITY PLAN


 


(as
amended effective August 7, 2007,


subject
to stockholder approval)


 


1.                                       PURPOSE AND OBJECTIVES


 


The National Semiconductor
2005 Executive Officer Equity Plan (the “Plan”) is designed to align the
interests of Executive Officers of National Semiconductor Corporation with the
interests of the Company’s stockholders and to provide incentives for such
Executive Officers to exert maximum efforts for the success of the Company. By
extending to Executive Officers the opportunity to acquire proprietary
interests in the Company and to participate in its success, the Plan may be
expected to benefit the Company and its stockholders by making it possible for
the Company to attract and retain the best available executive talent and by
rewarding them for their part in increasing the value of the Company’s shares.


 


2.                                       DEFINITIONS


 


Whenever used in this Plan,
the following terms shall have the meaning set forth below:


 


Award:     The
grant of any form of stock, stock option, or performance share units whether
granted singly, in combination or in tandem, to a Participant pursuant to such
terms, conditions, performance requirements, limitations and restrictions as
the Committee may establish in order to fulfill the objectives of the Plan.


 


Award Agreement:     An
agreement, which may be in written or electronic form, between the Company and
a Participant that sets forth the terms, conditions, performance requirements,
limitations and restrictions applicable to an Award.


 


Board:     The
board of directors of the Company.


 


Code:     The
Internal Revenue Code of 1986, as amended.


 


Committee:     The
committee appointed by the Board to administer the Plan. The Committee shall be
comprised solely of directors who are (a) “nonemployee directors” under Rule
16b-3 of the Securities Exchange Act of 1934, (b) “outside directors” under
Section 162(m) of the Code and (c) “independent directors” pursuant to New York
Stock Exchange requirements.


 


Common Stock:     National
Semiconductor Corporation’s common stock, par value $0.50 per share.


 


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Company:     National
Semiconductor Corporation (“NSC”) a Delaware corporation, and any corporation
in which NSC controls directly or indirectly more than fifty percent (50%) of
the combined voting power of voting securities.


 


Disability:     Inability
to perform any services for the Company and eligible to receive disability
benefits under the standards used by the Company’s applicable disability
benefit plans or any successor plan thereto.


 


Effective Date:     October
1, 2004, the date this Plan was approved by the Company’s stockholders.


 


EOIP:     The
Company’s Executive Officer Incentive Plan.


 


Exchange Act:     Securities
Exchange Act of 1934, as amended.


 


Executive Officer:     Employees
of the Company identified as the Company’s executive officers in the Company’s
annual report on Form 10-K filed with the Securities and Exchange Commission.


 


Exercise Price:     Price
at which a share of Common Stock may be purchased by a Participant pursuant to
the exercise of an Option.


 


Fiscal Year:     The
fiscal year of the Company.


 


Grant Date:     With
respect to an Award, the date that the Award was granted.


 


Immediate Family:     Parents
(including step-parents), spouses, children (including step-children and
adopted children) and siblings (including step-siblings.)


 


Non-Qualified Stock Option:     Option
to purchase shares of Common Stock that is not intended to be an incentive
stock option, as that term is defined in the Code.


 


Option:     Non-Qualified
Stock Option.


 


Participant:     An
Executive Officer to whom an Award has been made under the Plan.


 


Performance Goals:     The
goal(s) (or combined goals) 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 business criteria
specified in Section 6. The Performance Goals may differ from Participant to
Participant and from Award to Award.


 


Performance Share Units:     Awards
to be made under the conditions specified in Section 8.


 


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Retirement:     Permanent
termination of employment with the Company and (a) age is either sixty-five
(65) or age is at least fifty-five (55) and years of service in the employ of
the Company is ten (10) or more, and (b) the terminating employee has confirmed
to the Company that he or she does not intend to engage in a full-time
vocation; provided however, that the Committee may in its discretion waive the
obligation to deliver a certification that the terminating employee does not
intend to engage in a full-time vocation.


 


Secretary:     The
Secretary of the Company.


 


3.                                      ADMINISTRATION


 


3.1     The Committee.     The
Plan shall be administered by the Committee. The Committee shall consist of not
less than two (2) directors who shall be appointed from time to time by, and
shall serve at the pleasure of, the Board.


 


3.2     Authority
of the Committee.     It shall be the duty of the
Committee to administer the Plan in accordance with the Plan’s provisions. The
Committee shall have all powers and discretion necessary or appropriate to
administer the Plan and to control its operation, including, but not limited
to, the power to (a) approve which Executive Officers shall be granted Awards,
(b) prescribe the terms and conditions of the Awards, (c) interpret the Plan
and the Awards, (d) adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by Executive Officers who are
foreign nationals or employed outside of the United States, (e) adopt rules for
the administration, interpretation and application of the Plan as are
consistent therewith and (f) interpret, amend or revoke any such rules. The
duties of the Committee under this Plan may not be delegated.


 


3.3     Decisions
Binding.     All determinations and decisions made by
the Committee and the Board pursuant to the provisions of the Plan shall be
final, conclusive, and binding on all persons, and shall be given the maximum
deference permitted by law. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or an Award.


 


4.                                       SHARES SUBJECT TO THE PLAN


 


4.1     Number
of Shares. Subject to adjustment as provided in Section 4.3, the total number
of shares available for issuance under the Plan shall not exceed 6,000,000
(consisting of 3,000,000 shares approved in fiscal 2005 and 3,000,000 approved
in fiscal 2008) which may be unissued shares, or shares acquired by the
Company, either on the market or otherwise. Of the total number of shares of
Common Stock that may be issued under the Plan, up to 3,500,000 (consisting of
2,000,000 of the shares approved in fiscal 2005 and 1,500,000 of the shares
approved in fiscal 2008) shares of Common Stock can be delivered under the 


 


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Plan in connection with
Performance Share Units and the balance remaining may be delivered upon
exercise of Options that may be granted under this Plan. No shares from any of
NSC’s other equity plans shall be available for Awards under this Plan.


 


4.2     Expired
Awards. If an Award is forfeited, cancelled, terminates, expires, or lapses for
any reason, any shares of Common Stock subject to such Award shall again be
available to be the subject of an Award. Notwithstanding the foregoing, any
shares of Common Stock that are exchanged by a Participant or withheld by the
Company as full or partial payment in connection with any Award under the Plan,
as well as any shares exchanged by a Participant or withheld by the Company or
a Participant’s employing company to satisfy the tax withholding obligations
related to any Award under the Plan, shall not be available for subsequent
Awards under the Plan.


 


4.3     Adjustments
in Awards and Authorized Shares.     In the event that
there is any change in the shares of the Company through any dividend or other
distribution (whether in the form of cash, shares of Common Stock, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of shares of Common Stock or other securities of the
Company, then the number of shares of Common Stock that may be delivered under
the Plan, the number, class, and price of shares of Common Stock subject to
outstanding Awards, and the numerical limits of Section 4.1 shall be
appropriately adjusted. Notwithstanding the preceding, the number of shares of
Common Stock subject to any Award shall always be a whole number.


 


5.                                       ELIGIBILITY


 


Awards may be granted under
the Plan only to Executive Officers of the
Company.     No Executive Officer shall have the
automatic right to receive an Award under this Plan. Once having been selected
to receive an Award, an Executive Officer has no right to be selected to
receive a future Award.


 


6.                                       PERFORMANCE GOALS


 


Performance Goals shall
identify one or more business criteria, which may include any of the following:


 


Financial Business Criteria:


 


	
  Net income

  	
  Earnings per share

  
	
  Debt reduction

  	
  Cash flow

  
	
  Stockholder return

  	
  Revenue

  
	
  Return on investment

  	
  Revenue growth

  
	
  Return on invested capital

  	
  Return on net assets

  
	
  Return on equity

  	
  Profit before tax

  
	
  Gross operating profit

  	
  Profit after tax

  
	
  Return on research and

  	
  Market capitalization

  



 


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  development investment

  	
  Total stockholder return

  



Margin


 


Performance Goals based on
financial business criteria may be set on a pre tax or after tax basis, may be
defined by absolute or relative measures, and may be valued on a growth or
fixed basis.


 


Strategic and Operational
Business Criteria:


 


	
  Quality improvements

  Cycle time reductions

  Manufacturing improvements 

  and/or efficiencies

  Strategic positioning 

  programs

  Business/information 

  systems improvements

  Infrastructure support

  programs

  Human resource programs

  New product releases

  Operational and strategic

  programs

  	
  Market Share

  Reduction in product
  returns

  Customer satisfaction  

  improvements

  Compensation/review

  program improvements

  Expense management

  Customer request date

  performance

  New product revenue

  Customer programs

  Technology development

  programs

  



 


7.                                       STOCK OPTIONS


 


7.1     Grant
of Options.     Subject to the terms and provisions of
the Plan, Options may be granted to Executive Officers at any time and from
time to time as determined by the Committee in its sole discretion. The
Committee shall determine the number of shares of Common Stock subject to each
Option, provided, however that no one individual may receive a grant of more
than 500,000 Options in any one Fiscal Year.


 


7.2     Award Agreement.     Each Option shall be
evidenced by an Award Agreement that shall specify the Exercise Price, the
expiration date of the Option, the number of shares of Common Stock to which
the Option pertains, and such other terms and conditions as the Committee, in
its discretion, shall determine. The Committee may provide that Options become
exercisable in installments. The terms of the Award Agreement need not be
identical for all Participants or for each Option granted.


 


7.3     Exercise
Price.     The Exercise Price for each Option shall be
the closing price of the Common Stock on the New York Stock Exchange on the
date the Option grant was approved by the Committee. If there is no trading on
such date, the Grant Date shall be the next date on which the New York Stock
Exchange is open for trading and the Exercise Price shall be the closing price
of the Common Stock on the New York Stock Exchange on such Grant Date.


 


7.4     Term.     The
maximum term of any Option shall be six years and one day from the Grant Date.
The minimum full vesting period for any service based Option shall be three
years from the Grant 


 


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Date. Subject to these
limits, the Committee shall provide in each Award Agreement when each Option
expires and becomes unexercisable.


 


7.5           Performance Requirements.     The
Committee may establish performance requirements for exercisability of Options.
Performance requirements may be set based upon the achievement of Performance
Goals or other specific performance objectives (Company-wide, divisional, or
individual.)


 


7.6           Exercisability of Options.


 


7.6.1     Except
as provided in Section 9.1.1, an Option may not be exercised to any extent,
either by the person to whom it was granted, the grantee’s transferee, the
grantee’s guardian or legal representative or by any person after the grantee’s
death, unless the person to whom the Option was granted has remained in the
continuous employ of the Company for not less than six months from the date
when the Option was granted. Otherwise, each Option shall be exercisable as
determined by the Committee. Subject to the foregoing, Options shall be
exercisable only after the time vesting requirements specified in the Option
grant have been satisfied and, if applicable, the Committee has certified in
writing that all applicable performance conditions have been met.


 


7.6.2     The
Committee has the discretion to determine whether Options granted shall be
transferable without consideration to the Participant’s Immediate Family
members or family trusts for the benefit of the Participant’s Immediate Family
members. Options shall otherwise not be transferable, either with or without
consideration.


 


7.7           Payment of Purchase Price.


 


7.7.1     Options
shall be exercised by the Participant’s delivery of a notice of exercise (which
may be in electronic form) to the Company’s Stock Administration department (or
such other designee as the Company may identify), setting forth the number of
shares with respect to which the Option is to be exercised, accompanied by full
payment for the shares. The notice shall be given in the form and manner
specified by the Company from time to time.


 


7.7.2     Upon
the exercise of any Option, the Exercise Price shall be payable to the Company
in full in cash or its equivalent. Previously acquired shares of Common Stock
that have been held by the Participant for at least six months or a combination
of cash and Common Stock held by the Participant for at least six months may also
be tendered to pay the Exercise Price. Common Stock tendered in full or partial
payment of the Exercise Price shall be valued on the date of exercise at the
opening price of the Common Stock on the New York Stock Exchange on the date of
exercise or, if 


 


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there shall be no trading on
such date, then on the first previous date on which there was such trading. As
soon as practicable after receipt of a notification of exercise and full
payment for the shares of Common Stock purchased, the Company shall deliver to
the Participant (or to one of the Company’s preferred brokers that is
designated by the Participant), share certificates (which may be in book entry
form) representing such shares.


 


7.8           Termination of Employment.     An
Option shall terminate and may not be exercised if the Participant to whom it
is granted ceases to be continuously employed by the Company, except (subject
nevertheless to the last sentence of this Section 7.8): (a) if the
Participant’s continuous employment is terminated for any reason other than (i)
Retirement, (ii) Disability, or (iii) death, the Participant or the
Participant’s transferee may exercise the Option to the extent that the
Participant was entitled to exercise such Option at the date of such
termination at any time within a period of three (3) months following the date
of such termination, or if the Participant shall die within the period of three
(3) months following the date of such termination without having exercised such
Option, the Option may be exercised within a period of one year following the
Participant’s death by the Participant’s transferee or the person or persons to
whom the Participant’s rights under the Option otherwise pass by will or by the
laws of descent or distribution but only to the extent exercisable at the date
of such termination; (b) if the Participant’s continuous employment is
terminated by (i) Retirement, (ii) Disability, or (iii) death, the Option may
be exercised in accordance with its terms and conditions at any time within a
period of five (5) years following the date of such termination by the
Participant or the Participant’s transferee, or in the event of the
Participant’s death, by the persons to whom the Participant’s rights under the
Option shall pass by will or by the laws of descent or distribution; (c) if the
Participant’s continuous employment is terminated and within a period of ninety
(90) days thereafter the Participant returns to the active payroll as an
employee of the Company, the Committee may reinstate any portion of the Option
previously granted but not exercised. Nothing contained in this Section 7.8 is
intended to extend the stated term of the Option and in no event may an Option
be exercised by anyone after the expiration of its stated term.


 


8.                                       PERFORMANCE SHARE UNITS


 


8.1           Establishment of Performance Share Unit Targets.     Subject
to the terms and provisions of the Plan, the Committee, at any time and from
time to time, may establish for the Executive Officers target awards of
Performance Share Units in such amounts as the Committee, in its sole
discretion, shall determine. The Committee shall determine the number of
Performance Share Unit targets to be established for each Participant,
provided, however, that no one individual may have a target of more than
250,000 Performance Share Units established in any one Fiscal Year.


 


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8.2           Performance Share Unit
Agreement.     Performance Share Units shall be
evidenced by an agreement, which may be in written or electronic form, that
shall specify the target number of Performance Share Units established for the
Participant, applicable performance conditions, the performance period which at
a minimum shall be two years, a vesting period which may or may not run
concurrently to the performance period, and such other terms and conditions as
the Committee, in its sole discretion, shall determine.


 


8.3           Performance Conditions.     The
Committee shall set performance conditions for Performance Share Units in
accordance with this Section 8.3.


 


8.3.1        General Performance Conditions.     The
Committee may set performance conditions based upon the achievement of specific
performance objectives (Company-wide, divisional, or individual).


 


8.3.2        Section 162(m) Performance
Conditions.     For purposes of qualifying Performance
Share Units as “performance-based compensation” under Section 162(m) of the
Code, the Committee may set performance conditions based upon the achievement
of Performance Goals. The Performance Goals shall be set by the Committee on or
before the latest date permissible to enable the Performance Share Units to
qualify as “performance-based compensation” under Section 162(m) of the Code.
In qualifying Performance Share Units under Section 162(m) of the Code, the
Committee shall follow any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the Performance Share Units
under Section 162(m) of the Code (e.g., in determining the Performance Goals
and measuring performance achievement).


 


8.4           Award Determination and Calculation.     Awards
will be determined at the end of the performance period if a threshold
performance level on the performance conditions of 50% has been achieved. At
the time of Award determination, the actual number of Performance Share Units
earned will be determined, based on achievement of applicable performance
goals. The Committee must determine the performance level achieved and certify
in writing that the performance ratings and other applicable conditions have
been satisfied before Awards can be paid. The actual number of Performance
Share Units that may be earned may range from 50% to 150% of the established
target and may not exceed 375,000 for any one performance period for any one
Participant. Awards will be paid in shares of Common Stock equal to the number
of Performance Share Units that has been earned after the Committee has
approved the Award and any applicable vesting period thereafter has been
satisfied.


 


8.5           Transferability.     Prior to
actual payment of Awards, Participants shall not have the right to sell,
transfer, pledge, 


 


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assign, or otherwise
alienate or hypothecate any rights to Awards. Any attempted disposition thereof
shall be null and void and of no effect.


 


8.6           Other Conditions.                The
Committee may impose such other conditions as it may deem advisable or
appropriate in accordance with this Section 8.6.


 


8.6.1        General Conditions.             The Committee may set conditions
based on applicable federal or state securities laws or any other basis
determined by the Committee.


 


8.6.2  Termination of Employment.              Each Performance Share Unit
Agreement shall provide that any rights to receive shares of Common Stock upon achievement
of performance conditions shall terminate immediately upon termination of
employment for any reason during the applicable performance and vesting
periods; provided, however, that the Committee may provide that no such
termination shall occur in the event of a termination of employment because of
the Participant’s Retirement, Disability or death, in which event the Committee
shall have the discretion to determine whether and in what amount an Award is
payable. Awards determined by the Committee to be payable upon the
Participant’s termination of employment by reason of death or Disability shall
be paid as soon as practical after such termination of employment to (i) in the
case of death, the person or persons to whom the Participant’s rights pass by
will or by the laws of descent or distribution; or (ii) in the case of
Disability to the Participant or, if applicable, the Participant’s legal
representative. Any Awards determined by the Committee to be payable upon the
Participant’s employment by reason of Retirement shall only be paid after the
performance period has been completed and measured and the Committee has
determined the actual Award amount earned by the Participant. The Committee
shall have the discretion to determine the effect of all matters and questions
relating to termination of employment, including but not by way of limitation,
the question of whether a termination of employment resulted from a discharge
for cause, and all questions of whether particular leaves of absence constitute
termination of employment.


 


9.                                       CHANGE-OF-CONTROL PROVISIONS


 


9.1           Impact.     Notwithstanding any
other provision of the Plan to the contrary, in the event of a
Change-of-Control:


 


9.1.1     any
Options outstanding as of the date such Change-of-Control occurs, and which are
not then exercisable and vested, shall become fully exercisable and vested;


 


9.1.2     the
performance conditions imposed under each Performance Share Unit Agreement
shall lapse, and each Participant shall be entitled to receive shares of Common



 


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Stock equivalent to the
target number of Performance Share Units specified in the Performance Share
Unit Award Agreement.


 


Notwithstanding any of other
provision of the Plan, in the event of a Change-in-Control in which the
consideration paid to the holders of Common Stock is solely cash, each Award
shall, upon the occurrence of a Change-of-Control, be cancelled in exchange for
a payment in an amount equal to (i) the excess of the consideration paid per
share Common Stock in the Change-of-Control over the Exercise Price or other
applicable purchase price per share of Common Stock subject to the Award
multiplied by (ii) the number of shares of Common Stock granted under the
Award.


 


9.2           Definition of Change-of-Control.     For
purposes of the Plan, a “Change-of-Control” shall mean the happening of any of
the following events:


 


9.2.1     The acquisition by any
individual, entity or group (within the meaning of Section 13(d) (3) or 14(d)
(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of
either (x) the then outstanding shares of NSC’s Common Stock (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then outstanding
voting securities of NSC entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this Section 9.2.1, the following acquisitions shall not
be deemed to result in a Change-of-Control: (i) any acquisition directly from
NSC, (ii) any acquisition by NSC, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by NSC or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant
to a transaction that complies with clauses (i), (ii) and (iii) of Section
9.2.3 below; or


 


9.2.2        individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by NSC’s stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or


 


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9.2.3        the approval by the stockholders of
NSC’s of a reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of NSC or the acquisition of assets
of another corporation (“Business Combination”) or, if consummation of such
Business Combination is subject, at the time of such approval by stockholders,
to the consent of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly by consummation) unless, following
such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60%,
respectively, of the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns NSC or all or
substantially all of NSC’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of NSC or any
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 35% or more of, respectively, the then outstanding
shares of Common Stock resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business Combination;
or


 


9.2.4        approval by the stockholders of NSC of a
complete liquidation or dissolution of NSC.


 


9.3           Notwithstanding the foregoing, a Change-of-Control shall
not be deemed to have occurred by virtue of the consummation of any transaction
or series of integrated transactions immediately following which the record
holders of the Common Stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of NSC immediately
following such transaction or series of transactions.


 


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10.           FORFEITURE OF AWARDS


 


Notwithstanding anything in
the Plan to the contrary, the Committee may, in its sole discretion, in the
event of serious misconduct by a Participant (including, without limitation,
any misconduct prejudicial to or in conflict with the Company) or any
termination of employment for cause or in the event that a Participant
terminates employment for Retirement and subsequently engages in full-time
employment, or any activity of a Participant in competition with the business
of the Company, (a) cancel any outstanding Award granted to such Participant,
in whole or in part, whether or not vested or deferred, or (b) following the
exercise or payment of an Award within a period specified by the Committee,
require such Participant to repay to the Company any gain realized or payment
received upon the exercise or payment of such Award (with such gain or payment
valued as of the date of exercise or payment). Such cancellation or repayment
obligation shall be effective as of the date specified by the Committee. Any
repayment obligation may be satisfied in Common Stock or cash or a combination
thereof (valued based upon the opening price of the Common Stock on the New
York Stock Exchange on the date of payment or if there is no trading on the New
York Stock Exchange on such date, the opening price on the immediately
preceding trading day on the New York Stock Exchange), and the Committee may
provide for an offset to any future payments owed by the Company to the
Participant if necessary to satisfy the repayment obligation. The determination
of whether a Participant has engaged in a serious breach of conduct or any
activity in competition with the business of the Company shall be determined by
the Committee in good faith and in its sole discretion. This Section 11 shall
have no application following a Change-of-Control.


 


11.           TERM; AMENDMENT AND TERMINATION


 


11.1     Term
of the Plan.     The Plan shall be effective as of the
Effective Date and shall remain in effect thereafter, unless terminated earlier
by the Company. Awards outstanding on the Plan’s termination date shall not be
affected or impaired by the termination of the Plan, but no Award may be
granted or issued during any period of suspension or after termination of the
Plan.


 


11.2     Amendment.     The
Board may amend, alter, suspend, discontinue or terminate the Plan or any
portion thereof at any time; provided, however, that no such amendment,
alteration, suspension, discontinuation or termination (a) shall be made
without stockholder approval if such approval is required by applicable law,
regulatory requirement or stock exchange or accounting rules, or if the Board
deems it necessary or desirable to qualify for or comply with any tax,
applicable law, stock exchange, accounting or regulatory requirement, (b)
except as required by applicable law or stock exchange or accounting rules,
shall be made without the consent of the affected Participant, if such action
would impair the rights of such Participant under any outstanding Award or (c)
shall cause an Award qualified as 


 


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performance-based compensation
under Section 162(m) of the Code to cease to qualify as such. Notwithstanding
anything to the contrary herein, the Committee or Board may amend or alter the
Plan in such manner as may be necessary so as to have the Plan conform to local
rules and regulations in any jurisdiction outside the United States.


 


12.           GENERAL PROVISIONS


 


12.1     Representation.     The
Committee may require each person purchasing or receiving shares of Common
Stock pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.


 


12.2     Conditions
to NSC’s Obligation to Issue Stock.     Notwithstanding
any other provision of the Plan or agreements made pursuant thereto, NSC shall
not be required to issue or deliver any certificate or certificates for shares
of Common Stock under the Plan prior to fulfillment of all of the following
conditions:


 


12.2.1     Listing
or approval for listing upon notice of issuance, of such shares on the New York
Stock Exchange, Inc., or such other securities exchange as may at the time be
the principal market for the Common Stock;


 


12.2.2     Any
registration or other qualification of such shares of NSC under any state or
federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable; and


 


12.2.3     Obtaining
any other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, in its absolute discretion after receiving
the advice of counsel, determine to be necessary or advisable.


 


12.3         No Limit on Other Arrangements.     Nothing
contained in the Plan shall prevent the Company from adopting other or
additional compensation arrangements for its Executive Officers or otherwise
affect any other compensation or incentive plans in effect for the Company.


 


12.4         No Repricings/Regrants/Exchanges/Modifications. The
Committee may not grant new Options or Performance Share Units in exchange for
the cancellation of any other Award made under this Plan or any other plan of
the Company. Other than in connection with a change in the Company’s
capitalization as provided in Section 4.3, the Exercise Price of an Option may
not be reduced without approval of the Company’s stockholders. No material 


 


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amendments may be made to
the Plan without the approval of the Company’s stockholders.


 


12.5         No Contract of Employment.     The
Plan shall not constitute a contract of employment, and adoption of the Plan
shall not confer upon any Participant or Executive Officer any right to
continued employment, nor shall it interfere in any way with the right of the
Company to terminate the employment of any Participant or Executive Officer at
any time.


 


12.6         Tax Withholding.     No later than
the date on which an amount first becomes includible in the gross income of the
Participant for income tax purposes with respect to any Award under the Plan,
the Participant shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, any federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to such amount.
Unless otherwise determined by the Committee, withholding obligations may be
settled with Common Stock, including Common Stock that is part of the Award
that gives rise to the withholding requirement, cash, shares of Common Stock
previously owned by the Participant for at least six months duly enclosed for
transfer to the Company, or in any combination of the foregoing. If Common
Stock that is part of the Award is used to settle tax withholding obligations,
the value of such Common Stock may not exceed the maximum withholding rate
applicable to the Award. Common Stock used to satisfy tax withholding obligations
shall be valued at the opening price of the Common Stock on the New York Stock
Exchange on the date the Common Stock is used to satisfy the tax withholding
obligation or, if there is no trading on the New York Stock Exchange on such
day, the opening price on the immediately preceding trading day on the New York
Stock Exchange. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant. The Committee may establish such
procedures as it deems appropriate for the settlement of withholding
obligations with Common Stock.


 


12.7         Governing Law.     The Plan, all
Award Agreements and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
USA, without reference to principles of conflict of laws.


 


12.8         Nontransferability.     No Award,
or interest or right therein or part thereof, shall be liable for the debts,
contracts or engagements of the Participant or successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy)
and any attempted disposition thereof shall be null and void and of no effect.
Any transfer of Awards to independent third parties for cash consideration
without stockholder approval is prohibited.


 


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Notwithstanding the
foregoing, nothing in this Section 12.8 shall prevent transfers as provided by
Section 7.6.2 or by will or the applicable laws of descent and distribution.


 


12.9         Rights as Stockholder.     No
Participant (nor any beneficiary or transferee) shall have any of the rights or
privileges of a stockholder of the Company with respect to any shares of Common
Stock issuable pursuant to an Award (or exercise thereof), unless and until
certificates (which may be in book entry form) representing such shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Participant (or beneficiary or transferee,
as applicable.) Participants who have received target awards of Performance
Share Units shall not be entitled to receive any dividends that may be paid on the
Common Stock during the performance period.


 


12.10       Gender and Number.     Except where
otherwise indicated by the context, any masculine term used herein also shall
include the feminine; the plural shall include the singular and the singular
shall include the plural.


 


12.11       Severability.     In the event any
provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.


 


12.12       Section 409A.     This Plan is
intended to comply and shall be administered in a manner that is intended to
comply with Section 409A of the Code and shall be construed and interpreted in
accordance with such intent. To the extent that an Award, issuance and/or
payment is subject to 409A of the Code, it shall be awarded and/or issued or
paid in a manner that will comply with Section 409A of the Code, including
regulations or any other guidance issued by the Secretary of the Treasury and
the Internal Revenue Service with respect thereto. In particular, any payment
of shares of Common Stock due in connection with Performance Share Units shall
be made no later than sixty (60) days of the first of the calendar year
following the date that the Performance Share Unit Award has been deemed to be
earned. Any provision of this Plan that would cause an Award, issuance and/or
payment to fail to satisfy Section 409A of the Code shall have no force or
effect until amended to comply with Code Section 409A (which amendment may be
retroactive to the extent permitted by applicable law).


 


12.13       Acceleration of Awards.     Except as
permitted in Sections 7.8, 8.6.2, and 9.1, acceleration of Awards and/or
continued vesting of Awards after termination of employment shall not be
permitted without the approval of stockholders.


 


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