Document:

ex4_3.htm

 

EXHIBIT 4.3

 

PRAXAIR, INC.

 

SUBORDINATED

 

DEBT SECURITIES

 

INDENTURE

 

Dated as of [          ], 20[     ]

 

[               ], Trustee

 

  

  

  

 

PARTIAL CROSS-REFERENCE TABLE

 

	

Indenture Section

	

TIA Section

	  	  
	
2.05

	
317(b)

	
2.06

	
312(a)

	
2.11

	
316(a)

	  	
(last sentence)

	
4.07

	
314(a)(4)

	
4.08

	
314(a)(1)

	
6.04

	
316(a)(1)(B)

	
6.05

	
316(a)(1)(A)

	
6.07

	
317(a)(1)

	
7.04

	
315(b)

	
7.05

	
313(a)

	
7.05

	
313(d)

	
7.07

	
310(a), 310(b)

	
7.10

	
310(b)(1)

	
8.02

	
310(a), 310(b)

	
9.04

	
316(c)

	
11.01

	
318(a)

	
11.02

	
313(c)

	
11.03

	
314(c)(1)

	  	
314(c)(2)

	
11.04

	
314(e)

  

  

  

TABLE OF CONTENTS

 

Page                 

ARTICLE 1

 

DEFINITIONS

 

	
SECTION 1.01.

	
Definitions

	
1

	
SECTION 1.02.

	
Other Definitions

	
2

	
SECTION 1.03.

	
Rules of Construction

	
2

ARTICLE 2

 

THE SECURITIES

 

	
SECTION 2.02.

	
Execution and Authentication

	
4

	
SECTION 2.03.

	
Bond Agents

	
4

	
SECTION 2.04.

	
Bearer Securities

	
5

	
SECTION 2.05.

	
Paying Agent To Hold Money in Trust

	
5

	
SECTION 2.06.

	
Securityholder Lists

	
5

	
SECTION 2.07.

	
Transfer and Exchange

	
6

	
SECTION 2.08.

	
Replacement Securities

	
6

	
SECTION 2.09.

	
Outstanding Securities

	
6

	
SECTION 2.10.

	
Discounted Securities

	
7

	
SECTION 2.11.

	
Treasury Securities

	
7

	
SECTION 2.12.

	
Global Securities

	
7

	
SECTION 2.13.

	
Temporary Securities

	
7

	
SECTION 2.14.

	
Cancellation

	
7

	
SECTION 2.15.

	
Defaulted Interest

	
8

ARTICLE 3

 

REDEMPTION

 

	
SECTION 3.01.

	
Notices to Trustee

	
8

	
SECTION 3.02.

	
Selection of Securities To Be Redeemed

	
8

	
SECTION 3.03.

	
Notice of Redemption

	
8

	
SECTION 3.04.

	
Effect of Notice of Redemption

	
9

	
SECTION 3.05.

	
Payment of Redemption Price

	
9

	
SECTION 3.06.

	
Securities Redeemed in Part

	
9

ARTICLE 4

 

COVENANTS

 

	
SECTION 4.01.

	
Payment of Securities

	
9

	
SECTION 4.02.

	
Overdue Interest

	
10

	
SECTION 4.03.

	
Compliance Certificate

	
10

	
SECTION 4.04.

	
SEC Reports

	
10

  

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ARTICLE 5

 

SUCCESSORS

 

	
SECTION 5.01.

	
When Company May Merge etc.

	
10

ARTICLE 6

 

DEFAULTS AND REMEDIES

 

	
SECTION 6.01.

	
Events of Default

	
11

	
SECTION 6.02.

	
Acceleration

	
11

	
SECTION 6.03.

	
Other Remedies

	
12

	
SECTION 6.04.

	
Waiver of Past Defaults

	
12

	
SECTION 6.05.

	
Control by Majority

	
12

	
SECTION 6.06.

	
Limitation on Suits

	
12

	
SECTION 6.07.

	
Collection Suit by Trustee

	
13

	
SECTION 6.08.

	
Priorities

	
13

ARTICLE 7

 

TRUSTEE

 

	
SECTION 7.01.

	
Rights of Trustee

	
13

	
SECTION 7.02.

	
Individual Rights of Trustee

	
14

	
SECTION 7.03.

	
Trustee’s Disclaimer

	
14

	
SECTION 7.04.

	
Notice of Defaults

	
14

	
SECTION 7.05.

	
Reports by Trustee to Holders

	
14

	
SECTION 7.06.

	
Compensation and Indemnity

	
14

	
SECTION 7.07.

	
Replacement of Trustee

	
15

	
SECTION 7.08.

	
Successor Trustee by Merger. etc.

	
15

	
SECTION 7.09.

	
Trustee’s Capital and Surplus

	
15

	
SECTION 7.10.

	
No Conflicting Interest

	
16

ARTICLE 8

 

DISCHARGE OF INDENTURE

 

	
SECTION 8.01.

	
Defeasance

	
16

	
SECTION 8.02.

	
Conditions to Defeasance

	
16

	
SECTION 8.03.

	
Application of Trust Money

	
17

	
SECTION 8.04.

	
Repayment to Company

	
17

ARTICLE 9

 

AMENDMENTS

 

	
SECTION 9.01.

	
Without Consent of Holders

	
17

  

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SECTION 9.02.

	
With Consent of Holders

	
18

	
SECTION 9.03.

	
Compliance with Trust Indenture Act

	
18

	
SECTION 9.04.

	
Effect of Consents

	
18

	
SECTION 9.05.

	
Notation on or Exchange of Securities

	
18

	
SECTION 9.06.

	
Trustee Protection

	
19

ARTICLE 10

 

SUBORDINATION

 

	
SECTION 10.01.

	
Agreement to Subordinate

	
19

	
SECTION 10.02.

	
Certain Definitions

	
19

	
SECTION 10.03.

	
Liquidation; Dissolution; Bankruptcy

	
19

	
SECTION 10.04.

	
Company Not to Make Payments with Respect to Securities

  in Certain Circumstances

	
20

	
SECTION 10.05.

	
Acceleration of Securities

	
20

	
SECTION 10.06.

	
When Distribution Must Be Paid Over

	
20

	
SECTION 10.07.

	
Notice by Company

	
20

	
SECTION 10.08.

	
Subrogation

	
20

	
SECTION 10.09.

	
Subordination May Not Be Impaired by Company

	
21

	
SECTION 10.10.

	
Distribution or Notice to Representative

	
21

	
SECTION 10.11.

	
Rights of Trustee and Paying Agent

	
21

	
SECTION 10.12.

	
Officers’ Certificate

	
21

	
SECTION 10.13.

	
Obligation of Company Unconditional

	
21

ARTICLE 11

 

MISCELLANEOUS

 

	
SECTION 11.01.

	
Trust Indenture Act

	
22

	
SECTION 11.02.

	
Notices

	
22

	
SECTION 11.03.

	
Certificate and Opinion as to Conditions Precedent

	
23

	
SECTION 11.04.

	
Statements Required in Certificate or Opinion

	
23

	
SECTION 11.05.

	
Rules by Company and Agents

	
23

	
SECTION 11.06.

	
Legal Holidays

	
23

	
SECTION 11.07.

	
No Recourse Against Others

	
24

	
SECTION 11.08.

	
Duplicate Originals

	
24

	
SECTION 11.09.

	
Governing Law

	
24

Exhibit A                      A Form of Registered Security

Exhibit B                      A Form of Bearer Security Notes to Exhibits A and B

Exhibit C                      A Form of Assignment

  

-iii-

  

INDENTURE dated as of [          ], 20[  ] between PRAXAIR, INC., a Delaware corporation (“Company”), and [          ], a national banking association (“Trustee”).

 

Each party agrees as follows for the benefit of the Holders of the Company’s debt securities issued under this Indenture:

 

 

ARTICLE 1

DEFINITIONS

 

SECTION 1.01.                                Definitions.

 

“Affiliate” means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.

 

“Agent” means any Registrar, Transfer Agent or Paying Agent.

 

“Authorized Newspaper” means a newspaper that is:

 

(1)            printed in the English language or in an official language of the country of publication;

 

(2)            customarily published on each business day in the place of publication; and

 

(3)            of general circulation in the relevant place or in the financial community of such place.

 

Whenever successive publications in an Authorized Newspaper are required, they may be made on the same or different business days and in the same or different Authorized Newspapers.

 

“Bearer Security” means a Security payable to bearer.

 

“Board” means the Board of Directors of the Company or any authorized committee of the Board.

 

“Bond Resolution” means a resolution adopted by the Board or by an Officer or committee of officers pursuant to Board delegation authorizing a series of Securities.

 

“Company” means the party named as such above until a successor replaces it and thereafter means the successor.

 

“coupon” means an interest coupon for a Bearer Security.

 

“Default” means any event which is, or after notice or passage of time would be, an Event of Default.

 

“Discounted Security” means a Security where the amount of principal due upon acceleration is less than the stated principal amount.

 

“Holder” or “Securityholder” means the person in whose name a Registered Security is registered and the bearer of a Bearer Security or coupon.

 

“Indenture” means this Indenture and any Bond Resolution as amended from time to time.

 

  

  

  

“Officer” means the Chairman, any Vice-Chairman, the President, any Vice-President, the Treasurer, the Secretary, the Controller or any Assistant Treasurer of the Company.

 

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and an Assistant Secretary or Assistant Controller of the Company.

 

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company or the Trustee.

 

“principal” of a debt security means the principal of the security plus the premium, if and when applicable, on the security.

 

“Registered Security” means a Security registered as to principal and interest by the Registrar.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities” means the debt securities issued under this Indenture.

 

“series” means a series of Securities or the Securities of the series.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code § 77aaa-77bbbb) as in effect on the date shown above.

 

“Trustee” means the party named as such above until a successor replaces it and thereafter means the successor.

 

“Trust Officer” means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

 

“United States” means the United States of America, its territories and possessions and other areas subject to its jurisdiction.

 

“Yield to Maturity” means the yield to maturity on a Security at the time of its issuance or at the most recent determination of interest on the Security.

 

SECTION 1.02.                                Other Definitions.

 

	

Term

	

Defined in Section

	
 “Bankruptcy Law”

	
6.01

	
“Custodian”

	
6.01

	
“Event of Default”

	
6.01

	
“Legal Holiday”

	
11.06

	
“Paying Agent”

	
2.03

	
“Registrar”

	
2.03

	
“Representative”

	
10.02

	
“Senior Indebtedness”

	
10.02

	
“Transfer Agent”

	
2.03

	
“Treasury Regulations”

	
2.04

	
“U.S. Government Obligations”

	
8.02

  

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SECTION 1.03.                                Rules of Construction.

 

Unless the context otherwise requires:

 

(1)           a term has the meaning assigned to it;

 

(2)           an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in the United States;

 

(3)           generally accepted accounting principles are those applicable from time to time;

 

(4)           all terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings assigned to them by such definitions;

 

(5)           “or” is not exclusive; and

 

(6)           words in the singular include the plural, and in the plural include the singular.

 

ARTICLE 2

THE SECURITIES

 

SECTION 2.01.                                Issuable in Series.

 

The aggregate principal amount of Securities that may be issued under this Indenture is unlimited.  The Securities may be issued from time to time in one or more series.  Each series shall be created by a Bond Resolution or a supplemental indenture that establishes the terms of the series, which may include the following:

 

(1)           the title of the series;

 

(2)           the aggregate principal amount of the series;

 

(3)           the interest rate, if any, or method of calculating the interest rate;

 

(4)           the date from which interest will accrue;

 

(5)           the record dates for interest payable on Registered Securities;

 

(6)           the dates when principal and interest are payable;

 

(7)           the manner of paying principal and interest;

 

(8)           the places where principal and interest are payable;

 

(9)           the Registrar, Transfer Agent and Paying Agent;

 

(10)           the terms of any mandatory or optional redemption by the Company;

 

(11)           the terms of any redemption at the option of Holders;

 

  

-3-

  

(12)           the denominations in which Securities are issuable;

 

(13)           whether Securities will be issuable as Registered Securities or Bearer Securities;

 

(14)           whether and upon what terms Registered Securities and Bearer Securities may be exchanged;

 

(15)           whether any Securities will be represented by a Security in global form;

 

(16)           the terms of any global Security;

 

(17)           the terms of any tax indemnity;

 

(18)           the currencies (including any composite currency) in which principal or interest may be paid;

 

(19)           if payments of principal or interest may be made in a currency other than that in which Securities are denominated, the manner for determining such payments;

 

(20)           if amounts of principal or interest may be determined by reference to an index, formula or other method, the manner for determining such amounts;

 

(21)           provisions for electronic issuance of Securities or for Securities in uncertificated form;

 

(22)           the portion of principal payable upon acceleration of a Discounted Security;

 

(23)           any Events of Default or covenants in addition to or in lieu of those set forth in this Indenture;

 

(24)           whether and upon what terms Securities may be defeased;

 

(25)           the forms of the Securities or any coupon, which may be in the form of Exhibit A or B;

 

(26)           any terms that may be required by or advisable under U.S. or other applicable laws; and

 

(27)           any other terms not inconsistent with this Indenture.

 

All Securities of one series need not be issued at the same time and, unless otherwise provided, a series may be reopened for issuances of additional Securities of such series.

 

The creation and issuance of a series and the authentication and delivery thereof are not subject to any conditions precedent.

 

SECTION 2.02.                                Execution and Authentication.

 

Two Officers shall sign the Securities by manual or facsimile signature.  The Company’s seal shall be reproduced on the Securities.  An officer shall sign any coupons by facsimile signature.

 

  

-4-

  

If an Officer whose signature is on a Security or its coupons no longer holds that office at the time the Security is authenticated or delivered, the Security and coupons shall nevertheless be valid.

 

A Security and its coupons shall not be valid until the Security is authenticated by the manual signature of the Registrar.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

 

Each Registered Security shall be dated the date of its authentication.  Each Bearer Security shall be dated the date of its original issuance or as provided in the Bond Resolution.

 

Securities may have notations, legends or endorsements required by law, stock exchange rule, agreement or usage.

 

SECTION 2.03.                                Bond Agents.

 

The Company shall maintain an office or agency where Securities may be authenticated (“Registrar”), where securities may be presented for registration of transfer or for exchange (“Transfer Agent”) and where Securities may be presented for payment (“Paying Agent”).  Whenever the Company must issue or deliver Securities pursuant to this Indenture, the Registrar shall authenticate the Securities at the Company’s request.  The Transfer Agent shall keep a register of the Securities and of their transfer and exchange.

 

The Company may appoint more than one Registrar, Transfer Agent or Paying Agent for a series.  The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture.  If the Company fails to maintain a Registrar, Transfer Agent or Paying Agent for a series, the Trustee shall act as such.

 

SECTION 2.04.                                Bearer Securities.

 

U.S. laws and Treasury Regulations restrict sales or exchanges of and payments on Bearer Securities.  Therefore, except as provided below:

 

(1)           Bearer Securities will be offered, sold and delivered only outside the United States and will be delivered only upon presentation of a certificate in a form prescribed by the Company to comply with U.S. laws and regulations.

 

(2)           Bearer Securities will not be issued in exchange for Registered Securities.

 

(3)           All payments of principal and interest (including original issue discount) on Bearer Securities will be made outside the United States by a Paying Agent located outside the United States unless the Company determines that:

 

(a)           such payments may not be made by such Paying Agent because the payments are illegal or prevented by exchange controls as described in Treasury Regulation § 1.163-5(c)(2)(v); and

 

(b)           making the payments in the United States would not have an adverse tax effect on the Company.

 

  

-5-

  

If there is a change in the relevant provisions of U.S. laws or Treasury Regulations or the judicial or administrative interpretation thereof, a restriction set forth in paragraph (1), (2) or (3) above will not apply to a series if the Company determines that the relevant provisions no longer apply to the series or that failure to comply with the relevant provisions would not have an adverse tax effect on the Company or on Securityholders or cause the series to be treated as “registration-required” obligations under U.S. law.

 

The Company shall notify the Trustee of any determinations by the Company under this Section.

 

“Treasury Regulations” means regulations of the U.S. Treasury Department under the Internal Revenue Code of 1986, as amended.

 

SECTION 2.05.                                Paying Agent To Hold Money in Trust.

 

The Company shall require each Paying Agent for a series other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of the persons entitled thereto all money held by the Paying Agent for the payment of principal of or interest on the series, and will notify the Trustee of any default by the Company in making any such payment.

 

While any such default continues, the Trustee may require a Paying Agent to pay all money so held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money.

 

If the Company or an Affiliate acts as Paying Agent for a series, it shall segregate and hold as a separate trust fund all money held by it as Paying Agent for the series.

 

SECTION 2.06.                                Securityholder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders.  If the Trustee is not the Transfer Agent, the Company shall furnish to the Trustee semiannually and at such other times as the Trustee may request a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders of Registered Securities and Holders of Bearer Securities whose names are on the list referred to below.

 

The Transfer Agent shall keep a list of the names and addresses of Holders of Bearer Securities who file a request to .be included on such list.  A request will remain in effect for two years but successive requests may be made.

 

Whenever the Company or the Trustee is required to mail a notice to all Holders of Registered Securities of a series, it also shall mail the notice to Holders of Bearer Securities of the series whose names are on the list.

 

Whenever the Company is required to publish a notice to all Holders of Bearer Securities of a series, it also shall mail the notice to such of them whose names are on the list.

 

SECTION 2.07.                                Transfer and Exchange.

 

Where Registered Securities of a series are presented to the Transfer Agent with a request to register a transfer or to exchange them for an equal principal amount of Registered Securities of other denominations of the series, the Transfer Agent shall register the transfer or make the exchange if its requirements for such transactions are met.

 

  

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The Transfer Agent may require a Holder to pay a sum sufficient to cover any taxes imposed on a transfer or exchange

 

If a series provides for Registered and Bearer Securities and for their exchange, Bearer Securities may be exchanged for Registered Securities and Registered Securities may be exchanged for Bearer Securities as provided in the Securities or the Bond Resolution if the requirements of the Transfer Agent for such transactions are met and if Section 2.04 permits the exchange.

 

SECTION 2.08.                                Replacement Securities.

 

If the Holder of a Security or coupon claims that it has been lost, destroyed or wrongfully taken, then, in the absence of notice to the Company or the Trustee that the Security or coupon has been acquired by a bona fide purchaser, the Company shall issue a replacement Security or coupon if the Company and the Trustee receive:

 

(1)           evidence satisfactory to them of the loss, destruction or taking;

 

(2)           an indemnity bond satisfactory to them; and

 

(3)           payment of a sum sufficient to cover their expenses and any taxes for replacing the Security or coupon.

 

A replacement Security shall have coupons attached corresponding to those, if any, on the replaced Security.

 

Every replacement Security or coupon is an additional obligation of the Company.

 

SECTION 2.09.                                Outstanding Securities.

 

The Securities outstanding at any time are all the Securities authenticated by the Registrar except for those cancelled by it, those delivered to it for cancellation, and those described in this Section as not outstanding.

 

If a Security is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced security is held by a bona fide purchaser.

 

If securities are considered paid under Section 4.02, they cease to be outstanding and interest on them ceases to accrue.

 

A Security does not cease to be outstanding because the Company or an Affiliate holds the Security.

 

SECTION 2.10.                                Discounted Securities.

 

In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, the principal amount of a Discounted Security shall be the amount of principal that would be due as of the date of such determination if payment of the Security were accelerated on that date.

 

  

-7-

  

SECTION 2.11.                                Treasury Securities.

 

In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or an Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded.

 

SECTION 2.12.                                Global Securities.

 

If the Bond Resolution so provides, the Company may issue some or all of the Securities of a series in temporary or permanent global form.  A global Security may be in registered form, in bearer form with or without coupons or in uncertificated form.  A global Security shall represent that amount of Securities of a series as specified in the global Security or as endorsed thereon from time to time.  At the Company’s request, the Registrar shall endorse a global Security to reflect the amount of any increase or decrease in the Securities represented thereby.

 

The Company may issue a global Security only to a depository designated by the Company.  A depository may transfer a global Security only as a whole to its nominee or to a successor depository.

 

The Bond Resolution may establish, among other things, the manner of paying principal and interest on a global Security and whether and upon what terms a beneficial owner of an interest in a global Security may exchange such interest for definitive Securities.

 

The Company, an Affiliate, the Trustee and any Agent shall not be responsible for any acts or omissions of a depository, for any depository records of beneficial ownership interests or for any transactions between the depository and beneficial owners.

 

SECTION 2.13.                                Temporary Securities.

 

Until definitive Securities of a series are ready for delivery, the Company may use temporary Securities.  Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities.  Temporary Securities may be in global form.  Temporary Bearer Securities may have one or more coupons or no coupons.  Without unreasonable delay, the Company shall deliver definitive Securities in exchange for temporary Securities.

 

SECTION 2.14.                                Cancellation.

 

The Company at any time may deliver Securities to the Registrar for cancellation.  The Transfer Agent and the Paying Agent shall forward to the Registrar any Securities and coupons surrendered to them for payment, exchange or registration of transfer.  The Registrar shall cancel all Securities or coupons surrendered for payment, registration of transfer, exchange or cancellation as follows:the Registrar will cancel all Registered Securities and matured coupons.  The Registrar also will cancel all Bearer Securities and unmatured coupons unless the Company requests the Registrar to hold the same for redelivery.  Any Bearer Securities so held shall be considered delivered for cancellation under Section 2.09.  The Registrar shall destroy cancelled Securities and coupons unless the Company otherwise directs.

 

Unless the Bond Resolution otherwise provides, the Company may not issue new Securities to replace Securities that the Company has paid or that the Company has delivered to the Registrar for cancellation.

 

  

-8-

  

SECTION 2.15.                                Defaulted Interest.

 

If the Company defaults in a payment of interest on Registered Securities, it need not pay the defaulted interest to Holders on the regular record date.  The company may fix a special record date for determining Holders entitled to receive defaulted interest or the Company may pay defaulted interest in any other lawful manner.

 

ARTICLE 3

REDEMPTION

 

SECTION 3.01.                                Notices to Trustee.

 

Securities of a series that are redeemable before maturity shall be redeemable in accordance with their terms and, unless the Bond Resolution otherwise provides, in accordance with this Article.

 

In the case of a redemption by the Company, the Company shall notify the Trustee of the redemption date and the principal amount of Securities to be redeemed.  The Company shall notify the Trustee at least 50 days before the redemption date unless a shorter notice is satisfactory to the Trustee.

 

If the Company is required to redeem Securities, it may reduce the principal amount of Securities required to be redeemed to the extent it is permitted a credit by the terms of the Securities and it notifies the Trustee of the amount of the credit and the basis for it.  If the reduction is based on a credit for acquired or redeemed Securities that the Company has not previously delivered to the Registrar for cancellation, the Company shall deliver the Securities at the same time as the notice.

 

SECTION 3.02.                                Selection of Securities To Be Redeemed.

 

If less than all the Securities of a series are to be redeemed, the Trustee shall select the Securities to be redeemed by a method the Trustee considers fair and appropriate.  The Trustee shall make the selection from Securities of the series outstanding not previously called for redemption.  The Trustee may select for redemption portions of the principal of Securities having denominations larger than the minimum denomination for the series.  Securities and portions thereof selected for redemption shall be in amounts equal to the minimum denomination for the series or an integral multiple thereof.  Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.

 

SECTION 3.03.                                Notice of Redemption.

 

At least 20 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Registered Securities whose Securities are to be redeemed.

 

If Bearer Securities are to be redeemed, the Company shall publish a notice of redemption in an Authorized Newspaper as provided in the Securities.

 

A notice shall identify the Securities of the series to be redeemed and shall state:

 

(1)           the redemption date;

 

(2)           the redemption price;

 

  

-9-

  

(3)           the name and address of the Paying Agent;

 

(4)           that Securities called for redemption, together with all coupons, if any, maturing after the redemption date, must be surrendered to the Paying Agent to collect the redemption price;

 

(5)           that interest on Securities called for redemption ceases to accrue on and after the redemption date; and

 

(6)           whether the redemption by the Company is mandatory or optional.

 

A redemption notice given by publication need not identify Registered Securities to be redeemed.

 

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense.

 

SECTION 3.04.                                Effect of Notice of Redemption.

 

Once notice of redemption is given, Securities called for redemption become due and payable on the redemption date at the redemption price stated in the notice.

 

SECTION 3.05.                                Payment-of Redemption Price.

 

On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date.

 

When the Holder of a Security surrenders it for redemption in accordance with the redemption notice,, the Company shall pay to the Holder on the redemption date the redemption price and accrued interest to such date, except that:

 

(1)           the Company will pay any such interest (except defaulted interest) to Holders on the record date of Registered Securities if the redemption date occurs on an interest payment date; and

 

(2)           the Company will pay any such interest to Holders of coupons that mature on or before the redemption date upon surrender of such coupons to the Paying Agent.

 

Coupons maturing after the redemption date on a called Security are void absent a payment default on that date.  Nevertheless, if a Holder surrenders for redemption a Bearer Security missing any such coupons, the Company may deduct the face amount of such coupons from the redemption price.  If thereafter the Holder surrenders to the Paying Agent the missing coupons, the Company will return the amount so deducted.  The Company also may waive surrender of the missing coupons if it receives an indemnity bond satisfactory to the Company.

 

SECTION 3.06.                                Securities Redeemed in Part.

 

Upon surrender of a Security that is redeemed in part, the Company shall deliver to the Holder a new Security of the same series equal in principal amount to the unredeemed portion of the Security surrendered.

 

  

-10-

  

ARTICLE 4

COVENANTS

 

SECTION 4.01.                                Payment of Securities.

 

The Company shall pay the principal of and interest on a series in accordance with the terms of the Securities for the series, any related coupons, and this Indenture.  Principal and interest on a series shall be considered paid on the date due if the Paying Agent for the series holds on that date money sufficient to pay all principal and interest then due on the series.

 

SECTION 4.02.                                Overdue Interest.

 

Unless the Bond Resolution otherwise provides, the Company shall pay interest on overdue principal of a Security of a series at the rate (or Yield to maturity in the case of a Discounted Security) borne by the series; it shall pay interest on overdue installments of interest at the same rate or Yield to maturity to the extent lawful.

 

SECTION 4.03.                                Compliance Certificate.

 

The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, a brief certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company, as to the signer’s knowledge of the Company’s compliance with all conditions and covenants under this Indenture (determined without regard to any period of grace or requirement of notice provided herein).

 

Any other obligor on the Securities also shall deliver to the Trustee such a certificate similarly signed as to its compliance with this Indenture within 120 days after the end of each of its fiscal years.

 

The certificates need not comply with Section.10.04.

 

SECTION 4.04.                                SEC Reports.

 

The Company shall file with the Trustee, within 15 days after the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents, and other reports (or such portions of the foregoing as the SEC may prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

Any other obligor on the Securities shall do likewise as to the above items which it is required to file with the SEC pursuant to those Sections.

 

ARTICLE 5

SUCCESSORS

 

SECTION 5.01.                                When Company May Merge. etc.

 

The Company shall not consolidate with or merge into, or transfer all or substantially all of its assets to, any person unless:

 

(1)           the person is organized under the laws of the United States or a State thereof;

 

  

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(2)           the person assumes by supplemental indenture all the obligations of the Company under this Indenture, the Securities and any coupons;

 

(3)           immediately after the transaction no Default exists; and

 

(4)           if, as a result of the transaction, a Principal Property would become subject to a Lien not permitted by Section 4.04, the Company or such person secures the Securities equally and ratably with or prior to all obligations secured by the Lien.

 

The successor shall be substituted for the Company, and thereafter all obligations of the Company under this Indenture, the Securities and any coupons shall terminate.

 

ARTICLE 6

DEFAULTS AND REMEDIES

 

SECTION 6.01.                                Events of Default.

 

An “Event of Default” on a series occurs if:

 

(1)           the Company defaults in any payment of interest on any Securities of the series when the same becomes due and payable and the Default continues for a period of 10 days;

 

(2)           the Company defaults in the payment of the principal of any Securities of the series when the same becomes due and payable at maturity or upon redemption, acceleration or otherwise;

 

(3)           the Company defaults in the performance of any of its other agreements applicable to the series and the Default continues for 90 days after the notice specified below;

 

(4)           the Company pursuant to or within the meaning of any Bankruptcy Law:

 

(a)           commences a voluntary case,

 

(b)           consents to the entry of an order for relief against it in an involuntary case,

 

(c)           consents to the appointment of a Custodian for it or for all or substantially all of its property, or

 

(d)           makes a general assignment for the benefit of its creditors;

 

(5)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(a)           is for relief against the Company in an involuntary case,

 

(b)           appoints a Custodian for the Company or for all or substantially all of its property, or

 

(c)           orders the liquidation of the Company;

 

  

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and the order or decree remains unstayed and in effect for 60 days; or

 

(6)           any other Event of Default provided for in the series.

 

The term “Bankruptcy Law” means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or a similar official under any Bankruptcy Law.

 

A Default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the series notify the Company of the Default and the Company does not cure the Default within the time specified after receipt of the notice.  The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default.” If Holders notify the Company of a Default, they shall notify the Trustee at the same time.

 

SECTION 6.02.                                Acceleration.

 

If an Event of Default occurs and is continuing on a series, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the series by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Securities of the series to be due and payable immediately.  Discounted Securities may provide that the amount of principal due upon acceleration is less than the stated principal amount.

 

The Holders of a majority in principal amount of the series by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default on the series have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration.

 

SECTION 6.03.                                Other Remedies.

 

If an Event of Default occurs and is continuing on a series, the Trustee may pursue any available remedy to collect principal or interest then due on the series, to enforce the performance of any provision applicable to the series, or otherwise to protect the rights of the Trustee and Holders of the series.

 

The Trustee may maintain a proceeding even if it does not possess any of the Securities or coupons or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

 

SECTION 6.04.                                Waiver of Past Defaults.

 

Unless the Bond Resolution otherwise provides, the Holders of a majority in principal amount of a series by notice to the Trustee may waive an existing Default on the series and its consequences except:

 

(1)           a Default in the payment of the principal of or interest on the series, or

 

(2)           a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected.

 

  

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SECTION 6.05.                                Control by Majority.

 

The Holders of a majority in principal amount of a series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred on the Trustee, with respect to the series.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture.

 

SECTION 6.06.                                Limitation on Suits.

 

A Securityholder of a series may pursue a remedy with respect to the series only if:

 

(1)           the Holder gives to the Trustee notice of a continuing Event of Default on the series;

 

(2)           the Holders of at least 25% in principal amount of the series make a request to the Trustee to pursue the remedy;

 

(3)           such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(4)           the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

 

(5)           during such 60-day period the Holders of a majority in principal amount of the series do not give the Trustee a direction inconsistent with such request.

 

A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder.

 

SECTION 6.07.                                Collection Suit by Trustee.

 

If an Event of Default in payment of interest or principal specified in Section 6.01(1) or (2) occurs and is continuing on a series, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid on the series.

 

SECTION 6.08.                                Priorities.

 

If the Trustee collects any money for a series pursuant to this Article, it shall pay out the money in the following order:

 

First:           to the Trustee for amounts due under Section 7.06;

 

Second:                      to Securityholders of the series for amounts due and unpaid for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable for principal and interest, respectively; and

 

Third:           to the Company.

 

The Trustee may fix a payment date for any payment to Securityholders.

 

  

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ARTICLE 7

TRUSTEE

 

SECTION 7.01.                                Rights of Trustee.

 

(1)           The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

 

(2)           Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Certificate or Opinion.

 

(3)           The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(4)           The Trustee shall not be liable for any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

 

(5)           The Trustee may refuse to perform any duty or exercise any right or power which it reasonably believes may expose it to any loss, liability or expense unless it receives indemnity satisfactory to it against such loss, liability or expense.

 

(6)           The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(7)           The Trustee shall have no duty with respect to a Default unless it has actual knowledge of the Default.

 

(8)           The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized and within its powers.

 

(9)           Any Agent shall have the same rights and be protected to the same extent as if it were Trustee.

 

SECTION 7.02.                                Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities or coupons and may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.

 

SECTION 7.03.                                Trustee’s Disclaimer.

 

The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities or any coupons; it shall not be accountable for the Company’s use of the proceeds from the Securities; it shall not be responsible for any statement in the Securities or any coupons; it shall not be responsible for any overissue; it shall not be responsible for determining whether the form and terms of any Securities or coupons were established in conformity with this Indenture; and it shall not be responsible for determining whether any Securities were issued in accordance with this Indenture.

 

  

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SECTION 7.04.                                Notice of Defaults.

 

If a Default occurs and is continuing on a series and if it is known to the Trustee, the Trustee shall mail a notice of the Default within 90 days after it occurs to Holders of Registered Securities of the series.  Except in the case of a Default in payment on a series, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of Holders of the series.  The Trustee shall withhold notice of a Default described in Section 6.01(3) until at least 90 days after it occurs.

 

SECTION 7.05.                                Reports by Trustee to Holders.

 

Any report required by TIA § 313(a) to be mailed to Securityholders shall be mailed by the Trustee on or before June 30 of each year.

 

A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which any Securities are listed.  The Company shall notify the Trustee when any Securities are listed on a stock exchange.

 

SECTION 7.06.                                Compensation and Indemnity.

 

The Company shall pay to the Trustee from time to time reasonable compensation for its services.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shell reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it.  Such expenses shall include the reasonable compensation and expenses of the Trustee’s agents and counsel.

 

The Company shall indemnify the Trustee against any loss or liability incurred by it.  The Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  The Company shall defend the claim and the Trustee shall cooperate in the defense.  The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.  The Company need not pay for any settlement made without its consent.

 

The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith.

 

To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities and any coupons on all money or property held or collected by the Trustee, except that held in trust to pay principal or interest on particular securities.

 

SECTION 7.07.                                Replacement of Trustee.

 

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

 

The Trustee may resign by so notifying the Company.  The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee with the Company’s consent.

 

The Company may remove the Trustee if:

 

(1)           the Trustee fails to comply with TIA § 310(a) or § 310(b) or with Section 7.09;

 

  

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(2)           the Trustee is adjudged a bankrupt or an insolvent;

 

(3)           a Custodian or other public officer takes charge of the Trustee or its property;

 

(4)           the Trustee becomes incapable or acting; or

 

(5)           an event of the kind described in Section 6.01(4) or (5) occurs with respect to the Trustee.

 

The Company also may remove the Trustee with or without cause if the Company so notifies the Trustee six months in advance and if no Default occurs during the six-month period.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.

 

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee fails to comply with TIA § 310(a) or § 310(b) or with Section 7.09, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders of Registered Securities.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.06.

 

SECTION 7.08.                                Successor Trustee by Merger. etc.

 

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.

 

SECTION 7.09.                                Trustee’s Capital and Surplus.

 

The Trustee at all times shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published report of condition.

 

SECTION 7.10.                                No Conflicting Interest.

 

In determining whether the Trustee has a conflicting interest under TIA § 310(b)(1) the following are excluded:  (i) Indenture dated as of March 1, 1987 between Union Carbide Chemicals and Plastics Company Inc.:  (formerly Union Carbide Corporation) and Continental Bank, National Association (formerly Continental Illinois National Bank and Trust Company of Chicago), Trustee, for 93⁄4 % Senior Subordinated Notes Due 1994 and (2) Trust Agreement dated as of December 15, 1976 between General Electric Credit Corporation and Continental Bank, National Association (formerly Continental Illinois National Bank and Trust Company of Chicago), as Trustee, for Trust No. 13.

 

  

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ARTICLE 8

DISCHARGE OF INDENTURE

 

SECTION 8.01.                                Defeasance.

 

Securities of a series may be defeased in accordance their terms and, unless the Bond Resolution otherwise provides, in accordance with this Article.

 

The Company at any time may terminate as to a series all of its obligations under this Indenture, the Securities of the series and any related coupons (“legal defeasance option”).  The company at any time may terminate as to a series its obligations under Sections 4.04, 4.05 and 4.06 (“covenant defeasance option”).  However, in the case of the legal defeasance option, the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.06, 7.07 and 8.04 shall survive until the Securities of the series are no longer outstanding; thereafter the Company’s obligations in Section 7.06 shall survive.

 

The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.  If the Company exercises its legal defeasance option, a series may not be accelerated because of an Event of Default.  If the Company exercises its covenant defeasance option, a series may not be accelerated by reference to Section 4.04, 4.05 or 4.06.

 

The Trustee upon request shall acknowledge in writing the discharge of those obligations that the Company terminates.

 

SECTION 8.02.                                Conditions to Defeasance.

 

The Company may exercise as to a series its legal defeasance option or its covenant defeasance option if:

 

(1)           the Company irrevocably deposits in trust with the Trustee or another trustee money or U.S. Government Obligations;

 

(2)           the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. Government Obligations without reinvestment plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities of the series to maturity or redemption, as the case may be;

 

(3)           immediately after the deposit no Default exists;

 

(4)           the deposit does not constitute a default under any other agreement binding on the Company;

 

(5)           the deposit does not cause the Trustee to have a conflicting interest under TIA § 310(a) or § 310(b) as to another series;

 

(6)           the Company delivers to the Trustee an Opinion of Counsel to the effect that Holders of the series will not recognize income, gain or loss for Federal income tax purposes as a result of the defeasance;

 

  

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(7)           the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; and

 

(8)           91 days pass after the deposit is made and during the 91-day period no Default specified in Section 6.01(4) or (5) occurs that is continuing at the end of the period.

 

Before or after a deposit the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3.

 

“U.S. Government Obligations” means direct obligations of the United States which have the full faith and credit of the United States pledged for payment and which are not callable at the issuer’s option, or certificates representing an ownership interest in such obligations.

 

SECTION 8.03.                                Application of Trust Money.

 

The Trustee shall hold in trust money or U.S. Government obligations deposited with it pursuant to Section 8.02.  It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on Securities of the defeased series.

 

SECTION 8.04.                                Repayment to Company.

 

The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.

 

The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years.  After payment to the Company, Securityholders entitled to the money must look to the Company for payment as unsecured general creditors unless an abandoned property law designates another person.

 

ARTICLE 9

AMENDMENTS

 

SECTION 9.01.                                Without Consent of Holders.

 

The Company and the Trustee may amend this Indenture, the Securities or any coupons without the consent of any Securityholder:

 

(1)           to cure any ambiguity, omission, defect or inconsistency;

 

(2)           to comply with Article 5;

 

(3)           to provide that specific provisions of this Indenture shall not apply to a series not previously issued;

 

(4)           to create a series and establish its terms;

 

(5)           to provide for a separate Trustee for one or more series; or

 

  

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(6)           to make any change that does not materially adversely affect the rights of any Securityholder.

 

SECTION 9.02.                                With Consent of Holders.

 

Unless the Bond Resolution otherwise provides, the Company and the Trustee may amend this Indenture, the Securities and any coupons with the written consent of the Holders of a majority in principal amount of the Securities of all series affected by the amendment voting as one class.  However, without the consent of each Securityholder affected, an amendment under this Section may not:

 

(1)           reduce the amount of Securities whose Holders must consent to an amendment;

 

(2)           reduce the interest on or change the time for payment of interest on any Security;

 

(3)           change the fixed maturity of any Security;

 

(4)           reduce the principal of any non-Discounted Security or reduce the amount of principal of any Discounted Security that would be due upon an acceleration thereof;

 

(5)           change the currency in which principal or interest on a Security is payable; or

 

(6)           make any change in Section 6.04 or 9.02, except to increase the amount of Securities whose Holders must consent to an amendment or waiver or to provide that other provisions of this Indenture cannot be amended or waived without the consent of each Securityholder affected thereby.

 

An amendment of a provision included solely for the benefit of one or more series does not affect Securityholders of any other series.

 

Securityholders need not consent to the exact text of a proposed amendment or waiver; it is sufficient if they consent to the substance thereof.

 

SECTION 9.03.                                Compliance with Trust Indenture Act.

 

Every amendment pursuant to Section 9.01 or 9.02 shall be set forth in a supplemental indenture that complies with the TIA as then in effect.

 

If a provision of the TIA requires or permits a provision of this Indenture and the TIA provision is amended, then the Indenture provision shall be automatically amended to like effect.

 

SECTION 9.04.                                Effect of Consents.

 

An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Securityholder entitled to consent to it.

 

A consent to an amendment or waiver by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security that evidences the same debt as the consenting Holder’s Security.  Any Holder or subsequent Holder may revoke the consent as to his Security if the Trustee receives notice of the revocation before the amendment or waiver becomes effective.

 

  

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The Company may fix a record date for the determination of Holders of Registered Securities entitled to give a consent.  The record date shall not be less than 10 nor more than 60 days prior to the first written solicitation of Securityholders.

 

SECTION 9.05.                                Notation on or Exchange of Securities.

 

The Company or the Trustee may place an appropriate notation about an amendment or waiver on any Security thereafter authenticated.  The Company may issue in exchange for affected Securities new Securities that reflect the amendment or waiver.

 

SECTION 9.06.                                Trustee Protection.

 

The Trustee need not sign any supplemental indenture that adversely affects its rights.

 

ARTICLE 10

SUBORDINATION

 

SECTION 10.01.                                Agreement to Subordinate.

 

The Company agrees, and each Securityholder by accepting a Security agrees, that the indebtedness evidenced by the Securities and the payment of principal thereof and interest thereon are subordinated in right of payment, to the extent and in the manner provided in this Article, to the prior payment in full of all Senior Indebtedness and that the subordination is for the benefit of the holders of Senior Indebtedness.

 

Money and securities held in trust pursuant to Article 8 are not subject to the subordination provisions of this Article 10.

 

SECTION 10.02.                                Certain Definitions.

 

“Representative” means the indenture trustee or other trustee, agent or representative for an issue of Senior Indebtedness.

 

“Senior Indebtedness” means the principal of and interest on (a) any and all indebtedness and obligations of the Company (including. indebtedness of others guaranteed by the Company) other than the Securities, whether or not contingent and whether outstanding on the date of this Indenture or thereafter created, incurred or assumed, which (i) are for money borrowed; (ii) are evidenced by any bond, note, debenture or similar instrument; (iii) represent the unpaid balance on the purchase price of any property, business or asset of any kind; (iv) are obligations of the Company as lessee under any and all leases of property, equipment or other assets required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles; (v) are reimbursement obligations of the Company with respect to letters of credit; or (vi) are obligations of the Company with respect to interest rate swap obligations and foreign exchange agreements; and (b) any deferrals, amendments, renewals, extensions, modifications and refundings of any indebtedness or obligations of the types referred to above; provided that Senior Indebtedness shall not include (i) the Securities; (ii) any indebtedness or obligation of the Company which, by its express terms or the express terms of the instrument creating or evidencing it, is not superior in right of payment to the Securities; and (iii) any indebtedness or obligation incurred by the Company in connection with the purchase of assets, materials or services in the ordinary course of business and which constitutes a trade payable.

 

  

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SECTION 10.03.                                Liquidation; Dissolution; Bankruptcy.

 

Upon any payment or distribution of the Company’s assets to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, whether voluntary or involuntary:

 

(1)           holders of senior Indebtedness shall be entitled to receive payment in full of the principal of and interest to the date of payment on the Senior Indebtedness before Securityholders shall be entitled to receive any payment of principal of or interest on Securities; and

 

(2)           until the Senior Indebtedness is paid in full, any distribution to which Securityholders would be entitled but for this Article shall be made to holders of Senior Indebtedness as their interests may appear, except the Securityholders may receive securities that are subordinated to Senior Indebtedness to at least the same extent as the Securities.

 

	
SECTION 10.04.

	
Company Not to Make Payments with Respect to Securities in Certain Circumstances.

 

Except for payment in or distribution of securities that are subordinated to Senior Indebtedness to at least the same extent as the Securities, the Company shall not make any payment with respect to the principal of or interest on any of the Securities, or make any other payment with respect to the purchase or other acquisition of any of the Securities:

 

(a)           if there shall have occurred a default in the payment of the principal of or interest on any Senior Indebtedness; or

 

(b)            if there shall exist at the time of such payment, or such payment would create, an event of default (or an event which, with the giving of notice or the passage of time or both, would become an event of default) with respect to any Senior Indebtedness which would permit the holders (or any specified proportion of such holders) of such Senior Indebtedness to accelerate the maturity thereof, and if notification of such default or event of default has been given to the Company by a holder of such Senior Indebtedness or by a trustee, agent or Representative for an issue of Senior Indebtedness;

 

unless and until, in each case, whether described in clause (a) or clause (b), such default or event of default shall have been cured or waived in the manner required by the instrument relating to such Senior Indebtedness or shall otherwise have ceased to exist.

 

Regardless of anything to the contrary herein, nothing shall prevent (a) any payment by the Trustee to the Securityholders of amounts deposited with it pursuant to Article 8 or (b) any payment by the Trustee or the Paying Agent as permitted by Section 10.11.

 

SECTION 10.05.                                Acceleration of Securities.

 

If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration.

 

SECTION 10.06.                                When Distribution Must Be Paid Over.

 

In the event that the Company shall make any payment to the Trustee of the principal of or interest on the Securities at a time when such payment is prohibited by Section 10.03 or 10.04, such payment

 

  

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shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the Representatives or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.

 

If a distribution is made to Securityholders that because of this Article should not have been made to them, the Securityholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness and pay it over to them as their interests may appear.

 

SECTION 10.07.                                Notice by Company.

 

The Company shall promptly notify the Trustee and any Paying Agent in writing of any facts known to the Company that would cause a payment of principal of or interest on Securities to violate this Article.

 

SECTION 10.08.                                Subrogation.

 

After all Senior Indebtedness is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Securityholders have been applied to the payment of Senior Indebtedness.  A distribution made under this Article to holders of Senior Indebtedness which otherwise would have been made to Securityholders is not, as between the Company and Securityholders, a payment by the Company on Senior Indebtedness.

 

SECTION 10.09.                                Subordination May Not Be Impaired by Company.

 

No right of any holder of Senior Indebtedness to enforce the subordination of the indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture.

 

SECTION 10.10.                                Distribution or Notice to Representative.

 

Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative.

 

SECTION 10.11.                                Rights of Trustee and Paying Agent.

 

The Trustee or Paying Agent may continue to make payments on the Securities until a Trust Officer of the Trustee receives written notice of facts that would cause a payment of principal of or interest on the Securities to violate this Article.  Only the Company, a Representative or a holder of an issue of Senior Indebtedness that has no Representative may give the notice.

 

The Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a Representative on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a Representative on behalf of any such holder in the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person who is a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the

 

  

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extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article, and if such evidence is not furnished the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment or until such time as the Trustee shall be otherwise satisfied as to the right of such person to receive such payment.

 

The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.

 

The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holder if it shall mistakenly pay over or distribute to Securityholders or the Company or any other person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.

 

SECTION 10.12.                                Officers’ Certificate.

 

If there occurs an event referred to in Section 10.03 or 10.04, the Company shall promptly give to a Trust Officer of the Trustee an Officers’ Certificate (on which the Trustee may conclusively rely) identifying all holders of Senior Indebtedness or their Representatives and the principal amount of Senior Indebtedness then outstanding held by each such holder and stating the reasons why such Officers’ Certificate is being delivered to the Trustee.

 

SECTION 10.13.                                Obligation of Company Unconditional.

 

Nothing contained in this Article 10 or elsewhere in this Indenture or in any Bond Resolution is intended to or shall impair, as between the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities and the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy.  Upon any distribution of assets of the Company referred to in this Article 10, the Trustee, subject to the provisions of Section 7.01, and the Holders of the Securities shall be entitled to rely upon any order or decree by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10.  Nothing contained in this Article 10 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Company to make, or prevent the Company from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 10.04 (not cured or waived), payments at any time of the principal or of interest on the Securities.

 

  

-24-

  

ARTICLE 11

MISCELLANEOUS

 

SECTION 11.01.                                Trust Indenture Act.

 

The provisions of TIA §§ 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

 

If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

 

SECTION 11.02.                                Notices.

 

Any notice by one party to another is duly given if in writing and delivered in person, sent by facsimile transmission confirmed by mail or mailed by first-class mail to the other’s address shown below:

 

	
       Company:

	
Praxair, Inc.

39 Old Ridgebury Road

Danbury, CT 06817-0001

Attention:  Treasurer

 

	
       Trustee:

	
[                    ]

[                    ]

[                    ]

Attention:  Corporate Trust Department

A party by notice to the other parties may designate additional or different addresses for subsequent notices.

 

Any notice mailed to a Securityholder shall be mailed to his address shown on the register kept by the Transfer Agent or on the list referred to in section 2.06.  Failure to mail a notice to a Securityholder or any defect in a notice mailed to a Securityholder shall not affect the sufficiency of the notice mailed to other Securityholders or the sufficiency of any published notice.

 

If a notice is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

 

If the Company mails a notice to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.

 

If in the Company’s opinion it is impractical to mail a notice required to be mailed or to publish a notice required to be published, the Company may give such substitute notice as the Trustee approves.  Failure to publish a notice as required or any defect in it shall not affect the sufficiency of any mailed notice.

 

All notices shall be in the English language, except that any published notice may be in an official language of the country of publication.

 

A “notice” includes any communication required by this indenture.

 

  

-25-

  

SECTION 11.03.                                Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall if so requested furnish to the Trustee:

 

(1)           an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the Proposed action have been complied with; and

 

(2)           an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

 

SECTION 11.04.                                Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(1)           a statement that the person making such certificate or opinion has read such covenant or condition;

 

(2)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(3)           a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4)           a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

SECTION 11.05.                                Rules by Company and Agents.

 

The Company may make reasonable rules for action by or a meeting of Securityholders.  An Agent may make reasonable rules and set reasonable requirements for its functions.

 

SECTION 11.06.                                Legal Holidays.

 

A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions are not required to be open.  If a payment date is a Legal Holiday at a place of payment, unless the Bond Resolution otherwise provides, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

 

SECTION 11.07.                                No Recourse Against Others.

 

All liability described in the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released.

 

SECTION 11.08.                                Duplicate Originals.

 

The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture.

 

  

-26-

  

SECTION 11.09.                                Governing Law.

 

The laws of the State of New York shall govern this Indenture, the Securities and any coupons, unless federal law governs.

 

SIGNATURES

 

	
Dated:

	
PRAXAIR, INC.

 

 

By:  ____________________________

(SEAL)

Attest:

 

Assistant Secretary

 

	
Dated:

	
 

 

 

By:  ____________________________

        Vice President

(SEAL)

Attest:

 

Trust Officer

  

-27-

  

EXHIBIT A

 

A Form of Registered Security

 

 

	 No.	 $

 

PRAXAIR, INC.

 

(Title of Security)

 

Praxair, Inc. promises to pay to or registered assigns the principal sum of         Dollars on Interest Payment Dates:

 

Record Dates:

 

Dated:

 

[                         ]

Transfer Agent and Paying Agent                                                                           PRAXAIR, INC.

 

(SEAL)                                                                           by: Chairman of the Board

Authenticated

 

[                         ]

 

Registrar, by

 

Authorized Signature Vice-President

 

  

A-1

  

PRAXAIR, INC.

 

[Title of Security]

 

1.           Interest.1

 

Praxair, Inc. (“Company”), a Delaware corporation, promises to pay interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semiannually on [          ] and [          ] of each year commencing [          ] , 20[ ].  Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [          ], 20[ ].  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

2.           Method of Payment.2

 

The Company will pay interest on the Securities to the persons who are registered holders of securities at the close of business on the record date for the next interest payment date, except as otherwise provided in the Indenture.  Holders must surrender Securities to a Paying Agent to collect principal payments.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  The Company may pay principal and interest by check payable in such money.  It may mail an interest check to a holder’s registered address.

 

3.            Bond Agents.

 

Initially, [          ], will act as Paying Agent, Transfer Agent and Registrar.  The Company may change any Paying Agent, Transfer Agent or Registrar without notice.  The Company or any Affiliate may act in any such capacity.  Subject to certain conditions, the Company may change the Trustee.

 

4.            Indenture.

 

The company issued the securities of this series (“Securities”) under an Indenture dated as of [ ], 1992 (“Indenture”) between the Company and [          ] (“Trustee”).  The terms of the Securities include those stated in the Indenture and in the Bond Resolution creating the Securities and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb).  Securityholders are referred to the Indenture, the Bond Resolution and the Act for a statement of such terms.

 

5.           Optional Redemption.3

 

On or after [          ], the Company may redeem all the Securities at any time or some of them from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date.

 

If redeemed during the 12-month period beginning,

 

	
Year

	
Percentage

	
Year

	
Percentage

	
and thereafter at 100%.

	  	  	  

6.           Mandatory Redemption.4

 

The Company will redeem $[          ] principal amount of Securities on [          ] and on each [          ] thereafter through [          ] at a redemption price of 100% of principal amount, plus accrued interest to the redemption date.  The Company may reduce the principal amount of Securities to be

 

  

A-2

  

redeemed pursuant to this paragraph by subtracting 100% of the principal amount (excluding premium) of any Securities (i) that the Company has acquired or that the Company has redeemed other than pursuant to this paragraph and (ii) that the Company  has delivered to the Registrar for cancellation.  The Company may so subtract the same Security only once.

 

7.           Additional Optional Redemption.6

 

In addition to redemptions pursuant to the above paragraph(s), the Company may redeem not more than $[          ] principal amount of Securities on [          ] and on each [          ] thereafter through [          ] at a redemption price of 100% of principal amount, plus accrued interest to the redemption date.

 

8.           Notice of Redemption.7

 

Notice of redemption will be mailed at least 20 days but not more than 60 days before the redemption date to each holder of Securities to be redeemed at his registered address.

 

9.           Subordination.8

 

The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness (as defined in the Indenture).  Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.

 

10.           Denominations, Transfer, Exchange.

 

The Securities age in registered form without coupons in denominations of $1,0009 and whole multiples of $1,000.  The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture.  The Transfer Agent may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or the Indenture.  The Transfer Agent need not exchange or register the transfer of any Security or portion of a Security selected for redemption.  Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed.

 

11.           Persons Deemed Owners.

 

The registered holder of a Security may be treated as its owner for all purposes.

 

12.           Amendments and Waivers.

 

Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a majority in principal amount of the securities of all series affected by the amendment.10 Subject to certain exceptions, a default on a series may be waived with the consent of the holders of a majority in principal amount of the series.

 

Without the consent of any Securityholder, the Indenture or the Securities may be amended, among other things, to cure any ambiguity, omission, defect or inconsistency; to provide for assumption of Company obligations to Securityholders; or to make any change that does not materially adversely affect the rights of any Securityholder.

 

  

A-3

  

13.           Restrictive Covenants.11

 

The Securities are unsecured general obligations of the Company limited to $[ ] principal amount.  The Indenture does not limit other unsecured debt.

 

14.           Successors.

 

When a successor assumes all the obligations of the Company under the Securities and the Indenture, the Company will be released from those obligations.

 

15.           Defeasance Prior to Redemption or Maturity.12

 

Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity.  U.S. Government Obligations are securities backed by the full faith and credit of the United States of America or certificates representing an ownership interest in such Obligations.

 

16.           Defaults and Remedies.

 

An Event of Default13 includes:                                                      default for 10 days in payment of interest on the Securities; default in payment of principal on the Securities; default by the Company for a specified period after notice to it in the performance of any of its other agreements applicable to the Securities; certain events of bankruptcy or insolvency; and any other Event of Default provided for in the series.  If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare the principal of all the Securities to be due and payable immediately.

 

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities.  Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests.  The Company must furnish an annual compliance certificate to the Trustee.

 

17.           Trustee Dealings with Company.

 

[          ], the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with those persons, as if it were not Trustee.

 

18.           No Recourse Against Others.

 

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

 

  

A-4

  

19.           Authentication.

 

This Security shall not be valid until authenticated by a manual signature of the Registrar.

 

20.           Abbreviations.

 

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (+joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (+Uniform Gifts to Minors Act).

 

The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture and the Bond Resolution, which contains the text of this Security in larger type.  Requests may be made to:  Secretary, Praxair, Inc., 39 Old Ridgebury Road, Danbury, CT 06817-0001.

 

  

A-5

  

EXHIBIT B

 

A Form of Bearer Security

 

 

	 No.	 $

 

PRAXAIR, INC.

 

(Title of Security)

 

Praxair, Inc. promises to pay to or registered assigns the principal sum of       Dollars on Interest Payment Dates:

 

Record Dates:

 

Dated:

 

[                         ]

Transfer Agent                                                                           PRAXAIR, INC.

(SEAL)                                                                           by:  Chairman of the Board

Authenticated:

 

[                         ]

 

Registrar, by

 

Authorized Signature Vice-President

 

  

B-1

  

PRAXAIR, INC.

 

[Title of Security)

 

1.           Interest.1

 

Praxair, Inc. (“Company”), a Delaware corporation, promises to pay to bearer interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semiannually on [          ] and [          ] of each year commencing [          ], 20[ ].  Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [          ], 20[ ].  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

2.           Method of Payment.2

 

Holders must surrender Securities and any coupons to a Paying Agent to collect principal and interest payments.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  The Company may pay principal and interest by check payable in such money.

 

3.           Bond Agents.

 

Initially, [          ], will act as Transfer Agent, Paying Agent and Registrar.  The Company may change any Paying Agent, Transfer Agent or Registrar without notice.  The Company or any Affiliate may act in any such capacity.  Subject to certain conditions, the Company may change the Trustee.

 

4.           Indenture.

 

The Company issued the securities of this series (“Securities’) under an Indenture dated as of [ ], 1992 (“Indenture”) between the Company and [          ] (“Trustee”).  The terms of the Securities include those stated in the Indenture and in the Bond Resolution and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb).  Securityholders are referred to the Indenture, the Bond Resolution and the Act for a statement of such terms.

 

5.           Optional Redemption.3

 

On or after [          ], the Company may redeem all the Securities at any time or some of them from time to time at the following redemption prices (expressed in percentages of principal amount), plus: accrued interest to the redemption date.

 

If redeemed during the 12-month period beginning,

 

	
Year

	
Percentage

	
Year

	
Percentage

	
and thereafter at 100%.

	  	  	  

6.           Mandatory Redemption.4

 

The Company will redeem $[          ] principal amount of Securities on [          ] and on each [          ] thereafter through [          ] at a redemption price of 100% of principal amount, plus accrued interest to the redemption date.  The Company may reduce the principal amount of Securities to be redeemed pursuant to this paragraph by subtracting 100% of the principal amount (excluding premium) of

 

  

B-2

  

any Securities (i) that the Company has acquired or that the company has redeemed other than pursuant to this paragraph and (ii) that the Company has delivered to the Registrar for cancellation.  The Company may so subtract the same Security only once.

 

7.            Additional Optional Redemption.6

 

In addition to redemptions pursuant to the above paragraph(s), the Company may redeem not more than $[          ] principal amount of Securities on [          ] and on each [          ] thereafter through [          ] at a redemption price of 100% of principal amount, plus accrued interest to the redemption date.

 

8.           Notice of Redemption.7

 

Notice of redemption will be published once in an Authorized Newspaper in the City of New.  York and if the Securities are listed on any stock exchange located outside the United States and such stock exchange so requires, in any other required city outside the United States at least 20 days but not more than 60 days before the redemption date.  Notice of redemption also will be mailed to holders who have filed their names and addresses with the Transfer Agent within the two preceding years.  A holder of Securities may miss important notices if he fails to maintain his name and address with the Transfer Agent.

 

9.           Subordination.8

 

The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness (as defined in the Indenture).  Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.

 

10.           Denominations, Transfer, Exchange.

 

The Securities are in bearer form with coupons in denominations of $5,0009 and whole multiples of $5,000.  The Securities may be transferred by delivery and exchanged as provided in the Indenture.  Upon an exchange, the Transfer Agent may require a holder, among other things, to furnish appropriate documents and to pay any taxes and fees required by law or the Indenture.  The Transfer Agent need not exchange any Security or portion of a Security selected for redemption.  Also, it need not exchange any Securities for a period of 15 days before a selection of Securities to be redeemed.

 

11.           Persons Deemed Owners.

 

The holder of a Security or coupon may be treated as its owner for all purposes.

 

12.           Amendments and Waivers.

 

Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a majority in principal amount of the securities of all series affected by the amendment.10 Subject to certain exceptions, a default on a series may be waived with the consent of the holders of a majority in principal amount of the series.

 

Without the consent of any Securityholder, the Indenture or the Securities may be amended, among other things, to cure any ambiguity, omission, defect or inconsistency; to provide for assumption of Company obligations to Securityholders; or to make any change that does not materially adversely affect the rights of any Securityholder.

 

  

B-3

  

13.           Restrictive Covenants.11

 

The Securities are unsecured general obligations of the Company limited to $[          ] principal amount.  The Indenture does not limit other unsecured debt.

 

14.            Successors.

 

When a successor assumes all the obligations of the Company under the Securities, any coupons and the Indenture, the Company will be released from those obligations.

 

15.            Defeasance Prior to Redemption or Maturity.12

 

Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities, any coupons and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity.  U.S. Government Obligations are securities backed by the full faith and credit of the United States of America or certificates representing an ownership interest in such obligations.

 

16.            Defaults and Remedies.

 

An Event of Default13 includes:                                                      default for 10 days in payment of interest on the Securities; default in payment of principal on the Securities; default by the Company for a specified period after notice to it in the performance of any of its other agreements applicable to the Securities; certain events of bankruptcy or insolvency; and any other Event of Default provided for in the series.  If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare the principal14 of all the Securities to be due and payable immediately.

 

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities.  Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests.  The Company must furnish an annual compliance certificate to the Trustee.

 

17.            Trustee Dealings with Company.

 

[          ], the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with those persons, as if it were not Trustee.

 

18.            No Recourse Against Others.

 

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

 

  

B-4

  

19.            Authentication.

 

This Security shall not be valid until authenticated by a manual signature of the Registrar.

 

20.            Abbreviations.

 

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (+joint tenants with right of survivorship and not as tenants in common), CUST (+custodian), and U/G/M/A (+Uniform Gifts to Minors Act).

 

The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture and the Bond Resolution, which contains the text of this Security in larger type.  Requests may be made to:  Secretary, Praxair, Inc., 39 Old Ridgebury Road, Danbury, CT 06817-0001.

 

  

B-5

  

 [FACE OF COUPON]

 

  

B-6

  

_______

 

[$]_____

 

Due____

 

PRAXAIR, INC.

 

[Title of Security]

 

Unless the Security attached to this coupon has been called for redemption, Praxair, Inc. (“Company”) will pay to bearer, upon surrender, the amount shown hereon when due.  This coupon may be surrendered for payment to any Paying Agent listed on the back of this coupon unless the Company has replaced such Agent.  Payment may be made by check.  This coupon represents six months’ interest.

 

	
PRAXAIR, INC.

 

 

By:  _________________________

        [REVERSE OF COUPON]

        PAYING AGENTS 

  

B-7

  

NOTES TO EXHIBITS A AND B

 

1.           If the Security is not to bear interest at a fixed rate per annum, insert a description of the manner in which the rate of interest is to be determined.  If the Security is not to bear interest prior to maturity, so state.

 

2.           If the method or currency of payment is different, insert a statement thereof.

 

3.           If applicable.

 

4.           If applicable.

 

5.           If the Security is a Discounted Security, insert amount to be redeemed or method of calculating such amount.

 

6.           If applicable.  Also insert, if applicable, provisions for repayment of Securities at the option of the Securityholder.

 

7.           If applicable.

 

8.           If additional or different subordination terms apply insert a brief summary thereof.

 

9.           If applicable.  Insert additional or different denominations.

 

10.           If different terms apply, insert a brief summary thereof.

 

11.           If applicable.  If additional or different covenants apply, insert a brief summary thereof.

 

12.           If applicable.  If different defeasance terms apply, insert a brief summary thereof.

 

13.           If additional or different Events of Default apply, insert a brief summary thereof.

 

14.           If the Security is a Discounted Security, set forth the amount due and payable upon an Event of Default.

 

Note:           U.S. tax law may require certain legends on Discounted and Bearer Securities.

 

  

  

  

 

EXHIBIT C

ASSIGNMENT FORM

 

To assign this Security, fill in the form below:

 

I or we assign and transfer this Security to

 

_______________________________________________________________________________

(Insert assignee’s soc. sec. or tax I.D. no.)

 

_______________________________________________________________________________

 (Print or type assignee’s name, address and zip code)

 

and irrevocably appoint ______________________________________________________________

agent to transfer this Security on the books of the Company.  The agent may substitute another to act for him.

 

Date:  ____________________________                                                       Your Signature:                                                                          

 

 
 

	 	
________________________________________________________ 

(Sign exactly as your name appears on the other side of this Security)

 

 

C-1exhibit_10-01.htm

  

  

  

 

 

 

Form 10-Q

Exhibit 10.01

 

SILICON IMAGE, INC.

2008 EQUITY INCENTIVE PLAN

 

Adopted:  April 3, 2008

 

Amended:  March 30, 2010  and March 27, 2012

 

1. PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards.  Capitalized terms not defined elsewhere in the text are defined in Section 27.

 

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available.   Subject to Sections 2.5 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan is 21,130,623.  Any Award other than an Option or a SAR shall reduce the number of Shares available for issuance under the Plan by 1.50 Shares.  The Company may issue Shares that are authorized but unissued shares pursuant to the Awards granted under the Plan. The Company will reserve and keep available a sufficient number of Shares to satisfy the requirements of all outstanding Awards granted under the Plan.

 

2.2 Lapsed, Returned Awards.  Shares subject to Awards, and Shares issued upon exercise of Awards, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares:  (i) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; provided, however, that (x) Shares tendered by a Participant as full or partial payment to the Company upon exercise of an Option, or as full or partial payment of withholding taxes payable upon such exercise, shall not be available for future grant, (y) SARs to be settled in Shares of the Company’s Common Stock shall be counted against the Shares available for issuance as one (1) Share for every Share subject to the SAR, regardless of the number of Shares issued upon settlement of the SAR, and (z) Shares repurchased in the open market with the proceeds of the payment to the Company upon exercise of an Option shall not be available for future grant; (ii) are subject to Awards granted under this Plan that are forfeited, cancelled or expire; or (iii) are surrendered pursuant to an Exchange Program.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

 

2.3 Minimum Share Reserve.  At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan and all other outstanding but unvested Awards granted under this Plan.

 

2.4 Limitations.  No more than 40,000,000 Shares shall be issued pursuant to the exercise of ISOs.

 

2.5 Adjustment of Shares.  If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.4, and (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

 

 

  

  

  

 

3. ELIGIBILITY.  ISOs may be granted only to Employees.  All other Awards may be granted to Employees, Consultants, Directors and Outside Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Outside Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.  No Participant will be eligible to receive more than 500,000 Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or of a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of 750,000 Shares in the calendar year in which they commence their employment.

 

4. ADMINISTRATION.

 

4.1 Committee Composition; Authority.  This Plan will be administered by the Committee or by the Board acting as the Committee.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan.  The Committee will have the authority to:

 

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

 

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

 

(c) select persons to receive Awards;

 

(d) determine the form and 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 time or times when Awards may be exercised (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 relating thereto, based in each case on such factors as the Committee will determine;

 

(e) determine the number of Shares or other consideration subject to Awards;

 

(f) determine the Fair Market Value in good faith, if necessary;

 

(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(h) grant waivers of Plan or Award conditions;

 

(i) determine the vesting, exercisability and payment of Awards;

 

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

 

(k) determine whether an Award has been earned;

 

 

  

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(l) determine the terms and conditions of any, and to institute any Exchange Program;

 

(m) reduce or waive any criteria with respect to Performance Factors;

 

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code; and

 

(o) make all other determinations necessary or advisable for the administration of this Plan.

 

4.2 Committee Interpretation and Discretion.  Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan.  Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant.  The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

 

4.3 Section 162(m) of the Code and Section 16 of the Exchange Act.  When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Insiders must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act).

 

5. OPTIONS.  The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

 

5.1 Option Grant.  Each Option granted under this Plan will identify the Option as an ISO or an NQSO.  An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

 

 

 

  

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5.2 Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date.  The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

 

5.3 Exercise Period.  Options may be exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of seven (7) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

 

5.4 Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an ISO will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased may be made in accordance with Section 11.  The Exercise Price of a NQSO may not be less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

5.5 Method of Exercise.  Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.  An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. 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 stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will 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 2.5 of the Plan. Exercising an Option in any manner will 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.

 

5.6 Termination.  The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement):

 

(a) If the Participant is Terminated for any reason except for the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than three (3) months after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO), but in any event no later than the expiration date of the Options.

 

 

  

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(b) If the Participant is Terminated because of the Participant’s death (or the Participant dies within three (3) months after a Termination), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options.

 

(c) If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options.

 

5.7 Limitations on Exercise.  The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

 

5.8 Limitations on ISOs.  With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs 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 one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

 

5.9 Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.

 

5.10 No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

 

 

  

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5.11 Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

6. RESTRICTED STOCK AWARDS.

 

6.1 Awards of Restricted Stock.  A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”).  The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.

 

6.2 Restricted Stock Purchase Agreement.  All purchases under a Restricted Stock Award will be evidenced by an Award Agreement.  Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant.  If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

 

6.3 Purchase Price.  The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted.  Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement.

 

6.4 Terms of Restricted Stock Awards.  Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law.  These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement.  Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

 

6.5 Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

7. STOCK BONUS AWARDS.

 

7.1 Awards of Stock Bonuses.  A Stock Bonus Award is an award to an eligible person of Shares (which may consist of Restricted Stock or Restricted Stock Units) for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary.  All Stock Bonus Awards shall be made pursuant to an Award Agreement.  No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.

 

 

  

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7.2 Terms of Stock Bonus Awards.  The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon.  These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement.  Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.

 

7.3 Form of Payment to Participant.  Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

 

7.4 Termination of Participation.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

8. STOCK APPRECIATION RIGHTS.

 

8.1 Awards of SARs.  A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement).  All SARs shall be made pursuant to an Award Agreement.

 

8.2 Terms of SARs.  The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR.  The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value.  A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

 

8.3 Exercise Period and Expiration Date.  A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR.  The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of seven (7) years from the date the SAR is granted.  The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).  Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

 

 

  

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8.4 Form of Settlement.  Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 

8.5 Termination of Participation.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

9. RESTRICTED STOCK UNITS.

 

9.1 Awards of Restricted Stock Units.  A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock).  All RSUs shall be made pursuant to an Award Agreement.

 

9.2 Terms of RSUs.  The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; and (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each RSU.  An RSU may be awarded upon satisfaction of such Performance Factors (if any) during any Performance Period as are set out in advance in the Participant’s Award Agreement.  If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.  Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.

 

9.3 Form and Timing of Settlement.  Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both.

 

9.4 Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

10. PERFORMANCE SHARES.

 

10.1 Awards of Performance Shares.  A Performance Share Award is an award to a Participant denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock).  Grants of Performance Shares shall be made pursuant to an Award Agreement.

 

10.2 Terms of Performance Shares.  The Committee will determine, and each Award Agreement shall set forth, the terms of each award of Performance Shares including, without limitation: (a) the number of Shares deemed subject to such Award; (b) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each award of Performance Shares.  In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares.  Prior to settlement the Committee shall determine the extent to which Performance Shares have been earned.  Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Shares that are subject to different Performance Periods and different performance goals and other criteria.

 

 

  

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10.3 Value, Earning and Timing of Performance Shares.  Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.  After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.

 

10.4 Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

 

11. PAYMENT FOR SHARE PURCHASES.

 

Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

 

(a) by cancellation of indebtedness of the Company to the Participant;

 

(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

 

(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;

 

(d) by consideration received by the Company pursuant to a broker-assisted and/or same day sale (or other) cashless exercise program implemented by the Company in connection with the Plan;

 

(e) by any combination of the foregoing; or

 

(f) by any other method of payment as is permitted by applicable law.

 

12. GRANTS TO OUTSIDE DIRECTORS.

 

12.1 Types of Awards.  Outside Directors are eligible to receive any type of Award offered under this Plan except ISOs.  Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Committee, or made from time to time as determined in the discretion of the Board.

 

12.2 Eligibility.  Awards pursuant to this Section 12 shall be granted only to Outside Directors.  An Outside Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

 

 

  

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12.3 Vesting, Exercisability and Settlement.  Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Committee.  With respect to the grant of Options and SARs to Outside Directors, neither will be exercisable after the expiration of seven (7) years from the date of grant and the exercise price granted shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

 

13. WITHHOLDING TAXES.

 

13.1 Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements prior to the delivery of Shares pursuant to exercise or settlement of any Award.  Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements.

 

13.2 Stock Withholding.  The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may require or permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

14. TRANSFERABILITY.  Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, for consideration or otherwise, other than by will or by the laws of descent or distribution.  If the Committee makes an Award transferable, such Award will contain such additional terms and conditions as the Committee deems appropriate.  All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; and (ii) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees.

 

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

 

15.1 Voting and Dividends.  No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

 

15.2 Restrictions on Shares.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

 

 

  

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16. CERTIFICATES.  All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

 

17. ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.  Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

 

18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS.  Except in connection with a (i) Corporate Transaction or (ii) a stock dividend, recapitalization, stock split, reverse stock split, subdivision,  combination, reclassification or similar change in the capital structure of the Company without consideration, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARS in exchange for cash or other Awards (including Options or SARs) with an exercise price that is less than the exercise price of the original Option or SAR without prior stockholder approval.

 

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

 

20. NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.

 

 

 

  

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21. CORPORATE TRANSACTIONS.

 

21.1 Assumption or Replacement of Awards by Successor.  In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants.  In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards).  The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant.  In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine; the Board (or, the Committee, if so designated by the Board) may, in its sole discretion, accelerate the vesting of such Awards in connection with a Corporate Transaction.  In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period.  Awards need not be treated similarly in a Corporate Transaction.

 

21.2 Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code).

 

21.3 Outside Directors’ Awards.  Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Outside Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

 

22. ADOPTION AND STOCKHOLDER APPROVAL.  This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

 

23. TERM OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board.  This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware.

 

24. AMENDMENT OR TERMINATION OF PLAN.  The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.

 

 

  

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25. NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

26. INSIDER TRADING POLICY.  Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

 

27. DEFINITIONS.  As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

 

“Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

 

“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

 

“Board” means the Board of Directors of the Company.

 

 “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

“Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.

 

“Company” means Silicon Image, Inc., or any successor corporation.

 

“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

“Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then-outstanding voting securities; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation or (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

 

 

 

  

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“Director” means a member of the Board.

 

“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided, however, that except with respect to Awards granted as ISOs, the Committee in its discretion may determine whether a total and permanent disability exists in accordance with non-discriminatory and uniform standards adopted by the Committee from time to time, whether temporary or permanent, partial or total, as determined by the Committee.

 

“Effective Date” means the date this Plan is approved by the Company’s stockholders, the date of which shall be within twelve (12) months before or after the date this Plan is adopted by the Board.

 

“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

 

“Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof).

 

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

 

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;

 

(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable; or

 

(c)           if none of the foregoing is applicable, by the Board or the Committee in good faith.

 

“GAAP” means generally accepted accounting principles.

 

“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

 

“Option” means an award of an option to purchase Shares pursuant to Section 5 or Section 12 of the Plan.

 

“Outside Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.

 

 

  

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“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

“Participant” means a person who holds an Award under this Plan.

 

 “Performance Factors” means the factors selected by the Committee, which may include, but are not limited to the, the following measures (whether or not in comparison to other peer companies) to determine whether the performance goals established by the Committee and applicable to Awards have been satisfied:

 

	
·  

	
Net revenue and/or net revenue growth;

 

	
·  

	
Earnings per share and/or earnings per share growth;

 

	
·  

	
Earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;

 

	
·  

	
Operating income and/or operating income growth;

 

	
·  

	
Net income and/or net income growth;

 

	
·  

	
Total stockholder return and/or total stockholder return growth;

 

	
·  

	
Return on equity;

 

	
·  

	
Operating cash flow return on income;

 

	
·  

	
Adjusted operating cash flow return on income;

 

	
·  

	
Economic value added;

 

	
·  

	
Individual business objectives;

 

	
·  

	
Company specific operational metrics; and

 

	
·  

	
Any of the foregoing may be based on GAAP or NonGAAP standards.

 

“Performance Period” means the period of service determined by the Committee, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.

 

“Performance Share” means an Award granted pursuant to Section 10 or Section 12 of the Plan.

 

“Plan” means this Silicon Image, Inc. 2008 Equity Incentive Plan.

 

“Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.

 

 

  

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“Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.

 

“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Shares” means shares of the Company’s Common Stock and any successor security.

 

“Stock Appreciation Right” means an Award granted pursuant to Section 8 and Section 12 of the Plan.

 

“Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan.

 

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company.  An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing.  In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement.  The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

 

“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

 

 

  

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SILICON IMAGE, INC.

2008 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement (this "Agreement") is made and entered into as of the Date of Grant set forth in the Notice of Grant of Stock Options (the “Notice”) by and between Silicon Image, Inc., a Delaware corporation (the "Company"), and the Optionee.  Capitalized terms not defined herein shall have the meanings ascribed to them in the Company's 2008 Equity Incentive Plan (the "Plan").

1.           Grant of Option.  The Company hereby grants to Optionee an option (this "Option") to purchase up to the total number of shares of Common Stock of the Company set forth in the Notice as Total Option Shares (collectively, the "Shares") at the Exercise Price Per Share (the "Exercise Price") set forth in the Notice, subject to the terms and conditions of this Agreement and the Plan.

2.           Vesting; Exercise Period.

2.1           Vesting of Shares.  This Option shall be exercisable as it vests, unless otherwise indicated in the Notice.  Subject to the terms and conditions of the Plan and this Agreement, this Option shall vest and become exercisable pursuant to the vesting schedule specified in the Notice.   This Option shall cease to vest upon Optionee’s Termination and Optionee shall in no event be entitled under this Option to purchase a number of shares of the Company’s Common Stock greater than the "Total Option Shares."

2.2           Vesting of Options.  Shares that are vested pursuant to the schedule set forth in the Notice are "Vested Shares."  Shares that are not vested pursuant to the schedule set forth in the Notice are "Unvested Shares."

2.3           Expiration.  This Option shall expire on the Expiration Date set forth in the Notice and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is terminated in accordance with the provisions of Section 3 hereof.

3.           Termination.

3.1           Termination for Any Reason Except Death, Disability or Cause.  If Optionee is Terminated for any reason except Optionee's Death, Disability or Cause, then this Option, to the extent (and only to the extent) that it is vested on the Termination Date, may be exercised by Optionee no later than three (3) months after the Termination Date, but in no event later than the Expiration Date.

3.2           Termination Because of Death or Disability.  If Optionee is Terminated because of Death or Disability of Optionee (or the Optionee dies within three (3) months after Termination other than for Disability or Cause), then this Option, to the extent that it is vested on the Termination Date, may be exercised by Optionee (or Optionee's legal representative or authorized assignee) no later than twelve (12) months after the Termination Date, but in no event later than the Expiration Date.

3.3           Termination for Cause.  If Optionee is Terminated for Cause, this Option will expire on the Optionee’s date of Termination.

3.4           No Obligation to Employ.  Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Optionee's employment or other relationship at any time, with or without Cause.

 

 

  

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4.           Manner of Exercise.

4.1           Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in the case of exercise after Optionee's death, Optionee's legal representative or authorized assignee) must deliver to the Company an executed stock option exercise agreement in the form as Exhibit A, or in such other form as may be approved by the Company from time to time (the "Exercise Agreement"), which shall set forth, inter alia, Optionee's election to exercise this Option, the number of shares being purchased, any restrictions imposed on the shares and any representations, warranties and agreements regarding Optionee's investment intent and access to information as may be required by the Company to comply with applicable securities laws.  If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise this Option.

4.2           Limitations on Exercise.  This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as in effect on the date of exercise.  This Option may not be exercised for less than 100 Shares, unless it is exercised as to all Shares then exercisable.

4.3           Payment.  The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased.  Payment may be in the form of cash (by check), or where permitted by law:

	
  

	
(a)

	
by cancellation of indebtedness of the Company to the Optionee;

	
  

	
(b)

	
by surrender of shares of the Company's Common Stock that either: (1) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Optionee in the open public market; and (3) are clear of all liens, claims, encumbrances or security interests;

	
  

	
(c)

	
by waiver of compensation due or accrued to Optionee for services rendered;

	
  

	
(d)

	
provided that a public market for the Company's stock exists:  (1) through a "same day sale" commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer"), whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (2) through a "margin" commitment from Optionee and an NASD Dealer, whereby Optionee irrevocably elects to exercise this Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

	
  

	
(f)

	
by any combination of the foregoing.

4.4           Tax Withholding.  Prior to the issuance of the Shares upon exercise of this Option, Optionee must pay or provide for any applicable federal or state withholding obligations.  If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of this Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld.  In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares issuable upon exercise.

4.5           Issuance of Shares.  Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee's authorized assignee, or Optionee's legal representative, and shall deliver certificates representing the Shares.

5.           Compliance with Laws and Regulations.  The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's Common Stock may be listed at the time of such issuance or transfer.  Optionee understands that the Company is under no obligation to register or qualify the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

 

 

 

  

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6.           Nontransferability of Option.  This Option may not be transferred in any manner other than under the terms and conditions of the Plan or by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the legal representative or authorized assignee of Optionee.

7.           Tax Consequences.  Set forth below is a brief summary as of the date the Board adopted the Plan of some of the federal tax consequences of exercise of this Option and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

7.1           Exercise of Nonqualified Stock Option.  To the extent this Option does not qualify as an Incentive Stock Option, there may be a regular federal income tax liability upon the exercise of this Option.  Optionee will be treated as having received compensation (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price.  The Company may be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation at the time of exercise.

7.2           Disposition of Shares.  The following tax consequences may apply upon disposition of the Shares.

a.           Nonqualified Stock Options.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of a Non-Qualified Stock Option, any gain realized on disposition of the Shares will be treated as a long-term capital gain.

8.           Privileges of Stock Ownership.  Optionee shall not have any of the rights of a stockholder with respect to any Shares until the Shares are issued to Optionee.

9.           Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Compensation Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.

10.           Entire Agreement.  The Plan is incorporated herein by reference.  This Agreement, the Notice, the Plan and the Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter.

11.           Notices.  Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated on the Notice or to such other address as such party may designate in writing from time to time to the Company.  All notices shall be deemed to have been given or delivered upon:  personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

12.           Successors and Assigns.  The Company may assign any of its rights under this Agreement.  This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee's legal representatives or authorized assignee.

13.           Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law.

 

 

  

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SILICON IMAGE, INC.

2008 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

(For Non-U.S. Participants)

This Stock Option Agreement (this "Agreement") is made and entered into as of the Date of Grant set forth in the Notice of Grant of Stock Options (the “Notice”) by and between Silicon Image, Inc., a Delaware corporation (the "Company"), and the Optionee.  Capitalized terms not defined herein shall have the meanings ascribed to them in the Company's 2008 Equity Incentive Plan (the "Plan").

1.           Grant of Option.  The Company hereby grants to Optionee an option (this "Option") to purchase up to the total number of shares of Common Stock of the Company set forth in the Notice as Total Option Shares (collectively, the "Shares") at the Exercise Price Per Share (the "Exercise Price") set forth in the Notice, subject to the terms and conditions of this Agreement and the Plan.

2.           Vesting; Exercise Period.

2.1           Vesting of Shares.  This Option shall be exercisable as it vests, unless otherwise indicated in the Notice.  Subject to the terms and conditions of the Plan and this Agreement, this Option shall vest and become exercisable pursuant to the vesting schedule specified in the Notice.   This Option shall cease to vest upon Optionee’s Termination and Optionee shall in no event be entitled under this Option to purchase a number of shares of the Company’s Common Stock greater than the "Total Option Shares."

2.2           Vesting of Options.  Shares that are vested pursuant to the schedule set forth in the Notice are "Vested Shares."  Shares that are not vested pursuant to the schedule set forth in the Notice are "Unvested Shares."

2.3           Expiration.  This Option shall expire on the Expiration Date set forth in the Notice and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is terminated in accordance with the provisions of Section 3 hereof.

3.           Termination.

3.1           Termination for Any Reason Except Death, Disability or Cause.  If Optionee is Terminated for any reason except Optionee's Death, Disability or Cause, then this Option, to the extent (and only to the extent) that it is vested on the Termination Date, may be exercised by Optionee no later than three (3) months after the Termination Date, but in no event later than the Expiration Date.

3.2           Termination Because of Death or Disability.  If Optionee is Terminated because of Death or Disability of Optionee (or the Optionee dies within three (3) months after Termination other than for Disability or Cause), then this Option, to the extent that it is vested on the Termination Date, may be exercised by Optionee (or Optionee's legal representative or authorized assignee) no later than twelve (12) months after the Termination Date, but in no event later than the Expiration Date.

3.3           Termination for Cause.  If Optionee is Terminated for Cause, this Option will expire on the Optionee’s date of Termination.

3.4           No Obligation to Employ.  Nothing in the Plan or this Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Optionee's employment or other relationship at any time, with or without Cause.

 

 

 

  

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4.           Certain Conditions of the Option.

4.1           Privileges of Stock Ownership.  Optionee shall not have any of the rights of a stockholder with respect to any Shares until the Shares are issued to Optionee.

4.2           Compliance with Laws and Regulations.  Optionee agrees that the exercise of this Option and the issuance, transfer, assignment, sale, or other dealings of the Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of: (i) federal and state securities law, (ii) the laws, rules and regulations of the country of which Optionee is a resident (“Local Law”), and (iii) with all applicable requirements of any stock exchange on which the Company's Common Stock may be listed at the time of such issuance or transfer.  Furthermore, Optionee agrees that the Optionee will not acquire shares of Common Stock pursuant to the Option except in compliance with all aforementioned laws and requirements. Furthermore, Optionee understands that the Company is under no obligation to register or qualify the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

4.3           Employment Conditions.  In accepting the Option, the Optionee acknowledges that:

	
  

	
(a)

	
Any notice period mandated under Local Law shall not be treated as service for the purpose of determining the vesting of the Option; and the Optionee’s right to receive shares in settlement of the Option after Termination of service, if any, will be measured by the Termination Date of the Optionee’s active service and will not be extended by any notice period mandated under Local Law.  Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Optionee’s service has Terminated and the effective Termination Date.

	
  

	
(b)

	
The vesting of the Option shall cease upon, and no Shares shall become Vested Shares following, the Optionee’s Termination of service for any reason except as may be explicitly provided by the Plan or this Agreement.

	
  

	
(c)

	
The Plan is established voluntarily by the Company.  It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement.

	
  

	
(d)

	
The grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past.

	
  

	
(e)

	
All decisions with respect to future Option grants, if any, will be at the sole discretion of the Company.

	
  

	
(f)

	
The Optionee is voluntarily participating in the Plan.

	
  

	
(g)

	
The Option is an extraordinary item that does not constitute compensation of any kind for service of any kind rendered to the Company (or any Parent or Subsidiary), and which is outside the scope of the Optionee’s employment contract, if any.

	
  

	
(h)

	
The Option is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

	
  

	
(i)

	
In the event that the Optionee is not an employee of the Company, the Option grant will not be interpreted to form an employment contract or relationship with the Company; and furthermore the Option grant will not be interpreted to form an employment contract with any Parent or Subsidiary.

	
  

	
(j)

	
The future value of the underlying Shares is unknown and cannot be predicted with certainty.  If the Optionee obtains shares upon settlement of the Option, the value of those shares may increase or decrease.

	
  

	
(k)

	
No claim or entitlement to compensation or damages arises from Termination of the Option or diminution in value of the Option or shares acquired upon settlement of the Option resulting from Termination of the Optionee’s service (for any reason whether or not in breach of Local Law) and the Optionee irrevocably releases the Company and each Parent and Subsidiary from any such claim that may arise.  If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing this Agreement, the Optionee shall be deemed irrevocably to have waived the Optionee’s entitlement to pursue such a claim.

 

 

 

  

2

  

 

 

5.           Manner of Exercise.

5.1           Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in the case of exercise after Optionee's death, Optionee's legal representative or authorized assignee) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Company from time to time (the "Exercise Agreement"), which shall set forth, inter alia, Optionee's election to exercise this Option, the number of shares being purchased, any restrictions imposed on the shares and any representations, warranties and agreements regarding Optionee's investment intent and access to information as may be required by the Company to comply with applicable securities laws.  If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise this Option.

5.2           Limitations on Exercise.  This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, and Local Law, as in effect on the date of exercise.  This Option may not be exercised for less than 100 Shares, unless it is exercised as to all Shares then exercisable.

5.3           Payment.  The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased.  Payment may be in the form of cash (by check), or where permitted by law:

	
  

	
(a)

	
by cancellation of indebtedness of the Company to the Optionee;

	
  

	
(b)

	
by surrender of shares of the Company's Common Stock that either: (1) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Optionee in the open public market; and (3) are clear of all liens, claims, encumbrances or security interests;

	
  

	
(c)

	
by waiver of compensation due or accrued to Optionee for services rendered;

	
  

	
(d)

	
provided that a public market for the Company's stock exists:  (1) through a "same day sale" commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer"), whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (2) through a "margin" commitment from Optionee and an NASD Dealer, whereby Optionee irrevocably elects to exercise this Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

	
  

	
(e)

	
by any combination of the foregoing.

5.4           Issuance of Shares.  Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee's authorized assignee, or Optionee's legal representative, and shall deliver certificates representing the Shares.

6.           Nontransferability of Option.  This Option may not be transferred in any manner other than under the terms and conditions of the Plan or by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the legal representative or authorized assignee of Optionee.

7.           Tax Withholding.

7.1           In General.  Regardless of any action taken by the Company or of a Parent or Subsidiary of the Company with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding obligations (the “Tax Obligations”), the Optionee acknowledges that the ultimate liability for all Tax Obligations legally due by the Optionee is and remains the Optionee’s responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Option, including the grant, vesting or settlement of the Option, the subsequent sale of shares acquired pursuant to such settlement, or the receipt of any dividends and (b) does not commit to structure the terms of the grant or any other aspect of the Option to reduce or eliminate the Optionee’s liability for Tax Obligations.  The Optionee shall pay or make adequate arrangements satisfactory to the Company to satisfy all Tax Obligations of the Company at the time such Tax Obligations arise.  In this regard, the Optionee hereby authorizes withholding of all applicable Tax Obligations from payroll and any other amounts payable to the Optionee, and otherwise agrees to make adequate provision for withholding of all applicable Tax Obligations, if any, by the Company or of a Parent or Subsidiary of the Company which arise in connection with the Option.  Alternatively, or in addition, if permissible under applicable law, including Local Law, the Company may require the Optionee to satisfy the Tax Obligations through either or both of the methods described in Sections 7.2 and 7.3 below.  The Company shall have no obligation to process the settlement of the Option or to deliver shares of Common Stock until the Tax Obligations as described in this Section have been satisfied by the Optionee.

 

 

 

  

3

  

 

 

7.2           Assignment of Sale Proceeds.  Subject to compliance with applicable law, including Local Law, and the Company’s Insider Trading Policy, the Company may, in its discretion, require the Optionee to satisfy all or any portion of the Tax Obligations in accordance with procedures established by the Company providing for delivery by the Optionee to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the Shares being acquired upon exercise of the Option.

7.3           Withholding in Shares.  The Company may, in its discretion, require the Optionee to satisfy all or any portion of the Tax Obligations by deducting from the shares of Common Stock otherwise deliverable to the Optionee in settlement of the Option a number of whole shares having a Fair Market Value, as determined by the Company as of the date on which the Tax Obligations arise, not in excess of the amount of such Tax Obligations determined by the applicable minimum statutory withholding rates.

8.           Data Privacy Consent

8.1           The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s  personal data as described in this document by and among the Company and each Parent and Subsidiary for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

8.2           The Optionee understands that the Company (or any Parent or Subsidiary) holds certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all Options or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).  The Optionee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Optionee’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Optionee’s country.  The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Optionee’s local human resources representative.  The Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Optionee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Optionee may elect to deposit any shares acquired upon settlement of the Option.  The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan.  The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Optionee’s local human resources representative.  The Optionee understands, however, that refusing or withdrawing the Optionee’s consent may affect the Optionee’s ability to participate in the Plan.  For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact the Optionee’s local human resources representative.

9.           Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Compensation Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.

10.           Entire Agreement.  The Plan is incorporated herein by reference.  This Agreement, the Notice, the Plan and the Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter.

11.           Notices.  Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated on the Notice or to such other address as such party may designate in writing from time to time to the Company.  All notices shall be deemed to have been given or delivered upon:  personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

12.           Successors and Assigns.  The Company may assign any of its rights under this Agreement.  This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee's legal representatives or authorized assignee.

13.           Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law.

 

 

  

4

  

 

 

No. «Number»

SILICON IMAGE, INC.

2008 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

(For Non-Employee Directors)

This Stock Option Agreement (this "Agreement") is made and entered into as of the Date of Grant set forth below (the "Date of Grant") by and between Silicon Image, Inc., a Delaware corporation (the "Company"), and the Optionee named below ("Optionee").  Capitalized terms not defined herein shall have the meanings ascribed to them in the Company's 2008 Equity Incentive Plan (the "Plan").

Optionee:                                                          «Name»

Total Option Shares:                                          «Shares»

Exercise Price Per Share:                                «Price»

Date of Grant:                                                      «Date»

First Vest Date:                                                   «M_1st_vest»

	
Expiration Date:

	
Option will expire immediately on termination for cause, 3 months following termination for any other reason except death or disability, but in no event later than «Expire». (refer to Section 3 of this Stock Option Agreement)

Type of Stock Option:                                         Nonqualified Stock Option                    

1.           Grant of Option.  The Company hereby grants to Optionee an option (this "Option") to purchase up to the total number of shares of Common Stock of the Company set forth above as Total Option Shares (collectively, the "Shares") at the Exercise Price Per Share set forth above (the "Exercise Price"), subject to all of the terms and conditions of this Agreement and the Plan.

2.           Vesting; Exercise Period.

2.1           Vesting of Shares.  Subject to the terms and conditions of the Plan and this Agreement, this Option shall become vested and exercisable with respect to one twenty-fourth (1/24) of the Shares each month following the date of grant until fully vested; provided, however, this Option shall become fully vested immediately prior to the consummation of a Corporate Transaction (as provided in Section 21.3 of the Plan).

2.2           Expiration.  This Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is earlier terminated in accordance with the provisions of Section 3 hereof.

3.           Termination.  Except as provided below in this Section, this Option shall terminate and may not be exercised if Optionee ceases to be a member of the Board of Directors of the Company ("Board Member").  The date on which Optionee ceases to be a Board Member shall be referred to as the "Termination Date."

3.1           Termination for Any Reason Except Death, Disability or Cause.  If Optionee ceases to be a Board Member for any reason except death, Disability or Cause, then this Option may be exercised by Optionee no later than three (3) months after the Termination Date, but in any event no later than the Expiration Date.

3.2           Termination Because of Death or Disability.  If Optionee ceases to be a Board Member due to Optionee's death or Disability (or dies within 3 months after Termination other than for Cause or because of Disability), then this Option may be exercised by Optionee (or Optionee's legal representative or authorized assignee) no later than twelve (12) months after the Termination Date, but in any event no later than the Expiration Date.

3.3           Termination for Cause.  If Optionee is Terminated for Cause, this Option will expire on the Optionee's date of termination.

 

 

 

  

  

  

 

 

 

4.           Manner of Exercise.

4.1           Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in the case of exercise after Optionee's death, Optionee's executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Company from time to time (the "Exercise Agreement"), which shall set forth, inter alia, Optionee's election to exercise this Option, the number of shares being purchased, any restrictions imposed on the Shares and any representations, warranties and agreements regarding Optionee's investment intent and access to information as may be required by the Company to comply with applicable securities laws.  If someone other than Optionee exercises this Option, then such person must submit documentation, reasonably acceptable to the Company, establishing that such person has the right to exercise this Option.

4.2           Limitations on Exercise.  This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise.  This Option may not be exercised as to fewer than 100 Shares unless it is exercised as to all Shares as to which this Option is then exercisable.

4.3           Payment.  The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased in cash (by check), or where permitted by law:

	
  

	
(a)

	
by cancellation of indebtedness of the Company to the Optionee;

	
  

	
(b)

	
by surrender of shares of the Company's Common Stock that  are clear of all liens, claims, encumbrances or security interests and either: (1) have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Optionee in the open public market;

	
  

	
(c)

	
by waiver of compensation due or accrued to Optionee for services rendered;

	
  

	
(d)

	
provided that a public market for the Company's stock exists:  (1) through a "same day sale" commitment from Optionee and a Company-designated broker-dealer (a " Dealer") whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased to pay for the Exercise Price and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (2) through a "margin" commitment from Optionee and a Dealer whereby Optionee irrevocably elects to exercise this Option and to pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the Dealer in the amount of the Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company;

	
  

	
(f)

	
by any combination of the foregoing.

4.4           Tax Withholding.  Prior to the issuance of the Shares upon exercise of this Option, Optionee must pay or provide for any applicable federal or state withholding obligations of the Company.  If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of this Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld.  In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares issuable upon exercise.

4.5           Issuance of Shares.  Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee's authorized assignee, or Optionee's legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.

5.           Compliance with Laws and Regulations.  The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's Common Stock may be listed at the time of such issuance or transfer.  Optionee understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.

 

 

 

  

  

  

 

 

6.           Nontransferability of Option.  This Option may not be transferred in any manner other than under the terms and conditions of the Plan or by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee.

7.           Tax Consequences.  Set forth below is a brief summary as of the date the Board adopted the Plan of some of the federal tax consequences of exercise of this Option and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

7.1           Exercise of Nonqualified Stock Option.  There may be a regular federal income tax liability upon the exercise of this Option.  Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price.  The Company may be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

7.2           Disposition of Shares.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long-term capital gain.

8.           Privileges of Stock Ownership.  Optionee shall not have any of the rights of a stockholder with respect to any Shares until the Shares are issued to Optionee.

9.           Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.

10.           Entire Agreement.  The Plan is incorporated herein by reference.  This Agreement and the Plan and the Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter.

11.           Notices.  Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated above or to such other address as such party may designate in writing from time to time to the Company.  All notices shall be deemed to have been given or delivered upon:  personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

12.           Successors and Assigns.  The Company may assign any of its rights under this Agreement.  This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee's heirs, executors, administrators, legal representatives, successors and assigns.

13.           Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law.

14.           Acceptance.  Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement.  Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Agreement.  Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that the Company has advised Optionee to consult a tax advisor prior to such exercise or disposition.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its duly authorized representative and Optionee has executed this Agreement in duplicate as of the Date of Grant.

 

	  	
SILICON IMAGE, INC.

	  	  	
OPTIONEE

	  
	  	  	  	  	  	  
	 	 	 	 	 	 
	  	  	  	  	  	  
	  	
Noland Granberry

	  	  	
«Name»

	  
	  	
Chief Financial Officer

	  	  	  	  

 

 

 

  

  

  

 

	  	  	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	
Silicon Image, Inc.

	  
	
Notice of Grant of Stock Options

	  	  	
1140 East Arques Ave.

	  
	  	  	  	  	
Sunnyvale, CA 94085

	  
	  	  	  	  	  	  
	  	  	  	  	  	  

 

	
Optionee

	  	  	  	
Option Number:

	
«OPTION_NUMBER»

	
«FIRST_NAME» «LAST_NAME»

	  	  	  	
Plan:2008

	  	  	  	  	
ID:

	
«EMPLOYEE_IDENTIFIER»

	  	  	  	  	  	  
	  	  	  	  	  	  

You have been granted an option to buy Silicon Image, Inc. (the “Company”) Common Stock.  The pertinent details of your stock option grant are outlined below:

 

	  	
Date of Grant:

	  	
«OPTION_DATE»

	  	
Total Option Shares:

	  	
«TOTAL_SHARES_GRANTED»

	  	
Exercise Price Per Share:

	  	
«OPTION_PRICE»

	  	
First Vest Date:

	  	
«VEST_DATE_PERIOD1»

	  	
Expiration Date:

	  	
Option will expire immediately on termination for cause, 3 months following termination for any reason except death or disability, but in no event later than «EXPIRE_DATE_PERIOD1».

	  	  	  	
(refer to Section 3 of the Stock Option Agreement)

	  	  	  	  
	  	
Type of Stock Option:

	  	
Nonqualified Stock Option

 

Vesting and Exercise Period:

Provided that you have continuously provided services to the Company, or any Parent or Subsidiary (as those terms are defined in the Silicon Image, Inc. 2008 Equity Incentive Plan), this Option shall vest and become exercisable as follows:  25% of the shares shall vest on the First Vest Date; thereafter, this option shall become exercisable as to an additional 2.0833% of the shares on each monthly anniversary of the First Vest Date.

Acceptance:

Optionee hereby acknowledges receipt of a copy of the Silicon Image, Inc. 2008 Equity Incentive Plan (the “Plan”), Plan Prospectus and the Stock Option Agreement (the “Agreement”).  Please refer to the Plan and Plan Prospectus on our intranet website under the Finance Department/Stock Information tab.  The Agreement is the contract that fixes the terms of your option, including the purchase price and period over which your option can be exercised (purchased).  Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all terms and conditions of the Plan and the Agreement.  Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares, and that the Company has advised Optionee to consult a tax advisor prior to such exercise or disposition.

Please accept this Notice of Grant of Stock Options.  You are not obligated to purchase these shares; Silicon Image requires that the acceptance of this document be on file prior to purchase of the shares.

 

 

	  	
/s/ Camillo Martino

	  	  
	  	
Silicon Image, Inc.

	  	  
	  	
Camillo Martino, Chief Executive Officer

	  	  

 

 

 

  

  

  

 

 

SILICON IMAGE, INC.

RESTRICTED STOCK UNITS AGREEMENT

(For U.S. Participants)

Silicon Image, Inc. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Notice”) to which this Restricted Stock Units Agreement (the “Award Agreement”) is attached an award consisting of Restricted Stock Units (the “Award” or “RSUs”) subject to the terms and conditions set forth in the Notice and this Award Agreement.  The Award has been granted pursuant to the Silicon Image, Inc. 2008 Equity Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of which are incorporated herein by reference.  By signing the Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Notice, this Award Agreement, the Plan and a prospectus for the Plan (the “Plan Prospectus”) in the form most recently prepared in connection with the registration with the Securities and Exchange Commission of Shares issuable pursuant to the Plan, (b) accepts the Award subject to all of the terms and conditions of the Notice, this Award Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee (the “Committee”) or by the Company’s Board of Directors (the “Board”) acting as the Committee (upon any questions arising under the Notice, this Award Agreement or the Plan.

 

1. Definitions and Construction.

 

1.1 Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Notice or the Plan.

 

1.2 Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Award Agreement.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

2. Administration.

 

All questions of interpretation concerning the Notice, this Award Agreement and the Plan shall be determined by the Committee or by the Board acting as the Committee.  All determinations by the Committee or the Board shall be final and binding upon all persons having an interest in the Award.  Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided that such officer has apparent authority with respect to such matter, right, obligation, or election.

 

3. The Award.

 

3.1 Grant of RSUs.  On the Grant Date, the Participant shall acquire, subject to the provisions of this Award Agreement, the Number of RSUs set forth in the Notice, subject to adjustment as provided in section 2.5 of the Plan.  Each RSU represents a right to receive on a date determined in accordance with the Notice and this Award Agreement one (1) Share.

 

3.2 No Monetary Payment Required.  The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the RSUs or Shares issued upon settlement of the RSUs, the consideration for which shall be past services actually rendered and/or future services to be rendered to the Company (or any Parent or Subsidiary) or for its benefit.  Notwithstanding the foregoing, if required by applicable corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to the Company (or any Parent or Subsidiary) or for its benefit having a value not less than the par value of the Shares issued upon settlement of the RSUs.  The Participant may also be subject to, where applicable, the methods of payment required by the Plan.

 

4. Vesting of RSUs.

 

Except as otherwise provided by this section, the RSUs shall vest and become Vested RSUs as provided in the Notice.  In the event that a Vesting Date as provided in the Notice (an “Original Vesting Date”) would occur on a date on which a sale by the Participant of the Shares to be issued in settlement of the RSUs becoming Vested RSUs on such Original Vesting Date would violate the Company’s written policy pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by directors, officers, employees or other service providers who may possess material, nonpublic information regarding the Company or its securities (the “Insider Trading Policy”), such Vesting Date, in the discretion of the Company, may be deferred until the first to occur of (a) the next business day on which a sale by the Participant of such Shares would not violate the Insider Trading Policy or (b) the later of (i) the last day of the calendar year in which the Original Vesting Date occurred or (ii) the last day of the Company’s taxable year in which the Original Vesting Date occurred.

 

 

 

  

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5. Company Reacquisition Right.

 

In the event that the Participant’s service Terminates for any reason or no reason, with or without Cause, the Participant shall forfeit and the Company shall automatically reacquire all RSUs which are not, as of the time of such Termination, Vested RSUs, and the Participant shall not be entitled to any payment therefor.

 

6. Settlement of the Award.

 

6.1 Issuance of Shares.  Subject to the provisions of section 6.3 below, the Company shall issue to the Participant on the Vesting Date with respect to each Vested RSU to be settled on such date one (1) Share.  Shares issued in settlement of Vested RSUs shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to section 6.3, section 7 or the Company’s Insider Trading Policy.

 

6.2 Beneficial Ownership of Shares; Certificate Registration.   The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with a broker selected by the Company and with which the Participant has an account relationship any or all Shares acquired by the Participant pursuant to the settlement of the Vested RSUs.  Except as provided by the preceding sentence, a certificate for the Shares as to which the Award is settled shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

 

6.3 Restrictions on Grant of the Award and Issuance of Shares.  The grant of the Award and issuance of Shares upon settlement of the Vested RSUs shall be subject to compliance with all applicable requirements of federal, state law or foreign law with respect to such securities.  No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary for the lawful issuance of any Shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained.  As a condition to the settlement of the Vested RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

6.4 Fractional Shares.  The Company shall not be required to issue fractional Shares upon the settlement of the Award.

 

7. Tax Withholding.

 

7.1 In General.  At the time the Notice is executed, or at any time thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company, if any, which arise in connection with the Award or the issuance of Shares in settlement thereof.  Alternatively, or in addition, if permissible under applicable law, the Company may require the Participant to satisfy such tax withholding obligations through either or both of the methods described in sections 7.2 and 7.3 below.  The Company shall have no obligation to process the settlement of the Award or to deliver Shares until the tax withholding obligations as described in this section have been satisfied by the Participant.

 

7.2 Assignment of Sale Proceeds.  Subject to compliance with applicable law and the Company’s Insider Trading Policy, the Company may, in its discretion, require the Participant to satisfy all or any portion of the tax withholding obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the Shares being acquired upon settlement of Vested RSUs.

 

7.3 Withholding in Shares.  The Company may, in its discretion, require the Participant to satisfy all or any portion of the tax withholding obligations by deducting from the Shares otherwise deliverable to the Participant in settlement of the Vested RSUs a number of whole Shares having a Fair Market Value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates.

 

8. Compliance with Laws and Regulations

 

The vesting of the Award and the issuance and transfer of the Shares shall be subject to compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange or market system on which the Company's common stock may be listed at the time of such issuance or transfer.  The Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange or market system to effect such compliance.

9. Rights as a Stockholder or Employee.

 

The Participant shall have no rights as a stockholder with respect to any Shares which may be issued in settlement of this Award until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such Shares are issued, except as provided in section 2.5 of the Plan.  If the Participant is an employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between the Company or a Parent or Subsidiary and the Participant, the Participant’s employment is “at will” and is for no specified term.  Nothing in this Award Agreement shall confer upon the Participant any right to continue in service or interfere in any way with any right of the Company or any Parent or Subsidiary to Terminate the Participant’s service at any time.

 

 

 

  

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10. Legends.

 

The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing Shares issued pursuant to this Award Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Award in the possession of the Participant in order to carry out the provisions of this section.

 

11. Miscellaneous Provisions.

 

11.1 Termination or Amendment.  The Board may terminate or amend the Plan or this Award Agreement at any time; provided, however, that except as provided in section 21 of the Plan in connection with a corporate transaction, no such termination or amendment may adversely affect the Participant’s rights under this Award Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation.  No amendment or addition to this Award Agreement shall be effective unless in writing.

 

11.2 Nontransferability of the Award.  Prior the issuance of Shares on the applicable Vesting Date, neither this Award nor any RSUs subject to the Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

 

11.3 Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Award Agreement.

 

11.4 Binding Effect.  This Award Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

 

11.5 Delivery of Documents and Notices.  Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Award Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by the Company or a Parent or Subsidiary, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature to the Notice or at such other address as such party may designate in writing from time to time to the other party.

 

(a) Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, the Notice, this Award Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically.  In addition, the Participant may deliver electronically the Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

 

(b) Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read section 11.5(a) of this Award Agreement and consents to the electronic delivery of the Plan documents and Notice, as described in section 11.5(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in section 11.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in section 11.5(a).

 

11.6 Integrated Agreement.  The Plan is incorporated herein by reference.  The Notice, this Award Agreement and the Plan shall constitute the entire understanding and agreement of the Participant and the Company with respect to the subject matter contained herein or therein and supersedes any prior agreements, understandings, restrictions, representations, or warranties between the Participant and the Company with respect to such subject matter other than those as set forth or provided for herein or therein.  To the extent contemplated herein or therein, the provisions of the Notice and the Award Agreement shall survive any settlement of the Award and shall remain in full force and effect.

 

11.7 Applicable Law.  This Award Agreement shall be governed by and construed in accordance with the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

 

11.8 Interpretation. Any dispute regarding the interpretation of this Award Agreement shall be submitted by Participant or the Company to the Compensation Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and Participant.

 

11.9 Counterparts.  The Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

  

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SILICON IMAGE, INC.

RESTRICTED STOCK UNITS AGREEMENT

(For Non-U.S. Participants)

Silicon Image, Inc. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Notice”) to which this Restricted Stock Units Agreement (the “Award Agreement”) is attached an award consisting of Restricted Stock Units (the “Award” or “RSUs”) subject to the terms and conditions set forth in the Notice and this Award Agreement.  The Award has been granted pursuant to the Silicon Image, Inc. 2008 Equity Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of which are incorporated herein by reference.  By signing the Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Notice, this Award Agreement, the Plan and a prospectus for the Plan (the “Plan Prospectus”) in the form most recently prepared in connection with the registration with the Securities and Exchange Commission of Shares issuable pursuant to the Plan, (b) accepts the Award subject to all of the terms and conditions of the Notice, this Award Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee (the “Committee”) or by the Company’s Board of Directors (the “Board”) acting as the Committee (upon any questions arising under the Notice, this Award Agreement or the Plan.

 

1. Definitions and Construction.

 

1.1 Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Notice or the Plan.

 

1.2 Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Award Agreement.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

2. Certain Conditions of the Award.

 

2.1 Compliance with Local Law.  The Participant agrees that the Participant will not acquire Shares pursuant to the Award or transfer, assign, sell or otherwise deal with such Shares except in compliance with Local Law.  Local Law refers to the laws, rules and regulations of the country of which the Participant is a resident.

 

2.2 Employment Conditions.  In accepting the Award, the Participant acknowledges that:

 

(a) Any notice period mandated under Local Law shall not be treated as service for the purpose of determining the vesting of the Award; and the Participant’s right to receive Shares in settlement of the Award after Termination of service, if any, will be measured by the date of Termination of the Participant’s active service and will not be extended by any notice period mandated under Local Law.  Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Participant’s service has Terminated and the effective date of such Termination.

 

(b) The vesting of the Award shall cease upon, and no RSUs shall become Vested Shares following, the Participant’s Termination of service for any reason except as may be explicitly provided by the Plan or this Award Agreement.

 

(c) The Plan is established voluntarily by the Company.  It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Award Agreement.

 

(d) The grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if Awards have been granted repeatedly in the past.

 

(e) All decisions with respect to future Award grants, if any, will be at the sole discretion of the Company.

 

(f) The Participant’s participation in the Plan shall not create a right to further service with the Company (or any Parent or Subsidiary) and shall not interfere with the ability of the Company (or any Parent or Subsidiary) to Terminate the Participant’s service at any time, with or without Cause.

 

(g) The Participant is voluntarily participating in the Plan.

 

(h) The Award is an extraordinary item that does not constitute compensation of any kind for service of any kind rendered to the Company (or any Parent or Subsidiary), and which is outside the scope of the Participant’s employment contract, if any.

 

(i) The Award is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

(j) In the event that the Participant is not an employee of the Company, the Award will not be interpreted to form an employment contract or relationship with the Company; and furthermore the Award will not be interpreted to form an employment contract with any Parent or Subsidiary.

 

(k) The future value of the underlying Shares is unknown and cannot be predicted with certainty.  If the Participant obtains Shares upon settlement of the Award, the value of those Shares may increase or decrease.

 

(l) No claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or Shares acquired upon settlement of the Award resulting from Termination of the Participant’s service (for any reason whether or not in breach of Local Law) and the Participant irrevocably releases the Company and each Parent and Subsidiary from any such claim that may arise.  If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing the Notice and accepting this Award Agreement, the Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such a claim.

 

 

 

  

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2.3 Data Privacy Consent.

 

(a) The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this document by and among the Company and each Parent and Subsidiary for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

 

(b) The Participant understands that the Company (or any Parent or Subsidiary) holds certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all Awards or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).  The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country.  The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative.  The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any Shares acquired upon settlement of the Award.  The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan.  The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative.  The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan.  For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the Participant’s local human resources representative.

 

3. Administration.

 

All questions of interpretation concerning the Notice, this Award Agreement and the Plan shall be determined by the Committee or by the Board acting as the Committee.  All determinations by the Committee or the Board shall be final and binding upon all persons having an interest in the Award.  Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided that such officer has apparent authority with respect to such matter, right, obligation, or election.

 

4. The Award.

 

4.1 Grant of RSUs.  On the Grant Date, the Participant shall acquire, subject to the provisions of this Award Agreement, the Number of RSUs set forth in the Notice, subject to adjustment as provided in section 2.2 of the Plan.  Each RSU represents a right to receive on a date determined in accordance with the Notice and this Award Agreement one (1) Share.

 

4.2 No Monetary Payment Required.  The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the RSUs or Shares issued upon settlement of the RSUs, the consideration for which shall be past services actually rendered and/or future services to be rendered to the Company (or any Parent or Subsidiary) or for its benefit.  Notwithstanding the foregoing, if required by applicable corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to the Company (or any Parent or Subsidiary) or for its benefit having a value not less than the par value of the Shares issued upon settlement of the RSUs.  The Participant may also be subject to, where applicable, the methods of payment required by the Plan.

 

5. Vesting of RSUs.

 

Except as otherwise provided by this section, the RSUs shall vest and become Vested RSUs as provided in the Notice.  In the event that a Vesting Date as provided in the Notice (an “Original Vesting Date”) would occur on a date on which a sale by the Participant of the Shares to be issued in settlement of the RSUs becoming Vested RSUs on such Original Vesting Date would violate the Company’s written policy pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by directors, officers, employees or other service providers who may possess material, nonpublic information regarding the Company or its securities (the “Insider Trading Policy”), such Vesting Date, in the discretion of the Company, may be deferred until the first to occur of (a) the next business day on which a sale by the Participant of such Shares would not violate the Insider Trading Policy or (b) the later of (i) the last day of the calendar year in which the Original Vesting Date occurred or (ii) the last day of the Company’s taxable year in which the Original Vesting Date occurred.

 

 

 

  

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6. Company Reacquisition Right.

 

In the event that the Participant’s service Terminates for any reason or no reason, with or without Cause, the Participant shall forfeit and the Company shall automatically reacquire all RSUs which are not, as of the time of such Termination, Vested RSUs, and the Participant shall not be entitled to any payment therefor.

 

7. Settlement of the Award.

 

7.1 Issuance of Shares.  Subject to the provisions of section 7.3 below, the Company shall issue to the Participant on the Vesting Date with respect to each Vested RSU to be settled on such date one (1) Share.  Shares issued in settlement of Vested RSUs shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to section 7.3, section 8 or the Company’s Insider Trading Policy.

 

7.2 Beneficial Ownership of Shares; Certificate Registration.   The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with a broker selected by the Company and with which the Participant has an account relationship any or all Shares acquired by the Participant pursuant to the settlement of the Vested RSUs.  Except as provided by the preceding sentence, a certificate for the Shares as to which the Award is settled shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

 

7.3 Restrictions on Grant of the Award and Issuance of Shares.  The grant of the Award and issuance of Shares upon settlement of the Vested RSUs shall be subject to compliance with all applicable requirements of U.S. federal and state law or Local Law with respect to such securities.  No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws, including Local Law, or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary for the lawful issuance of any Shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained.  As a condition to the settlement of the Vested RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

7.4 Fractional Shares.  The Company shall not be required to issue fractional Shares upon the settlement of the Award.

 

8. Tax Withholding.

 

8.1 In General.  Regardless of any action taken by the Company or any Parent or Subsidiary with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding obligations (the “Tax Obligations”), the Participant acknowledges that the ultimate liability for all Tax Obligations legally due by the Participant is and remains the Participant’s responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Award, including the grant, vesting or settlement of the Award, the subsequent sale of Shares acquired pursuant to such settlement, or the receipt of any dividends and (b) does not commit to structure the terms of the grant or any other aspect of the Award to reduce or eliminate the Participant’s liability for Tax Obligations.  The Participant shall pay or make adequate arrangements satisfactory to the Company to satisfy all Tax Obligations of the Company and any Parent or Subsidiary at the time such Tax Obligations arise.  In this regard, the Participant hereby authorizes withholding of all applicable Tax Obligations from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, withholding of all applicable Tax Obligations, if any, by the Company and each Parent or Subsidiary, which arise in connection with the Award.  Alternatively, or in addition, if permissible under applicable law, including Local Law, the Company may require the Participant to satisfy the Tax Obligations through either or both of the methods described in sections 8.2 and 8.3 below.  The Company shall have no obligation to process the settlement of the Award or to deliver Shares until the Tax Obligations as described in this section have been satisfied by the Participant.

 

8.2 Assignment of Sale Proceeds.  Subject to compliance with applicable law, including Local  Law, and the Company’s Insider Trading Policy, the Company may, in its discretion, require the Participant to satisfy all or any portion of the Tax Obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the Shares being acquired upon settlement of Vested RSUs.

 

8.3 Withholding in Shares.  The Company may, in its discretion, require the Participant to satisfy all or any portion of the Tax Obligations by deducting from the Shares otherwise deliverable to the Participant in settlement of the Vested RSUs a number of whole Shares having a Fair Market Value, as determined by the Company as of the date on which the Tax Obligations arise, not in excess of the amount of such Tax Obligations determined by the applicable minimum statutory withholding rates.

 

 

 

  

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9. Rights as a Stockholder or Employee.

 

The Participant shall have no rights as a stockholder with respect to any Shares which may be issued in settlement of this Award until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such Shares are issued, except as provided in section 2.2 of the Plan.  If the Participant is an employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between the Company or a Parent or Subsidiary and the Participant, the Participant’s employment is “at will” and is for no specified term.  Nothing in this Award Agreement shall confer upon the Participant any right to continue in service or interfere in any way with any right of the Company or any Parent or Subsidiary to Terminate the Participant’s service at any time.

 

10. Legends.

 

The Company may at any time place legends referencing any applicable federal, state or foreign securities law, including Local Law, restrictions on all certificates representing Shares issued pursuant to this Award Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Award in the possession of the Participant in order to carry out the provisions of this section.

 

11. Miscellaneous Provisions.

 

11.1 Termination or Amendment.  The Board may terminate or amend the Plan or this Award Agreement at any time; provided, however, that except as provided in section 19 of the Plan in connection with a corporate transaction, no such termination or amendment may adversely affect the Participant’s rights under this Award Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation.  No amendment or addition to this Award Agreement shall be effective unless in writing.

 

11.2 Nontransferability of the Award.  Prior the issuance of Shares on the applicable Vesting Date, neither this Award nor any RSUs subject to the Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

 

11.3 Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Award Agreement.

 

11.4 Binding Effect.  This Award Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

 

11.5 Delivery of Documents and Notices.  Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Award Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by the Company or a Parent or Subsidiary, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature to the Notice or at such other address as such party may designate in writing from time to time to the other party.

 

(a) Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, the Notice, this Award Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically.  In addition, the Participant may deliver electronically the Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

 

(b) Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read section 11.5(a) of this Award Agreement and consents to the electronic delivery of the Plan documents and Notice, as described in section 11.5(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in section 11.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in section 11.5(a).

 

11.6 Integrated Agreement.  The Plan is incorporated herein by reference.  The Notice, this Award Agreement and the Plan shall constitute the entire understanding and agreement of the Participant and the Company with respect to the subject matter contained herein or therein and supersedes any prior agreements, understandings, restrictions, representations, or warranties between the Participant and the Company with respect to such subject matter other than those as set forth or provided for herein or therein.  To the extent contemplated herein or therein, the provisions of the Notice and the Award Agreement shall survive any settlement of the Award and shall remain in full force and effect.

 

11.7 Applicable Law.  This Award Agreement shall be governed by and construed in accordance with the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

 

11.8 Counterparts.  The Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

  

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SILICON IMAGE, INC.

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

(For U.S. Participants)

The Participant has been granted an award of Restricted Stock Units (the “Award” or “RSUs”) pursuant to the Silicon Image, Inc. 2008 Equity Incentive Plan, as amended to the Grant Date (the “Plan”), each of which represents the right to receive on the applicable Vesting Date one (1) Share, as follows:

	
Participant:

	
«FIRST_NAME» «LAST_NAME»

	
Employee ID:

	
«EMPLOYEE_IDENTIFIER»

	
Grant Date:

	
«OPTION_DATE»

	
Grant No.:

	
«OPTION_NUMBER»

	
Number of RSUs:

	
«TOTAL_SHARES_GRANTED»  , subject to adjustment as provided by the Award Agreement.

	
Vesting Schedule:

	
Subject to Participant’s continued service to the Company or a Parent or Subsidiary of the Company through the applicable “Vesting Date”, RSUs shall vest, if at all, and become “Vested RSUs” on each applicable Vesting Date, as set forth in Exhibit A attached hereto, and on the terms and conditions of which are incorporated herein.

By their signatures below or by electronic acceptance or authentication in a form authorized by the Company, the Company and the Participant agree that the Award is governed by this Notice and by the provisions of the Plan and the Award Agreement, both of which are made a part of this document.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Award Agreement or the Plan.  The Participant acknowledges that copies of the Plan and the prospectus for the Plan are available on the Company’s internal web site under the Finance Department/Stock Information tab and may be viewed and printed by the Participant for attachment to the Participant’s copy of this Notice.  The Participant represents that the Participant has read and is familiar with the provisions of the Plan and the Award Agreement, and hereby accepts the Award subject to all of their terms and conditions.

SILICON IMAGE, INC.

By:           /s/ Camillo Martino                                                      

Its:           Chief Executive Officer                                                      

Address:               1140 East Arques Avenue

Sunnyvale, CA 94085, USA

	
ATTACHMENTS:

	
2008 Equity Incentive Plan, as amended to the Grant Date; Award Agreement and Plan Prospectus

 

 

 

  

  

  

 

 

 

EXHIBIT A

VESTING SCHEDULE

Time Based Awards

	
Vested RSUs:

	
Except as provided by the Award Agreement and provided that the Participant’s service has not Terminated prior to the relevant Vesting Date, the number of Vested RSUs shall cumulatively increase on each respective Vesting Date set forth below by the number of RSUs set forth opposite such date, as follows:

	  	
Vesting Date

	  	
Number of Units Vesting

	  	
«VEST_DATE_PERIOD1»

	  	
«SHARES_PERIOD1»

	  	
«VEST_DATE_PERIOD2»

	  	
«SHARES_PERIOD2»

	  	
«VEST_DATE_PERIOD3»

	  	
«SHARES_PERIOD3»

	  	
«VEST_DATE_PERIOD4»

	  	
«SHARES_PERIOD4»

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