As filed with the Securities and Exchange Commission on April 19, 2001 Registration No. 333-__________ ==================================================================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 --------------- PUBLIC STORAGE, INC. (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation or organization) 95-3551121 (I.R.S. Employer Identification No.) 701 Western Avenue Glendale, California 91201-2349 (Address of Principal Executive Offices with Zip Code) PUBLIC STORAGE, INC. 2001 NON-EXECUTIVE/NON-DIRECTOR STOCK OPTION AND INCENTIVE PLAN PUBLIC STORAGE, INC. 2001 STOCK OPTION AND INCENTIVE PLAN (Full Title of the Plans) HARVEY LENKIN Public Storage, Inc. 701 Western Avenue Glendale, California 91201-2349 (818) 244-8080 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------- With a copy to: DAVID GOLDBERG, ESQ. Public Storage, Inc. 701 Western Avenue Glendale, California 91201-2349 ---------------
CALCULATION OF REGISTRATION FEE ==================================================================================================================== Proposed maximum Proposed maximum Amount of Title of securities to be registered Amount to be offering price per aggregate offering registration registered share price fee -------------------------------------------------------------------------------------------------------------------- Common Stock, $.10 par value per share................................ 5,500,000(1) $26.44(2) $145,420,000(1) $36,355(1) ==================================================================================================================== (1) Includes 500,000 shares issuable under the Public Storage, Inc. 2001 Non-Executive/Non-Director Stock Option and Incentive Plan and 5,000,000 shares issuable under the Public Storage, Inc. 2001 Stock Option and Incentive Plan. (2) Estimated pursuant to Rule 457(h) under the Securities Act of 1933 as of April 17, 2001 solely for the purpose of calculating the registration fee.
PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Documents containing the information required to be provided in this Part I will be separately sent or given to employees as contemplated by Rule 428(b)(1) under the Securities Act of 1933, as amended (the "Securities Act"). In accordance with the instructions to Part I of Form S-8, such documents will not be filed with the Securities and Exchange Commission (the "Commission") either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3.Incorporation of Documents by Reference Public Storage, Inc. (the "Company") hereby incorporates by reference into this Registration Statement the following documents: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000; (b) The Company's Current Report on Form 8-K dated January 16, 2001 (filed January 17, 2001); (c) The Company's Current Report on Form 8-K dated April 5, 2001 (filed April 6, 2001); (d) All reports filed by the Company with the Commission under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December 31, 2000; (e) The description of the Company's Common Stock, $.10 par value per share, contained in the Company's Registration Statement on Form 8-A, effective June 30, 1981, as supplemented by the description of the Company's Common Stock contained in the Prospectus dated July 8, 1999 included in the Company's Registration Statement on Form S-3 (File No. 333-81041); (f) All documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities remaining unsold. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such prior statement. The documents required to be so modified or superseded shall not be deemed to constitute a part of this Registration Statement, except as so modified or superseded. To the extent that any proxy statement is incorporated by reference herein, such incorporation shall not include any information contained in such proxy statement which is not, pursuant to the Commission's rules, deemed to be "filed" with the Commission or subject to the liabilities of Section 18 of the Exchange Act.
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ITEM 4.Description of Securities A description of the Company's Common Stock, $.10 par value per share, is incorporated by reference under Item 3. ITEM 5.Interests of Named Experts and Counsel David Goldberg, senior vice president and general counsel of the Company, has delivered an opinion to the effect that the shares of Common Stock covered by this Registration Statement will be legally issued, fully paid and non-assessable. Mr. Goldberg owns 111,713 shares of the Company's Common Stock, 4,048 shares of the Company's Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A, 600 shares of the Company's preferred stock, and has options to acquire an additional 356,167 shares of the Company's Common Stock. ITEM 6.Indemnification of Directors and Officers The Company's Restated Articles of Incorporation provide that the Company may indemnify the agents of the Company to the maximum extent permitted under California law. The Company has also entered into indemnity agreements with its management and non-management directors and executive officers. The agreements permit the Company to indemnify directors and executive officers to the maximum extent permitted under California law and prohibit the Company from terminating its indemnification obligations as to acts or omissions of any director or executive officer occurring before the termination. The indemnification and limitations on liability permitted by the Restated Articles of Incorporation and the agreements are subject to the limitations set forth by California law. The Company believes the indemnification agreements will assist it in attracting and retaining qualified individuals to serve as directors and executive officers of the Company. ITEM 7.Exemption From Registration Claimed Not applicable. ITEM 8.Exhibits Exhibit Number Description 5.1 Opinion of David Goldberg as to the legality of the securities being registered. 23.1 Consent of Independent Auditors. 23.2 Consent of David Goldberg (included in Exhibit 5.1). 24.1 Power of Attorney (contained on page 5 of this Registration Statement). 99.1 The Company's 2001 Non-Executive/Non-Director Stock Option and Incentive Plan. 99.2 The Company's 2001 Stock Option and Incentive Plan. ITEM 9.Undertakings (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
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(ii) To reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the
securities being registered that remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to
directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Glendale, State of California, on the 19th day of April, 2001.
PUBLIC STORAGE, INC.
By: /S/ DAVID GOLDBERG
---------------------------------------
David Goldberg, Senior Vice President
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POWER OF ATTORNEY
Each director and officer of Public Storage, Inc. whose signature appears below hereby authorizes
B. Wayne Hughes and Harvey Lenkin, and each of them, as attorney-in-fact and agent, with full powers of
substitution and resubstitution, to sign on his behalf, individually and in each capacity stated below, any
amendment, including post-effective amendments to this Registration Statement and/or to sign any related
registration statement filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and in each case
to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, with full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute(s), may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.
Signature Capacity Date
Chairman of the Board, Chief Executive
/S/ B. WAYNE HUGHES Officer and Director (principal April 19, 2001
---------------------------------------- executive officer)
B. Wayne Hughes
/S/ HARVEY LENKIN President and Director April 19, 2001
----------------------------------------
Harvey Lenkin
/S/ B. WAYNE HUGHES, JR. Vice President and Director April 19, 2001
----------------------------------------
B. Wayne Hughes, Jr.
/S/ MARVIN M. LOTZ Senior Vice President and Director April 19, 2001
----------------------------------------
Marvin M. Lotz
Senior Vice President and Chief
/S/ JOHN REYES Financial Officer (principal financial April 19, 2001
---------------------------------------- officer and principal accounting officer)
John Reyes
Director
----------------------------------------
Robert J. Abernethy
/S/ DANN V. ANGELOFF Director April 19, 2001
----------------------------------------
Dann V. Angeloff
/S/ WILLIAM C. BAKER Director April 19, 2001
----------------------------------------
William C. Baker
/S/ THOMAS J. BARRACK, JR. Director April 19, 2001
----------------------------------------
Thomas J. Barrack, Jr.
Director
----------------------------------------
Uri P. Harkham
Director
----------------------------------------
Daniel C. Staton
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EXHIBIT INDEX
Exhibit NumberDescription
5.1 Opinion of David Goldberg as to the legality of the securities being registered.
23.1 Consent of Independent Auditors.
23.2 Consent of David Goldberg (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page 5 of this Registration Statement).
99.1 The Company's 2001 Non-Executive/Non-Director Stock Option and Incentive Plan.
99.2 The Company's 2001 Stock Option and Incentive Plan.
Exhibit 5.1
DAVID GOLDBERG
Senior Vice President and General Counsel
701 Western Avenue
Glendale, California 91201-2349
April 19, 2001
Public Storage, Inc.
701 Western Avenue
Glendale, California 91201-2349
Gentlemen:
As Senior Vice President and General Counsel of Public Storage, Inc. (the "Company"), I have examined the
Registration Statement on Form S-8, which is being filed by the Company on or about the date hereof with the
Securities and Exchange Commission (the "Registration Statement"), relating to the offer and sale of (i) up to
500,000 shares of the Company's Common Stock, par value $.10 per share, pursuant to the Company's 2001
Non-Executive/Non-Director Stock Option and Incentive Plan and (ii) up to 5,000,000 shares of the Company's Common
Stock, par value $.10 per share, pursuant to the Company's 2001 Stock Option and Incentive Plan (the Company's 2001
Non-Executive/Non-Director Stock Option and Incentive Plan and the Company's 2001 Stock Option and Incentive Plan
are collectively referred to as the "Plans" and the aggregate of 5,500,000 shares of the Company's Common Stock
issuable under the Plans is referred to as the "Securities").
I am familiar with the proceedings taken and proposed to be taken by the Company relating to the
authorization and issuance of the Securities in the manner set forth in the Registration Statement and the Plans.
Subject to the taking of the contemplated proceedings in connection with the foregoing matters, I am of
the opinion that the Securities, when issued and sold in the manner set forth in the Registration Statement and the
respective Plan, will be legally issued and outstanding, fully paid and non-assessable.
I hereby consent to the reference to me under the caption "Interests of Named Experts and Counsel" in the
Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ DAVID GOLDBERG
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on Form S-8 (No.
333-____________) of Public Storage, Inc. pertaining to the Public Storage, Inc. 2001 Non-Executive/Non-Director
Stock Option and Incentive Plan and the Public Storage, Inc. 2001 Stock Option and Incentive Plan of our report
dated February 23, 2001 with respect to the consolidated financial statements and schedule of Public Storage, Inc.
included in its Annual Report on Form 10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Los Angeles, California
April 19, 2001
EXHIBIT 99.1
PUBLIC STORAGE, INC.
2001 NON-EXECUTIVE/NON-DIRECTOR STOCK OPTION AND INCENTIVE PLAN
Public Storage, Inc., a California corporation (the "Company"), sets forth herein the terms of its 2001
Non-Executive/Non-Director Stock Option and Incentive Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to enhance the Company's ability to attract and retain highly qualified employees
and other persons to advance the interests of the Company by providing such persons with stronger incentives to
continue to serve the Company and its affiliates (as defined herein) and to expend maximum effort to improve the
business results and earnings of the Company. The Plan is intended to accomplish this objective by providing to
eligible persons an opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, restricted stock and
restricted stock units in accordance with the terms hereof. Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including Award Agreements), the following
definitions shall apply:
2.1 "affiliate" of, or person "affiliated" with, a person means any company or other trade or business
that controls, is controlled by or is under common control with such person within the meaning of Rule 405 of
Regulation C under the 1933 Act (as defined herein).
2.2 "Award Agreement" means the stock option agreement, restricted stock agreement, restricted stock unit
agreement or other written agreement between the Company and a Grantee that evidences and sets out the terms and
conditions of a Grant.
2.3 "Benefit Arrangement" shall have the meaning set forth in Section 13 hereof.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.6 "Committee" means each of the Equity Awards Committee of the Board and the Executive Equity Awards
Committee of the Board.
2.7 "Company" means Public Storage, Inc.
2.8 "Effective Date" means March 15, 2001, the date on which the Plan was adopted by the Board.
2.9 "Fair Market Value" means the value of a share of Stock, determined as follows: if on the Grant Date
or other determination date the Stock is listed on an established national or regional stock exchange, is admitted
to quotation on the Nasdaq National Market, or is publicly traded on an established securities market, the Fair
Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in such market (the
closing price on the principal such exchange or market if there is more than one such exchange or market) on the
Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value
shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such
trading day) or, if no sale of Stock is reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the Stock is not listed on such an exchange, quoted on such system or traded on such a
market, Fair Market Value shall be the value of the Stock as determined by the Committee in good faith.
2.10 "Grant" means an award of an Option, Restricted Stock or Restricted Stock Units under the Plan.
2.11 "Grant Date" means the later of (i) the date as of which the Committee approves the Grant or (ii) the
date as of which the Grantee and the Company or Service Provider enter into the relationship resulting in the
Grantee's becoming eligible to receive a Grant.
2.12 "Grantee" means a person who receives or holds an Option, Restricted Stock or Restricted Stock Units
under the Plan.
2.13 "Incentive Stock Option" means an "incentive stock option" within the meaning of Section 422 of the
Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.
2.14 "Officer" means "officer" as defined in Section 312.04(g) of the New York Stock Exchange Listed
Company Manual.
2.15 "Option" means an option to purchase one or more shares of Stock pursuant to the Plan.
2.16 "Option Period" means the period during which Options may be exercised as set forth in Section 11
hereof.
2.17 "Option Price" means the purchase price for each share of Stock subject to an Option.
2.18 "Other Agreement" shall have the meaning set forth in Section 13 hereof.
2.19 "Plan" means the Public Storage, Inc. 2001 Non-Executive/Non-Director Stock Option and Incentive
Plan.
2.20 "Restricted Period" means the period during which Restricted Stock or Restricted Stock Units are
subject to restrictions or conditions pursuant to Section 12.2 hereof.
2.21 "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant to Section 12 hereof, that
are subject to restrictions and to a risk of forfeiture.
2.22 "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to Section 12 hereof, which
represents a conditional right to receive a share of Stock in the future, and which is subject to restrictions and
to a risk of forfeiture.
2.23 "Securities Act" means the Securities Act of 1933, as now in effect or as hereafter amended.
2.24 "Service Provider" means a consultant or adviser to the Company, a manager of the Company's
properties or affairs, or other similar service provider or affiliate of the Company, or any corporation or other
entity in which the Company owns at least a ninety percent (90%) economic interest, and employees of any of the
foregoing, as such persons may be designated from time to time by the Committee pursuant to Section 6 hereof.
2.25 "Stock" means the common stock, par value $0.10 per share, of the Company.
2.26 "Subsidiary" means any "subsidiary corporation" of the Company within the meaning of Section 424(f)
of the Code.
2.27 "Termination Date" shall be the date upon which an Option shall terminate or expire, as set forth in
Section 10.2 hereof.
3. ADMINISTRATION OF THE PLAN
3.1General. Subject to Section 3.2 hereof, the Plan shall be administered by the Committee. The
Board may remove members, add members, and fill vacancies on the Committee from time to time, all in accordance
with the Company's articles of incorporation and by-laws and applicable law.
3.2Plenary Authority of the Committee. The Committee shall have such powers and authorities
related to the administration of the Plan as are consistent with the Company's articles of incorporation and
by-laws and applicable law. The Committee shall have full power and authority to take all actions and to make
all determinations required or provided for under the Plan, subject to any limitations imposed by the resolutions
of the Board designating and empowering such Committee, and shall have full power and authority to take all such
other actions and make all such other determinations not inconsistent with the specific terms and provisions of
the Plan that the Committee deems to be necessary or appropriate to the administration of the Plan. Only the
Executive Equity Awards Committee shall have the authority to authorize Grants of Options, Restricted Stock or
Restricted Stock Units to any one person for more than 100,000 shares of Stock in any calendar year. Each
Committee shall have the power and authority to take actions and make determinations required or provided for
under an outstanding Grant or Award Agreement only if such Grant or Award Agreement was initially authorized by
such committee. All such actions and determinations shall be by the affirmative vote of a majority of the
members of the Committee present at a meeting or by unanimous consent of the Committee executed in writing in
accordance with the Company's articles of incorporation and by-laws and applicable law. The interpretation and
construction by the Committee of any provision of the Plan, any Grant or any Award Agreement shall be final and
conclusive.
3.3Discretionary Grants. Subject to the other terms and conditions of the Plan, the Committee
shall have full and final authority to designate Grantees, (i) to determine the type or types of Grant to be made
to a Grantee, (ii) to determine the number of shares of Stock to be subject to a Grant, (iii) to establish the
terms and conditions of each Grant (including, but not limited to, the exercise price of any Option, the nature
and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of a Grant or the shares of Stock subject thereto, and any terms or conditions that may
be necessary to qualify Options as Incentive Stock Options), (iv) to prescribe the form of each Award Agreement
evidencing a Grant, and (v) to amend, modify, or supplement the terms of any outstanding Grant; provided,
however, that the Committee shall not have the authority to reduce the exercise price of any outstanding Option
other than pursuant to Section 16 hereof. Such authority specifically includes the authority, in order to
effectuate the purposes of the Plan but without amending the Plan, to modify Grants to eligible individuals who
are foreign nationals or are individuals who are employed outside the United States to recognize differences in
local law, tax policy, or custom. As a condition to any subsequent Grant, the Committee shall have the right, at
its discretion, to require Grantees to return to the Company Grants previously awarded under the Plan. Subject
to the terms and conditions of the Plan, any such new Grant shall be upon such terms and conditions as are
specified by the Committee at the time the new Grant is made.
3.4No Liability. No member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant or Award Agreement.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 16 hereof, the number of shares of Stock available for
issuance under the Plan shall be 500,000. Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by a Grant are not purchased or are forfeited, or if a Grant otherwise
terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect to such Grant shall, to the extent of any such
forfeiture or termination, again be available for making Grants under the Plan.
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1Effective Date. The Plan shall be effective as of the Effective Date.
5.2Term.The Plan has no termination date; however, no Incentive Stock Option may be granted on
or after the tenth anniversary of the Effective Date.
6. DISCRETIONARY GRANTS
6.1Company or Subsidiary Employees. Grants (including Grants of Incentive Stock Options) may be
made under the Plan to any employee of the Company or of any Subsidiary, excluding any person who is an Officer
or director of the Company, as the Committee shall determine and designate from time to time.
6.2Service Providers. Grants may be made under the Plan to any Service Provider whose
participation in the Plan is determined by the Committee to be in the best interests of the Company and is so
designated by the Committee; provided, however, that Grants to Service Providers who are not employees of the
Company or of any Subsidiary shall not be Incentive Stock Options.
6.3Successive Grants. An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.
7. LIMITATIONS ON GRANTS
7.1Limitation on Shares of Stock Subject to Grants. The maximum number of shares of Stock subject
to Options that can be awarded under the Plan to any person eligible for a Grant under Section 6 hereof is
250,000 per year. The maximum number of shares of Restricted Stock that can be awarded under the Plan (including
for this purpose any shares of Stock represented by Restricted Stock Units) to any person eligible for a Grant
under Section 6 hereof is 250,000 per year.
7.2Limitations on Incentive Stock Options. An Option shall constitute an Incentive Stock Option
only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to
the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair
Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year
(under the Plan and all other plans of the Grantee's employer and its affiliates) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which they were granted.
8. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, to be executed by the Company
and by the Grantee, in such form or forms as the Committee shall from time to time determine. Award Agreements
granted from time to time or at the same time need not contain similar provisions but shall be consistent with
the terms of the Plan. Each Award Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options.
9. OPTION PRICE
The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement
evidencing such Option. The Option Price shall be the aggregate Fair Market Value on the Grant Date of the
shares of Stock subject to the Option; provided, however, that in the event that a Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to ownership of more than ten percent of the Company's outstanding Stock), the Option Price of
an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than the
greater of the par value of a share of Stock or 110 percent of the Fair Market Value of a share of Stock on the
Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock.
10. VESTING, TERM AND EXERCISE OF OPTIONS
10.1Vesting and Option Period. Unless otherwise provided in an Award Agreement evidencing the
Grant of an Option, each Option granted under the Plan shall become exercisable in accordance with the following
schedule: (i) prior to the first anniversary of the Grant Date, the Option shall not be exercisable; (ii) on the
first anniversary of the Grant Date, the Option shall become exercisable with respect to one-third of the shares
of Stock subject to such Option; (iii) on the second anniversary of the Grant Date, the Option shall become
exercisable with respect to an additional one-third of the shares of Stock subject to such Option and (iv) on the
third anniversary of the Grant Date, the Option shall become exercisable with respect to the remaining shares of
Stock subject to such Option and shall remain exercisable in full up to (but not including) the Termination Date
(as defined in Section 10.2 hereof). For purposes of this Section 10.1, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number. The period during which any Option
shall be exercisable in accordance with the foregoing schedule shall constitute the "Option Period" with respect
to such Option.
10.2Term. Each Option granted under the Plan shall terminate, and all rights to purchase shares of
Stock thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or under
such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee
and stated in the Award Agreement relating to such Option (the "Termination Date"); provided, however, that in
the event that the Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent of the
outstanding Stock), an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not
be exercisable after the expiration of five years from its Grant Date.
10.3Acceleration. Any limitation on the exercise of an Option contained in any Award Agreement may
be rescinded, modified or waived by the Committee, in its sole discretion, at any time and from time to time
after the Grant Date of such Option, so as to accelerate the time at which the Option may be exercised.
10.4Termination of Employment or Other Relationship. Upon the termination (i) of the employment of
a Grantee with the Company or a Service Provider or (ii) of a Service Provider's relationship with the Company,
other than, in the case of individuals, by reason of death or "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code), any Option or portion thereof held by such Grantee that has not vested
in accordance with the provisions of Section 10.1 hereof shall terminate immediately, and any Option or portion
thereof that has vested in accordance with the provisions of Section 10.1 hereof but has not been exercised shall
terminate at the close of business on the thirtieth day following the Grantee's termination of service,
employment, or other relationship, unless the Committee, in its discretion, extends the period during which the
Option may be exercised (which period may not be extended beyond the original term of the Option). Upon
termination of an Option or portion thereof, the Grantee shall have no further right to purchase shares of Stock
pursuant to such Option or portion thereof. Whether a leave of absence or leave on military or government
service shall constitute a termination of employment for purposes of the Plan shall be determined by the
Committee, which determination shall be final and conclusive. For purposes of the Plan, a termination of
employment, service or other relationship shall not be deemed to occur if the Grantee is immediately thereafter
employed with the Company or any other Service Provider, or is engaged as a Service Provider of the Company.
Whether a termination of a Service Provider's relationship with the Company shall have occurred shall be
determined by the Committee, which determination shall be final and conclusive.
10.5Rights in the Event of Death. If a Grantee dies while employed by the Company or a Service
Provider, or while serving as a Service Provider, all Options granted to such Grantee shall fully vest on the
date of death, and the executors or administrators or legatees or distributees of such Grantee's estate shall
have the right, at any time within one year after the date of such Grantee's death (or such longer period as the
Committee, in its discretion, may determine prior to the expiration of such one-year period) and prior to
termination of the Option pursuant to Section 10.2 above, to exercise any Option held by such Grantee at the date
of such Grantee's death.
10.6Rights in the Event of Disability. If a Grantee terminates employment with the Company or a
Service Provider, or (if the Grantee is a Service Provider who is an individual) ceases to provide services to
the Company, in either case by reason of the "permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of such Grantee, such Grantee's Options shall continue to vest, and shall be
exercisable to the extent that they are vested, for a period of one year after such termination of employment or
service (or such longer period as the Committee, in its discretion, may determine prior to the expiration of such
one-year period), subject to earlier termination of the Option as provided in Section 10.2 above. Whether a
termination of employment or service is to be considered by reason of "permanent and total disability" for
purposes of the Plan shall be determined by the Committee, which determination shall be final and conclusive.
10.7Limitations on Exercise of Option. Notwithstanding any other provision of the Plan, in no
event may any Option be exercised, in whole or in part, after ten years following the date upon which the Option
is granted, or after the occurrence of an event referred to in Section 16 hereof which results in termination of
the Option.
10.8Method of Exercise. An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the Company's principal office, addressed to
the attention of the Committee. Such notice shall specify the number of shares of Stock with respect to which
the Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares for
which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may
be exercised, in whole or in part, at any time shall be the lesser of (i) 100 shares or such lesser number set
forth in the applicable Award Agreement and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares purchased pursuant to the exercise of
an Option shall be made (i) in cash or in cash equivalents; (ii) through the tender to the Company of shares of
Stock, which shares shall be valued, for purposes of determining the extent to which the Option Price has been
paid thereby, at their Fair Market Value on the date of exercise; or (iii) by a combination of the methods
described in (i) and (ii). The Committee may provide, by inclusion of appropriate language in an Award
Agreement, that payment in full of the Option Price need not accompany the written notice of exercise provided
that the notice of exercise directs that the certificate or certificates for the shares of Stock for which the
Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such certificate or certificates are delivered, the broker tenders to the
Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the shares of Stock
purchased pursuant to the exercise of the Option plus the amount (if any) of federal and/or other taxes which the
Company may in its judgment, be required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect.
Unless otherwise stated in the applicable Award Agreement, an individual holding or exercising an Option shall
have none of the rights of a shareholder (for example, the right to receive cash or dividend payments or
distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock
) until the shares of Stock covered thereby are fully paid and issued to him. Except as provided in Section 16
hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is
prior to the date of such issuance.
10.9Delivery of Stock Certificates. Promptly after the exercise of an Option by a Grantee and the
payment in full of the Option Price, such Grantee shall be entitled to the issuance of a stock certificate or
certificates evidencing his or her ownership of the shares of Stock subject to the Option.
11. TRANSFERABILITY OF OPTIONS
Each Option granted pursuant to this Plan shall, during a Grantee's lifetime, be exercisable only by the
Grantee or his or her permitted transferees, and neither the Option nor any right thereunder shall be
transferable by the Grantee, by operation of law or otherwise, other than as may be provided in the Award
Agreement evidencing such Option or as may be provided by will or the laws of descent and distribution. Except
as may be provided in the Award Agreement evidencing an Option, no Option shall be pledged or hypothecated (by
operation of law or otherwise) or subject to execution, attachment or similar processes.
12. RESTRICTED STOCK
12.1Grant of Restricted Stock or Restricted Stock Units. The Committee may from time to time grant
Restricted Stock or Restricted Stock Units to persons eligible to receive such Grants as set forth in Section 6
hereof, subject to such restrictions, conditions and other terms as the Committee may determine.
12.2Restrictions. At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Committee shall establish a period of time (the "Restricted Period") applicable to such Restricted Stock or
Restricted Stock Units. The minimum Restricted Period which may be provided for by the Committee with respect to
Restricted Stock or Restricted Stock Units the vesting of which is subject solely to the passage of time and/or
continued employment shall be three years, subject to earlier expiration of the Restricted Period upon the death,
disability, retirement or other termination of service of the Grantee, or upon a change in control of the
Company, in accordance with the provisions of the Plan. Each Grant of Restricted Stock or Restricted Stock Units
may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a Grant
of Restricted Stock or Restricted Stock Units is made, prescribe restrictions in addition to or other than the
expiration of the Restricted Period, including the satisfaction of corporate or individual performance
objectives, which may be applicable to all or any portion of the Restricted Stock or Restricted Stock Units.
Such performance objectives shall be established in writing by the Committee prior to the ninetieth day of the
year in which the Grant is made and while the outcome is substantially uncertain. Performance objectives shall
be based on Stock price, market share, sales, earnings per share, return on equity or costs. Performance
objectives may include positive results, maintaining the status quo or limiting economic losses. The Committee
also may, in its sole discretion, shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock or Restricted Stock Units. Neither Restricted Stock nor
Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during
the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with
respect to such Restricted Stock or Restricted Stock Units.
12.3Restricted Stock Certificates. The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Secretary of the Company
shall hold such certificates for the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company, or the restrictions lapse.
12.4Rights of Holders of Restricted Stock. Unless the Committee otherwise provides in an Award
Agreement, holders of Restricted Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock. The Committee may provide that any dividends paid on
Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock. All distributions, if any, received by a
Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of shares,
or other similar transaction shall be subject to the restrictions applicable to the original Grant.
12.5Rights of Holders of Restricted Stock Units. Unless the Committee otherwise provides in an
Award Agreement, holders of Restricted Stock Units shall have no rights as stockholders of the Company. The
Committee may provide in an Award Agreement evidencing a Grant of Restricted Stock Units that the holder of such
Restricted Stock Units shall be entitled to receive, upon the Company's payment of a cash dividend on its
outstanding Stock, a cash payment for each Restricted Stock Unit held equal to the per-share dividend paid on the
Stock. Such Award Agreement may also provide that such cash payment will be deemed reinvested in additional
Restricted Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on the date that
such dividend is paid.
12.6Termination of Employment or Other Relationship. Upon the termination of the employment of a
Grantee with the Company or a Service Provider, or of a Service Provider's relationship with the Company, in
either case other than, in the case of individuals, by reason of death or "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code), any Restricted Stock or Restricted Stock Units held by such
Grantee that has not vested, or with respect to which all applicable restrictions and conditions have not lapsed,
shall immediately be deemed forfeited, unless the Committee, in its discretion, determines otherwise. Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have no further rights with respect
to such Grant, including but not limited to any right to vote Restricted Stock or any right to receive dividends
with respect to shares of Restricted Stock or Restricted Stock Units. Whether a leave of absence or leave on
military or government service shall constitute a termination of employment for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to occur if the Grantee is
immediately thereafter employed with the Company or any other Service Provider, or is engaged as a Service
Provider. Whether a termination of a Service Provider's relationship with the Company shall have occurred shall
be determined by the Committee, which determination shall be final and conclusive.
12.7Rights in the Event of Death. If a Grantee dies while employed by the Company or a Service
Provider or while serving as a Service Provider, all Restricted Stock or Restricted Stock Units granted to such
Grantee shall fully vest on the date of death, and the shares of Stock represented thereby shall be deliverable
in accordance with the terms of the Plan to the executors, administrators, legatees or distributees of the
Grantee's estate.
12.8Rights in the Event of Disability. If a Grantee terminates employment with the Company or a
Service Provider, or (if the Grantee is a Service Provider who is an individual) ceases to provide services to
the Company, in either case by reason of the "permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of such Grantee, such Grantee's Restricted Stock or Restricted Stock Units shall
continue to vest in accordance with the applicable Award Agreement for a period of one year after such
termination of employment or service (or such longer period as the Committee, in its discretion, may determine
prior to the expiration of such one-year period), subject to the earlier forfeiture of such Restricted Stock or
Restricted Stock Units in accordance with the terms of the applicable Award Agreement. Whether a termination of
employment or service is to be considered by reason of "permanent and total disability" for purposes of the Plan
shall be determined by the Committee, which determination shall be final and conclusive.
12.9Delivery of Stock and Payment Therefor. Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to
shares of Restricted Stock or Restricted Stock Units shall lapse, and, upon payment by the Grantee to the
Company, in cash or by check, of the aggregate par value of the shares of Stock represented by such Restricted
Stock or Restricted Stock Units, a stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case may be.
13. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding
heretofore or hereafter entered into by a Grantee with the Company or any Subsidiary, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or excludes application of this
paragraph (an "Other Agreement"), and notwithstanding any formal or informal plan or other arrangement for the
direct or indirect provision of compensation to the Grantee (including groups or classes of participants or
beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is
in the form of a benefit to or for the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted Stock or Restricted Stock Unit
held by that Grantee and any right to receive any payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Grantee under this Plan, all Other Agreements, and
all Benefit Arrangements, would cause any payment or benefit to the Grantee under this Plan to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment")
and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements, and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to
be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the
Grantee under any Other Agreement or any Benefit Arrangement would cause the Grantee to be considered to have
received a Parachute Payment under this Plan that would have the effect of decreasing the after-tax amount
received by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall have the
right, in the Grantee's sole discretion, to designate those rights, payments, or benefits under this Plan, any
Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the
payment or benefit to the Grantee under this Plan be deemed to be a Parachute Payment.
14. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any shares of Stock under any Grant if the sale or
issuance of such shares would constitute a violation by the Grantee, any other individual exercising an Option,
or the Company of any provision of any law or regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares subject to a Grant upon any
securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Grant unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect the date of termination of the Grant.
Specifically, in connection with the Securities Act, upon the exercise of any Option or the delivery of any
shares of Restricted Stock or Stock underlying Restricted Stock Units, unless a registration statement under such
Act is in effect with respect to the shares of Stock covered by such Grant, the Company shall not be required to
sell or issue such shares unless the Committee has received evidence satisfactory to it that the Grantee or any
other individual exercising an Option may acquire such shares pursuant to an exemption from registration under
the Securities Act. Any determination in this connection by the Committee shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby
pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable until the shares of Stock covered by such Option are registered or are exempt
from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply)
shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.
15. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any shares
of Stock as to which Grants have not been made. The Company may retain the right in an Award Agreement to cause
a forfeiture of the gain realized by a Grantee on account of the Grantee taking actions in "competition with the
Company," as defined in the applicable Award Agreement. Furthermore, the Company may annul a Grant if the
Grantee is an employee of the Company or an affiliate and is terminated "for cause" as defined in the applicable
Award Agreement. Except as permitted under this Section 15 or Section 16 hereof, no amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee, alter or impair rights or obligations under
any Grant theretofore awarded under the Plan.
16. EFFECT OF CHANGES IN CAPITALIZATION
16.1Changes in Stock. If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which Grants of Options, Restricted Stock and Restricted Stock Units may
be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number
and kind of shares for which Grants are outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the Grantee immediately following such event shall, to the extent practicable, be the
same as immediately before such event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares that are subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price per share. In the event of a
spin-off by the Company of the shares of a subsidiary, a stock dividend for which the Company will claim a
dividends paid deduction under Section 561 of the Code (or any successor provision), or a pro rata distribution
to all shareholders of other assets of the Company, the Committee may, but shall not be required to, make
appropriate adjustments to (i) the number and kind of shares or other assets for which outstanding Options are
exercisable and (ii) the per-share exercise price of outstanding Options.
16.2Reorganization in Which the Company Is the Surviving Entity and in Which No Change of Control
Occurs. Subject to Section 16.3 hereof, if the Company shall be the surviving entity in any reorganization,
merger, or consolidation of the Company with one or more other entities, any Option theretofore granted pursuant
to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock
subject to such Option would have been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in
an Award Agreement evidencing a Grant of Restricted Stock, any restrictions applicable to such Restricted Stock
shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger
or consolidation.
16.3Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control. Subject to
the exceptions set forth in the last sentence of this Section 16.3, (i) upon the occurrence of a "Change of
Control" (as defined below), all outstanding shares of Restricted Stock and Restricted Stock Units shall be
deemed to have vested, and all restrictions and conditions applicable to such shares of Restricted Stock and
Restricted Stock Units shall be deemed to have lapsed immediately prior to the occurrence of such Change of
Control, and (ii) fifteen days prior to the scheduled consummation of a Change of Control, all Options
outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen
days. Any exercise of an Option during such fifteen-day period shall be conditioned upon the consummation of the
Change of Control and shall be effective only immediately before the consummation of the Change of Control. Upon
consummation of any Change of Control, the Plan and all outstanding but unexercised Options shall terminate. The
Committee shall send written notice of an event that will result in such a termination to all individuals who
hold Options not later than the time at which the Company gives notice thereof to its shareholders. For purposes
of this Section 16.3, a "Change of Control" shall be deemed to occur upon (i) the dissolution or liquidation of
the Company or upon a merger, consolidation, or reorganization of the Company with one or more other entities in
which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to
another entity, or (iii) any transaction (including without limitation a merger or reorganization in which the
Company is the surviving corporation) which results in any person or entity (other than B. Wayne Hughes and
members of his family and their affiliates) owning 50% or more of the combined voting power of all classes of
stock of the Company. This Section 16.3 shall not apply to any Change of Control to the extent that (A)
provision is made in writing in connection with such Change of Control for the continuation of the Plan or the
assumption of the Options, Restricted Stock and Restricted Stock Units theretofore granted, or for the
substitution for such Options, Restricted Stock and Restricted Stock Units of new options, restricted stock and
restricted stock units covering the stock of a successor corporation, or a parent, subsidiary or affiliate
thereof, with appropriate adjustments as to the number and kind of shares and exercise prices, in which event the
Plan and Options, Restricted Stock and Restricted Stock Units theretofore granted shall continue in the manner
and under the terms so provided or (B) a majority of the full Board determines that such Change of Control shall
not trigger application of the provisions of this Section 16.3.
16.4Adjustments. Adjustments under this Section 16 related to shares of Stock or securities of the
Company shall be made by the Committee, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest
whole share.
16.5No Limitations on Company. The making of Grants pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all
or any part of its business or assets.
17. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Grant or Award Agreement shall be construed to confer upon any
individual the right to remain in the employ or service of the Company or any affiliate, or to interfere in any
way with any contractual or other right or authority of the Company or any Service Provider either to increase or
decrease the compensation or other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company or a Service Provider. In addition, notwithstanding
anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, no
Grant awarded under the Plan shall be affected by any change of duties or position of the Optionee (including a
transfer to or from the Company or a Service Provider), so long as such Grantee continues to be a consultant,
employee, or independent contractor (as the case may be) of the Company or a Service Provider. The obligation of
the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay
only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in
no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any participant or beneficiary under the terms of the Plan. No
Grantee shall have any of the rights of a shareholder with respect to the shares of Stock subject to an Option
except to the extent the certificates for such shares of Stock shall have been issued upon the exercise of the
Option.
18. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any limitations upon the right and authority
of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular individual or particular
individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of
stock options otherwise than under the Plan.
19. WITHHOLDING TAXES
The Company, a Subsidiary or a Service Provider, as the case may be, shall have the right to deduct from
payments of any kind otherwise due to a Grantee any Federal, state, or local taxes of any kind required by law to
be withheld with respect to the vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the exercise of an Option. At the time
of such vesting, lapse, or exercise, the Grantee shall pay to the Company, the Subsidiary or the Service
Provider, as the case may be, any amount that the Company, the Subsidiary or the Service Provider may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company,
the Subsidiary or the Service Provider, which may be withheld by the Company, the Subsidiary or the Service
Provider, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole
or in part, (i) by causing the Company, the Subsidiary or the Service Provider to withhold shares of Stock
otherwise issuable to the Grantee or (ii) by delivering to the Company, the Subsidiary or the Service Provider
shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock
used to satisfy such withholding obligation shall be determined by the Company, the Subsidiary or the Service
Provider as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 19 may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
20. CAPTIONS
The use of captions in this Plan or any Award Agreement is for the convenience of reference only and
shall not affect the meaning of any provision of the Plan or such Award Agreement.
21. OTHER PROVISIONS
Each Grant awarded under the Plan may contain such other terms and conditions not inconsistent with the
Plan as may be determined by the Committee, in its sole discretion.
22. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include the plural form, the masculine
gender shall include the feminine gender, etc., as the context requires.
23. SEVERABILITY
If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable
by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.
24. GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing the Grants awarded hereunder
shall be governed by the laws of the State of California.
* * *
The Plan was duly adopted and approved by the Board of Directors of the Company as of the 15th day of
March, 2001.
/S/ SARAH HASS
----------------------------------------------
Sarah Hass
Secretary of the Company
EXHIBIT 99.2
PUBLIC STORAGE, INC.
2001 STOCK OPTION AND INCENTIVE PLAN
Public Storage, Inc., a California corporation (the "Company"), sets forth herein the terms of its 2001
Stock Option and Incentive Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to enhance the Company's ability to attract and retain highly qualified officers,
key employees, outside directors, and other persons to advance the interests of the Company by providing such
persons with stronger incentives to continue to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the Company. The Plan is intended to
accomplish this objective by providing to eligible persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the Company. To this end, the Plan provides for the
grant of stock options, restricted stock and restricted stock units in accordance with the terms hereof. Stock
options granted under the Plan may be non-qualified stock options or incentive stock options, as provided herein,
except that stock options granted to outside directors shall in all cases be non-qualified stock options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including Award Agreements), the following
definitions shall apply:
2.1 "affiliate" of, or person "affiliated" with, a person means any company or other trade or
business that controls, is controlled by or is under common control with such person within the meaning of Rule
405 of Regulation C under the 1933 Act (as defined herein).
2.2 "Award Agreement" means the stock option agreement, restricted stock agreement, restricted
stock unit agreement or other written agreement between the Company and a Grantee that evidences and sets out the
terms and conditions of a Grant.
2.3 "Benefit Arrangement" shall have the meaning set forth in Section 14 hereof.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.6 "Committee" means one or more committees of the Board, as designated from time to time by
resolution of the Board, each of which shall have all powers, privileges and obligations vested by the Plan in
the Committee to the extent specified in such resolution. At least one committee of the Board that is designated
by the Board as a Committee shall consist of no fewer than two members of the Board, none of whom shall be an
officer or other salaried employee of the Company or any affiliate, and each of whom shall qualify in all
respects as a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act or any successor
rule or regulation and as an "outside director" within the meaning of Section 162(m) of the Code. Until such
time as the Board shall determine otherwise, the Executive Equity Awards Committee of the Board shall be such
Committee, and the Equity Awards Committee of the Board also shall be a Committee.
2.7 "Company" means Public Storage, Inc.
2.8 "Effective Date" means March 15, 2001, the date on which the Plan was adopted by the Board.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as now in effect or as hereafter
amended.
2.10 "Fair Market Value" means the value of a share of Stock, determined as follows: if on the
Grant Date or other determination date the Stock is listed on an established national or regional stock exchange,
is admitted to quotation on the Nasdaq National Market, or is publicly traded on an established securities
market, the Fair Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in
such market (the closing price on the principal such exchange or market if there is more than one such exchange
or market) on the Grant Date or such other determination date (or if there is no such reported closing price, the
Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Stock is reported for such trading day, on the next preceding
day on which any sale shall have been reported. If the Stock is not listed on such an exchange, quoted on such
system or traded on such a market, Fair Market Value shall be the value of the Stock as determined by the
Committee in good faith.
2.11 "Grant" means an award of an Option, Restricted Stock or Restricted Stock Units under the Plan.
2.12 "Grant Date" means (a) for Grants other than Grants to Outside Directors, the later of (i) the
date as of which the Committee approves the Grant or (ii) the date as of which the Grantee and the Company or
Service Provider enter into the relationship resulting in the Grantee's becoming eligible to receive a Grant, and
(b) for Grants to Outside Directors, the date on which such Grant is made in accordance with Section 7 hereof.
2.13 "Grantee" means a person who receives or holds an Option, Restricted Stock or Restricted Stock
Units under the Plan.
2.14 "Incentive Stock Option" means an "incentive stock option" within the meaning of Section 422 of
the Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.
2.15 "Option" means an option to purchase one or more shares of Stock pursuant to the Plan.
2.16 "Option Period" means the period during which Options may be exercised as set forth in
Section 11 hereof.
2.17 "Option Price" means the purchase price for each share of Stock subject to an Option.
2.18 "Other Agreement" shall have the meaning set forth in Section 14 hereof.
2.19 "Outside Director" means a member of the Board who is not an officer or employee of the Company.
2.20 "Plan" means the Public Storage, Inc. 2001 Stock Option and Incentive Plan.
2.21 "Reporting Person" means a person who is required to file reports under Section 16(a) of the
Exchange Act.
2.22 "Restricted Period" means the period during which Restricted Stock or Restricted Stock Units
are subject to restrictions or conditions pursuant to Section 13.2 hereof.
2.23 "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant to Section 13 hereof,
that are subject to restrictions and to a risk of forfeiture.
2.24 "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to Section 13 hereof, which
represents a conditional right to receive a share of Stock in the future, and which is subject to restrictions
and to a risk of forfeiture.
2.25 "Securities Act" means the Securities Act of 1933, as now in effect or as hereafter amended.
2.26 "Service Provider" means a consultant or adviser to the Company, a manager of the Company's
properties or affairs, or other similar service provider or affiliate of the Company, or any corporation or other
entity in which the Company owns at least a ninety percent (90%) economic interest, and employees of any of the
foregoing, as such persons may be designated from time to time by the Committee pursuant to Section 6 hereof.
2.27 "Stock" means the common stock, par value $0.10 per share, of the Company.
2.28 "Subsidiary" means any "subsidiary corporation" of the Company within the meaning of
Section 424(f) of the Code.
2.29 "Termination Date" shall be the date upon which an Option shall terminate or expire, as set
forth in Section 11.2 hereof.
3. ADMINISTRATION OF THE PLAN
3.1General. Subject to Section 3.2 hereof, the Plan shall be administered by the Committee. The
Board may remove members, add members, and fill vacancies on the Committee from time to time, all in accordance
with the Company's articles of incorporation and by-laws and applicable law.
3.2Plenary Authority of the Committee. Subject to Section 3.4 hereof, the Committee shall have
such powers and authorities related to the administration of the Plan as are consistent with the Company's
articles of incorporation and by-laws and applicable law. The Committee shall have full power and authority to
take all actions and to make all determinations required or provided for under the Plan, subject to any
limitations imposed by the resolutions of the Board designating and empowering such Committee, and shall have
full power and authority to take all such other actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the Committee deems to be necessary or appropriate to the
administration of the Plan. In the event, however, that more than one committee of the Board is authorized to
act as the Committee, (i) each such committee shall have the power and authority to take actions and make
determinations required or provided for under an outstanding Grant or Award Agreement only if such Grant or Award
Agreement was initially authorized by such committee, and (ii) only a committee comprised solely of "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act and "outside directors" within the meaning of
Section 162(m) of the Code shall have the authority to approve a Grant to any officer who is then a Reporting
Person. All such actions and determinations shall be by the affirmative vote of a majority of the members of the
Committee present at a meeting or by unanimous consent of the Committee executed in writing in accordance with
the Company's articles of incorporation and by-laws and applicable law. The interpretation and construction by
the Committee of any provision of the Plan, any Grant or any Award Agreement shall be final and conclusive.
3.3Discretionary Grants. Subject to Section 3.4 hereof and to the other terms and conditions of
the Plan, the Committee shall have full and final authority to designate Grantees, (i) to determine the type or
types of Grant to be made to a Grantee, (ii) to determine the number of shares of Stock to be subject to a Grant,
(iii) to establish the terms and conditions of each Grant (including, but not limited to, the exercise price of
any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to
the vesting, exercise, transfer, or forfeiture of a Grant or the shares of Stock subject thereto, and any terms
or conditions that may be necessary to qualify Options as Incentive Stock Options), (iv) to prescribe the form of
each Award Agreement evidencing a Grant, and (v) to amend, modify, or supplement the terms of any outstanding
Grant; provided, however, that the Committee shall not have the authority to reduce the exercise price of any
outstanding Option other than pursuant to Section 17 hereof. Such authority specifically includes the authority,
in order to effectuate the purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed outside the United States to recognize
differences in local law, tax policy, or custom. As a condition to any subsequent Grant, the Committee shall
have the right, at its discretion, to require Grantees to return to the Company Grants previously awarded under
the Plan. Subject to the terms and conditions of the Plan, any such new Grant shall be upon such terms and
conditions as are specified by the Committee at the time the new Grant is made.
3.4Grants to Outside Directors. With respect to Grants of Options to Outside Directors pursuant
to Section 7 hereof, the Committee's responsibilities under the Plan shall be limited to taking all legal actions
necessary to document the Options so granted, to interpret the Award Agreements evidencing such Options, to
maintain appropriate records and reports regarding such Options, and to take all acts authorized by this Plan or
otherwise reasonably necessary to effect the purposes hereof.
3.5No Liability. No member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant or Award Agreement.
3.6Applicability of Rule 16b-3. Those provisions of the Plan that make express reference to
Rule 16b-3 under the Exchange Act shall apply only to Reporting Persons.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 17 hereof, the number of shares of Stock available for
issuance under the Plan shall be 5,000,000. Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by a Grant are not purchased or are forfeited, or if a Grant otherwise
terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect to such Grant shall, to the extent of any such
forfeiture or termination, again be available for making Grants under the Plan.
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1Effective Date. The Plan shall be effective as of the Effective Date, subject to approval of
the Plan within one year of the Effective Date, by a majority of the votes cast on the proposal at a meeting of
shareholders, provided that the total votes cast represent a majority of all shares entitled to vote. Upon
approval of the Plan by the shareholders of the Company as set forth above, all Grants made under the Plan on or
after the Effective Date shall be fully effective as if the shareholders of the Company had approved the Plan on
the Effective Date. If the shareholders fail to approve the Plan within one year after the Effective Date, any
Grants made hereunder shall be null and void and of no effect.
5.2Term. The Plan has no termination date; however, no Incentive Stock Option may be granted on
or after the tenth anniversary of the Effective Date.
6. DISCRETIONARY GRANTS
6.1Company or Subsidiary Employees. Grants (including Grants of Incentive Stock Options) may be
made under the Plan to any employee of the Company or of any Subsidiary, including any such employee who is an
officer or director of the Company or of any Subsidiary, as the Committee shall determine and designate from time
to time.
6.2Service Providers. Grants may be made under the Plan to any Service Provider whose
participation in the Plan is determined by the Committee to be in the best interests of the Company and is so
designated by the Committee;provided,however, that Grants to Service Providers who are not employees of the
Company or of any Subsidiary shall not be Incentive Stock Options.
6.3Successive Grants. An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.
7. GRANTS TO OUTSIDE DIRECTORS
7.1Initial Grants of Options. Each Outside Director who is initially elected to the Board on or
after the Effective Date shall, upon the date of his or her initial election by the Board or the shareholders of
the Company, automatically be awarded a Grant of an Option, which shall not be an Incentive Stock Option, to
purchase 15,000 shares of Stock (which amount shall be subject to adjustment as provided in Section 17 hereof).
7.2Subsequent Grants of Options. Immediately following each Annual Meeting of Shareholders of the
Company held after the Effective Date, each Outside Director then duly elected and serving (other than an Outside
Director initially elected to the Board at such Annual Meeting of Shareholders) shall automatically be awarded a
Grant of an Option, which shall not be an Incentive Stock Option, to purchase 2,500 shares of Stock (which amount
shall be subject to adjustment as provided in Section 17 hereof);provided,however, that no Outside Director
shall be eligible to receive a Grant of Options under this Section 7.2 unless such person attended, in person or
by telephone, at least seventy-five percent of the meetings held by the Board or, if a member of a committee of
the Board, held by both the Board and all committees of the Board on which such person served, during the
immediately preceding calendar year (or such portion thereof during which the Outside Director served on the
Board and any such committees).
7.3Vesting. Options granted to Outside Directors pursuant to Sections 7.1 and 7.2 shall vest in
three equal annual installments in accordance with the schedule set forth in the first sentence of Section 11.1
hereof.
8. LIMITATIONS ON GRANTS
8.1Limitation on Shares of Stock Subject to Grants. The maximum number of shares of Stock subject
to Options that can be awarded under the Plan to any person eligible for a Grant under Section 6 hereof is
2,500,000 during the first ten years after the Effective Date and 250,000 per year thereafter. The maximum
number of shares of Restricted Stock that can be awarded under the Plan (including for this purpose any shares of
Stock represented by Restricted Stock Units) to any person eligible for a Grant under Section 6 hereof is 250,000
per year.
8.2Limitations on Incentive Stock Options. An Option shall constitute an Incentive Stock Option
only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to
the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair
Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year
(under the Plan and all other plans of the Grantee's employer and its affiliates) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which they were granted.
9. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, to be executed by the Company
and by the Grantee, in such form or forms as the Committee shall from time to time determine. Award Agreements
granted from time to time or at the same time need not contain similar provisions but shall be consistent with
the terms of the Plan. Each Award Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options.
10. OPTION PRICE
The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement
evidencing such Option. The Option Price shall be the aggregate Fair Market Value on the Grant Date of the
shares of Stock subject to the Option;provided,however, that in the event that a Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to ownership of more than ten percent of the Company's outstanding Stock), the Option Price of
an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than the
greater of the par value of a share of Stock or 110 percent of the Fair Market Value of a share of Stock on the
Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock.
11. VESTING, TERM AND EXERCISE OF OPTIONS
11.1Vesting and Option Period. Unless otherwise provided in an Award Agreement evidencing the
Grant of an Option, each Option granted under the Plan shall become exercisable in accordance with the following
schedule: (i) prior to the first anniversary of the Grant Date, the Option shall not be exercisable; (ii) on the
first anniversary of the Grant Date, the Option shall become exercisable with respect to one-third of the shares
of Stock subject to such Option; (iii) on the second anniversary of the Grant Date, the Option shall become
exercisable with respect to an additional one-third of the shares of Stock subject to such Option and (iv) on the
third anniversary of the Grant Date, the Option shall become exercisable with respect to the remaining shares of
Stock subject to such Option and shall remain exercisable in full up to (but not including) the Termination Date
(as defined in Section 11.2 hereof). For purposes of this Section 11.1, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number. The period during which any Option
shall be exercisable in accordance with the foregoing schedule shall constitute the "Option Period" with respect
to such Option.
11.2Term. Each Option granted under the Plan shall terminate, and all rights to purchase shares of
Stock thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or under
such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee
and stated in the Award Agreement relating to such Option (the "Termination Date");provided,however, that in
the event that the Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent of the
outstanding Stock), an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not
be exercisable after the expiration of five years from its Grant Date.
11.3Acceleration. Any limitation on the exercise of an Option contained in any Award Agreement may
be rescinded, modified or waived by the Committee, in its sole discretion, at any time and from time to time
after the Grant Date of such Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option shall be exercisable in whole or in part prior to the
date the Plan is approved by the shareholders of the Company as provided in Section 5.1 hereof.
11.4Termination of Employment or Other Relationship. Upon the termination (i) of the employment of
a Grantee with the Company or a Service Provider, (ii) of a Service Provider's relationship with the Company, or
(iii) of an Outside Director's service to the Company, other than, in the case of individuals, by reason of death
or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code), any Option or portion
thereof held by such Grantee that has not vested in accordance with the provisions of Section 11.1 hereof shall
terminate immediately, and any Option or portion thereof that has vested in accordance with the provisions of
Section 11.1 hereof but has not been exercised shall terminate at the close of business on the thirtieth day
following the Grantee's termination of service, employment, or other relationship, unless the Committee, in its
discretion, extends the period during which the Option may be exercised (which period may not be extended beyond
the original term of the Option). Upon termination of an Option or portion thereof, the Grantee shall have no
further right to purchase shares of Stock pursuant to such Option or portion thereof. Whether a leave of absence
or leave on military or government service shall constitute a termination of employment for purposes of the Plan
shall be determined by the Committee, which determination shall be final and conclusive. For purposes of the
Plan, a termination of employment, service or other relationship shall not be deemed to occur if the Grantee is
immediately thereafter employed with the Company or any other Service Provider, or is engaged as a Service
Provider or an Outside Director of the Company. Whether a termination of a Service Provider's or an Outside
Director's relationship with the Company shall have occurred shall be determined by the Committee, which
determination shall be final and conclusive.
11.5Rights in the Event of Death. If a Grantee dies while employed by the Company or a Service
Provider, or while serving as a Service Provider or an Outside Director, all Options granted to such Grantee
shall fully vest on the date of death, and the executors or administrators or legatees or distributees of such
Grantee's estate shall have the right, at any time within one year after the date of such Grantee's death (or
such longer period as the Committee, in its discretion, may determine prior to the expiration of such one-year
period) and prior to termination of the Option pursuant to Section 11.2 above, to exercise any Option held by
such Grantee at the date of such Grantee's death.
11.6Rights in the Event of Disability. If a Grantee terminates employment with the Company or a
Service Provider, or (if the Grantee is a Service Provider who is an individual or is an Outside Director) ceases
to provide services to the Company, in either case by reason of the "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of such Grantee, such Grantee's Options shall continue to vest, and
shall be exercisable to the extent that they are vested, for a period of one year after such termination of
employment or service (or such longer period as the Committee, in its discretion, may determine prior to the
expiration of such one-year period), subject to earlier termination of the Option as provided in Section 11.2
above. Whether a termination of employment or service is to be considered by reason of "permanent and total
disability" for purposes of the Plan shall be determined by the Committee, which determination shall be final and
conclusive.
11.7Limitations on Exercise of Option. Notwithstanding any other provision of the Plan, in no
event may any Option be exercised, in whole or in part, prior to the date the Plan is approved by the
shareholders of the Company as provided herein, or after ten years following the date upon which the Option is
granted, or after the occurrence of an event referred to in Section 17 hereof which results in termination of the
Option.
11.8Method of Exercise. An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the Company's principal office, addressed to
the attention of the Committee. Such notice shall specify the number of shares of Stock with respect to which
the Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares for
which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may
be exercised, in whole or in part, at any time shall be the lesser of (i) 100 shares or such lesser number set
forth in the applicable Award Agreement and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares purchased pursuant to the exercise of
an Option shall be made (i) in cash or in cash equivalents; (ii) through the tender to the Company of shares of
Stock, which shares shall be valued, for purposes of determining the extent to which the Option Price has been
paid thereby, at their Fair Market Value on the date of exercise, and which shares, if acquired by the Grantee
from the Company, shall have been held by the Grantee for at least six months; or (iii) by a combination of the
methods described in (i) and (ii). The Committee may provide, by inclusion of appropriate language in an Award
Agreement, that payment in full of the Option Price need not accompany the written notice of exercise provided
that the notice of exercise directs that the certificate or certificates for the shares of Stock for which the
Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such certificate or certificates are delivered, the broker tenders to the
Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the shares of Stock
purchased pursuant to the exercise of the Option plus the amount (if any) of federal and/or other taxes which the
Company may in its judgment, be required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect.
Unless otherwise stated in the applicable Award Agreement, an individual holding or exercising an Option shall
have none of the rights of a shareholder (for example, the right to receive cash or dividend payments or
distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock)
until the shares of Stock covered thereby are fully paid and issued to him. Except as provided in Section 17
hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is
prior to the date of such issuance.
11.9Delivery of Stock Certificates. Promptly after the exercise of an Option by a Grantee and the
payment in full of the Option Price, such Grantee shall be entitled to the issuance of a stock certificate or
certificates evidencing his or her ownership of the shares of Stock subject to the Option.
12. TRANSFERABILITY OF OPTIONS
Each Option granted pursuant to this Plan shall, during a Grantee's lifetime, be exercisable only by the
Grantee or his or her permitted transferees, and neither the Option nor any right thereunder shall be
transferable by the Grantee, by operation of law or otherwise, other than as may be provided in the Award
Agreement evidencing such Option or as may be provided by will or the laws of descent and distribution. Except
as may be provided in the Award Agreement evidencing an Option, no Option shall be pledged or hypothecated (by
operation of law or otherwise) or subject to execution, attachment or similar processes.
13. RESTRICTED STOCK
13.1Grant of Restricted Stock or Restricted Stock Units. The Committee may from time to time grant
Restricted Stock or Restricted Stock Units to persons eligible to receive such Grants as set forth in Section 6
hereof, subject to such restrictions, conditions and other terms as the Committee may determine.
13.2Restrictions. At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Committee shall establish a period of time (the "Restricted Period") applicable to such Restricted Stock or
Restricted Stock Units. Each Grant of Restricted Stock or Restricted Stock Units may be subject to a different
Restricted Period. The Committee may, in its sole discretion, at the time a Grant of Restricted Stock or
Restricted Stock Units is made, prescribe restrictions in addition to or other than the expiration of the
Restricted Period, including the satisfaction of corporate or individual performance objectives, which may be
applicable to all or any portion of the Restricted Stock or Restricted Stock Units. Such performance objectives
shall be established in writing by the Committee prior to the ninetieth day of the year in which the Grant is
made and while the outcome is substantially uncertain. Performance objectives shall be based on Stock price,
market share, sales, earnings per share, return on equity or costs. Performance objectives may include positive
results, maintaining the status quo or limiting economic losses. The Committee also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions applicable to all or a portion of the
Restricted Stock or Restricted Stock Units. Neither Restricted Stock nor Restricted Stock Units may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to
the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Stock or
Restricted Stock Units.
13.3Restricted Stock Certificates. The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Secretary of the Company
shall hold such certificates for the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company, or the restrictions lapse.
13.4Rights of Holders of Restricted Stock. Unless the Committee otherwise provides in an Award
Agreement, holders of Restricted Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock. The Committee may provide that any dividends paid on
Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock. All distributions, if any, received by a
Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of shares,
or other similar transaction shall be subject to the restrictions applicable to the original Grant.
13.5Rights of Holders of Restricted Stock Units. Unless the Committee otherwise provides in an
Award Agreement, holders of Restricted Stock Units shall have no rights as stockholders of the Company. The
Committee may provide in an Award Agreement evidencing a Grant of Restricted Stock Units that the holder of such
Restricted Stock Units shall be entitled to receive, upon the Company's payment of a cash dividend on its
outstanding Stock, a cash payment for each Restricted Stock Unit held as of the record date for such dividend
equal to the per-share dividend paid on the Stock. Such Award Agreement may also provide that such cash payment
will be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value
of a share of Stock on the date that such dividend is paid.
13.6Termination of Employment or Other Relationship. Upon the termination of the employment of a
Grantee with the Company or a Service Provider, or of a Service Provider's relationship with the Company, in
either case other than, in the case of individuals, by reason of death or "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code), any Restricted Stock or Restricted Stock Units held by such
Grantee that has not vested, or with respect to which all applicable restrictions and conditions have not lapsed,
shall immediately be deemed forfeited, unless the Committee, in its discretion, determines otherwise. Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have no further rights with respect
to such Grant, including but not limited to any right to vote Restricted Stock or any right to receive dividends
with respect to shares of Restricted Stock or Restricted Stock Units. Whether a leave of absence or leave on
military or government service shall constitute a termination of employment for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to occur if the Grantee is
immediately thereafter employed with the Company or any other Service Provider, or is engaged as a Service
Provider. Whether a termination of a Service Provider's relationship with the Company shall have occurred shall
be determined by the Committee, which determination shall be final and conclusive.
13.7Rights in the Event of Death. If a Grantee dies while employed by the Company or a Service
Provider or while serving as a Service Provider, all Restricted Stock or Restricted Stock Units granted to such
Grantee shall fully vest on the date of death, and the shares of Stock represented thereby shall be deliverable
in accordance with the terms of the Plan to the executors, administrators, legatees or distributees of the
Grantee's estate.
13.8Rights in the Event of Disability. If a Grantee terminates employment with the Company or a
Service Provider, or (if the Grantee is a Service Provider who is an individual) ceases to provide services to
the Company, in either case by reason of the "permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of such Grantee, such Grantee's Restricted Stock or Restricted Stock Units shall
continue to vest in accordance with the applicable Award Agreement for a period of one year after such
termination of employment or service (or such longer period as the Committee, in its discretion, may determine
prior to the expiration of such one-year period), subject to the earlier forfeiture of such Restricted Stock or
Restricted Stock Units in accordance with the terms of the applicable Award Agreement. Whether a termination of
employment or service is to be considered by reason of "permanent and total disability" for purposes of the Plan
shall be determined by the Committee, which determination shall be final and conclusive.
13.9Delivery of Stock and Payment Therefor. Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to
shares of Restricted Stock or Restricted Stock Units shall lapse, and, upon payment by the Grantee to the
Company, in cash or by check, of the aggregate par value of the shares of Stock represented by such Restricted
Stock or Restricted Stock Units, a stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case may be.
14. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding
heretofore or hereafter entered into by a Grantee with the Company or any Subsidiary, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or excludes application of this
paragraph (an "Other Agreement"), and notwithstanding any formal or informal plan or other arrangement for the
direct or indirect provision of compensation to the Grantee (including groups or classes of participants or
beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is
in the form of a benefit to or for the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted Stock or Restricted Stock Unit
held by that Grantee and any right to receive any payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Grantee under this Plan, all Other Agreements, and
all Benefit Arrangements, would cause any payment or benefit to the Grantee under this Plan to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment")
and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements, and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to
be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the
Grantee under any Other Agreement or any Benefit Arrangement would cause the Grantee to be considered to have
received a Parachute Payment under this Plan that would have the effect of decreasing the after-tax amount
received by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall have the
right, in the Grantee's sole discretion, to designate those rights, payments, or benefits under this Plan, any
Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the
payment or benefit to the Grantee under this Plan be deemed to be a Parachute Payment.
15. REQUIREMENTS OF LAW
15.1General. The Company shall not be required to sell or issue any shares of Stock under any
Grant if the sale or issuance of such shares would constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or regulations. If at any time the Company
shall determine, in its discretion, that the listing, registration or qualification of any shares subject to a
Grant upon any securities exchange or under any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Stock may be
issued or sold to the Grantee or any other individual exercising an Option pursuant to such Grant unless such
listing, registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of
termination of the Grant. Specifically, in connection with the Securities Act, upon the exercise of any Option
or the delivery of any shares of Restricted Stock or Stock underlying Restricted Stock Units, unless a
registration statement under such Act is in effect with respect to the shares of Stock covered by such Grant, the
Company shall not be required to sell or issue such shares unless the Committee has received evidence
satisfactory to it that the Grantee or any other individual exercising an Option may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the
Committee shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to
take any affirmative action in order to cause the exercise of an Option or the issuance of shares of Stock
pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction
that expressly imposes the requirement that an Option shall not be exercisable until the shares of Stock covered
by such Option are registered or are exempt from registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
15.2Rule 16b-3. It is the intent of the Company that Grants pursuant to the Plan and the exercise
of Options granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Committee does not comply with the requirements of
Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Committee,
and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board
may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to
take advantage of any features of, the revised exemption or its replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any shares
of Stock as to which Grants have not been made;provided,however, that the Board shall not, without approval of
the Company's shareholders, amend the Plan such that it does not comply with the Code. The Company may retain
the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of the Grantee
taking actions in "competition with the Company," as defined in the applicable Award Agreement. Furthermore, the
Company may annul a Grant if the Grantee is an employee of the Company or an affiliate and is terminated "for
cause" as defined in the applicable Award Agreement. Except as permitted under this Section 16 or Section 17
hereof, no amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, alter or
impair rights or obligations under any Grant theretofore awarded under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
17.1Changes in Stock. If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which Grants of Options, Restricted Stock and Restricted Stock Units may
be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number
and kind of shares for which Grants are outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the Grantee immediately following such event shall, to the extent practicable, be the
same as immediately before such event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares that are subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price per share. In the event of a
spin-off by the Company of the shares of a subsidiary, a stock dividend for which the Company will claim a
dividends paid deduction under Section 561 of the Code (or any successor provision), or a pro rata distribution
to all shareholders of other assets of the Company, the Committee may, but shall not be required to, make
appropriate adjustments to (i) the number and kind of shares or other assets for which outstanding Options are
exercisable and (ii) the per-share exercise price of outstanding Options.
17.2Reorganization in Which the Company Is the Surviving Entity and in Which No Change of Control
Occurs. Subject to Section 17.3 hereof, if the Company shall be the surviving entity in any reorganization,
merger, or consolidation of the Company with one or more other entities, any Option theretofore granted pursuant
to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock
subject to such Option would have been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in
an Award Agreement evidencing a Grant of Restricted Stock, any restrictions applicable to such Restricted Stock
shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger
or consolidation.
17.3Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control. Subject to
the exceptions set forth in the last sentence of this Section 17.3, (i) upon the occurrence of a "Change of
Control" (as defined below), all outstanding shares of Restricted Stock and Restricted Stock Units shall be
deemed to have vested, and all restrictions and conditions applicable to such shares of Restricted Stock and
Restricted Stock Units shall be deemed to have lapsed immediately prior to the occurrence of such Change of
Control, and (ii) fifteen days prior to the scheduled consummation of a Change of Control, all Options
outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen
days. Any exercise of an Option during such fifteen-day period shall be conditioned upon the consummation of the
Change of Control and shall be effective only immediately before the consummation of the Change of Control. Upon
consummation of any Change of Control, the Plan and all outstanding but unexercised Options shall terminate.
The Committee shall send written notice of an event that will result in such a termination to all individuals who
hold Options not later than the time at which the Company gives notice thereof to its shareholders. For purposes
of this Section 17.3, a "Change of Control" shall be deemed to occur upon (i) the dissolution or liquidation of
the Company or upon a merger, consolidation, or reorganization of the Company with one or more other entities in
which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to
another entity, or (iii) any transaction (including without limitation a merger or reorganization in which the
Company is the surviving corporation) which results in any person or entity (other than B. Wayne Hughes and
members of his family and their affiliates) owning 50% or more of the combined voting power of all classes of
stock of the Company. This Section 17.3 shall not apply to any Change of Control to the extent that (A)
provision is made in writing in connection with such Change of Control for the continuation of the Plan or the
assumption of the Options, Restricted Stock and Restricted Stock Units theretofore granted, or for the
substitution for such Options, Restricted Stock and Restricted Stock Units of new options, restricted stock and
restricted stock units covering the stock of a successor corporation, or a parent, subsidiary or affiliate
thereof, with appropriate adjustments as to the number and kind of shares and exercise prices, in which event the
Plan and Options, Restricted Stock and Restricted Stock Units theretofore granted shall continue in the manner
and under the terms so provided or (B) a majority of the full Board determines that such Change of Control shall
not trigger application of the provisions of this Section 17.3.
17.4Adjustments. Adjustments under this Section 17 related to shares of Stock or securities of the
Company shall be made by the Committee, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest
whole share.
17.5No Limitations on Company. The making of Grants pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all
or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Grant or Award Agreement shall be construed to confer upon any
individual the right to remain in the employ or service of the Company or any affiliate, or to interfere in any
way with any contractual or other right or authority of the Company or any Service Provider either to increase or
decrease the compensation or other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company or a Service Provider. No provision in the Plan or in
any Grant awarded or Award Agreement entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the service of the Company as a director (including as an Outside Director), or
shall interfere with or restrict in any way the rights of the Company's shareholders to remove any director
pursuant to the provisions of the California General Corporation Law, as from time to time amended. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award
Agreement, no Grant awarded under the Plan shall be affected by any change of duties or position of the Optionee
(including a transfer to or from the Company or a Service Provider), so long as such Grantee continues to be a
director, officer, consultant, employee, or independent contractor (as the case may be) of the Company or a
Service Provider. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted
as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions
prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a
third party trustee or otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. No Grantee shall have any of the rights of a shareholder with respect
to the shares of Stock subject to an Option except to the extent the certificates for such shares of Stock shall
have been issued upon the exercise of the Option.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the shareholders of the Company for
approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such
other incentive compensation arrangements (which arrangements may be applicable either generally to a class or
classes of individuals or specifically to a particular individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting of stock options otherwise than
under the Plan.
20. WITHHOLDING TAXES
The Company, a Subsidiary or a Service Provider, as the case may be, shall have the right to deduct from
payments of any kind otherwise due to a Grantee any Federal, state, or local taxes of any kind required by law to
be withheld with respect to the vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the exercise of an Option. At the time
of such vesting, lapse, or exercise, the Grantee shall pay to the Company, the Subsidiary or the Service
Provider, as the case may be, any amount that the Company, the Subsidiary or the Service Provider may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company,
the Subsidiary or the Service Provider, which may be withheld by the Company, the Subsidiary or the Service
Provider, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole
or in part, (i) by causing the Company, the Subsidiary or the Service Provider to withhold shares of Stock
otherwise issuable to the Grantee or (ii) by delivering to the Company, the Subsidiary or the Service Provider
shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock
used to satisfy such withholding obligation shall be determined by the Company, the Subsidiary or the Service
Provider as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 20 may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
21. CAPTIONS
The use of captions in this Plan or any Award Agreement is for the convenience of reference only and
shall not affect the meaning of any provision of the Plan or such Award Agreement.
22. OTHER PROVISIONS
Each Grant awarded under the Plan may contain such other terms and conditions not inconsistent with the
Plan as may be determined by the Committee, in its sole discretion.
23. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include the plural form, the masculine
gender shall include the feminine gender, etc., as the context requires.
24. SEVERABILITY
If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable
by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.
25. GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing the Grants awarded hereunder
shall be governed by the laws of the State of California.
* * *
The Plan was duly adopted and approved by the Board of Directors of the Company as of the 15th day of
March, 2001.
/S/ SARAH HASS
Sarah Hass
Secretary of the Company
The Plan was duly approved by the shareholders of the Company on the ______ day of _______________, 2001.
____________________________________________
Secretary of the Company