EXHIBIT
10.1
MICROCHIP
TECHNOLOGY INCORPORATED
2004
EQUITY INCENTIVE PLAN
As
amended and restated by the Board on May 1, 2006
Subject
to Stockholder Approval at our 2006 annual meeting
1.
Purposes
of the Plan
.
The
purposes of this 2004 Equity Incentive Plan are:
·
to
attract and retain the best available personnel,
·
to
provide additional incentive to Service Providers, and
·
to
promote the success of the Company’s business.
Awards
granted under the Plan may be Nonstatutory Stock Options, Restricted Stock,
Stock Appreciation Rights, Performance Shares, Performance Units or Deferred
Stock Units, as determined by the Administrator at the time of
grant.
2.
Definitions
.
As used
herein, the following definitions shall apply:
(a)
“
Administrator
”
means
the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.
(b)
“
Annual
Revenue
”
means
the Company’s or a business unit’s net sales for the Fiscal Year, determined in
accordance with generally accepted accounting principles.
(c)
“
Applicable
Laws
”
means
the legal requirements relating to the administration of equity compensation
plans under state and federal corporate and
securities laws and the Code.
(d)
“
Award
”
means,
individually or collectively, a grant under the Plan of Options, Restricted
Stock, Stock Appreciation Rights, Performance Shares, Performance Units or
Deferred Stock Units.
(e)
“
Award
Agreement
”
means
the written agreement setting forth the terms and provisions applicable to
each
Award granted under the Plan. The Award Agreement is subject to the terms
and
conditions of the Plan.
(f)
“
Awarded
Stock
”
means
the Common Stock subject to an Award.
(g)
“
Board
”
means
the Board of Directors of the Company.
(h)
“
Cash
Position
”
means
the Company’s level of cash and cash equivalents.
(i)
“
Change
of Control
”
means
the occurrence of any of the following events, in one or a series of related
transactions:
(1)
any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
other than the Company, a subsidiary of the Company or a Company employee
benefit plan, including any trustee of such plan acting as trustee, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
(2)
fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or
(3)
a
merger
or consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger or consolidation
which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by
being converted into voting securities of the surviving entity) at least
fifty
percent (50%) of the total voting power represented by the voting securities
of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or
(4)
the
sale
or disposition by the Company of all or substantially all of the Company’s
assets; or
(5)
a
change
in the composition of the Board, as a result of which fewer than a majority
of
the directors are Incumbent Directors. “Incumbent Directors” shall mean
directors who either (A) are Directors as of the date this Plan is approved
by
the Board, or (B) are elected, or nominated for election, to the Board with
the
affirmative votes of at least a majority of the Incumbent Directors and whose
election or nomination was not in connection with any transaction described
in
(1) or (2) above or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.
(j)
“
Code
”
means
the Internal Revenue Code of 1986, as amended.
(k)
“
Committee
”
means
a
committee appointed by the Board in accordance with Section 4 of the
Plan.
(l)
“
Common
Stock
”
means
the common stock of the Company.
(m)
“
Company
”
means
Microchip Technology Incorporated.
(n)
“
Consultant
”
means
any person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services and who is compensated for such services. The
term
Consultant shall not include Directors who are compensated by the Company
only
for their service as Directors.
(o)
“
Deferred
Stock Unit
”
means
a
deferred stock unit Award granted to a Participant pursuant to Section
13.
(p)
“
Director
”
means
a
member of the Board.
(q)
“
Disability
”
means
total and permanent disability as defined in Section 22(e)(3) of the Code.
(r)
“
Earnings
Per Share
”
means as
to any Fiscal Year, the Company’s or a business unit’s Net Income, divided by a
weighted average number of common shares outstanding and dilutive common
equivalent shares deemed outstanding, determined in accordance with generally
accepted accounting principles.
(s)
“
Employee
”
means
any person, including Officers and Directors, employed by the Company or
any
Parent or Subsidiary of the Company. A Service Provider shall not cease to
be an
Employee in the case of (i) any leave of absence approved by the Company
or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary, or any successor. Neither service as a Director nor payment
of a
director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.
(t)
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended.
(u)
“
Fair
Market Value
”
means,
as of any date, the value of Common Stock determined as follows:
(1)
If
the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System,
the Fair Market Value of a Share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such system or exchange (or the exchange with the greatest volume of trading
in Common Stock) on the day of determination, as reported in
The
Wall Street Journal
or such
other source as the Administrator deems reliable;
(2)
If
the
Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market thereof) or is regularly quoted by a recognized securities dealer
but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the
Common
Stock on the last market trading day prior to the day of determination, as
reported in
The
Wall Street Journal
or such
other source as the Administrator deems reliable; or
(3)
In
the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.
(v)
“
Fiscal
Year
”
means
a
fiscal year of the Company.
(w)
“
Gross
Margin
”
means
the Company’s net revenue less its cost of goods sold.
(x)
“
Net
Income
”
means as
to any Fiscal Year, the income after taxes of the Company for the Fiscal
Year
determined in accordance with generally accepted accounting
principles.
(y)
“
Non-Employee
Director
”
means
a
member of the Board who is not an Employee.
(z)
“
Nonstatutory
Stock Option
”
means
an Option not intended to qualify as an incentive stock option under Section
422
of the Code and regulations promulgated thereunder.
(aa)
“
Notice
of Grant
”
means
a
written or electronic notice evidencing certain terms and conditions of an
individual Award. The Notice of Grant is part of the Option
Agreement.
(bb)
“
Officer
”
means
a
person who is an officer of the Company within the meaning of Section 16
of the
Exchange Act and the rules and regulations promulgated thereunder.
(cc)
“
Operating
Cash Flow
”
means
the Company’s or a business unit’s sum of Net Income plus depreciation and
amortization less capital expenditures plus changes in working capital comprised
of accounts receivable, inventories, other current assets, trade accounts
payable, accrued expenses, product warranty, advance payments from customers
and
long-term accrued expenses, determined in accordance with generally acceptable
accounting principles.
(dd)
“
Operating
Income
”
means
the Company’s or a business unit’s income from operations but excluding any
unusual items, determined in accordance with generally accepted accounting
principles.
(ee)
“
Option
”
means
a
stock option granted pursuant to the Plan.
(ff)
“
Option
Agreement
”
means
a
written or electronic agreement between the Company and a Participant evidencing
the terms and conditions of an individual Option grant. The Option Agreement
is
subject to the terms and conditions of the Plan.
(gg)
“
Parent
”
means
a
“parent corporation,” whether now or hereafter existing, as defined in Section
424(e)
of
the
Code.
(hh)
“
Participant
”
means
the holder of an outstanding Award granted under the Plan.
(ii)
“
Performance
Goals
”
means
the goal(s) (or combined goal(s)) determined by the Administrator (in its
discretion) to be applicable to a Participant with respect to an Award. As
determined by the Administrator, the Performance Goals applicable to an Award
may provide for a targeted level or levels of achievement using one or more
of
the following measures: (a) Annual Revenue, (b) Cash Position, (c) Earnings
Per
Share, (d) Net Income, (e) Operating Cash Flow, (f) Operating Income, (g)
Return
on Assets, (h) Return on Equity, (i) Return on Sales, (j) Total Stockholder
Return, and (k) Gross Margin. For Awards not intended to qualify for treatment
under Section 162(m) of the Code, there may be additional Performance Goals
set
by the Board. The Performance Goals may differ from Participant to Participant
and from Award to Award.
(jj)
“
Performance
Share
”
means
a
performance share Award granted to a Participant pursuant to Section
11.
(kk)
“
Performance
Unit
”
means
a
performance unit Award granted to a Participant pursuant to
Section 12.
(ll)
“
Plan
”
means
this 2004 Equity Incentive Plan.
(mm)
“
Restricted
Stock
”
means
Shares granted pursuant to Section 10 of the Plan.
(nn)
“
Return
on Assets
”
means
the percentage equal to the Company’s or a business unit’s Operating Income
before incentive compensation, divided by average net Company’s or business
unit’s, as applicable, assets, determined in accordance with generally accepted
accounting principles.
(oo)
“
Return
on Equity
”
means
the percentage equal to the Company’s Net Income divided by average
stockholder’s equity, determined in accordance with generally accepted
accounting principles.
(pp)
“
Return
on Sales
”
means
the percentage equal to the Company’s or a business unit’s Operating Income
before incentive compensation, divided by the Company’s or the business unit’s,
as applicable, revenue, determined in accordance with generally accepted
accounting principles.
(qq)
“
Rule
16b-3
”
means
Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect
when
discretion is being exercised with respect to the Plan.
(rr)
“
Section
16(b)
”
means
Section 16(b) of the Exchange Act, as amended.
(ss)
“
Service
Provider
”
means
an Employee, Consultant or Non-Employee Director.
(tt)
“
Share
”
means
a
share of the Common Stock, as adjusted in accordance with Section 19 of the
Plan.
(uu)
“
Stock
Appreciation Right
”
or
“
SAR
”
means
an Award granted pursuant to Section 9 of the Plan.
(vv)
“
Subsidiary
”
means
a
“subsidiary corporation,” whether now or hereafter existing, as defined
in
Section 424(f) of the Code.
(ww)
“
Total
Stockholder Return
”
means
the total return (change in share price plus reinvestment of any dividends)
of a
Share.
3.
Stock
Subject to the Plan
.
Subject
to the provisions of Section 19 of the Plan, the maximum aggregate number
of
Shares which may be issued under the Plan is 20,400,000
Shares
comprised of (i) any Shares remaining available for issuance pursuant to
the
Company’s 1993 Stock Option Plan as of the date upon which this Plan is
effective, up to a maximum of 7,500,000 Shares, (ii) any Shares remaining
available for issuance pursuant to the Company’s 1997 Nonstatutory Stock Option
Plan as of the date upon which this Plan is effective, up to a maximum of
7,900,000 Shares, and (iii) any Shares subject to any outstanding options
under
the Company’s 1993 or 1997 Nonstatutory Stock Option Plans that subsequently
expire unexercised, up to a maximum of an additional 5,000,000 Shares.
In
no
event shall more than 30% of the Shares remaining issuable under the Plan
as of
the effective date and 30% of the Shares subsequently added to the Plan by
virtue of outstanding 1993 Stock Option Plan and 1997 Nonstatutory Stock
Option
Plan options expiring unexercised be issued pursuant to Restricted Stock,
Performance Share, Performance Unit or Deferred Stock Unit Awards with a
purchase price lower than 100% of the Fair Market Value of the underlying
Shares
or units on the date of grant; provided, however, that such 30% limitation
shall
not apply to Restricted Stock Units issued on or after the date of the Company’s
2006 annual stockholders’ meeting.
The
Shares may be authorized, but unissued, or reacquired Common Stock.
If
an
Award expires or becomes unexercisable without having been exercised in full,
or
with respect to Restricted Stock, Performance Shares, Performance Units or
Deferred Stock Units, is forfeited to or repurchased by the Company, the
unpurchased Shares (or for Awards other than Options and SARs, the forfeited
or
repurchased Shares) which were subject thereto shall become available for
future
grant or sale under the Plan (unless the Plan has terminated). With respect
to
SARs, only Shares actually issued pursuant to an SAR shall cease to be available
under the Plan; all remaining Shares under SARs shall remain available for
future grant or sale under the Plan (unless the Plan has terminated). However,
Shares that have actually been issued under the Plan under any Award shall
not
be returned to the Plan and shall not become available for future distribution
under the Plan; provided, however, that if Shares of Restricted Stock,
Performance Shares, Performance Units or Deferred Stock Units are repurchased
by
the Company at their original purchase price or are forfeited to the Company,
such Shares shall become available for future grant under the Plan. Shares
used
to pay the exercise price or purchase price, if applicable, of an Award shall
become available for future grant or sale under the Plan. To the extent an
Award
under the Plan is paid out in cash rather than stock, such cash payment shall
not result in reducing the number of Shares available for issuance under
the
Plan.
4.
Administration
of the Plan
.
(a)
Procedure
.
(1)
Multiple
Administrative Bodies
.
The
Plan may be administered by different Committees with respect to different
groups of Service Providers.
(2)
Section
162(m)
.
To the
extent that the Administrator determines it to be desirable to qualify Options
granted hereunder as “performance-based compensation” within the meaning of
Section 162(m) of the Code, the Plan shall be administered by a Committee
of two
or more “outside directors” within the meaning of Section 162(m) of the
Code.
(3)
Rule
16b-3
.
To the
extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the
transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.
(4)
Other
Administration
.
Other
than as provided above, the Plan shall be administered by (A) the Board or
(B) a
Committee, which committee shall be constituted to satisfy Applicable
Laws.
(b)
Powers
of the Administrator
.
Subject
to the provisions of the Plan, and in the case of a Committee, subject to
the
specific duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:
(1)
to
determine the Fair Market Value of the Common Stock, in accordance with
Section 2(u) of the Plan;
(2)
to
select
the Service Providers to whom Awards may be granted hereunder (other than
the
automatic grants to Non-Employee Directors provided for in Section 17 of
the
Plan);
(3)
to
determine whether and to what extent Awards or any combination thereof, are
granted under the Plan;
(4)
to
determine the number of shares of Common Stock or equivalent units to be
covered
by each Award granted under the Plan;
(5)
to
approve forms of agreement for use under the Plan;
(6)
to
determine the terms and conditions, not inconsistent with the terms of the
Plan,
of any award granted under the Plan. Such terms and conditions include, but
are
not limited to, the exercise price, the time or times when Options or SARs
may
be exercised or other Awards vest (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator,
in
its sole discretion, shall determine;
(7)
to
construe and interpret the terms of the Plan and Awards;
(8)
to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;
(9)
to
modify
or amend each Award (subject to Section 21(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period
of
Options and SARs longer than is otherwise provided for in the Plan;
(10)
to
authorize any person to execute on behalf of the Company any instrument required
to effect the grant of an Award previously granted by the
Administrator;
(11)
to
allow
Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares or cash to be issued upon exercise or vesting
of an Award (or distribution of a Deferred Stock Unit) that number of Shares
or
cash having a Fair Market Value equal to the minimum amount required to be
withheld (but no more). The Fair Market Value of any Shares to be withheld
shall
be determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares or cash withheld
for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;
(12)
to
determine the terms and restrictions applicable to Awards; and
(13)
to
make
all other determinations deemed necessary or advisable for administering
the
Plan.
(c)
Effect
of Administrator’s Decision
.
The
Administrator’s decisions, determinations and interpretations shall be final and
binding on all Participants and any other holders of Awards.
5.
Eligibility
.
Restricted Stock, Performance Shares, Performance Units, Stock Appreciation
Rights, Deferred Stock Units and Nonstatutory Stock Options may be granted
to
Service Providers.
Non-Employee
Directors shall only receive Awards pursuant to Section 17 of the
Plan.
6.
Limitations
.
(a)
Nonstatutory
Stock Option
.
Each
Option shall be designated in the Notice of Grant as a Nonstatutory Stock
Option.
(b)
No
Employment Rights
.
Neither
the Plan nor any Award shall confer upon a Participant any right with respect
to
continuing the Participant’s employment with the Company or its Subsidiaries,
nor shall they interfere in any way with the Participant’s right or the
Company’s or Subsidiary’s right, as the case may be, to terminate such
employment at any time, with or without cause or notice.
(c)
162(m)
Limitations
.
The
following limitations shall apply to grants of Options and Stock Appreciation
Rights to Participants:
(1)
No
Participant shall be granted, in any Fiscal Year, Options and Stock Appreciation
Rights to purchase more than 1,500,000
Shares;
provided, however, that such limit shall be 4,000,000 Shares in the
Participant’s first Fiscal Year of Company service.
(2)
The
foregoing limitations shall be adjusted proportionately in connection with
any
change in the Company’s capitalization as described in Section
19(a).
7.
Term
of Plan
.
The
Plan is effective as of October 1, 2004 (the “Effective Date”). It shall
continue in effect until September 30, 2014, unless sooner terminated under
Section 21 of the Plan.
8.
Stock
Options
.
(a)
Term
.
The
term of each Option shall be stated in the Notice of Grant; provided, however,
that the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant.
(b)
Option
Exercise Price
.
The
per
share exercise price for the Shares to be issued pursuant to exercise of
an
Option shall be determined by the Administrator and shall be no less than
100%
of the Fair Market Value per share on the date of grant.
(c)
No
Repricing
.
The
exercise price for an Option may not be reduced. This shall include, without
limitation, a repricing of the Option as well as an Option exchange program
whereby the Participant agrees to cancel an existing Option in exchange for
an
Option, SAR or other Award.
(d)
Waiting
Period and Exercise Dates
.
At the
time an Option is granted, the Administrator shall fix the period within
which
the Option may be exercised and shall determine any conditions which must
be
satisfied before the Option may be exercised. In so doing, the Administrator
may
specify that an Option may not be exercised until the completion of a service
period.
(e)
Form
of Consideration
.
The
Administrator shall determine the acceptable form of consideration for
exercising an Option, including the method of payment. Subject to Applicable
Laws, such consideration may consist entirely of
:
(1)
cash;
(2)
check;
(3)
other
Shares which (A) in the case of Shares acquired upon exercise of an option
have
been owned by the Participant for more than six months on the date of surrender,
and (B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised;
(4)
delivery
of a properly executed exercise notice together with such other documentation
as
the Administrator and the broker, if applicable, shall require to effect
an
exercise of the Option and delivery to the Company of the sale proceeds required
to pay the exercise price;
(5)
any
combination of the foregoing methods of payment; or
(6)
such
other consideration and method of payment for the issuance of Shares to the
extent permitted by
Applicable Laws.
(f)
Exercise
of Option
.
Any
Option granted hereunder shall be exercisable according to the terms of the
Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement.
An
Option
may not be exercised for a fraction of a Share.
An
Option
shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise
of
an Option shall be issued in the name of the Participant or, if requested
by the
Participant, in the name of the Participant and his or her spouse. Until
the
stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other
rights
as a stockholder shall exist with respect to the optioned stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued)
such
stock certificate promptly after the Option is exercised. No adjustment will
be
made for a dividend or other right for which the record date is prior to
the
date the stock certificate is issued, except as provided in Section 19 of
the
Plan.
Exercising
an Option in any manner shall decrease the number of Shares thereafter available
for sale under the Option, by the number of Shares as to which the Option
is
exercised.
(g)
Termination
of Relationship as a Service Provider
.
If a
Participant ceases to be a Service Provider, other than upon the
Participant’s
misconduct, death or Disability, the Participant may exercise his or her
Option
within such period of time as is specified in the Option Agreement to the
extent
that the Option is vested on the date of termination (but in no event later
than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Participant’s termination.
If, on the date of termination, the Participant is not vested as to his or
her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Participant does not exercise
his
or her Option within the time specified by the Administrator, the Option
shall
terminate, and the Shares covered by such Option shall revert to the
Plan.
(h)
Disability
.
If a
Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such period
of
time as is specified in the Option Agreement to the extent the Option is
vested
on the date of termination (but in no event later than the expiration of
the
term of such Option as set forth in the Option Agreement). In the absence
of a
specified time in the Option Agreement, the Option shall remain exercisable
for
six (6) months following the Participant’s termination. If, on the date of
termination, the Participant is not vested as to his or her entire Option,
the
Shares covered by the unvested portion of the Option shall revert to the
Plan.
If, after termination, the Participant does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(i)
Death
of Participant
.
If a
Participant dies while a Service Provider, the Option may be exercised following
the Participant’s death within such period of time as is specified in the Option
Agreement (but in no event may the option be exercised later than the expiration
of the term of such Option as set forth in the Option Agreement), by the
personal representative of the Participant’s estate, provided such
representative has been designated prior to Participant’s death in a form
acceptable to the Administrator. If no such representative has been designated
by the Participant, then such Option may be exercised by the person(s) to
whom
the Option is transferred pursuant to the Participant’s will or in accordance
with the laws of descent and distribution. In the absence of a specified
time in
the Option Agreement, the Option shall remain exercisable for twelve (12)
months
following Participant’s death. If the Option is not so exercised within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
9.
Stock
Appreciation Rights
.
(a)
Grant
of SARs
.
Subject
to the terms and conditions of the Plan, SARs may be granted to Participants
at
any time and from time to time as shall be determined by the Administrator,
in
its sole discretion. The Administrator shall have complete discretion to
determine the number of SARs granted to any Participant.
(b)
Exercise
Price and Other Terms
.
Subject
to Section 4(c) of the Plan, the Administrator, subject to the provisions
of the
Plan, shall have complete discretion to determine the terms and conditions
of
SARs granted under the Plan; provided, however, that no SAR may have a term
of
more than ten (10) years from the date of grant. The per share exercise price
for the Shares or cash to be issued pursuant to exercise of an SAR shall
be
determined by the Administrator and shall be no less than 100% of the Fair
Market Value per share on the date of grant. The exercise price may not be
reduced. This shall include, without limitation, a repricing of the SAR as
well
as an SAR exchange program whereby the Participant agrees to cancel an existing
SAR in exchange for an Option, SAR or other Award
(c)
Payment
of SAR Amount
.
Upon
exercise of an SAR, a Participant shall be entitled to receive payment from
the
Company in an amount determined by multiplying:
(1)
the
difference between the Fair Market Value of a Share on the date of exercise
over
the exercise price; times
(2)
the
number of Shares with respect to which the SAR is exercised.
(d)
Payment
Upon Exercise of SAR
.
At the
discretion of the Administrator, payment for an SAR may be in cash, Shares
or a
combination thereof.
(e)
SAR
Agreement
.
Each
SAR grant shall be evidenced by an Award Agreement that shall specify the
exercise price, the term of the SAR, the conditions of exercise, and such
other
terms and conditions as the Administrator, in its sole discretion, shall
determine.
(f)
Expiration
of SARs
.
An SAR
granted under the Plan shall expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award
Agreement.
(g)
Termination
of Relationship as a Service Provider
.
If a
Participant ceases to be a Service Provider, other than upon the Participant’s
death or Disability termination, the Participant may exercise his or her
SAR
within such period of time as is specified in the SAR Agreement to the extent
that the SAR is vested on the date of termination (but in no event later
than
the expiration of the term of such SAR as set forth in the SAR Agreement).
In
the absence of a specified time in the SAR Agreement, the SAR shall remain
exercisable for three (3) months following the Participant’s termination. If, on
the date of termination, the Participant is not vested as to his or her entire
SAR, the Shares covered by the unvested portion of the SAR shall revert to
the
Plan. If, after termination, the Participant does not exercise his or her
SAR
within the time specified by the Administrator, the SAR shall terminate,
and the
Shares covered by such SAR shall revert to the Plan.
(h)
Disability
.
If a
Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her SAR within such period
of
time as is specified in the SAR Agreement to the extent the SAR is vested
on the
date of termination (but in no event later than the expiration of the term
of
such SAR as set forth in the SAR Agreement). In the absence of a specified
time
in the SAR Agreement, the SAR shall remain exercisable for six (6) months
following the Participant’s termination. If, on the date of termination, the
Participant is not vested as to his or her entire SAR, the Shares covered
by the
unvested portion of the SAR shall revert to the Plan. If, after termination,
the
Participant does not exercise his or her SAR within the time specified herein,
the SAR shall terminate, and the Shares covered by such SAR shall revert
to the
Plan.
(i)
Death
of Participant
.
If a
Participant dies while a Service Provider, the SAR may be exercised following
the Participant’s death within such period of time as is specified in the SAR
Agreement (but in no event may the SAR be exercised later than the expiration
of
the term of such SAR as set forth in the SAR Agreement), by the personal
representative of the Participant’s estate, provided such representative has
been designated prior to Participant’s death in a form acceptable to the
Administrator. If no such representative has been designated by the Participant,
then such SAR may be exercised by the person(s) to whom the SAR is transferred
pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the SAR Agreement, the
SAR
shall remain exercisable for twelve (12) months following Participant’s death.
If the SAR is not so exercised within the time specified herein, the SAR
shall
terminate, and the Shares covered by such SAR shall revert to the
Plan.
10.
Restricted
Stock
.
(a)
Grant
of Restricted Stock
.
Subject
to the terms and conditions of the Plan, Restricted Stock may be granted
to
Participants at any time as shall be determined by the Administrator, in
its
sole discretion. The Administrator shall have complete discretion to determine
(i) the number of Shares subject to a Restricted Stock award granted to any
Participant (provided that during any Fiscal Year, no Participant shall be
granted more than 300,000 Shares of Restricted Stock); provided, however,
that
such limit shall be 750,000 Shares in the Participant’s first Fiscal Year of
Company service, and (ii) the conditions that must be satisfied, which typically
will be based principally or solely on continued provision of services but
may
include a performance-based component, upon which is conditioned the grant
or
vesting of Restricted Stock.
(b)
Restricted
Stock Units.
Restricted Stock may be granted in the form of Restricted Stock or units
to
acquire Shares. Each such unit shall be the equivalent of one Share for purposes
of determining the number of Shares subject to an Award. With respect to
the
units to acquire Shares, until the Shares are issued, no right to vote or
receive dividends or any other rights as a stockholder shall exist.
(c)
Other
Terms
.
The
Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of Restricted Stock granted
under the Plan. Restricted Stock grants shall be subject to the terms,
conditions, and restrictions determined by the Administrator at the time
the
stock is awarded. The
Administrator
may require
the
recipient to sign a Restricted Stock Award agreement as a condition of the
award. Any certificates representing the Shares of stock awarded shall bear
such
legends as shall be determined by the Administrator.
(d)
Restricted
Stock Award Agreement
.
Each
Restricted Stock grant shall be evidenced by an agreement that shall specify
the
purchase price (if any) and such other terms and conditions as the
Administrator, in its sole discretion, shall determine; provided, however,
that
if the Restricted Stock grant has a purchase price, such purchase price must
be
paid no more than ten (10) years following the date of grant.
(e)
Section
162(m) Performance Restrictions
.
For
purposes of qualifying grants of Restricted Stock as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Administrator on or before
the
latest date permissible to enable the Restricted Stock to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
Restricted Stock which is intended to qualify under Section 162(m) of the
Code,
the Administrator shall follow any procedures determined by it from time
to time
to be necessary or appropriate to ensure qualification of the Restricted
Stock
under Section 162(m) of the Code (e.g., in determining the Performance
Goals).
11.
Performance
Shares
.
(a)
Grant
of Performance Shares
.
Subject
to the terms and conditions of the Plan, Performance Shares may be granted
to
Participants at any time as shall be determined by the Administrator, in
its
sole discretion. The Administrator shall have complete discretion to determine
(i) the number of Shares subject to a Performance Share award granted to
any
Participant (provided that during any Fiscal Year, no Participant shall be
granted more than 300,000 units of Performance Shares); provided, however,
that
such limit shall be 750,000 Shares in the Participant’s first Fiscal Year of
Company service, and (ii) the conditions that must be satisfied, which typically
will be based principally or solely on achievement of performance milestones
but
may include a service-based component, upon which is conditioned the grant
or
vesting of Performance Shares. Performance Shares shall be granted in the
form
of units to acquire Shares. Each such unit shall be the equivalent of one
Share
for purposes of determining the number of Shares subject to an Award. Until
the
Shares are issued, no right to vote or receive dividends or any other rights
as
a stockholder shall exist with respect to the units to acquire Shares.
(b)
Other
Terms
.
The
Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of Performance Shares granted
under the Plan. Performance Share grants shall be subject to the terms,
conditions, and restrictions determined by the Administrator at the time
the
stock is awarded, which may include such performance-based milestones as
are
determined appropriate by the Administrator. The Administrator may require
the
recipient to sign a Performance Shares agreement as a condition of the award.
Any certificates representing the Shares of stock awarded shall bear such
legends as shall be determined by the Administrator.
(c)
Performance
Share Award Agreement
.
Each
Performance Share grant shall be evidenced by an agreement that shall specify
such other terms and conditions as the Administrator, in its sole discretion,
shall determine.
(d)
Section
162(m) Performance Restrictions
.
For
purposes of qualifying grants of Performance Shares as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Administrator on or before
the
latest date permissible to enable the Performance Shares to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
Performance Shares which are intended to qualify under Section 162(m) of
the
Code, the Administrator shall follow any procedures determined by it from
time
to time to be necessary or appropriate to ensure qualification of the
Performance Shares under Section 162(m) of the Code (e.g., in determining
the
Performance Goals).
12.
Performance
Units
.
(a)
Grant
of Performance Units
.
Performance Units are similar to Performance Shares, except that they shall
be
settled in a cash equivalent to the Fair Market Value of the underlying Shares,
determined as of the vesting date. Subject to the terms and conditions of
the
Plan, Performance Units may be granted to Participants at any time and from
time
to time as shall be determined by the Administrator, in its sole discretion.
The
Administrator shall have complete discretion to determine the conditions
that
must be satisfied, which typically will be based principally or solely on
achievement of performance milestones but may include a service-based component,
upon which is conditioned the grant or vesting of Performance Units. Performance
Units shall be granted in the form of units to acquire Shares. Each such
unit
shall be the cash equivalent of one Share of Common Stock. No right to vote
or
receive dividends or any other rights as a stockholder shall exist with respect
to Performance Units or the cash payable thereunder.
(b)
Number
of Performance Units
.
The
Administrator will have complete discretion in determining the number of
Performance Units granted to any Participant, provided that during any Fiscal
Year, no Participant shall receive Performance Units having an initial value
greater than $1,500,000, provided, however, that such limit shall be $4,000,000
in the Participant’s first Fiscal Year of Company service.
(c)
Other
Terms
.
The
Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of Performance Units granted
under the Plan. Performance Unit grants shall be subject to the terms,
conditions, and restrictions determined by the Administrator at the time
the
stock is awarded, which may include such performance-based milestones as
are
determined appropriate by the Administrator. The Administrator may require
the
recipient to sign a Performance Unit agreement as a condition of the award.
Any
certificates representing the Shares awarded shall bear such legends as shall
be
determined by the Administrator.
(d)
Performance
Unit Award Agreement
.
Each
Performance Unit grant shall be evidenced by an agreement that shall specify
such terms and conditions as the Administrator, in its sole discretion, shall
determine.
(e)
Section
162(m) Performance Restrictions
.
For
purposes of qualifying grants of Performance Units as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Administrator on or before
the
latest date permissible to enable the Performance Units to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
Performance Units which are intended to qualify under Section 162(m) of the
Code, the Administrator shall follow any procedures determined by it from
time
to time to be necessary or appropriate to ensure qualification of the
Performance Units under Section 162(m) of the Code (e.g., in determining
the
Performance Goals).
13.
Deferred
Stock Units
.
(a)
Description
.
Deferred Stock Units shall consist of a Restricted Stock, Performance Share
or
Performance Unit Award that the Administrator, in its sole discretion permits
to
be paid out in installments or on a deferred basis, in accordance with rules
and
procedures established by the Administrator. Deferred Stock Units shall remain
subject to the claims of the Company’s general creditors until distributed to
the Participant.
(b)
162(m)
Limits
.
Deferred Stock Units shall be subject to the annual 162(m) limits applicable
to
the underlying Restricted Stock, Performance Share or Performance Unit
Award.
14.
Death
of Participant
.
In the
event that a Participant dies while a Service Provider, then 100% of his
or her
Awards shall immediately vest.
15.
Leaves
of Absence
.
Unless
the Administrator provides otherwise or as otherwise required by Applicable
Laws, vesting of Awards granted hereunder shall cease commencing on the first
day of any unpaid leave of absence and shall only recommence upon return
to
active service.
16.
Misconduct
.
Should
(i) the Participant’s service be terminated for misconduct (including, but not
limited to, any act of dishonesty, willful misconduct, fraud or embezzlement),
or (ii) the Participant makes any unauthorized use or disclosure of confidential
information or trade secrets of the Company or any Parent or Subsidiary,
then in
any such event all outstanding Awards held by the Participant under the Plan
shall terminate immediately and cease to be outstanding, including as to
both
vested and unvested Awards.
17.
Non-Employee
Director Options
.
(a)
Initial
Grants
.
Each
Non-Employee Director who first becomes a Non-Employee Director on or after
the
date upon which the Plan is approved by the Company’s stockholders (excluding
any Non-Employee Director who previously served on the Board), shall be entitled
to receive an automatic Option grant of 12,000 shares of Common Stock, as
of the
date that the individual first is appointed or elected as a Non-Employee
Director.
(b)
Annual
Grants
.
On the
date of the Company’s annual stockholders meeting, each Non-Employee Director
who has served as a Non-Employee Director for at least three months on that
date
shall be automatically granted an Option grant of 6,000 shares of Common
Stock,
provided that such Non-Employee Director has been elected by the stockholders
to
serve as a member of the Board at that annual meeting.
18.
Non-Transferability
of Awards
.
Unless
determined otherwise by the Administrator, an Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than
by
will or by the laws of descent or distribution and may be exercised, during
the
lifetime of the recipient, only by the recipient. If the Administrator makes
an
Award transferable, such Award shall contain such additional terms and
conditions as the Administrator deems appropriate.
19.
Adjustments
Upon Changes in Capitalization, Dissolution or Liquidation or Change of
Control
.
(a)
Changes
in Capitalization
.
Subject
to any required action by the stockholders of the Company, the number of
shares
of Common Stock covered by each outstanding Award, the number of shares of
Common Stock which have been authorized for issuance under the Plan but as
to
which no Awards have yet been granted or which have been returned to the
Plan
upon cancellation or expiration of an Award, as well as the price per share
of
Common Stock covered by each such outstanding Award and the 162(m) fiscal
year
share issuance limits under Sections 6(c), 10(a) and 11(a) shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
any
such change in capitalization shall not affect the number of shares awarded
under the automatic grants to Non-Employee Directors described in Sections
17(a)
and (b), and provided that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except
as
expressly provided herein, no issuance by the Company of shares of stock
of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the
number or price of shares of Common Stock subject to an Award.
(b)
Dissolution
or Liquidation
.
In the
event of the proposed dissolution or liquidation of the Company, the
Administrator shall notify each Participant as soon as practicable prior
to the
effective date of such proposed transaction. The Administrator in its discretion
may provide for a Participant to have the right to exercise his or her Option
or
SAR until ten (10) days prior to such transaction as to all of the Awarded
Stock
covered thereby,
including
Shares as to which the Award would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting
shall accelerate 100%, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not
been
previously exercised (with respect to Options and SARs) or vested (with respect
to other Awards), an Award will terminate immediately prior to the consummation
of such proposed action.
(c)
Change
of Control
.
(1)
Stock
Options and SARs
.
In the
event of a Change of Control, each outstanding Option and SAR shall be assumed
or an equivalent option or SAR substituted by the successor corporation or
a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Option or SAR,
the
Participant shall fully vest in and have the right to exercise the Option
or SAR
as to all of the Awarded Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option or SAR becomes fully vested
and
exercisable in lieu of assumption or substitution in the event of a Change
of
Control, the Administrator shall notify the Participant in writing or
electronically that the Option or SAR shall be fully vested and exercisable
for
a period of thirty (30) days from the date of such notice, and the Option
or SAR
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or SAR shall be considered assumed if, following the
Change of Control, the option or stock appreciation right confers the right
to
purchase or receive, for each Share of Awarded Stock subject to the Option
or
SAR immediately prior to the Change of Control, the consideration (whether
stock, cash, or other securities or property) received in the Change of Control
by holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type
of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change of Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide
for
the consideration to be received upon the exercise of the Option or SAR,
for
each Share of Awarded Stock subject to the Option or SAR, to be solely common
stock of the successor corporation or its Parent equal in fair market value
to
the per share consideration received by holders of Common Stock in the Change
of
Control.
(2)
Restricted
Stock, Performance Shares, Performance Units and Deferred Stock
Units
.
In the
event of a Change of Control, each outstanding Restricted Stock, Performance
Share, Performance Unit and Deferred Stock Unit award shall be assumed or
an
equivalent Restricted Stock, Performance Share, Performance Unit and Deferred
Stock Unit award substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Restricted Stock,
Performance Share, Performance Unit or Deferred Stock Unit award, the
Participant shall fully vest in the Restricted Stock, Performance Share,
Performance Unit or Deferred Stock Unit including as to Shares (or with respect
to Performance Units, the cash equivalent thereof) which would not otherwise
be
vested. For the purposes of this paragraph, a Restricted Stock, Performance
Share, Performance Unit and Deferred Stock Unit award shall be considered
assumed if, following the Change of Control, the award confers the right
to
purchase or receive, for each Share (or with respect to Performance Units,
the
cash equivalent thereof) subject to the Award immediately prior to the Change
of
Control, the consideration (whether stock, cash, or other securities or
property) received in the Change of Control by holders of Common Stock for
each
Share held on the effective date of the transaction (and if holders were
offered
a choice of consideration, the type of consideration chosen by the holders
of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change of Control is not solely common stock
of
the successor corporation or its Parent, the Administrator may, with the
consent
of the successor corporation, provide for the consideration to be received,
for
each Share and each unit/right to acquire a Share subject to the Award, to
be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common
Stock
in the Change of Control.
20.
Date
of Grant
.
The
date of grant of an Award shall be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other
later
date as is determined by the
Administrator.
Notice of the determination shall be provided to each Participant within
a
reasonable time after the date of such grant.
21.
Amendment
and Termination of the Plan
.
(a)
Amendment
and Termination
.
The
Board may at any time amend, alter, suspend or terminate the Plan.
(b)
Stockholder
Approval
.
The
Company shall obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Section 422 of the Code (or any successor
rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock
is
listed or quoted). Such stockholder approval, if required, shall be obtained
in
such a manner and to such a degree as is required by the applicable law,
rule or
regulation.
(c)
Effect
of Amendment or Termination
.
No
amendment, alteration, suspension or termination of the Plan shall impair
the
rights of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and
signed
by the Participant and the Company.
22.
Conditions
Upon Issuance of Shares
.
(a)
Legal
Compliance
.
Shares
shall not be issued pursuant to the exercise of an Award unless the exercise
of
the Award or the issuance and delivery of such Shares (or with respect to
Performance Units, the cash equivalent thereof) shall comply with Applicable
Laws and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
(b)
Investment
Representations
.
As a
condition to the exercise or receipt of an Award, the Company may require
the
person exercising or receiving such Award to represent and warrant at the
time
of any such exercise or receipt that the Shares are being purchased only
for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.
23.
Liability
of Company
.
(a)
Inability
to Obtain Authority
.
The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such
Shares
as to which such requisite authority shall not have been obtained.
(b)
Grants
Exceeding Allotted Shares
.
If the
Awarded Stock covered by an Award exceeds, as of the date of grant, the number
of Shares which may be issued under the Plan without additional stockholder
approval, such Award shall be void with respect to such excess Awarded Stock,
unless stockholder approval of an amendment sufficiently increasing the number
of Shares subject to the Plan is timely obtained in accordance with Section
21(b) of the Plan.
24.
Reservation
of Shares
.
The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satis
fy
the
requirements of the Plan
.
