2005 Long-Term Equity Incentive Plan - Starbucks Corp.
STARBUCKS CORPORATION
2005 LONG-TERM EQUITY INCENTIVE PLAN
(EFFECTIVE FEBRUARY 9, 2005, AS AMENDED AND RESTATED EFFECTIVE
NOVEMBER 15, 2005)
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STARBUCKS CORPORATION
2005 LONG-TERM EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
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PART I PURPOSE, ADMINISTRATION AND RESERVATION OF SHARES
Section 1. PURPOSE OF THE PLAN........................................... 1
Section 2. DEFINITIONS................................................... 1
(a) Active Status.................................................... 1
(b) Award............................................................ 2
(c) Award Agreement.................................................. 2
(d) Beneficial Ownership............................................. 2
(e) Board............................................................ 2
(f) Change of Control................................................ 2
(g) Code............................................................. 3
(h) Committee........................................................ 3
(i) Common Stock..................................................... 3
(j) Company.......................................................... 3
(k) Consultant....................................................... 3
(l) Director......................................................... 3
(m) Disability....................................................... 3
(n) Effective Date................................................... 3
(o) Exchange Act..................................................... 3
(p) Executive Officers............................................... 3
(q) Fair Market Value................................................ 3
(r) FAS 123.......................................................... 4
(s) FLSA............................................................. 4
(t) Former Plans..................................................... 4
(u) Incentive Stock Option........................................... 4
(v) Independent Director............................................. 4
(w) Maximum Annual Participant Award................................. 4
(x) Misconduct....................................................... 4
(y) Nasdaq........................................................... 5
(aa) Nominating and Corporate Governance Committee.................... 5
(bb) NonEmployee Director............................................. 5
(cc) Nonqualified Stock Option........................................ 5
(dd) Option........................................................... 5
(ee) Optionee......................................................... 5
(ff) Parent........................................................... 5
(gg) Participant...................................................... 5
(hh) Partner.......................................................... 5
(ii) Performance Criteria............................................. 6
(jj) Plan............................................................. 6
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(kk) Reprice.......................................................... 6
(ll) Resignation (or Resign) for Good Reason.......................... 6
(mm) Restricted Stock................................................. 6
(nn) Restricted Stock Units........................................... 6
(oo) Retirement....................................................... 6
(pp) SAR.............................................................. 7
(pp) SEC.............................................................. 7
(qq) Share............................................................ 7
(ss) Stand-Alone SARS................................................. 7
(rr) Subcommittee..................................................... 7
(ss) Subsidiary....................................................... 7
(vv) Tandem SARS...................................................... 7
Section 3. ADMINISTRATION OF THE PLAN.................................... 7
(a) Authority........................................................ 7
(b) Powers of the Committee.......................................... 7
(c) Effect of Committee's Decision................................... 9
(d) Delegation....................................................... 9
(e) Administration................................................... 9
Section 4. SHARES SUBJECT TO THE PLAN.................................... 9
(a) Reservation of Shares............................................ 9
(b) Time of Granting Awards.......................................... 10
(c) Securities Law Compliance........................................ 10
(d) Substitutions and Assumptions.................................... 10
Section 5. ADJUSTMENTS TO SHARES SUBJECT TO THE PLAN..................... 10
PART II TERMS APPLICABLE TO ALL AWARDS
Section 6. GENERAL ELIGIBILITY........................................... 11
(a) Awards........................................................... 11
(b) Maximum Annual Participant Award................................. 11
(c) No Employment/Service Rights..................................... 11
Section 7. PROCEDURE FOR EXERCISE OF AWARDS; RIGHTS AS A SHAREHOLDER..... 11
(a) Procedure........................................................ 11
(b) Method of Payment................................................ 12
(c) Withholding Obligations.......................................... 12
(d) Shareholder Rights............................................... 12
(e) Non-Transferability of Awards.................................... 12
Section 8. EXPIRATION OF AWARDS.......................................... 13
(a) Expiration, Termination or Forfeiture of Awards.................. 13
(b) Extension of Term................................................ 13
Section 9. EFFECT OF CHANGE OF CONTROL................................... 13
(a) Acceleration..................................................... 13
(b) Definition....................................................... 14
PART III SPECIFIC TERMS APPLICABLE TO OPTIONS AND STOCK AWARDS
Section 10. GRANT, TERMS AND CONDITIONS OF OPTIONS....................... 14
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(a) Designation...................................................... 14
(b) Term of Options.................................................. 15
(c) Option Price..................................................... 15
(d) Vesting.......................................................... 15
(e) Substitution of Stock SARS for Options........................... 15
(e) Exercise......................................................... 16
Section 11. GRANT, TERMS AND CONDITIONS OF STOCK AWARDS.................. 16
(a) Designation...................................................... 16
(b) Performance Critiera............................................. 16
(d) Vesting.......................................................... 16
Section 12. GRANT, TERMS AND CONDITIONS OF SARS.......................... 17
(a) Grants........................................................... 17
(b) Tandem SARs...................................................... 17
(c) Stand Alone SARs................................................. 17
(d) Exercised SARs................................................... 18
PART IV TERM OF PLAN AND SHAREHOLDER APPROVAL
Section 12. TERM OF PLAN................................................. 18
Section 13. AMENDMENT AND TERMINATION OF THE PLAN........................ 18
(a) Amendment and Termination........................................ 18
(b) Participants in Foreign Countries................................ 18
(c) Effect of Amendment or Termination............................... 19
Section 14. SHAREHOLDER APPROVAL......................................... 19
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STARBUCKS CORPORATION
2005 LONG-TERM EQUITY INCENTIVE PLAN
PART I
PURPOSE, ADMINISTRATION AND RESERVATION OF SHARES
SECTION 1. PURPOSE OF THE PLAN. The purposes of this Plan are (a) to
attract and retain the most talented Partners, officers and Directors available,
and (b) to promote the growth and success of the Company's business, (i) by
aligning the long-term interests of Partners, officers and Directors with those
of the shareholders by providing an opportunity to acquire an interest in the
Company and (ii) by providing both rewards for exceptional performance and long
term incentives for future contributions to the success of the Company and its
Subsidiaries.
The Plan permits the grant of Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock, Restricted Stock Units, or SARs, at the
discretion of the Committee and as reflected in the terms of the Award
Agreement. Each Award will be subject to conditions specified in the Plan, such
as continued employment or satisfaction of performance criteria.
This Plan will serve as a framework for the Committee to establish
sub-plans or procedures governing the grants to Partners, Directors and
Consultants and Partners working outside of the United States. The awards
granted under the Former Plans shall continue to be administered under the
Former Plans until such time as those options are exercised, expire or become
unexercisable for any reason.
SECTION 2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ACTIVE STATUS" shall mean (i) for Partners, the absence of any
interruption or termination of service as a Partner, (ii) for Directors, that
the Director has not been removed from the Board for cause (as determined by the
Company's shareholders), and (iii) for Consultants, the absence of any
interruption, expiration, or termination of such person's consulting or advisory
relationship with the Company or any Subsidiary or the occurrence of any
termination event as set forth in such person's Award Agreement. Active Status
shall not be considered interrupted (A) for a Partner in the case of sick leave,
maternity leave, infant care leave, medical emergency leave, military leave, or
any other leave of absence properly taken in accordance with the policies of the
Company or any applicable Subsidiary as may be in effect from time to time, and
(B) for a Consultant, in the case of any temporary interruption in such person's
availability to provide services to the Company or any Subsidiary which has been
granted in writing by an authorized officer of the Company. Whenever a mandatory
severance period applies under applicable law with respect to a termination of
service as a Partner, Active Status shall be considered terminated upon such
Partner's receipt of notice of termination in whatever form prescribed by
applicable law.
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(b) "AWARD" shall mean any award or benefits granted under the Plan,
including Options, Restricted Stock, Restricted Stock Units, and SARs.
(c) "AWARD AGREEMENT" shall mean a written or electronic agreement
between the Company and the Participant setting forth the terms of the Award.
(d) "BENEFICIAL OWNERSHIP" shall have the meaning set forth in Rule
13d-3 promulgated under the Exchange Act.
(e) "BOARD" shall mean the Board of Directors of the Company.
(f) "CHANGE OF CONTROL" shall mean the first day that any one or more
of the following conditions shall have been satisfied:
(i) the sale, liquidation or other disposition of all or
substantially all of the Company's assets in one or a series of related
transactions;
(ii) an acquisition (other than directly from the Company) of any
outstanding voting securities by any person, after which such person (as the
term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) has
Beneficial Ownership of twenty-five percent (25%) or more of the then
outstanding voting securities of the Company, other than a Board approved
transaction;
(iii) during any 36-consecutive month period, the individuals
who, at the beginning of such period, constitute the Board ("Incumbent
Directors") cease for any reason other than death to constitute at least a
majority of the members of the Board; provided however that except as set forth
in this Section 2(f)(iii), an individual who becomes a member of the Board
subsequent to the beginning of the 36-month period, shall be deemed to have
satisfied such 36-month requirement and shall be deemed an Incumbent Director if
such Director was elected by or on the recommendation of or with the approval of
at least two-thirds of the Directors who then qualified as Incumbent Directors
either actually (because they were Directors at the beginning of such period) or
by operation of the provisions of this section; if any such individual initially
assumes office as a result of or in connection with either an actual or
threatened solicitation with respect to the election of Directors (as such terms
are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitations of proxies or consents by or on
behalf of a person other than the Board, then such individual shall not be
considered an Incumbent Director; or
(iv) a merger, consolidation or reorganization of the Company, as
a result of which the shareholders of the Company immediately prior to such
merger, consolidation or reorganization own directly or indirectly immediately
following such merger, consolidation or reorganization less than fifty percent
(50%) of the combined voting power of the outstanding voting securities of the
entity resulting from such merger, consolidation or reorganization.
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(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(h) "COMMITTEE" shall mean the Compensation and Management Development
Committee appointed by the Board.
(i) "COMMON STOCK" shall mean the common stock of the Company, par
value $0.001 per share.
(j) "COMPANY" shall mean Starbucks Corporation, a Washington
corporation, and any successor thereto.
(k) "CONSULTANT" shall mean any person, except a Partner, engaged by
the Company or any Subsidiary of the Company, to render personal services to
such entity, including as an advisor, pursuant to the terms of a written
agreement.
(l) "DIRECTOR" shall mean a member of the Board.
(m) "DISABILITY" shall mean (i) in the case of a Participant whose
employment with the Company or a Subsidiary is subject to the terms of an
employment or consulting agreement that includes a definition of "Disability" as
used in this Plan shall have the meaning set forth in such employment or
consulting agreement during the period that such employment or consulting
agreement remains in effect; and (ii) in all other cases, the term "Disability"
as used in this Plan shall have the same meaning as set forth under the
Company's long-term disability plan applicable to the Participant as may be
amended from time to time, and in the event the Company does not maintain any
such plan with respect to a Participant, a physical or mental condition
resulting from bodily injury, disease or mental disorder which renders the
Participant incapable of continuing his or her usual and customary employment
with the Company or a Subsidiary, as the case may be, for a period of not less
than 120 days or such other period as may be required by applicable law.
(n) "EFFECTIVE DATE" shall mean the date on which the Company's
shareholders have approved this Plan in accordance with applicable Nasdaq rules.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "EXECUTIVE OFFICERS" shall mean the officers of the Company as
such term is defined in Rule 16a-1 under the Exchange Act.
(q) "FAIR MARKET VALUE" shall mean the closing price per share of the
Common Stock on Nasdaq as to the date specified (or the previous trading day if
the date specified is a day on which no trading occurred), or if Nasdaq shall
cease to be the principal exchange or quotation system upon which the shares of
Common Stock are listed or quoted, then
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such exchange or quotation system as the Company elects to list or quote its
shares of Common Stock and that the Committee designates as the Company's
principal exchange or quotation system.
(r) "FAS 123" shall mean Statements of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation", as promulgated by the
Financial Accounting Standards Board.
(s) "FLSA" shall mean the Fair Labor Standards Act of 1938, as
amended.
(t) "FORMER PLANS" shall mean the Starbucks Corporation Company-Wide
1991 Stock Option Plan, as amended, the Starbucks Corporation Amended and
Restated Key Employee Stock Option Plan-1994, as amended, and the Starbucks
Corporation Amended and Restated 1989 Stock Option Plan for Non-Employee
Directors.
(u) "INCENTIVE STOCK OPTION" shall mean any Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(v) "INDEPENDENT DIRECTOR" shall mean a Director who: (1) meets the
independence requirements of Nasdaq, or if Nasdaq shall cease to be the
principal exchange or quotation system upon which the shares of Common Stock are
listed or quoted, then such exchange or quotation system as the Company elects
to list or quote its shares of Common Stock and that the Committee designates as
the Company's principal exchange or quotation system; (2) qualifies as an
"outside director" under Section 162(m) of the Code; (3) qualifies as a
"non-employee director" under Rule 16b-3 promulgated under the Exchange Act; and
(4) satisfies independence criteria under any other applicable laws or
regulations relating to the issuance of Shares to Partners.
(w) "MAXIMUM ANNUAL PARTICIPANT AWARD" shall have the meaning set
forth in Section 6(b).
(x) "MISCONDUCT" shall mean any of the following; provided, however,
that with respect to Non-Employee Directors "Misconduct" shall mean subsection
(viii) only:
(i) any material breach of an agreement between the Participant
and the Company or any Subsidiary which, if curable, has not been cured within
twenty (20) days after the Participant has been given written notice of the need
to cure such breach, or which breach, if previously cured, recurs;
(ii) willful unauthorized use or disclosure of confidential
information or trade secrets of the Company or any Subsidiary by the
Participant;
(iii) the Participant's continued willful and intentional failure
to satisfactorily perform Participant's essential responsibilities, provided
that the Participant has
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been given at least thirty (30) days' written notice of the need to cure the
failure and cure has not been effected within that time period, or which
failure, if previously cured, recurs;
(iv) material failure of the Participant to comply with rules,
policies or procedures of the Company or any Subsidiary as they may be amended
from time to time, provided that the Participant has been given at least thirty
(30) days' written notice of the need to cure the failure, if such failure is
curable, and cure has not been effected within that time period, or which
failure, if previously cured, recurs;
(v) Participant's dishonesty, fraud or gross negligence related
to the business or property of the Company or any Subsidiary;
(vi) personal conduct that is materially detrimental to the
business of the Company or any Subsidiary;
(vii) conviction of or plea of nolo contendere to a felony; or
(viii) in the case of Non-Employee Directors, the removal from
the Board for cause (as determined by the Company's shareholders).
(y) "NASDAQ" shall mean The Nasdaq Stock Market, Inc.
(z) "NOMINATING AND CORPORATE GOVERNANCE COMMITTEE" shall mean the
Nominating and Corporate Governance Committee appointed by the Board.
(aa) "NON-EMPLOYEE DIRECTOR" shall mean a Director who is not a
Partner.
(bb) "NONQUALIFIED STOCK OPTION" shall mean an Option that does not
qualify or is not intended to qualify as an Incentive Stock Option.
(cc) "OPTION" shall mean a stock option granted pursuant to Section 10
of the Plan.
(dd) "OPTIONEE" shall mean a Participant who has been granted an
Option.
(ee) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(ff) "PARTICIPANT" shall mean a Partner, Director or Consultant
granted an Award.
(gg) "PARTNER" shall mean any person, including an officer, who is a
common law employee of, receives remuneration for personal services to, is
reflected on the official human resources database as an employee of, and is on
the payroll of the Company or any
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Subsidiary of the Company. A person is on the payroll if he or she is paid from
or at the direction of the payroll department of the Company, or any Subsidiary
of the Company. Persons providing services to the Company, or to any Subsidiary
of the Company, pursuant to an agreement with a staff leasing organization,
temporary workers engaged through or employed by temporary or leasing agencies,
and workers who hold themselves out to the Company, or a Subsidiary to which
they are providing services as being independent contractors, or as being
employed by or engaged through another company while providing the services, and
persons covered by a collective bargaining agreement (unless the collective
bargaining agreement applicable to the person specifically provides for
participation in this Plan) are not Partners for purposes of this Plan and do
not and cannot participate in this Plan, whether or not such persons are, or may
be reclassified by the courts, the Internal Revenue Service, the U. S.
Department of Labor, or other person or entity as, common law employees of the
Company, or any Subsidiary, either solely or jointly with another person or
entity.
(hh) "PERFORMANCE CRITERIA" shall have the meaning set forth in
Section 11(b).
(ii) "PLAN" shall mean this Starbucks Corporation 2005 Long-Term
Equity Incentive Plan, including any amendments thereto.
(jj) "REPRICE" shall mean the adjustment or amendment of the exercise
price of Options or SARs previously awarded whether through amendment,
cancellation, replacement of grants or any other means.
(kk) "RESIGNATION (OR RESIGN) FOR GOOD REASON" shall mean any
voluntary termination by written resignation of the Active Status of any Partner
after a Change of Control because of: (1) a material reduction in the Partner's
authority, responsibilities or scope of employment; (2) an assignment of duties
to the Partner inconsistent with the Partner's role at the Company (including
its Subsidiaries) prior to the Change of Control, (3) a reduction in the
Partner's base salary or total incentive compensation; (4) a material reduction
in the Partner's benefits unless such reduction applies to all Partners of
comparable rank; or (5) the relocation of the Partner's primary work location
more than fifty (50) miles from the Partner's primary work location prior to the
Change of Control; provided that the Partner's written notice of voluntary
resignation must be tendered within one (1) year after the Change of Control,
and shall specify which of the events described in (1) through (5) resulted in
the resignation.
(ll) "RESTRICTED STOCK" shall mean a grant of Shares pursuant to
Section 11 of the Plan.
(mm) "RESTRICTED STOCK UNITS" shall mean a grant of the right to
receive Shares in the future or their cash equivalent (or both) pursuant to
Section 11 of the Plan.
(nn) "RETIREMENT" shall mean, (i) with respect to any Partner,
voluntary termination of employment after attainment of age 55 and at least ten
(10) years of credited
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service with the Company or any Subsidiary (but only during the time the
Subsidiary was a Subsidiary), as determined by the Committee in its sole
discretion, and (ii) with respect to any Non-Employee Director, ceasing to be a
Director pursuant to election by the Company's shareholders or by voluntary
resignation with the approval of the Board's chair after having attained the age
of 55 years and served continuously on the Board for at least six years.
(oo) "SAR" shall mean a stock appreciation right awarded pursuant to
Section 12 of the Plan.
(pp) "SEC" shall mean the Securities and Exchange Commission.
(qq) "SHARE" shall mean one share of Common Stock, as adjusted in
accordance with Section 5 of the Plan.
(rr) "STAND-ALONE SARS" shall have the meaning set forth in Section
12(c) of the Plan.
(ss) "SUBCOMMITTEE" shall have the meaning set forth in Section 3(d).
(tt) "SUBSIDIARY" shall mean (1) in the case of an Incentive Stock
Option a "subsidiary corporation," whether now or hereafter existing, as defined
in Section 424(f) of the Code, and (2) in the case of a Nonqualified Stock
Option, Restricted Stock, a Restricted Stock Unit or a SAR, in addition to a
subsidiary corporation as defined in (1), (A) a limited liability company,
partnership or other entity in which the Company controls fifty percent (50%) or
more of the voting power or equity interests, or (B) an entity with respect to
which the Company possesses the power, directly or indirectly, to direct or
cause the direction of the management and policies of that entity, whether
through the Company's ownership of voting securities, by contract or otherwise.
(uu) "TANDEM SARS" shall have the meaning set forth in Section 12(b)
of the Plan.
SECTION 3. ADMINISTRATION OF THE PLAN.
(a) AUTHORITY. The Plan shall be administered by the Committee. The
Committee shall have full and exclusive power to administer the Plan on behalf
of the Board, subject to such terms and conditions as the Committee may
prescribe. Notwithstanding anything herein to the contrary, the Committee's
power to administer the Plan, and actions the Committee takes under the Plan,
shall be limited by the provisions set forth in the Committee's charter, as such
charter may be amended from time to time, and the further limitation that
certain actions may be subject to review and approval by either the full Board
or a panel consisting of all of the Independent Directors of the Company.
(b) POWERS OF THE COMMITTEE. Subject to the other provisions of this
Plan, the Committee shall have the authority, in its discretion:
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(i) to grant Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock, Restricted Stock Units, and SARs to Participants and to
determine the terms and conditions of such Awards, including the determination
of the Fair Market Value of the Shares and the exercise price, and to modify or
amend each Award, with the consent of the Participant when required;
(ii) to determine the Participants, to whom Awards, if any, will
be granted hereunder, the timing of such Awards, and the number of Shares to be
represented by each Award;
(iii) to construe and interpret the Plan and the Awards granted
hereunder;
(iv) to prescribe, amend, and rescind rules and regulations
relating to the Plan, including the form of Award Agreement, and manner of
acceptance of an Award, such as correcting a defect or supplying any omission,
or reconciling any inconsistency so that the Plan or any Award Agreement
complies with applicable law, regulations and listing requirements and to avoid
unanticipated consequences deemed by the Committee to be inconsistent with the
purposes of the Plan or any Award Agreement;
(v) to establish performance criteria for Awards made pursuant to
the Plan in accordance with a methodology established by the Committee, and to
determine whether performance goals have been attained;
(vi) to accelerate or defer (with the consent of the Participant)
the exercise or vested date of any Award;
(vii) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Award previously granted
by the Committee;
(viii) to establish sub-plans, procedures or guidelines for the
grant of Awards to Partners, Directors, Consultants and Partners working outside
of the United States; and
(ix) to make all other determinations deemed necessary or
advisable for the administration of the Plan;
Provided that, no consent of a Participant is necessary under clauses
(i) or (vi) if a modification, amendment, acceleration, or deferral, in the
reasonable judgment of the Committee confers a benefit on the Participant or is
made pursuant to an adjustment in accordance with Section 5.
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(c) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations, and
interpretations of the Committee shall be final and binding on all Participants,
the Company (including its Subsidiaries), any shareholder and all other persons.
(d) DELEGATION. Consistent with the Committee's charter, as such
charter may be amended from time to time, the Committee may delegate (i) to one
or more separate committees consisting of members of the Committee or other
Directors who are Independent Directors (any such committee a "Subcommittee"),
or (ii) to an Executive Officer of the Company, the ability to grant Awards and
take the other actions described in Section 3(b) with respect to Participants
who are not Executive Officers, and such actions shall be treated for all
purposes as if taken by the Committee; provided that the grant of Awards shall
be made in accordance with parameters established by the Committee. Any action
by any such Subcommittee or Executive Officer within the scope of such
delegation shall be deemed for all purposes to have been taken by the Committee.
(e) ADMINISTRATION. The Committee may delegate the administration of
the Plan to an officer or officers of the Company, and such administrator(s) may
have the authority to directly, or under their supervision, execute and
distribute agreements or other documents evidencing or relating to Awards
granted by the Committee under this Plan, to maintain records relating to the
grant, vesting, exercise, forfeiture or expiration of Awards, to process or
oversee the issuance of Shares upon the exercise, vesting and/or settlement of
an Award, to interpret the terms of Awards and to take such other actions as the
Committee may specify. Any action by any such administrator within the scope of
its delegation shall be deemed for all purposes to have been taken by the
Committee and references in this Plan to the Committee shall include any such
administrator, provided that the actions and interpretations of any such
administrator shall be subject to review and approval, disapproval or
modification by the Committee.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) RESERVATION OF SHARES. The shares of Common Stock reserved under
this Plan will include reserved shares of Common Stock that are not subject to a
grant or as to which the option award granted has been forfeited under the
Former Plans, and an additional 24,000,000 shares of Common Stock. Subject to
the provisions of Sections 5 of the Plan, the maximum aggregate number of Shares
(adjusted, proportionately, in the event of any stock split or stock dividend
with respect to the Shares) which may be granted as Incentive Stock Options
under the Plan shall not exceed 21,000,000. The aggregate number of Shares
available for issuance under the Plan will be reduced by 2.1 Shares for each
Share delivered in settlement of any award of Restricted Stock, Restricted Stock
Unit, or SAR and one Share for each Share delivered in settlement of an Option .
If an Award expires, is forfeited or becomes unexercisable for any reason
without having been exercised in full, the undelivered Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future Awards under the Plan. Without limiting the foregoing, unless the Plan
shall have been terminated, Shares underlying an Award that has been exercised,
either in part or in full, including any Shares that would otherwise be issued
to a Participant that are used to satisfy any withholding tax obligations that
arise with respect to any Award, shall become available for future Awards under
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the Plan except to the extent Shares were issued in settlement of the Award.
Shares available for issuance under the Plan shall be increased by any shares of
Common Stock subject to outstanding awards under the Former Plans on the date of
shareholder approval of the Plan that later cease to be subject to such awards
for any reason other than such awards having been exercised, subject to
adjustment from time to time as provided in Section 5, which shares of Common
Stock shall, as of the date such shares cease to be subject to such awards,
cease to be available for grant and issuance under the Former Plans, but shall
be available for issuance under the Plan. The Shares may be authorized but
unissued, or reacquired shares of Common Stock. The Company, during the term of
this Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
(b) TIME OF GRANTING AWARDS. The date of grant of an Award shall, for
all purposes, be the date on which the Company completes the corporate action
relating to the grant of such Award and all conditions to the grant have been
satisfied, provided that conditions to the exercise of an Award shall not defer
the date of grant. Notice of a grant shall be given to each Participant to whom
an Award is so granted within a reasonable time after the determination has been
made.
(c) SECURITIES LAW COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated under either
such Act, and the requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.
(d) SUBSTITUTIONS AND ASSUMPTIONS. The Board or the Committee shall
have the right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of
the Code applies, provided such substitutions and assumptions are permitted by
Section 424 of the Code and the regulations promulgated thereunder. The number
of Shares reserved pursuant to Section 4(a) may be increased by the
corresponding number of Awards assumed and, in the case of a substitution, by
the net increase in the number of Shares subject to Awards before and after the
substitution.
SECTION 5. ADJUSTMENTS TO SHARES SUBJECT TO THE PLAN. If any change is made
to the Shares by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Shares as a class without the Company's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
and/or the price per Share covered by outstanding Awards under the Plan and
(iii) the Maximum Annual Participant Award. The Committee may also make
adjustments described in (i)-(iii) of the previous sentence in the event of any
distribution of assets to shareholders other than a normal cash dividend. In
determining adjustments to be made under this Section 5, the Committee may take
into account such factors as it deems appropriate, including the restrictions
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of applicable law and the potential tax consequences of an adjustment, and in
light of such factors may make adjustments that are not uniform or proportionate
among outstanding Awards. Adjustments, if any, and any determinations or
interpretations, including any determination of whether a distribution is other
than a normal cash dividend, made by the Committee shall be final, binding and
conclusive. For purposes of this Section 5, conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration."
Except as expressly provided herein, no issuance by the Company of
shares of any class, or securities convertible into shares of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to an Award.
PART II
TERMS APPLICABLE TO ALL AWARDS
SECTION 6. GENERAL ELIGIBILITY.
(a) AWARDS. Awards may be granted to Participants who are Partners,
Directors or Consultants; provided however that Incentive Stock Options may only
be granted to Partners.
(b) MAXIMUM ANNUAL PARTICIPANT AWARD. The aggregate number of Shares
with respect to which an Award or Awards may be granted to any one Participant
in any one taxable year of the Company (the "Maximum Annual Participant Award")
shall not exceed 1,750,000 shares of Common Stock (increased, proportionately,
in the event of any stock split or stock dividend with respect to the Shares).
If an Option is in tandem with a SAR, such that the exercise of the Option or
SAR with respect to a Share cancels the tandem SAR or Option right,
respectively, with respect to each Share, the tandem Option and SAR rights with
respect to each Share shall be counted as covering but one Share for purposes of
the Maximum Annual Participant Award.
(c) NO EMPLOYMENT/SERVICE RIGHTS. Nothing in the Plan shall confer
upon any Participant the right to an Award or to continue in service as a
Partner or Consultant for any period of specific duration, or interfere with or
otherwise restrict in any way the rights of the Company (or any Subsidiary
employing or retaining such person), or of any Participant, which rights are
hereby expressly reserved by each, to terminate such person's services at any
time for any reason, with or without cause.
SECTION 7. PROCEDURE FOR EXERCISE OF AWARDS; RIGHTS AS A SHAREHOLDER.
(a) PROCEDURE. An Award shall be exercised when written, electronic or
verbal notice of exercise has been given to the Company, or the brokerage firm
or firms approved by the Company to facilitate exercises and sales under this
Plan, in accordance with the terms of the Award by the person entitled to
exercise the Award and full payment for the Shares with
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respect to which the Award is exercised has been received by the Company or the
brokerage firm or firms, as applicable. The notification to the brokerage firm
shall be made in accordance with procedures of such brokerage firm approved by
the Company. Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 7(b) of the Plan.
The Company shall issue (or cause to be issued) such share certificate promptly
upon exercise of the Award. In the event that the exercise of an Award is
treated in part as the exercise of an Incentive Stock Option and in part as the
exercise of a Nonqualified Stock Option pursuant to Section 10(a), the Company
shall issue a share certificate evidencing the Shares treated as acquired upon
the exercise of an Incentive Stock Option and a separate share certificate
evidencing the Shares treated as acquired upon the exercise of a Nonqualified
Stock Option, and shall identify each such certificate accordingly in its share
transfer records. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the share certificate is issued,
except as provided in Section 5 of the Plan.
(b) METHOD OF PAYMENT. The consideration to be paid for any Shares to
be issued upon exercise or other required settlement of an Award, including the
method of payment, shall be determined by the Committee at the time of
settlement and which forms may include: (i) with respect to an Option, a request
that the Company or the designated brokerage firm conduct a cashless exercise of
the Option; (ii) cash; and (iii) tender of shares of Common Stock owned by the
Participant in accordance with rules established by the Committee from time to
time. Shares used to pay the exercise price shall be valued at their Fair Market
Value on the exercise date. Payment of the aggregate exercise price by means of
tendering previously-owned shares of Common Stock shall not be permitted when
the same may, in the reasonable opinion of the Company, cause the Company to
record a loss or expense as a result thereof.
(c) WITHHOLDING OBLIGATIONS. To the extent required by applicable
federal, state, local or foreign law, the Committee may and/or a Participant
shall make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise with respect to any Incentive Stock
Option, Nonqualified Stock Option, SAR, Restricted Stock or Restricted Stock
Units, or any sale of Shares. The Company shall not be required to issue Shares
or to recognize the disposition of such Shares until such obligations are
satisfied. These obligations may be satisfied by having the Company withhold a
portion of the Shares that otherwise would be issued to a Participant under such
Award or by tendering Shares previously acquired by the Participant in
accordance with rules established by the Committee from time to time.
(d) SHAREHOLDER RIGHTS. Except as otherwise provided in this Plan,
until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the share
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Shares subject to
the Award, notwithstanding the exercise of the Award.
(e) NON-TRANSFERABILITY OF AWARDS. An Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in exchange for
consideration, except that an Award may be transferred by will or by the laws of
descent or distribution and may be exercised,
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during the lifetime of the Participant, only by the Participant; unless the
Committee permits further transferability, on a general or specific basis, in
which case the Committee may impose conditions and limitations on any permitted
transferability.
SECTION 8. EXPIRATION OF AWARDS.
(a) EXPIRATION, TERMINATION OR FORFEITURE OF AWARDS. Unless otherwise
provided in the applicable Award Agreement or any severance agreement, vested
Awards granted under this Plan shall expire, terminate, or otherwise be
forfeited as follows:
(i) three (3) months after the date the Company delivers a notice
of termination of a Active Status for a Participant other than a Non-Employee
Director, other than in circumstances covered by (ii), (iii), (iv) or (v) below;
or thirty-six (36) months after the date a Non-Employee Director ceases to be a
Director, other than in circumstances covered by (ii) and (iv) below;
(ii) immediately upon termination of a Participant's Active
Status for Misconduct;
(iii) twelve (12) months after the date on which a Participant
other than a Non-Employee Director ceased performing services as a result of his
or her total and permanent Disability;
(iv) twelve (12) months after the date of the death of a
Participant whose Active Status terminated as a result of his or her death; and
(v) thirty-six (36) months after the date on which the
Participant ceased performing services as a result of Retirement.
(b) EXTENSION OF TERM. Notwithstanding subsection (a) above, the
Committee shall have the authority to extend the expiration date of any
outstanding Option, other than an Incentive Stock Option, or SAR in
circumstances in which it deems such action to be appropriate (provided that no
such extension shall extend the term of an Option or SAR beyond the date on
which the Option or SAR would have expired if no termination of the Partner's
Active Status had occurred).
SECTION 9. EFFECT OF CHANGE OF CONTROL. Notwithstanding any other provision
in the Plan to the contrary, the following provisions shall apply unless
otherwise provided in the most recently executed agreement between the
Participant and the Company, or specifically prohibited under applicable laws,
or by the rules and regulations of any applicable governmental agencies or
national securities exchanges or quotation systems.
(a) ACCELERATION. Awards of a Participant shall be Accelerated (as
defined in Section 9(b) below) as follows:
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(i) With respect to Non-Employee Directors, upon the occurrence
of a Change of Control;
(ii) With respect to any Partner, upon the occurrence of a Change
of Control described in Section 2(f)(i);
(iii) With respect to any Partner who Resigns for Good Reason or
whose Active Status is terminated within one year after a Change of Control
described in Section 2(f)(ii) or (iii);
(iv) With respect to any Partner, upon the occurrence of a Change
of Control described in Section 2(f)(iv) in connection with which each Award is
not assumed or an equivalent award substituted by such successor entity or a
parent or subsidiary of such successor entity; and
(v) With respect to any Partner who Resigns for Good Reason or
whose Active Status is terminated within one year after a Change of Control
described in Section 2(f)(iv) in connection with which each Award is assumed or
an equivalent award substituted by the successor entity or a parent or
subsidiary of such successor entity.
(b) DEFINITION. For purposes of this Section 9, Awards of a
Participant being "Accelerated" means, with respect to such Participant:
(i) any and all Options and SARs shall become fully vested and
immediately exercisable, and shall remain exercisable throughout their entire
term;
(ii) any restriction periods and restrictions imposed on
Restricted Stock or Restricted Stock Units that are not performance-based shall
lapse; and
(iii) the restrictions and deferral limitations and other
conditions applicable to any other Awards shall lapse, and such other Awards
shall become free of all restrictions, limitations or conditions and become
fully vested and transferable to the full extent of the original grant.
PART III
SPECIFIC TERMS APPLICABLE TO OPTIONS, STOCK AWARDS AND SARS
SECTION 10. GRANT, TERMS AND CONDITIONS OF OPTIONS.
(a) DESIGNATION. Each Option shall be designated in an Award Agreement
as either an Incentive Stock Option or a Nonqualified Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Partner during any calendar
year (under all plans of the Company) exceeds $100,000, such excess
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Options shall be treated as Nonqualified Stock Options. Options shall be taken
into account in the order in which they were granted.
(b) TERMS OF OPTIONS. The term of each Incentive Stock Option shall be
no more than ten (10) years from the date of grant. However, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Option is
granted, owns Shares representing more than ten percent (10%) of the voting
power of all classes of shares of the Company or any Parent or Subsidiary, the
term of the Option shall be no more than five (5) years from the date of grant.
The terms of all Nonqualified Stock Options shall be at the discretion of the
Committee.
(c) OPTION EXERCISE PRICES.
(i) The per Share exercise price under an Incentive Stock Option
shall be as follows:
(A) If granted to a Partner who, at the time of the grant of
such Incentive Stock Option, owns shares representing more than ten percent
(10%) of the voting power of all classes of shares of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) If granted to any other Partner, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) The per Share exercise price under a Nonqualified Stock
Option or SAR shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(iii) In no event shall the Board or the Committee be permitted
to Reprice an Option after the date of grant without shareholder approval.
(d) VESTING. To the extent Options vest and become exercisable in
increments, such Options shall cease vesting as of the date of the Optionee's
Disability or termination of such Optionee's Active Status (or, for Directors,
as of the date the Director ceases to serve as a Director) for reasons other
than Retirement or death. Unless otherwise provided in the applicable Award
Agreement or any written severance agreement or employment agreement between the
Company and the Optionee, in case of such Optionee's termination of Active
Status (or, for Directors, the Director's ceasing to serve as a Director) due to
Retirement or death, such Options shall become fully vested and immediately
exercisable.
(e) SUBSTITUTION OF STOCK SARS FOR OPTIONS. Notwithstanding anything
in this Plan to the contrary, if the Company is required to or elects to record
as an expense in its consolidated statements of earnings the cost of Options
pursuant to FAS 123 or a similar accounting requirement, the Committee shall
have the sole discretion to substitute, without receiving Participants'
permission, SARs paid only in stock for outstanding Options; provided, the terms
of the substituted stock SARs are the same as the terms of the Options, the
number of
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shares underlying the number of stock SARs equals the number of shares
underlying the Options and the difference between the Fair Market Value of the
underlying Shares and the grant price of the SARs is equivalent to the
difference between the Fair Market Value of the underlying shares and the
exercise price of the Options.
(f) EXERCISE. Any Option granted hereunder shall be exercisable at
such times and under such conditions as determined by the Committee at the time
of grant, and as are permissible under the terms of the Plan. An Option may not
be exercised for a fraction of a Share.
SECTION 11. GRANT, TERMS AND CONDITIONS OF STOCK AWARDS.
(a) DESIGNATION. Restricted Stock or Restricted Stock Units may be
granted either alone, in addition to, or in tandem with other Awards granted
under the Plan. Restricted Stock or Restricted Stock Units may include a
dividend equivalent right, as permitted by Section 5. After the Committee
determines that it will offer Restricted Stock or Restricted Stock Units, it
will advise the Participant in writing or electronically, by means of an Award
Agreement, of the terms, conditions and restrictions, including vesting, if any,
related to the offer, including the number of Shares that the Participant shall
be entitled to receive or purchase, the price to be paid, if any, and, if
applicable, the time within which the Participant must accept the offer. The
offer shall be accepted by execution of an Award Agreement or as otherwise
directed by the Committee. Restricted Stock Units may be paid as permitted by
Section 7(b). The term of each award of Restricted Stock or Restricted Stock
Units shall be at the discretion of the Committee.
(b) PERFORMANCE CRITERIA. Restricted Stock and Restricted Stock Units
granted pursuant to the Plan that are intended to qualify as "performance based
compensation" under Section 162(m) of the Code shall be subject to the
attainment of performance goals relating to the Performance Criteria selected by
the Committee and specified at the time such Restricted Stock and Restricted
Stock Units are granted. For purposes of this Plan, "Performance Criteria" means
one or more of the following (as selected by the Committee): (i) cash flow; (ii)
earnings per share, including as adjusted (A) to exclude the impact of any (1)
significant acquisitions or dispositions of businesses by the Company, (2)
one-time, non-operating charges, or (3) accounting changes (including the early
adoption of any accounting change mandated by any governing body, organization
or authority); and (B) for any stock split, stock dividend or other
recapitalization; (iii) earnings before interest, taxes, and amortization; (iv)
return on equity; (v) total shareholder return; (vi) share price performance;
(vii) return on capital; (viii) return on assets or net assets; (ix) revenue;
(x) income; (xi) operating income; (xii) operating profit; (xiii) profit margin;
(xiv) return on operating revenue; (xv) return on invested capital; (xvi) market
price; (xvii) brand recognition/acceptance; (xviii) customer satisfaction; (xix)
productivity; or (xx) sales growth and volume. Any of these Performance Criteria
may be used to measure the performance of the Company as a whole or any business
unit or division of the Company.
(c) VESTING. Unless the Committee determines otherwise, the Award
Agreement shall provide for the forfeiture of the non-vested Shares underlying
Restricted Stock or Restricted Stock Units upon the termination of a
Participant's Active Status. To the extent
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that the Participant purchased the Shares granted under such Restricted Stock or
Restricted Stock Units and any such Shares remain non-vested at the time the
Participant's Active Status terminates, the termination of Active Status shall
cause an immediate sale of such non-vested Shares to the Company at the original
price per Share paid by the Participant.
SECTION 12. GRANT, TERMS AND CONDITIONS OF SARS.
(a) GRANTS. The Committee shall have the full power and authority,
exercisable in its sole discretion, to grant SARs to selected Participants. The
Committee is authorized to grant both tandem stock appreciation rights,
consisting of SARs with underlying Options ("Tandem SARs"), and stand-alone
stock appreciation rights ("Stand-Alone SARs") as described below. The terms of
SARs shall be at the discretion of the Committee. In no event shall the Board or
the Committee be permitted to Reprice a SAR after the date of grant without
shareholder approval.
(b) TANDEM SARS.
(i) Participants may be granted a Tandem SAR, exercisable upon
such terms and conditions as the Committee shall establish, to elect between the
exercise of the underlying Option for Shares or the surrender of the Option in
exchange for a distribution from the Company in an amount equal to the excess of
(A) the Fair Market Value (on the Option surrender date) of the number of Shares
in which the Participant is at the time vested under the surrendered Option (or
surrendered portion thereof) over (B) the aggregate exercise price payable for
such vested Shares.
(ii) No such Option surrender shall be effective unless it is
approved by the Committee, either at the time of the actual Option surrender or
at any earlier time. If the surrender is so approved, then the distributions to
which the Participant shall become entitled under this Section 12(b) may be made
in Shares valued at Fair Market Value (on the Option surrender date), in cash,
or partly in Shares and partly in cash, as the Committee shall deem appropriate.
(iii) If the surrender of an Option is not approved by the
Committee, then the Participant shall retain whatever rights he or she had under
the surrendered Option (or surrendered portion thereof) on the Option surrender
date and may exercise such rights at any time prior to the later of (A) five (5)
business days after the receipt of the rejection notice or (B) the last day on
which the Option is otherwise exercisable in accordance with the terms of the
instrument evidencing such Option, but in no event may such rights be exercised
more than ten (10) years after the date of the Option grant.
(c) STAND-ALONE SARS.
(i) A Participant may be granted a Stand-Alone SAR not tied to
any underlying Option under Section 10 of the Plan. The Stand-Alone SAR shall
cover a specified
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number of Shares and shall be exercisable upon such terms and conditions as the
Committee shall establish. Upon exercise of the Stand-Alone SAR, the holder
shall be entitled to receive a distribution from the Company in an amount equal
to the excess of (A) the aggregate Fair Market Value (on the exercise date) of
the Shares underlying the exercised right over (B) the aggregate base price in
effect for those Shares.
(ii) The number of Shares underlying each Stand-Alone SAR and the
base price in effect for those Shares shall be determined by the Committee at
the time the Stand-Alone SAR is granted. In no event, however, may the base
price per Share be less than the Fair Market Value per underlying Share on the
grant date.
(iii) The distribution with respect to an exercised Stand-Alone
SAR may be made in Shares valued at Fair Market Value on the exercise date, in
cash, or partly in Shares and partly in cash, as the Committee shall deem
appropriate.
(d) EXERCISED SARS. The Shares issued in settlement of any SARs
exercised under this Section 12 shall not be available for subsequent issuance
under the Plan. In accordance with Section 4, Shares underlying any exercised
SARs that were not issued in settlement of the SAR shall become available for
future issuance under the Plan.
PART IV
TERM OF PLAN AND SHAREHOLDER APPROVAL
SECTION 13. TERM OF PLAN. The Plan shall become effective as of the
Effective Date. It shall continue in effect until the tenth anniversary of the
Effective Date or until terminated under Section 14 of the Plan or extended by
an amendment approved by the shareholders of the Company pursuant to Section
14(a).
SECTION 14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board or the Committee may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable (including, but not limited to amendments which the Board deems
appropriate to enhance the Company's ability to claim deductions related to
stock option exercises); provided that to the extent required by the Code or the
rules of Nasdaq or the SEC, shareholder approval shall be required for any
amendment of the Plan. Subject to the foregoing, it is specifically intended
that the Board or Committee may amend the Plan without shareholder approval to
comply with legal, regulatory and listing requirements and to avoid
unanticipated consequences deemed by the Committee to be inconsistent with the
purpose of the Plan or any Award Agreement.
(b) PARTICIPANTS IN FOREIGN COUNTRIES. The Committee shall have the
authority to adopt such modifications, procedures, and sub-plans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its
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Subsidiaries may operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries and to meet the
objectives of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any amendment or termination
of the Plan shall not affect Awards already granted and such Awards shall remain
in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Participant and the Committee,
which agreement must be in writing and signed by the Participant and the
Company.
SECTION 15. SHAREHOLDER APPROVAL. The effectiveness of the Plan is subject
to approval by the shareholders of the Company in accordance with applicable
Nasdaq rules.
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