EXHIBIT 10.7
Published on November 16, 2000
Exhibit 10.7
TTM TECHNOLOGIES, INC.
2000 EQUITY COMPENSATION PLAN
1. PURPOSES. The purposes of the TTM Technologies, Inc. 2000
EQUITY COMPENSATION PLAN (the "PLAN") are to advance the interests of the
Company and its stockholders by attracting, motivating and retaining officers,
employees and consultants and to reward officers, employees and consultants for
contributing to the success of the Company and the creation of stockholder
value. The Plan permits the Committee to make Awards which constitute "qualified
performance-based compensation" for purposes of Section 162(m) of the Code.
2. DEFINITIONS AND RULES OF CONSTRUCTION.
(a) DEFINITIONS. For purposes of the Plan, the following
capitalized words shall have the meanings set forth below:
"ADMINISTRATOR" means the individual or individuals to whom
the Committee delegates authority under the Plan in accordance with
Section 3(d).
"AWARD" means a Stock Award, Restricted Stock Unit, Option,
SAR, Dividend Equivalent, Other Award, Performance Award or any
combination of the foregoing.
"AWARD DOCUMENT" means an agreement, certificate, grant letter
or other type or form of document or documentation approved by the
Committee which sets forth the terms and conditions of an Award. An
Award Document may be in written, electronic or other media, may be
limited to a notation on the books and records of the Company and,
unless the Committee requires otherwise, need not be signed by a
representative of the Company or a Participant.
"BENEFICIARY" means the person designated in writing by the
Participant to exercise or to receive an Award or payments or other
amounts in respect thereof in the event of the Participant's death or,
if no such person has been designated in writing by the Participant
prior to the date of death, the Participant's estate. No Beneficiary
designation under the Plan shall be effective unless it is in writing
and is received by the Company prior to the date of death of the
applicable Participant.
"BOARD" means the Board of Directors of the Company.
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"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rulings and regulations (including any
proposed regulations) promulgated thereunder.
"COMMITTEE" means the Compensation Committee of the Board, or
such other committee of the Board as may be designated from time to
time by the Board to administer the Plan.
"COMMON STOCK" means the common stock, no par value, of the
Company.
"COMPANIES" means the Company and each Subsidiary.
"COMPANY" means TTM Technologies, Inc, a Delaware corporation.
"DEFERRED COMPENSATION ACCOUNT" means the account established
on the books and records of the Company to record the amount of
deferred compensation payable under the Plan to a Participant.
"DIVIDEND EQUIVALENT" means a right granted in accordance with
Section 12 to receive a payment in cash, shares of Common Stock or
other property equal in value to the dividends declared and paid on a
specified number of shares of Common Stock. A Dividend Equivalent may
constitute a free-standing Award or may be granted in connection with
another type of Award.
"EFFECTIVE DATE" means September 1, 2000.
"ELIGIBLE INDIVIDUAL" means an individual described in Section
4(a) who is eligible for Awards under the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rulings and regulations promulgated
thereunder.
"FAIR MARKET VALUE" means, with respect to a share of Common
Stock, the fair market value thereof as of the relevant date of
determination, as determined in accordance with a valuation methodology
approved by the Committee. In the absence of any alternative valuation
methodology approved by the Committee, the Fair Market Value of a share
of Common Stock shall be (i) if the Stock is admitted to quotation on
the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the average of the highest bid and lowest asked
prices of the Stock as reported for such date or, if no bid and asked
prices were reported for such date, for the last day preceding such
date for which such prices ere reported, or (ii) if the Stock is
admitted to trading on a United States securities exchange or the
NASDAQ National Market System, the closing
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price reported for the Stock on such exchange or system for such date
or, if no sales were reported for such date, for the last day preceding
such date for which a sale was reported. Notwithstanding the foregoing,
the Fair Market Value of the Stock on the effective date of the Initial
Public Offering shall be the offering price to the public of the Stock
on such date.
"GAAP" means U.S. Generally Accepted Accounting Principles.
"INCENTIVE STOCK OPTION" means an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code
and designated by the Committee as an Incentive Stock Option in an
Award Document.
"NONQUALIFIED STOCK OPTION" means any Option which is not an
Incentive Stock Option.
"OPTION" means an Option granted under Section 9 of the Plan,
including an Incentive Stock Option and a Nonqualified Stock Option.
"OTHER AWARD" means an Award granted under the Plan in
accordance with Section 13.
"PARTICIPANT" means an Eligible Individual who has been
granted an Award under the Plan.
"PERFORMANCE AWARD" means the right of a Participant to
receive a specified amount following the completion of a Performance
Period based upon performance in respect of one or more of the
Performance Goals applicable to such period.
"PERFORMANCE GOAL" means any of the following: earnings per
share, net income, net operating income, pretax profits, pretax
operating income, revenue growth, return on sales, return on equity,
return on assets managed, return on investment, increase in the Fair
Market Value of a share of Common Stock, total return to stockholders,
cash flow, or economic value added. A Performance Goal may be measured
over a Performance Period on a periodic, annual, cumulative or average
basis and may be established on a corporate-wide basis or established
with respect to one or more operating units, divisions, Subsidiaries,
acquired businesses, minority investments, partnerships or joint
ventures. To the extent that there is a change in GAAP during a
Performance Period, the Committee may calculate any Performance Goal
with or without regard to such change.
"PERFORMANCE PERIOD" means a period of time designated by the
Committee over which one or more Performance Goals are measured.
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"PERFORMANCE UNIT" means an Award granted pursuant to
Section 11.
"RESTORATION OPTION" means an Option that is awarded upon the
exercise of an Option earlier awarded under the Plan or any other plan
of the Company (an "UNDERLYING OPTION") for which the exercise price is
paid in whole or in part by tendering shares of Common Stock previously
owned by the Participant, where such Restoration Option (i) covers a
number of shares of Common Stock no greater than the number of
previously owned shares tendered in payment of the exercise price of
the Underlying Option plus the number of shares withheld to pay taxes
arising upon such exercise, (ii) the expiration date of the Restoration
Option is no later than the expiration date of the Underlying Option
and (iii) the exercise price per share of the Restoration Option is no
less than the Fair Market Value per share of Common Stock on the date
of exercise of the Underlying Option.
"RESTRICTED SHARES" means shares of Common Stock subject to a
Stock Award that have not vested or remain subject to forfeiture,
transfer or other restrictions in accordance with Section 7 and the
applicable Award Document.
"RESTRICTED STOCK UNIT" means a restricted stock unit award
granted in accordance with Section 8.
"SAR" means a stock appreciation right or limited stock
appreciation right granted in accordance with Section 10.
"STOCK AWARD" means a grant of shares of Common Stock in
accordance with Section 7.
"SUBSIDIARY" means (i) a corporation or other entity with
respect to which the Company, directly or indirectly, has the power,
whether through the ownership of voting securities, by contract or
otherwise, to elect at least a majority of the members of such
corporation's board of directors or analogous governing body, or (ii)
any other corporation or other entity in which the Company, directly or
indirectly, has an equity or similar interest and which the Committee
designates as a Subsidiary for purposes of the Plan. For purposes of
determining eligibility for the grant of Incentive Stock Options under
the Plan, the term "Subsidiary" shall be defined in the manner required
by Section 424(f) of the Code.
"SUBSTITUTE AWARD" means an Award granted upon assumption of,
or in substitution for, outstanding awards previously granted by a
company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property
or stock.
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"TARGET" means the target performance objective set by the
Committee for a Performance Goal.
"TARGET PAYMENT" means the amount payable to a Participant for
a Performance Period upon the achievement of one of more Targets set by
the Committee for that period.
(b) RULES OF CONSTRUCTION. The masculine pronoun shall be
deemed to include the feminine pronoun and the singular form of a word shall be
deemed to include the plural form, unless the context requires otherwise. Unless
the text indicates otherwise, references to sections are to sections of the
Plan.
3. ADMINISTRATION.
(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall
be administered by the Committee, which shall have full power and authority,
subject to the express provisions hereof:
(i) to select Participants from the Eligible Individuals;
(ii) to make Awards in accordance with the Plan;
(iii) to determine the number of shares of Common Stock
subject to each Award or the cash amount payable in connection with an Award;
(iv) to determine the terms and conditions of each Award,
including, without limitation, those related to vesting, forfeiture, payment and
exercisability, and the effect, if any, of a Participant's termination of
employment with the Company, and including the authority to amend the terms and
conditions of an Award after the granting thereof to a Participant in a manner
that is not, without the consent of the Participant, prejudicial to the rights
of such Participant in such Award;
(v) to specify and approve the provisions of the Award
Documents delivered to Participants in connection with their Awards;
(vi) to construe and interpret any Award Document
delivered under the Plan;
(vii) to prescribe, amend and rescind rules and procedures
relating to the Plan;
(viii) subject to the provisions of the Plan and subject to
such additional limitations and restrictions as the Committee may impose, to
delegate to one or more officers of the Company some or all of its authority
under the Plan;
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(ix) to employ such legal counsel, independent auditors
and consultants as it deems desirable for the administration of the Plan and to
rely upon any opinion or computation received therefrom; and
(x) to make all other determinations and to formulate
such procedures as may be necessary or advisable for the administration of the
Plan.
(b) PLAN CONSTRUCTION AND INTERPRETATION. The Committee
shall have full power and authority, subject to the express provisions hereof,
to construe and interpret the Plan.
(c) DETERMINATIONS OF COMMITTEE FINAL AND BINDING. All
determinations by the Committee in carrying out and administering the Plan and
in construing and interpreting the Plan shall be final, binding and conclusive
for all purposes and upon all interested persons.
(d) DELEGATION OF AUTHORITY. The Committee may, but need
not, from time to time delegate some or all of its authority under the Plan to
an Administrator consisting of one or more officers of the Company, one or more
members of the Committee or one or more members of the Board; provided, however,
that the Committee may not delegate its responsibility (i) to make Awards to
individuals who are subject to Section 16 of the Exchange Act, (ii) to make
Awards under Section 14 which are intended to constitute "qualified
performance-based compensation" under Section 162(m) of the Code or (iii) to
amend or terminate the Plan in accordance with Section 20. Any delegation
hereunder shall be subject to the restrictions and limits that the Committee
specifies at the time of such delegation or thereafter. Nothing in the Plan
shall be construed as obligating the Committee to delegate authority to an
Administrator, and the Committee may at any time rescind the authority delegated
to an Administrator appointed hereunder or appoint a new Administrator. At all
times, the Administrator appointed under this Section 3(d) shall serve in such
capacity at the pleasure of the Committee. Any action undertaken by the
Administrator in accordance with the Committee's delegation of authority shall
have the same force and effect as if undertaken directly by the Committee, and
any reference in the Plan to the Committee shall, to the extent consistent with
the terms and limitations of such delegation, be deemed to include a reference
to the Administrator.
(e) RELIANCE AND INDEMNIFICATION. The Committee shall be
entitled to rely in good faith upon any report or other information furnished to
it by any officer or employee of the Companies or from the financial,
accounting, legal or other advisers of any of the Companies. Each member of the
Committee, each Administrator and each other person acting at the direction of
or on behalf of the Committee shall not be liable for any action, omission or
determination made in good faith by him or by any other member of the Committee
or any other such individual in connection with the Plan, except for his own
willful misconduct or as expressly provided by statute, and, to the extent
permitted by law and the bylaws of the Company, shall be
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fully indemnified and protected by the Company with respect to such
determination, act or omission.
4. PARTICIPATION.
(a) ELIGIBLE INDIVIDUALS. Awards may be granted by the
Committee to (i) officers and employees of one of the Companies (or a division
or operating unit thereof), (ii) key consultants or advisers to any of the
Companies, or (iii) any individual who has accepted an offer of employment with
any of the Companies as an officer or employee. Members of the Committee will
not be eligible to receive Awards under the Plan. An individual's status as an
Administrator will not affect his or her eligibility to participate in the Plan.
(b) AWARDS TO PARTICIPANTS. The Committee shall have no
obligation to grant any Eligible Individual an Award or to designate an Eligible
Individual as a Participant for a Performance Period solely by reason of such
Eligible Individual having received a prior Award or having been designated as a
Participant for any prior Performance Period. The Committee may grant more than
one Award to a Participant at the same time or may designate an Eligible
Individual as a Participant in Performance Periods that begin on the same date
or that cover overlapping periods of time.
5. COMMON STOCK SUBJECT TO THE PLAN.
(a) PLAN LIMIT. The number of shares of Common Stock
that is reserved for issuance under the Plan (the "PLAN LIMIT") shall be:
(i) 2,000,000; and
(ii) an annual increase to be added as of the
first day of the Company's fiscal year for each of the years 2001, 2002, 2003
and 2004 commencing on January 1, 2001 equal to (i) the lesser of (a) 1% of the
outstanding shares of Common Stock as of the close of business on the last day
of the immediately preceding fiscal year and (b) 400,000 shares of Common Stock,
or (ii) a lesser amount determined by the Board of Directors of the Company (the
"BOARD"), provided that any shares from any such increase that are not issued
shall be added to the aggregate number of shares available for issuance under
the Plan.
Such shares of Common Stock may be newly issued shares of
Common Stock, treasury shares or any combination thereof.
(b) RULES APPLICABLE TO DETERMINING SHARES AVAILABLE FOR
ISSUANCE. For purposes of determining the number of shares of Common Stock that
remain available for issuance, the following shares shall be added back to the
Plan Limit and again be available for Awards:
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(i) The number of shares tendered to pay the
exercise price of an Option or other Award or to satisfy a Participant's tax
withholding obligations; and
(ii) The number of shares withheld from any
Award to satisfy a Participant's tax withholding obligations or, if applicable,
to pay the exercise price of an Option or other form of Award.
In addition, any shares issued in connection with Substitute Awards shall not be
counted against the Plan Limit and shall not be subject to Section 5(d).
(c) RESERVE. In administering the Plan, the Committee may
establish reserves against the Plan Limit for amounts payable in settlement of
Awards or in settlement of Deferred Compensation Accounts. The Committee may
also promulgate additional rules and procedures for calculating the portion of
the Plan Limit available for Awards. This Section 5 shall be applied and
construed by the Committee so that no share of Common Stock is counted more than
once for purposes of any debit or credit to the Plan Limit.
(d) SPECIAL LIMITS. Anything to the contrary in
Section 5(a) notwithstanding, but subject to Section 18(b), the following
special limits shall apply to shares of Common Stock available for Awards under
the Plan:
(i) The maximum number of shares that may be issued in
the form of Stock Awards, or issued upon settlement of Restricted Stock Units,
SARs, Performance Units or Other Awards, shall not exceed 2,000,000 shares;
PROVIDED, HOWEVER, that any such Stock Awards, Restricted Stock Units, SARs,
Performance Units or Other Awards that are issued in lieu of cash compensation
that otherwise would be paid to a Participant, or in satisfaction of any other
obligation owed by the Company to a Participant, shall not be counted against
such limitation; and
(ii) The maximum number of shares of Common Stock that
may be subject to Options or free-standing SARs granted to any Eligible
Individual in any calendar year shall equal 2,000,000 shares, plus any shares
which were available under this Section 5(d)(ii) for Awards of Options or
free-standing SARs to such Eligible Individual in any prior calendar year but
which were not covered by such Awards.
(iii) In no event will the number of shares of Common
Stock issued in connection with the grant of Incentive Stock Options exceed the
Plan Limit, as in effect on the Effective Date.
6. AWARDS IN GENERAL.
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(a) TYPES OF AWARDS. Awards under the Plan may consist of
Stock Awards, Restricted Stock Units, Options, SARs, Performance Units, Dividend
Equivalents, Other Awards, Performance Awards or any combination of the
foregoing. Any Award may be granted singly or in combination or tandem with any
other Award, as the Committee may determine. Awards may be made in combination
with or as alternatives to grants or rights under any other compensation or
benefit plan of the Companies, including the plan of any acquired entity.
(b) TERMS SET FORTH IN AWARD DOCUMENT. The terms and
provisions of each Award shall be set forth in an Award Document approved by the
Committee and delivered or made available to the Participant as soon as
practicable following the date of the Award. The vesting, exercisability,
payment and other restrictions applicable to an Award (which may include,
without limitation, restrictions on transferability or provision for mandatory
resale to the Company) shall be determined by the Committee and set forth in the
applicable Award Document.
7. STOCK AWARDS.
(a) FORM OF AWARD. The Committee is authorized to grant
shares of Common Stock to an Eligible Individual as a Stock Award for no
consideration other than the provision of services or at a purchase price
determined by the Committee. Stock Awards may be granted in lieu of other
compensation or benefits payable to a Participant or in settlement of previously
granted Awards. Shares of Common Stock granted pursuant to this Section 7 shall
be subject to such restrictions on transfer or other incidents of ownership for
such periods of time, and shall be subject to such conditions of vesting, as the
Committee may determine and as shall be set forth in the Award Document. If
shares of Common Stock are offered for sale under the Plan, the purchase price
shall be payable in cash, or, in the sole discretion of the Committee or as set
forth in the applicable Award Document, in shares of Common Stock already owned
by the Participant, for other consideration acceptable to the Committee or in
any combination of cash, shares of Common Stock or such other consideration.
(b) SHARE CERTIFICATES; RIGHTS AND PRIVILEGES. At the
time Restricted Shares are granted or sold to a Participant, share certificates
representing the appropriate number of Restricted Shares shall be registered in
the name of the Participant but shall be held by the Company in custody for the
account of such person. The certificates shall bear a legend restricting their
transferability as provided herein. Except for such restrictions on transfer or
other incidents of ownership as may be determined by the Committee and set forth
in the Award Document relating to an award or sale of Restricted Shares, a
Participant shall have the rights of a stockholder as to such Restricted Shares,
including the right to receive dividends and the right to vote in accordance
with applicable law.
(c) DISTRIBUTIONS. Unless the Committee determines
otherwise at or after the time of grant, any shares of Common Stock or other
securities of the Company received by a
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Participant to whom Restricted Shares have been granted or sold as a result of a
non-cash distribution to holders of Common Stock or as a stock dividend on
Common Stock shall be subject to the same terms, conditions and restrictions as
such Restricted Shares.
8. RESTRICTED STOCK UNITS. The Committee is authorized
to grant Restricted Stock Units to Eligible Individuals. Each Restricted Stock
Unit shall represent the right to receive, one share of Common Stock subject to
the terms and conditions established by the Committee in connection with the
Award and set forth in the applicable Award Document. Upon satisfaction of the
conditions to vesting and payment specified in the applicable Award Document,
Restricted Stock Units will be payable, at the discretion of the Committee, in
Common Stock, in cash or other property with a value equal to the Fair Market
Value of a share of Common Stock on the date of settlement of the Restricted
Stock Unit. Restricted Stock Units shall be subject to such vesting, payment and
settlement terms and restrictions as the Committee shall impose. Restricted
Stock Units may be granted in lieu of other compensation or benefits payable to
a Participant or in settlement of previously granted Awards.
9. STOCK OPTIONS.
(a) FORM OF AWARD. The Committee is authorized to grant
Options to Eligible Individuals. An Option shall entitle a Participant to
purchase a specified number of shares of Common Stock during a specified time at
an exercise price determined in accordance with Section 9(b) below. The
Committee will fix the vesting and exercisability conditions applicable to all
Options which shall be set forth in the Award Document. An Option shall be
effective for such term as shall be determined by the Committee and set forth in
the Award Document relating to such Option, and the Committee may extend the
term of an Option after the time of grant; provided, however, that the term of
an Option may in no event extend beyond the tenth anniversary of the date of
grant of such Option. The Committee may also provide at or after the time of
grant that a Participant shall have the right to receive a Restoration Option
upon the exercise through the tendering of shares of Common Stock of an Option
or an option granted under another plan of the Company.
(b) EXERCISE PRICE. The exercise price per share of
Common Stock purchasable under a Option shall be fixed by the Committee at the
time of grant or, alternatively, shall be determined by a method specified by
the Committee at the time of grant.
(c) METHOD OF EXERCISE. Subject to the provisions of the
applicable Award Document, the exercise price of an Option may be paid in cash
or shares that have been held at least six months by the relevant Participant or
a combination thereof and, if the applicable Award Document explicitly so
provides, in whole or in part through the withholding of shares subject to the
Stock Option with a value equal to the exercise price. The Committee may also
establish procedures pursuant to which an Option may be exercised through a
"cashless exercise" procedure involving a broker or dealer approved by the
Committee, that affords Participants the
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opportunity to sell immediately some or all of the shares underlying the
exercised portion of the Option in order to generate sufficient cash to pay the
Option exercise price and/or to satisfy withholding tax obligations related to
the Option.
(d) INCENTIVE STOCK OPTIONS. Each Option granted
pursuant to the Plan shall be designated at the time of grant as either an
Incentive Stock Option or as a Nonqualified Stock Option. No Option granted
to a non-employee may be an Incentive Stock Option. No Incentive Stock Option
may be issued pursuant to the Plan to any individual who, at the time the
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of its
Subsidiaries, unless (i) the exercise price determined as of the date of
grant is at least 110% of the Fair Market Value on the date of grant of the
shares of Common Stock subject to such Option, and (ii) the Incentive Stock
Option is not exercisable more than five years from the date of grant
thereof. No Incentive Stock Option may be granted under the Plan after the
tenth anniversary of the Effective Date.
10. STOCK APPRECIATION RIGHTS.
(a) FORM OF AWARD. The Committee is authorized to grant
SARs to Eligible Individuals. An SAR shall entitle a Participant to receive,
upon exercise, (i) an amount in cash equal to the excess, if any, of the Fair
Market Value on the exercise date of the number of shares of Common Stock for
which the stock appreciation right is exercised, over the Fair Market Value of
such number of shares on the date of grant (or, in the case of an SAR granted in
tandem with an Option, the aggregate exercise price which the Participant would
otherwise have been required to pay under the terms of the Option in order to
purchase such shares), (ii) a number of shares of Common Stock having an
aggregate Fair Market Value, as of the date of exercise, equal to the amount
determined as in the preceding clause (i), or (iii) a combination of cash and
shares having an aggregate value equal to the amount determined as in the
preceding clause (i). An SAR may be granted on a free-standing basis or in
tandem with another Award. Notwithstanding the foregoing, the exercise price of
an SAR that is a Substitute Award may be less than the Fair Market Value of a
share of Common Stock on the date of grant.
(b) EXERCISABILITY. The Committee shall determine at or
after the time of grant whether payments in respect of an SAR shall be in cash,
shares of Common Stock or a combination thereof. An SAR shall be exercisable at
the time or times established by the Committee at or after the time of grant.
(c) TANDEM SARS. If an SAR is granted in tandem with an
Option, the SAR shall not be exercisable prior to or later than the time the
related Option could be exercised. An SAR granted in tandem with an Option may
be granted either at the same time as such Option or subsequent thereto. If
granted in tandem with an Option, an SAR shall cover the same number of shares
of Common Stock as covered by the Option (or such lesser number of shares as the
Committee may determine) and shall be exercisable only at such time or times and
to the extent
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the related Option shall be exercisable, and shall have the same term and
exercise price as the related Option (which, in the case of an SAR granted after
the grant of the related Option, may be less than the Fair Market Value per
share on the date of grant of the tandem SAR). Upon exercise of an SAR granted
in tandem with an Option, the related Option shall be canceled automatically to
the extent of the number of shares covered by such exercise; conversely, if the
related Option is exercised as to some or all of the shares covered by the
tandem grant, the tandem SAR shall be canceled automatically to the extent of
the number of shares covered by the Option exercise.
11. PERFORMANCE UNITS. The Committee is authorized to
grant Performance Units to Eligible Individuals. Performance Units may be
granted as fixed or variable share- or dollar-denominated units subject to such
conditions of vesting and time of payment as the Committee may determine and as
shall be set forth in the applicable Award Document relating to such Performance
Units. Performance Units may be paid in cash, Common Stock, Awards, other
property or any combination thereof, as the Committee may determine at or after
the time of grant.
12. DIVIDEND EQUIVALENTS. The Committee is authorized to
grant Dividend Equivalents to a Participant, entitling the Participant to
receive cash, Common Stock, Awards or other property equal in value to the
dividends paid in respect of a specified number of shares of Common Stock.
Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents will be
paid or distributed when accrued or will be deemed reinvested in additional
shares of Common Stock, Awards, or other investment vehicles as the Committee
may specify. Dividend Equivalents may be subject to the same terms and
conditions as any Award granted in connection therewith or to such other terms
and conditions as the Committee specifies in connection with the granting of the
Dividend Equivalents.
13. OTHER AWARDS. The Committee is authorized to grant
Other Awards in addition to the Awards as described in Sections 6 through 12
pursuant to which cash, Common Stock or other securities of the Company, other
property or any combination thereof is, or in the future may be, acquired by a
Participant. Other Awards may be valued in whole or in part with reference to,
or otherwise based upon or related to one or more Performance Goals, the value
of a share of Common Stock or the value of other securities of the Company,
including preferred stock, debentures, notes, convertible or exchangeable debt
securities, rights or warrants, the value of any asset or property of the
Company or such other criteria as the Committee shall specify. Other Awards may
consist solely of cash bonuses or supplemental cash payments to a Participant,
including without limitation, payments to permit the Participant to pay some or
all of the tax liability incurred in connection with the vesting, exercise,
payment or settlement of an Award. Other Awards may be granted in lieu of other
compensation or benefits payable to a Participant or in settlement of previously
granted Awards.
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14. PERFORMANCE AWARDS.
(a) FORM OF AWARD. Subject to the further provisions of
this Section 14, the Committee is authorized to grant Performance Awards under
this Section 14 which shall provide for Target Payments to Participants for a
Performance Period upon the achievement of the Target or Targets established by
the Committee for such Performance Period. Target Payments may be made in cash,
Common Stock, Awards, other property or any combination thereof. The provisions
of this Section 14 shall be construed and administered by the Committee in a
manner which complies with the requirements under Section 162(m) of the Code
applicable to "qualified performance-based compensation."
(b) PERFORMANCE GOALS AND TARGETS. The Performance Goals
and Targets applicable to a Performance Period shall be established by the
Committee prior to, or reasonably promptly following the inception of, a
Performance Period but, to the extent required by Section 162(m) of the Code and
the regulations thereunder, by no later than the earlier of the date that is
ninety days after the commencement of the Performance Period or the day prior to
the date on which twenty-five percent of the Performance Period has elapsed. At
the time that the Committee specifies the Performance Goals and Targets
applicable to a Performance Period, the Committee shall also specify (i) the
Target Payment payable for the Performance Period if the applicable Target or
Targets are achieved, (ii) the amount, if any, payable in excess of the Target
Payment if actual performance exceeds the Target or Targets and (iii) the amount
by which the Target Payment will be reduced if actual performance is less than
the Target or Targets established for the Performance Period. The Committee may
also establish the minimum level of performance on one or more Performance Goals
for a Performance Period below which no amounts will be payable for the
Performance Period.
(c) ADDITIONAL PROVISIONS APPLICABLE TO PERFORMANCE
PERIODS. More than one Performance Goal may apply to a given Performance Period
and the payment in connection with a Performance Award for a given Performance
Period may be made based upon (i) the attainment of the performance Targets for
only one Performance Goal or for any one of the Performance Goals applicable to
that Performance Period or (ii) performance related to two or more Performance
Goals, whether assessed individually or in combination with each other. The
Committee may, in connection with the establishment of Performance Goals and
Targets for a Performance Period, establish a matrix setting forth the
relationship between performance on two or more Performance Goals and the amount
of the Award payable for that Performance Period.
(d) DURATION OF THE PERFORMANCE PERIOD. The Committee
shall establish the duration of each Performance Period at the time that it sets
the Performance Goals and Targets applicable to that period. The Committee shall
be authorized to permit overlapping or consecutive Performance Periods.
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(e) CERTIFICATION. Following the completion of each
Performance Period, the Committee shall certify, in accordance with the
requirements in the regulations under Section 162(m) of the Code, whether the
criteria for paying amounts in respect of each Performance Award related to that
Performance Period have been achieved. Unless the Committee determines
otherwise, no amounts payable in respect of Performance Awards shall be paid for
a Performance Period until the Performance Period has ended and the Committee
has certified the amount of the Awards payable for the Performance Period in
accordance with Section 162(m) of the Code.
(f) DISCRETION. The Committee is authorized at any time
during or after a Performance Period to reduce or eliminate the amount payable
in respect of a Performance Award to any Participant, for any reason, including,
without limitation, (i) in recognition of unusual or nonrecurring events
affecting the Company, any Subsidiary, or any business division or unit or the
financial statements of the Company or any Subsidiary, or in response to changes
in applicable laws, regulations, or accounting principles, (ii) to take into
account a change in the position or duties of a Participant during the
Performance Period or a change in the Participant's employment status during the
Performance Period or (iii) to take into account subjective or objective
performance factors not otherwise set forth in the Plan or applicable Award
Documents.
(g) TIMING OF PAYMENT. Subject to Section 14(e), the
amounts, if any, payable in respect of Performance Awards for a Performance
Period will generally be paid within ninety days following the end of the
applicable Performance.
(h) MAXIMUM AMOUNT PAYABLE PER PARTICIPANT UNDER THIS
SECTION 14. The maximum aggregate value of the cash and other property in
settlement of a Performance Award (prior to adjustment in accordance with
Section 14(i)) payable per Participant for any Performance Period of twelve
months may not exceed $5,000,000 (the "Performance Dollar Limit"). If a
Performance Period is greater than or less than twelve months, the applicable
Performance Dollar Limit, as the case may be, shall be determined by multiplying
the applicable twelve-month limit by a fraction, the numerator of which is the
number of whole and partial months in the Performance Period and the denominator
of which is twelve.
(i) PAYMENT OF PERFORMANCE AWARDS IN SHARES OF COMMON
STOCK. In the event that the Company settles a Performance Award through the
payment of Common Stock that is subject to either forfeiture or transfer
restrictions, the Company may apply a reasonable discount to the then Fair
Market Value of the stock in determining the number of shares issued in
settlement of such portion of the award; provided, however, that the amount of
the discount applied to the Fair Market Value of a share of Common Stock may not
exceed twenty-five percent.
15
15. VESTING; FORFEITURE; TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL. The Committee shall specify at or after the time of grant of
an Award the vesting, forfeiture and other conditions applicable to the Award
and the provisions governing the disposition of an Award in the event of a
Participant's termination of employment with the Companies. In connection with a
Participant's termination of employment, the Committee may, but is not required
to, vary the vesting, exercisability and settlement provisions of an Award
relative to the circumstances resulting in such termination of employment. The
Committee shall have the discretion to accelerate the vesting or exercisability
of, eliminate the restrictions and conditions applicable to, or extend the
post-termination exercise period of an outstanding Award. Similarly, the
Committee shall have full authority to determine the effect, if any, of a change
in control of the Company or an underwritten initial public offering of the
Company's Common Stock on the vesting, exercisability, payment or lapse of
restrictions applicable to an Award, which effect may be specified in the
applicable Award Document or determined at a subsequent time.
16. ACCELERATION AND DEFERRAL.
(a) ACCELERATION. The Committee may accelerate the
payment or settlement of an Award and may apply a reasonable discount to the
amount delivered to the Participant to reflect such accelerated payment or
settlement. If the Committee accelerates the payment or settlement of a
Performance Award, the amount of the discount applied to such accelerated
payment or settlement shall meet the requirements of the regulations under
Section 162(m) of the Code.
(b) DEFERRAL. In accordance with rules and procedures
established by the Committee, the Committee (i) may permit a Participant at or
after the time of grant to defer receipt of payment or settlement of some or all
of an Award to one or more dates elected by the Participant, subsequent to the
date on which such Award is payable or otherwise to be settled, or (ii) may
require at or after the time of grant that the portion of an Award in excess of
an amount specified by the Committee be mandatorily deferred until one or more
dates specified by the Committee. Amounts deferred in accordance with the
preceding sentence shall be noted in a bookkeeping account maintained by the
Company for this purpose and may periodically be credited with notional interest
or earnings in accordance with procedures established by the Committee from time
to time. Deferred amounts shall be paid in cash, Common Stock or other property,
as determined by the Committee at or after the time of deferral, on the date or
dates elected by the Participant or, in the case of amounts which are
mandatorily deferred, on the date or dates specified by the Committee.
17. GENERAL PROVISIONS.
(a) NON-TRANSFERABILITY OF AWARD. Unless the Committee
determines otherwise, no Award or amount payable under, or interest in, the Plan
shall be transferable by a
16
Participant except by will or the laws of descent and distribution or as
required by law, or otherwise be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge; PROVIDED,
HOWEVER, that the Committee may, in its discretion and subject to such terms and
conditions as it shall specify, permit the transfer of an Award for no
consideration to a Participant's family members or to one or more trusts or
partnerships established in whole or in part for the benefit of one or more of
such family members (collectively, "Permitted Transferees"); and provided
further that this sentence shall not preclude a Participant from designating a
Beneficiary to receive the Participant's outstanding Award following the death
of the Participant. Any Award transferred to a Permitted Transferee shall be
further transferable only by will or the laws of descent and distribution or,
for no consideration, to another Permitted Transferee of the Participant. The
Committee, may in its discretion, permit transfers of Awards other than those
contemplated by this Section 17(a). During the lifetime of the Participant, an
Option, SAR or similar-type Other Award shall be exercisable only by the
Participant or by a Permitted Transferee to whom such Option, SAR or Other Award
has been transferred in accordance with this Section 17(a).
(b) RIGHTS WITH RESPECT TO SHARES. A Participant shall
have no rights as a stockholder with respect to shares of Common Stock covered
by an Award until the date the Participant or his nominee becomes the holder of
record of such shares, and, except as provided in Section 12, no adjustments
shall be made for cash dividends or other distributions or other rights as to
which there is a record date preceding the date such person becomes the holder
of record of such shares.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. No Eligible
Individual or Participant shall have any claim or right to receive grants of
Awards under the Plan. Nothing in the Plan or in any Award or Award Document
shall confer upon any employee of the Company any right to continued employment
with the Company or interfere in any way with the right of the Company to
terminate the employment of any of its employees at any time, with or without
cause.
(d) CONSENT TO PLAN. By accepting any Award or other
benefit under the Plan, each Participant and each person claiming under or
through him shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.
(e) WAGE AND TAX WITHHOLDING. The Company or any
Subsidiary is authorized to withhold from any Award or any compensation or other
payment to a Participant amounts of withholding and other taxes due in
connection with any Award, and to take such other action as the Committee may
deem necessary or advisable to enable the Company and the Participants to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority for
the Company to withhold or receive Common Stock or other property and to make
cash payments in respect thereof in
17
satisfaction of a Participant's tax obligations, either on a mandatory or
elective basis in the discretion of the Committee.
(f) COMPLIANCE WITH SECURITIES LAWS. An Award may not be
exercised, and no shares of Common Stock may be issued in connection with an
Award, unless the issuance of such shares has been registered under the
Securities Act of 1933, as amended, and qualified under applicable state "blue
sky" laws, or the Company has determined that an exemption from registration and
from qualification under such state "blue sky" laws is available.
(g) AWARDS TO INDIVIDUALS SUBJECT TO NON-U.S.
JURISDICTIONS. To the extent that Awards under the Plan are awarded to
individuals who are domiciled or resident outside of the United States or to
persons who are domiciled or resident in the United States but who are subject
to the tax laws of a jurisdiction outside of the United States, the Committee
may adjust the terms of the Awards granted hereunder to such person (i) to
comply with the laws of such jurisdiction and (ii) to permit the grant of the
Award not to be a taxable event to the Participant. The authority granted under
the previous sentence shall include the discretion for the Committee to adopt,
on behalf of the Company, one or more sub-plans applicable to separate classes
of Eligible Individuals who are subject to the laws of jurisdictions outside of
the United States.
(h) UNFUNDED PLAN. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. Nothing contained in the Plan (or in
any Award Documents or other documentation related thereto) shall give any
Participant any rights that are greater than those of a general creditor of the
Company; provided, however, that the Committee may authorize the creation of
trusts and deposit therein cash, shares of Common Stock, or other property or
make other arrangements, to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee determines otherwise. The trustee of such trusts
may be authorized to dispose of trust assets and reinvest the proceeds in
alternative investments, subject to such terms and conditions as the Committee
may specify.
(i) OTHER EMPLOYEE BENEFIT PLANS. Payments received by a
Participant under any Award made pursuant to the Plan shall not be included in,
nor have any effect on, the determination of benefits under any other employee
benefit plan or similar arrangement provided by the Company, unless otherwise
specifically provided for under the terms of such plan or arrangement or by the
Committee.
(j) COMPLIANCE WITH RULE 16b-3. Notwithstanding anything
contained in the Plan or in any Award Document to the contrary, if the
consummation of any transaction under the Plan would result in the possible
imposition of liability on a Participant pursuant to Section 16(b) of the
Exchange Act, the Committee shall have the right, in its sole discretion, but
shall not be obligated, to defer such transaction or the effectiveness of such
action to the extent necessary to avoid such liability, but in no event for a
period longer than six months.
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(k) EXPENSES. The costs and expenses of administering and
implementing the Plan shall be borne by the Company.
(l) APPLICATION OF FUNDS. The proceeds received by the
Company from the sale of Common Stock or other securities pursuant to Award will
be used for general corporate purposes.
(m) AWARD DOCUMENT. In the event of any conflict or
inconsistency between the Plan and any Award Document, the Plan shall govern,
and the Award Document shall be interpreted to minimize or eliminate any such
conflict or inconsistency.
18. RECAPITALIZATION OR REORGANIZATION.
(a) AUTHORITY OF THE COMPANY AND STOCKHOLDERS. The
existence of the Plan, the Award Documents and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
(b) CHANGE IN CAPITALIZATION. Notwithstanding any
provision of the Plan or any Award Document, the number and kind of shares
authorized for issuance under Section 5(a), including the maximum number of
shares available under the special limits provided for in Section 5(d), may be
equitably adjusted in the sole discretion of the Committee in the event of a
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, extraordinary dividend, split-up, spin-off, combination, exchange
of shares, warrants or rights offering to purchase Common Stock at a price
substantially below Fair Market Value or other similar corporate event affecting
the Common Stock in order to preserve, but not increase, the benefits or
potential benefits intended to be made available under the Plan. In addition,
upon the occurrence of any of the foregoing events, the number of outstanding
Awards and the number and kind of shares subject to any outstanding Award and
the purchase price per share, if any, under any outstanding Award may be
equitably adjusted (including by payment of cash to a Participant) in the sole
discretion of the Committee in order to preserve the benefits or potential
benefits intended to be made available to Participants granted Awards. Such
adjustments shall be made by the Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final. Unless
otherwise determined by the Committee, such adjusted Awards shall be subject to
the same vesting schedule and restrictions to which the underlying
19
Award is subject. Notwithstanding the foregoing, in the event of a stock split
or reverse stock split, the appropriate proportional adjustment to the Plan
Limit, any other limits hereunder, and the number of shares of Common Stock and
purchase price per share with respect to any outstanding Awards shall
automatically be effected without the necessity of any action by the Committee
or the Board.
19. EFFECTIVE DATE. The Plan shall become effective on
the Effective Date, subject to subsequent approval thereof by the Company's
stockholders at the first annual meeting of stockholders to occur after the
Effective Date, and shall remain in effect until it has been terminated pursuant
to Section 20. If the Plan is not approved by the stockholders at such annual
meeting, the Plan and all interests in the Plan awarded to Participants before
the date of such annual meeting shall be void ab initio and of no further force
and effect. Section 14 of the Plan and the definition of "Performance Goal"
shall be submitted to the Company's stockholders at the first stockholder
meeting that occurs in the fifth year following the year in which the Plan was
last approved by stockholders (or any earlier meeting designated by the Board),
in accordance with the requirements of Section 162(m) of the Code and the
regulations thereunder. If stockholder approval of the Plan is not obtained at
any such meeting, then no further Performance Awards shall be made under Section
14 after the date of such annual meeting, but the remainder of the Plan shall
continue in effect until terminated in accordance with Section 20.
20. AMENDMENT AND TERMINATION. Notwithstanding anything
herein to the contrary, the Board or the Committee may, at any time, terminate
or, from time to time, amend, modify or suspend the Plan; provided, however,
that no amendment which (i) increases the Plan Limit or increases limits set
forth in Section 5(d) (except as otherwise contemplated by the terms of the Plan
as approved by stockholders), (ii) allows for grants of Options (other than
Substitute Awards) at an exercise price less than Fair Market Value at the time
of grant or (iii) amends the last sentence of Section 6 in a manner that would
permit a reduction in the exercise price of Options (or options granted under
another plan of the Companies), under circumstances other than those stated in
such sentence, shall be effective without stockholder approval.
21. GOVERNING LAW. The validity, construction and effect
of the Plan, any rules and regulations relating to the Plan, and any Award shall
be determined in accordance with the laws of the State of Washington applicable
to contracts to be performed entirely within such state and without giving
effect to principles of conflicts of laws.