Exhibit 10.1
COGNIZANT TECHNOLOGY SOLUTIONS
CORPORATION
2009 INCENTIVE COMPENSATION
PLAN
ARTICLE ONE
GENERAL PROVISIONS
This 2009 Incentive Compensation
Plan is intended to promote the business success and interests of
Cognizant Technology Solutions Corporation, a Delaware corporation,
by providing eligible persons in the Corporation’s service
with the opportunity to participate in one or more cash or equity
incentive compensation programs designed to encourage them to
continue their service relationship with the Corporation and to
contribute to the Corporation’s growth and long-term
success.
Capitalized terms shall have the
meanings assigned to such terms in the attached
Appendix.
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II.
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STRUCTURE OF
THE PLAN
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A. The Plan shall be divided into
three separate incentive compensation programs:
– the
Discretionary Grant Program under which eligible persons may, at
the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock or stock appreciation rights tied
to the value of such Common Stock,
– the
Stock Issuance Program under which eligible persons may, at the
discretion of the Plan Administrator, be issued shares of Common
Stock pursuant to restricted stock awards, restricted stock units,
performance shares or other stock-based awards which vest upon the
completion of a designated service period and/or the attainment of
pre-established performance milestones, or such shares of Common
Stock may be issued through direct purchase or as a bonus for
services rendered to the Corporation (or any Parent or Subsidiary),
and
– the
Incentive Bonus Program under which eligible persons may, at the
discretion of the Plan Administrator, be provided with bonus
opportunities through performance unit awards and other special
cash incentive programs tied to the attainment of pre-established
performance milestones.
B. The provisions of Articles One
and Five shall apply to all incentive compensation programs under
the Plan and shall govern the interests of all persons under the
Plan.
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III.
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ADMINISTRATION OF THE PLAN
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A. The Compensation Committee shall
have sole and exclusive authority to administer the Plan with
respect to Section 16 Insiders. Administration of the Plan
with respect to all other persons eligible to participate in the
Plan may, at the Board’s discretion, be vested in the
Compensation Committee or a Secondary Board Committee, or the Board
may retain the power to administer those programs with respect to
all such persons. In addition, administration of the Plan may, at
the Board’s discretion, be vested in a Special Award
Committee with authority to administer the Plan with respect to
employees other than Section 16 Insiders and members of such
Special Award Committee and to make Awards to such individuals
under the Plan subject to such limitations and other terms and
conditions as the Board shall specify from time to time.
Notwithstanding the foregoing, any Awards for one or more members
of the Compensation Committee (other than ad hoc or formulaic
Awards made to all or substantially all of the non-employee Board
members on substantially the same basis) must be authorized by a
disinterested majority of the non-employee Board
members.
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B. Members of the Compensation
Committee or any Secondary Board Committee or Special Award
Committee shall serve for such period of time as the Board may
determine and may be removed by the Board at any time. The Board
may also at any time terminate the functions of any Secondary Board
Committee or Special Award Committee and reassume all powers and
authority previously delegated to such committee.
C. Each Plan Administrator shall,
within the scope of its administrative functions under the Plan,
have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the
provisions of the Plan and any outstanding Awards thereunder as it
may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions
under the Plan shall be final and binding on all parties who have
an interest in the Plan under its jurisdiction or any Award
thereunder.
D. Service as a Plan Administrator
by the members of the Compensation Committee or the Secondary Board
Committee shall constitute service as Board members, and the
members of each such committee shall accordingly be entitled to
full indemnification and reimbursement as Board members for their
service on such committee. No member of the Compensation Committee,
the Special Award Committee or the Secondary Board Committee shall
be liable for any act or omission made in good faith with respect
to the Plan or any Award thereunder.
A. The persons eligible to
participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the
Board or the board of directors of any Parent or Subsidiary,
and
(iii) consultants and other
independent advisors who provide services to the Corporation (or
any Parent or Subsidiary).
B. The Plan Administrator shall have
full authority to determine, (i) with respect to Awards made
under the Discretionary Grant Program, which eligible persons are
to receive such Awards, the time or times when those Awards are to
be made, the number of shares to be covered by each such Award, the
time or times when the Award is to become exercisable, the vesting
schedule (if any) applicable to the Award, the maximum term for
which such Award is to remain outstanding and the status of a
granted option as either an Incentive Option or a Non-Statutory
Option; (ii) with respect to Awards under the Stock Issuance
Program, which eligible persons are to receive such Awards, the
time or times when the Awards are to be made, the number of shares
subject to each such Award, the applicable performance and/or
service vesting provisions, the issuance schedule in effect for the
shares that vest and become issuable under such Award, the cash
consideration (if any) payable for those shares and the form (cash
or shares of Common Stock) in which the Award is to be settled; and
(iii) with respect to Awards under the Incentive Bonus
Program, which eligible persons are to receive such Awards, the
time or times when the Awards are to be made, the performance
objectives for each such Award, the amounts payable at designated
levels of attained performance, any applicable service vesting
requirements, the payout schedule for each such Award and the form
(cash or shares of Common Stock) in which the Award is to be
settled.
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V.
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STOCK
SUBJECT TO THE PLAN
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A. The stock issuable under the Plan
shall be shares of authorized but unissued or reacquired Common
Stock, including shares repurchased by the Corporation on the open
market. The number of shares of Common Stock initially reserved for
issuance over the term of the Plan shall be limited to Twenty-Four
Million (24,000,000) shares. The Plan shall serve as the
successor to the Predecessor Plans, and no further stock option
grants or other awards shall be made under the Predecessor Plans on
or after the Plan Effective Date. However, all option grants and
unvested share awards outstanding under the Predecessor Plans on
the Plan Effective Date
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shall continue in full force and effect in
accordance with their terms, and no provision of this Plan shall be
deemed to affect or otherwise modify the rights or obligations of
the holders of those awards with respect to their acquisition of
shares of Common Stock thereunder.
B. Notwithstanding the foregoing,
for each share of Common Stock issued without cash consideration
pursuant to the Stock Issuance or the Incentive Bonus Program, the
number of shares of Common Stock available for issuance under the
Plan shall be reduced by 1.55 shares of Common Stock.
C. The maximum number of shares of
Common Stock that may be issued pursuant to Incentive Options
granted under the Plan shall be limited to Twenty-Four Million
(24,000,000) shares, subject to periodic adjustment in
accordance with Section V.G. of this Article One.
D. Each person participating in the
Plan shall be subject the following limitations:
– for
Awards denominated in shares of Common Stock at the time of grant
(whether subsequently payable in cash or Common Stock, or a
combination of both), the maximum number of shares of Common Stock
for which such Awards may be made to such person in any calendar
year shall not exceed One Million (1,000,000) shares of Common
Stock in the aggregate, and
– for
Awards denominated in dollars at the time of grant (whether
subsequently payable in cash or Common Stock, or a combination of
both), the maximum dollar amount for which such Awards may be made
to such person in any calendar year shall not exceed Three Million
Dollars ($3,000,000).
E. Shares of Common Stock subject to
outstanding Awards made under the Plan shall be available for
subsequent issuance under the Plan to the extent those Awards
expire or terminate for any reason prior to the issuance of the
shares of Common Stock subject to those Awards. Unvested shares
issued under the Plan and subsequently forfeited or repurchased by
the Corporation, at a price per share not greater than the original
issue price paid per share, pursuant to the Corporation’s
repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and
shall accordingly be available for subsequent
reissuance.
F. Should the exercise price of an
option under the Plan be paid with shares of Common Stock, then the
authorized reserve of Common Stock under the Plan shall be reduced
by the gross number of shares for which that option is exercised,
and not by the net number of shares issued under the exercised
stock option. Upon the exercise of any stock appreciation right
under the Plan, the share reserve shall be reduced by the gross
number of shares as to which such right is exercised, and not by
the net number of shares actually issued by the Corporation upon
such exercise. If shares of Common Stock otherwise issuable under
the Plan are withheld by the Corporation in satisfaction of the
withholding taxes or other taxes incurred in connection with the
issuance, vesting or exercise of an Award or the issuance of Common
Stock thereunder (including, without limitation any fringe benefit
or employer taxes permitted to be passed through to the employee
under applicable law), then the number of shares of Common Stock
available for issuance under the Plan shall be reduced on the basis
of the gross number of shares issued, vested or exercised under
such Award, calculated in each instance prior to any such share
withholding.
G. Should any change be made to the
Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares,
spin-off transaction or other change affecting the outstanding
Common Stock as a class without the Corporation’s receipt of
consideration, or should the value of outstanding shares of Common
Stock be substantially reduced as a result of a spin-off
transaction or an extraordinary dividend or distribution, or should
there occur any merger, consolidation or other reorganization, then
equitable adjustments shall be made by the Plan Administrator to
(i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities by
which the share reserve will be reduced for each security issued
without cash consideration under the Stock Issuance and Incentive
Bonus Programs, (iii) the maximum number and/or class of
securities issuable under the Plan pursuant to Incentive Options,
(iv) the maximum number and/or class of securities for which
any one person may be granted Common
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Stock-denominated Awards under the Plan per
calendar year, (v) the number and/or class of securities and
the exercise or base price per share in effect under each
outstanding Award under the Discretionary Grant Program,
(vi) the number and/or class of securities subject to each
outstanding Award under the Stock Issuance Program and the cash
consideration (if any) payable per share, (vii) the number
and/or class of securities subject to each outstanding Award under
the Incentive Bonus Program denominated in shares of Common Stock
and (viii) the number and/or class of securities subject to
the Corporation’s outstanding repurchase rights under the
Plan and the repurchase price payable per share. The adjustments
shall be made in such manner as the Plan Administrator deems
appropriate and such adjustments shall be final, binding and
conclusive. In the event of a Change in Control, however, the
adjustments (if any) shall be made solely in accordance with the
applicable provisions of the Plan governing Change in Control
transactions.
H. Outstanding Awards granted
pursuant to the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its
business or assets.
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ARTICLE TWO
DISCRETIONARY GRANT
PROGRAM
Each option shall be evidenced by an
Award Agreement in the form approved by the Plan Administrator;
provided, however, that each such Award Agreement
shall comply with the terms specified below. Each Award Agreement
evidencing an Incentive Option shall, in addition, be subject to
the provisions of the Plan applicable to such options.
A. Exercise Price
.
1. The exercise price per share
shall be fixed by the Plan Administrator; provided ,
however , that such exercise price shall not be less than
one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the grant date.
2. The exercise price shall become
immediately due upon exercise of the option and shall, subject to
the provisions of the Award Agreement, be payable in one or more of
the forms specified below:
(i) cash or check made payable to
the Corporation,
(ii) shares of Common Stock (whether
delivered in the form of actual stock certificates or through
attestation of ownership) held for the requisite period (if any)
necessary to avoid any resulting charge to the Corporation’s
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date,
(iii) to the extent the option is
exercised for vested shares of Common Stock, through a special sale
and remittance procedure pursuant to which the Optionee shall
concurrently provide instructions to (a) a brokerage firm
(reasonably satisfactory to the Corporation for purposes of
administering such procedure in compliance with the
Corporation’s pre-clearance/pre-notification policies) to
effect the immediate sale of all or a portion of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes and Foreign Taxes required
to be withheld by the Corporation by reason of such exercise and
any employer taxes required to be paid by the Optionee under
Section V.B, V.C or V.D of this Article II and (b) the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm on such settlement date in order to
complete the sale, or
(iv) to the extent the option is at
the time exercisable for vested shares of Common Stock, through the
surrender to the Corporation of all or any part of that vested
portion for an appreciation distribution payable in shares of
Common Stock with a Fair Market Value at the time of such option
surrender equal to the dollar amount by which the then Fair Market
Value of the shares of Common Stock subject to the surrendered
portion exceeds the aggregate exercise price payable for those
shares of Common Stock, with any resulting fractional share to be
rounded down to the next whole share.
Except to the extent such sale and
remittance procedure is utilized, payment of the exercise price for
the purchased shares must be made on the Exercise Date.
B. Term and Exercisability of
Options.
1. No option shall have a term in
excess of seven (7) years measured from the option grant date.
Unless a shorter term is specified in the Award Agreement, each
option under the Discretionary Grant Program shall have such a
seven (7)-year maximum term.
2. Unless otherwise set forth in the
Award Agreement, each option shall vest and become exercisable for
twenty-five percent (25%) of the option shares upon the
Optionee’s completion of each year of Service over the four
(4)-year period measured from the grant date. In no event, however,
shall such option be exercisable for fractional shares.
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3. The Plan Administrator shall also
have the discretionary authority, consistent with Code
Section 162(m), to structure one or more Awards under the
Discretionary Grant Program so that those Awards shall vest and
become exercisable only after the achievement of pre-established
corporate performance objectives based on one or more Performance
Goals and measured over the performance period specified by the
Plan Administrator at the time of the Award
C. Effect of Termination of
Service .
1. Unless otherwise set forth in the
Award Agreement, the following provisions shall govern the exercise
of any options granted to an Optionee pursuant to the Discretionary
Grant Program that are outstanding at the time of his or her
cessation of Service or death:
(i) Should Optionee cease to remain
in Service for any reason (other than death, Permanent Disability,
Misconduct or Cause) while an option is outstanding, then Optionee
(or any person or persons to whom an option is transferred pursuant
to a permitted transfer under Paragraph F below) shall have a three
(3)-month period measured from the date of such cessation of
Service during which to exercise the option, but in no event shall
the option be exercisable at any time after the expiration of the
option term.
(ii) Should Optionee die while his
or her option is outstanding, then the option may be exercised by
(i) the personal representative of Optionee’s estate or
(ii) the person or persons to whom the option is transferred
pursuant to Optionee’s will or the laws of inheritance
following Optionee’s death or (iii) the person to whom
the option is transferred during Optionee’s lifetime pursuant
to a permitted transfer under Paragraph F below, as the case may
be. However, if Optionee dies while holding an outstanding option
under the Discretionary Grant Program and has an effective
beneficiary designation in effect for that option at the time of
his or her death, then the designated beneficiary or beneficiaries
shall have the exclusive right to exercise the option following
Optionee’s death. Any such right to exercise the option shall
lapse, and the option shall cease to be outstanding, upon the
earlier of (i) the expiration of the twelve (12)-month period
measured from the date of Optionee’s death and (ii) the
expiration of the option term.
(iii) Should Optionee cease Service
by reason of Permanent Disability while his or her option is
outstanding, then Optionee (or any person or persons to whom this
option is transferred pursuant to a permitted transfer under
Paragraph F below) shall have a twelve (12)-month period measured
from the date of such cessation of Service during which to exercise
the option. In no event shall the option be exercisable at any time
after the expiration of the option term.
(iv) The applicable period of
post-Service exercisability in effect pursuant to the foregoing
provisions of this Paragraph C.1 shall automatically be extended by
an additional period of time equal in duration to any interval
within such post-Service exercise period during which the exercise
of the option or the immediate sale of the underlying shares of
Common Stock purchasable under that option cannot be effected in
compliance with applicable federal and state securities laws, but
in no event shall such an extension result in the extension of the
option beyond the expiration of the maximum option term.
(v) During the limited period of
post-Service exercisability, the option may not be exercised in the
aggregate for more than the number of shares of Common Stock for
which such option is, at the time of Optionee’s cessation of
Service, vested and exercisable pursuant to the vesting provisions
of Paragraph B.2 above or the special vesting acceleration
provisions of Section IV.A of this Article Two. The option shall
not vest or become exercisable for any additional underlying shares
of Common Stock, whether pursuant to the normal vesting provisions
of Paragraph B.2 above or the special vesting acceleration
provisions of Section IV.A of this Article Two, following
Optionee’s cessation of Service, except to the extent (if
any) specifically authorized by the Plan Administrator pursuant to
an express written agreement with Optionee. Upon the expiration of
such limited exercise period or (if earlier) upon the expiration of
the term, the option shall terminate and cease to be outstanding
for any exercisable shares of Common Stock for which the option has
not otherwise been exercised.
(vi) Should Optionee’s Service
be terminated for Misconduct or Cause or should Optionee otherwise
engage in any Misconduct or other act or omission constituting
grounds for termination for Cause while his or her option is
outstanding, then such option, whether vested or unvested at the
time, shall terminate immediately and cease to remain
outstanding.
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2. The Plan Administrator shall have
complete discretion, exercisable either at the time an option is
granted or at any time while the option remains outstanding,
to:
(i) extend the period of time for
which the option is to remain exercisable following
Optionee’s cessation of Service from the limited exercise
period otherwise in effect for that option to such greater period
of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or
(ii) permit the option to be
exercised, during the applicable post-Service exercise period, not
only with respect to the number of vested shares of Common Stock
for which such option is exercisable at the time of
Optionee’s cessation of Service but also with respect to one
or more additional shares in which Optionee would have vested had
Optionee continued in Service.
D. Stockholder Rights. The
holder of an option shall have no stockholder rights with respect
to the shares subject to the option until such person shall have
exercised the option, paid the exercise price and become a holder
of record of the purchased shares.
E. Repurchase Rights. The
Plan Administrator shall have the discretion to grant options which
are exercisable for unvested shares of Common Stock. Should the
Optionee cease Service while such shares are unvested, the
Corporation shall have the right to repurchase any or all of those
unvested shares at a price per share equal to the
lower of (i) the exercise price paid per share
or (ii) the Fair Market Value per share of Common Stock at the
time of repurchase. The terms upon which such repurchase right
shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set
forth in the document evidencing such repurchase right.
F. Transferability of Options
. The transferability of options granted under the Plan shall be
governed by the following provisions:
(i) Incentive Options :
During the lifetime of the Optionee, Incentive Options shall be
exercisable only by the Optionee and shall not be assignable or
transferable other than by will or the laws of inheritance
following the Optionee’s death.
(ii) Non-Statutory Options .
Non-Statutory Options shall be subject to the same limitation on
transfer as Incentive Options. Notwithstanding the foregoing,
unless otherwise set forth in the Award Agreement, a Non-Statutory
Option may be assigned in whole or in part during the
Optionee’s lifetime, by gratuitous transfer to a revocable
living trust established for the exclusive benefit of Optionee or
Optionee and his or her spouse (the “Trust”) or
pursuant to a domestic relations order to Optionee’s former
spouse in settlement of their marital property rights (the
“Spouse Transferee”). The assigned portion may only be
exercised by the Trust or the Spouse Transferee acquiring the
proprietary interest in the option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those
in effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the
Plan Administrator may deem appropriate.
(iii) Beneficiary
Designations . Notwithstanding the foregoing, the Optionee may
designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding options under this Article Two (whether
Incentive Options or Non-Statutory Options), and those options
shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement
evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be
exercised following the Optionee’s death.
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The terms specified below shall be
applicable to all Incentive Options. Except as modified by the
provisions of this Section II, all the provisions of Articles One,
Two and Six shall be applicable to Incentive Options. Options which
are specifically designated as Non-Statutory Options when issued
under the Plan shall not be subject to the terms of this
Section II.
A. Eligibility. Incentive
Options may only be granted to Employees.
B. Dollar Limitation. The
aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary)
may for the first time become exercisable as Incentive Options
during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000).
To the extent the Employee holds two
(2) or more such options which become exercisable for the
first time in the same calendar year, then for purposes of the
foregoing limitations on the exercisability of those options as
Incentive Options, such options shall be deemed to become first
exercisable in that calendar year on the basis of the chronological
order in which they were granted, except to the extent otherwise
provided under applicable law or regulation.
C. 10% Stockholder. If any
Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less
than one hundred ten percent (110%) of the Fair Market Value
per share of Common Stock on the option grant date, and the option
term shall not exceed five (5) years measured from the option
grant date.
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III.
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STOCK
APPRECIATION RIGHTS
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A. Authority . The Plan
Administrator shall have full power and authority, exercisable in
its sole discretion, to grant stock appreciation rights in
accordance with this Section III to selected Optionees or other
individuals eligible to receive option grants under the
Discretionary Grant Program.
B. Types . Two types of stock
appreciation rights shall be authorized for issuance under this
Section III: (i) tandem stock appreciation rights
(“Tandem Rights”) and (ii) Stand-Alone stock
appreciation rights (“Stand-Alone Rights”).
C. Tandem Rights . The
following terms and conditions shall govern the grant and exercise
of Tandem Rights.
1. One or more Optionees may be
granted a Tandem Right, exercisable upon such terms and conditions
as the Plan Administrator may establish, to elect between the
exercise of the underlying option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the
Corporation in an amount equal to the excess of (i) the Fair
Market Value (on the option surrender date) of the number of shares
in which the Optionee is at the time vested under the surrendered
option (or surrendered portion thereof) over (ii) the
aggregate exercise price payable for such vested shares.
2. Any distribution to which the
Optionee becomes entitled upon the exercise of a Tandem Right may
be made in (i) shares of Common Stock valued at Fair Market
Value on the option surrender date, (ii) cash or (iii) a
combination of cash and shares of Common Stock, as the Plan
Administrator shall determine in its sole discretion. Unless
otherwise specified in the applicable Award Agreement, the
distribution shall be made in shares of Common Stock.
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D. Stand-Alone Rights . The
following terms and conditions shall govern the grant and exercise
of Stand-Alone Rights:
1. One or more individuals eligible
to participate in the Discretionary Grant Program may be granted a
Stand-Alone Right not tied to any underlying option under this
Discretionary Grant Program. The Stand-Alone Right shall relate to
a specified number of shares of Common Stock and shall be
exercisable upon such terms and conditions as the Plan
Administrator may establish. In no event, however, may the
Stand-Alone Right have a maximum term in excess of seven
(7) years measured from the grant date. Except to the extent
otherwise provided in the applicable Award Agreement, the
provisions of Paragraphs B.1 and B.2 of Section I of this Article
Two shall govern the term and exercisability of each Stand-Alone
Right awarded under the Plan.
2. Upon exercise of the Stand-Alone
Right, the holder shall be entitled to receive a distribution from
the Corporation in an amount equal to the excess of (i) the
aggregate Fair Market Value (on the exercise date) of the shares of
Common Stock underlying the exercised right over (ii) the
aggregate base price in effect for those shares.
3. The number of shares of Common
Stock underlying each Stand-Alone Right and the base price in
effect for those shares shall be determined by the Plan
Administrator in its sole discretion at the time the Stand-Alone
Right is granted. In no event, however, may the base price per
share be less than the Fair Market Value per underlying share of
Common Stock on the grant date.
4. Stand-Alone Rights shall be
subject to the same transferability restrictions applicable to
Non-Statutory Options under Section I.F of this Article Two. In
addition, one or more beneficiaries may be designated for an
outstanding Stand-Alone Right in accordance with substantially the
same terms and provisions as set forth in Section I.F of this
Article Two.
5. The distribution with respect to
an exercised Stand-Alone Right may be made in (i) shares of
Common Stock valued at Fair Market Value on the exercise date,
(ii) cash or (iii) a combination of cash and shares of
Common Stock, as the Plan Administrator shall determine in its sole
discretion. Unless otherwise specified in the applicable Award
Agreement, the distribution shall be made in shares of Common
Stock.
6. The holder of a Stand-Alone Right
shall have no stockholder rights with respect to the shares subject
to the Stand-Alone Right unless and until such person shall have
exercised the Stand-Alone Right and become a holder of record of
the shares of Common Stock issued upon the exercise of such
Stand-Alone Right.
E. Post-Service Exercise .
The provisions governing the exercise of Tandem and Stand-Alone
Rights following the cessation of the recipient’s Service
shall be the same as those set forth in Section I.C of this Article
Two for the options granted under the Discretionary Grant Program,
and the Plan Administrator’s discretionary authority under
Section I.C.2 of this Article Two shall also extend to any
outstanding Tandem or Stand-Alone Appreciation Rights.
A. In the event of an actual Change
in Control transaction, each Award outstanding at that time under
the Discretionary Grant Program but not otherwise fully vested and
exercisable shall automatically accelerate and become exercisable
immediately prior to the effective date of that Change in Control
as to all of the shares of Common Stock at the time subject to such
Award, unless (i) such Award is to be assumed by the successor
corporation (or parent thereof) or is otherwise to continue in full
force and effect pursuant to the terms of the Change in Control
transaction or (ii) such Award is to be replaced with a cash
incentive program of the successor corporation which preserves the
spread existing at the time on the Change in Control on any shares
as to which the Award is not otherwise at that time vested and
exercisable and provides for the subsequent vesting and payout of
that spread in accordance with the same exercise/vesting schedule
in effect for that Award or (iii) the acceleration of such
Award is subject to other limitations imposed by the Plan
Administrator.
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B. All outstanding repurchase rights
under the Discretionary Grant Program shall automatically
terminate, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, immediately prior
to the effective date of an actual Change in Control transaction,
except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) or are
otherwise to continue in full force and effect pursuant to the
terms of the Change in Control transaction or (ii) such
accelerated vesting is precluded by other limitations imposed by
the Plan Administrator.
C. Immediately following the
consummation of the Change in Control, all outstanding Awards under
the Discretionary Grant Program shall terminate and cease to be
outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control
transaction.
D. Each Award under the
Discretionary Grant Program which is assumed in connection with a
Change in Control or otherwise continued in effect shall be
appropriately adjusted, immediately after such Change in Control,
to apply to the number and class of securities into which the
shares of Common Stock subject to that Award would have been
converted in consummation of such Change in Control had those
shares actually been outstanding at that time. Equitable
adjustments to reflect such Change in Control shall also be made to
(i) the exercise or base price per share in effect under each
such assumed Award under the Discretionary Grant Program,
provided the aggregate exercise or base price in effect for
such securities shall remain the same, (ii) the maximum number
and/or class of securities available for issuance over the
remaining term of the Plan, (iii) the number and/or class of
securities by which the share reserve will be reduced for each
security issued without cash consideration under the Stock Issuance
and Incentive Bonus Programs, (iv) the maximum number and/or
class of securities which may be issued pursuant to Incentive
Options granted under the Plan, (v) the maximum number and/or
class of securities for which any one person may be granted Common
Stock-denominated Awards under the Plan per calendar year,
(vi) the number and/or class of securities and the exercise or
base price per share in effect under each outstanding Award under
the Discretionary Grant Program, (vii) the number and/or class
of securities subject to each outstanding Award under the Stock
Issuance Program and the cash consideration (if any) payable per
share, (viii) the number and/or class of securities subject to
each outstanding Award under the Incentive Bonus Program
denominated in shares of Common Stock and (ix) the number
and/or class of securities subject to the Corporation’s
outstanding repurchase rights under the Plan and the repurchase
price payable per share. To the extent the actual holders of the
Corporation’s outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change
in Control, the successor corporation may, in connection with the
assumption or continuation of the outstanding Awards under the
Discretionary Grant Program and subject to the Plan
Administrator’s approval, substitute, for the securities
underlying those assumed rights, one or more shares of its own
common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in
Control transaction, provided such common stock is readily traded
on an established U.S. securities exchange.
E. The Plan Administrator shall have
the discretionary authority to structure one or more outstanding
Awards under the Discretionary Grant Program so that those Awards
shall, immediately prior to the effective date of an actual Change
in Control transaction, vest and become exercisable as to all the
shares of Common Stock at the time subject to those Awards and may
be exercised as to any or all of those shares as fully vested
shares of Common Stock, whether or not those Awards are to be
assumed in the Change in Control transaction or otherwise continued
in effect. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the
Corporation’s repurchase rights under the Discretionary Grant
Program so that those rights shall terminate immediately prior to
the effective date of an actual Change in Control transaction, and
the shares subject to those terminated rights shall thereupon vest
in full.
F. The Plan Administrator shall have
full power and authority to structure one or more outstanding
Awards under the Discretionary Grant Program so that those Awards
shall vest and become exercisable as to all the shares of Common
Stock at the time subject to those Awards in the event the
Optionee’s Service is subsequently terminated by reason of an
Involuntary Termination within a designated period following the
effective date of any Change in Control transaction in which those
Awards do not otherwise fully accelerate. In addition, the
Plan
10
Administrator may structure one or more of the
Corporation’s repurchase rights so that those rights shall
immediately terminate with respect to any shares held by the
Optionee at the time of such Involuntary Termination, and the
shares subject to those terminated repurchase rights shall
accordingly vest in full at that time.
G. The portion of any Incentive
Option accelerated in connection with a Change in Control shall
remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the
accelerated portion of such option shall be exercisable as a
Non-statutory Option under the Federal tax laws.
A. The Corporation’s
obligation to deliver shares of Common Stock or make a cash payment
in connection with the grant, exercise, vesting or settlement of
any Award under this Discretionary Grant Program shall be subject
to the satisfaction of all applicable income and employment taxes,
and Foreign Tax withholding requirements, any employer taxes passed
through to the Optionee under Section V.B, V.C or V.D of this
Article II and any other taxes required to be collected at the time
of the grant, exercise, vesting or settlement of such Award.
Accordingly, no shares shall be issued or cash payment made with
respect to an outstanding Award under this Discretionary Grant
Program until all such taxes have been collected.
B. Any Optionee who is subject to
taxation in India shall be required to pay any fringe benefits or
other tax payable by the Corporation (or the Parent or Subsidiary
employing such Optionee) as a result of or with respect to the
grant, vesting or exercise of an Award under the Discretionary
Grant Program or the issuance of shares of Common Stock thereunder
(the “Employer Option Taxes”). Optionee must pay such
Employer Option Taxes at such times and in such form as determined
by the Corporation (or such Parent or Subsidiary).
C. Any Optionee who is subject to
taxation in the United Kingdom shall be liable for and pay all
secondary Class 1 National Insurance Contributions which may be
payable by the Corporation (or the Parent or Subsidiary employing
such Optionee) arising in connection with the grant, vesting or
exercise of an Award under the Discretionary Grant Program or the
issuance of shares of Common Stock thereunder (the “Employer
Option NIC”). The Optionee must pay such Employer Option NIC
at such times and in such form as determined by the
Corpo
