EXHIBIT 99
WELLPOINT INCENTIVE COMPENSATION
PLAN
WellPoint, Inc., an Indiana
corporation (the “ Company ”), has adopted the
WellPoint Incentive Compensation Plan (formerly named, the
“WellPoint 2006 Incentive Compensation Plan”) (the
“ Plan ”) for the benefit of non-employee
directors of the Company and officers and eligible employees and
consultants of the Company and any Subsidiaries and Affiliates (as
each term defined below), as follows:
ARTICLE I.
ESTABLISHMENT; PURPOSES; AND
DURATION
1.1 Establishment of the Plan
. The Board of Directors (defined below) originally established and
adopted the incentive compensation plan known as the
“WellPoint 2006 Incentive Compensation Plan” on
March 15, 2006 and it became effective on May 16, 2006
upon approval by the Company’s shareholders. The
Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Units, Performance
Shares, Cash-Based Awards and Other Stock-Based Awards. The Plan is
hereby amended and restated to reflect an increase in the number of
shares available for issuance under the Plan and to rename the
Plan, the “WellPoint Incentive Compensation Plan.” The
Board of Directors has adopted the Plan, as amended and restated,
March 4, 2009. The Plan, as amended and restated, shall become
effective upon approval by the shareholders of the Company, which
approval must occur within the period beginning on such adoption
date and ending on March 3, 2010 (the “ Effective
Date ”). The Plan shall remain in effect as provided in
Section 1.3.
1.2 Purposes of the Plan .
The purposes of the Plan are to provide additional incentives to
non-employee directors of the Company and to those officers,
employees and consultants of the Company, Subsidiaries and
Affiliates whose substantial contributions are essential to the
continued growth and success of the business of the Company and the
Subsidiaries and Affiliates, in order to strengthen their
commitment to the Company and the Subsidiaries and Affiliates, and
to attract and retain competent and dedicated individuals whose
efforts will result in the long-term growth and profitability of
the Company and to further align the interests of such non-employee
directors, officers, employees and consultants with the interests
of the shareholders of the Company. To accomplish such purposes,
the Plan provides that the Company may grant Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units,
Performance Shares, Cash-Based Awards and Other Stock-Based
Awards.
1.3 Duration of the Plan .
The Plan shall remain in effect, subject to the right of the Board
of Directors to amend or terminate the Plan at any time pursuant to
Article XVII, until all Shares subject to it shall have been
delivered, and any restrictions on such Shares have lapsed,
pursuant to the Plan’s provisions. However, in no event may
an Award be granted under the Plan on or after ten years from the
Effective Date.
ARTICLE II.
DEFINITIONS
Whenever used in the Plan, the
following terms shall have the meanings set forth below, and when
the meaning is intended, the initial letter of the word shall be
capitalized:
2.1 “ Affiliate ”
means any entity other than the Company and any Subsidiary that is
affiliated with the Company through stock or equity ownership or
otherwise and is designated as an Affiliate for purposes of the
Plan by the Committee; provided , however , that,
notwithstanding any other provisions of the Plan to the contrary,
for purposes of NQSOs and SARs, if an individual who otherwise
qualifies as an Employee or Non-Employee Director provides services
to such an entity and not to the Company or a Subsidiary, such
entity may only be designated an Affiliate if the Company qualifies
as a “service recipient,” within the meaning of
Code
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Section 409A, with respect to such
individual; provided further that such definition of
“service recipient” shall be determined by
(a) applying Code Section 1563(a)(1), (2) and (3),
for purposes of determining a controlled group of corporations
under Code Section 414(b), using the language “at least
50 percent” instead of “at least 80 percent” each
place it appears in Code Section 1563(a)(1), (2) and (3),
and by applying Treasury Regulations Section 1.414(c)-2, for
purposes of determining trades or businesses (whether or not
incorporated) that are under common control for purposes of Code
Section 414(c), using the language “at least 50
percent” instead of “at least 80 percent” each
place it appears in Treasury Regulations Section 1.414(c)-2,
and (b) where the use of Shares with respect to the grant of
an Option or SAR to such an individual is based upon legitimate
business criteria, by applying Code Section 1563(a)(1),
(2) and (3), for purposes of determining a controlled group of
corporations under Code Section 414(b), using the language
“at least 20 percent” instead of “at least 80
percent” at each place it appears in Code
Section 1563(a)(1), (2) and (3), and by applying Treasury
Regulations Section 1.414(c)-2, for purposes of determining
trades or businesses (whether or not incorporated) that are under
common control for purposes of Code Section 414(c), using the
language “at least 20 percent” instead of “at
least 80 percent” at each place it appears in Treasury
Regulations Section 1.414(c)-2.
2.2 “ Annual Meeting
” means the annual meeting of shareholders at which members
of the Board are routinely elected.
2.3 “ Award ”
means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Restricted Stock
Units, Performance Shares, Performance Units, Cash-Based Awards,
and Other Stock-Based Awards.
2.4 “ Award Agreement
” means either: (a) a written agreement entered into by
the Company and a Participant setting forth the terms and
provisions applicable to an Award granted under the Plan, or
(b) a written or electronic statement issued by the Company to
a Participant describing the terms and provisions of such Award,
including any amendment or modification thereof. The Committee may
provide for the use of electronic, internet or other non-paper
Award Agreements, and the use of electronic, internet or other
non-paper means for the acceptance thereof and actions thereunder
by a Participant.
2.5 “ Board ” or
“Board of Directors” means the Board of Directors of
the Company.
2.6 “ Cash-Based Award
” means an Award granted to a Participant, as described in
Article IX.
2.7 “ Cause ”
shall have the definition given such term in a Participant’s
Award Agreement, or in the absence of any such definition, as
determined in good faith by the Committee.
2.8 “ Change of Control
” means the first to occur of the following events with
respect to the Company:
(a) any person (as such term is used
in Rule 13d-5 of the SEC under the Exchange Act) or group (as such
term is defined in Section 13(d) of the Exchange Act), other
than a subsidiary of the Company or any employee benefit plan (or
any related trust) of the Company or a subsidiary or affiliate of
the Company, becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of 20% or more of the Shares or of other
voting securities representing 20% or more of the combined voting
power of all voting securities the Company; provided ,
however , that (1) no Change of Control shall be deemed
to have occurred solely by reason of any such acquisition by a
corporation with respect to which, after such acquisition, more
than 80% of both the common stock of such corporation and the
combined voting power of the voting securities of such corporation
are then beneficially owned, directly or indirectly, by the persons
who were the beneficial owners of the Shares and other voting
securities of the Company immediately before such acquisition, in
substantially the same proportion as their ownership of the Shares
and other voting securities of the Company immediately before such
acquisition; (2) if any person or group owns 20% or more but
less than 30% of the combined voting power of the Shares and other
voting securities of the Company and such person or group has a No
Change of Control Agreement with the Company, no Change of Control
shall be deemed to have occurred solely by reason of such ownership
for so long as the No Change of Control
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Agreement remains in effect and such
person or group is not in violation of the No Change of Control
Agreement; and (3) once a Change of Control occurs under this
Section 2.8(a), the occurrence of the next Change of Control
(if any) under this Section 2.8(a) shall be determined by
reference to a person or group other than the person or group whose
acquisition of beneficial ownership created such prior Change of
Control unless the original person or group has in the meantime
ceased to own 20% or more of the Shares or other voting securities
representing 20% or more of the combined voting power of all voting
securities of the Company; or
(b) within any period of thirty-six
(36) or fewer consecutive months individuals who, as of the
first day of such period were members of the Board (the “
Incumbent Directors ”) cease for any reason to
constitute at least 75% of the members of the Board;
provided , however , that (1) any individual who
becomes a member of the Board after the first day of such period
whose nomination for election to the Board was approved by a vote
or written consent of at least 75% of the members of the Board who
are then Incumbent Directors shall be considered an Incumbent
Director, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of the Company (as such terms are used in Rule 14a-11 of
the SEC under the Exchange Act) or an Imminent Change of Control or
other transaction described in Section 2.8(a) or 2.8(c); and
(2) once a Change of Control occurs under this
Section 2.8(b), the occurrence of the next Change of Control
(if any) under this Section 2.8(b) shall be determined by
reference to a period of thirty-six (36) or fewer consecutive
months beginning not earlier than the date immediately after the
date of such prior Change of Control; or
(c) closing of a transaction which
is any of the following:
(1) a merger, reorganization or
consolidation of the Company (“ Merger ”), after
which (A) the individuals and entities who were the respective
beneficial owners of the Shares and other voting securities of the
Company immediately before such Merger do not beneficially own,
directly or indirectly, more than 60% of, respectively, the Shares
or the combined voting power of the common stock and voting
securities of the corporation resulting from such Merger, in
substantially the same proportion as their ownership of the Shares
and other voting securities of the Company immediately before such
Merger;
(2) a Merger after which individuals
who were members of the Board of Directors immediately before the
Merger do not comprise a majority of the members of the Board of
Directors of the corporation resulting from such Merger;
(3) a sale or other disposition by
the Company of all or substantially all of the assets owned by it
(a “ Sale ”) after which the individuals and
entities who were the respective beneficial owners of the Shares
and other voting securities of the Company immediately before such
Sale do not beneficially own, directly or indirectly, more than 60%
of, respectively, the Shares or the combined voting power of the
common stock and voting securities of the transferee of
substantially all of the Company’s assets in such Sale in
substantially the same proportion as their ownership of the Shares
and other voting securities of the Company immediately before such
Sale;
(4) a Sale after which individuals
who were members of the Board of Directors immediately before the
Sale do not comprise a majority of the members of the board of
directors of the transferee corporation that acquired substantially
all of the Company’s assets; or
(5) a liquidation of the
Company.
2.9 “ Code ”
means the Internal Revenue Code of 1986, as it may be amended from
time to time, including rules and regulations promulgated
thereunder and successor provisions and rules and regulations
thereto.
2.10 “ Committee
” means the Compensation Committee of the Board of Directors
or a subcommittee thereof, or such other committee designated by
the Board to administer the Plan.
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2.11 “ Consultant
” means an independent contractor or consultant who performs
services for the Company or a Subsidiary or Affiliate in a capacity
other than as an Employee or Director.
2.12 “ Covered Employee
” means any Employee who is or may become a “covered
employee,” as defined in Code Section 162(m), and who is
designated, either as an individual Employee or a member of a class
of Employees, by the Committee within the shorter of
(i) ninety (90) days after the beginning of the
Performance Period, or (ii) the first twenty-five percent
(25%) of the Performance Period, as a “Covered
Employee” under the Plan for such applicable Performance
Period.
2.13 “ Designated
Percentage ” has the meaning given such term in
Section 11.2.
2.14 “ Director ”
means any individual who is a member of the Board of Directors of
the Company.
2.15 “ Dividend
Equivalents ” means the equivalent value (in cash or
Shares) of dividends that would otherwise be paid on the Shares
subject to an Award but that have not been issued or delivered, as
described in Article XIII.
2.16 “ Effective Date
” shall have the meaning ascribed to such term in
Section 1.1.
2.17 “ Employee ”
means any person designated as an employee of the Company, a
Subsidiary and/or an Affiliate on the payroll records thereof. An
Employee shall not include any individual during any period he or
she is classified or treated by the Company, a Subsidiary or an
Affiliate as an independent contractor, a consultant, or any
employee of an employment, consulting, or temporary agency or any
other entity other than the Company, a Subsidiary and/or an
Affiliate without regard to whether such individual is subsequently
determined to have been, or is subsequently retroactively
reclassified as a common-law employee of the Company, a Subsidiary
and/or an Affiliate during such period. As further provided in
Section 21.4, for purposes of the Plan, upon approval by the
Committee, the term Employee may also include Employees whose
employment with the Company, a Subsidiary or an Affiliate has been
terminated subsequent to being granted an Award under the Plan. For
the avoidance of doubt, a Director who would otherwise be an
“Employee” within the meaning of this Section 2.17
shall be considered an Employee for purposes of the
Plan.
2.18 “ Exchange Act
” means the Securities Exchange Act of 1934, as it may be
amended from time to time, including the rules and regulations
promulgated thereunder and successor provisions and rules and
regulations thereto.
2.19 “ Fair Market
Value ” means the fair market value of the Shares as
determined by the Committee by the reasonable application of such
reasonable valuation method, consistently applied, as the Committee
deems appropriate; provided , however , that, with
respect to ISOs, for purposes of Section 6.3 and 6.9(c), such
fair market value shall be determined subject to
Section 422(c)(7) of the Code; provided further ,
however , that (a) if the Shares are readily tradable
on an established securities market, Fair Market Value on any date
shall be the last sale price reported for the Shares on such market
on such date or, if no sale is reported on such date, on the last
date preceding such date on which a sale was reported, or
(b) if the Shares are admitted for listing on the New York
Stock Exchange or other comparable market, Fair Market Value on any
date shall be the last sale price reported for the Shares on such
market on such date or, if no sale is reported on such date, on the
last day preceding such date on which a sale was reported. In each
case, the Committee shall determine Fair Market Value in a manner
that satisfies the applicable requirements of Code
Section 409A.
2.20 “ Fees ”
means all cash amounts payable to a Non-Employee Director for
services rendered as a director, including retainer fees, meeting
fees and committee fees, but excluding travel and other
out-of-pocket expense reimbursements.
2.21 “ Fiscal Year
” means the calendar year, or such other consecutive
twelve-month period as the Committee may select.
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2.22 “ Freestanding SAR
” means an SAR that is granted independently of any Options,
as described in Article VII.
2.23 “ Grant Price
” means the price established at the time of grant of an SAR
pursuant to Article VII, used to determine whether there is any
payment due upon exercise of the SAR.
2.24 “ Imminent Change of
Control ” means (a) the public announcement (whether
by advertisement, press release, press interview, public statement,
SEC filing or otherwise) of a proposal or offer which if
consummated would be a Change of Control, (b) the making to a
director or executive officer of the Company of a written proposal
which if consummated would be a Change of Control, or (c) the
approval by the Board of Directors or the stockholders of the
Company of a transaction that upon closing would be a Change of
Control.
2.25 “ Incentive Stock
Option ” or “ ISO ” means a right to
purchase Shares under the Plan in accordance with the terms and
conditions set forth in Article VI and which is designated as an
Incentive Stock Option and which is intended to meet the
requirements of Section 422 of the Code.
2.26 “ Incumbent
Directors ” has the meaning given such term in
Section 2.8(a)(ii).
2.27 “ Insider ”
means an individual who is, on the relevant date, an officer,
director or ten percent (10%) beneficial owner of any class of
the Company’s equity securities that is registered pursuant
to Section 12 of the Exchange Act, as determined by the
Committee in accordance with Section 16 of the Exchange
Act.
2.28 “ Merger ”
has the meaning given such term in
Section 2.8(c)(1).
2.29 “ No Change of Control
Agreement ” means a legal, binding and enforceable
agreement executed by and in effect between a person or all members
of a group and the Company that provides that: (1) such person
or group shall be bound by the agreement for the time period of not
less than five (5) years from its date of execution;
(2) such person or group shall not acquire beneficial
ownership or voting control equal to a percentage of the Shares or
the voting power of other voting securities of the Company that
exceeds a percentage specified in the agreement which percentage
shall in all events be less than 30%; (3) such person or group
may not designate for election as directors a number of directors
in excess of 25% of the number of directors on the Board; and
(4) such person or group shall vote the Shares and other
voting securities of the Company in all matters in the manner
directed by the majority of the Incumbent Directors. If any
agreement described in the preceding sentence is violated by such
person or group or is amended in a fashion such that it no longer
satisfies the requirements of the preceding sentence, such
agreement shall, as of the date of such violation or amendment, be
treated for purposes hereof as no longer constituting a No Change
of Control Agreement.
2.30 “ Non-Employee
Director ” means a Director who is not an
Employee.
2.31 “ Nonqualified Stock
Option ” or “ NQSO ” means a right to
purchase Shares under the Plan in accordance with the terms and
conditions set forth in Article VI and which is not intended to
meet the requirements of Section 422 of the Code or otherwise
does not meet such requirements.
2.32 “ Notice ”
means notice provided by a Participant to the Company in a manner
prescribed by the Committee.
2.33 “ Option ”
or “ Stock Option ” means an Incentive Stock
Option or a Nonqualified Stock Option, as described in Article
VI.
2.34 “ Option Price
” means the price at which a Share may be purchased by a
Participant pursuant to an Option.
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2.35 “ Other Stock-Based
Award ” means an equity-based or equity-related Award
described in Section 10.1, granted in accordance with the
terms and conditions set forth in Article X.
2.36 “ Participant
” means any eligible individual as set forth in Article V who
holds one or more outstanding Awards.
2.37 “ Performance-Based
Compensation ” means compensation under an Award that is
intended to satisfy the requirements of Code Section 162(m)
for certain performance-based compensation paid to Covered
Employees. Notwithstanding the foregoing, nothing in the Plan shall
be construed to mean that an Award which does not satisfy the
requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based
compensation for other purposes, including Code
Section 409A.
2.38 “ Performance
Measure ” means performance criteria or measures as
described in Section 12.1 on which the performance goals
described in Article XII are based and which are approved by the
Company’s shareholders pursuant to the Plan in order to
qualify certain Awards as Performance-Based Compensation in
accordance with Article XII.
2.39 “ Performance
Period ” means the period of time during which the
performance goals must be met in order to determine the degree of
payout and/or vesting with respect to, or the amount or entitlement
to, an Award.
2.40 “ Performance
Share ” means an Award of a performance share granted to
a Participant, as described in Article IX.
2.41 “ Performance Unit
” means an Award of a performance unit granted to a
Participant, as described in Article IX.
2.42 “ Period of
Restriction ” means the period during which Shares of
Restricted Stock or Restricted Stock Units are subject to a
substantial risk of forfeiture, and, in the case of Restricted
Stock, the transfer of Shares of Restricted Stock is limited in
some way, as provided in Article VIII.
2.43 “ Prior Plan
” means the Anthem 2001 Stock Incentive Plan.
2.44 “ Qualified Change of
Control ” means a Change of Control that qualifies as a
change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the assets of the
Company, within the meaning of Section 409A(a)(2)(A)(v) of the
Code.
2.45 “ Restricted Stock
” means an Award granted to a Participant pursuant to Article
VIII.
2.46 “ Restricted Stock
Unit ” means an Award, whose value is equal to a Share,
granted to a Participant pursuant to Article VIII.
2.47 “ Rule 16b-3
” means Rule 16b-3 under the Exchange Act, or any successor
rule, as the same may be amended from time to time.
2.48 “ Sale ” has
the meaning given such term in Section 2.8(c)(3).
2.49 “ SEC ”
means the Securities and Exchange Commission.
2.50 “ Securities Act
” means the Securities Act of 1933, as it may be amended from
time to time, including the rules and regulations promulgated
thereunder and successor provisions and rules and regulations
thereto.
2.51 “ Share ”
means a share of common stock of the Company (including any new,
additional or different stock or securities resulting from any
change in corporate capitalization as listed in
Section 4.3).
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2.52 “ Stock Appreciation
Right ” or “ SAR ” means an Award,
granted alone (a “ Freestanding SAR ”) or in
connection with a related Option (a “ Tandem SAR
”), designated as an SAR, pursuant to the terms of Article
VII.
2.53 “ Stock Election
” has the meaning given such term in
Section 11.2.
2.54 “ Subsidiary
” means any present or future corporation which is or would
be a “subsidiary corporation” of the Company as the
term is defined in Section 424(f) of the Code.
2.55 “ Substitute
Awards ” means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for,
options or other awards previously granted, or the right or
obligation to grant future options or other awards, by a company
acquired by the Company, a Subsidiary and/or an Affiliate or with
which the Company, a Subsidiary and/or an Affiliate combines, or
otherwise in connection with any merger, consolidation, acquisition
of property or stock, or reorganization involving the Company, a
Subsidiary or an Affiliate, including a transaction described in
Code Section 424(a).
2.56 “ Tandem SAR
” means a SAR that is granted in connection with a related
Option pursuant to Article VII.
2.57 “ Termination
” means the time when a Participant ceases the performance of
services for the Company, any Affiliate or Subsidiary, as
applicable, for any reason, with or without Cause, including a
Termination by resignation, discharge, death, disability or
retirement, but excluding (a) a Termination where there is a
simultaneous reemployment (or commencement of service) or
continuing employment (or service) of a Participant by the Company,
Affiliate or any Subsidiary, (b) at the discretion of the
Committee, a Termination that results in a temporary severance, and
(c) at the discretion of the Committee, a Termination of an
Employee that is immediately followed by the Participant’s
service as a Non-Employee Director.
ARTICLE III.
ADMINISTRATION
3.1 General . The Committee
shall have exclusive authority to operate, manage and administer
the Plan in accordance with its terms and conditions.
Notwithstanding the foregoing, in its absolute discretion, the
Board may at any time and from time to time exercise any and all
rights, duties and responsibilities of the Committee under the
Plan, including establishing procedures to be followed by the
Committee, but excluding matters which under any applicable law,
regulation or rule, including any exemptive rule under
Section 16 of the Exchange Act (including Rule 16b-3) or
Section 162(m) of the Code, are required to be determined in
the sole discretion of the Committee. If and to the extent that the
Committee does not exist or cannot function, the Board may take any
action under the Plan that would otherwise be the responsibility of
the Committee, subject to the limitations set forth in the
immediately preceding sentence. Notwithstanding any other provision
of the Plan to the contrary, any action or determination
specifically affecting or relating to an Award granted to a
Non-Employee Director, including under Article XI, shall be taken,
or approved or ratified, by the Board.
3.2 Committee . The members
of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors. The Committee
shall consist of not less than three (3) non-employee members
of the Board, each of whom satisfies such criteria of independence
as the Board may establish and such additional regulatory or
listing requirements as the Board may determine to be applicable or
appropriate. Appointment of Committee members shall be effective
upon their acceptance of such appointment. Committee members may be
removed by the Board at any time either with or without cause, and
such members may resign at any time by delivering notice thereof to
the Board. Any vacancy on the Committee, whether due to action of
the Board or any other reason, shall be filled by the Board. The
Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may
authorize any action. Any decision reduced to writing and signed by
a majority of the members of the Committee shall be fully effective
as if it has been made at a meeting duly held.
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3.3 Authority of the
Committee . The Committee shall have full discretionary
authority to grant, pursuant to the terms of the Plan, Awards to
those individuals who are eligible to receive Awards under the
Plan. Except as limited by law or by the Certificate of
Incorporation or By-Laws of the Company, and subject to the
provisions herein, the Committee shall have full power, in
accordance with the other terms and provisions of the Plan,
to:
(a) select Employees, Non-Employee
Directors and Consultants who may receive Awards under the Plan and
become Participants;
(b) determine eligibility for
participation in the Plan and decide all questions concerning
eligibility for, and the amount of, Awards under the
Plan;
(c) determine the sizes and types of
Awards;
(d) determine the terms and
conditions of Awards, including the Option Prices of Options and
the Grant Prices of SARs;
(e) grant Awards as an alternative
to, or as the form of payment for grants or rights earned or
payable under, other bonus or compensation plans, arrangements or
policies of the Company or a Subsidiary or Affiliate;
(f) grant Substitute Awards on such
terms and conditions as the Committee may prescribe, subject to
compliance with the ISO rules under Code Section 422 and the
nonqualified deferred compensation rules under Code
Section 409A, where applicable;
(g) make all determinations under
the Plan concerning Termination of any Participant’s
employment or service with the Company or a Subsidiary or
Affiliate, including whether such Termination occurs by reason of
Cause, disability or in connection with a Change of Control and
whether a leave constitutes a Termination;
(h) determine whether or not a
Change of Control or an Imminent Change of Control shall have
occurred and whether or not a Change of Control is a Qualified
Change of Control;
(i) construe and interpret the Plan
and any agreement or instrument entered into under the Plan,
including any Award Agreement;
(j) establish and administer any
terms, conditions, restrictions, limitations, forfeiture, vesting
or exercise schedule, and other provisions of or relating to any
Award;
(k) establish and administer any
performance goals in connection with any Awards, including related
Performance Measures or performance criteria and applicable
Performance Periods, determine the extent to which any performance
goals and/or other terms and conditions of an Award are attained or
are not attained, and certify whether, and to what extent, any such
performance goals and other material terms applicable to Awards
intended to qualify as Performance-Based Compensation were in fact
satisfied;
(l) construe any ambiguous
provisions, correct any defects, supply any omissions and reconcile
any inconsistencies in the Plan and/or any Award Agreement or any
other instrument relating to any Awards;
(m) establish, adopt, amend, waive
and/or rescind rules, regulations, procedures, guidelines, forms
and/or instruments for the Plan’s operation or
administration;
(n) make all valuation
determinations relating to Awards and the payment or settlement
thereof;
(o) grant waivers of terms,
conditions, restrictions and limitations under the Plan or
applicable to any Award, or accelerate the vesting or
exercisability of any Award;
(p) subject to the provisions of
Article XVII, amend or adjust the terms and conditions of any
outstanding Award and/or adjust the number and/or class of shares
of stock subject to any outstanding Award;
(q) at any time and from time to
time after the granting of an Award, specify such additional terms,
conditions and restrictions with respect to such Award as may be
deemed necessary or appropriate to ensure
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compliance with any and all
applicable laws or rules, including terms, restrictions and
conditions for compliance with applicable securities laws or
listing rules, methods of withholding or providing for the payment
of required taxes and restrictions regarding a Participant’s
ability to exercise Options through a cashless (broker-assisted)
exercise;
(r) determine whether, and to what
extent and under what circumstances Awards may be settled in cash,
Shares or other property or canceled or suspended; and
(s) exercise all such other
authorities, take all such other actions and make all such other
determinations as it deems necessary or advisable for the proper
operation and/or administration of the Plan.
3.4 Award Agreements . The
Committee shall, subject to applicable laws and rules, determine
the date an Award is granted. Each Award shall be evidenced by an
Award Agreement; however , two or more Awards granted to a
single Participant may be combined in a single Award Agreement. An
Award Agreement shall not be a precondition to the granting of an
Award; provided , however , that (a) the
Committee may, but need not, require as a condition to any Award
Agreement’s effectiveness, that such Award Agreement be
executed on behalf of the Company and/or by the Participant to whom
the Award evidenced thereby shall have been granted (including by
electronic signature or other electronic indication of acceptance),
and such executed Award Agreement be delivered to the Company, and
(b) no person shall have any rights under any Award unless and
until the Participant to whom such Award shall have been granted
has complied with the applicable terms and conditions of the Award.
The Committee shall prescribe the form of all Award Agreements,
and, subject to the terms and conditions of the Plan, shall
determine the content of all Award Agreements. Any Award Agreement
may be supplemented or amended in writing from time to time as
approved by the Committee; provided that the terms and
conditions of any such Award Agreement as supplemented or amended
are not inconsistent with the provisions of the Plan. In the event
of any dispute or discrepancy concerning the terms of an Award, the
records of the Committee or its designee shall be
determinative.
3.5 Discretionary Authority;
Decisions Binding . The Committee shall have full discretionary
authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan.
All determinations, decisions, actions and interpretations by the
Committee with respect to the Plan and any Award Agreement, and all
related orders and resolutions of the Committee shall be final,
conclusive and binding on all Participants, the Company and its
shareholders, any Subsidiary or Affiliate and all persons having or
claiming to have any right or interest in or under the Plan and/or
any Award Agreement. The Committee shall consider such factors as
it deems relevant to making or taking such decisions,
determinations, actions and interpretations, including the
recommendations or advice of any Director or officer or employee of
the Company, any director, officer or employee of a Subsidiary or
Affiliate and such attorneys, consultants and accountants as the
Committee may select. A Participant or other holder of an Award may
contest a decision or action by the Committee with respect to such
person or Award only on the grounds that such decision or action
was arbitrary or capricious or was unlawful, and any review of such
decision or action shall be limited to determining whether the
Committee’s decision or action was arbitrary or capricious or
was unlawful.
3.6 Attorneys; Consultants .
The Committee may consult with counsel who may be counsel to the
Company. The Committee may, with the approval of the Board, employ
such other attorneys and/or consultants, accountants, appraisers,
brokers, agents and other persons, any of whom may be an Employee,
as the Committee deems necessary or appropriate. The Committee, the
Company and its officers and Directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. The
Committee shall not incur any liability for any action taken in
good faith in reliance upon the advice of such counsel or other
persons.
3.7 Delegation of
Administration . Except to the extent prohibited by applicable
law, including any applicable exemptive rule under Section 16
of the Exchange Act (including Rule 16b-3) or Section 162(m)
of the Code, or the applicable rules of a stock exchange, the
Committee may, in its discretion, allocate all or any portion of
its responsibilities and powers under this Article III to any one
or more of its members and/or delegate all or any part of its
responsibilities and powers under this Article III to any person or
persons selected by it; provided ,
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however , that the Committee may not delegate its
authority to correct defects, omissions or inconsistencies in the
Plan. Any such authority delegated or allocated by the Committee
under this Section 3.7 shall be exercised in accordance with
the terms and conditions of the Plan and any rules, regulations or
administrative guidelines that may from time to time be established
by the Committee, and any such allocation or delegation may be
revoked by the Committee at any time.
ARTICLE IV.
SHARES SUBJECT TO THE PLAN AND
AWARD LIMITS
4.1 Number of Shares Available
for Grants . The shares of stock subject to Awards granted
under the Plan shall be Shares. Such Shares subject to the Plan may
be either authorized and unissued shares (which will not be subject
to preemptive rights) or previously issued shares acquired by the
Company or any Subsidiary. Subject to adjustment as provided in
Section 4.3, the total number of Shares that may be delivered
pursuant to Awards under the Plan as of the Effective Date shall be
sixty million sixty-eight thousand three hundred and thirty-four
(60,068,334) Shares (the “Share Reserve”), which
represents the sum of (a) twenty million
(20,000,000) Shares authorized under the original Plan,
plus (b) thirty-three million (33,000,000) Shares
authorized under this amendment and restatement of the Plan,
plus (c) seven million sixty-eight thousand, three
hundred and thirty-four (7,068,334) Shares available for
issuance pursuant to the Prior Plan, as previously approved by the
shareholders of the Company, on May 16, 2006. The Share
Reserve shall be increased by any Shares allocable to outstanding
stock options or other awards under the Prior Plan which expire,
are forfeited or otherwise terminate unexercised after May 16,
2006. For purposes of this Section 4.1, (d) each Share
delivered pursuant to an Option shall reduce the Share Reserve by
one (1) Share; (e) each Share subject to the exercised
portion of a SAR (whether the distribution upon exercise is made in
cash, Shares or a combination of cash and Shares) shall reduce the
Share Reserve by one (1) Share, other than an SAR that,
by its terms, from and after the grant date thereof, is payable
only in cash, in which case the Share Reserve shall not be reduced;
(f) each Share delivered pursuant to a Restricted Stock Award
with a per-Share purchase price at least equal to one hundred
percent (100%) of the Fair Market Value of a Share on the grant
date of such Restricted Stock Award shall reduce the Share Reserve
by one (1) Share; and (g) each Share delivered pursuant to an Award
other than an Option, an SAR or a Restricted Stock Award with a
per-Share purchase price at least equal to one hundred percent
(100%) of the Fair Market Value of a Share on the grant date
of such Restricted Stock Award shall reduce the Share Reserve by
one and sixty-seven one hundredths (1.67) Shares for Awards granted
on or after the Effective Date and by two (2) Shares for Awards
granted prior to the Effective Date. Subject to the immediately
preceding sentence and, in the case of ISOs, any limitations
applicable thereto under the Code, any Shares that are subject to
an Option, SAR, or other Award which for any reason expires or is
terminated or canceled without having been fully exercised or
satisfied, and any Shares that are subject to any Restricted Stock
Award (including any Shares subject to a Participant’s
Restricted Stock Award that are repurchased by the Company at the
Participant’s cost), Restricted Stock Unit Award or other
Award granted under the Plan which are forfeited, shall, to the
extent of any such expiration, termination, cancellation or
forfeiture, be available for delivery in connection with future
Awards under the Plan. However, notwithstanding any other
provisions of this Section 4.1 to the contrary,
(i) Shares withheld or tendered to pay the exercise price or
withholding taxes with respect to an outstanding Award shall not
again be made available for issuance pursuant to Awards under the
Plan, and (ii) the payment of cash dividends or Dividend
Equivalents in cash in connection with Awards shall not reduce the
Share Reserve. Any Shares delivered under the Plan upon exercise or
satisfaction of Substitute Awards shall not reduce the Shares
available for delivery under the Plan; provided ,
however , that the total number of Shares that may be
delivered pursuant to Incentive Stock Options granted under the
Plan shall be equal to twenty-seven million
(27,000,000) Shares, as adjusted pursuant to this
Section 4.1, but without application of the foregoing
provisions of this sentence. From and after May 16, 2006, no
further grants or awards were made under the Prior Plan; however,
grants or awards made under the Prior Plan before May 16, 2006
shall continue in effect in accordance with their terms.
4.2 Award Limits . The
following limits shall apply to grants of all Awards under
the Plan:
(a) Options : The maximum
aggregate number of Shares that may be subject to Options granted
in any two consecutive Fiscal Years to any one Participant shall be
four million (4,000,000) Shares.
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(b) SARs : The maximum
aggregate number of Shares that may be subject to Stock
Appreciation Rights granted in any two consecutive Fiscal Years to
any one Participant shall be four million (4,000,000) Shares.
Any Shares covered by Options which include Tandem SARs granted to
one Participant in any two consecutive Fiscal Years shall reduce
this limit on the number of Shares subject to SARs that can be
granted to such Participant in such two consecutive Fiscal
Years.
(c) Restricted Stock or
Restricted Stock Units : The maximum aggregate number of Shares
that may be subject to Awards of Restricted Stock or Restricted
Stock Units granted in any two consecutive Fiscal Years to any one
Participant shall be two million
(2,000,000) Shares.
(d) Performance Shares or
Performance Units : The maximum aggregate grant with respect to
Awards of Performance Shares or Performance Units granted in any
two consecutive Fiscal Years to any one Participant shall be two
million (2,000,000) Shares.
(e) Cash-Based Awards : The
maximum aggregate amount awarded with respect to Cash-Based Awards
made in any two consecutive Fiscal Years to any one Participant
shall not exceed fifteen million dollars ($15,000,000).
(f) Other Stock-Based Awards
: The maximum aggregate grant with respect to Other Stock-Based
Awards made in any two consecutive Fiscal Years to any one
Participant shall be two million (2,000,000) Shares (or cash
amounts based on the value of such number of Shares).
To the extent required by
Section 162(m) of the Code, Shares subject to Options or SARs
which are canceled shall continue to be counted against the limits
set forth in paragraphs (a) and (b) immediately
preceding.
4.3 Adjustments in Authorized
Shares . In the event of any corporate event or transaction
(including a change in the Shares or the capitalization of the
Company), such as a reclassification, recapitalization, merger,
consolidation, reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the
Code), issuance of warrants or rights, dividend or other
distribution (whether in the form of cash, stock or other
property), stock split or reverse stock split, spin-off, split-up,
combination or exchange of shares, repurchase of shares, or other
like change in corporate structure, partial or complete liquidation
of the Company or distribution (other than normal cash dividends)
to shareholders of the Company, or any similar corporate event or
transaction, the Committee, in order to prevent dilution or
enlargement of Participants’ rights under the Plan, shall
substitute or adjust, as applicable, the number, class and kind of
securities which may be delivered under Section 4.1; the
number, class and kind, and/or price (such as the Option Price of
Options or the Grant Price of SARs) of securities subject to
outstanding Awards; the Award limits set forth in Section 4.2;
and other value determinations applicable to outstanding Awards;
provided, however that the number of Shares subject to any Award
shall always be a whole number. The Committee shall also make
appropriate adjustments and modifications in the terms of any
outstanding Awards to reflect or related to any such events,
adjustments, substitutions or changes, including modifications of
performance goals and changes in the length of Performance Periods,
subject to the requirements of Article XII in the case of Awards
intended to qualify as Performance-Based Compensation. Any
adjustment, substitution or change pursuant to this
Section 4.3 made with respect to an Award intended to be an
Incentive Stock Option shall be made only to the extent consistent
with such intent, unless the Committee determines otherwise, and
any such adjustment that is made with respect to an Award that
provides for Performance-Based Compensation shall be made
consistent with the intent that such Award qualify for the
performance-based compensation exception under Section 162(m)
of the Code. The Committee shall not make any adjustment pursuant
to this Section 4.3 that would cause an Award that is
otherwise exempt from Code Section 409A to become subject to
Code Section 409A, or that would cause an Award that is
subject to Code Section 409A to fail to satisfy the
requirements of Code Section 409A. All determinations of the
Committee as to adjustments or changes under this Section 4.3
shall be conclusive and binding on the Participants.
4.4 No Limitation on Corporate
Actions . The existence of the Plan and any Awards granted
hereunder shall not affect in any way the right or power of the
Company, any Subsidiary or any Affiliate to make or authorize any
adjustment, recapitalization, reorganization or other change in its
capital structure or business structure, any
11
merger or consolidation, any issuance of debt,
preferred or prior preference stock ahead of or affecting the
Shares, additional shares of capital stock or other securities or
subscription rights thereto, any dissolution or liquidation, any
sale or transfer of all or part of its assets or business or any
other corporate act or proceeding. Further, except as expressly
provided herein or by the Committee, (i) the issuance by the
Company of Shares or any class of securities convertible into
shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities,
(ii) the payment of a dividend in property other than Shares,
(iii) the occurrence of any capital change described in
Section 4.3 or (iv) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with
respect to, the number of Shares subject to Awards theretofore
granted or the Option Price, Grant Price or purchase price per
share applicable to any Award, unless the Committee shall
determine, in its discretion, that an adjustment is necessary or
appropriate.
ARTICLE V.
ELIGIBILITY AND
PARTICIPATION
5.1 Eligibility . Employees,
Non-Employee Directors and Consultants shall be eligible to become
Participants and receive Awards in accordance with the terms and
conditions of the Plan, subject to the limitations on the granting
of ISOs set forth in Section 6.9(a).
5.2 Actual Participation .
Subject to the provisions of the Plan, the Committee may, from time
to time, select Participants from all eligible Employees,
Non-Employee Directors and Consultants and shall determine the
nature and amount of each Award.
ARTICLE VI.
STOCK
OPTIONS
6.1 Grant of Options .
Subject to the terms and provisions of the Plan, Options may be
granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by
the Committee. The Committee may grant an Option or provide for the
grant of an Option, either from time to time in the discretion of
the Committee or automatically upon the occurrence of specified
events, including the achievement of performance goals, the
satisfaction of an event or condition within the control of the
recipient of the Option or within the control of others. The
granting of an Option shall take place when the Committee by
resolution, written consent or other appropriate action determines
to grant such Option for a particular number of Shares to a
particular Participant at a particular Option Price.
6.2 Award Agreement . Each
Option grant shall be evidenced by an Award Agreement that shall
specify the Option Price, the maximum duration of the Option, the
number of Shares to which the Option pertains, the conditions upon
which the Option shall become exercisable and such other provisions
as the Committee shall determine, which are not inconsistent with
the terms of the Plan. The Award Agreement also shall specify
whether the Option is intended to be an ISO or an NQSO. To the
extent that any Option does not qualify as an ISO (whether because
of its provisions or the time or manner of its exercise or
otherwise), such Option, or the portion thereof which does not so
qualify, shall constitute a separate NQSO.
6.3 Option Price . The Option
Price for each Option shall be determined by the Committee and set
forth in the Award Agreement; provided that, subject to
Section 6.9(c), the Option Price of an Option shall be not
less than one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted; provided
further , that Substitute Awards or Awards granted in
connection with an adjustment provided for in Section 4.3, in
the form of stock options, shall have an Option Price per Share
that is intended to maintain the economic value of the Award that
was replaced or adjusted, as determined by the
Committee.
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6.4 Duration of
Options . Each Option granted to a Participant shall expire at
such time as the Committee shall determine at the time of grant and
set forth in the Award Agreement; provided , however
, that no Option shall be exercisable later than the tenth
(10 th ) anniversary of
its date of grant, subject to the respective last sentences of
Sections 6.5 and 6.9(c).
6.5 Exercise of Options .
Options shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance
determine and set forth in the Award Agreement, which need not be
the same for each grant or for each Option or Participant. An
Agreement may provide that the period of time over which an Option
other than an ISO may be exercised shall be automatically extended
if on the scheduled expiration date of such Option the
Optionee’s exercise of such Option would violate applicable
securities laws; provided , however , that during
such extended exercise period the Option may only be exercised to
the extent the Option was exercisable in accordance with its terms
immediately prior to such scheduled expiration date; provided
further , however , that such extended exercise period
shall end not later than thirty (30) days after the exercise
of such Option first would no longer violate such laws.
6.6 Payment . Options shall
be exercised by the delivery of a written notice of exercise to the
Company, in a form specified or accepted by the Committee, or by
complying with any alternative exercise procedures that may be
authorized by the Committee, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by
full payment for such Shares, which shall include applicable taxes,
if any, in accordance with Article XVIII. The Option Price upon
exercise of any Option shall be payable to the Company in full
either: (a) in cash or its equivalent; (b) subject to
such terms, conditions and limitations as the Committee may
prescribe, by tendering (either by actual delivery or attestation)
unencumbered Shares previously acquired by the Participant
exercising such Option having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price, (c) by a
combination of (a) and (b); or (d) by any other method
approved or accepted by the Committee in its sole discretion,
including, if the Committee so determines, a cashless
(broker-assisted) exercise that complies with all applicable laws.
Subject to any governing rules or regulations, as soon as
practicable after receipt of a written notification of exercise and
full payment in accordance with the preceding provisions of this
Section 6.6, the Company shall deliver to the Participant
exercising an Option, in the Participant’s name, evidence of
book entry Shares, or, upon the Participant’s request, Share
certificates, in an appropriate amount based upon the number of
Shares purchased under the Option, subject to Section 21.9.
Unless otherwise determined by the Committee, all payments under
all of the methods described above shall be paid in United States
dollars.
6.7 Rights as a Shareholder .
No Participant or other person shall become the beneficial owner of
any Shares subject to an Option, nor have any rights to dividends
or other rights of a shareholder with respect to any such Shares,
until the Participant has actually received such Shares following
exercise of his or her Option in accordance with the provisions of
the Plan and the applicable Award Agreement.
6.8 Termination of Employment or
Service . Except as otherwise provided in the Award Agreement,
an Option may be exercised only to the extent that it is then
exercisable, and if at all times during the period beginning with
the date of granting of such Option and ending on the date of
exercise of such Option the Participant is an Employee or
Non-Employee Director, and shall terminate immediately upon a
Termination of the Participant. An Option shall cease to become
newly exercisable upon a Termination of the holder thereof.
Notwithstanding the foregoing provisions of this Section 6.8
to the contrary, the Committee may determine in its discretion that
an Option may be exercised following any such Termination, whether
or not exercisable at the time of such Termination; provided,
however, that in no event may an Option be exercised after the
expiration date of such Option specified in the applicable Award
Agreement, except as provided in the last sentence of
Section 6.5.
6.9 Limitations on Incentive
Stock Options .
(a) General . No ISO shall be
granted to any individual otherwise eligible to participate in the
Plan who is not an Employee of the Company or a Subsidiary on the
date of granting of such Option. Any ISO granted
13
under the Plan shall contain such
terms and conditions, consistent with the Plan, as the Committee
may determine to be necessary to qualify such Option as an
“incentive stock option” under Section 422 of the
Code. Any ISO granted under the Plan may be modified by the
Committee to disqualify such Option from treatment as an
“incentive stock option” under Section 422 of the
Code.
(b) $100,000 Per Year
Limitation . Notwithstanding any intent to grant ISOs, an
Option granted under the Plan will not be considered an ISO to the
extent that it, together with any other “incentive stock
options” (within the meaning of Section 422 of the Code,
but without regard to subsection (d) of such Section) under
the Plan and any other “incentive stock option” plans
of the Company, any Subsidiary and any “parent
corporation” of the Company within the meaning of
Section 424(e) of the Code, are exercisable for the first time
by any Participant during any calendar year with respect to Shares
having an aggregate Fair Market Value in excess of $100,000 (or
such other limit as may be required by the Code) as of the time the
Option with respect to such Shares is granted. The rule set forth
in the preceding sentence shall be applied by taking Options into
account in the order in which they were granted.
(c) Options Granted to Certain
Shareholders . No ISO shall be granted to an individual
otherwise eligible to participate in the Plan who owns (within the
meaning of Section 424(d) of the Code), at the time the Option
is granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or a Subsidiary
or
