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Exhibit (10)(iii)(A) 2
LUCENT TECHNOLOGIES INC. 1996 LONG TERM INCENTIVE PROGRAM
As Amended through July 19, 2000
SECTION 1. PURPOSE. The purposes of the Lucent Technologies Inc. 1996
Long Term Incentive Program (the "Plan") are to encourage selected key employees
of Lucent Technologies Inc. (the "Company") and its Affiliates to acquire a
proprietary and vested interest in the growth and performance of the Company, to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of
shareowners, and to enhance the ability of the Company and its Affiliates to
attract and retain individuals of exceptional managerial talent upon whom, in
large measure, the sustained progress, growth and profitability of the Company
depend.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
(a) "Affiliate" shall mean (i) any Person that directly, or through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Company or (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share, Performance Unit, Dividend Equivalent, Other
Stock Unit Award, or any other right, interest, or option relating to Shares or
other securities of the Company granted pursuant to the provisions of the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted by the Committee
hereunder and signed by both the Company and the Participant.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Change in Control" shall mean the happening of any of the
following events:
(i) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (an "Entity")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
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was itself acquired directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (4) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii) of this Section
2(e); or
(ii) A change in the composition of the Board during any two
year period such that the individuals who, as of the beginning of such two year
period, constitute the Board (such Board shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the beginning of the two year
period, whose election, or nomination for election by the Company's shareowners,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or deemed
to be such pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; and provided further, however,
that any such individual whose initial assumption of office occurs as a result
of or in connection with either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an Entity other than the Board shall not be so considered as
a member of the Incumbent Board; or
(iii) The approval by the shareowners of the Company of a
merger, reorganization or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (each, a "Corporate Transaction")
or, if consummation of such Corporate Transaction is subject, at the time of
such approval by shareowners, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding however, such a Corporate Transaction pursuant to which
(A) all or substantially all of the individuals and entities who are the
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of the outstanding
shares of common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation or other Person which as a result of such transaction
owns the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries (a "Parent Company")) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, (B) no Entity (other than the Company, any employee
benefit plan (or related trust) of the Company, such corporation resulting from
such Corporate Transaction or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (A) above is satisfied
in connection with the applicable Corporate Transaction, such Parent Company)
will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
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securities of such corporation entitled to vote generally in the election of
directors unless such ownership resulted solely from ownership of securities of
the Company prior to the Corporate Transaction, and (C) individuals who were
members of the Incumbent Board will immediately after the consummation of the
Corporate Transaction constitute at least a majority of the members of the board
of directors of the corporation resulting from such Corporate Transaction (or,
if reference was made to equity ownership of any Parent Company for purposes of
determining whether clause (A) above is satisfied in connection with the
applicable Corporate Transaction, of the Parent Company); or
(iv) The approval by the shareowners of the Company of a
complete liquidation or dissolution of the Company.
(f) "Change in Control Price" means the higher of (A) the highest
reported sales price, regular way, of a Share in any transaction reported on the
New York Stock Exchange Composite Tape or other national exchange on which
Shares are listed or on NASDAQ during the 60-day period prior to and including
the date of a Change in Control or (B) if the Change in Control is the result of
a tender or exchange offer or a Corporate Transaction, the highest price per
Share paid in such tender or exchange offer or Corporate Transaction; provided
however, that in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change in Control Price shall be
in all cases the Fair Market Value of a Share on the date such Incentive Stock
Option or Stock Appreciation Right is exercised or deemed exercised. To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration shall be determined in the
sole discretion of the Board.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(h) "Committee" shall mean the Corporate Governance and Compensation
Committee of the Board (or any successor committee).
(i) "Company" shall mean Lucent Technologies Inc., a Delaware
corporation.
(j) "Company Action" shall mean a Company or Subsidiary declared force
management program, sale of a unit or portion of a unit, Company or Subsidiary
initiated transfer of a Participant to a corporation, partnership, limited
liability company or other business entity in which the Company has an equity
interest and which does not constitute a Subsidiary or placement of the job
function of a Participant with an outsourcing contractor.
(k) "Covered Employee" shall mean a "covered employee" within the
meaning of Section 162(m)(3) of the Code.
(l) "Dividend Equivalent" shall mean any right granted pursuant to
Section 14(h) hereof.
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(m) "Employee" shall mean any employee of the Company or of any
Affiliate. Unless otherwise determined by the Committee in its sole discretion,
for purposes of the Plan, an Employee shall be considered to have terminated
employment and to have ceased to be an Employee if his or her employer ceases to
be an Affiliate, even if he or she continues to be employed by such employer.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(o) "Fair Market Value" shall mean, (i) with respect to Shares, the
average of the highest and lowest reported sales prices, regular way, of Shares
in transactions reported on the New York Stock Exchange on the date of
determination of Fair Market Value, or if no sales of Shares are reported on the
New York Stock Exchange for that date, the comparable average sales price for
the last previous day for which sales were reported on the New York Stock
Exchange, and (ii) with respect to any other property, the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee.
(p) "Incentive Stock Option" shall mean an Option granted under Section
6 hereof that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.
(q) "Net Income" shall mean the net income of the Company as determined
under generally accepted accounting principles, excluding (a) extraordinary
items (net of applicable taxes); (b) cumulative effects of changes in accounting
principles; (c) securities gains and losses (net of applicable taxes); and (d)
nonrecurring items (net of applicable taxes) including, but not limited to,
gains or losses on asset dispositions and sales of divisions, business units or
subsidiaries, restructuring charges, gains and losses from qualified benefit
plan curtailments and settlements, and income or expenses related to deferred
tax assets.
(r) "Nonstatutory Stock Option" shall mean an Option granted under
Section 6 hereof that is not intended to be an Incentive Stock Option.
(s) "Officer" shall mean any manager of the Company or any Affiliate
holding a position above the executive level (E band) or any future salary grade
that is the equivalent thereof.
(t) "Option" shall mean any right granted to a Participant under the
Plan allowing such Participant to purchase Shares at such price or prices and
during such period or periods as the Committee shall determine.
(u) "Other Stock Unit Award" shall mean any right granted to a
Participant by the Committee pursuant to Section 10 hereof.
(v) "Participant" shall mean an Employee who is selected by the
Committee to receive an Award under the Plan.
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(w) "Performance Award" shall mean any Award of Performance Shares or
Performance Units pursuant to Section 9 hereof.
(x) "Performance Period" shall mean that period, established by the
Committee at the time any Performance Award is granted or at any time
thereafter, during which any performance goals specified by the Committee with
respect to such Award are to be measured.
(y) "Performance Share" shall mean any grant pursuant to Section 9
hereof of a unit valued by reference to a designated number of Shares, which
value may be paid to the Participant by delivery of such property as the
Committee shall determine, including, without limitation, cash, Shares, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant or
thereafter.
(z) "Performance Unit" shall mean any grant pursuant to Section 9
hereof of a unit valued by reference to a designated amount of property other
than Shares, which value may be paid to the Participant by delivery of such
property as the Committee shall determine, including, without limitation, cash,
Shares, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.
(aa) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, limited
liability company, other entity or government or political subdivision thereof.
(bb) "Restricted Stock" shall mean any Share issued with the
restriction that the holder may not sell, transfer, pledge, or assign such Share
and with such other restrictions as the Committee, in its sole discretion, may
impose (including, without limitation, any restriction on the right to vote such
Share, and the right to receive any cash dividends), which restrictions may
lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
(cc) "Restricted Stock Award" shall mean an award of Restricted Stock
under Section 8 hereof.
(dd) "Shares" shall mean the shares of common stock, $.01 par value, of
the Company and such other securities of the Company as the Committee may from
time to time determine.
(ee) "Stock Appreciation Right" shall mean any right granted to a
Participant pursuant to Section 7 hereof to receive, upon exercise by the
Participant, the excess of (i) the Fair Market Value of one Share on the date of
exercise or, if the Committee shall so determine in the case of any such right
other than one related to any Incentive Stock Option, at any time during a
specified period before the date of exercise over (ii) the grant price of the
right on the date of grant, or if granted in connection with an outstanding
Option on the date of grant of the related Option, as specified by the
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Committee in its sole discretion, which, other than in the case of Substitute
Awards, shall not be less than the Fair Market Value of one Share on such date
of grant of the right or the related Option, as the case may be. Any payment by
the Company in respect of such right may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in its sole discretion,
shall determine.
(ff) "Subsidiary" shall mean a "subsidiary corporation" of the Company
as defined in Section 424(f) of the Code, an entity in which the Company
directly or indirectly owns 50% or more of the voting interests or an entity in
which the Company has a significant equity interest, as determined by the Board
or the Committee.
(gg) "Substitute Award" is defined in Section 4(a).
(hh) "Term" shall mean the period beginning on February 18, 1998, and
ending on February 28, 2003.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the
Committee. The Committee shall have full power and authority, subject to such
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company and
its Affiliates to whom Awards may from time to time be granted hereunder; (ii)
determine the type or types of Award to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property or canceled or suspended; (vi) determine whether,
to what extent and under what circumstances cash, Shares and other property and
other amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan. Decisions of the Committee shall be
final, conclusive and binding upon all Persons, including the Company, any
Participant, any shareowner, and any employee of the Company or of any
Affiliate.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 4(b), the total number
of Shares available for Awards granted under the Plan on and after February 18,
1998 and on or prior to February 28, 2003 shall be one hundred twenty-eight
million (128,000,000) Shares; provided, that if any Shares are subject to an
Award granted hereunder that is forfeited, settled in cash, expires, or
otherwise is terminated without issuance of Shares, the Shares subject to such
Award shall again be available for Awards under the Plan, if no Participant
shall have received any benefits of ownership in respect thereof; and provided
further, that no more than forty million (40,000,000) Shares shall be available
for the grant of Incentive Stock Options under the Plan during
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the Term; and provided further, that no more than forty million (40,000,000)
Shares shall be available for the grant of Awards in the form of Stock
Appreciation Rights pursuant to Section 7 (excluding for this purpose any Stock
Appreciation Right granted in relation to an Incentive Stock Option or a
Nonstatutory Stock Option), Restricted Stock pursuant to Section 8, Performance
Shares pursuant to Section 9, and Other Stock Unit Awards pursuant to Section 10
that are valued by reference to Shares during the Term; and provided further,
that no Participant may be granted Awards with respect to more than twenty
million (20,000,000) Shares in the aggregate during the Term. In addition,
Awards granted or Shares issued by the Company through the assumption of, or in
substitution or exchange for, employee benefit awards or the right or obligation
to make future employee benefit awards, in connection with the acquisition of
another corporation or business entity ("Substitute Awards") shall not reduce
the Shares available for grants under the Plan or to a Participant. Any Shares
issued hereunder may consist, in whole or in part, of authorized and unissued
Shares or treasury Shares.
(b) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split, spin-off or
similar transaction or other change in corporate structure affecting the Shares,
such adjustments and other substitutions shall be made to the Plan and to Awards
as the Committee in its sole discretion deems equitable or appropriate,
including without limitation such adjustments in the aggregate number, class and
kind of Shares which may be delivered under the Plan, in the aggregate or to any
one Participant, in the number, class, kind and option or exercise price of
Shares subject to outstanding Options, Stock Appreciation Rights or other Awards
granted under the Plan, and in the number, class and kind of Shares subject to
Awards granted under the Plan (including, if the Committee deems appropriate,
the substitution of similar options to purchase the shares of, or other awards
denominated in the shares of, another company) as the Committee may determine to
be appropriate in its sole discretion, provided that the number of Shares or
other securities subject to any Award shall always be a whole number.
SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the
Committee) shall be eligible to be selected as a Participant.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan.
Options may be granted for no consideration or for such consideration as the
Committee may determine. Any Option granted under the Plan shall be evidenced by
an Award Agreement in such form as the Committee may from time to time approve.
Any such Option shall be subject to the following terms and conditions and to
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The exercise price per Share under an Option shall be
determined by the Committee in its sole discretion; provided that except in the
case of an Option pursuant to a Substitute Award, such purchase price shall not
be less than the Fair Market Value of a Share on the date of the grant of the
Option.
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(b) OPTION PERIOD. The term of each Option shall be fixed by the
Committee in its sole discretion; provided that no Incentive Stock Option shall
be exercisable after the expiration of ten years from the date the Option is
granted.
(c) EXERCISABILITY. Options shall be exercisable at such time or times
as determined by the Committee at or subsequent to grant. Unless otherwise
determined by the Committee at or subsequent to grant, no Incentive Stock Option
shall be exercisable during the year ending on the day before the first
anniversary date of the granting of the Incentive Stock Option.
(d) METHOD OF EXERCISE. Subject to the other provisions of the Plan and
any applicable Award Agreement, any Option may be exercised by the Participant
in whole or in part at such time or times, and the Participant may make payment
of the option price in such form or forms, including, without limitation,
payment by delivery of cash, Shares or other consideration (including, where
permitted by law and the Committee, Awards) having a Fair Market Value on the
exercise date equal to the total option price, or by any combination of cash,
Shares and other consideration as the Committee may specify in the applicable
Award Agreement.
(e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options
held by any Participant which are exercisable for the first time by such
Participant during any calendar year under the Plan (and under any other benefit
plans of the Company or of any parent or subsidiary corporation of the Company)
shall not exceed $100,000 or, if different, the maximum limitation in effect at
the time of grant under Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. The terms of any Incentive Stock Option
granted hereunder shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision, and any regulations promulgated
thereunder.
(f) FORM OF SETTLEMENT. In its sole discretion, the Committee may
provide, at the time of grant, that the shares to be issued upon an Option's
exercise shall be in the form of Restricted Stock or other similar securities,
or may reserve the right so to provide after the time of grant.
(g) COMPANY ACTION. With respect to any Option granted after July 19,
2000, unless otherwise provided in the applicable Award Agreement, if a
Participant's employment terminates by reason of a Company Action, then the
Company Action Vesting Portion of any such Option held by that Participant shall
not be forfeited and canceled and instead shall become immediately exercisable
upon termination until the earlier of ninety days following termination of
employment and the original expiration date of the Option. "Company Action
Vesting Portion" is determined as of the date of termination of employment and
shall be the portion of the Option computed as follows (but not less than zero):
Company Action Vesting Portion = N x M/D - E
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where:
N = the number of shares originally subject to the Option,
M = the number of complete months elapsed since the grant date
of the Option,
D = the number of complete months between the grant date of
the Option and the date on which the Option was originally
scheduled to become completely exercisable, and
E = the number of Shares covered by the Option for which the
Option has already become exercisable (regardless of whether
the Option has been exercised with respect to such Shares).
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock Appreciation Rights need not be
the same with respect to each recipient. Any Stock Appreciation Right related to
a Nonstatutory Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such Option.
Any Stock Appreciation Right related to an Incentive Stock Option must be
granted at the same time such Option is granted. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of Shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 8. RESTRICTED STOCK. Restricted Stock Awards may be issued
hereunder to Participants, for no cash consideration or for such minimum
consideration as may be required by applicable law, either alone or in addition
to other Awards granted under the Plan. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient. Any Restricted Stock
Award issued hereunder may be evidenced in such manner as the Committee in its
sole discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of a Restricted Stock
Award, such certificate shall be registered in the name of the Participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. Except as otherwise determined by the
Committee, upon termination of employment for any reason during the restriction
period, any portion of a Restricted Stock Award still subject to restriction
shall be forfeited by the Participant and reacquired by the Company.
SECTION 9. PERFORMANCE AWARDS. Performance Awards in the form of
Performance Units or Performance Shares may be issued hereunder to Participants,
for
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no cash consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards granted under the
Plan. The performance criteria to be achieved during any Performance Period and
the length of the Performance Period shall be determined by the Committee upon
the grant of each Performance Award or at any time thereafter. Except as
provided in Section 11, Performance Awards will be distributed only after the
end of the relevant Performance Period. Performance Awards may be paid in cash,
Shares, other property or any combination thereof, in the sole discretion of the
Committee at the time of payment. The performance levels to be achieved for each
Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period.
SECTION 10. OTHER STOCK UNIT AWARDS. Other Awards of Shares and other
Awards that are valued in whole or in part by reference to, or are otherwise
based on, Shares or other property ("Other Stock Unit Awards") may be granted
hereunder to Participants, either alone or in addition to other Awards granted
under the Plan. Other Stock Unit Awards may be paid in Shares, other securities
of the Company, cash or any other form of property as the Committee shall
determine. Shares (including securities convertible into Shares) granted under
this Section 10 may be issued for no cash consideration or for such minimum
consideration as may be required by applicable law. Shares (including securities
convertible into Shares) purchased pursuant to a purchase right awarded under
this Section 10 shall be purchased for such consideration as the Committee shall
in its sole discretion determine, which shall not be less than the Fair Market
Value of such Shares or other securities as of the date such purchase right is
awarded. Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees of the Company and its
Affiliates to whom and the time or times at which such Awards shall be made, the
number of Shares to be granted pursuant to such Awards, and all other conditions
of the Awards. The provisions of Other Stock Unit Awards need not be the same
with respect to each recipient.
SECTION 11. CHANGE IN CONTROL PROVISIONS.
(a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
the contrary, unless the Committee shall determine otherwise at the time of
grant with respect to a particular Award, in the event of a Change in Control:
(i) Any Options and Stock Appreciation Rights outstanding as
of the date such Change in Control is determined to have occurred, and which are
not then exercisable and vested, shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to
any Restricted Stock Awards shall lapse, and such Restricted Stock Awards shall
become free of all restrictions and limitations and become fully vested and
transferable.
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(iii) All Performance Awards shall be considered to be earned
and payable in full, and any deferral or other restriction shall lapse and such
Performance Awards shall be immediately settled or distributed.
(iv) The restrictions and deferral limitations and other
conditions applicable to any Other Stock Unit Awards or any other Awards shall
lapse, and such Other Stock Unit Awards or such other Awards shall become free
of all restrictions, limitations or conditions and become fully vested and
transferable.
(b) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), if the Committee shall determine at, or at any time after,
the time of grant, a Participant holding an Option shall have the right, whether
or not the Option is fully exercisable and in lieu of the payment of the
purchase price for the Shares being purchased under the Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Option to the Company and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the Change in Control Price
per Share on the date of such election shall exceed the purchase price per Share
under the Option (the "Spread") multiplied by the number of Shares granted under
the Option as to which the right granted under this Section 11(b) shall have
been exercised.
(c) Notwithstanding any other provision of this Plan, if any right
granted pursuant to this Plan would make a Change in Control transaction
ineligible for pooling-of-interests accounting under APB No. 16 (or other
relevant accounting literature), which transaction (after giving effect to any
other actions taken to cause such transaction to be eligible for such
pooling-of-interests accounting treatment), but for the nature of such grant,
would otherwise be eligible for such accounting treatment, the Committee shall
have the ability to substitute for the cash payable pursuant to such right,
Shares with an equivalent Fair Market Value.
SECTION 12. CODE SECTION 162(m) PROVISIONS.
(a) Notwithstanding any other provision of this Plan, if the Committee
determines at the time Restricted Stock, a Performance Award or an Other Stock
Unit Award is granted to a Participant that such Participant is, or may be as of
the end of the tax year for which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, then the Committee may provide
that this Section 12 is applicable to such Award under such terms as the
Committee shall determine.
(b) If an Award is subject to this Section 12, then the lapsing of
restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the Company having a level
of Net Income for the fiscal year preceding lapse or distribution set by the
Committee within the time prescribed by Section 162(m) of the Code or the
regulations thereunder in order for the level to be considered
"pre-established". The Committee may, in its discretion, reduce the amount of
any Performance Award or Other Stock Unit Award subject to this Section 12 at
any
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time prior to payment based on such criteria as it shall determine, including
but not limited to individual merit and the attainment of specified levels of
one or any combination of the following: net cash provided by operating
activities, earnings per Share from continuing operations, operating income,
revenues, gross margin, return on operating assets, return on equity, economic
value added, stock price appreciation, total shareowner return (measured in
terms of stock price appreciation and dividend growth), or cost control, of the
Company or the Affiliate or division of the Company for or within which the
Participant is primarily employed.
(c) Notwithstanding any contrary provision of the Plan other than
Section 11, the Committee may not adjust upwards the amount payable pursuant to
any Award subject to this Section 12, nor may it waive the achievement of the
Net Income requirement contained in Section 12(b), except in the case of the
death or disability of a Participant.
(d) Prior to the payment of any Award subject to this Section 12, the
Committee shall certify in writing that the Net Income requirement applicable to
such Award was met.
(e) The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 12 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code, the regulations promulgated thereunder, and any successors thereto.
SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of an optionee or Participant under an Award
theretofore granted, without the optionee's or Participant's consent, or that
without the approval of the shareowners would:
(a) except as is provided in Section 4(b) of the Plan, increase the
total number of shares reserved for the purpose of the Plan; or
(b) change the employees or class of employees eligible to participate
in the Plan.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his consent. Except as provided in Section 4(b) and
Section 14(e), the Committee shall not have the authority to cancel any
outstanding Option and issue a new Option in its place with a lower exercise
price.
SECTION 14. GENERAL PROVISIONS.
(a) Unless the Committee determines otherwise at the time the Award is
granted, no Award, and no Shares subject to Awards described in Section 10 which
have not been issued or as to which any applicable restriction, performance or
deferral period has not lapsed, may be sold, assigned, transferred, pledged or
otherwise en-
<PAGE> 13
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cumbered, except by will or by the laws of descent and distribution and all
Awards shall be exercisable, during the Participant's lifetime, only by the
Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative; provided that, if so determined by the
Committee, a Participant may, in the manner established by the Committee,
designate a beneficiary to exercise the rights of the Participant with respect
to any Award upon the death of the Participant.
(b) The term of each Award shall be for such period of months or years
from the date of its grant as may be determined by the Committee; provided that
in no event shall the term of any Incentive Stock Option or any Stock
Appreciation Right related to any Incentive Stock Option exceed a period of ten
(10) years from the date of its grant.
(c) No Employee or Participant shall have any claim to be granted any
Award under the Plan and there is no obligation for uniformity of treatment of
Employees or Participants under the Plan.
(d) The prospective recipient of any Award under the Plan shall not,
with respect to such Award, be deemed to have become a Participant, or to have
any rights with respect to such Award, until and unless such recipient shall
have executed an agreement or other instrument evidencing the Award and
delivered a fully executed copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
(e) Except as provided in Section 12, the Committee shall be authorized
to make adjustments in Performance Award criteria or in the terms and conditions
of other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements, or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable. In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
(f) The Committee shall have full power and authority to determine
whether, to what extent and under what circumstances any Award shall be canceled
or suspended. In particular, but without limitation, all outstanding Awards to
any Participant shall be canceled if the Participant, without the consent of the
Committee, while employed by the Company or after termination of such
employment, engages in any activity which is in competition with the Company, as
determined by the Committee, one or more Officers of the Company or a committee
of Officers of the Company to whom the authority to make such determination is
delegated by the Committee.
(g) All certificates for Shares delivered under the Plan pursuant to
any Award shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are
<PAGE> 14
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then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(h) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award (including, without limitation, any deferred Award) may,
if so determined by the Committee, be entitled to receive, currently or on a
deferred basis, interest or dividends, or interest or dividend equivalents, with
respect to the number of Shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested.
(i) Except as otherwise required in any applicable Award Agreement or
by the terms of the Plan, recipients of Awards under the Plan shall not be
required to make any payment or provide consideration other than the rendering
of services.
(j) To the extent permitted by law, the Committee may delegate to one
or more directors of the Company (who need not be members of the Committee) the
right to grant Awards to Employees who are not officers of the Company for
purposes of Section 16 of the Exchange Act or directors of the Company and to
amend, administer, interpret, waive conditions with respect to, cancel or
suspend Awards to Employees who are not such officers.
(k) The Committee is authorized to establish procedures pursuant to
which the payment of any Award may be deferred.
(l) The maximum value of the property, including cash, that may be paid
or distributed to any Participant pursuant to grants of Performance Units and/or
Other Stock Unit Awards that are valued with reference to property other than
Shares made in any one calendar year is $9,000,000.
(m) The Company is authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due in respect of an
Award or payment hereunder and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Committee shall be authorized to establish procedures for election by
Participants to satisfy such withholding taxes by delivery of, or directing the
Company to retain, Shares.
(n) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
shareowner approval if such approval is otherwise required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
(o) The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.
<PAGE> 15
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(p) If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
(q) Awards may be granted to Employees who are foreign nationals or
employed outside the United States, or both, on such terms and conditions
different from those specified in the Plan as may, in the judgment of the
Committee, be necessary or desirable in order to recognize differences in local
law or tax policy. The Committee also may impose conditions on the exercise or
vesting of Awards in order to minimize the Company's obligation with respect to
tax equalization for Employees on assignments outside their home country.
SECTION 15. EFFECTIVE DATE OF PLAN. The Plan first became effective on
October 1, 1996.
SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the
Plan after February 28, 2003, but any Award theretofore granted may extend
beyond that date.
IN WITNESS WHEREOF, the Company has caused this Plan as amended to be effective
July 19, 2000.
LUCENT TECHNOLOGIES INC.
By:_____________________________
Alan J. Ritchie
Vice President, Compensation, Benefits & Health Services
Attest:_________________________
Richard J. Rawson
Senior Vice President, General Counsel
and Secretary
