SCI SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
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SCI SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
SECTION I. DEFINITIONS......................................................1
1.1 DEFINITIONS.........................................................1
SECTION 2 THE STOCK INCENTIVE PLAN..........................................10
2.1 PURPOSE OF THE PLAN.................................................10
2.2 STOCK SUBJECT TO THE PLAN...........................................11
2.3 ADMINISTRATION OF THE PLAN..........................................11
2.4 ELIGIBILITY AND LIMITS..............................................12
SECTION 3 TERMS OF STOCK INCENTIVES.........................................13
3.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES........................13
3.2 TERMS AND CONDITIONS OF OPTIONS.....................................15
(a) Option Price.................................................16
(b) Option Term..................................................17
(c) Payment......................................................17
(d) Conditions to the Exercise of an Option......................18
(e) Termination of Incentive Stock Option........................19
(f) Special Provisions for Certain Substitute Options............20
3.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS...................20
(a) Settlement...................................................20
(b) Conditions to Exercise.......................................21
3.4 TERMS AND CONDITIONS OF STOCK AWARDS................................21
3.5 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS..................22
(a) Payment......................................................22
(b) Conditions to Payment........................................22
3.6 TERMS AND CONDITIONS OF PERFORMANCE UNIT AWARDS.....................23
(a) Payment......................................................23
(b) Conditions to Payment........................................24
3.7 TERMS AND CONDITIONS OF PHANTOM SHARES..............................24
(a) Payment......................................................24
(b) Conditions to Payment........................................25
3.8 TREATMENT OF AWARDS UPON TERMINATION OF EMPLOYMENT..................25
SECTION 4 RESTRICTIONS ON STOCK.............................................26
4.1 ESCROW OF SHARES....................................................26
4.2 RESTRICTIONS ON TRANSFER............................................27
SECTION 5 GENERAL PROVISIONS................................................27
5.1 WITHHOLDING.........................................................27
5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION......................28
5.3 CASH AWARDS.........................................................30
5.4 COMPLIANCE WITH CODE................................................31
5.5 RIGHT TO TERMINATE EMPLOYMENT.......................................31
5.6 NON-ALIENATION OF BENEFITS..........................................31
5.7 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS................31
5.8 LISTING AND LEGAL COMPLIANCE........................................32
5.9 TERMINATION AND AMENDMENT OF THE PLAN...............................33
5.10 STOCKHOLDER APPROVAL..............................................33
5.11 CHOICE OF LAW.....................................................33
5.12 EFFECTIVE DATE OF PLAN............................................34
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SCI SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
SECTION I. DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun will be
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Affiliate" means:
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(1) Any Subsidiary or Parent,
(2) An entity that directly or through one or more
intermediaries controls, is controlled by, or is under common
control with the Company, as determined by the Company, or
(3) Any entity in which the Company has such a
significant interest that the Company determines it should be
deemed an "Affiliate", as determined in the sole discretion of
the Company.
(b) "Board of Directors" means the board of directors of the Company.
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(c) "Code" means the Internal Revenue Code of 1986, as amended.
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(d) "Committee" means the committee appointed by the Board of Directors
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to administer the Plan. The Board of Directors shall consider the
advisability of whether the members of the Committee shall consist
solely of at least two members of the Board of Directors who are both
"outside directors" as defined in Treas. Reg.ss.1.162-27(e) as
promulgated by the Internal Revenue Service and "non-employee
directors" as defined in Rule 16b-3(b)(3) as promulgated under the
Exchange Act. If the Committee has not been appointed, the Board
of Directors in their entirety shall constitute the Committee. In
addition, for purposes of any Stock Incentive granted to a director
of the Company who is not also an employee of the Company, the
Board of Directors in its entirety shall constitute the Committee.
(e) "Company" means SCI Systems, Inc., a Delaware corporation.
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(f) "Disability" has the same meaning as provided in the long-term
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disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any Affiliate of the
Company for the Participant. If no long-term disability plan or policy
was ever maintained on behalf of the Participant or, if the
determination of Disability relates to an Incentive Stock Option,
Disability means that condition described in Code Section 22(e)(3), as
amended from time to time. In the event of a dispute, the determination
of Disability will be made by the Committee and will be supported by
advice of a physician competent in the area to which such Disability
relates.
(g) "Dividend Equivalent Rights" means certain rights to receive cash
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payments as described in Section 3.5.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
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from time to time.
(i) "Fair Market Value" with regard to a date means:
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(1) the price at which Stock shall have been sold on that date or
the last trading date prior to that date as reported by the
national securities exchange selected by the Committee on
which the shares of Stock are then actively traded or, if
applicable, as reported by the NASDAQ Stock Market.
(2) if such market information is not published on a regular
basis, the price of Stock in the over-the-counter market on
that date or the last business day prior to that date as
reported by the NASDAQ Stock Market or, if not so reported, by
a generally accepted reporting service.
(3) if Stock is not publicly traded, as determined in good faith
by the Committee with due consideration being given to (i) the
most recent independent appraisal of the Company, if such
appraisal is not more than twelve months old and (ii) the
valuation methodology used in any such appraisal.
For purposes of Paragraphs (1), (2), or (3) above, the Committee may
use the closing price as of the applicable date or the trading day
prior to the applicable date, the average of the high and low prices as
of the applicable date or for a period certain ending on such date, the
price determined at the time the transaction is processed, the tender
offer price for shares of Stock, or any other method which the
Committee determines is reasonably indicative of the fair market value.
(j) "Incentive Stock Option" means an incentive stock option within the
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meaning of Section 422 of the Internal Revenue Code.
(k) "Option" means a Non-Qualified Stock Option or an Incentive Stock
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Option.
(l) "Over 10% Owner" means an individual who at the time an Incentive Stock
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Option is granted owns Stock possessing more than ten percent (10%) of
the total combined voting power of the Company or one of its
Subsidiaries, determined by applying the attribution rules of Code
Section 424(d).
(m) "Non-Qualified Stock Option" means a stock option that is not an
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Incentive Stock Option.
(n) "Parent" means any corporation (other than the Company) in an unbroken
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chain of corporations ending with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option,
each of the corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A
Parent shall include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations and rulings thereunder.
(o) "Participant" means an individual who receives a Stock Incentive
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hereunder.
(p) "Performance Goals" means the measurable performance objectives, if
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any, established by the Committee for a Performance Period that are to
be achieved with respect to a Stock Incentive granted to a Participant
under the Plan. Performance Goals may be described in terms of
Company-wide objectives or in terms of objectives that are related to
performance of the division, Affiliate, department or function within
the Company or an Affiliate in which the Participant receiving the
Stock Incentive is employed or on which the Participant's efforts have
the most influence. The achievement of the Performance Goals
established by the Committee for any Performance Period will be
determined without regard to the effect on such Performance Goals of
any acquisition or disposition by the Company of a trade or business,
or of substantially all of the assets of a trade or business, during
the Performance Period and without regard to any change in accounting
standards by the Financial Accounting Standards Board or any successor
entity. The Performance Goals established by the Committee for any
Performance Period under the Plan will consist of one or more of the
following:
(i) earnings per share and/or growth in earnings per share in relation
to target objectives, excluding the effect of extraordinary
or nonrecurring items;
(ii) operating cash flow and/or growth in operating cash flow in relation
to target objectives;
(iii) cash available in relation to target objectives;
(iv) net income and/or growth in net income in relation to target
objectives, excluding the effect of extraordinary or nonrecurring
items;
(v) revenue and/or growth in revenue in relation to target objectives;
(vi) total shareholder return (measured as the total of the appreciation
of and dividends declared on the Common Stock) in relation to
target objectives;
(vii) economic value added;
(viii) stock price;
(viii) return on invested capital in relation to target objectives;
(ix) return on shareholder equity in relation to target objectives;
(x) return on assets in relation to target objectives; and
(xi) return on common book equity in relation to target objectives
If the Committee determines that, as a result of a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which the Company conducts its business, or any other events or
circumstances, the Performance Goals are no longer suitable, the Committee may
in its discretion modify such Performance Goals or the related minimum
acceptable level of achievement, in whole or in part, with respect to a period
as the Committee deems appropriate and equitable.
(q) "Performance Period" means, with respect to a Stock Incentive, a period
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of time within which the Performance Goals relating to such Stock
Incentive are to be measured. The Performance Period will be
established by the Committee at the time the Stock Incentive is
granted.
(r) "Performance Unit Award" refers to a performance unit award as
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described in Section 3.6.
(s) "Phantom Shares" refers to the rights described in Section 3.7.
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(t) "Plan" means the SCI Systems, Inc. 2000 Stock Incentive Plan.
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(u) "Stock" means the Company's common stock.
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(v) "Stock Appreciation Right" means a stock appreciation right described
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in Section 3.3.
(w) "Stock Award" means a stock award described in Section 3.4.
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(x) "Stock Incentive Agreement" means an agreement between the Company and
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a Participant or other documentation evidencing an award of a Stock
Incentive.
(y) "Stock Incentive Program" means a written program established by the
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Committee, pursuant to which Stock Incentives are awarded under the
Plan under uniform terms, conditions and restrictions set forth in such
written program.
(z) "Stock Incentives" means, collectively, Dividend Equivalent Rights,
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Incentive Stock Options, Non-Qualified Stock Options, Phantom Shares,
Stock Appreciation Rights and Stock Awards and Performance Unit Awards.
(aa) "Subsidiary" means any corporation (other than the Company) in an
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unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain. A "Subsidiary"
shall include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations or rulings thereunder.
(bb) "Termination of Employment" means the termination of the
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employee-employer relationship between a Participant and the Company
and its Affiliates, regardless of whether severance or similar payments
are made to the Participant for any reason, including, but not by way
of limitation, a termination by resignation, discharge, death,
Disability or retirement. The Committee will, in its absolute
discretion, determine the effect of all matters and questions relating
to a Termination of Employment, including, but not by way of
limitation, the question of whether a leave of absence constitutes a
Termination of Employment.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive
to officers, employees, directors and consultants of the Company and its
Affiliates to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that will provide for
the long-term growth and profitability of the Company; (b) encourage stock
ownership by officers, employees, directors and consultants by providing them
with a means to acquire a proprietary interest in the Company, acquire shares of
Stock, or to receive compensation which is based upon appreciation in the value
of Stock; and (c) provide a means of obtaining, rewarding and retaining
officers, employees, directors and consultants.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, seven million five hundred thousand (7,500,000) shares of Stock,
plus the number of shares of Common Stock which are released from reservation
under the SCI Systems, Inc. 1994 Stock Option Incentive Plan immediately prior
to the adoption of this Plan, (the "Maximum Plan Shares") are hereby reserved
exclusively for issuance upon exercise or payment pursuant to Stock Incentives.
The shares of Stock attributable to the nonvested, unpaid, unexercised,
unconverted or otherwise unsettled portion of any Stock Incentive that is
forfeited or cancelled or expires or terminates for any reason without becoming
vested, paid, exercised, converted or otherwise settled in full will again be
available for grant under the Plan.
2.3 Administration of the Plan. The Plan is administered by the
Committee. The Committee has full authority in its discretion to determine the
officers, employees, directors and consultants of the Company or its Affiliates
to whom Stock Incentives will be granted and the terms and provisions of Stock
Incentives, subject to the Plan. Subject to the provisions of the Plan, the
Committee has full and conclusive authority to interpret the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective Stock Incentive Agreements and to make
all other determinations necessary or advisable for the proper administration of
the Plan. The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). The Committee's decisions are final and binding on all Participants.
Notwithstanding the foregoing, for purposes of any Stock Incentive granted to a
director of the Company who is not also an employee of the Company, the Board of
Directors in its entirety shall constitute the Committee.
2.4 Eligibility and Limits. Stock Incentives may be granted only to
officers, employees, directors, and consultants of the Company, or any Affiliate
of the Company; provided, however, that an Incentive Stock Option may only be
granted to an employee of the Company or any Subsidiary. In the case of
Incentive Stock Options, the aggregate Fair Market Value (determined as at the
date an Incentive Stock Option is granted) of stock with respect to which stock
options intended to meet the requirements of Code Section 422 become exercisable
for the first time by an individual during any calendar year under all plans of
the Company and its Subsidiaries may not exceed $100,000; provided further, that
if the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded will be treated as Non-Qualified Stock Option(s).
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
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(a) The number of shares of Stock as to which a Stock
Incentive may be granted will be determined by the Committee in its
sole discretion, subject to the provisions of Section 2.2 as to the
total number of shares available for grants under the Plan and subject
to the limits on Options and Stock Appreciation Rights in the following
sentence. On such date as required by Section 162(m) of the Code and
the regulations thereunder for compensation to be treated as qualified
performance based compensation, the maximum number of shares of Stock
with respect to which any Stock Incentives may be granted during any
calendar year to any employee may not exceed 500,000. If, after grant,
an Option is cancelled, the cancelled Option shall continue to be
counted against the maximum number of shares for which options may be
granted to an employee as described in this Section 3.1.
Notwithstanding any other provision hereof, and except for adjustments
to the Exercise Price as contemplated by Section 5.2 hereof, in no
event will the Exercise Price per share of Stock purchasable under any
Option or the base amount on which a Stock Appreciation Right is
calculated be reduced after the date of grant of the Option or Stock
Appreciation Right and no Option or Stock Appreciation Right may be
canceled or surrendered in exchange for an Option or Stock Appreciation
Right, as applicable, with a lower Exercise Price.
(b) Each Stock Incentive will either be evidenced by a Stock
Incentive Agreement in such form and containing such terms, conditions
and restrictions as the Committee may determine to be appropriate,
including without limitation, Performance Goals that must be achieved
as a condition to vesting or payment of the Stock Incentive, or be made
subject to the terms of a Stock Incentive Program, containing such
terms, conditions and restrictions as the Committee may determine to be
appropriate, including without limitation, Performance Goals that must
be achieved as a condition to vesting or payment of the Stock
Incentive. Each Stock Incentive Agreement or Stock Incentive Program is
subject to the terms of the Plan and any provisions contained in the
Stock Incentive Agreement or Stock Incentive Program that are
inconsistent with the Plan are null and void.
(c) The date a Stock Incentive is granted will be the date on
which the Committee has approved the terms and conditions of the Stock
Incentive and has determined the recipient of the Stock Incentive and
the number of shares covered by the Stock Incentive, and has taken all
such other actions necessary to complete the grant of the Stock
Incentive.
(d) Any Stock Incentive may be granted in connection with all
or any portion of a previously or contemporaneously granted Stock
Incentive. Exercise or vesting of a Stock Incentive granted in
connection with another Stock Incentive may result in a pro rata
surrender or cancellation of any related Stock Incentive, as specified
in the applicable Stock Incentive Agreement or Stock Incentive Program.
(e) Stock Incentives are not transferable or assignable except
by will or by the laws of descent and distribution and are exercisable,
during the Participant's lifetime, only by the Participant; or in the
event of the Disability of the Participant, by the legal representative
of the Participant; or in the event of death of the Participant, by the
legal representative of the Participant's estate or if no legal
representative has been appointed, by the successor in interest
determined under the Participant's will; provided, however, that the
Committee may waive any of the provisions of this Section or provide
otherwise as to any Stock Incentives other than Incentive Stock
Options.
(f) The terms of any Stock Incentive Agreement award to a
Participant under the Plan may be modified with the consent of the
Committee and the Participant.
3.2 Terms and Conditions of Options. Each Option granted under the Plan
must be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee will determine whether the Option is to be an Incentive
Stock Option described in Code Section 422 or a Non-Qualified Stock Option, and
the Option must be clearly identified as to its status as an Incentive Stock
Option or a Non-Qualified Stock Option. Incentive Stock Options may only be
granted to employees of the Company or any Subsidiary. At the time any Incentive
Stock Option granted under the Plan is exercised, the Company will be entitled
to legend the certificates representing the shares of Stock purchased pursuant
to the Option to clearly identify them as representing the shares purchased upon
the exercise of an Incentive Stock Option. An Incentive Stock Option may only be
granted within ten (10) years from the earlier of the date the Plan is adopted
or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with
Section 5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under any
Option must be as set forth in the applicable Stock Incentive
Agreement, but in no event may it be less than the Fair Market Value on
the date the Option is granted with respect to an Incentive Stock
Option or any option issued to an employee who is a "covered employee"
within the meaning of Code Section 162(m). Notwithstanding the
foregoing, the Exercise Price of any Option which is not an Incentive
Stock Option, is not granted to a covered employee and is granted
within four months of the employee's date of employment with the
Company or Subsidiary, may not be less than the lesser of Fair Market
Value on the date of grant or Fair Market Value as of the date of the
employee's employment with the Company or Subsidiary commenced. With
respect to each grant of an Incentive Stock Option to a Participant who
is an Over 10% Owner, the Exercise Price may not be less than 110% of
the Fair Market Value on the date the Option is granted.
(b) Option Term. Any Incentive Stock Option granted to a
Participant who is not an Over 10% Owner is not exercisable after the
expiration of ten (10) years after the date the Option is granted. Any
Incentive Stock Option granted to an Over 10% Owner is not exercisable
after the expiration of five (5) years after the date the Option is
granted. The term of any Non-Qualified Stock Option must be as
specified in the applicable Stock Incentive Agreement.
(c) Payment. Payment for all shares of Stock purchased
pursuant to exercise of an Option will be made in any form or manner
authorized by the Committee in the Stock Incentive Agreement or by
amendment thereto, including, but not limited to, cash or, if the Stock
Incentive Agreement provides:
(i) by delivery to the Company of a number of shares
of Stock which have been owned by the holder for at least six
(6) months prior to the date of exercise having an aggregate
Fair Market Value of not less than the product of the Exercise
Price multiplied by the number of shares the Participant
intends to purchase upon exercise of the Option on the date of
delivery;
(ii) in a cashless exercise through a broker; or
(iii) by having a number of shares of Stock withheld,
the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price.
In its discretion, the Committee also may authorize (at the time an
Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be
offered by the Committee in its discretion. Payment must be made at the
time that the Option or any part thereof is exercised, and no shares
may be issued or delivered upon exercise of an option until full
payment has been made by the Participant. The holder of an Option, as
such, has none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option
granted under the Plan is exercisable by the Participant or any other
designated person, at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee specifies
in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Committee, at any time before complete
termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without
limitation, upon a Change in Control as defined in the Stock Incentive
Agreement and may permit the Participant or any other designated person
to exercise the Option, or any portion thereof, for all or part of the
remaining Option term, notwithstanding any provision of the Stock
Incentive Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect to an
Incentive Stock Option, in the event of Termination of Employment of a
Participant, the Option or portion thereof held by the Participant
which is unexercised will expire, terminate, and become unexercisable
no later than the expiration of three (3) months after the date of
Termination of Employment; provided, however, that in the case of a
holder whose Termination of Employment is due to death or Disability,
one (1) year will be substituted for such three (3) month period;
provided, further that such time limits may be exceeded by the
Committee under the terms of the grant, in which case, the Incentive
Stock Option will be a Non-Qualified Option if it is exercised after
the time limits that would otherwise apply. For purposes of this
Subsection (e), Termination of Employment of the Participant will not
be deemed to have occurred if the Participant is employed by another
corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the
Participant in a transaction to which Code Section 424(a) is
applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any
Option issued in substitution for an option previously issued by
another entity, which substitution occurs in connection with a
transaction to which Code Section 424(a) is applicable, may provide for
an exercise price computed in accordance with such Code Section and the
regulations thereunder and may contain such other terms and conditions
as the Committee may prescribe to cause such substitute Option to
contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained
in the previously issued option being replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan must be evidenced by a Stock Incentive
Agreement. A Stock Appreciation Right entitles the Participant to receive the
excess of (1) the Fair Market Value of a specified or determinable number of
shares of the Stock at the time of payment or exercise over (2) a specified or
determinable price which, in the case of a Stock Appreciation Right granted in
connection with an Option, may not be less than the Exercise Price for that
number of shares subject to that Option. A Stock Appreciation Right granted in
connection with a Stock Incentive may only be exercised to the extent that the
related Stock Incentive has not been exercised, paid or otherwise settled.
(a) Settlement. Upon settlement of a Stock Appreciation Right,
the Company must pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date
of payment or exercise) as provided in the Stock Incentive Agreement
or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right
granted under the Plan is exercisable or payable at such time or times,
or upon the occurrence of such event or events, and in such amounts, as
the Committee specifies in the Stock Incentive Agreement; provided,
however, that subsequent to the grant of a Stock Appreciation Right,
the Committee, at any time before complete termination of such Stock
Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised or paid in whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such shares, if any,
will be as the Committee determines, and the certificate for such shares will
bear evidence of any restrictions or conditions. In no event shall Stock Awards
under the Plan be made for more than seven hundred fifty thousand (750,000)
shares of Stock; provided that the shares of Stock attributable to the nonvested
portion of any Stock Award that is forfeited or cancelled or terminates for any
reason without becoming vested will again be available for grant under the Plan
as a Stock Award. Subsequent to the date of the grant of the Stock Award, the
Committee has the power to permit, in its discretion, an acceleration of the
expiration of an applicable restriction period with respect to any part or all
of the shares awarded to a Participant. The Committee may require a cash payment
from the Participant in an amount no greater than the aggregate Fair Market
Value of the shares of Stock awarded determined at the date of grant in exchange
for the grant of a Stock Award or may grant a Stock Award without the
requirement of a cash payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right entitles the Participant to receive payments from the Company
in an amount determined by reference to any cash dividends paid on a specified
number of shares of Stock to Company stockholders of record during the period
such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right
may be made by the Company in cash or shares of Stock (valued at Fair
Market Value as of the date payment is owed) as provided in the Stock
Incentive Agreement or Stock Incentive Program, or, in the absence of
such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right
granted under the Plan is payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the
Committee specifies in the applicable Stock Incentive Agreement or
Stock Incentive Program; provided, however, that subsequent to the
grant of a Dividend Equivalent Right, the Committee, at any time before
complete termination of such Dividend Equivalent Right, may accelerate
the time or times at which such Dividend Equivalent Right may be paid
in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
Award shall entitle the Participant to receive, at a specified future date,
payment of an amount equal to all or a portion of the value of a specified or
determinable number of units (stated in terms of a designated or determinable
dollar amount per unit) granted by the Committee. At the time of the grant, the
Committee must determine the base value of each unit, the number of units
subject to a Performance Unit Award, and the Performance Goals applicable to the
determination of the ultimate payment value of the Performance Unit Award. The
Committee may provide for an alternate base value for each unit under certain
specified conditions.
(a) Payment. Payment in respect of Performance Unit Awards may
be made by the Company in cash or shares of Stock (valued at Fair
Market Value as of the date payment is owed) as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program or, in
the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award granted
under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the
Committee shall specify in the applicable Stock Incentive Agreement or
Stock Incentive Program; provided, however, that subsequent to the
grant of a Performance Unit Award, the Committee, at any time before
complete termination of such Performance Unit Award, may accelerate the
time or times at which such Performance Unit Award may be paid in whole
or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall
entitle the Participant to receive, at a specified future date, payment of an
amount equal to all or a portion of the Fair Market Value of a specified number
of shares of Stock at the end of a specified period. At the time of the grant,
the Committee will determine the factors which will govern the portion of the
phantom shares so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment. Phantom
Share awards containing performance criteria may be designated as performance
share awards.
(a) Payment. Payment in respect of Phantom Shares may be made
by the Company in cash or shares of Stock (valued at Fair Market Value
as of the date payment is owed) as provided in the applicable Stock
Incentive Agreement or Stock Incentive Program, or, in the absence of
such provision, as the Committee may determine.
(b) Conditions to Payment. Each Phantom Share granted under
the Plan is payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee specify in
the applicable Stock Incentive Agreement or Stock Incentive Program;
provided, however, that subsequent to the grant of a Phantom Share, the
Committee, at any time before complete termination of such Phantom
Share, may accelerate the time or times at which such Phantom Share may
be paid in whole or in part.
3.8 Treatment of Awards Upon Termination of Employment. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who has experienced a Termination of Employment may be cancelled,
accelerated, paid or continued, as provided in the applicable Stock Incentive
Agreement or Stock Incentive Program, or, in the absence of such provision, as
the Committee may determine. The portion of any award exercisable in the event
of continuation or the amount of any payment due under a continued award may be
adjusted by the Committee to reflect the Participant's period of service from
the date of grant through the date of the Participant's Termination of
Employment or such other factors as the Committee determines are relevant to its
decision to continue the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock
issued under the Plan will be issued in the Participant's name, but, if the
applicable Stock Incentive Agreement or Stock Incentive Program so provides, the
shares of Stock will be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian must appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant is entitled to all rights, except as provided in the applicable
Stock Incentive Agreement or Stock Incentive Program, applicable to shares of
Stock not so held. Any dividends declared on shares of Stock held by the
Custodian must provide in the applicable Stock Incentive Agreement or Stock
Incentive Program, to be paid directly to the Participant or, in the
alternative, be retained by the Custodian or by the Company until the expiration
of the term specified in the applicable Stock Incentive Agreement or Stock
Incentive Program and shall then be delivered, together with any proceeds, with
the shares of Stock to the Participant or to the Company, as applicable.
4.2 Restrictions on Transfer. The Participant does not have the right
to make or permit to exist any disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Incentive Agreement or Stock Incentive Program. Any disposition of the shares of
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Incentive Agreement or Stock Incentive Program will
be void. The Company will not recognize, or have the duty to recognize, any
disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
will continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company must deduct from all cash distributions
under the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company has the right to require the recipient to remit to the Company an amount
sufficient to satisfy the miminum statutory federal, state and local tax
withholding requirements prior to the delivery of any certificate or
certificates for such shares or the vesting of such Stock Award. A Participant
may pay the withholding obligation in cash, or, if the applicable Stock
Incentive Agreement or Stock Incentive Program provides, a Participant may elect
to have the number of shares of Stock he is to receive reduced by, or with
respect to a Stock Award, tender back to the Company, the smallest number of
whole shares of Stock which, when multiplied by the Fair Market Value of the
shares of Stock determined as of the Tax Date (defined below), is sufficient to
satisfy minimum statutory federal, state and local, if any, withholding
obligations arising from exercise or payment of a Stock Incentive (a
"Withholding Election"). A Participant may make a Withholding Election only if
both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the
date on which the amount of tax required to be withheld is determined
(the "Tax Date") by executing and delivering to the Company a properly
completed notice of Withholding Election as prescribed by the
Committee; and
(b) Any Withholding Election made will be irrevocable except
on six months advance written notice delivered to the Company; however,
the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
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(a) The number of shares of Stock reserved for the grant of
Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom
Shares, Stock Appreciation Rights and Stock Awards; the number of
shares of Stock reserved for issuance upon the exercise or payment, as
applicable, of each outstanding Option, Dividend Equivalent Right,
Phantom Share and Stock Appreciation Right and upon vesting or grant,
as applicable, of each Stock Award; the number of shares of Stock with
respect to which any Stock Incentives may be granted during any
calendar year to any employee, the Exercise Price of each outstanding
Option and the specified number of shares of Stock to which each
outstanding Dividend Equivalent Right, Phantom Share and Stock
Appreciation Right pertains must be proportionately adjusted for any
increase or decrease in the number of issued shares of Stock resulting
from a subdivision or combination of shares or the payment of a stock
dividend in shares of Stock to holders of outstanding shares of Stock
or any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company.
(b) In the event of a merger, consolidation, reorganization,
extraordinary dividend, spin-off, sale of substantially all of the
Company's assets, other change in capital structure of the Company,
tender offer for shares of Stock, or a change in control of the Company
(as defined by the Committee in the applicable Stock Incentive
Agreement) the Committee may make such adjustments with respect to
awards and take such other action as it deems necessary or appropriate
to reflect such merger, consolidation, reorganization or tender offer,
including, without limitation, the substitution of new awards, or the
adjustment of outstanding awards, the acceleration of awards, the
removal of restrictions on outstanding awards, or the termination of
outstanding awards in exchange for the cash value determined in good
faith by the Committee of the vested and/or unvested portion of the
award. Any adjustment pursuant to this Section 5.2 may provide, in the
Committee's discretion, for the elimination without payment therefor of
any fractional shares that might otherwise become subject to any Stock
Incentive, but except as set forth in this Section may not otherwise
diminish the then value of the Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted
pursuant to the Plan must not affect in any way the right or power of
the Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure,
any merger or consolidation of the Company, any issue of debt or equity
securities having preferences or priorities as to the Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights thereunder.
5.4 Compliance with Code. All Incentive Stock Options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all Incentive Stock Options granted hereunder must be construed in
such manner as to effectuate that intent.
5.5 Right to Terminate Employment. Nothing in the Plan or in any Stock
Incentive confers upon any Participant the right to continue as an employee or
officer of the Company or any of its Affiliates or affect the right of the
Company or any of its Affiliates to terminate the Participant's employment or
services at any time.
5.6 Non-Alienation of Benefits. Other than as provided herein, no
benefit under the Plan may be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do
so shall be void. No such benefit may, prior to receipt by the Participant, be
in any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the Participant.
5.7 Restrictions on Delivery and Sale of Shares; Legends. Each Stock
Incentive is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Stock Incentive upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Stock Incentive or the purchase or delivery
of shares thereunder, the delivery of any or all shares pursuant to such Stock
Incentive may be withheld unless and until such listing, registration or
qualification shall have been effected. If a registration statement is not in
effect under the Securities Act of 1933 or any applicable state securities laws
with respect to the shares of Stock purchasable or otherwise deliverable under
Stock Incentives then outstanding, the Committee may require, as a condition of
exercise of any Option or as a condition to any other delivery of Stock pursuant
to a Stock Incentive, that the Participant or other recipient of a Stock
Incentive represent, in writing, that the shares received pursuant to the Stock
Incentive are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities laws. The Company
may include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.
5.8 Listing and Legal Compliance. The Committee may suspend the
exercise or payment of any Stock Incentive so long as it determines that
securities exchange listing or registration or qualification under any
securities laws is required in connection therewith and has not been completed
on terms acceptable to the Committee.
5.9 Termination and Amendment of the Plan. The Board of Directors at
any time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of a Stock Incentive may adversely
affect the rights of the Participant under such Stock Incentive.
5.10 Stockholder Approval. The Plan must be submitted to the
stockholders of the Company for their approval within twelve (12) months before
or after the adoption of the Plan by the Board of Directors of the Company. If
such approval is not obtained, any Stock Incentive granted hereunder will be
void.
5.11 Choice of Law. The laws of the State of Alabama shall govern the
Plan, to the extent not preempted by federal law, without reference to the
principles of conflict of laws.
5.12 Effective Date of Plan. This Plan was approved by the
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SCI SYSTEMS, INC.
By:
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Title:
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ATTEST:
Title:
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[CORPORATE SEAL]
