-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E9t6vyivxKdvKpPfyY8TEluvmiDKyt8z9NhsfhjT5XUuh7w4ipkMTRz6cXDFQrXN 7zREqi0N9yfESyCz3ha+iA== 0000950149-96-002057.txt : 19961219 0000950149-96-002057.hdr.sgml : 19961219 ACCESSION NUMBER: 0000950149-96-002057 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19961218 EFFECTIVENESS DATE: 19961218 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYCHEM CORP CENTRAL INDEX KEY: 0000082206 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 941369731 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-18125 FILM NUMBER: 96682602 BUSINESS ADDRESS: STREET 1: 300 CONSTITUTION DR STREET 2: MS 120/8502 CITY: MENLO PARK STATE: CA ZIP: 94025-1164 BUSINESS PHONE: 4153613333 MAIL ADDRESS: STREET 1: 300 CONSTITUTION DRIVE STREET 2: MS 120/8502 CITY: MENLO PARK STATE: CA ZIP: 94025-1164 FORMER COMPANY: FORMER CONFORMED NAME: RAYTHERM CORP DATE OF NAME CHANGE: 19720526 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on December 18, 1996 Registration No. 333-___ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RAYCHEM CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 94-1369731 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 300 Constitution Drive, Menlo Park, California 94025-1164 (Address of Principal Executive Offices) (Zip Code) AMENDED AND RESTATED 1990 INCENTIVE PLAN; AMENDED AND RESTATED 1984 EMPLOYEE STOCK PURCHASE PLAN; AMENDED AND RESTATED 1985 SUPPLEMENTAL EMPLOYEE STOCK PURCHASE PLAN; 1996 DIRECTORS STOCK OPTION PLAN (Full Title of the Plans) Karen O. Cottle Raychem Corporation 300 Constitution Drive Menlo Park, California 94025-1164 (Name and Address of Agent For Service) (415) 361-3333 (Telephone Number, Including Area Code, of Agent For Service) Copy to: Sarah A. O'Dowd Heller, Ehrman, White & McAuliffe 525 University Avenue Palo Alto, California 94301-1908 (415) 324-7000 CALCULATION OF REGISTRATION FEE
Proposed Proposed Title Of Maximum Maximum Securities Amount Offering Aggregate Amount Of To Be To Be Price Per Offering Registration Registered Registered Share (1) Price (1) Fee ---------- ---------- --------- --------- --- Common Stock, $1.00 par value 4,000,000 $81.625 $326,500,000 $98,940
(1) Estimated (solely for the purpose of calculating the registration fee) on the basis of the average high and low price of the registrant's Common Shares on the New York Stock Exchange on December 13, 1996 (as reported in the Wall Street Journal on December 16, 1996). 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT This Registration Statement on Form S-8 covers 4,000,000 shares (the "Shares") of Common Stock, par value $1.00 (the "Common Stock"), of Raychem Corporation, a Delaware corporation ("Registrant"). Of the shares (i) 2,800,000 shares of Common Stock are being registered under the Registrant's Amended and Restated 1990 Incentive Stock Plan, (ii) 1,000,000 shares of Common Stock are being registered under the Registrant's Amended and Restated 1984 Employee Stock Purchase Plan and Amended and Restated 1985 Supplemental Employee Stock Purchase Plan, and (iii) 200,000 shares of Common Stock are being registered under the Registrant's 1996 Directors Stock Option Plan. ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents filed or to be filed with the Securities and Exchange Commission (the "Commission") by the Registrant are incorporated by reference in this registration statement: (a) The Registrant's latest annual report (Form 10-K) filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that contains audited financial statements for the Registrant's latest fiscal year for which such statements have been filed; (b) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report referred to in (a) above; (c) The description of the Common Stock of the Registrant contained in the registration statement filed under the Exchange Act registering such Common Stock under Section 12 of the Exchange Act. All documents subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be part thereof from the date of filing of such documents. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 102 of the Delaware General Corporation Law allows a corporation to include in its Certificate of Incorporation a provision to eliminate the personal liability of a director to the corporation or to any of its stockholders for monetary damage for a breach of his fiduciary duty as a director, except in the case where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. The Registrant's Amended and Restated Certificate of Incorporation contains a provision that eliminates directors' personal liability as set forth above. Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association against expenses (including attorneys' fees), -2- 3 judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In addition, Article 8 of the Registrant's Amended and Restated Certificate of Incorporation provides as follows: Limitation of Liability and Indemnification of Directors. A. Elimination of Certain Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. B. Indemnification and Insurance (1) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding") by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise (including service with respect to employee benefit plans), whether the basis of the proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act of 1974 excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of the final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service with respect to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if ultimately it shall be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. (2) Nonexclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provisions of this Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. -3- 4 (3) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. The Company has purchased directors and officers liability insurance which may indemnify the directors and officers of the Company (subject to policy deductibles) against damages arising out of certain kinds of claims made against them based on their negligent acts or omissions while acting in their capacity as directors and officers. ITEM 8. EXHIBITS
5 Opinion of Heller, Ehrman, White & McAuliffe 23.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part of Exhibit 5) 23.2 Consent of Price Waterhouse LLP, Independent Accountants 24 Power of Attorney (see pages 6-7) 99.1 Amended and Restated 1990 Incentive Plan 99.2 Amended and Restated 1984 Employee Stock Purchase Plan 99.3 Amended and Restated 1985 Supplemental Employee Stock Purchase Plan 99.4 1996 Directors Stock Option Plan
ITEM 9. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. -4- 5 (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act, (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. -5- 6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Menlo Park, state of California, on this 18th day of December, 1996. RAYCHEM CORPORATION By: /s/ Raymond J. Sims _______________________________________ Raymond J. Sims Senior Vice President and Chief Financial Officer POWER OF ATTORNEY TO SIGN AMENDMENTS KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Richard A. Kashnow, Raymond J. Sims and Karen O. Cottle, and each of them, with full power of substitution and full power to act without the other such person's true and lawful attorney-in-fact and agent for such person in such person's name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as they or such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the dates indicated.
/s/ Richard A. Kashnow President, Chief December 18, 1996 _________________________ Executive Officer and Richard A. Kashnow Chairman of the Board of Directors (Principal Executive Officer) /s/ Raymond J. Sims Senior Vice President and December 18, 1996 _________________________ Chief Financial Officer Raymond J. Sims (Principal Financial Officer) /s/ Deidra D. Barsotti Vice President and December 18, 1996 _________________________ Controller (Principal Deidra D. Barsotti Accounting Officer)
-6- 7
/s/ Richard Dulude Director December 18, 1996 - ------------------------- Richard Dulude /s/ James F. Gibbons Director December 18, 1996 - ------------------------- James F. Gibbons /s/ John P. McTague Director December 18, 1996 - ------------------------- John P. McTague /s/ Dean O. Morton Director December 18, 1996 - ------------------------- Dean O. Morton /s/ Isaac Stein Director December 18, 1996 - ------------------------- Isaac Stein /s/ Chang-Lin Tien Director December 18, 1996 - ------------------------- Chang-Lin Tien /s/ Cyril J. Yansouni Director December 18, 1996 - ------------------------- Cyril J. Yansouni
-7- 8 Index to Exhibits
Sequentially Numbered Item No. Description of Item Page -------- ------------------- ---- 5 Opinion of Heller, Ehrman, White & McAuliffe 23.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part of Exhibit 5) 23.2 Consent of Price Waterhouse LLP, Independent Accountants 24 Power of Attorney (see pages 6 and 7) 99.1 Amended and Restated 1990 Incentive Plan 99.2 Amended and Restated 1984 Employee Stock Purchase Plan 99.3 Amended and Restated 1985 Supplemental Employee Stock Purchase Plan 99.4 1996 Directors Stock Option Plan
-8- EX-5 2 OPINION OF HELLER EHRMAN 1 EXHIBIT 5.0 December 18, 1996 11850-0200 Raychem Corporation 300 Constitution Drive Menlo Park, California 94025-1164 Registration Statement on Form S-8 ---------------------------------- Ladies and Gentlemen: We have acted as counsel to Raychem Corporation a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-8 (the "Registration Statement") which the Company proposes to file with the Securities and Exchange Commission on or about December 18, 1996 for the purpose of registering under the Securities Act of 1933, as amended, an additional 4,000,000 shares of Common Stock of the Company (the "Shares"), pursuant to the Company's Amended and Restated 1990 Incentive Plan, the Company's Amended and Restated 1984 Employee Stock Purchase Plan, the Company's Amended and Restated 1985 Supplemental Employee Stock Purchase Plan, and the Company's 1996 Directors Stock Option Plan (the "Plans"). We have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all records, documents and instruments submitted to us as copies. In rendering our opinion, we have examined the following records, documents and instruments: (a) The Amended and Restated Certificate of Incorporation of the Company, certified by the Secretary of State of the State of Delaware as of December 17, 1996 and certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; 2 Raychem Corporation December 18, 1996 Page 2 (b) The Bylaws of the Company, certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; (c) A Certificate of the Senior Vice President and Chief Financial Officer of the Company (i) attaching records certified to us as constituting all records of proceedings and actions of the Board of Directors and stockholders of the Company relating to the Plans and the Registration Statement, and (ii) certifying as to certain factual matters; (d) The Registration Statement; (e) The Plans; and (f) A letter from Harris Trust and Savings Bank, the Company's transfer agent, dated December 13, 1996, as to the number of shares of the Company's Common Stock outstanding on December 12, 1996. This opinion is limited to the Delaware General Corporation Law, and we disclaim any opinion as to the laws of any other jurisdiction. We further disclaim any opinion as to any other statute, rule, regulation, ordinance, order or other promulgation of any other jurisdiction or any regional or local governmental body or as to any related judicial or administrative opinion. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and assuming that (i) the Registration Statement becomes and remains effective during the period when the Shares are offered and issued, (ii) the full consideration stated in the Plans is paid for each Share and that such consideration in respect of each Share includes payment of cash or other lawful consideration at least equal to the par value thereof, (iii) all applicable securities laws are complied with, and (iv) appropriate certificates evidencing the Shares will be executed and delivered upon issuance of the Shares, it is our opinion that when issued and sold by the Company, after payment therefor in the manner provided in the Plans and in the Registration Statement, the Shares will be validly issued, fully paid and nonassessable. This opinion is rendered to you in connection with the Registration Statement and is solely for your benefit. This opinion may not be relied upon by you for any other purpose, or relied upon by any other person, firm, corporation or other entity for any purpose, without our prior written consent. We disclaim any obligation to advise you of any change of law that occurs, or any facts of which we become aware, after the date of this opinion. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ HELLER EHRMAN WHITE & MCAULIFFE EX-23.2 3 CONSENT OF PRICE WATERHOUSE LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated July 17, 1996, which appears on page 21 of the 1996 Annual Report to Stockholders of Raychem Corporation, which is incorporated by reference in Raychem Corporation's Annual Report on Form 10-K for the year ended June 30, 1996. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 14 of such Annual Report on Form 10-K. Price Waterhouse LLP San Jose, California December 18, 1996 -10- EX-99.1 4 AMENDED AND RESTATED 1990 INCENTIVE PLAN 1 EXHIBIT 99.1 RAYCHEM CORPORATION AMENDED AND RESTATED 1990 INCENTIVE PLAN SECTION 1. PURPOSE; DEFINITIONS. (a) Purpose. The purpose of the Plan is to provide selected eligible employees of, and consultants to, Raychem Corporation, a Delaware corporation, its subsidiaries and affiliates an opportunity to participate in the Company's future by offering them an opportunity to acquire stock in the Company so as to retain, attract and motivate them. (b) Definitions. For purposes of the Plan, the following terms have the following meanings: (i) "Award" means any award under the Plan, including any Option, Restricted Stock, or Performance Share Award. (ii) "Award Agreement" means, with respect to each Award, the signed written agreement between the Company and the Plan participant setting forth the terms and conditions of the Award. (iii) "Board" means the Board of Directors of the Company. (iv) "Change in Control" has the meaning set forth in Section 8(a). (v) "Change in Control Price" has the meaning set forth in Section 8(c). (vi) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute. (vii) "Commission" means the Securities and Exchange Commission and any successor agency. (viii) "Committee" means the Committee referred to in Section 2, or the Board in its capacity as administrator of the Plan in accordance with Section 2. (ix) "Company" means Raychem Corporation, a Delaware corporation. (x) "Disability" means permanent and total disability as determined by the Committee for purposes of the Plan. (xi) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. (xii) "Fair Market Value" means as of any given date the closing sales price of the Stock reported on the New York Stock Exchange Composite Tape or, if no sale of Stock occurs on such date, the fair market value of the Stock as determined by the Committee in good faith. (xiii) "Incentive Stock Option" means any Option intended to be and designated as an "incentive stock option" within the meaning of Section 422 of the Code. -11- 2 (xiv) "Option" means an option granted under Section 5. (xv) "Performance Criteria" shall mean the following measures of performance: total stockholder return, stock price, cash value added, economic value added, operating margin, asset turnover, sales growth, asset growth, return on investment, earnings per share, return on equity, return on assets, return on capital, operating cash flow, cost of capital, net income, net operating profit, customer satisfaction, and employee satisfaction. (xvi) "Performance Period" means the period determined by the Committee under Section 7(a). (xvii) "Performance Share" means the equivalent, as of any time such assessment is made, of the Fair Market Value of one share of Stock. (xviii) "Performance Share Award" means an Award under Section 7. (xix) "Plan" means this Raychem Corporation 1990 Incentive Plan, as amended from time to time. (xx) "Restricted Stock" means an Award of Stock subject to restrictions, as more fully described in Section 6. (xxi) "Restriction Period" means the period determined by the Committee under Section 6(b). (xxii) "Retirement" has the same meaning as in the "Raychem Corporation Pension Plan" as in effect from time to time. (xxiii) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act, as amended from time to time, and any successor rule. (xxiv) "Stock" means the Common Stock, $1.00 par value, of the Company, and any successor security. (xxv) "Subsidiary" has the meaning set forth in Section 424 of the Code. (xxvi) "Supplemental Stock Option" means any Option that is not an Incentive Stock Option. (xxvii) "Tax Date" means the date defined in Section 9(f). (xxviii) "Termination" means, for purposes of the Plan, with respect to a participant, that the participant has ceased to be, for any reason, employed by, or consulting to, the Company, a subsidiary or an affiliate; provided, however, that for purposes of this definition, Termination shall not include a change in status from an employee of, to a consultant to, the Company or any subsidiary or affiliate, or vice versa. SECTION 2. ADMINISTRATION. (a) Committee. The Plan shall be administered by the Board or, upon delegation by the Board, either in its entirety or only as it relates to persons subject to Section 16 of the Exchange Act, by a committee of the Board. In connection with the administration of the Plan, the Committee shall have the powers possessed by the Board. The Committee may act only by a majority of its members, except that -12- 3 the Committee (i) may authorize any one or more of its members or any officer of the Company to execute and deliver documents on behalf of the Committee and (ii) so long as not otherwise required for the Plan to comply with Rule 16b-3, may delegate to one or more officers or directors of the Company authority to grant Awards to persons who are not subject to Section 16 of the Exchange Act with respect to Stock. The Board at any time may abolish the Committee and revest in the Board the administration of the Plan. (b) Authority. The Committee shall grant Awards to eligible employees and consultants. In particular and without limitation, the Committee, subject to the terms of the Plan, shall: (i) select the officers, employees and consultants to whom Awards may be granted; (ii) determine whether and to what extent Awards are to be granted under the Plan; (iii) determine the number of shares to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan and any related loans to be made by the Company, based upon factors determined by the Committee; and (v) determine to what extent and under what circumstances any Award payments may be deferred by a participant. (c) Committee Determinations Binding. The Committee may adopt, alter and repeal administrative rules, guidelines and practices governing the Plan as it from time to time shall deem advisable, may interpret the terms and provisions of the Plan, any Award and any Award Agreement and may otherwise supervise the administration of the Plan. Any determination made by the Committee pursuant to the provisions of the Plan with respect to any Award shall be made in its sole discretion at the time of the grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time. All decisions made by the Committee under the Plan shall be binding on all persons, including the Company and Plan participants. SECTION 3. STOCK SUBJECT TO PLAN. (a) Number of Shares. The total number of shares of Stock reserved and available for issuance pursuant to Awards under the Plan shall be 7,750,000 shares. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares or shares reacquired in private transactions or open market purchases, but all shares issued under the Plan regardless of source shall be counted against the 7,750,000 share limitation. (b) Adjustments. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or other change in corporate structure affecting the Stock, such substitution or adjustments shall be made in the aggregate number of shares of Stock reserved for issuance under the Plan, in the number of shares of Stock specified in Section 3(c), in the number and exercise price of shares subject to outstanding Options, and in the number of shares subject to other outstanding Awards, as may be determined to be appropriate by the Committee, in its sole discretion; provided, however, that the number of shares subject to any Award shall always be a whole number. (c) Individual Limitation. The Company may not issue Options or Performance Shares with a Fair Market Value exercise price as of the date of grant covering in the aggregate more than 500,000 shares of Stock (subject to adjustments and substitutions as required under Section 3(b) above) to any one participant in any one-year period. If and when the Committee establishes performance criteria for the award of Options with an exercise price of less than Fair Market Value or the award of Restricted Stock, -13- 4 the Company may limit the number of shares issuable under such Awards to the extent required to comply with the limitation on amounts deductible by the Company under Section 162(m) of the Code. SECTION 4. ELIGIBILITY. Awards may be granted to officers and other key employees of, and consultants to, the Company, its subsidiaries and affiliates (excluding members of the Committee and any person who serves only as a director). SECTION 5. STOCK OPTIONS. (a) Types. Any Option granted under the Plan shall be in such form as the Committee may from time to time approve. The Committee shall have the authority to grant to any participant Incentive Stock Options, Supplemental Stock Options or both types of Options. Incentive Stock Options may be granted only to employees of the Company, its parent (within the meaning of Section 424 of the Code) or Subsidiaries. Any portion of an Option that is not designated as, or does not qualify as, an Incentive Stock Option shall constitute a Supplemental Stock Option. (b) Terms and Conditions. Options granted under the Plan shall be subject to the following terms and conditions: (i) Option Term. The term of each Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than ten (10) years after the date the Option is granted, and no Supplemental Stock Option shall be exercisable more than fifteen (15) years after the date the Option is granted. If, at the time the Company grants an Incentive Stock Option, the optionee owns directly or by attribution stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or Subsidiary of the Company, the Incentive Stock Option shall not be exercisable more than five (5) years after the date of grant. (ii) Grant Date. The Company may grant Options under the Plan at any time and from time to time before the Plan terminates. The Committee shall specify the date of grant or, if it fails to, the date of grant shall be the date of action taken by the Committee to grant the Option. However, if an Option is approved in anticipation of employment, the date of grant shall be the date the intended optionee is first treated as an employee for payroll purposes. (iii) Exercise Price. Except as provided in Section 9(v), the exercise price per share of Stock purchasable under an Option shall be equal to at least 85% of the Fair Market Value on the date of grant, and in the case of Incentive Stock Options shall be equal to at least the Fair Market Value on the date of grant; provided, however, that if, at the time the Company grants an Incentive Stock Option, the optionee owns directly or by attribution stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or Subsidiary of the Company, then the exercise price shall be not less than 110% of the Fair Market Value on the date the Incentive Stock Option is granted. (iv) Exercisability. Subject to the other provisions of the Plan, an Option shall be exercisable in its entirety at grant or at such times and in such amounts as are specified in the Award Agreement evidencing the Option. The Committee, in its absolute discretion, at any time may waive any limitations respecting the time at which an Option first becomes exercisable in whole or in part. (v) Method of Exercise; Payment. To the extent the right to purchase shares has accrued, Options may be exercised, in whole or in part, from time to time, by written notice from the optionee to the Company stating the number of shares being purchased, accompanied by payment of the exercise price for the shares. -14- 5 (vi) No Disqualification. Notwithstanding any other provision in the Plan, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered nor shall any discretion or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422. SECTION 6. RESTRICTED STOCK. (a) Price. Participants awarded Restricted Stock, within forty-five (45) days of receipt of the applicable Award Agreement, which in no event shall be later than ten (10) days after the Award grant date, shall pay to the Company an amount equal to the par value of the Stock subject to the Award. If such payment is not made and received by the Company by such date, the Award of Restricted Stock shall lapse. (b) Restrictions. Except as provided in Section 9(v), subject to the provisions of the Plan and the Award Agreement, during the Restriction Period set by the Committee, commencing with, and not exceeding ten (10) years from, the date of such award, the participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock. Within these limits, the Committee may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or in part, based on service, performance or such other factors or criteria as the Committee may determine. (c) Dividends. Unless otherwise determined by the Committee, with respect to dividends on shares of Restricted Stock, dividends payable in cash shall be automatically reinvested in additional Restricted Stock, and dividends payable in Stock shall be paid in the form of Restricted Stock. (d) Termination. Except to the extent otherwise provided in the Award Agreement and pursuant to Section 6(b), in the event of a Termination during the Restriction Period, all shares still subject to restriction shall be forfeited by the participant. SECTION 7. PERFORMANCE SHARES. (a) Awards. The Committee shall determine the nature, length and starting date of the Performance Period for each Performance Share Award, which period shall be at least two (2) years (subject to Section 8) and not more than six (6) years. The consideration payable by a participant with respect to a Performance Share Award shall be an amount determined by the Committee in the exercise of the Committee's discretion at the time of the Award; provided, however, that the amount of consideration may be zero and may in no event exceed 50% of the Fair Market Value at the time of grant. The Committee shall determine the Performance Criteria to be used in awarding Performance Shares and the extent to which such Performance Shares have been earned. Performance Periods may overlap and participants may participate simultaneously with respect to Performance Share Awards that are subject to different Performance Periods and different performance factors and criteria. At the beginning of each Performance Period, the Committee shall determine for each Performance Share Award subject to such Performance Period the number of shares of Stock (which may consist of Restricted Stock) to be awarded to the participant at the end of the Performance Period if and to the extent that the Performance Criteria for such Performance Share Awards are met. Such number of shares of Stock may be fixed or may vary in accordance with such Performance Criteria as may be determined by the Committee. The Committee may provide that (i) amounts equivalent to interest at such rates as the Committee may determine, or (ii) amounts equivalent to dividends paid by the Company upon outstanding Stock shall be payable with respect to Performance Share Awards. -15- 6 (b) Termination. Except as otherwise provided in the Award Agreement or determined by the Committee, in the event of a Termination during a Performance Period, the participant shall not be entitled to any payment with respect to the Performance Shares subject to the Performance Period. (c) Form of Payment. Payment shall be made in the form of cash or whole shares of Stock, as the Committee, in its discretion, shall determine. SECTION 8. CHANGE IN CONTROL. (a) Definition of "Change in Control". For purposes of Section 8(b), a "Change in Control" means the occurrence of any one of the following: (i) Any "person", as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, an affiliate, or a Company employee benefit plan, including any trustee of such plan acting as trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities; (ii) the solicitation of proxies (within the meaning of Rule 14a-1(k) under the Exchange Act and any successor rule with respect to the election of any director of the Company where such solicitation is for any candidate who is not a candidate proposed by a majority of the Board in office prior to the time of such election; or (iii) the dissolution or liquidation (partial or total) of the Company or a sale of assets involving 30% or more of the assets of the Company, any merger or reorganization of the Company whether or not another entity is the survivor, a transaction pursuant to which the holders, as a group, of all of the shares of the Company outstanding prior to the transaction hold, as a group, less than 70% of the shares of the Company outstanding after the transaction, or any other event which the Committee determines, in its discretion, would materially alter the structure of the Company or its ownership. (b) Impact of Event. In the event of a "Change in Control" as defined in Section 8(a), but only if and to the extent so specifically determined by the Committee in its discretion, which determination may be amended or reversed only by the affirmative vote of a majority of the persons who were members of the Committee at the time such determination was made, acceleration and valuation provisions no more favorable to participants than the following may apply: (i) Subject to Section 5(b)(vi), any Options outstanding as of the date such Change in Control is determined to have occurred and not then exercisable and vested shall become fully exercisable and vested. (ii) The restrictions and limitations applicable to any Restricted Stock shall lapse, and such Restricted Stock shall become fully vested. (iii) The value (net of any exercise price) of all outstanding Options and Restricted Stock, unless otherwise determined by the Committee at or after grant and subject to Rule 16b-3, shall be cashed out on the basis of the "Change in Control Price", as defined in Section 8(c), as of the date such Change in Control is determined to have occurred or such other date as the Committee may determine prior to the Change in Control. (iv) Any outstanding Performance Share Awards shall be vested and paid in full as if all performance criteria had been met. -16- 7 (c) Change in Control Price. For purposes of this Section 8, "Change in Control Price" means the highest price per share paid in any transaction reported on the New York Stock Exchange Composite Tape or paid or offered in any bona fide transaction related to a potential or actual Change in Control of the Company at any time during the preceding 60-day period as determined by the Committee, except that, in the case of Incentive Stock Options, such price shall be based only on transactions reported for the date on which the Committee decides to cash out such Options. SECTION 9. GENERAL PROVISIONS. (a) Award Grants. Any Award may be granted either alone or in addition to other Awards granted under the Plan. Subject to the terms and restrictions set forth elsewhere in the Plan, the Committee shall determine the consideration, if any, payable by the participant for any Award and, in addition to those set forth in the Plan, any other terms and conditions of the Awards. Subject to the terms and restrictions set forth elsewhere in the Plan, the Committee may condition the grant or payment of any Award upon the attainment of specified performance goals or such other factors or criteria, including vesting based on continued employment or consulting, as the Committee shall determine. Performance objectives may vary from participant to participant and among groups of participants and shall be based upon such Company, subsidiary, group or division factors or criteria as the Committee may deem appropriate, including, but not limited to, earnings per share or return on equity. The other provisions of Awards also need not be the same with respect to each recipient. Unless specified otherwise in the Plan or by the Committee, the date of grant of an Award shall be the date of action by the Committee to grant the Award. The Committee may also substitute new Options for previously granted options, including previously granted Options having higher exercise prices. (b) Award Agreement. As soon as practicable after the date of an Award grant, the Company and the participant shall enter into a written Award Agreement identifying the date of grant, and specifying the terms and conditions of the Award. Options are not exercisable until after execution of the Award agreement by the Company and the Plan participant, but a delay in execution of the agreement shall not affect the validity of the Option grant. (c) Certificates. All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders, legends and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed and any applicable federal, state or foreign securities law. (d) Termination. Unless otherwise provided in the applicable Award Agreement or by the Committee, in the event of Termination for any reason other than death, Retirement or Disability, Awards held at the date of Termination (and only to the extent then exercisable or payable, as the case may be) may be exercised in whole or in part at any time within three (3) months after the date of Termination, or such lesser period specified in the Award Agreement (but in no event after the expiration date of the Award), but not thereafter. If Termination is due to death or Disability or, in the case of Awards granted prior to August 2, 1991, Retirement, Awards held at the date of Termination (and only to the extent then exercisable or payable, as the case may be) may be exercised in whole or in part by the participant in the case of Retirement or Disability, by the participant's guardian or legal representative or by the person to whom the Award is transferred by will or the laws of descent and distribution, at any time within two (2) years from the date of Termination or any lesser period specified in the Award Agreement (but in no event after the expiration of the Award). For Awards granted on or after August 2, 1991 and before August 12, 1994, if Termination is due to Retirement, Awards held at the date of Termination shall become fully exercisable or payable, as the case may be, and may be exercised, in whole or in part, by the participant, by the participant's guardian or legal representative or by the person to whom the Award is transferred by will or the laws of descent and distribution, at any time within three (3) years from the date of such Termination or any lesser period specified in the Award Agreement (but in no event after the expiration of the Award). For Awards granted on or after August 12, 1994, if Termination is due to Retirement, Awards held at the date of Termination shall become fully exercisable or payable, as the case may be, and may -17- 8 be exercised, in whole or in part, by the participant, by the participant's guardian or legal representative or by the person to whom the Award is transferred by will or the laws of descent and distribution, at any time within five (5) years from the date of such Termination or any lesser period specified in the Award Agreement (but in no event after the expiration of the Award). (e) Delivery of Purchase Price. If and only to the extent authorized by the Committee, participants may make all or any portion of any payment due to the Company (i) with respect to the consideration payable for an Award, (ii) upon exercise of an Award, or (iii) with respect to federal, state, local or foreign tax payable in connection with an Award, by delivery of (x) cash, (y) check, or (z) any property other than cash (including a promissory note of the participant or shares of Stock or securities) so long as, if applicable, such property constitutes valid consideration for the Stock under applicable law. No promissory note under the Plan shall have a term (including extensions) of more than five (5) years or shall be of a principal amount exceeding 90% of the purchase price paid by the borrower. To the extent participants may make payments due to the Company upon grant or exercise of Awards by the delivery of shares of Stock or other securities, the Committee, in its discretion, may permit participants constructively to deliver for any such payment securities of the Company held by the participant for at least three (3) months or, if such securities were acquired through the exercise of an Award, for at least six (6) months. Constructive delivery shall be effected by (i) identification by the participant of shares intended to be delivered constructively, (ii) confirmation by the Company of participant's ownership of such shares (for example, by reference to the Company's stock records, or by some other means of verification), and (iii) if applicable, upon exercise, delivery to the participant of a certificate for that number of shares equal to the number of shares for which the Award is exercised less the number of shares constructively delivered. If authorized by the Committee, exercise of an Option may be made pursuant to a "cashless exercise/sale" procedure pursuant to which funds to pay for exercise of the Option are delivered to the issuer by a broker upon receipt of stock certificates from the issuer, or pursuant to which participants obtain margin loans from brokers to fund the exercise of the Option. (f) Tax Withholding. If and to the extent authorized by the Committee, in its sole discretion, a person who has received an Award or payment under an Award, may make an election (i) to deliver to the Company a promissory note of the participant on the terms set forth in Section 9(e), (ii) to tender to the Company previously owned shares of Stock, or (iii) to have shares of Stock to be obtained upon exercise of the Award or lapse of restrictions applicable to an Award withheld by the Company on behalf of the participant, to pay the amount of tax that the Committee, in its discretion, determines to be required to be withheld by the Company. Any shares tendered to or withheld by the Company shall be valued at Fair Market Value on such date. The value of the shares of Stock tendered or withheld may not exceed the required federal, state, local and foreign withholding tax obligations as computed by the Company. Unless the Committee permits otherwise, the participant shall pay to the Company in cash, promptly when the amount of such obligations becomes determinable, all applicable federal, state, local and foreign withholding taxes that the Committee, in its discretion, determines to result from the lapse of restrictions imposed upon an Award or upon exercise of an Award or from a transfer or other disposition of shares of Stock acquired upon exercise or payment of an Award or otherwise related to the Award or shares of Stock acquired in connection with an Award. (g) No Transferability. No Award shall be assignable or otherwise transferable by the participant other than by will or by the laws of descent and distribution, except as expressly permitted in the participant's Award Agreement. During the life of a participant, except as expressly permitted in the -18- 9 Award Agreement, an Award shall be exercisable, and any elections with respect to an Award may be made, only by the participant or participant's guardian or legal representative. (h) Adjustment of Awards; Waivers. Subject to Section 5(b)(vi), the Committee may adjust the performance goals and measurements applicable to Awards (i) to take into account changes in law and accounting and tax rules, (ii) to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or exclusion of the impact of extraordinary or unusual items, events or circumstances in order to avoid windfalls or hardships, and (iii) to make such adjustments as the Committee deems necessary or appropriate to reflect any material changes in business conditions. In the event of hardship or other special circumstances of a participant and otherwise in its discretion, the Committee may waive in whole or in part any or all restrictions, conditions, vesting, or forfeiture with respect to any Award granted to such participant. (i) Non-Competition. The Committee may condition its discretionary waiver of a forfeiture, the acceleration of vesting at the time of Termination of a participant holding any unexercised or unearned Award, the waiver of restrictions on any Award, or the extension of the expiration period to a period not longer than that provided by the Plan upon such participant's agreement (and compliance with such agreement) to (i) not engage in any business or activity competitive with any business or activity conducted by the Company and (ii) be available for consultations at the request of the Company's management, all on such terms and conditions (including conditions in addition to (i) and (ii)) as the Committee may determine. (j) Dividends. The reinvestment of dividends in additional Stock or Restricted Stock at the time of any dividend payment pursuant to Section 6(c) shall only be permissible if sufficient shares of Stock are available under Section 3 for such reinvestment (taking into account then outstanding Awards). (k) Regulatory Compliance. Each Award under the Plan shall be subject to the condition that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Stock, Common Shares, or Preferred Shares upon any securities exchange or under any state or federal law, (ii) the consent or approval of any government or regulatory body or (iii) an agreement by the participant with respect thereto, is necessary or desirable, then such Award shall not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee. (l) Listing. So long as the Stock is listed on the New York Stock Exchange, shares of Stock for use under the provisions of the Plan shall not be issued until they have been duly listed, upon official notice of issuance, on the New York Stock Exchange and any other exchanges determined by the Board. (m) Rights as Stockholder. Unless the Plan or the Committee expressly specifies otherwise, an optionee shall have no rights as a stockholder with respect to any shares covered by an Award until the issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of a certificate evidencing the shares of Stock. Subject to Sections 3(b) and 6(c), no adjustment shall be made for dividends or other rights for which the record date precedes the date the certificate is issued. (n) Beneficiary Designation. The Committee, in its discretion, may establish procedures for a participant to designate a beneficiary to whom any amounts payable in the event of the participant's death are to be paid. (o) Additional Plans. Nothing contained in the Plan shall prevent the Company, a subsidiary or an affiliate from adopting other or additional compensation arrangements for its employees and consultants. -19- 10 (p) No Employment Rights. The adoption of the Plan shall not confer upon any employee any right to continued employment nor shall it interfere in any way with the right of the Company, a subsidiary or an affiliate to terminate the employment of any employee at any time. (q) Rule 16b-3. Notwithstanding any provision of the Plan, Awards shall always be granted and exercised in such a manner as to conform to the provisions of Rule 16b-3. (r) Governing Law. Except as required by the Delaware General Corporation Law, the Plan and all Awards shall be governed by and construed in accordance with the laws of the State of California. (s) Use of Proceeds. All cash proceeds to the Company under the Plan shall constitute general funds of the Company. (t) Unfunded Status of Plan. The Plan shall constitute an "unfunded" plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or arrangements to meet the obligations created under the Plan to deliver Stock or make payments; provided, however, that unless the Committee otherwise determines, the existence of such trusts or other arrangements shall be consistent with the "unfunded" status of the Plan. (u) Assumption by Successor. The obligations of the Company under the Plan and under any outstanding Award may be assumed by any successor corporation, which for purposes of the Plan shall be included within the meaning of "Company". (v) Award Limitations (i) Notwithstanding the provisions of Section 5(b) (iii), except as provided in Section 9(v) (iv) and (v) below, the exercise price per share of Stock purchasable under Options other than Incentive Stock Options shall be equal to at least the Fair Market Value on the date of grant unless the discount below Fair Market Value is expressly granted by the Committee in lieu of an otherwise payable amount of salary or cash bonus. (ii) Notwithstanding the provisions of Section 6(b), except as provided in Section 9(v) (iv) and (v) below, the Restriction Period of an Award of Restricted Stock shall be at least three years unless the restriction is performance-based, in which event the Restriction Period shall be at least one year. (iii) Notwithstanding the last sentence of Section 9(a) or the first sentence of Section 10, except as provided in Section 9(v) (v) below, the Committee may substitute new Options for previously granted Options having higher exercise prices or amend the exercise price of outstanding options to lower such exercise price only where such substitutions or amendments would, when aggregated with all Awards that do not satisfy the specific limitations of this Section 9(v) (i) and (ii), cover not more than 5% of the shares of Stock reserved for issuance under the Plan. Such substitutions or amendments shall be initiated only to fulfill a legitimate corporate purpose (such as, without limitation, retention of a key employee) and then only in order to maintain option value when due to extreme circumstances beyond management's control. (iv) Notwithstanding the foregoing, the Administrator may grant Awards that do not satisfy the specific limitations of this Section 9(v) (i) and (ii) so long as such Awards, in aggregate with Awards described in Section 9(v) (iii), do not cover more than 5% of the shares of Stock reserved for issuance under this Plan. (v) Notwithstanding the foregoing, the provisions of this Section 9(v) do not apply to the first 4,950,000 shares reserved for issuance under this Plan. -20- 11 SECTION 10. AMENDMENTS AND TERMINATION. The Board may amend, alter or discontinue the Plan or any Award (subject to the provisions of Section 9(v) (iii)), but no amendment, alteration or discontinuance shall be made which would impair the rights of a participant under an outstanding Award without the participant's consent. In addition, to the extent required for the Plan to comply with Rule 16b-3 or, with respect to provisions solely as they relate to Incentive Stock Options, to the extent required for the Plan to comply with Section 422 of the Code, the Board may not amend or alter the Plan without the approval of a majority of the votes cast at a duly held stockholders' meeting at which a quorum of the voting power of the Company is represented in person or by proxy, where such amendment or alteration would: (a) except as expressly provided in the Plan, increase the total number of shares reserved for issuance pursuant to Awards under the Plan; (b) except as expressly provided in the Plan, change the minimum price terms of Section 5(b)(iii); (c) change the class of employees and consultants eligible to participate in the Plan; (d) extend the maximum Option period under Section 5(b)(i); or (e) materially increase the benefits accruing to participants under the Plan. SECTION 11. EFFECTIVE DATE OF PLAN. The Plan shall be effective on the date it is adopted by the Board but all Awards shall be conditioned upon approval of the Plan at a duly held stockholders' meeting by the affirmative vote of the holders of a majority of the voting power of the shares of the Company represented in person or by proxy and entitled to vote at the meeting. SECTION 12. TERM OF PLAN. No Award shall be granted on or after October 31, 2000, but Awards granted prior to October 31, 2000 may extend beyond that date. -21- EX-99.2 5 AMENDED AND RESTATED 1984 ESPP 1 EXHIBIT 99.2 RAYCHEM CORPORATION AMENDED AND RESTATED 1984 EMPLOYEE STOCK PURCHASE PLAN 1. Purpose The Amended and Restated 1984 Employee Stock Purchase Plan (the "Plan") is designed to encourage and assist employees of Raychem Corporation and participating subsidiaries (together, the "Company") to acquire an equity interest in the Company through the purchase of shares of Common Stock. 2. Administration (a) The Plan shall be administered by the Board of Directors except to the extent the Board of Directors, by resolution, delegates administration of the Plan to a committee of the Board. The Board of Directors or the committee to which the Board of Directors delegates administration hereunder, in either case, are hereinafter referred to as the "Board." (b) The Corporate Benefits Committee, or such other committee or persons as the Board may from time to time select (the "Administrator"), shall be responsible for such matters as the Board shall determine from time to time. Subject to the express provisions of the Plan, to the overall supervision of the Board, and to the limitations of Section 423 or any successor provision of the Internal Revenue Code of 1986, as amended (the "Code"), the Administrator may administer and interpret the Plan in any manner it believes to be desirable and any such interpretation shall be conclusive and binding on the Company and all participants. 3. Shares Subject to Plan (a) Number of Shares. The Company has reserved for sale under the Plan 16,000,000 shares of Common Stock, less any shares sold under either the Plan, the Amended and Restated Raychem Limited Employee Stock Purchase Plan or the Amended and Restated 1985 Supplemental Employee Stock Purchase Plan. Shares sold under the Plan may be newly issued shares or shares reacquired in private transactions or open market purchases, but all shares sold under the Plan regardless of source shall be counted against the 16,000,000 share limitation. (b) Adjustments. In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, offering of rights, or other similar change in the capital structure of the Company, the Administrator may make such adjustment, if any, as it deems appropriate in the number, kind, and purchase price of the shares available for purchase under the Plan and in the maximum number of shares subject to any option under the Plan. 4. Eligibility Requirements Each employee, except those described in the next paragraph, shall become eligible to participate in the Plan in accordance with Section 5 on the first Enrollment Date (as herein defined) following employment by the Company. Participation in the Plan is entirely voluntary. The following employees are not eligible to participate in the Plan: (i) employees who would, immediately upon enrollment in the Plan, own directly or indirectly, or hold options or rights to acquire, an aggregate of 5% or more of the total combined voting power or value of all outstanding shares of all classes of the Company or any subsidiary; (ii) employees who are customarily employed by the Company less than 15 hours per week or less than five months in any calendar year; and -22- 2 (iii) employees who are prohibited by the laws of the nation of their residence or employment from participating in the Plan. "Employee" shall mean any individual who performs services for Raychem Corporation or a participating subsidiary pursuant to an employment relationship described in Treasury Regulations Section 31.3401(c)-1 or any successor provision. "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with Raychem Corporation if, as of the applicable Enrollment Date, each of the corporations other than the last corporation in the chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. "Participating Subsidiary" shall mean a Subsidiary which has been designated by the Administrator as covered by the Plan. 5. Participation Enrollment. Any eligible employee may enroll or re-enroll in the Plan as of the first trading day of any February, May, August and November, or as of such other specific trading days established by the Administrator from time to time (each an "Enrollment Date"). In order to enroll an eligible employee must complete, sign, and submit to the Company an enrollment form. An enrollment form must be received by the Company before the date established by the Administrator from time to time (each a "Cut-Off Date"); provided, however, that in no event shall a Cut-Off Date be more than 60 days before an Enrollment Date. An enrollment form that is received before a CutOff Date shall be effective on the Enrollment Date to which such Cut-Off Date relates. 6. Options to Purchase Common Stock (a) Grant of Options. Enrollment by a participant in the Plan on an Enrollment Date will constitute the grant by the Company to the participant of options to purchase shares of Common Stock under the Plan. The number of options granted will equal the number of percentage points of salary the participant elects to have withheld. Re-enrollment by a participant in the Plan will constitute cancellation by the participant of one or more outstanding options and the grant by the Company to the participant of new options (equal in number to the number of options canceled) on the Enrollment Date on which re-enrollment occurs. An increase (but not a decrease) in the level of payroll withholding also constitutes the grant of new options for the incremental change in the percentage withheld but does not cancel outstanding options. Any participant whose options expire and who has not withdrawn from the Plan will automatically be re-enrolled in the Plan and granted new options (equal in number to the number of expiring options) on the Enrollment Date immediately following the Purchase Date on which the participant's then current options expire. Any date on which a participant is granted options under the Plan is referred to as a "Grant Date." (b) Terms and Conditions of Options. Each option granted under the Plan shall have the following terms: (i) whether or not all shares of Common Stock have been purchased thereunder, the option will expire on the earliest to occur of (A) the completion of the purchase of shares on the last Purchase Date occurring within 12 months of the Grant Date for such option, or such shorter option period as may be established by the Board from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date, or (B) the date on which participation of such participant in the Plan terminates for any reason; (ii) payment for shares purchased under the option will be made only through payroll withholding in accordance with Section 7; (iii) purchase of shares upon exercise of the option will be accomplished only in installments in accordance with Section 8; -23- 3 (iv) the price per share under the option will be determined as provided in Section 8; (v) unless otherwise determined by the Administrator, the number of shares available for purchase under each option shall be equal to the number of shares determined by dividing $3333 1/3 by the fair market value of a share determined at the Grant Date of such option; (vi) notwithstanding clause (v), no option (taken together with all other options then outstanding under this Plan and under all other similar stock purchase plans of the Raychem Corporation or any Subsidiary) shall in any event give the participant the right to purchase shares at a rate which accrues in excess of $25,000 of fair market value of such shares determined at the applicable Grant Dates in any calendar year during which such participant is enrolled in the Plan at any time; and (vii) the option will in all respects be subject to the terms and conditions of the Plan, as interpreted by the Administrator from time to time. 7. Payroll Withholding (a) Withholding Elections. Each participant may elect to make contributions at a rate equal to any whole percentage up to a maximum of 15%, or such other maximum percentage as the Board may establish from time to time before an Enrollment Date for all options to be granted on such Enrollment Date, of his or her monthly base earnings from the Company (excluding bonuses, overtime pay, shift premiums, long term disability or workers' compensation payments and similar amounts, but including elective qualified contributions by the participant to employee benefit plans). The rate of contribution shall be designated by the participant in the enrollment form. A participant may elect to increase or decrease the rate of contribution effective as of any Enrollment Date by delivery to the Company not later than the related Cut-Off Date of a new enrollment form indicating the revised rate of contribution. An increase (but not a decrease) in the contribution rate constitutes the grant of new options. If the rate is decreased and there is more than one option outstanding, the participant may specify the option to which such decrease should apply. (b) Use of Funds. Contributions shall be credited to a participant's account as soon as administratively feasible after payroll withholding. The Company shall be entitled to use of the contributions immediately after payroll withholding and shall have no obligation to pay interest on the contributions to any participant. 8. Purchase of Shares (a) Purchase Procedures. On the last trading day of each January, April, July and October, or on such other specific trading days as may be established by the Administrator from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date (each a "Purchase Date"), the Company shall apply the funds then credited to each participant's account to the purchase of whole and fractional shares of Common Stock. The cost to the participant for the shares purchased under any option shall be 85% of the lower of: (i) the closing price of Common Stock on the New York Stock Exchange composite transactions tape on the Grant Date for such option; or (ii) the closing price of Common Stock on the New York Stock Exchange composite transactions tape on that Purchase Date. Any cash equal to less than the price of the smallest fractional share of Common Stock which may be purchased under the Plan left in a participant's payroll deduction account on a Purchase Date shall be carried forward in such participant's account for application on the next Purchase Date. The Administrator may in the case of participants employed by participating subsidiaries provide for Common Stock to be sold through the relevant Participating Subsidiaries to such participants, to the extent consistent with Section 423 of the Code. -24- 4 (b) Certificates Evidencing Common Stock. At the election of the participant, certificates evidencing shares purchased on any Purchase Date shall be delivered as soon as administratively feasible or a notation of noncertificated shares shall be made on the stock records of the Company, but, in either case, participants shall be treated as the owners of their shares effective as of the Purchase Date. 9. Withdrawal From the Plan A participant may withdraw from the Plan in full (but not in part) at any time. All funds credited to a participant's payroll deduction account shall be distributed to him or her without interest as soon as administratively feasible after notice of withdrawal is received by the Company. An employee who has withdrawn may not return funds to the Company and require the Company to apply those funds to the purchase of shares. Any eligible employee who has withdrawn from the Plan may, however, enroll in the Plan again on any subsequent Enrollment Date in accordance with the provisions of Section 5. 10. Termination of Employment Participation in the Plan terminates immediately when a participant ceases to be employed by the Company for any reason whatsoever (including death or disability) or otherwise becomes ineligible to participate in the Plan. As soon as administratively feasible after termination, the Company shall pay to the participant or his or her beneficiary or legal representative all amounts credited to the participant's payroll deduction account. 11. Leave of Absence Unless a participant has voluntarily withdrawn from the Plan, shares will be purchased for that participant's account on the Purchase Date next following commencement of a leave of absence by such participant. Participation in the Plan will terminate immediately after the purchase of shares on such Purchase Date, however, unless: (i) the leave of absence is of less than 90 days' duration and is due to illness, injury or other reason approved by the Administrator; or (ii) the participant's right to reemployment after such leave is guaranteed by contract or statute. 12. Designation of Beneficiary Each participant may designate one or more beneficiaries in the event of death and may, in his or her sole discretion, change such designation at any time. Any such designation shall be effective upon receipt by the Company and shall control over any disposition by will or otherwise. As soon as administratively feasible after the death of a participant, fractional shares will be sold and the cash proceeds along with a certificate representing whole shares credited to his or her account shall be delivered to the designated beneficiaries or, in the absence of a designation, to the executor, administrator or other legal representative of the participant's estate. Such delivery shall relieve the Company of further liability with respect to the Plan on account of the deceased participant. If more than one beneficiary is designated, each beneficiary shall receive an equal portion of the account unless the participant has given express contrary instructions. 13. Assignment The rights of a participant under the Plan shall not be assignable by such participant, by operation of law, or otherwise. No participant may create a lien on any funds, securities, rights or other property held by the Company for the account of the participant under the Plan, except to the extent that there has been a designation of beneficiaries in accordance with the Plan, and except to the extent permitted by the laws of descent and distribution if beneficiaries have not been designated. -25- 5 A participant's right to purchase shares under the Plan shall be exercisable only during the participant's lifetime and only by him or her, except that a participant may direct the Company in the enrollment form to issue share certificates to the participant jointly with one or more other persons with right of survivorship, or to certain forms of trusts approved by the Administrator. 14. Administrative Assistance The Administrator may, in its sole discretion, retain a brokerage firm, bank, or other financial institution to assist in the purchase of shares, delivery of reports, or other administrative aspects of the Plan. If the Administrator so elects, each participant shall (unless prohibited by the laws of the nation of his or her employment or residence) be deemed upon enrollment in the Plan to have authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a participant under the Plan shall be held in the account in the participant's name, or if the participant so indicates in the enrollment form, in the participant's name together with the name of one or more other persons, in joint tenancy with right of survivorship or spousal community property, or in certain forms of trusts approved by the Administrator. 15. Costs All costs and expenses incurred in administering the Plan shall be paid by the Company, except that (i) the Company may impose a transaction fee on each sale of shares made by a participant through the Company and (ii) any stamp duties or transfer taxes applicable to participation in the Plan may be charged to a participant's account. Any brokerage fees for the purchase of shares by a participant shall be paid by the Company, but brokerage and/or bank fees for the resale of shares by a participant shall be borne by the participant. 16. Reports The Company shall provide or cause to be provided to each participant a report of his or her contributions and the shares purchased by that participant on each Purchase Date. 17. Equal Rights and Privileges All eligible employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an "employee stock purchase plan" within the meaning of Section 423 or any successor provision of the Code and the related regulations. Any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company or the Board be reformed to comply with the requirements of Section 423. This Section 17 shall take precedence over all other provisions in the Plan. 18. Applicable Law The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of California. 19. Modification and Termination The Board may amend, alter or terminate the Plan at any time. No amendment shall be effective without the approval of a majority of the votes cast at a duly held stockholders' meeting at which a quorum of the voting power of the Company is represented in person or by proxy, if such amendment would: (i) increase the number of shares reserved for purchase under the Plan; (ii) materially increase the benefits to participants; or (iii) materially modify the requirements for participation. -26- 6 The Board may elect to terminate any or all outstanding options at any time. In the event the Plan is terminated, the Board may also elect either to terminate outstanding options upon completion of the purchase of shares on the next Purchase Date, or to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds contributed to the Plan that have not been used to purchase shares shall be returned to the participants as soon as administratively feasible. If at any time the shares available under the Plan are over-enrolled, enrollments shall be reduced proportionately to eliminate the over-enrollment. Any funds that cannot be applied to the purchase of shares due to over-enrollment shall be refunded to participants as soon as administratively feasible. 20. Board and Stockholder Approval This Plan was approved by the Board of Directors on August 3, 1984 and by the holders of a majority of the voting power of all outstanding shares of the Company on October 1, 1984. Amendments to this Plan were approved by the Board of Directors on August 9, 1985, January 24, 1986, August 8, 1986, August 3, 1990, August 2, 1991, May 8, 1992, August 20, 1993, August 12, 1994, June 7, 1995, August 16, 1996 and October 4, 1996 and by the stockholders of the Company on October 14, 1985, November 11, 1986, October 31, 1990, October 30, 1991, October 28, 1992, October 27, 1993, November 9, 1994, November 1, 1995 and November 1, 1996. -27- EX-99.3 6 AMENDED AND RESTATED 1985 SUPPLEMENTAL ESPP 1 EXHIBIT 99.3 RAYCHEM CORPORATION AMENDED AND RESTATED 1985 SUPPLEMENTAL EMPLOYEE STOCK PURCHASE PLAN 1. Purpose The Amended and Restated 1985 Supplemental Employee Stock Purchase Plan (the "Plan") is designed to encourage and assist employees of participating subsidiaries (the "Participating Subsidiaries") of Raychem Corporation (the "Company") to acquire an equity interest in the Company through the purchase of shares of Common Stock of the Company. The terms and conditions of purchase are designed to be substantially the same in economic substance as the terms for employees of the Company under the Amended and Restated 1984 Employee Stock Purchase Plan (the "1984 Plan") but may vary as to procedures for purchase as desirable or necessary to reflect the tax, employment, securities, foreign exchange or other applicable laws and regulations in effect from time to time in the nations in which the Participating Subsidiaries are located. 2. Administration (a) The Plan shall be administered by the Board of Directors of the Company unless and until such time as the Board of Directors delegates administration to a committee pursuant to Section 2(b). (b) The Board of Directors, by resolution, may delegate administration of the Plan to a committee of the Board. The Board of Directors or the committee to which the Board of Directors delegates administration hereunder, in either case, are hereafter referred to as the "Board." (c) The Corporate Benefits Committee, or such other committee or persons as the Board may from time to time select (the "Administrator") shall be responsible for the matters set forth herein and for such additional matters as the Board shall determine from time to time. At the time that the Plan is adopted by a Participating Subsidiary, the Administrator, after consultation with the management of the Participating Subsidiary and local legal and financial advisors, where required, shall publish supplemental rules for administration of the Plan (the "Rules") for that Participating Subsidiary. The Rules shall specify purchase procedures under the Plan for that Participating Subsidiary so as to comply with the tax, employment, securities, foreign exchange or other applicable laws of the nation where the Participating Subsidiary is located without materially affecting the economic substance of the Plan with respect to the Company or participants. (d) The Administrator shall have the power, subject to, and within the limits of, the express provisions of the Plan and the overall supervision of the Board: (1) To construe and interpret the Plan and to establish, amend, and revoke the Rules. The Administrator, in the exercise of this power, shall generally determine all questions of policy and expediency that may arise and may correct any defect, omission, or inconsistency in the Plan or the Rules in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (2) To prescribe the terms and provisions of participation by eligible employees which shall be identical for all employees of each Participating Subsidiary but may vary among Participating Subsidiaries to the extent deemed necessary or desirable by the Administrator; provided, however, that in no event shall such variation materially alter the economic substance of the Plan with respect to the Company or participants. -28- 2 (3) To designate from time to time which subsidiaries shall become Participating Subsidiaries. (4) To provide for Common Stock to be sold through the Participating Subsidiaries to participants, if the Administrator in its discretion so elects. (5) To retain a brokerage firm, bank or other financial institution to act as trustee, depository, pledgeholder, escrowholder, or in such other capacity as specified by the Administrator to assist in the purchase and sale of shares, delivery of reports, holding or delivery of funds or share certificates or other administrative aspects of the Plan, and to make such provision for currency translation as the Administrator deems appropriate. (6) To establish a mechanism to enable the participants to purchase shares with U.S. dollars should exchange control regulations, or any other law or regulation be enacted which in any way limits or restricts the purchase of Common Stock by participants through limitations on transfer of funds into or out of the country in which the Participating Subsidiaries are located. (7) To specify the method of designation of funds to be applied to the purchase of shares which may include, without limitation, payroll withholding, payment in full in cash upon purchase, loans from the Company or Participating Subsidiary with appropriate escrow and repurchase agreements, or any other arrangement not inconsistent with the Plan which the Administrator in its discretion may approve. (8) To exercise such powers and to perform such acts as are deemed generally necessary or expedient to promote the best interests of the Company or any Participating Subsidiary, and to enable the general purpose of the Plan, as expressed in Section 1, to be accomplished. 3. Shares Subject to Plan (a) Number of Shares. The Company has reserved for sale under the Plan 16,000,000 shares of Common Stock, less any shares sold under either the 1984 Plan, the Amended and Restated Raychem Limited Employee Stock Purchase Plan, or the Plan. Shares sold under the Plan may be newly issued shares or shares reacquired in private transactions or open market purchases, but all shares sold under the Plan regardless of source shall be counted against the 16,000,000 share limitation. (b) Adjustments. In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, offering of rights or other similar change in the capital structure of the Company, the Administrator may make such adjustment, if any, as it deems appropriate in the number, kind and purchase price of the shares available for purchase under the Plan and in the maximum number of shares subject to any grant under the Plan. 4. Eligibility Requirements Each employee of a Participating Subsidiary, except those described in the next paragraph, shall be eligible to participate in the Plan. Participation in the Plan is entirely voluntary. The following employees are not eligible to participate in the Plan: (a) employees who would, immediately upon enrollment in the Plan, own directly or indirectly, or hold options or rights to acquire, an aggregate of 5% or more of the total combined voting power or value of all outstanding shares of all classes of the Company or any Subsidiary; (b) employees who are customarily employed for less than five months in any calendar year or less than 15 hours per week; and -29- 3 (c) employees who are prohibited by the laws of the nation of their residence or employment from participating in the Plan. "Employee" shall mean any individual who performs services for a Participating Subsidiary and is deemed to be an employee under the laws of the country in which such Subsidiary is located. "Subsidiary" shall mean any company whose financial statements are consolidated with those of the Company. 5. Participation (a) Enrollment. Any eligible employee may enroll or re-enroll in the Plan as of such specific trading days as are established from time to time ("Enrollment Dates"). The Administrator may require eligible employees to complete, sign and submit to the Company an enrollment form in order to enroll or re-enroll in the Plan and may establish deadlines prior to the Enrollment Dates by which such enrollment forms must be received so as to effect enrollment on such Enrollment Date. Enrollment or re-enrollment by a participant in the Plan on an Enrollment Date will constitute the one or more grants by the Company to the participant of the right to apply funds to the purchase of shares of Common Stock from the Company under the Plan, in accordance with Section 6. (b) Special Rule. A participant in the 1984 Plan ("1984 Plan Participant") whose employment is transferred without material interruption to a Participating Subsidiary may (if such transfer terminates his or her participation in the 1984 Plan) enroll in the Plan within ten business days following the beginning of his or her employment by the Participating Subsidiary. Unless otherwise elected by the 1984 Plan Participant or determined by the Administrator at the time of such enrollment, the Grant Date of the 1984 Plan Participant for purposes of the Plan for such enrollment will be considered to be the 1984 Plan Participant's most recent date of enrollment in the 1984 Plan, and the percentage of compensation being withheld under the 1984 Plan shall be the percentage used to determine the 1984 Plan Participant's Designed Funds pursuant to Section 6(b) of the Plan. 6. Purchase (a) Designated Funds. Each participant may elect to purchase shares with designated funds in an amount equal to any whole percentage, up to 15 percent (or such other maximum percentage as the Board may specify for the Plan and the 1984 Plan), of such participant's base pay (the "Designated Funds"). (b) Grant of Right to Apply Designated Funds. Enrollment or re-enrollment by a participant in the Plan on an Enrollment Date will constitute the grant by the Company to the participant of the right to apply Designated Funds to the purchase of shares of Common Stock from the Company under the Plan. The number of grants granted on any such Enrollment Date will be equal to the number of percentage points of Designated Funds specified by the participant. Any date on which a participant is granted the right to apply Designated Funds to the purchase of shares of Common Stock under the Plan is referred to as a "Grant Date." (c) Terms and Conditions of Rights to Apply Designated Funds. For each grant made under the Plan the Administrator must set forth in the Rules the following terms (and, in its discretion, may set forth in the Rules any additional terms of grant not inconsistent with the terms below): (1) the expiration date of the grant shall be the earlier to occur of (A) the completion of the purchase of shares within 12 months of the applicable Grant Date, (or such shorter period as the Board may establish) or (B) the date on which participation of such participant in the Plan terminates for any reason; (2) the per share price which shall be paid in U.S. dollars and shall be 85% of the lower of: (A) the closing price of Common Stock reported by the New York Stock Exchange on the applicable Grant Date; or (B) the closing price of Common Stock reported by the New York Stock Exchange -30- 4 on the Delivery Date; and (3) unless otherwise determined by the Administrator, the number of shares available for purchase under each grant shall be determined by dividing $3333-1/3 by the fair market value of a share of Common Stock determined at the Grant Date of such grant for each 1% of Designated Funds; (4) notwithstanding clause (3), the grant (taken together with all other grants then outstanding under this Plan and under all other similar stock purchase plans of the Company or any subsidiary) will in no event give the participant the right to purchase shares at a rate which accrues in excess of U.S. $25,000 of fair market value of such shares determined at the applicable Grant Dates in any calendar year during which such participant is enrolled in the Plan at any time. (d) Delivery Dates. On such specific trading days as may be established by the Administrator from time to time prior to an Enrollment Date for all enrollments or re-enrollments made on such Enrollment Date ("Delivery Dates"), the Company shall apply the equivalent in U.S. dollars of the Designated Funds of each participant to whole and fractional shares of Common Stock. 7. Withdrawal from the Plan A participant may withdraw from the Plan in full (but not in part) at any time. All Designated Funds not applied or to be applied to the purchase of shares under the Plan by such participant shall be distributed to such participant without interest as soon as administratively feasible after notice of withdrawal is received by the Company. Any eligible employee who has withdrawn from the Plan may enroll in the Plan again on any subsequent Enrollment Date in accordance with the provisions of Section 5. 8. Termination of Employment (a) Except as provided in Section 8(b) below, participation in the Plan ceases immediately when the employment of a participant by a Participating Subsidiary terminates (such that after employment termination such participant is not employed by any Participating Subsidiary) for any reason whatsoever, including death or disability, or when such participant otherwise becomes ineligible to participate in the Plan. As soon as administratively feasible after termination, the Company shall pay to the participant or his or her beneficiary or legal representative all Designated Funds of such participant not applied or to be applied to the purchase of shares under the Plan. (b) Following transfer of a participant's employment without material interruption from a Participating Subsidiary to the Company or any subsidiary that is a participant in the 1984 Plan, any outstanding grant to the participant under the Plan shall not terminate until the last occurrence of the earliest of: (i) the end of the last Delivery Date included in the term of the grant, (ii) enrollment of the participant in the 1984 Plan, (iii) any event or change of condition or status (other than the transfer described in this Section 8(b)) that would have caused the grant to terminate if the transfer of employment described in this Section 8(b) had not occurred. While a grant remains outstanding pursuant to this Section 8(b), the Company or other subsidiary to which the participant is transferred shall effect payroll withholdings pursuant to the grant and shall remit them to the Participating Subsidiary that employed the Participant at the time of the transfer; such withholdings shall be treated by the Participating Subsidiary as Designated Funds of the participant at the time withheld by the Company or other subsidiary. Notwithstanding the provisions of Section 6 relating to the designation and application of Designated Funds, following approval by the Company and the Participating Subsidiary, the participant may, in lieu of payroll withholding, pay a corresponding amount to the Participating Subsidiary if such amount is received on or before the relevant Delivery Date. 9. Leave of Absence Unless a participant has voluntarily withdrawn from the Plan, Designated Funds will be applied to the purchase of shares on the Delivery Date next following commencement of a leave of absence by such participant. Participation in the Plan will terminate immediately after the application of funds on such Delivery Date, however, -31- 5 unless: (a) the leave of absence is of less than 90 days duration and is due to illness, injury or other reason approved by the Administrator; or (b) the participant's right to reemployment after such leave is guaranteed by contract or statute. 10. Costs All costs and expenses incurred in administering the Plan shall be paid by the Participating Subsidiary, except that (i) the Company may impose a transaction fee on each sale of shares made by a participant through the Company and (ii) any stamp duties or transfer taxes applicable to participation in the Plan may be charged to the account of such participant. Any brokerage fees for the purchase of shares by a participant shall be paid by the Company, but brokerage and/or bank fees for the resale of shares by a participant shall be borne by the participant. 11. Reports The Company shall provide or cause to be provided to each participant a report of his or her Designated Funds and the application of such Designated Funds on each Delivery Date. 12. Modification and Termination (a) Modification. The Board may amend, alter or terminate the Plan at any time. No amendment shall be effective without the approval of a majority of the votes cast at a duly held stockholders' meeting at which a quorum of the voting power of the Company is represented in person or by proxy if such amendment would: (i) increase the number of shares reserved for purchase under the Plan; (ii) materially increase the benefits to participants; or (iii) materially modify the requirements for participation. (b) Termination. The Board may elect to terminate any or all outstanding options at any time. In the event the Plan is terminated, the Board may also elect to either terminate outstanding grants upon completion of the application of Designated Funds on the next Delivery Date, or to permit grants to expire in accordance with their terms (and participation to continue through such expiration dates). If the grants are terminated prior to expiration, all Designated Funds that have not been and will not be applied to the purchase of shares shall be returned to the participants as soon as administratively feasible. If at any time the shares available under the Plan are overenrolled, enrollments shall be reduced proportionately to eliminate the overenrollment. Any Designated Funds that cannot be applied to the purchase of shares due to overenrollment shall be refunded to participants as soon as administratively feasible. 13. Effective Date; Approvals (a) Effective Date. The Plan shall be effective with respect to each Participating Subsidiary on the date specified by the Administrator for such Participating Subsidiary. (b) Approvals. This Plan was approved by the Board of Directors on August 9, 1985 and by the holders of a majority of the voting power of all outstanding shares of the Company on October 14, 1985. Amendments to this Plan were approved by the Board of Directors on August 8, 1986, August 3, 1990, August 2, 1991, May 8, 1992, August 20, 1993, August 12, 1994, June 7, 1995, August 16, 1996 and October 4, 1996 and by the stockholders of the Company on November 11, 1986, October 31, 1990, October 30, 1991, October 28, 1992, October 27, 1993, November 9, 1994, November 1, 1995 and November 1, 1996. -32- EX-99.4 7 1996 DIRECTORS STOCK OPTION 1 EXHIBIT 99.4 RAYCHEM CORPORATION 1996 DIRECTORS STOCK OPTION PLAN 1. Purpose. The purpose of the 1996 Directors Stock Option Plan (the "Plan") of Raychem Corporation (the "Company") is to supplement the cash compensation of nonemployee members of the Company's Board of Directors (the "Board") and to provide a means for such directors to increase their holdings of Company stock. 2. Definitions. The following definitions shall apply to this Plan: (a) "Annual Grant Date" shall mean, for each calendar year, the date on which the stockholders of the Company have their regular annual meeting. (b) "Board" shall mean the Board of Directors of the Company. (c) "Committee" shall mean the Committee referred to in Section 3(a), or the Board in its capacity as administrator of the Plan in accordance with Section 3. (d) "Eligible Director" shall mean any person who is a member of the Board and who is not a full or part-time employee of the Company or of any subsidiary or affiliate of the Company. (e) "Grant Date" shall mean the Initial Grant Date or the Annual Grant Date, as appropriate. (f) "Initial Grant Date" shall mean (i) in the case of an Eligible Director who was not an employee of the Company immediately prior to the date such person became an Eligible Director, the date such Eligible Director is first elected as a member of the Board, or (ii) in the case of an Eligible Director who was an employee of the Company immediately prior to the date such person became an Eligible Director, the date such Eligible Director resigned as an employee of the Company. (g) "Option" shall mean an option to purchase Shares granted under this Plan. (h) "Option Agreement" shall mean the written agreement described in Section 6. (i) "Shares" shall mean shares of common stock of the Company. -33- 2 3. Administration. (a) General. This Plan shall be administered by the Board or, upon delegation by the Board, by a committee of the Board. (b) Powers of Committee. The Committee shall have full and complete authority to adopt such rules and regulations and to make all such other determinations not inconsistent with the Plan as may be necessary for the administration of the Plan. 4. Shares Subject to Plan. (a) Aggregate Number. Subject to adjustment in accordance with Section 6(h), an aggregate of 200,000 Shares is reserved for issuance under this Plan. Shares sold under this Plan may be unissued Shares or reacquired Shares, but all Shares issued under the Plan, regardless of source, shall be counted against the 200,000-Share limitation. (b) Rights as Stockholder. An Eligible Director shall have no rights as a stockholder with respect to Shares acquired by exercise of an option until the issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of a stock certificate evidencing the Shares. Subject to Section 6(h), no adjustment shall be made for dividends or other events for which the record date is prior to the date the certificate is issued. 5. Nondiscretionary Grants. (a) Initial Grants. On the Initial Grant Date, each Eligible Director shall receive the grant of an Option to purchase 5,000 Shares. (b) Regular Annual Grants. On each Annual Grant Date, immediately after the annual election of directors, each Eligible Director then in office shall receive the grant of an Option to purchase 1,250 Shares. (c) One Time Grant. On November 1, 1996, each Eligible Director then in office shall receive the grant of an Option to purchase 2,000 Shares. (d) Adjustment. The number of Shares for which Options are granted in accordance with this Section 5 and the number of Shares subject to any option shall be subject to adjustment in accordance with Section 6(h). -34- 3 6. Terms of Option Agreements. Upon the grant of each Option, the Company and the Eligible Director shall enter into an Option Agreement which shall specify the Grant Date and the exercise price, and shall include or incorporate by reference the substance of all of the following provisions and such other provisions consistent with this Plan as the Board may determine: (a) Term. The term of the Option shall be ten years from its Grant Date, subject to earlier termination in accordance with Sections 6(f) or 6(i). (b) Exercise Schedule. The Option shall be exercisable on the following schedule: Beginning on the first anniversary of the Grant Date, for up to 25% of the Shares covered by the option; beginning on the second anniversary of the Grant Date, for up to 50% of such Shares; beginning on the third anniversary of the Grant Date, for up to 75% of such Shares; and beginning on the fourth anniversary of the Grant Date, and, thereafter until the earlier of expiration of the Option's term or termination of the Option in accordance with Section 6(g) or 6(i), for up to 100% of such Shares. Notwithstanding the foregoing, an Option held by an Eligible Director shall become immediately exercisable in full upon the death or disability of such Eligible Director, upon retirement of such Eligible Director from the Board, or upon an unsuccessful attempt by such Eligible Director to win reelection to the Board, or upon the adoption by the Company of a plan for a liquidation, dissolution, merger, consolidation or reorganization as described in clause (x), (y) or (z) of Section 6(i). (c) Purchase Price. The purchase price of the Shares subject to each Option shall be the closing sales price for Shares as reported by the Wall Street Journal, New York Stock Exchange Composite Transactions, on the Grant Date of such Option, or on the last preceding business day if such Grant Date is not a business day. (d) Payment of Purchase Price. The purchase price of Shares acquired pursuant to an Option shall be paid in full at the time the Option is exercised in cash or by delivery of any property other than cash (including Shares, or other securities of the Company), so long as such property constitutes valid consideration for the Shares purchased under applicable law and is surrendered in good form for transfer, or by some combination of cash and such property; provided, however, that Options may not be exercised by the delivery of Shares more frequently than at six-month intervals. Exercise of an Option may also be made pursuant to a "cashless exercise/sale" procedure pursuant to which funds to pay for exercise of the Option are delivered to the issuer by a broker upon receipt of stock certificates from the issuer, or pursuant to which participants obtain margin loans from brokers to fund the exercise of the Option. (e) Tax Withholding. A participant may make an election to have the Shares to be obtained upon exercise of the Option withheld by the Company on behalf of the participant, to pay the amount of tax that the Committee, in its discretion, determines to be required to be withheld by the Company. Any Shares tendered to or withheld by the Company shall be valued at Fair Market Value on such date. The value of the Shares tendered or withheld may not exceed the required federal, state, local and foreign withholding tax obligations as computed by the Company. The participant shall pay to the Company in cash or by delivery of any valid consideration other than cash (including Shares, or other securities of the Company), promptly when the amount of such obligations becomes determinable, all applicable federal, state, local and foreign withholding taxes that the Committee, in its discretion, determines to result upon exercise of an -35- 4 Option or from a transfer or other disposition of Shares upon exercise of an Option or otherwise related to the Option or Shares acquired in connection with an Option. (f) Transferability. Except as approved by the Board, no Option shall be transferable otherwise than by will or the laws of descent and distribution, and, an Option shall be exercisable during the Eligible Director's lifetime only by the Eligible Director. (g) Termination of Membership on the Board. Except in the case of death, disability, retirement from the Board, or an unsuccessful attempt to win reelection to the Board, if an Eligible Director's membership on the Board terminates for any reason, an Option held at the date of termination (but only to the extent exercisable at the time of such termination in accordance with Section 6(b)) may be exercised in whole or in part at any time within one year after the date of such termination (but in no event after the term of the Option expires) and shall thereafter terminate. If an Eligible Director's membership terminates because of death, disability, retirement from the Board, or an unsuccessful attempt to win reelection to the Board, an Option held at the date of such termination may be exercised for up to 100% of the Shares covered by such Options at any time within one year after the date of such termination (but in no event after the term of the Option expires) and shall thereafter terminate. (h) Capitalization Changes. If any change is made in the Shares subject to the Plan or subject to any Option granted under the Plan, through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise, the Committee shall make appropriate adjustments as to the maximum number of Shares subject to the Plan, the number of Shares covered by any Option Grant, the maximum number of Shares for which Options may be granted to any Eligible Director, and the number of Shares and price per Share covered by outstanding Options. (i) Change of Ownership. In the event of (x) a dissolution or liquidation of the Company, (y) a merger or consolidation in which the Company is not the surviving corporation, or (z) any other capital reorganization in which more than 50% of the shares of the Company entitled to vote are exchanged, the Company shall give to the Eligible Director, at the time of adoption of the plan for liquidation, dissolution, merger, consolidation or reorganization, either (i) a reasonable time thereafter within which to exercise the Option prior to the effectiveness of such liquidation, dissolution, merger, consolidation or reorganization, at the end of which time the Option shall terminate, or (ii) the right to exercise the Option as to an equivalent number of shares of stock of the corporation succeeding the Company or acquiring its business by reason of such liquidation, dissolution, merger, consolidation or reorganization. 7. Use of Proceeds. Proceeds from the sale of Shares pursuant to this Plan shall be used by the Company for general corporate purposes. 8. Legal Requirements. The Company shall not be obligated to offer or sell any Shares except in compliance with all applicable federal and state securities laws and any rules and regulations thereunder. Any certificates representing shares purchased upon exercise of an Option shall bear appropriate legends. -36- 5 9. Amendment of Plan. The Board may amend the Plan at any time, provided, however, that any amendment that increases the number of shares as to which Options may be granted or reduces the exercise price below the price provided in the Plan shall be subject to the approval of the Company's stockholders. No other amendment shall require stockholder approval except to the extent (a) required by applicable laws, regulations or rules or (b) the Board otherwise concludes that stockholder approval is advisable. No amendment shall affect the rights of the holder of any Option, except with that holder's consent. 10. Termination or Suspension of Plan. The Board at any time may suspend or terminate this Plan. This Plan, unless sooner terminated, shall terminate on the tenth anniversary of its adoption by the Board. No Option may be granted under this Plan while this Plan is suspended or after it is terminated. Suspension or termination of this Plan shall not affect the rights of the holder of any Option, except with that holder's consent. 11. Stockholder Approval. This Plan is subject to approval at the annual meeting of stockholders on November 1, 1996, by the affirmative vote of the holders of a majority of the voting power of the shares of the Company represented in person or by proxy and entitled to vote at the meeting. -37- -----END PRIVACY-ENHANCED MESSAGE-----