ADT 2008 Annual Report Download - page 88

4.3 Stock Options and Stock Appreciation Rights. The Committee may grant Stock Options and
Stock Appreciation Rights under the Plan to those Employees whom the Committee may from time to
time select, in the amounts and pursuant to the other terms and conditions that the Committee, in its
discretion, may determine and set forth in the Award Certificate, subject to the provisions below:
(a) Form. Stock Options granted under the Plan will, at the discretion of the Committee
and as set forth in the Award Certificate, be in the form of Incentive Stock Options, Nonqualified
Stock Options or a combination of the two. If an Incentive Stock Option and a Nonqualified Stock
Option are granted to the same Participant under the Plan at the same time, the form of each will
be clearly identified, and they will be deemed to have been granted in separate grants. In no event
will the exercise of one Award affect the right to exercise the other Award. Stock Appreciation
Rights may be granted either alone or in connection with concurrently or previously granted
Nonqualified Stock Options.
(b) Exercise Price. The Committee will set the Exercise Price of Fair Market Value Stock
Options or Stock Appreciation Rights granted under the Plan at a price that is equal to the Fair
Market Value of a Share on the date of grant, subject to adjustment as provided in Sections 5.3
and 5.4. The Committee will set the Exercise Price of Premium-Priced Stock Options at a price
that is higher than the Fair Market Value of a Share as of the date of grant, provided that such
price is no higher than 150 percent of such Fair Market Value. The Exercise Price of Incentive
Stock Options will be equal to or greater than 110 percent of the Fair Market Value of a Share as
of the date of grant if the Participant receiving the Stock Options owns stock possessing more than
10 percent of the total combined voting power of all classes of stock of the Company or any
Subsidiary, as defined in Code Section 424. The Exercise Price of a Stock Appreciation Right
granted in tandem with a Stock Option will equal the Exercise Price of the related Stock Option.
The Committee will set forth the Exercise Price of a Stock Option or Stock Appreciation Right in
the Award Certificate. Stock Options granted under the Plan will, at the discretion of the
Committee and as set forth in the Award Certificate, be Fair Market Value Stock Options,
Premium-Priced Stock Options or a combination of Fair Market Value Stock Options and
Premium-Priced Stock Options.
(c) Term and Timing of Exercise. Each Stock Option or Stock Appreciation Right granted
under the Plan will be exercisable in whole or in part, subject to the following conditions, unless
determined otherwise by the Committee:
(i) The Committee will determine and set forth in the Award Certificate the date on
which any Award of Stock Options or Stock Appreciation Rights to a Participant may first be
exercised. Unless the applicable Award Certificate provides otherwise, a Stock Option or
Stock Appreciation Right will become exercisable in equal annual installments over a period
of four years beginning immediately after the date on which the Stock Option or Stock
Appreciation Right was granted, and will lapse 10 years after the date of grant, except as
otherwise provided herein.
(ii) Unless the applicable Award Certificate provides otherwise, upon the death,
Disability or Normal Retirement of a Participant who has outstanding Stock Options or Stock
Appreciation Rights, the unvested Stock Options or Stock Appreciation Rights will vest.
Unless the applicable Award Certificate provides otherwise, the Participant’s Stock Options
and Stock Appreciation Rights will lapse, and will not thereafter be exercisable, upon the
earlier of (A) their original expiration date or (B) the date that is three years after the date
on which the Participant dies, incurs a Disability or incurs a Normal Retirement.
(iii) Unless the applicable Award Certificate provides otherwise, upon the Termination of
Employment of a Participant for any reason other than the Participant’s death, Disability or
Normal Retirement or due to a Change in Control, if the Participant has attained age 55, and
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