JABIL CIRCUIT, INC. PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (PBRSU EPS ONEU)
Exhibit 10.3
This RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made as of (the “Grant Date”)
between JABIL CIRCUIT, INC. a Delaware corporation (the “Company”) and ______________ (the
“Grantee”).
Background Information
A. The Board of Directors (the “Board”) and stockholders of the Company previously adopted the
Jabil Circuit, Inc. 2011 Stock Award and Incentive Plan (the “Plan”).
B. Section 8 of the Plan provides that the Administrator shall have the discretion and right
to grant Stock Awards, including Stock Awards denominated in units representing rights to receive
shares, to any Employees or Consultants or Non-Employee Directors, subject to the terms and
conditions of the Plan and any additional terms provided by the Administrator. The Administrator
has made a Stock Award grant denominated in units to the Grantee as of the Grant Date pursuant to
the terms of the Plan and this Agreement.
C. The Compensation Committee of the Board (the “Committee”) has determined that it is
desirable for compensation delivered pursuant to such Stock Award to be eligible to qualify for an
exemption from the limit on tax deductibility of compensation under Section 162(m) of the Code, and
the Compensation Committee has determined that Section 11 of the Plan is applicable to such Stock
Award.
D. The Grantee desires to accept the Stock Award grant and agrees to be bound by the terms and
conditions of the Plan and this Agreement.
E. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Agreement.
Agreement
1. Restricted Stock Units. Subject to the terms and conditions provided in this
Agreement and the Plan, the Company hereby grants to the Grantee _____ restricted stock units (the
“Restricted Stock Units”) as of the Grant Date. Each Restricted Stock Unit represents the right to
receive a Share of Common Stock if the Restricted Stock Unit becomes vested and non-forfeitable in
accordance with Section 2 or Section 3 of this Agreement. The Grantee shall have no rights as a
stockholder of the Company, no dividend rights and no voting rights with respect to the Restricted
Stock Units or the Shares underlying the Restricted Stock Units unless and until the Restricted
Stock Units become vested and non-forfeitable and such Shares are delivered to the Grantee in
accordance with Section 4 of this Agreement. The Grantee is required to pay no cash consideration
for the grant of the Restricted Stock Units. The Grantee acknowledges and agrees that (i) the
Restricted Stock Units and related rights are nontransferable as provided in Section 5 of this
Agreement, (ii) the Restricted Stock Units are subject to forfeiture in the event the Grantee’s
Continuous Status as an Employee or Consultant or Non-Employee Director
terminates in certain
circumstances, as specified in Section 6 of this Agreement, (iii) sales of Shares of Common Stock
delivered in settlement of the Restricted Stock Units will be subject to the Company’s policies
regulating trading by Employees and Consultants, including any applicable “blackout” or other
designated periods in which sales of Shares are not permitted, (iv) Shares delivered in settlement
will be subject to any recoupment or “clawback” policy of the Company, and (v) any entitlement to
dividend equivalents will be in accordance with Section 7 of this Agreement. The extent to which
the Grantee’s rights and interest in the Restricted Stock Units becomes vested and non-forfeitable
shall be determined in accordance with the provisions of Sections 2 and 3 of this Agreement.
2. Vesting.
(a) Except as may be otherwise provided in Section 3 or Section 6 of this Agreement, the vesting of
the Grantee’s rights and interest in the Restricted Stock Units shall be determined in accordance
with this Section 2. The extent to which the Grantee’s interest in the Restricted Stock Units
becomes vested and non-forfeitable shall be based upon the satisfaction of the performance goal
specified in this Section 2 (the “Performance Goal”), subject to Section 3. The Performance Goal
shall be based upon the Cumulative EPS (“Cumulative EPS”) of the Company’s adjusted core earnings
per share (as defined below) during the five-year period beginning [ ], and ending on [ ] (the
“Performance Period,” subject to early termination in accordance with Section 2(b)). The
Cumulative EPS for the Performance Period shall be determined by the sum of the adjusted core
earnings per share for the Company’s fiscal years ending [ ],
[ ], [ ],
[ ] and [ ] and shall be
measured on three dates:
[ ], [ ] and [ ] (each a “Measurement Date”)
(in each case subject to
adjustment under Section 7(b)). For purposes of this Agreement, “adjusted core earnings per share”
means the Company’s net income determined under U.S. generally accepted accounting principles
(“GAAP”), before amortization of intangibles, stock-based compensation expense and related charges,
and goodwill impairment charges, and net of tax and deferred tax valuation allowance charges that
result from the write-off of goodwill and impairment charges, divided by the weighted average
number of outstanding shares determined in accordance with GAAP.
(b) The portion of the Grantee’s rights and interest in the Restricted Stock Units, if any,
that becomes vested and non-forfeitable at the first Measurement Date (that is, [ ]) during the
Performance Period shall be determined in accordance with the following schedule:
| Cumulative EPS for Three Fiscal Years | Percentage of Shares Vested | |
| Beginning [ ] and | ||
| Ending [ ] | ||
| Less than [$X] [$X] |
[X]% [X]% |
Notwithstanding the foregoing schedule, (i) if the certified achievement of the Performance Goal at
the first Measurement Date (that is, [ ]) is at or above a Cumulative EPS of [$X]
2
(that is, 100
percent or more of the related Shares are certified to vest and become non-forfeitable), then the
Performance Period shall end on the first Measurement Date and no additional related Shares shall
be available to become vested under this Agreement; (ii) if the certified achievement of the
Performance Goal at the first Measurement Date is at a Cumulative EPS of less than [$X] (that is,
less than 100 percent, if any, of the related Shares are certified to vest and become
non-forfeitable), then the cumulative percentage of related Shares underlying the Restricted Stock
Units that may be certified to vest and become non-forfeitable during the Performance Period shall
not exceed 100 percent, and the number of Restricted Stock Units and related Shares that may be
certified to vest and become non-forfeitable as of any Measurement Date after the first Measurement
Date shall be reduced (but not below zero) by the number of Restricted Stock Units and related
Shares, if any, that were certified to vest and become non-forfeitable on any preceding
Determination Date (as defined below); and (iii) no fractional Shares shall be issued, and subject
to the preceding limitations on the number of related Shares available under this Agreement (that
is, 150 percent of the related Shares through the first Measurement Date and 100 percent of the
related Shares thereafter), any fractional Share that would have resulted from the foregoing
calculations shall be rounded up to the next whole Share.
(c) The portion of the Grantee’s rights and interest in the Restricted Stock Units, if any,
that becomes vested and non-forfeitable at the second Measurement Date (that is,
[ ]) during the
Performance Period shall be determined in accordance with the following schedule (reduced by the
number of Restricted Stock Units that were previously certified to vest and become non-forfeitable
on any preceding Determination Date, as provided in Section 2(b)):
| Cumulative EPS for Four Fiscal Years | Percentage of Shares Vested | |
| Beginning [ ] and | ||
| Ending [ ] | ||
| Less than [$X] | [X]% | |
| [$X] | [X]% |
(d) The portion of the Grantee’s rights and interest in the Restricted Stock Units, if any,
that becomes vested and non-forfeitable at the third Measurement Date (that is,
[ ]) during the
Performance Period shall be determined in accordance with the following schedule (reduced by the
number of Restricted Stock Units that were previously certified to vest and become non-forfeitable
on any preceding Determination Date, as provided in Section 2(b)):
| Cumulative EPS for Five Fiscal Years | Percentage of Shares Vested | |
| Beginning [ ] and | ||
| Ending [ ] | ||
| Less than [$X] | [X]% | |
| [$X] | [X]% |
(e) The applicable portion of the Restricted Stock Units shall become vested and
non-forfeitable in accordance with this Section 2, subject to the Committee determining and
3
certifying in writing that the corresponding Performance Goal and all other conditions for the
vesting of the Restricted Stock Units have been satisfied; provided the Grantee’s Continuous Status
as an Employee or Consultant or Non-Employee Director has not terminated before the Measurement
Date. The Committee shall make this determination within sixty (60) days after each Measurement
Date during the Performance Period (each, a “Determination Date”). This determination shall be
based on the actual level of the Performance Goal achieved, and shall not be subject to an exercise
of discretion to determine a level of achievement of the Performance Goal other than that actually
achieved, provided that the Committee’s good faith determination shall be final, binding and
conclusive on all persons, including, but not limited to, the Company and the Grantee. The Grantee
shall not be entitled to any claim or recourse if any action or inaction by the Company, or any
other circumstance or event, including any circumstance or event outside the control of the
Grantee, adversely affects the ability of the Grantee to satisfy the Performance Goal or in any way
prevents the satisfaction of the Performance Goal.
3. Change in Control. In the event of a Change in Control, any portion of the
Restricted Stock Units that is not yet vested on the date such Change in Control is determined to
have occurred:
(a) shall become fully vested on the first anniversary of the date of such Change in
Control (the “Change in Control Anniversary”) if the Grantee’s Continuous Status as an
Employee or Consultant or Non-Employee Director does not terminate prior to the Change in
Control Anniversary;
(b) shall become fully vested on the Date of Termination if the Grantee’s Continuous
Status as an Employee or Consultant or Non-Employee Director terminates prior to the Change
in Control Anniversary as a result of termination by the Company without Cause or
resignation by the Grantee for Good Reason; or
(c) shall not become fully vested if the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director terminates prior to the Change in Control Anniversary as
a result of termination by the Company for Cause or resignation by the Grantee without Good
Reason, but only to the extent such Restricted Stock Units have not previously become
vested.
For purposes of this Agreement, the references to “fully vested” refer to vesting of the number of
Restricted Stock Units that would vest upon achievement of the maximum level of achievement of the
Performance Goal under Section 2 at the next Measurement Date (that is, 150 percent of the related
Shares through the first Measurement Date and 100 percent of the related Shares thereafter). This
Section 3 shall supersede the standard vesting provision contained in Section 2 of this Agreement
only to the extent that it results in accelerated vesting of the Restricted Stock Units, and it
shall not result in a delay of any vesting or non-vesting of any Restricted Stock Units that
otherwise would occur at a Measurement Date during the Performance Period under the terms of the
standard vesting provision contained in Section 2 of this Agreement.
For purposes of this Section 3, the following definitions shall apply:
4
(d) “Cause” means:
(i) The Grantee’s conviction of a crime involving fraud or dishonesty; or
(ii) The Grantee’s continued willful or reckless material misconduct in the
performance of the Grantee’s duties after receipt of written notice from the Company
concerning such misconduct;
provided, however, that for purposes of Section 3(d)(ii), Cause shall not include
any one or more of the following: bad judgment, negligence or any act or omission
believed by the Grantee in good faith to have been in or not opposed to the interest
of the Company (without intent of the Grantee to gain, directly or indirectly, a
profit to which the Grantee was not legally entitled).
(e) “Good Reason” means:
(i) The assignment to the Grantee of any duties adverse to the Grantee and
materially inconsistent with the Grantee’s position (including status, titles and
reporting requirement), authority, duties or responsibilities, or any other action by
the Company that results in a material diminution in such position, authority, duties
or responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action that is not taken in bad faith;
(ii) Any material reduction in the Grantee’s compensation; or
(iii) Change in location of the Grantee’s assigned office of more than 35 miles
without prior consent of the Grantee.
The Grantee’s resignation will not constitute a resignation for Good Reason unless
the Grantee first provides written notice to the Company of the existence of the Good
Reason within 90 days following the effective date of the occurrence of the Good
Reason, and the Good Reason remains uncorrected by the Company for more than 30 days
following receipt of such written notice of the Good Reason from the Grantee to the
Company, and the effective date of the Grantee’s resignation is within one year
following the effective date of the occurrence of the Good Reason.
4. Timing and Manner of Settlement of Restricted Stock Units.
(a) Settlement Timing. Unless and until the Restricted Stock Units become vested and
non-forfeitable in accordance with Section 2, Section 3 or Section 6 of this Agreement, the Grantee
will have no right to settlement of any such Restricted Stock Units. Restricted Stock Units will
be settled under this Section 4 by the Company delivering to the Grantee (or his
5
beneficiary in the
event of death) a number of Shares equal to the number of Restricted Stock Units that have become
vested and non-forfeitable and are to be settled at the applicable settlement date. In the case of
Restricted Stock Units that become vested and non-forfeitable at a Measurement Date in accordance
with Section 2 of this Agreement (including Restricted Stock Units not forfeited by operation of
Section 6(a) or 6(c)), such Restricted Stock Units will be settled at a date that is as prompt as
practicable after the Determination Date but in no event later than two and one-half (2-1/2) months
after the applicable Measurement Date (settlement that is prompt but in no event later than two and
one-half (2-1/2) months after the applicable vesting date is referred to herein as “Prompt
Settlement”). The settlement of Restricted Stock Units that become vested and non-forfeitable in
circumstances governed by Section 3 or Section 6(b) will be as follows:
(i) Restricted Stock Units that do not constitute a deferral of compensation under Code
Section 409A will be settled as follows:
(A) Restricted Stock Units that become vested in accordance with Section 6(b)
(due to the Grantee’s death) will be settled within the period extending to not
later than two and one-half (2-1/2) months after the later of the end of calendar
year or the end of the Company’s fiscal year in which death occurred; and
(B) Restricted Stock Units that become vested in accordance with Section 3(a)
(on the Change in Control Anniversary) or Section 3(b) (during the year following a
Change in Control) will be settled in a Prompt Settlement following the applicable
vesting date under Section 3(a) or 3(b).
(ii) Restricted Stock Units that constitute a deferral of compensation under Code
Section 409A (“000X XXXx”) will be settled as follows:
(A) 000X XXXx that become vested in accordance with Section 6(b) (due to the
Grantee’s death) will be settled on the 30th day after the date of the
Grantee’s death;
(B) 000X XXXx that become vested in accordance with Section 3(a) (on the Change
in Control Anniversary), if in connection with the Change in Control there occurred
a change in the ownership of the Company, a change in effective control of the
Company or a change in the ownership of a substantial portion of the assets of the
Company as defined in Treasury Regulation § 1.409A-3(i)(5) (a “409A Change in
Control”), will be settled in a Prompt Settlement following the first anniversary of
the 409A Change in Control, and if there occurred no 409A Change in Control in
connection with the Change in Control, such 000X XXXx will be settled in a Prompt
Settlement following the earliest of the next Measurement Date (at the applicable
Determination Date), one year after a 409A Change in Control not related to the
Change in Control or the termination of the Grantee’s Continuous Status as an
Employee or Consultant or Non-
6
Employee Director, subject to Section 9(b) (including
the six-month delay rule); and
(C) 000X XXXx that become vested in accordance with Section 3(b) (during the
year following a Change in Control) will be settled in a Prompt Settlement following
termination of the Grantee’s Continuous Status as an Employee or Consultant or
Non-Employee Director, subject to Section 9(b) (including the six-month delay rule).
(b) Manner of Settlement. The Company may make delivery of shares of Common Stock in
settlement of Restricted Stock Units by either delivering one or more certificates representing
such Shares to the Grantee (or his beneficiary in the event of death), registered in the name of
the Grantee (and any joint name, if so directed by the Grantee), or by depositing such Shares into
a stock brokerage account maintained for the Grantee (or of which the Grantee is a joint owner,
with the consent of the Grantee). In no event will the Company issue fractional Shares.
(c) Effect of Settlement. Neither the Grantee nor any of the Grantee’s successors,
heirs, assigns or personal representatives shall have any further rights or interests in any
Restricted Stock Units that have been paid and settled. Although a settlement date or range of
dates for settlement are specified above in order to comply with Code Section 409A, the Company
retains discretion to determine the settlement date, and no Grantee or beneficiary of a Grantee
shall have any claim for damages or loss by virtue of the fact that the market price of Common
Stock was higher on a given date upon which settlement could have been made as compared to the
market price on or after the actual settlement date (any claim relating to settlement will be
limited to a claim for delivery of Shares and related dividend equivalents).
5. Restrictions on Transfer. The Grantee shall not have the right to make or permit
to occur any transfer, assignment, pledge, hypothecation or encumbrance of all or any portion of
the Restricted Stock Units, related rights to dividend equivalents or any other rights relating
thereto, whether outright or as security, with or without consideration, voluntary or involuntary,
and the Restricted Stock Units, related rights to dividend equivalents and other rights relating
thereto, shall not be subject to execution, attachment, lien, or similar process; provided,
however, the Grantee will be entitled to designate a beneficiary or beneficiaries to receive any
settlement in respect of the Restricted Stock Units upon the death of the Grantee, in the manner
and to the extent permitted by the Administrator. Any purported transfer or other transaction not
permitted under this Section 5 shall be deemed null and void.
6. Forfeiture. Except as may be otherwise provided in this Section 6, the Grantee
shall forfeit all of his rights and interest in the Restricted Stock Units and related dividend
equivalents if his Continuous Status as an Employee or Consultant or Non-Employee Director
terminates for any reason before the Restricted Stock Units become vested in accordance with
Section 2 or Section 3 of this Agreement.
(a) Retirement. In the event of the Grantee’s Retirement in accordance with the terms
and conditions set forth in this Section 6(a), the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director shall be treated as not having terminated for
7
a number of years
determined in accordance with this Section 6(a) for purposes of application of the vesting
provisions of this Agreement. For purposes of this Section 6(a), “Retirement” means termination of
the Grantee’s Continuous Status as an Employee or Consultant or Non-Employee Director after the
earliest of:
(i) The Grant Date or the end of the Company fiscal year in the Performance
Period at which the Grantee has attained age fifty (50) and completed fifteen (15)
Full Years of Continuous Status as an Employee or Consultant or Non-Employee
Director;
(ii) The Grant Date or the end of the Company fiscal year in the Performance
Period at which the Grantee has attained age fifty-eight (58) and completed ten (10)
Full Years of Continuous Status as an Employee or Consultant or Non-Employee
Director; or
(iii) The Grant Date or the end of the Company fiscal year in the Performance
Period at which the Grantee has attained age sixty-two (62) and completed five (5)
Full Years of Continuous Status as an Employee or Consultant or Non-Employee
Director.
For purposes of this Section 6(a), “Full Year” means a twelve-month period beginning on the
date of the Grantee’s commencement of service for the Company or a Subsidiary and each anniversary
thereof. Except as otherwise provided in this Section 6(a), the time period of Continuous Status
as an Employee or Consultant or Non-Employee Director for a Grantee whose service with the Company
or a Subsidiary terminates and who subsequently returns to service with the Company or a Subsidiary
shall include all time periods of the Grantee’s service for the Company or a Subsidiary for
purposes of this Section 6(a). This Section 6(a) will only apply to a Retirement if the Grantee’s
Continuous Status as an Employee or Consultant or Non-Employee Director does not terminate due to
Cause as defined in this Agreement. In addition, this Section 6(a) will only apply to a Retirement
if the Grantee executes the agreement, if any, required under Section 6(d). For a Grantee who
became an Employee or Consultant or Non-Employee Director of the Company or a Subsidiary following
the acquisition of his or her employer by the Company or a Subsidiary, service with the acquired
employer shall not count toward the number of years of the Grantee’s Continuous Status as an
Employee or Consultant or Non-Employee Director for purposes of this Section 6(a), and Continuous
Status as an Employee or Consultant or Non-Employee Director shall be measured from the
commencement of the Grantee ’s service for the Company or a Subsidiary following such acquisition.
For purposes of this Section 6(a), the number of years of the Grantee’s Continuous Status as an
Employee or Consultant or Non-Employee Director shall also include service with Jabil Circuit Co.,
a Michigan corporation and predecessor to the Company, and any Predecessor Subsidiary. For
purposes of this Section 6(a), “Predecessor Subsidiary” means a company of which not less than
fifty percent (50%) of the voting shares were held by Jabil Circuit Co. or a Predecessor
Subsidiary. For purposes of this Section 6(a), for a Grantee who subsequent to the Grant Date
performs service for the Company or a Subsidiary in a role as an employee of the Company or a
Subsidiary that no longer includes being a state law officer of the Company or a substantially
equivalent position of a Subsidiary
8
(“Subsequent Non-Officer Service”), the time period of such
Grantee’s Continuous Status as an Employee or Consultant or Non-Employee Director shall not
include the time period of any such Subsequent Non-Officer Service, but shall include any time
period during which such Grantee subsequently resumes service for the Company or a Subsidiary in a
role as an employee of the Company or a Subsidiary that includes being a state law officer of the
Company or a substantially equivalent position of a Subsidiary.
If this Section 6(a) applies to the Grantee’s Retirement, the Grantee’s Continuous Status as
an Employee or Consultant or Non-Employee Director shall be treated as not having terminated for
the number of years beginning on the effective date of the Retirement, or the remaining portion of
the vesting period, whichever is applicable, in accordance with the following table based on the
Grantee’s age and full years of Continuous Status as an Employee or Consultant or Non-Employee
Director at the later of the Grant Date or the Company’s fiscal year-end next preceding the
effective date of the Retirement:
| Full Years of Continuous Status as an Employee or Consultant or Non-Employee Director | ||||||||
| Age | 5 Years | 10 Years | 15 Years | 20 or More Years | ||||
50 — 54
|
None | None | 1 year | 2 years | ||||
55 — 57
|
None | None | 2 years | Full vesting period | ||||
58 — 61
|
None | 2 years | 3 years | Full vesting period | ||||
62 or Older
|
Full vesting period | Full vesting period | Full vesting period | Full vesting period | ||||
Accordingly, upon such Retirement, Restricted Stock Units that otherwise would be forfeited because
such Restricted Stock Units remain unvested (and not previously forfeited) at the effective date of
the Retirement will not be forfeited if one or more Measurement Dates would have been reached had
the Grantee remained in Continuous Status as an Employee or Consultant or Non-Employee Director for
the additional period specified in the table above. Vesting of such Restricted Stock Units will
remain subject to Section 2, and settlement of such Restricted Stock Units will remain subject to
Section 4. Any portion of the Restricted Stock Units that could not potentially become vested
under Section 2 assuming the Grantee’s Continuous Status as an Employee or Consultant or
Non-Employee Director as set forth in the above table will be forfeited upon Retirement. The death
of the Grantee following Retirement or a Change in Control following Retirement shall not affect
the application of this Section 6(a), although such events will trigger a settlement of the
Restricted Stock Units not forfeited by operation of this Section 6(a) in accordance with Section 4
9
(b) Death. In the event that the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director terminates due to death at a time that Grantee’s Restricted
Stock Units have not yet vested, a pro rata portion of the Grantee’s Restricted Stock Units shall
vest as follows: First, for purposes of Section 2, the Company shall determine the actual level of
the Performance Goal achieved (such determination may be by means of a good faith estimate) as of
the Company’s fiscal quarter-end coincident with or next preceding the Grantee’s death (or, if the
Grantee’s death occurs in the first fiscal quarter of the Performance Period, then the Company’s
fiscal quarter-end coincident with or next following the Grantee’s death) and calculating, on a
preliminary basis, the resulting number of Restricted Stock Units that would have become vested
(based on such calculation) as of the next Measurement Date, which resulting number shall then be
reduced (but not below zero) by the number of Restricted Stock Units, if any, that were certified
to vest and become non-forfeitable on any Determination Date coincident with or preceding the
Grantee’s death. Second, a pro rata portion of that number of Restricted Stock Units will be
calculated by multiplying that number by a fraction, the numerator of which is the number of months
from [ ] through the date of death (rounding any partial month to the next whole month) and the
denominator of which is 36 (if the Grantee dies on or before [ ]), 48 (if the Grantee dies after
[ ]
and on or before [ ]) or 60 (if the Grantee dies after [ ] and on or before [ ]), whichever is
applicable. No fractional Shares shall be issued, and subject to the limitations under Section
2(b) on the number of related Shares available under this Agreement (that is, 150 percent of the
related Shares through the first Measurement Date and 100 percent of the related Shares
thereafter), any fractional Share that would have resulted from the foregoing calculations shall be
rounded up to the next whole Share. Any Restricted Stock Units that were unvested at the date of
death and that exceed the pro rata portion of the Restricted Stock Units that become vested under
this Section 6(b) shall be forfeited.
(c) Disability. In the event that the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director terminates due to Disability at a time that any portion of the
Grantee’s Restricted Stock Units have not yet vested, a pro rata portion of the Grantee’s
Restricted Stock Units shall remain outstanding and shall be eligible for future vesting based on
the actual level of achievement in the Performance Period, provided, however, that non-forfeiture
of such Restricted Stock Units will only apply if the Grantee executes the agreement, if any,
required under Section 6(d). The pro rata portion shall be calculated as follows: (i) first, the
full number of Restricted Stock Units originally granted (regardless of any prior vesting) shall be
reduced (but not below zero) by the number of Restricted Stock Units, if any, that were certified
to vest and become non-forfeitable on any Determination Date coincident with or preceding the
Grantee’s termination, and (ii) second, at each subsequent Measurement Date, the resulting number
of Restricted Stock Units shall be multiplied by a fraction, the numerator of which is the number
of months from [ ] through the date of termination (rounding any partial month to the next whole
month) and the denominator of which is the aggregate number of months from [ ] through such
Measurement Date. No fractional Shares shall be issued, and subject to the limitations under
Section 2(b) on the number of related Shares available under this Agreement (that is, 150 percent
of the related Shares through the first Measurement Date and 100 percent of the related Shares
thereafter), any fractional Share that would have resulted from the foregoing calculations shall be
rounded up to the next whole Share. Vesting of such
10
Restricted Stock Units will remain subject to
Section 2, and settlement of such Restricted Stock Units will remain subject to Section 4. The
death of the Grantee following a termination governed by this Section 6(c), or a Change in Control
following such termination, shall not increase or decrease the number of Restricted Stock Units
forfeited or not forfeited under this Section 6(c), although such events will trigger a settlement
of the Restricted Stock Units not forfeited by operation of this Section 6(c) in accordance with
Section 4. Any Restricted Stock Units that at any time after the date of a termination governed by
this Section 6(c) exceed the pro rata portion of the Restricted Stock Units that remain outstanding
and potentially subject to future vesting under this Section 6(c) shall be forfeited.
(d) Execution of Separation Agreement and Release. Unless otherwise determined by the
Administrator, as a condition to the non-forfeiture of Restricted Stock Units upon Retirement under
Section 6(a) or upon a termination due to Disability under Section 6(c), the Grantee shall be
required to execute a separation agreement and release, in a form prescribed by the Administrator,
setting forth covenants relating to noncompetition, nonsolicitation, nondisparagement,
confidentiality and similar covenants for the protection of the Company’s business, and releasing
the Company from liability in connection with the Grantee’s termination. Such agreement shall
provide for the forfeiture and/or clawback of the Restricted Stock Units subject to Section 6(a) or
6(c), and the Shares of Common Stock issued or issuable in settlement of the Restricted Stock
Units, and related dividend equivalents and any other related rights, in the event of the Grantee’s
failure to comply with the terms of such agreement. The Administrator will provide the form of
such agreement to the Grantee at the date of termination, and the Grantee must execute and return
such form within the period specified by law or, if no such period is specified, within 21 days
after receipt of the form of agreement, and not revoke such agreement within any permitted
revocation period (the end of these periods being the “Agreement Effectiveness Deadline”). If any
Restricted Stock Units subject to Section 6(a) or 6(c) or related rights would be required to be
settled before the Agreement Effectiveness Deadline, the settlement shall not be delayed pending
the receipt and effectiveness of the agreement, but any such Restricted Stock Units or related
rights settled before such receipt and effectiveness shall be subject to a “clawback” (repaying to
the Company the Shares and cash paid upon settlement) in the event that the agreement is not
received and effective and not revoked by the Agreement Effectiveness Deadline.
11
7. Dividend Equivalents; Adjustments.
(a) Dividend Equivalents. During the period beginning on the Grant Date and ending on
the date that Shares are issued in settlement of a Restricted Stock Unit, the Grantee will accrue
dividend equivalents on Restricted Stock Units (including electively deferred 409A RSUs) equal to
the cash dividend or distribution that would have been paid on the Restricted Stock Unit had the
Restricted Stock Unit been an issued and outstanding Share of Common Stock on the record date for
the dividend or distribution. Such accrued dividend equivalents (i) will vest and become payable
upon the same terms and at the same time of settlement as the Restricted Stock Units to which they
relate, and (ii) will be denominated and payable solely in cash. Dividend equivalent payments, at
settlement, will be net of applicable federal, state, local and foreign income and social insurance
withholding taxes (subject to Section 8).
(b) Adjustments. The number of Restricted Stock Units (including electively deferred
409A RSUs) credited to the Grantee, and each adjusted core earnings per share amount and Cumulative
EPS amount specified for purposes of the Performance Goal, shall be subject to adjustment by the
Company, in accordance with Section 13 of the Plan, in order to preserve without enlarging the
Grantee’s rights with respect to such Restricted Stock Units. Any such adjustment shall be made
taking into account any crediting of cash dividend equivalents to the Grantee under Section 7(a) in
connection with such transaction or event. In the case of an extraordinary cash dividend, the
Committee may determine to adjust Grantee’s Restricted Stock Units under this Section 7(b) in lieu
of crediting cash dividend equivalents under Section 7(a). Restricted Stock Units credited to the
Grantee as a result of an adjustment shall be subject to the same forfeiture and settlement terms
as applied to the related Restricted Stock Units prior to the adjustment.
8. Responsibility for Taxes and Withholding. Regardless of any action the Company,
any of its Subsidiaries and/or the Grantee’s employer takes with respect to any or all income tax,
social insurance, payroll tax, payment on account or other tax-related items related to the
Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”),
the Grantee acknowledges that the ultimate liability for all Tax-Related Items is and remains the
Grantee’s responsibility and may exceed the amount actually withheld by the Company or any of its
affiliates. The Grantee further acknowledges that the Company and/or its Subsidiaries (i) make no
representations or undertakings regarding the treatment of any Tax-Related Items in connection with
any aspect of the Restricted Stock Units, including, but not limited to, the grant or vesting of
the Restricted Stock Units, the delivery of Shares, the subsequent sale of Shares acquired pursuant
to such delivery and the receipt of any dividends and/or dividend equivalents; and (ii) do not
commit to and are under no obligation to structure the terms of any award to reduce or eliminate
the Grantee’s liability for Tax-Related Items or achieve any particular tax result. Further, if
the Grantee becomes subject to tax in more than one jurisdiction between the Grant Date and the
date of any relevant taxable event, the Grantee acknowledges that the Company and/or its
Subsidiaries may be required to withhold or account for Tax-Related Items in more than one
jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, the Grantee will pay or
make adequate arrangements satisfactory to the Company and/or its Subsidiaries to satisfy all
12
Tax-Related Items. In this regard, the Grantee authorizes the Company and/or its Subsidiaries, or
their respective agents, at their discretion, to satisfy the obligations with regard to all
Tax-Related Items by one or a combination of the following:
(a) withholding from the Grantee’s wages or other cash compensation paid to the Grantee
by the Company and/or its Subsidiaries; or
(b) withholding from proceeds of the Shares acquired following settlement either
through a voluntary sale or through a mandatory sale arranged by the Company (on the
Grantee’s behalf pursuant to this authorization); or
(c) withholding in Shares to be delivered upon settlement; or
(d) withholding from dividend equivalent payments (payable in cash) related to the
Shares to be delivered at settlement.
To avoid negative accounting treatment, the Company and/or its Subsidiaries may withhold or account
for Tax-Related Items by considering applicable minimum statutory withholding amounts or other
applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding
in Shares, for tax purposes, the Grantee is deemed to have been issued the full number of Shares
attributable to the awarded Restricted Stock Units, notwithstanding that a number of Shares are
held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of
the Grantee’s participation in the Plan.
Finally, the Grantee shall pay to the Company and/or its Subsidiaries any amount of
Tax-Related Items that the Company and/or its Subsidiaries may be required to withhold or account
for as a result of the Grantee’s participation in the Plan that are not satisfied by the means
previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the
sale of Shares, if the Grantee fails to comply with the Grantee’s obligations in connection with
the Tax-Related Items.
9. Code Section 409A.
(a) General. Payments made pursuant to this Agreement are intended to be exempt from
Section 409A of the Code or to otherwise comply with Section 409A of the Code. Accordingly, other
provisions of the Plan or this Agreement notwithstanding, the provisions of this Section 9 will
apply in order that the Restricted Stock Units, and related dividend equivalents and any other
related rights, will be exempt from or otherwise comply with Code Section 409A. In addition, the
Company reserves the right, to the extent the Company deems necessary or advisable in its sole
discretion, to unilaterally amend or modify the Plan and/or this Agreement to ensure that all
Restricted Stock Units, and related dividend equivalents and any other related rights, are exempt
from or otherwise comply, and in operation comply, with Code Section 409A (including, without
limitation, the avoidance of penalties thereunder). Other provisions of the Plan and this
Agreement notwithstanding, the Company makes no representations that the Restricted Stock Units,
and related dividend equivalents and any other related rights, will be exempt from or avoid any
penalties that may apply under Code Section 409A, makes no undertaking to preclude Code Section
409A from applying to the Restricted Stock Units and related dividend equivalents and any other
related rights, and will not indemnify or provide a gross up payment to a Grantee (or his
beneficiary) for any taxes, interest or penalties imposed under Code Section
13
409A. Other
restrictions and limitations under any deferred compensation plan or general rules applicable to
deferrals apply to electively deferred 000X XXXx and related dividend equivalents and, if those
provisions apply and are compliant with Code Section 409A, they shall take precedence over
inconsistent provisions of this Section 9.
(b) Restrictions on 409A RSUs. In the case of any 409A RSUs, the following
restrictions will apply:
(i) Separation from Service. Any payment in settlement of the 000X XXXx that
is triggered by a termination of Continuous Status as an Employee or Consultant or
Non-Employee Director (or other termination of employment) hereunder will occur only if the
Grantee has had a “separation from service” within the meaning of Treasury Regulation
§ 1.409A-1(h), with such separation from service treated as the termination for purposes of
determining the timing of any settlement based on such termination.
(ii) Six-Month Delay Rule. The “six-month delay rule” will apply to 000X XXXx
if these four conditions are met:
(A) the Grantee has a separation from service (within the meaning of Treasury
Regulation § 1.409A-1(h)) for a reason other than death;
(B) a payment in settlement is triggered by such separation from service; and
(C) the Grantee is a “specified employee” under Code Section 409A.
If it applies, the six-month delay rule will delay a settlement of 000X XXXx triggered by
separation from service where the settlement otherwise would occur within six months after
the separation from service, subject to the following:
(D) any delayed payment shall be made on the date six months and one day after
separation from service;
(E) during the six-month delay period, accelerated settlement will be permitted
in the event of the Grantee’s death and for no other reason (including no
acceleration upon a Change in Control) except to the extent permitted under Code
Section 409A; and
(F) any settlement that is not triggered by a separation from service, or is
triggered by a separation from service but would be made more than six months after
separation (without applying this six-month delay rule), shall be unaffected by the
six-month delay rule.
14
(c) Other Compliance Provisions. The following provisions apply to Restricted Stock
Units:
(i) Each tranche of Restricted Stock Units (including dividend equivalents
accrued thereon) that potentially could vest at or following a given Measurement
Date or on account of a separate Determination Date under Section 2 shall be deemed
a separate payment for purposes of Code Section 409A.
(ii) The settlement of 000X XXXx may not be accelerated by the Company except
to the extent permitted under Code Section 409A. The Company may, however,
accelerate vesting (i.e., may waive the risk of forfeiture tied to termination of
the Grantee’s Continuous Status as an Employee or Consultant or Non-Employee
Director) of 409A RSUs, without changing the settlement terms of such 409A RSUs.
(iii) It is understood that Good Reason for purposes of this Agreement is
limited to circumstances that qualify under Treasury Regulation § 1.409A-1(n)(2).
(iv) Any election to defer settlement of Restricted Stock Units must comply
with the election timing rules under Code Section 409A.
(v) Any restriction imposed on 000X XXXx hereunder or under the terms of other
documents solely to ensure compliance with Code Section 409A shall not be applied to
a Restricted Stock Unit that is not a 000X XXX except to the extent necessary to
preserve the status of such Restricted Stock Unit as not being a “deferral of
compensation” under Code Section 409A.
(vi) If any mandatory term required for 000X XXXx or other RSUs, or related
dividend equivalents or other related rights, to avoid tax penalties under Code
Section 409A is not otherwise explicitly provided under this document or other
applicable documents, such term is hereby incorporated by reference and fully
applicable as though set forth at length herein.
(vii) In the case of any settlement of Restricted Stock Units during a
specified period following the Determination Date or other date triggering a right
to settlement, the Grantee shall have no influence (other than permitted deferral
elections) on any determination as to the tax year in which the settlement will be
made.
(viii) In the case of any Restricted Stock Unit that is not a 000X XXX, if the
circumstances arise constituting a Disability but termination of the Grantee’s
Continuous Status as an Employee or Consultant or Non-Employee Director has not in
fact resulted immediately without an election by the Grantee, then only the Company
or a Subsidiary may elect to terminate the Grantee’s Continuous Status as an
Employee or Consultant or Non-Employee Director due to such Disability.
15
(ix) If the Company has a right of setoff that could apply to a 000X XXX, such
right may only be exercised at the time the 000X XXX would have been settled, and
may be exercised only as a setoff against an obligation that arose not more than 30
days before and within the same year as the settlement date if application of such
setoff right against an earlier obligation would not be permitted under Code Section
409A.
10. Deferral. If permitted by the Administrator, the issuance of the Shares issuable
with respect to the Restricted Stock Units may be deferred upon such terms and conditions as
determined by the Administrator, subject to the Administrator’s determination that any such right
of deferral or any term thereof complies with applicable laws or regulations in effect from time to
time, including but not limited to Section 409A of the Code and the Employee Retirement Income
Security Act of 1974, as amended. Shares issuable with respect to electively deferred 409A RSUs,
and related dividend equivalents, shall remain subject to the terms and conditions of this
Agreement, and for this purpose shall be considered rights related to the 409A RSUs, to the extent
applicable and not otherwise superseded by any deferred compensation plan or general rules
applicable to electively deferred 409A RSUs, until such 000X XXXx are settled and the Shares
issued, including but not limited to Sections 5, 6(d), 7, 8, 9, 11, 12, 13, 14, 15 and 16 of this
Agreement.
11. No Effect on Employment or Rights under Plan. Nothing in the Plan or this
Agreement shall confer upon the Grantee the right to continue in the employment of the Company or
any Subsidiary or affect any right which the Company or any Subsidiary may have to terminate the
employment of the Grantee regardless of the effect of such termination of employment on the rights
of the Grantee under the Plan or this Agreement. If the Grantee’s employment is terminated for any
reason whatsoever (and whether lawful or otherwise), he will not be entitled to claim any
compensation for or in respect of any consequent diminution or extinction of his rights or benefits
(actual or prospective) under this Agreement or any Award or otherwise in connection with the Plan.
The rights and obligations of the Grantee under the terms of his employment with the Company or
any Subsidiary will not be affected by his participation in the Plan or this Agreement, and neither
the Plan nor this Agreement form part of any contract of employment between the Grantee and the
Company or any Subsidiary. The granting of Awards under the Plan is entirely at the discretion of
the Administrator, and the Grantee shall not in any circumstances have any right to be granted an
Award.
12. Governing Laws. This Agreement shall be construed and enforced in accordance with
the laws of the State of Florida.
13. Successors; Severability; Entire Agreement; Headings. This Agreement shall inure
to the benefit of, and be binding upon, the Company and the Grantee and their heirs, legal
representatives, successors and permitted assigns. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate or otherwise affect
any other provisions of this Agreement, and this Agreement shall be construed as if the invalid,
illegal or unenforceable provision or portion thereof had never been contained herein. Subject to
the terms and conditions of the Plan, any rules adopted by the Company or the Administrator and
applicable
16
to this Agreement and the terms of any elective deferral of the Grantee applicable to
the Restricted Stock Units, which are incorporated herein by reference, this Agreement expresses
the entire understanding and agreement of the parties hereto with respect to such terms,
restrictions and limitations. Section headings used herein are for convenience of reference only
and shall not be considered in construing this Agreement.
14. Grantee Acknowledgements and Consents.
(a) Grantee Consent. By accepting this Agreement electronically, the Grantee
voluntarily acknowledges and consents to the collection, use, processing and transfer of personal
data as described in this Section 14(a). The Grantee is not obliged to consent to such collection,
use, processing and transfer of personal data; however, failure to provide the consent may affect
the Grantee’s ability to participate in the Plan. The Company and its subsidiaries hold, for the
purpose of managing and administering the Plan, certain personal information about the Grantee,
including the Grantee’s name, home address and telephone number, date of birth, social security
number or other Grantee identification number, salary, nationality, job title, any shares of stock
or directorships held in the Company, and details of all options or any other entitlement to Shares
of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in the Grantee’s
favor (“Data”). The Company and/or its subsidiaries will transfer Data among themselves as
necessary for the purpose of implementation, administration and management of the Grantee’s
participation in the Plan and the Company and/or any of its subsidiaries may each further transfer
Data to any third parties assisting the Company in the implementation, administration and
management of the Plan. These recipients may be located in the European Economic Area, or
elsewhere throughout the world, in countries that may have different data privacy laws and
protections than the Grantee’s country, such as the United States. By accepting this Agreement
electronically, the Grantee authorizes them to receive, possess, use, retain and transfer the Data,
in electronic or other form, for the purposes of implementing, administering and managing the
Grantee’s participation in the Plan, including any requisite transfer of such Data as may be
required for the administration of the Plan and/or the subsequent holding of Shares on the
Grantee’s behalf to a broker or other third party with whom the Grantee may elect to deposit any
Shares acquired pursuant to the Plan. The Grantee may, at any time, review Data, require any
necessary amendments to it or withdraw the consents herein in writing by contacting the
Administrator; however, withdrawing consent may affect the Grantee’s ability to participate in the
Plan.
(b) Voluntary Participation. The Grantee’s participation in the Plan is voluntary.
The value of the Restricted Stock Units is an extraordinary item of compensation. Unless otherwise
expressly provided in a separate agreement between the Grantee and the Company or a Subsidiary, the
Restricted Stock Units are not part of normal or expected compensation for purposes of calculating
any severance, resignation, redundancy, end-of-service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments.
(c) Electronic Delivery and Acceptance. BY ACCEPTING THIS AGREEMENT ELECTRONICALLY,
THE GRANTEE HEREBY CONSENTS TO ELECTRONIC DELIVERY OF THE PLAN, THE PROSPECTUS FOR THE PLAN AND
OTHER
17
DOCUMENTS RELATED TO THE PLAN (COLLECTIVELY, THE “PLAN DOCUMENTS”). THE COMPANY WILL DELIVER
THE PLAN DOCUMENTS ELECTRONICALLY TO THE GRANTEE BY E-MAIL, BY POSTING SUCH DOCUMENTS ON ITS
INTRANET WEBSITE OR BY ANOTHER MODE OF ELECTRONIC DELIVERY AS DETERMINED BY THE COMPANY IN ITS SOLE
DISCRETION. BY ACCEPTING THIS AGREEMENT ELECTRONICALLY, THE GRANTEE CONSENTS AND AGREES THAT SUCH
PROCEDURES AND DELIVERY MAY BE EFFECTED BY A BROKER OR THIRD PARTY ENGAGED BY THE COMPANY TO
PROVIDE ADMINISTRATIVE SERVICES RELATED TO THE PLAN. BY ACCEPTING THIS AGREEMENT ELECTRONICALLY,
THE GRANTEE HEREBY CONSENTS TO ANY AND ALL PROCEDURES THE COMPANY HAS ESTABLISHED OR MAY ESTABLISH
FOR ANY ELECTRONIC SIGNATURE SYSTEM FOR DELIVERY AND ACCEPTANCE OF ANY PLAN DOCUMENTS, INCLUDING
THIS AGREEMENT, THAT THE COMPANY MAY ELECT TO DELIVER AND AGREES THAT HIS ELECTRONIC SIGNATURE IS
THE SAME AS, AND WILL HAVE THE SAME FORCE AND EFFECT AS, HIS MANUAL SIGNATURE. THE COMPANY WILL
SEND TO THE GRANTEE AN E-MAIL ANNOUNCEMENT WHEN THE PLAN DOCUMENTS ARE AVAILABLE ELECTRONICALLY FOR
THE GRANTEE’S REVIEW, DOWNLOAD OR PRINTING AND WILL PROVIDE INSTRUCTIONS ON WHERE THE PLAN
DOCUMENTS CAN BE FOUND. UNLESS OTHERWISE SPECIFIED IN WRITING BY THE COMPANY, THE GRANTEE WILL NOT
INCUR ANY COSTS FOR RECEIVING THE PLAN DOCUMENTS ELECTRONICALLY THROUGH THE COMPANY’S COMPUTER
NETWORK. THE GRANTEE WILL HAVE THE RIGHT TO RECEIVE PAPER COPIES OF ANY PLAN DOCUMENT BY SENDING A
WRITTEN REQUEST FOR A PAPER COPY TO THE ADMINISTRATOR. THE GRANTEE’S CONSENT TO ELECTRONIC
DELIVERY OF THE PLAN DOCUMENTS WILL BE VALID AND REMAIN EFFECTIVE UNTIL THE EARLIER OF (i) THE
TERMINATION OF THE GRANTEE’S PARTICIPATION IN THE PLAN AND (ii) THE WITHDRAWAL OF THE GRANTEE’S
CONSENT TO ELECTRONIC DELIVERY AND ACCEPTANCE OF THE PLAN DOCUMENTS. THE COMPANY ACKNOWLEDGES AND
AGREES THAT THE GRANTEE HAS THE RIGHT AT ANY TIME TO WITHDRAW HIS CONSENT TO ELECTRONIC DELIVERY
AND ACCEPTANCE OF THE PLAN DOCUMENTS BY SENDING A WRITTEN NOTICE OF WITHDRAWAL TO THE
ADMINISTRATOR. IF THE GRANTEE WITHDRAWS HIS CONSENT TO ELECTRONIC DELIVERY AND ACCEPTANCE, THE
COMPANY WILL RESUME SENDING PAPER COPIES OF THE PLAN DOCUMENTS WITHIN TEN (10) BUSINESS DAYS OF ITS
RECEIPT OF THE WITHDRAWAL NOTICE. BY ACCEPTING THIS AGREEMENT ELECTRONICALLY, THE GRANTEE
ACKNOWLEDGES THAT HE IS ABLE TO ACCESS, VIEW AND RETAIN AN E-MAIL ANNOUNCEMENT INFORMING THE
GRANTEE THAT THE PLAN DOCUMENTS ARE AVAILABLE IN EITHER HTML, PDF OR SUCH OTHER FORMAT AS THE
COMPANY DETERMINES IN ITS SOLE DISCRETION.
(d) Unfunded Plan. The Grantee acknowledges and agrees that any rights of the Grantee
relating to the Grantee’s Restricted Stock Units and related dividend equivalents and any other
related rights shall constitute bookkeeping entries on the books of the Company and shall not
create in the Grantee any right to, or claim against, any specific assets of the Company or any
Subsidiary, nor result in the creation of any trust or escrow account for the Grantee. With
18
respect to the Grantee’s entitlement to any payment hereunder, the Grantee shall be a general
creditor of the Company.
15. Additional Acknowledgements. By accepting this Agreement electronically, the
Grantee and the Company agree that the Restricted Stock Units are granted under and governed by the
terms and conditions of the Plan and this Agreement. The Grantee has reviewed in its entirety the
prospectus that summarizes the terms of the Plan and this Agreement, has had an opportunity to
request a copy of the Plan in accordance with the procedure described in the prospectus, has had an
opportunity to obtain the advice of counsel prior to electronically accepting this Agreement and
fully understands all provisions of the Plan and this Agreement. The Grantee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to the Plan and this Agreement.
16. Country Appendix. Notwithstanding any provision of this Agreement to the
contrary, this Restricted Stock Unit grant and any Shares issued pursuant to this Agreement shall
be subject to the applicable terms and provisions as set forth in the Country Appendix attached
hereto and incorporated herein, if any, for the Grantee’s country of residence (and country of
employment or engagement as a Consultant, if different).
Acceptance by the Grantee
By selecting the “I accept” box on the website of the Company’s administrative agent, the Grantee
acknowledges acceptance of, and consents to be bound by, the Plan and this Agreement and any other
rules, agreements or other terms and conditions incorporated herein by reference.
19
