AMENDED AND RESTATED
ASHLAND INC. INCENTIVE PLAN
(As amended January 24, 2001)
SECTION 1. PURPOSE
The purpose of the Ashland Inc. Incentive Plan is to promote the
interests of Ashland Inc. and its shareholders by providing incentives to
its directors, officers and employees. Accordingly, the Company may grant
to selected officers and employees Option Awards, Stock Appreciation Rights
Awards, Restricted Stock Awards, Incentive Awards, Performance Unit Awards
and Merit Awards in an effort to attract and retain in its employ qualified
individuals and to provide such individuals with incentives to continue
service with the Company, devote their best efforts to the Company and
improve the Company's economic performance, thus enhancing the value of the
Company for the benefit of shareholders. This Plan also provides an
incentive for qualified persons, who are not officers or employees of the
Company, to serve on the Board of Directors of the Company and to continue
to work for the best interests of the Company by rewarding such persons
with an automatic Restricted Stock Award and with discretionary Option
Awards.
SECTION 2. DEFINITIONS
(A) "Agreement" shall mean a written agreement setting forth the terms
of an Award, to be entered into at the Company's discretion.
(B) "Attestation" means the delivery to the Company of a completed
attestation form prescribed by the Company setting forth the whole shares
of Common Stock owned by the Recipient which the Recipient wishes to
utilize to pay the Exercise Price. The Common Stock listed on the
attestation form must have been owned by the Recipient six months or
longer, and not have been used to effect an Option exercise within the
preceding six months, unless the Committees specifically provide otherwise.
(C) "Award" shall mean an Option Award, a Stock Appreciation Right
Award, an Incentive Award, a Performance Unit Award, a Restricted Stock
Award or a Merit Award, in each case granted under this Plan.
(D) "Beneficiary" shall mean the person, persons, trust or trusts
designated by a Recipient or if no designation has been made, the person,
persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive the benefits specified under this Plan in the event
of a Recipient's death.
(E) "Board" shall mean the Board of Directors of the Company or its
designee.
(F) "Cashless Exercise" shall mean the procedure by which a broker
provides the funds to a Recipient to effect an Option exercise. At the
direction of the Recipient, the broker will either: (i) sell all of the
shares received when the Option is exercised and pay the Recipient the
proceeds of the sale (minus the Exercise Price, withholding taxes and any
fees due to the broker); or (ii) sell enough of the shares received upon
exercise of the Option to cover the Exercise Price, withholding taxes and
any fees due the broker and deliver to the Recipient (either directly or
through the Company) a stock certificate for the remaining shares.
(G) "Change in Control" shall be deemed to occur (1) upon approval of
the shareholders of the Company (or if such approval is not required, upon
the approval of the Board) of (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of Common Stock would be converted into cash,
securities or other property other than a merger in which the holders of
Common Stock immediately prior to the merger will have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, or (C) adoption of any plan or
proposal for the liquidation or dissolution of the Company, (2) when any
person (as defined in Section 3(a)(9) or 13(d) of the Exchange Act), other
than the Company or any Subsidiary or employee benefit plan or trust
maintained by the Company, shall become the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of more than
15% of the Company's Common Stock outstanding at the time, without the
approval of the Board, or (3) at any time during a period of two
consecutive years, individuals who at
the beginning of such period constituted the Board shall cease for any
reason to constitute at least a majority thereof, unless the election or
the nomination for election by the Company's shareholders of each new
director during such two-year period was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such two-year period.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(I) "Committees" shall refer to the P&C Committee as it relates to
Awards to Participants and to the G&N Committee as it relates to Awards to
Outside Directors.
(J) "Common Stock" shall mean the Common Stock of the Company ($1.00
par value), subject to adjustment pursuant to Section 15 hereof.
(K) "Company" shall mean, collectively, Ashland Inc. and its
Subsidiaries.
(L) "Disability" shall mean, (i) in the case of a Participant, he or
she becomes unable to perform the functions required by his or her regular
job due to physical or mental illness and, in connection with the grant of
an Incentive Stock Option shall be disabled if he or she falls within the
meaning of that term as provided in Section 22(e)(3) of the Code and (ii)
in the case of an Outside Director, when he or she is unable to attend to
his or her duties and responsibilities as a member of the Board because of
incapacity due to physical or mental illness.
(M) "Exercise Price" shall mean, with respect to each share of Common
Stock subject to an Option, the price fixed by the Committees at which such
share may be purchased from the Company pursuant to the exercise of such
Option, which price at no time may be less than 100% of the Fair Market
Value of the Common Stock on the date the Option is granted.
(N) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(O) "Fair Market Value" shall mean the price of the Common Stock as
reported on the Composite Tape of the New York Stock Exchange on the date
and at the time selected by the Committees or as otherwise provided in this
Plan.
(P) "G&N Committee" shall mean the Governance and Nominating Committee
of the Board, as from time to time constituted, or any successor committee
of the Board with similar functions, or its designee.
(Q) "Incentive Award" shall mean an Award made pursuant to Section 7
hereof, the payment of which is contingent upon the achievement of the
Performance Goals for the particular Performance Period.
(R) "Incentive Stock Option" or "ISO" shall mean an Option that is
intended by the Committees to meet the requirements of Section 422 of the
Code or any successor provision.
(S) "ISO Award" shall mean an Award of an Incentive Stock Option
pursuant to Section 10 hereof.
(T) "Merit Award" shall mean an Award of Common Stock issued pursuant
to Section 9 hereof.
(U) "Non-Employee Director" shall mean a non-employee director within
the meaning of applicable regulatory requirements, including those
promulgated under Section 16 of the Exchange Act.
(V) "Nonqualified Stock Option" or "NQSO" shall mean an Option granted
pursuant to this Plan which does not qualify as an Incentive Stock Option.
(W) "Notice of Grant" shall mean a written notice setting forth the
terms of an Option or SAR Award, to be entered into at the Company's
discretion.
(X) "Option" shall mean the right to purchase Common Stock at a price
to be specified and upon terms to be designated by the Committees or
otherwise determined pursuant to this Plan. The Committees shall designate
an Option as a Nonqualified Stock Option or an Incentive Stock Option.
(Y) "Option Award" shall mean an Award of an Option pursuant to
Section 10 hereof.
(Z) "Outside Director" shall mean a director of the Company who is not
also an employee of the Company as selected by the G&N Committee to receive
an Award under this Plan.
(AA) "P&C Committee" shall mean the Personnel and Compensation
Committee of the Board, as from time to time constituted, or any successor
committee of the Board with similar functions, which shall consist of three
or more members, each of whom shall be a Non-Employee Director and an
outside director as defined in the regulations issued under Section 162(m)
of the Code, or its designee.
(BB) "Participant" shall mean a regular, full-time or part-time
employee of the Company as selected by the P&C Committee to receive an
Award under this Plan.
(CC) "Performance Goals" shall mean performance goals as may be
established in writing by the P&C Committee which may be based on earnings,
stock price, return on equity, return on investment, total return to
shareholders, economic profit, debt rating or achievement of business,
financial or operational goals. Such goals may be absolute in their terms
or measured against or in relation to other companies comparably or
otherwise situated. Such performance goals may be particular to a
Participant or the division or other unit in which the Participant works
and/or may be based on the performance of the Company generally.
(DD) "Performance Period" shall mean the period designated by the P&C
Committee during which the performance objectives shall be measured.
(EE) "Performance Unit Award" shall mean an Award made pursuant to
Section 8 hereof, the payment of which is contingent upon the achievement
of the Performance Goals for the particular Performance Period.
(FF) "Personal Representative" shall mean the person or persons who,
upon the Disability or incompetence of a Recipient, shall have acquired on
behalf of the Recipient by legal proceeding or otherwise the right to
receive the benefits specified in this Plan.
(GG) "Plan" shall mean this Ashland Inc. Incentive Plan, as amended
and restated.
(HH) "Recipients" shall mean a Participant or an Outside Director, as
appropriate.
(II) "Restricted Period" shall mean the period designated during which
Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered, which period in the case of Participants shall not be
less than one year from the date of grant (unless otherwise directed by the
P&C Committee), and in the case of Outside Directors is the period set
forth in Section 6(B) hereof.
(JJ) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are subject to the restrictions,
terms, and conditions set forth in the related Agreement, if any.
(KK) "Restricted Stock Award" shall mean an Award of Restricted Stock
pursuant to Section 6 hereof.
(LL) "Retained Distributions" shall mean any securities or other
property (other than regular cash dividends) distributed by the Company in
respect of Restricted Stock during any Restricted Period.
(MM) "Retirement" shall mean, (a) in the case of a Participant,
retirement from the employ of the Company at any time as described in the
Ashland Inc. and Affiliates Pension Plan or in any successor pension plan,
as from time to time in effect, and (b) in the case of an Outside Director,
retirement from the Board at age 72 or at any other age as the Board may
from time to time determine.
(NN) "Stock Appreciation Right" or "SAR" shall mean the right of the
holder to elect to surrender an Option or any portion thereof which is then
exercisable and receive in exchange therefor shares of Common Stock, cash,
or a combination thereof, as the case may be, with an aggregate value equal
to the excess of the Fair Market Value of one share of Common Stock over
the Exercise Price specified in such Option multiplied by the number of
shares of Common Stock covered by such Option or portion thereof which is
so surrendered. A SAR may only be granted concurrently with the grant of
the related Option. A SAR shall be exercisable upon any additional terms
and conditions (including, without limitation, the issuance of Restricted
Stock and the imposition of restrictions upon the timing of exercise) which
may be determined as provided in this Plan.
(OO) "Stock Appreciation Right Award" or "SAR Award" shall mean an
Award of a Stock Appreciation Right pursuant to Section 11 hereof.
(PP) "Subsidiary" shall mean any present or future subsidiary
corporations, as defined in Section 424 of the Code, of the Company.
(QQ) "Tax Date" shall mean the date the withholding tax obligation
arises with respect to an Award.
SECTION 3. STOCK SUBJECT TO THIS PLAN
There will be reserved for issuance under this Plan an aggregate of
4,000,000 shares of Common Stock, par value $1.00 per share; provided,
however, that of such shares only 1,000,000 shares in the aggregate shall
be available for Restricted Stock Awards, Merit Awards, ISO Awards and
Performance Unit Awards. Such shares shall be authorized but unissued
shares of Common Stock. If any Award under this Plan shall expire or
terminate for any reason without having been earned or vested in full, or
if any Award shall be forfeited or deferred, the shares subject to the
unearned, forfeited or deferred portion of such Award shall again be
available for the purposes of this Plan. No Participant shall be granted
more than a total of 250,000 Option or SAR Awards annually and no Outside
Director shall be granted more than a total of 10,000 Option or SAR Awards
annually.
SECTION 4. ADMINISTRATION
The P&C Committee shall have the exclusive authority to administer
this Plan for Participants. The G&N Committee shall have the exclusive
authority to administer this Plan for Outside Directors.
In addition to any implied powers and duties that may be needed to
carry out the provisions hereof, the Committees, acting individually, shall
have all the powers vested in them by the terms hereof, including exclusive
authority to select the Recipients, to determine the type, size and terms
of the Awards to be made to each Recipient, to determine the time when
Awards will be granted, and to prescribe the form of the Agreement or
Notice of Grant embodying Awards made under this Plan. The Committees shall
be authorized to interpret this Plan and the Awards granted under this
Plan, to establish, amend and rescind any rules and regulations relating to
this Plan, to make any other determinations which they believe necessary or
advisable for the administration hereof, and to correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any
Award in the manner and to the extent the Committees deem desirable to
carry it into effect. Any decision of the Committees in the administration
of this Plan, as described herein, shall be final and conclusive.
SECTION 5. ELIGIBILITY
Awards may only be granted (i) to regular full-time or part-time
employees of the Company, or (ii) as expressly provided in Sections 6(B),
10 and 11 hereof, to Outside Directors of the Company.
SECTION 6. RESTRICTED STOCK AWARDS
(A) Awards to Employees
The P&C Committee may make a Restricted Stock Award to selected
Participants, which Restricted Stock Awards may, at the Company's
discretion and as directed by the P&C Committee, be evidenced by an
Agreement which shall contain such terms and conditions as the P&C
Committee, in its sole discretion, may determine. The
amount of each Restricted Stock Award and the respective terms and
conditions of such Award (which terms and conditions need not be the same
in each case) shall be determined by the P&C Committee in its sole
discretion. As a condition to any Restricted Stock Award hereunder, the P&C
Committee may require a Participant to pay to the Company a non-refundable
amount equal to, or in excess of, the par value of the shares of the
Restricted Stock Award. Subject to the terms and conditions of each
Restricted Stock Award, the Participant, as the owner of the Common Stock
issued as Restricted Stock, shall have all rights of a shareholder
including, but not limited to, voting rights as to such Common Stock and
the right to receive dividends thereon when, as and if paid.
Unless otherwise determined and directed by the P&C Committee, in the
event that a Restricted Stock Award has been made to a Participant whose
employment or service is subsequently terminated for any reason prior to
the lapse of all restrictions thereon, such Restricted Stock will be
forfeited in its entirety by such Participant.
(B) Awards to Outside Directors
During the term of this Plan, each person who is hereafter duly
appointed or elected as an Outside Director shall be granted, effective on
the date of his or her appointment or election to the Board, a Restricted
Stock Award of 1,000 shares. All Awards under this subsection (B) are
subject to the limitation on the number of shares of Common Stock available
pursuant to Section 3 hereof and to the terms and conditions set forth in
this subsection (B) and subsection (C) below.
As a condition to any Restricted Stock Award hereunder, the Outside
Director may be required to pay to the Company a non-refundable amount
equal to the par value of the shares of the Restricted Stock Award. Upon
the granting of the Restricted Stock Award, such Outside Director shall be
entitled to all rights incident to ownership of Common Stock of the Company
with respect to his or her Restricted Stock, including, but not limited to,
the right to vote such shares of Restricted Stock and to receive dividends
thereon when, as and if paid; provided, however, that subject to subsection
(C) hereof, in no case may any shares of Restricted Stock granted to an
Outside Director be sold, assigned, transferred, pledged, or otherwise
encumbered during the Restricted Period which shall not lapse until the
earlier to occur of the following: (i) Retirement, (ii) the death or
Disability of such Outside Director, (iii) a 50% change in the beneficial
ownership of the Company as defined in Rule 13d-3 under the Exchange Act,
or (iv) voluntary early retirement to take a position in governmental
service. Unless otherwise determined and directed by the G&N Committee, in
the case of voluntary resignation or other termination of service of an
Outside Director prior to the occurrence of any of the events described in
the preceding sentence, any Restricted Stock Award made pursuant to this
subsection will be forfeited by such Outside Director.
(C) Transferability
Subject to Section 17(B) hereof, Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered during a Restricted
Period, which, in the case of Participants, shall be determined by the P&C
Committee and, unless otherwise determined by the P&C Committee, shall not
be less than one year from the date of the Restricted Stock Award, and, in
the case of Outside Directors, shall be determined in accordance with
subsection (B) of this Section. The P&C Committee may, at any time, reduce
the Restricted Period with respect to any outstanding shares of a
Restricted Stock Award, but, unless otherwise determined by the P&C
Committee, such Restricted Period shall not be less than one year.
During the Restricted Period, certificates representing the Restricted
Stock and any Retained Distributions shall be registered in the Recipient's
name and bear a restrictive legend to the effect that ownership of such
Restricted Stock (and any such Retained Distributions), and the enjoyment
of all rights appurtenant thereto are subject to the restrictions, terms,
and conditions provided in this Plan and the applicable Agreement, if any.
Such certificates shall be deposited by the Recipient with the Company,
together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock and any securities constituting Retained
Distributions which shall be forfeited in accordance with this Plan and the
applicable Agreement, if any. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes, with the
exception that: (i) the Recipient will not be entitled to delivery of the
stock certificates representing such Restricted Stock until the
restrictions applicable thereto shall have expired; (ii) the Company will
retain custody of all Retained Distributions made or declared with respect
to the Restricted Stock (and such Retained Distributions will be subject to
the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall have been made, paid, or
declared shall have become vested, and such Retained Distributions shall
not bear interest or be segregated in separate accounts; (iii) subject to
Section 17(B) hereof, the Recipient may not sell, assign, transfer, pledge,
exchange, encumber, or dispose of the Restricted Stock or any Retained
Distributions during the Restricted Period; and (iv) unless otherwise
determined and directed by the Committees, a breach of any restrictions,
terms, or conditions provided in this Plan or established by the Committees
with respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with
respect thereto.
SECTION 7. INCENTIVE AWARDS
(A) Any Participant may receive one or more Incentive Awards, as the
P&C Committee shall from time to time determine.
(B) No later than 120 days (90 days for those Participants subject to
the limitations of Code Section 162(m)) after the commencement of each
Performance Period, the P&C Committee shall establish in writing one or
more Performance Goals that must be reached by a Participant in order to
receive an Incentive Award for such Performance Period. Except with respect
to Participants subject to the limitations of Code Section 162(m), the P&C
Committee shall have the discretion to later revise the Performance Goals
and the amount to be paid out upon the attainment of these goals for any
reason including the reflection of promotions, transfers or other changes
in a Participant's employment so long as such changes are consistent with
the Performance Goals established for other Participants in the same or
similar positions. Performance Goals established for Participants subject
to Code Section 162(m) may only be adjusted to reduce or eliminate the
amount of compensation otherwise payable upon attainment of the Performance
Goals.
(C) The target Incentive Award is a fixed percentage of the
Participant's Base Salary paid during the year. The maximum Incentive Award
is 150% of the target Incentive Award. No Incentive Award shall exceed
three million dollars ($3,000,000).
(D) Payment of Incentive Awards shall be made on a date or dates fixed
by the P&C Committee. Payment may be made in one or more installments and
may be made wholly in cash, wholly in shares of Common Stock or a
combination thereof as determined by the P&C Committee.
If payment of an Incentive Award shall be made all or partially in
shares of Common Stock, the number of shares of Common Stock to be
delivered to a Participant on any payment date shall be determined by
dividing (x) the original dollar amount to be paid on the payment date (or
the part thereof determined by the P&C Committee to be delivered in shares
of such Incentive Award) by (y) the Fair Market Value on the date the Board
approves the P&C Committee's decision to pay an Incentive Award or such
other date as the Board shall determine.
(E) Unless otherwise determined and directed by the P&C Committee, an
Incentive Award shall terminate if the Participant does not remain
continuously employed and in good standing with the Company until the date
of payment of such Award. Unless otherwise determined and directed by the
P&C Committee, in the event a Participant's employment is terminated
because of death, Disability or Retirement, the Participant (or his or her
beneficiaries or estate) shall receive the prorated portion of the payment
of an Incentive Award for which the Participant would have otherwise been
eligible based upon the portion of the Performance Period during which he
or she was so employed so long as the Performance Goals are subsequently
achieved.
SECTION 8. PERFORMANCE UNIT AWARDS
(A) Any Participant may receive one or more Performance Unit Awards,
as the P&C Committee shall from time to time determine.
(B) The Performance Goals and Performance Period applicable to a
Performance Unit Award shall be set forth in writing by the P&C Committee
no later than 120 days (90 days for those Participants subject to the
limitations imposed by Code Section 162(m)) after the commencement of the
Performance Period. Except with respect to Participants subject to the
limitations of Code Section 162(m), the P&C Committee shall have the
discretion to later
revise the Performance Goals and the amount to be paid out upon the
attainment of these goals for any reason including the reflection of
promotions, transfers or other changes in a Participant's employment so
long as such changes are consistent with the Performance Goals established
for other Participants in the same or similar positions. Goals established
for Participants subject to Code Section 162(m) may only be adjusted to
reduce or eliminate the amount of compensation otherwise payable upon
attainment of the Performance Goals.
(C) Each Performance Unit Award shall be established in dollars or
shares of Common Stock, or a combination of both, as determined by the P&C
Committee. The original amount of any Performance Unit Award shall not
exceed 400% of the Participant's then annual base salary and the original
amount of any Performance Unit Award shall not exceed five million dollars
($5,000,000). In determining the amount of any Performance Unit Award made,
in whole or in part, in shares of Common Stock, the value thereof shall be
based on the Fair Market Value on the first day of the Performance Period
or on such other date, as the Board shall determine.
(D) Unless otherwise determined and directed by the P&C Committee, a
Performance Unit Award shall terminate for all purposes if the Participant
does not remain continuously employed and in good standing with the Company
until payment of such Performance Unit Award. Unless otherwise determined
and directed by the P&C Committee, a Participant (or his or her
beneficiaries or estate) whose employment was terminated because of death,
Disability or Retirement will receive a prorated portion of the payment of
his or her Award based upon the portion of the Performance Period during
which he or she was so employed so long as the Performance Goals are
subsequently achieved.
(E) Payment with respect to Performance Unit Awards will be made to
Participants on a date or dates fixed by the P&C Committee. The amount of
such payment shall be determined by the P&C Committee and shall be based on
the original amount of such Performance Unit Award adjusted to reflect the
attainment of the Performance Goals during the Performance Period. Payment
may be made in one or more installments and may be made wholly in cash,
wholly in shares of Common Stock or a combination thereof as determined by
the P&C Committee.
If payment of a Performance Unit Award established in dollars is to be
made in shares of Common Stock or partly in such shares, the number of
shares of Common Stock to be delivered to a Participant on any payment date
shall be determined by dividing (x) the amount payable by (y) the Fair
Market Value on the date the Board approves the P&C Committee's decision to
pay the Performance Unit Award or on such other date as the Board shall
determine.
If payment of a Performance Unit Award established in shares of Common
Stock is to be made in cash or partly in cash, the amount of cash to be
paid to a Participant on any payment date shall be determined by
multiplying (x) the number of shares of Common Stock to be paid in cash on
such payment date with respect to such Performance Unit Award, by (y) the
Fair Market Value on the date the Board approves the P&C Committee's
decision to pay the Performance Unit Award or on such other date as the
Board shall determine. Any payment may be subject to such restrictions and
conditions as the P&C Committee may determine.
SECTION 9. MERIT AWARDS
Any Participant may receive a Merit Award of Common Stock under this
Plan for such reasons and in such amounts as the P&C Committee may from
time to time determine. As a condition to any such Merit Award, the P&C
Committee may require a Participant to pay to the Company a non-refundable
amount equal to, or in excess of, the par value of the shares of Common
Stock awarded to him or her.
SECTION 10. OPTION AWARDS
(A) Any Recipient may receive one or more Option Awards, as the
Committees shall from time to time determine.
(B) Designation and Price
(1) Any Option granted under this Plan may be granted as an
Incentive Stock Option or as a Nonqualified Stock Option as shall be
designated by the Committees at the time of the grant of such Option. Only
Participants
may be granted ISOs. Each Option shall, at the discretion of the Company
and as directed by the Committees, be evidenced by a Notice of Grant, which
Notice of Grant shall specify the designation of the Option as an ISO or a
NQSO, as the case may be, and shall contain such terms and conditions as
the Committees, in their sole discretion, may determine in accordance with
this Plan.
(2) Every ISO shall provide for a fixed expiration date of not
later than ten years from the date such ISO is granted. Every NQSO shall
provide for a fixed expiration date of not later than ten years and one
month from the date such NQSO is granted.
(3) The Exercise Price of Common Stock issued pursuant to each
Option shall be fixed by the Committees at the time of the granting of the
Option; provided, however, that such Exercise Price shall in no event be
less than 100% of the Fair Market Value of the Common Stock on the date
such Option is granted.
(C) Exercise
The Committees may, in their sole discretion, provide for Options
granted under this Plan to be exercisable in whole or in part; provided,
however, that no Option shall be exercisable prior to the first anniversary
of the date of its grant, except as provided in Section 13 hereof or as the
Committees otherwise determine in accordance with this Plan, and in no case
may an Option be exercised at any time for fewer than 50 shares (or the
total remaining shares covered by the Option if fewer than 50 shares)
during the term of the Option. The specified number of shares will be
issued upon receipt by the Company of (i) notice from the holder thereof of
the exercise of an Option, and (ii) payment to the Company (as provided in
subsection (D) of this Section), of the Exercise Price for the number of
shares with respect to which the Option is exercised. Each such notice and
payment shall be delivered or mailed by postpaid mail, addressed to the
Trust Investments Department of the Company, 3499 Blazer Parkway,
Lexington, Kentucky 40509, or such other place as the Company may designate
from time to time.
(D) Payment for Shares
Except as otherwise provided in this Section, the Exercise Price for
the Common Stock shall be paid in full when the Option is exercised.
Subject to such rules as the Committees may impose, the Exercise Price may
be paid in whole or in part: (i) in cash; (ii) in whole shares of Common
Stock owned by the Recipient and evidenced by negotiable certificates,
valued at their Fair Market Value (which shares of Common Stock must have
been owned by the Recipient six months or longer, and not used to effect an
Option exercise within the preceding six months, unless the Committees
specifically provide otherwise); (iii) by Attestation; (iv) by a
combination of such methods of payment; or (v) by such other consideration
as shall constitute lawful consideration for the issuance of Common Stock
and be approved by the Committees (including, without limitation, effecting
a Cashless Exercise of the Option with a broker).
(E) Continued Employment, Agreement to Serve and Exercise Period
(1) Participants
(a) Subject to the provisions of Section 13(D) hereof,
every Option and SAR shall provide that it may not be exercised in whole or
in part for a period of one year after the date of granting such Option
(unless otherwise determined by the P&C Committee) and if the employment of
the Participant shall terminate prior to the end of such one year period
(or such other period determined by the P&C Committee), the Option granted
to such Participant shall immediately terminate.
(b) Every Option shall provide that in the event the
Participant dies (i) while employed by the Company, (ii) during the periods
in which Options may be exercised by a Participant determined to be
Disabled, or (iii) after Retirement, such Option shall be exercisable, at
any time or from time to time, prior to the fixed termination date set
forth in the Option, by the Beneficiaries of the decedent for the number of
shares which the Participant could have acquired under the Option
immediately prior to the Participant's death.
(c) Every Option shall provide that in the event the
employment of any Participant shall cease by reason of Disability, as
determined by the P&C Committee at any time during the term of the Option,
such Option
shall be exercisable, at any time or from time to time prior to the fixed
termination date set forth in the Option by such Participant for the number
of shares which the Participant could have acquired under the Option
immediately prior to the Participant's Disability. The determination by the
P&C Committee of any question involving Disability of a Participant shall
be conclusive and binding.
(d) Every Option shall provide that in the event the
employment of any Participant shall cease by reason of Retirement, such
Option may be exercised at any time or from time to time, prior to the
fixed termination date set forth in the Option for the number of shares
which the Participant could have acquired under the Option immediately
prior to such Retirement.
(e) Notwithstanding any provision of this Plan to the
contrary, any Option, may, in the discretion of the P&C Committee or as
provided in the relevant Notice of Grant (if any), become exercisable, at
any time or from time to time, prior to the fixed termination date set
forth in the Option for the full number of awarded shares or any part
thereof, less such number as may have been theretofore acquired under the
Option from and after the time the Participant ceases to be an employee of
the Company as a result of the sale or other disposition by the Company of
assets or property (including shares of any Subsidiary) in respect of which
such Participant had theretofore been employed or as a result of which such
Participant's continued employment with the Company is no longer required.
(f) Except as provided in sub-subsections (b), (c), (d),
(e) and (g) of this Section 10(E) and Section 13(D) hereof, every Option
shall provide that it shall terminate on the earlier to occur of the fixed
termination date set forth in the Option or thirty (30) days after
cessation of the Participant's employment for any cause in respect of the
number of shares which the Participant could have acquired under the Option
immediately prior to such cessation of employment; provided, however, that
no Option may be exercised after the fixed termination date set forth in
the Option.
(g) Notwithstanding any provision of this Section to the
contrary, in the event the P&C Committee determines, in its sole and
absolute discretion, that the employment of any Participant has terminated
for a reason or in a manner adversely affecting the Company (which may
include, without limitation, taking other employment or rendering service
to others without the consent of the Company), then the P&C Committee may
direct that such Participant forfeit any and all Options that he or she
could otherwise have exercised pursuant to the terms of this Plan.
(h) Each Participant granted an Award under this Plan
shall agree by his or her acceptance of such Award to remain in the service
of the Company for a period of at least one year from the date of the
Notice of Grant respecting the Award (or, if no Notice of Grant is given,
at least one year from the date of the Award). Such service shall, subject
to the terms of any contract between the Company and such Participant, be
at the pleasure of the Company and at such compensation as the Company
shall reasonably determine from time to time. Nothing in this Plan, or in
any Award granted pursuant to this Plan, shall confer on any individual any
right to continue in the employment of or service to the Company or
interfere in any way with the right of the Company to terminate the
Participant's employment at any time.
(i) Notwithstanding anything to the contrary herein, any
Option that is an ISO shall be exercisable not later than three (3) months
following the date that the employment of a Participant terminated.
(2) Outside Directors
If an Outside Director's service on the Board terminates by reason
of (i) Retirement, (ii) the death or Disability of such Outside Director,
(iii) a 50% change in the beneficial ownership of the Company as defined in
Rule 13d-3 under the Exchange Act, or (iv) voluntary early retirement to
take a position in governmental service, any Option held by such Outside
Director may thereafter be exercised by the Outside Director, or in the
event of death, by his or her Beneficiary to the extent it was vested and
exercisable at the time of such termination (i) for a period equal to the
number of years of completed Board service as of the date of such
termination of the Outside Director on whose behalf the Option is
exercised, or (ii) until the expiration of the stated term of such Option
whichever period is the shorter. In the event of termination for any reason
other than those set forth above, any Option held by such Outside Director
may thereafter be exercised by the Outside Director to the extent it was
vested and exercisable at the time of termination (i) for a period of one
year from the date of such termination or (ii) until
the expiration of the stated term of such Option, whichever period is the
shorter, unless otherwise determined by the G&N Committee.
SECTION 11. STOCK APPRECIATION RIGHT AWARDS
The Committees may grant Stock Appreciation Rights pursuant to the
provisions of this Section to any Recipient holding any Option granted
under this Plan with respect to all or a portion of the shares subject to
the related Option. A SAR may only be granted concurrently with the grant
of the related Option. Subject to the terms and provisions of this Section,
each SAR shall be exercisable only at the same time and to the same extent
the related Option is exercisable and in no event after the termination of
the related Option. A SAR shall be exercisable only when the Fair Market
Value (determined as of the date of exercise of the SAR) of each share of
Common Stock with respect to which the SAR is to be exercised shall exceed
the Exercise Price per share of Common Stock subject to the related Option.
A SAR granted under this Plan shall be exercisable in whole or in part by
notice to the Company. Each such notice shall be delivered or mailed by
postpaid mail, addressed to the Trust Investments Department of the
Company, 3499 Blazer Parkway, Lexington, Kentucky 40509, or such other
place as the company may designate from time to time. Such notice shall
state that the holder of the SAR elects to exercise the SAR and the number
of shares in respect of which the SAR is being exercised.
Subject to the terms and provisions of this Section, upon the exercise
of a SAR, the Recipient shall be entitled to receive from the Company
consideration (in the form hereinafter provided) equal in value to the
excess of the Fair Market Value (determined as of the date of exercise of
the SAR) of each share of Common Stock with respect to which such SAR has
been exercised over the Exercise Price per share of Common Stock subject to
the related Option. The Committees may stipulate in the Notice of Grant the
form of consideration which shall be received upon the exercise of a SAR.
If no consideration is specified therein, upon the exercise of a SAR, the
Recipient, may specify the form of consideration to be received by such
Recipient, which shall be in shares of Common Stock, or in cash, or partly
in cash and partly in shares of Common Stock (valued at the Fair Market
Value on the date of exercise of the SAR), as the Recipient shall request;
provided, however, that the Committees, in their sole discretion, may
disapprove the form of consideration requested and instead authorize the
payment of such consideration in shares of Common Stock (valued as
aforesaid), or in cash, or partly in cash and partly in shares of Common
Stock.
Upon the exercise of a SAR, the related Option shall be deemed
exercised to the extent of the number of shares of Common Stock with
respect to which such SAR is exercised and to that extent a corresponding
number of shares of Common Stock shall not again be available for the grant
of Awards under this Plan. Upon the exercise or termination of the related
Option, the SAR with respect thereto shall be considered to have been
exercised or terminated to the extent of the number of shares of Common
Stock with respect to which the related Option was so exercised or
terminated.
SECTION 12. CONTINUED EMPLOYMENT
Nothing in this Plan, or in any Award granted pursuant to this Plan,
shall confer on any individual any right to continue in the employment of,
or service to, the Company or interfere in any way with the right of the
Company to terminate the Participant's employment at any time.
SECTION 13. CHANGE IN CONTROL
(A) Upon a Change in Control, any Restricted Stock Award shall be free
of all restrictions for the full number of awarded shares less such number
as may have been theretofore acquired under the Restricted Stock Award.
(B) Upon a Change in Control, there shall be an acceleration of any
Performance Period relating to any Incentive Award, and payment of any
Incentive Award shall be made in cash as soon as practicable after such
Change in Control based upon achievement of the Performance Goals
applicable to such Award up to the date of the Change in Control. Further,
the Company's obligation with respect to such Incentive Award shall be
assumed, or new obligations substituted therefor, by the acquiring or
surviving corporation after such Change in Control. In addition, prior to
the date of such Change in Control, the P&C Committee, in its sole
judgment, may make adjustments to any Incentive Award as may be appropriate
to reflect such Change in Control.
(C) Upon a Change in Control, there shall be an acceleration of any
Performance Period relating to any Performance Unit Award, and payment of
any Performance Unit Award shall be made in cash as soon as practicable
after such Change in Control based upon achievement of the Performance
Goals applicable to such Performance Unit Award up to the date of the
Change in Control. If such Performance Unit Award was established in shares
of Common Stock, the amount of cash to be paid to a Participant with
respect to the Performance Unit Award shall be determined by multiplying
(x) the number of shares of Common Stock relating to such Performance Unit
Award, by (y) the Fair Market Value on the date of the Change in Control.
Further, the Company's obligation with respect to such Performance Unit
Award shall be assumed, or new obligations substituted therefor, by the
acquiring or surviving corporation after such Change in Control. In
addition, prior to the date of such Change in Control, the P&C Committee,
in its sole judgment, may make adjustments to any Performance Unit Award as
may be appropriate to reflect such Change in Control.
(D) Upon a Change in Control, any Option Award or SAR Award shall
become immediately exercisable for the full number of awarded shares or any
part thereof, less such numbers as may have been theretofore acquired under
the Option Award or SAR Award from and after the date of such Change in
Control, unless otherwise provided in the Notice of Grant.
SECTION 14. WITHHOLDING TAXES
Federal, state or local law may require the withholding of taxes
applicable to gains resulting from the payment or vesting of an Award.
Unless otherwise prohibited by the P&C Committee, each Participant may
satisfy any such tax withholding obligation by any of the following means,
or by a combination of such means: (i) a cash payment; (ii) authorizing the
Company to withhold from the shares of Common Stock otherwise issuable to
the Participant pursuant to the vesting of an Award a number of shares
having a Fair Market Value, as of the Tax Date, which will satisfy the
amount of the withholding tax obligation; or (iii) by delivery to the
Company of a number of shares of Common Stock having a Fair Market Value as
of the Tax Date which will satisfy the amount of the withholding tax
obligation arising from the vesting of an Award. A Participant's election
to pay the withholding tax obligation by (ii) or (iii) above must be made
on or before the Tax Date, is irrevocable, is subject to such rules as the
P&C Committee may adopt, and may be disapproved by the P&C Committee. If
the amount requested is not paid, the P&C Committee may refuse to issue
Common Stock under this Plan.
SECTION 15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination, or exchange of shares,
split-up, split-off, spin-off, liquidation or other similar change in
capitalization, or any distribution to common stockholders other than cash
dividends, the number or kind of shares that may be issued under this Plan
pursuant to Section 3 hereof and the number or kind of shares subject to,
or the price per share under any outstanding Award shall be automatically
adjusted so that the proportionate interest of the Recipient shall be
maintained as before the occurrence of such event. Such adjustment shall be
conclusive and binding for all purposes hereof.
SECTION 16. AMENDMENT AND TERMINATIONS
The Committees may amend, alter or terminate this Plan at any time
without the prior approval of the Board; provided, however, that: (i) the
Committees may not, without approval by the Board and the shareholders, (a)
materially increase the benefits provided to Recipients under this Plan or
(b) provide for the re-pricing of Options; and (ii) any amendment with
respect to Restricted Stock granted to Outside Directors must be approved
by the full Board.
Termination of this Plan shall not affect any Awards made hereunder
which are outstanding on the date of termination and such Awards shall
continue to be subject to the terms of this Plan notwithstanding its
termination.
SECTION 17. MISCELLANEOUS PROVISIONS
(A) Except as to Awards of Restricted Stock to Outside Directors, no
Participant or other person shall have any claim or right to be granted an
Award under this Plan.
(B) A Recipient's rights and interest under this Plan may not be
assigned or transferred in whole or in part, either directly or by
operation of law or otherwise (except in the event of a Recipient's death,
by will or the laws of descent and distribution), including, but not by way
of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner, and no such right or interest of any Recipient in
this Plan shall be subject to any obligation or liability of such
individual; provided, however, that a Recipient's rights and interest under
this Plan may, subject to the discretion and direction of the Committees,
be made transferable by such Recipient during his or her lifetime. Except
as specified in Section 6 hereof, the holder of an Award shall have none of
the rights of a shareholder until the shares subject thereto shall have
been registered in the name of the person receiving or person or persons
exercising the Award on the transfer books of the Company.
(C) No Common Stock shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable Federal, state, and other securities laws.
(D) The expenses of this Plan shall be borne by the Company.
(E) By accepting any Award under this Plan, each Recipient and each
Personal Representative or Beneficiary claiming under or through him or her
shall be conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under this Plan by the
Company, the Board, and the Committees.
(F) Awards granted under this Plan shall be binding upon the Company,
its successors, and assigns.
(G) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required.
(H) Each Recipient shall be deemed to have been granted any Award on
the date the Committees took action to grant such Award under this Plan or
such date as the Committees in their sole discretion shall determine at the
time such grant is authorized.
SECTION 18. EFFECTIVENESS OF THIS PLAN
This Plan was originally approved by the shareholders of the Company
on January 27, 2000. The Amended and Restated Plan shall be submitted to
the shareholders of the Company for their approval and adoption on January
25, 2001, or such other date fixed for the next meeting of shareholders or
any adjournment or postponement thereof. If not approved by the
shareholders of the Company at the January 25, 2001 Annual Meeting, the
original Plan shall remain in effect with respect to Awards other than
Option Awards and SAR Awards. No Option Awards or SAR Awards shall be made
under the Amended and Restated Plan unless and until the Amended and
Restated Plan has been approved and adopted at a meeting of the Company's
shareholders.
SECTION 19. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.