BRISTOL-MYERS SQUIBB COMPANY
1997 STOCK INCENTIVE PLAN
(as amended and restated as of December 2, 1997)
1. Purpose: The purpose of the 1997 Stock Incentive Plan is to secure for
the Company and its stockholders the benefits of the incentive inherent in
common stock ownership by the officers and key employees of the Company and its
Subsidiaries and Affiliates who will be largely responsible for the Company's
future growth and continued financial success and by providing long-term
incentives in addition to current compensation to certain key executives of the
Company and its Subsidiaries and Affiliates who contribute significantly to the
long-term performance and growth of the Company and such Subsidiaries and
Affiliates. It is intended that the former purpose will be effected through the
granting of stock options, stock appreciation rights, dividend equivalents
and/or restricted stock under the Plan and that the latter purpose will be
effected through an award conditionally granting performance units or
performance shares under the Plan, either independently or in conjunction with
and related to a nonqualified stock option grant under the Plan.
2. Definitions: For purposes of this Plan:
(a) "Affiliate" shall mean any entity in which the Company has an
ownership interest of at least 20%.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Company's common stock (par value
$.10 per share).
(d) "Company" shall mean the Issuer (the Bristol-Myers Squibb
Company), its Subsidiaries and Affiliates.
(e) "Disability" or "Disabled" shall mean qualifying for and
receiving payments under a disability pay plan of the Company or any Subsidiary
or Affiliate.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(g) "Fair Market Value" shall mean the average of the high and low
sale prices of a share of Common Stock on the New York Stock Exchange,
Inc. composite tape on the date of measurement or on any date as determined by
the Committee and if there were no trades on such date, on the day on which a
trade occurred next preceding such date.
(h) "Issuer" shall mean the Bristol-Myers Squibb Company.
(i) "Prior Plan" shall mean the Bristol-Myers Squibb Company 1983
Stock Option Plan as amended and restated effective as of September 10, 1996.
(j) "Retirement" shall mean termination of the employment of an
employee with the Company or a Subsidiary or Affiliate on or after (i) the
employee's 65th birthday or (ii) the employee's 55th birthday if the employee
has completed 10 years of service with the Company, its Subsidiaries and/or its
Affiliates. For purposes of this Section 2(j) and all other purposes of this
Plan, Retirement shall also mean termination of employment of an employee with
the Company or a Subsidiary or Affiliate for any reason (other than the
employee's death, disability, resignation, willful misconduct or activity
deemed detrimental to the interests of the Company) where, on termination, the
employee's age plus years of service (rounded up to the next higher whole
number) equals at least 70 and the employee has completed 10 years of service
with the Company, its Subsidiaries and/or its Affiliates.
Furthermore, an employee who makes an election to retire under Article 19 of
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the Bristol-Myers Squibb Company Retirement Income Plan (the "Retirement Income
Plan") shall have any additional years of age and service which are credited
under Article 19 of the Retirement Income Plan taken into account when
determining such employee's age and service under this Section 2(j). Such
election shall be deemed a Retirement for purposes of this Section 2(j) and all
other purposes of this Plan.
(k) "Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" in Section 424 of the Code.
3. Amount of Stock: The amount of stock which may be made subject to
grants of options or awards of performance units under the Plan in calendar
year 1997 shall not exceed an amount equal to the amount of shares available
for, and not made subject to, grants of options or awards under the Prior Plan
as of February 28, 1997. With respect to each succeeding year, the amount of
stock which may be made subject to grants of options or awards of performance
units under the Plan shall not exceed an amount equal to (i) 0.9% of the
outstanding shares of the Company's Common Stock on January 1 of such year
plus, subject to this Section 3, (ii) in any year the number of shares equal to
the amount of shares that were available for grants and awards in the prior
year but were not made subject to a grant or award in such prior year and (iii)
the number of shares that were subject to options or awards granted hereunder
or under the Prior Plan, which options or awards terminated or expired in the
prior year without being exercised. No individual may be granted options or
awards under Sections 6, 7 or 8 in the aggregate, in respect of more than
1,500,000 shares of the Company's Common Stock in a calendar year; upon a
change in stock the maximum number of shares shall be adjusted in number and
kind pursuant to Section 10. Aggregate shares issued under performance share
awards made pursuant to Section 7 and restricted stock awards made pursuant to
Section 8 may not exceed 10,000,000 shares over the life of the Plan. Common
Stock issued hereunder may be authorized and reissued shares or issued shares
acquired by the Company or its Subsidiaries on the market or otherwise.
4. Administration: The Plan shall be administered under the supervision of
the Board of Directors of the Company which shall exercise its powers, to the
extent herein provided, through the agency of a Compensation and Management
Development Committee (the "Committee") which shall be appointed by the Board
of Directors of the Company. The Committee shall consist of not less than three
(3) members of the Board who meet the definition of "outside director" under
the provisions of Section 162(m) of the Code and the definition of
"non-employee directors" under the provisions of the Exchange Act or rules or
regulations promulgated thereunder. No member of the Committee shall have been
within one year prior to appointment to, or while serving on, the Committee
granted or awarded equity securities of the Company pursuant to this or any
other plan of the Company except to the extent that participation in any such
plan or receipt of any such grant or award would not adversely affect the
Committee member's status as a "non-employee director" or as an "outside
director".
The Committee, from time to time, may adopt rules and regulations
("Regulations") for carrying out the provisions and purposes of the Plan and
make such other determinations, not inconsistent with the terms of the Plan, as
the Committee shall deem appropriate. The interpretation and construction of
any provision of the Plan by the Committee shall, unless otherwise determined
by the Board of Directors, be final and conclusive.
The Committee shall maintain a written record of its proceedings. A majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the Committee.
5. Eligibility: Options and awards may be granted only to present or
future officers and key employees of the Company and its Subsidiaries and
Affiliates, including Subsidiaries and Affiliates which become such after the
adoption of the Plan. Any officer or key employee of the Company or of any such
Subsidiary or Affiliate shall be eligible to receive one or more options or
awards under the Plan. Any director who is not an officer or employee of the
Company or one of its Subsidiaries or Affiliates and any member of the
Committee, during the time of the member's service as such or thereafter, shall
be ineligible to receive an option or award under the Plan. The adoption of
this Plan shall not be deemed to give any officer or employee any right to an
award or to be granted an option to purchase Common Stock of the Company,
except to the extent and upon such terms and conditions as may be determined
by the Committee.
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6. Stock Options: Stock options under the Plan shall consist of incentive
stock options under Section 422 of the Code or nonqualified stock options
(options not intended to qualify as incentive stock options), as the Committee
shall determine. In addition, the Committee may grant stock appreciation
rights in conjunction with an option, as set forth in Section 6(b)(11), or may
grant awards in conjunction with an option, as set forth in Section 6(b)(10)
(an "Associated Option").
Each option shall be subject to the following terms and conditions:
(a) Grant of Options. The Committee shall (1) select the officers and
key employees of the Company and its Subsidiaries and Affiliates to whom
options may from time to time be granted, (2) determine whether incentive stock
options or nonqualified stock options are to be granted, (3) determine the
number of shares to be covered by each option so granted, (4) determine the
terms and conditions (not inconsistent with the Plan) of any option granted
hereunder (including but not limited to restrictions upon the options,
conditions of their exercise, or on the shares of Common Stock issuable upon
exercise thereof), (5) determine whether nonqualified stock options or
incentive stock options granted under the Plan shall include stock appreciation
rights and, if so, shall determine the terms and conditions thereof in
accordance with Section 6(b)(11) hereof, (6) determine whether any nonqualified
stock options granted under the Plan shall be Associated Options, and (7)
prescribe the form of the instruments necessary or advisable in the
administration of options.
(b) Terms and Conditions of Option. Any option granted under the Plan
shall be evidenced by a Stock Option Agreement executed by the Company and the
optionee, in such form as the Committee shall approve, which agreement shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions not inconsistent with the Plan, and in the case of an
incentive stock option not inconsistent with the provisions of the Code
applicable to incentive stock options, as the Committee shall prescribe:
(1) Number of Shares Subject to an Option. The Stock Option
Agreement shall specify the number of shares of Common Stock subject to the
Agreement. If the option is an Associated Option, the number of shares of
Common Stock subject to such Associated Option shall initially be equal to the
number of performance units or performance shares subject to the award, but one
share of Common Stock shall be canceled for each performance unit or
performance share paid out under the award.
(2) Option Price. The purchase price per share of Common Stock
purchasable under an option will be determined by the Committee but will be not
less than the Fair Market Value of a share of Common Stock on the date of the
grant of such option.
(3) Option Period. The period of each option shall be fixed by
the Committee, but no option shall be exercisable after the expiration of ten
years from the date the option is granted.
(4) Consideration. Each optionee, as consideration for the grant
of an option, shall remain in the continuous employ of the Company or of one of
its Subsidiaries or Affiliates for at least one year from the date of the
granting of such option, and no option shall be exercisable until after the
completion of such one year period of employment by the optionee.
(5) Exercise of Option. An option may be exercised in whole or
in part from time to time during the option period (or, if determined by the
Committee, in specified installments during the option period) by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, such notice to be accompanied by payment in full of the purchase
price and Withholding Taxes (as defined in Section 11 hereof), unless an
election to defer receipt of shares is made under Section 12, due either by
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certified or bank check, or in shares of Common Stock of the Company owned by
the optionee having a Fair Market Value at the date of exercise equal to such
purchase price, or in a combination of the foregoing; provided, however, that
payment in shares of Common Stock of the Company will not be permitted unless
at least 100 shares of Common Stock are required and delivered for such
purpose. No shares shall be issued until full payment therefor has been made.
An optionee shall have the rights of a stockholder only with respect to shares
of stock for which certificates have been issued to the optionee.
(6) Nontransferability of Options. No option or stock
appreciation right granted under the Plan shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution, and such
option or stock appreciation right shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee
may set forth in a Stock Option Agreement at the time of grant or thereafter,
that the options (other than Incentive Stock Options) may be transferred to
members of the optionee's immediate family, to trusts solely for the benefit of
such immediate family members and to partnerships in which such family members
and/or trusts are the only partners. For this purpose, immediate family means
the optionee's spouse, parents, children, stepchildren, grandchildren and legal
dependants. Any transfer of options made under this provision will not be
effective until notice of such transfer is delivered to the Company.
(7) Retirement and Termination of Employment Other than by Death
or Disability. If an optionee shall cease to be employed by the Company or any
of its Subsidiaries or Affiliates for any reason (other than termination of
employment by reason of death or Disability) after the optionee shall have been
continuously so employed for one year after the granting of the option, the
option shall be exercisable only to the extent that the optionee was otherwise
entitled to exercise it at the time of such cessation of employment with the
Company, Subsidiary or Affiliate, but in no event after the expiration of the
option period set forth therein except that in the case of cessation of
employment other than by reason of Retirement or death, the option shall in no
event be exercisable after the date three months next succeeding such cessation
of employment. The Plan does not confer upon any optionee any right with
respect to continuation of employment by the Company or any of its Subsidiaries
or Affiliates.
(8) Disability of Optionee. An optionee who ceases to be
employed by reason of Disability shall be treated as though the optionee
remained in the employ of the Company or a Subsidiary or Affiliate until the
earlier of (i) cessation of payments under a disability pay plan of the
Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the
optionee's 65th birthday.
(9) Death of Optionee. In the event of the death of the optionee
while in the employ of the Company or of any of its Subsidiaries or Affiliates
or within whichever period after Retirement or cessation of employment of the
optionee specified in subsection (7) or (8) is applicable, and provided the
optionee shall have been continuously so employed for one year after the
granting of the option, the option shall be exercisable by the executors,
administrators, legatees or distributees of the optionee's estate, as the case
may be, at any time following death but in no event after the expiration of the
option period set forth therein and only to the extent that the optionee would
otherwise have been entitled to exercise it if the optionee were then living,
except that in the case of the death of an optionee after Retirement or other
cessation of employment, the option shall in no event be exercisable after the
later of (i) the date twelve months next succeeding such death or (ii) the last
day of the period after Retirement or other cessation of employment of the
optionee specified in Section 6(b)(7). In the event any option is exercised by
the executors, administrators, legatees or distributees of the estate of a
deceased optionee, the Company shall be under no obligation to issue stock
thereunder unless and until the Company is satisfied that the person or persons
exercising the option are the duly appointed legal representatives of the
deceased optionee's estate or the proper legatees or distributees thereof.
(10) Long-Term Performance Awards. The Committee may from time
to time grant nonqualified stock options under the Plan in conjunction with and
related to an award of performance units or performance shares made under a
Long-Term Performance Award as set forth in Section 7(b)(11). In such event,
notwithstanding any other provision hereof, (i) the number of shares to which
the Associated Option applies shall initially be equal to the number of
performance units or performance shares granted by the award, but such number
of shares shall be reduced on a one-share-for-one unit or share basis to the
extent that the Committee determines pursuant to the terms of the award, to pay
to the optionee or the optionee's beneficiary the performance units or
performance shares granted pursuant to such award; and (ii) such Associated
Option shall be cancelable in the discretion of the Committee, without the
consent of the optionee, under the conditions and to the extent specified in
the award.
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(11) Stock Appreciation Rights. In the case of any option
granted under the Plan, either at the time of grant or by amendment of such
option at any time after such grant there may be included a stock appreciation
right which shall be subject to such terms and conditions, not inconsistent
with the Plan, as the Committee shall impose, including the following:
(A) A stock appreciation right shall be exercisable to the
extent, and only to the extent, that the option in which it is included is at
the time exercisable, and may be exercised within such period only at such time
or times as may be determined by the Committee;
(B) A stock appreciation right shall entitle the optionee
(or any person entitled to act under the provisions of subsection (9) hereof)
to surrender unexercised the option in which the stock appreciation right is
included (or any portion of such option) to the Company and to receive from the
Company in exchange therefor that number of shares having an aggregate value
equal to (or, in the discretion of the Committee, less than) the excess of the
value of one share (provided such value does not exceed such multiple of the
option price per share as may be specified by the Committee) over the option
price per share specified in such option times the number of shares called for
by the option, or portion thereof, which is so surrendered. The Committee shall
be entitled to cause the Company to settle its obligation, arising out of the
exercise of a stock appreciation right, by the payment of cash equal to the
aggregate value of the shares the Company would otherwise be obligated to
deliver or partly by the payment of cash and partly by the delivery of shares.
Any such election shall be made within 30 business days after the receipt by
the Committee of written notice of the exercise of the stock appreciation
right. The value of a share for this purpose shall be the Fair Market Value
thereof on the last business day preceding the date of the election to exercise
the stock appreciation right;
(C) No fractional shares shall be delivered under this
subsection (11) but in lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is
exercised, such option shall be deemed to have been exercised to the extent of
the number of shares called for by the option or portion thereof which is
surrendered on exercise of the stock appreciation right and no new option may
be granted covering such shares under this Plan; and
(E) If an option which includes a stock appreciation right
is exercised, such stock appreciation right shall be deemed to have been
canceled to the extent of the number of shares called for by the option or
portion thereof is exercised and no new stock appreciation rights may be
granted covering such shares under this Plan.
(12) Incentive Stock Options. In the case of any incentive stock
option granted under the Plan, the aggregate Fair Market Value of the shares
of Common Stock of the Company (determined at the time of grant of each option)
with respect to which incentive stock options granted under the Plan and any
other plan of the Company or its parent or a Subsidiary which are exercisable
for the first time by an employee during any calendar year shall not exceed
$100,000 or such other amount as may be required by the Code. In any year, the
maximum number of shares with respect to which incentive stock options may be
granted shall not exceed 4,000,000 shares.
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(13) Rights of Transferee. Notwithstanding anything to the
contrary herein, if an option has been transferred in accordance with
Section 6(b)(6), the option shall be exercisable solely by the transferee. The
option shall remain subject to the provisions of the Plan, including that it
will be exercisable only to the extent that the optionee or optionee's estate
would have been entitled to exercise it if the optionee had not transferred the
option. In the event of the death of the optionee prior to the expiration of
the right to exercise the transferred option, the period during which the
option shall be exercisable will terminate on the date one year following the
date of the optionee's death. In the event of the death of the transferee
prior to the expiration of the right to exercise the option, the period during
which the option shall be exercisable by the executors, administrators,
legatees and distributees of the transferee's estate, as the case may be, will
terminate on the date one year following the date of the transferee's death.
In no event will be the option be exercisable after the expiration of the
option period set forth in the Stock Option Agreement. The option shall be
subject to such other rules as the Committee shall determine.
7. Long-term Performance Awards: Awards under the Plan shall consist of
the conditional grant to the participants of a specified number of performance
units or performance shares. The conditional grant of a performance unit to a
participant will entitle the participant to receive a specified dollar value,
variable under conditions specified in the award, if the performance objectives
specified in the award are achieved and the other terms and conditions thereof
are satisfied. The conditional grant of a performance share to a participant
will entitle the participant to receive a specified number of shares of Common
Stock of the Company, or the equivalent cash value, if the objective(s)
specified in the award are achieved and the other terms and conditions thereof
are satisfied.
Each award will be subject to the following terms and conditions:
(a) Grant of Awards. The Committee shall (1) select the officers and
key executives of the Company and its Subsidiaries and Affiliates to whom
awards may from time to time be granted, (2) determine the number of
performance units or performance shares covered by each award, (3) determine
the terms and conditions of each performance unit or performance share awarded
and the award period and performance objectives with respect to each award, (4)
determine the periods during which a participant may request the Committee to
approve deferred payment of a percentage (not less than 25%) of an award (the
"Deferred Portion") and the interest or rate of return thereon or the basis on
which such interest or rate of return thereon is to be determined, (5)
determine whether payment with respect to the portion of an award which has not
been deferred (the "Current Portion") and the payment with respect to the
Deferred Portion of an award shall be made entirely in cash, entirely in Common
Stock or partially in cash and partially in Common Stock, (6) determine whether
the award is to be made independently of or in conjunction with a nonqualified
stock option granted under the Plan, and (7) prescribe the form of the
instruments necessary or advisable in the administration of the awards.
(b) Terms and Conditions of Award. Any award conditionally granting
performance units or performance shares to a participant shall be evidenced by
a Performance Unit Agreement or Performance Share Agreement, as applicable,
executed by the Company and the participant, in such form as the Committee
shall approve, which Agreement shall contain in substance the following terms
and conditions applicable to the award and such additional terms and conditions
as the Committee shall prescribe:
(1) Number and Value of Performance Units. The Performance Unit
Agreement shall specify the number of performance units conditionally granted
to the participant. If the award has been made in conjunction with the grant of
an Associated Option, the number of performance units granted shall initially
be equal to the number of shares which the participant is granted the right to
purchase pursuant to the Associated Option, but one performance unit shall be
canceled for each share of the Company's Common Stock purchased upon exercise
of the Associated Option or for each stock appreciation right included in such
option that has been exercised. The Performance Unit Agreement shall specify
the threshold, target and maximum dollar values of each performance unit and
corresponding performance objectives as provided under Section 6(b)(5). No
payout under a performance unit award to an individual Participant may exceed
0.15% of the pre-tax earnings of the Company for the fiscal year which
coincides with the final year of the performance unit period.
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(2) Number and Value of Performance Shares. The Performance
Share Agreement shall specify the number of performance shares conditionally
granted to the participant. If the award has been made in conjunction with the
grant of an Associated Option, the number of performance shares granted shall
initially be equal to the number of shares which the participant is granted the
right to purchase pursuant to the Associated Option, but one performance share
shall be canceled for each share of the Company's Common Stock purchased upon
exercise of the Associated Option or for each stock appreciation right included
in such option that has been exercised. The Performance Share Agreement shall
specify that each Performance Share will have a value equal to one (1) share of
Common Stock of the Company.
(3) Award Periods. For each award, the Committee shall designate
an award period with a duration to be determined by the Committee in its
discretion but in no event less than three calendar years within which
specified performance objectives are to be attained. There may be several award
periods in existence at any one time and the duration of performance objectives
may differ from each other.
(4) Consideration. Each participant, as consideration for the
award of performance units or performance shares, shall remain in the
continuous employ of the Company or of one of its Subsidiaries or Affiliates
for at least one year after the date of the making of such award, and no award
shall be payable until after the completion of such one year of employment by
the participant.
(5) Performance Objectives. The Committee shall establish
performance objectives with respect to the Company for each award period on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time determine. Performance criteria for awards under the Plan may
include one or more of the following measures of the operating performance:
a. Earnings d. Financial return ratios
b. Revenue e. Total Shareholder Return
c. Operating or net cash flows f. Market share
The Committee shall establish the specific targets for the selected criteria.
These targets may be set at a specific level or may be expressed as relative to
the comparable measure at comparison companies or a defined index. These
targets may be based upon the total Company or upon a defined business unit
which the executive has responsibility for or influence over.
(6) Determination and Payment of Performance Units or
Performance Shares Earned. As soon as practicable after the end of an award
period, the Committee shall determine the extent to which awards have been
earned on the basis of the Company's actual performance in relation to the
established performance objectives as set forth in the Performance Unit
Agreement or Performance Share Agreement and certify these results in writing.
The Performance Unit Agreement or Performance Share Agreement shall specify
that as soon as practicable after the end of each award period, the Committee
shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof
have been met and, if so, shall ascertain the amount payable or shares which
should be distributed to the participant in respect of the performance units or
performance shares. As promptly as practicable after it has determined that an
amount is payable or should be distributed in respect of an award, the
Committee shall cause the Current Portion of such award to be paid or
distributed to the participant or the participant's beneficiaries, as the case
may be, in the Committee's discretion, either entirely in cash, entirely in
Common Stock or partially in cash and partially in Common Stock. The Deferred
Portion of an award shall be contingently credited and payable to the
participant over a deferred period and shall be credited with interest, rate of
return, or other valuation as determined by the Committee. The Committee, in
its discretion, shall determine the conditions upon, and method of, payment of
such Deferred Portions and whether such payment will be made entirely in cash,
entirely in Common Stock or partially in cash and partially in Common Stock.
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In making the payment of an award in Common Stock hereunder, the cash
equivalent of such Common Stock shall be determined by the Fair Market Value of
the Common Stock on the day the Committee designates the performance units
shall be payable.
(7) Nontransferability of Awards and Designation of
Beneficiaries. No award under this Section of the Plan shall be transferable by
the participant other than by will or by the laws of descent and distribution,
except that a participant may designate a beneficiary pursuant to the
provisions hereof.
If any participant or the participant's beneficiary shall attempt to assign the
participant's rights under the Plan in violation of the provisions thereof, the
Company's obligation to make any further payments to such participant or the
participant's beneficiaries shall forthwith terminate.
A participant may name one or more beneficiaries to receive any payment of an
award to which the participant may be entitled under the Plan in the event of
the participant's death, on a form to be provided by the Committee. A
participant may change the participant's beneficiary designation from time to
time in the same manner.
If no designated beneficiary is living on the date on which any payment becomes
payable to a participant's beneficiary, or if no beneficiary has been specified
by the participant, such payment will be payable to the person or persons in
the first of the following classes of successive preference:
(i) Widow or widower, if then living,
(ii) Surviving children, equally,
(iii) Surviving parents, equally,
(iv) Surviving brothers and sisters, equally,
(v) Executors or administrators
and the term "beneficiary" as used in the Plan shall include such person or
persons.
(8) Retirement and Termination of Employment Other Than by Death
or Disability. In the event of the Retirement prior to the end of an award
period of a participant who has satisfied the one year employment requirement
of Section 7(b)(4) with respect to an award prior to Retirement, the
participant, or his estate, shall be entitled to a payment of such award at the
end of the award period, pursuant to the terms of the Plan and the
participant's Performance Unit Agreement or Performance Share Agreement,
provided, however, that the participant shall be deemed to have earned that
proportion (to the nearest whole unit or share) of the value of the performance
units or performance shares granted to the participant under such award as the
number of months of the award period which have elapsed since the first day of
the calendar year in which the award was made to the end of the month in which
the participant's Retirement occurs, bears to the total number of months in the
award period, subject to the attainment of performance objectives associated
with the award as certified by the Committee. The participant's right to
receive any remaining performance units or performance shares shall be canceled
and forfeited.
Subject to Section 7(b)(6) hereof, the Performance Unit Agreement or
Performance Share Agreement shall specify that the right to receive the
performance units or performance shares granted to such participant shall be
conditional and shall be canceled, forfeited and surrendered if the
participant's continuous employment with the Company and its Subsidiaries and
Affiliates shall terminate for any reason, other than the participant's death,
Disability or Retirement prior to the end of the award period.
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(9) Disability of Participant. For the purposes of any award a
participant who becomes Disabled shall be deemed to have suspended active
employment by reason of Disability commencing on the date the participant
becomes entitled to receive payments under a disability pay plan of the Company
or any Subsidiary or Affiliate and continuing until the date the participant is
no longer entitled to receive such payments. In the event a participant becomes
Disabled during an award period but only if the participant has satisfied the
one year employment requirement of Section 7(b)(4) with respect to an award
prior to becoming Disabled, upon the determination by the Committee of the
extent to which an award has been earned pursuant to Section 7(b)(6) the
participant shall be deemed to have earned that proportion (to the nearest
whole unit) of the value of the performance units granted to the participants
under such award as the number of months of the award period in which the
participant was not Disabled bears to the total number of months in the award
period subject to the attainment of the performance objectives associated with
the award as certified by the Committee. The participant's right to receive
any remaining performance units shall be canceled and forfeited.
(10) Death of Participant. In the event of the death prior to
the end of an award period of a participant who has satisfied the one year
employment requirement with respect to an award prior to the date of death, the
participant's beneficiaries or estate, as the case may be, shall be entitled to
a payment of such award upon the end of the award period, pursuant to the terms
of the Plan and the participant's Performance Unit Agreement or Performance
Share Agreement, provided, however, that the participant shall be deemed to
have earned that proportion (to the nearest whole unit or share) of the value
of the performance units or performance shares granted to the participant under
such award as the number of months of the award period which have elapsed since
the first day of the calendar year in which the award was made to the end of
the month in which the participant's death occurs, bears to the total number of
months in the award period. The participant's right to receive any remaining
performance units or performance shares shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such
cancellation and forfeiture of any performance units or performance shares.
(11) Grant of Associated Option. If the Committee determines
that the conditional grant of performance units or performance shares under the
Plan is to be made to a participant in conjunction with the grant of a
nonqualified stock option under the Plan, the Committee shall grant the
participant an Associated Option under the Plan subject to the terms and
conditions of this subsection (11). In such event, such award under the Plan
shall be contingent upon the participant's being granted such an Associated
Option pursuant to which: (i) the number of shares the optionee may purchase
shall initially be equal to the number of performance units or performance
shares conditionally granted by the award, (ii) such number of shares shall be
reduced on a one-share-for-one-unit or share basis to the extent that the
Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the
participant or the participant's beneficiaries the performance units or
performance shares conditionally granted pursuant to the award, and (iii) the
Associated Option shall be cancelable in the discretion of the Committee,
without the consent of the participant, under the conditions and to the extent
specified herein and in Section 7(b)(6) hereof.
If no amount is payable in respect of the conditionally granted performance
units or performance shares, the award and such performance units or
performance shares shall be deemed to have been canceled, forfeited and
surrendered, and the Associated Option, if any, shall continue in effect in
accordance with its terms. If any amount is payable in respect of the
performance units or performance shares and such units or shares were granted
in conjunction with an Associated Option, the Committee shall, within 30 days
after the determination of the Committee referred to in the first sentence of
Section 7(b)(6), determine, in its sole discretion, either:
(A) to cancel in full the Associated Option, in which event
the value of the performance units or performance shares payable pursuant to
Sections 7(b)(5) and (6) shall be paid or the performance shares shall be
distributed;
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(B) to cancel in full the performance units or performance
shares, in which event no amount shall be paid to the participant in respect
thereof and no shares shall be distributed but the Associated Option shall
continue in effect in accordance with its terms; or
(C) to cancel some, but not all, of the performance units
or performance shares, in which event the value of the performance units
payable pursuant to Sections 7(b)(5) and (6) which have not been canceled
shall be paid and/or the performance shares shall be distributed and the
Associated Option shall be canceled with respect to that number of shares equal
to the number of conditionally granted performance units or performance shares
that remain payable.
Any action taken by the Committee pursuant to the preceding sentence shall be
uniform with respect to all awards having the same award period. If the
Committee takes no such action, it shall be deemed to have determined to cancel
in full the award in accordance with clause (b) above.
8. Restricted Stock: Restricted stock awards under the Plan shall consist
of grants of shares of Common Stock of the Issuer subject to the terms and
conditions hereinafter provided.
(a) Grant of Awards: The Committee shall (i) select the officers and
key employees to whom Restricted Stock may from time to time be granted, (ii)
determine the number of shares to be covered by each award granted, (iii)
determine the terms and conditions (not inconsistent with the Plan) of any
award granted hereunder, and (iv) prescribe the form of the agreement, legend
or other instrument necessary or advisable in the administration of awards
under the Plan.
(b) Terms and Conditions of Awards: Any restricted stock award
granted under the Plan shall be evidenced by a Restricted Stock Agreement
executed by the Issuer and the recipient, in such form as the Committee shall
approve, which agreement shall be subject to the following terms and conditions
and shall contain such additional terms and conditions not inconsistent with
the Plan as the Committee shall prescribe:
(1) Number of Shares Subject to an Award: The Restricted Stock
Agreement shall specify the number of shares of Common Stock subject to the
Award.
(2) Restriction Period: The period of restriction applicable to
each Award shall be established by the Committee but may not be less than one
year. The Restriction Period applicable to each Award shall commence on the
Award Date.
(3) Consideration: Each recipient, as consideration for the
grant of an award, shall remain in the continuous employ of the Company for at
least one year from the date of the granting of such award, and any shares
covered by such an award shall lapse if the recipient does not remain in the
continuous employ of the Company for at least one year from the date of the
granting of the award.
(4) Restriction Criteria: The Committee shall establish the
criteria upon which the restriction period shall be based. Restrictions may be
based upon either the continued employment of the recipient or upon the
attainment by the Company of one or more of the following measures of the
operating performance:
a. Earnings d. Financial return ratios
b. Revenue e. Total Shareholder Return
c. Operating or net cash flows f. Market share
The Committee shall establish the specific targets for the selected criteria.
These targets may be set at a specific level or may be expressed as relative to
the comparable measure at comparison companies or a defined index. Performance
objectives may be established in combination with restrictions based upon the
continued employment of the recipient. These targets may be based upon the
total Company or upon a defined business unit which the executive has
responsibility for or influence over.
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In cases where objective performance criteria are established, the Committee
shall determine the extent to which the criteria have been achieved and the
corresponding level to which restrictions will be removed from the Award or the
extent to which a participant's right to receive an Award should be lapsed in
cases where the performance criteria have not been met and shall certify these
determinations in writing. The Committee may provide for the determination of
the attainment of such restrictions in installments where deemed appropriate.
(c) Terms and Conditions of Restrictions and Forfeitures: The shares
of Common Stock awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:
(1) During the Restriction Period, the participant will not be
permitted to sell, transfer, pledge or assign Restricted Stock awarded under
this Plan.
(2) Except as provided in Section 8(c)(i), or as the Committee
may otherwise determine, the participant shall have all of the rights of a
stockholder of the Issuer, including the right to vote the shares and receive
dividends and other distributions provided that distributions in the form of
stock shall be subject to the same restrictions as the underlying Restricted
Stock.
(3) In the event of a participant's retirement, death or
disability prior to the end of the Restriction Period for a participant who has
satisfied the one year employment requirement of Section 7(c)(iii) with respect
to an award prior to Retirement, death or Disability, the participant, or
his/her estate, shall be entitled to receive that proportion (to the nearest
whole share) of the number of shares subject to the Award granted as the number
of months of the Restriction Period which have elapsed since the Award date to
the date at which the participant's retirement, death or disability occurs,
bears to the total number of months in the Restriction Period. The
participant's right to receive any remaining shares shall be canceled and
forfeited and the shares will be deemed to be reacquired by the Issuer.
(4) In the event of a participant's retirement, death,
disability or in cases of special circumstances as determined by the Committee,
the Committee may, in its sole discretion when it finds that such an action
would be in the best interests of the Company, accelerate or waive in whole or
in part any or all remaining time based restrictions with respect to all or
part of such participant's Restricted Stock.
(5) Upon termination of employment for any reason during the
restriction period, subject to the provisions of paragraph (iii) above or in
the event that the participant fails promptly to pay or make satisfactory
arrangements as to the withholding taxes as provided in the following
paragraph, all shares still subject to restriction shall be forfeited by the
participant and will be deemed to be reacquired by the Company.
(6) A participant may, at any time prior to the expiration of
the Restriction Period, waive all right to receive all or some of the shares of
a Restricted Stock Award by delivering to the Company a written notice of such
waiver.
(7) Notwithstanding the other provisions of this Section 7, the
Committee may adopt rules which would permit a gift by a participant of
restricted shares to members of his/her immediate family (spouse, parents,
children, stepchildren, grandchildren or legal dependants) or to a Trust whose
beneficiary or beneficiaries shall be either such a person or persons or the
participant.
(8) Any attempt to dispose of Restricted Stock in a manner
contrary to the restrictions shall be ineffective.
E-3-11
9. Determination of Breach of Conditions: The determination of the
Committee as to whether an event has occurred resulting in a forfeiture or a
termination or reduction of the Company's obligations in accordance with the
provisions of the Plan shall be conclusive.
10. Adjustment in the Event of Change in Stock: In the event of changes in
the outstanding Common Stock of the Company by reason of stock dividends,
recapitalization, mergers, consolidations, split-ups, combinations or exchanges
of shares and the like, the aggregate number and class of shares available
under the Plan, and the number, class and the price of shares subject to
outstanding options and/or awards and the number of performance units and/or
the dollar value of each unit shall be appropriately adjusted by the Committee,
whose determination shall be conclusive.
11. Taxes: Each participant shall, no later than the Tax Date (as defined
below), pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Withholding Tax (as defined below) with respect to an
Option or Award, and the Company shall, to the extent permitted by law, have
the right to deduct such amount from any payment of any kind otherwise due to
the participant. The Company shall also have the right to retain or sell
without notice, or to demand surrender of, shares of Common Stock in value
sufficient to cover the amount of any Withholding Tax (that is that portion of
any Applicable Tax, as defined below, required by any governmental entity to be
withheld or otherwise deducted and paid with respect to such Award), and to
make payment (or to reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such Withholding
Tax, remitting any balance to the participant. For purposes of the paragraph,
the value of shares of Common Stock so retained or surrendered shall be the
average of the high and low sales prices per share on the New York Stock
Exchange composite tape on the date that the amount of the Withholding Tax is
to be determined (the "Tax Date") and the value of shares of Common Stock so
sold shall be the actual net sale price per share (after deduction of
commissions) received by the Company. Notwithstanding the foregoing, if the
stock options have been transferred, the optionee shall provide the Company
with funds sufficient to pay such Withholding Tax or Applicable Tax.
Furthermore, if such optionee does not satisfy his tax payment obligation and
the stock options have been transferred, the transferee may provide the funds
sufficient to enable the Company to pay such taxes. However, if the stock
options have been transferred, the Company shall have no right to retain or
sell without notice, or to demand surrender from the transferee of, shares of
Common Stock in order to pay such Withholding Tax or Applicable Tax.
Notwithstanding the foregoing, the participant shall be entitled to satisfy the
obligation to pay any Withholding Tax or to satisfy the obligation to pay any
tax to any governmental entity in respect of such Award, including any Federal,
state or local income tax up to an amount determined on the basis of the
highest marginal tax rate applicable to such participant, Federal Insurance
Contribution Act taxes or other governmental impost or levy (an "Applicable
Tax"), in whole or in part, by providing the Company with funds sufficient to
enable the Company to pay such Withholding Tax or Applicable Tax or by
requiring the Company to retain or to accept upon delivery thereof by the
participant shares of Common Stock having a Fair Market Value sufficient to
cover the amount of such Withholding Tax or Applicable Tax or in a greater
amount as deemed appropriate by the Company. Each election by a participant to
have shares retained or to deliver shares for this purpose shall be subject to
the following restrictions: (i) the election must be in writing and be made on
or prior to the Tax Date; (ii) the election must be irrevocable; (iii) the
election shall be subject to the disapproval of the Committee.
12. Deferral Election: Notwithstanding the provisions of Section 11, any
optionee or participant may elect, with the concurrence of the Committee and
consistent with any rules and regulations established by the Committee, to
defer the delivery of the proceeds of the exercise of any stock option not
transferred under the provisions of Section 6(b)(6) or stock appreciation
rights.
E-3-12
(a) Election Timing: The election to defer the delivery of the
proceeds from any eligible award must be made at least six months prior to the
date such award is exercised or at such other time as the Committee may
specify. Deferrals will only be allowed for exercises which occur while the
optionee or participant is an active employee of the Company. Any election to
defer the delivery of proceeds from an eligible award shall be irrevocable as
long as the optionee or participant remains an employee of the Company.
(b) Stock Option Deferral: The deferral of the proceeds of stock
options may be elected by an optionee subject to the Regulations established by
the Committee. The proceeds from such an exercise shall be credited to the
optionee's deferred stock option account as the number of deferred share units
equivalent in value to those proceeds. Deferred share units shall be valued at
the Fair Market Value on the date of exercise. Subsequent to exercise, the
deferred share units shall be valued at the Fair Market Value of Common Stock
of the Company. Deferred share units shall accrue dividends at the rate paid
upon the Company's Common Stock credited in the form of additional deferred
share units. Deferred share units shall be distributed in shares of Company
Stock upon the termination of employment of the participant or at such other
date as may be approved by the Committee over a period of no more than 10
years.
(c) Stock Appreciation Right Deferral: Upon such exercise, the
Company will credit the optionee's deferred stock option account with the
number of deferred share units equivalent in value to the difference between
the Fair Market Value of a share of Common Stock on the exercise date and the
exercise price of the Stock Appreciation Right multiplied by the number of
shares exercised. Deferred share units shall be valued at the Fair Market Value
on the date of exercise. Subsequent to exercise, the deferred share units
shall be valued at the Fair Market Value of Common Stock of the Company.
Deferred share units shall accrue dividends at the rate paid upon the
Company's Common Stock credited in the form of additional deferred share units.
Deferred share units shall be distributed in shares of Common Stock upon the
termination of employment of the participant or at such other date as may be
approved by the Committee over a period of no more than 10 years.
(d) Accelerated Distributions: The Committee may, at its sole
discretion, allow for the early payment of an optionee's or participant's
deferred share units account in the event of an "unforeseeable emergency" or in
the event of the death or disability of the optionee or participant. An
"unforeseeable emergency" is defined as an unanticipated emergency caused by an
event beyond the control of the optionee or participant that would result in
severe financial hardship if the distribution were not permitted. Such
distributions shall be limited to the amount necessary to sufficiently address
the financial hardship. Any distributions under this provision shall be
consistent with the Regulations established under the Code. Additionally, the
Committee may use its discretion to cause deferred share unit accounts to be
distributed when continuing the Program is no longer in the best interest of
the Company.
(e) Assignability: No rights to deferred share unit accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an optionee or participant may designate a beneficiary pursuant to any
rules established by the Committee.
13. Amendment of the Plan: The Board of Directors may amend or suspend the
Plan at any time and from time to time. No such amendment of the Plan may,
however, increase the maximum number of shares to be offered under options or
awards, or change the manner of determining the option price, or change the
designation of employees or class of employees eligible to receive options or
awards, or permit the transfer or issue of stock before payment therefor in
full, or, without the written consent of the optionee or participant, alter or
impair any option or award previously granted under the Plan or Prior Plan.
Notwithstanding the foregoing, if an option has been transferred in accordance
with Section 6(b)(6), written consent of the transferee (and not the optionee)
shall be necessary to alter or impair any option or award previously granted
under the Plan.
E-3-13
14. Miscellaneous:
(a) By accepting any benefits under the Plan, each optionee or
participant and each person claiming under or through such optionee or
participant shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, any action taken or made to be taken or made
under the Plan by the Company, the Board, the Committee or any other Committee
appointed by the Board.
(b) No participant or any person claiming under or through him shall
have any right or interest, whether vested or otherwise, in the Plan or in any
option, or stock appreciation right or award thereunder, contingent or
otherwise, unless and until all of the terms, conditions and provisions of the
Plan and the Agreement that affect such participant or such other person shall
have been complied with.
(c) Nothing contained in the Plan or in any Agreement shall require
the Company to segregate or earmark any cash or other property.
(d) Neither the adoption of the Plan nor its operation shall in any
way affect the rights and powers of the Company or any of its Subsidiaries or
Affiliates to dismiss and/or discharge any employee at any time.
(e) Notwithstanding anything to the contrary in the Plan, neither the
Board nor the Committee shall have any authority to take any action under the
Plan where such action would affect the Company's ability to account for any
business combination as a "pooling of interests."
15. Term of the Plan: The Plan, if approved by stockholders, will be
effective May 6, 1997. The Plan shall expire on May 31, 2002 unless suspended
or discontinued by action of the Board of Directors. The expiration of the
Plan, however, shall not affect the rights of Optionees under options
theretofore granted to them or the rights of participants under awards
theretofore granted to them, and all unexpired options and awards shall
continue in force and operation after termination of the Plan except as they
may lapse or be terminated by their own terms and conditions.
E-3-14