BRISTOL-MYERS SQUIBB COMPANY
1997 STOCK INCENTIVE PLAN
(as amended as of November 3, 1998)
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.
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Furthermore, an employee who makes an election to retire under Article 19
of 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 "nonemployee 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
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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.
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.
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(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 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. Except as otherwise provided in subsection (13),
in the event of the optionee's death (i) while in the employ of the
Company or any of its Subsidiaries or Affiliates, (ii) while
Disabled as described in subsection (8) or (iii) after cessation
of employment due to Retirement, the option shall be fully
exercisable by the executors, administrators, legatees or
distributees of the optionee's estate, as the case may be, at any
time following such death. In the event of the optionee's death
after cessation of employment for any reason other than Disability
or Retirement, 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 during the twelve month period
following such death. Notwithstanding the foregoing, in no event
shall an option be exercisable unless the optionee shall have been
continuously employed by the Company or any of its Subsidiaries or
Affiliates for a period of at least one year after the option grant,
and no option shall be exercisable after the expiration of the
option period set forth in the Stock Option Agreement. In the event
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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.
(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
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(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.
(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.
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(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.
(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
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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.
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
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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.
(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.
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(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;
(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.
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(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.
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.
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(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.
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
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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.
(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,
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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.
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.
E-1-14
(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-1-15