Exhibit A
DOLLAR GENERAL CORPORATION
1995 EMPLOYEE STOCK INCENTIVE PLAN
SECTION 1. Purpose; Definitions.
(a) Purpose. The purpose of the Plan is to enable the
Corporation to attract, retain and reward officers and key employees
of and consultants to the Corporation and its Subsidiaries and
Affiliates, and strengthen the mutuality of interests between such
individuals and the Corporation's shareholders, by offering such
officers, key employees and consultants Options or other rights with
respect to shares of Common Stock of the Corporation. The creation
of the Plan shall not diminish or prejudice other compensation
programs approved from time to time by the Board.
(b) Definitions. For purposes of the Plan, the following terms
are defined as set forth below:
(i) "Affiliate" means any entity other than the Corporation and
its Subsidiaries that is designated by the Board as a participating
employer under the Plan, provided that the Corporation directly or
indirectly owns at least 20% of the combined voting power of all
classes of stock of such entity or at least 20% of the ownership
interests in such entity.
(ii) "Board" means the Board of Directors of the Corporation.
(iii) "Capital Transaction" has the meaning provided in
Section 3(b) of the Plan.
(iv) "Cause" has the meaning provided in Section 5(b)(x) of the
Plan.
(v) "Change in Control" has the meaning provided in Section
9(b) of the Plan.
(vi) "Change in Control Price" has the meaning provided in
Section 9(d) of the Plan.
(vii) "Common Stock" means the Corporation's Common Stock,
$.50 par value.
(viii) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(ix) "Commission" means the Securities and Exchange Commission.
(x) "Committee" means the Committee referred to in Section 2 of
the Plan.
(xi) "Corporation" means Dollar General, a corporation organized
under the laws of the State of Kentucky, or any successor
corporation.
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(xii) "Disability" means disability as determined under the
Corporation's long-term disability insurance policy or, if there is
no such definition, as reasonably determined by the Committee.
(xiii) "Disinterested Person" has the meaning set forth in
Rule 16b-3(c)(2)(i) as promulgated by the Commission under the
Exchange Act, or any successor definition adopted by the Commission.
(xiv) "Early Retirement" means retirement, for purposes of
this Plan with the express consent of the Corporation at or before
the time of such retirement, from active employment with the
Corporation and any Subsidiary or Affiliate prior to age 65, in
accordance with any applicable early retirement policy of the
Corporation then in effect.
(xv) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor thereto.
(xvi) "Fair Market Value" means the reported closing price
of the Common Stock on The New York Stock Exchange, or such other
exchange or over the counter market on or through which the Common
Stock trades on the relevant date or, if no shares of Common Stock
are traded on that date, the reported closing price on the next
preceding date on which shares were traded. In the event that
trading in the shares of Common Stock is no longer reported on The
New York Stock Exchange, or such other exchange or market, Fair
Market Value shall be determined by such other method as the
Committee in good faith deems appropriate without regard to any
restriction other than a restriction which, by its terms, will never
lapse.
(xvii) "Incentive Stock Option" means any Option intended to
be and designated as an "Incentive Stock Option" within the meaning
of Section 422 of the Code.
(xviii) "Non-Qualified Stock Option" means any Option that is
not an Incentive Stock Option.
(xix) "Normal Retirement" means retirement from active
employment with the Corporation and any Subsidiary or Affiliate on or
after age 65.
(xx) "Option" means any option to purchase shares of Common
Stock granted pursuant to Section 5 below.
(xxi) "Other Stock-Based Award" means an award under
Section 8 below that is valued in whole or in part by reference to,
or is otherwise based on, Common Stock.
(xxii) "Plan" means this Dollar General Corporation 1995
Employee Stock Incentive Plan, as amended from time to time in
accordance herewith.
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(xxiii) "Restriction Period" has the meaning provided in
Section 7(c)(i) of the Plan.
(xxiv) "Restricted Stock" means an award of shares of Common
Stock that is subject to restrictions under Section 7 of the Plan.
(xxv) "Retirement" means Normal Retirement or Early
Retirement.
(xxvi) "Stock Appreciation Right" means the right granted under
Section 6 of the Plan.
(xxvii) "Subsidiary" means any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
SECTION 2. Administration.
(a) The Committee. The Plan shall be administered by a
Committee of not less than two Disinterested Persons, who shall be
appointed by the Board and who shall serve at the pleasure of the
Board. The functions of the Committee specified in the Plan may be
exercised by an existing Committee of the Board composed exclusively
of Disinterested Persons. The initial Committee shall be the
Compensation Committee of the Board.
(b) Authority of the Committee. The Committee shall have
authority to grant, pursuant to the terms of the Plan, to officers,
other key employees and consultants eligible under Section 4 hereof:
Options, Stock Appreciation Rights, Restricted Stock and Other
Stock-Based Awards.
In particular, the Committee shall have the authority,
consistent with the terms of the Plan:
(i) to select the officers and other key employees of and
consultants to the Corporation and its Subsidiaries and Affiliates
to whom Options, Stock Appreciation Rights, Restricted Stock or
Other Stock-Based Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible
employees;
(iii) to determine the number of shares to be covered by
each such award granted hereunder;
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(iv) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction
or limitation, or any vesting, acceleration of vesting or waiver of
forfeiture restrictions regarding any Option or other award or the
shares of Common Stock relating thereto, based in each case on such
factors as the Committee shall determine, in its sole discretion)
and to amend or waive any such terms and conditions to the extent
permitted by Section 10 hereof;
(v) to determine whether and under what circumstances an
Option or Stock Appreciation Right may be settled in cash or
Restricted Stock under Section 5(b)(xiii) hereof, instead of shares
of Common Stock;
(vi) to determine whether, to what extent and under what
circumstances Option grants or other awards under the Plan are to be
made, and operate, on a tandem basis vis-a-vis other awards under
the Plan, or on an additive basis;
(vii) to determine whether, to what extent and under what
circumstances shares of Common Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period); and
(viii) to determine whether to require payment of any
withholding requirements in shares of Common Stock.
The Committee shall have the authority to adopt, alter and repeal
such rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the
administration of the Plan.
All decisions made by the Committee pursuant to the provisions of
the Plan shall be made in the Committee's sole discretion and shall
be final and binding on all persons, including the Corporation and
Plan participants.
SECTION 3. Shares of Common Stock Subject to Plan.
(a) Shares of Common Stock Reserved Under Plan. The aggregate
number of shares of Common Stock reserved and available for
distribution under the Plan shall be 2,900,000 shares. Such shares
of Common Stock may consist, in whole or in part, of authorized and
unissued shares or treasury shares. The aggregate number of shares
of Common Stock that may be granted to any individual pursuant to any
award under the Plan shall be 500,000 in any one year.
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If any Option or Stock Appreciation Right expires or is forfeited
without exercise, or if any shares of Common Stock that are subject
to any Restricted Stock or Other Stock-Based Award granted hereunder
are forfeited prior to the payment of any dividends, if applicable,
with respect to such shares of Common Stock, such shares shall again
be available for distribution in connection with future awards under
the Plan. If dividends have been paid to the grantee with respect to
the shares of Common Stock subject to such forfeited award, such
shares shall not be available for distribution in connection with
future awards under the Plan.
(b) Adjustment in Certain Events. In the event of any merger,
reorganization, consolidation, recapitalization, extraordinary cash
dividend, stock dividend, stock split or other change in corporate
structure affecting the Common Stock (a "Capital Transaction"), a
substitution or adjustment will be made in the aggregate number of
shares reserved for issuance under the Plan, the number that may be
granted to any individual in any year or over the life of the Plan
and the number and price (if applicable) of shares subject to
outstanding awards granted under the Plan, so as to provide each
holder of an award under this Plan with the same rights on exercise
or distribution of the benefits of such award that such holder would
have received if such holder had exercised or received a distribution
of the benefits of such award immediately prior to the occurrence of
such Capital Transaction; provided, however, that the number of
shares subject to any award shall always be a whole number. In the
event of any dispute as to any substitution or adjustment made under
this Section 3(b), the decision of the Committee shall be final and
binding on all persons, including the Corporation and Plan
participants.
SECTION 4. Eligibility.
Officers and other key employees of and consultants to the
Corporation and its Subsidiaries and Affiliates (but excluding
members of the Committee and any person who serves only as a
director) who are responsible for or contribute to the management,
growth or profitability of the business of the Corporation and its
Subsidiaries and Affiliates are eligible to be granted awards under
the Plan. Incentive Stock Options may only be granted to persons who
are employees of the Corporation or a Subsidiary of the Corporation.
SECTION 5. Options.
(a) Administration. Options may be granted alone, in addition to
or in tandem with other awards granted under the Plan. Any Option
granted under the Plan shall be in such form as the Committee may
from time to time approve.
Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock
Options may be granted only to individuals who are employees of the
Corporation or any Subsidiary of the Corporation.
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The Committee shall have the authority to grant to any optionee
(subject to the limitation set forth in the paragraph above)
Incentive Stock Options, Non-Qualified Stock Options, or both types
of Options (in each case with or without Stock Appreciation Rights).
(b) Terms and Conditions. Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable.
(i) Option Price. The option price per share of Common Stock
purchasable under an Option shall be determined by the Committee at
the time of grant but shall be not less than 100% (or, in the case
of any employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation or
of any of its subsidiary or parent corporations, not less than 110%)
of the Fair Market Value of the Common Stock at grant, in the case
of Incentive Stock Options, and not less than 50% of the Fair Market
Value of the Common Stock at grant, in the case of Non-Qualified
Stock Options.
(ii) Option Term. The term of each Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable
more than ten years (or, in the case of an employee who owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation or any of its subsidiary or
parent corporations, more than five years) after the date the Option
is granted.
(iii) Exercisability. Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at or after grant; provided, however,
that except as provided in Section 5(b)(vii), (viii) and (ix) hereof
and Section 9 hereof, unless otherwise determined by the Committee
at or after grant, no Option shall be exercisable prior to the first
anniversary date of the granting of the Option. The Committee may
provide that an Option shall vest over a period of future service at
a rate specified at the time of grant, or that the Option is
exercisable only in installments. If the Committee provides, in its
sole discretion, that any Option is exercisable only in
installments, the Committee may waive such installment exercise
provisions at any time at or after grant in whole or in part, based
on such factors as the Committee shall determine, in its sole
discretion. The Committee may establish performance conditions or
other conditions to the exercisability of any Options, as determined
by the Committee in its sole discretion, which conditions may be
waived by the Committee in its sole discretion.
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(iv) Method of Exercise. Subject to whatever installment or
other exercise restrictions apply under Section 5(b)(iii) hereof,
Options may be exercised in whole or in part at any time during the
option period, by giving written notice of exercise to the
Corporation specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price, either by check, note or such other instrument as
the Committee may accept. As determined by the Committee, in its
sole discretion, at or (except in the case of an Incentive Stock
Option) after grant, payment in full or in part may also be made in
the form of unrestricted shares of Common Stock already owned by the
optionee or, in the case of the exercise of a Non-Qualified Stock
Option or Restricted Stock subject to an award hereunder (based in
each case, on the Fair Market Value of the Common Stock on the date
the option is exercised, as determined by the Committee). If
payment of the exercise price is made in part or in full with shares
of Common Stock, the Committee may (subject to the availability of
additional shares reserved for issuance under Section 3 above) award
to the optionee a new Option to replace the shares of Common Stock
which were surrendered.
If payment of the option exercise price of a Non-Qualified
Stock Option is made in whole or in part in the form of Restricted
Stock, such Restricted Stock (and any replacement shares relating
thereto) shall remain (or be) restricted in accordance with the
original terms of the Restricted Stock award in question, and any
additional shares of Common Stock received upon the exercise shall
be subject to the same forfeiture restrictions, unless otherwise
determined by the Committee, in its sole discretion, at or after
grant.
No shares of Common Stock shall be issued until full payment
therefor has been made. An optionee shall generally have the rights
to dividends or other rights of a shareholder with respect to shares
subject to the Option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has
given the representation described in Section 12(a) hereof.
(v) Non-Transferability of Incentive Stock Options.
Notwithstanding any other provision of this Plan, no Incentive Stock
Option shall be transferable by the optionee otherwise than by will
or by the laws of descent and distribution, and all Incentive Stock
Options shall be exercisable, during the optionee's lifetime, only
by the optionee.
(vi) Bonus for Taxes. In the case of a Non-Qualified Stock
Option, the Committee in its discretion may award at the time of
grant or thereafter the right to receive upon exercise of such
Option a cash bonus calculated to pay part or all of the federal and
state, if any, income tax incurred by the optionee upon such
exercise.
(vii) Termination by Death. Subject to Section 5(b)(xi)
hereof, if an optionee's employment by the Corporation and any
Subsidiary or (except in the case of an Incentive Stock Option)
Affiliate terminates by reason of death, any Option held by such
optionee may thereafter be exercised, to the extent such Option was
exercisable at the time of death or (except in the case of an
Incentive Stock Option)
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on such accelerated basis as the Committee may determine at or after
grant (or except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the
Committee) by the legal representative of the estate or by the
legatee of the optionee under the will of the optionee, for a period
of one year (or such shorter period as the Committee may specify at
grant) from the date of such death or until the expiration of the
stated term of such Option, whichever period is the shorter.
(viii) Termination by Reason of Disability. Subject to
Section 5(b)(xi) hereof, if an optionee's employment by the
Corporation and any Subsidiary or (except in the case of an
Incentive Stock Option) Affiliate terminates by reason of
Disability, any Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the
time of termination or (except in the case of an Incentive Stock
Option) on such accelerated basis as the Committee may determine at
or after grant (or, except in the case of an Incentive Stock Option,
as may be determined in accordance with procedures established by
the Committee), for a period of (A) three years (or such shorter
period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term
of such Option, whichever period is the shorter, in the case of a
Non-Qualified Stock Option and (B) one year from the date of
termination of employment or until the expiration of the stated term
of such Option, whichever period is shorter, in the case of an
Incentive Stock Option; provided, however, that, if the optionee
dies within the period specified in clause (A) above (or such other
period as the Committee shall specify at grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or
until the expiration of the stated term of such Option, whichever
period is the shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise period applicable to Incentive
Stock Options, but before the expiration of any period that would
apply if such Stock Option were a Non-Qualified Stock Option, such
Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(ix) Termination by Reason of Retirement. Subject to
Section 5(b)(xi) hereof, if an optionee's employment by the
Corporation and any Subsidiary or (except in the case of an
Incentive Stock Option) Affiliate terminates by reason of Normal or
Early Retirement, any Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the
time of such Retirement or (except in the case of an Incentive Stock
Option) on such accelerated basis as the Committee may determine at
or after grant (or, except in the case of an Incentive Stock Option,
as may be determined in accordance with procedures established by
the Committee), for a period of (A) three years (or such shorter
period as the Committee may specify at grant) from the date of such
termination of employment or the expiration of the stated term of
such Option, whichever period is the shorter, in the case of a Non-
Qualified Stock Option and (B) three months from the date of such
termination of employment or the expiration of the stated term of
such Option, whichever period is the shorter, in the event of an
Incentive Stock Option;
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provided, however, that, if the optionee dies within the period
specified in clause (A) above (or such shorter period as the
Committee may specify at grant), any unexercised Non-Qualified Stock
Option held by such optionee shall thereafter be exercisable, to the
extent to which it was exercisable at the time of death, for a
period of 12 months from the date of such death or until the
expiration of the stated term of such Option, whichever period is
the shorter. In the event of termination of employment by reason of
Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise period applicable to Incentive Stock
Options, but before the expiration of the period that would apply
if such Stock Option were a Non-Qualified Stock Option, the option
will thereafter be treated as a Non-Qualified Stock Option.
(x) Other Termination. Unless otherwise determined by the
Committee (or pursuant to procedures established by the Committee)
at or (except in the case of an Incentive Stock Option) after grant,
if an optionee's employment by the Corporation and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate is
involuntarily terminated for any reason other than death, Disability
or Normal or Early Retirement, the Option shall thereupon terminate,
except that such Option may be exercised, to the extent otherwise
then exercisable, for the lesser of three months or the balance of
such Option's term if the involuntary termination is without Cause.
For purposes of this Plan, "Cause" means (A) a felony conviction of
a participant or the failure of a participant to contest prosecution
for a felony, or (B) a participant's willful misconduct or
dishonesty, which is directly and materially harmful to the business
or reputation of the Corporation or any Subsidiary or Affiliate. If
an optionee voluntarily terminates employment with the Corporation
and any Subsidiary or (except in the case of an Incentive Stock
Option) Affiliate (except for Disability, Normal or Early
Retirement), the Option shall thereupon terminate; provided,
however, that the Committee at grant or (except in the case of an
Incentive Stock Option) thereafter may extend the exercise period in
this situation for the lesser of three months or the balance of such
Option's term.
(xi) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be so exercised,
so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the optionee(s) affected, to disqualify any
Incentive Stock Option under such Section 422.
No Incentive Stock Option shall be granted to any participant
under the Plan if such grant would cause the aggregate Fair Market
Value (as of the date the Incentive Stock Option is granted) of the
shares of Common Stock with respect to which all Incentive Stock
Options are exercisable for the first time by such optionee during
any calendar year (under all such plans of the Corporation and any
Subsidiary) to exceed $100,000.
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To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
a. if the exercise of an Incentive Stock Option is
accelerated by reason of a Change in Control, any portion of
such option that is not exercisable as an "incentive stock
option" under Section 422 of the Code by reason of the $100,000
limitation contained in Section 422(d) of the Code shall be
treated as a Non-Qualified Stock Option;
b. if for any other reason the portion of any Incentive
Stock Option that is otherwise exercisable without regard to
the $100,000 limitation contained in Section 422(d) of the
Code, is greater than the portion of such option that is
immediately exercisable as an "incentive stock option" under
Section 422 of the Code, such excess shall be treated as a Non-
Qualified Stock Option; and
c. the Committee shall have the right, with the consent
of the optionee, to treat an Incentive Stock Option that cannot
be exercised, for any other reason, as an "incentive stock
option" under Section 422 of the Code as a Non-Qualified Stock
Option.
(xii) Performance and Other Conditions. The Committee may
condition the exercise of any Option upon the attainment of
specified performance goals or other factors as the Committee may
determine, in its sole discretion. Unless specifically provided in
the option agreement, any such conditional Option shall vest
immediately prior to its expiration if the conditions to exercise
have not theretofore been satisfied. The shares of Common Stock
acquired pursuant to any conditional Option shall not be
transferable by an optionee subject to Section 16(a) of the Exchange
Act within six months of the date such Option first becomes
exercisable.
(xiii) Settlement Provisions. If the option agreement so
provides at grant or (except in the case of an Incentive Stock
Option) is amended after grant and prior to exercise to so provide
(with the optionee's consent), the Committee may require that all or
part of the shares to be issued with respect to the spread value of
an exercised Option take the form of Restricted Stock, which shall
be valued on the date of exercise on the basis of the Fair Market
Value (as determined by the Committee) of such Restricted Stock
determined without regards to the forfeiture restrictions involved.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
alone or in conjunction with all or part of any Option granted under
the Plan. In the case of a Non-Qualified
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Stock Option, such rights may be granted either at or after the time
of the grant of such Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of
such Option.
A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Option,
subject to such provisions as the Committee may specify at grant
where a Stock Appreciation Right is granted with respect to less than
the full number of shares covered by a related Option.
A Stock Appreciation Right may be exercised by the grantee, subject
to Section 6(b) hereof, in accordance with the procedures established
by the Committee for such purpose. Upon such exercise, the grantee
shall be entitled to receive an amount determined in the manner
prescribed in Section 6(b) hereof. Options relating to exercised
Stock Appreciation Rights shall no longer be exercisable to the
extent that the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by
the Committee, including the following:
(i) Exercise Provisions for Tandem Grants. A Stock
Appreciation Right granted in conjunction with all or part of any
Option shall be exercisable only at such time or times and to the
extent that the Option to which it relates shall be exercisable in
accordance with the provisions of Section 5 and this Section 6 of
the Plan; provided, however, that any Stock Appreciation Right
granted to a grantee subject to Section 16(a) of the Exchange Act
shall be subject to the further limitations set forth in Section
6(b)(v) and, if applicable, Section 6(b)(vi) below.
(ii) Payment on Exercise. Upon the exercise of a Stock
Appreciation Right, a grantee shall be entitled to receive an amount
in cash or shares of Common Stock (or a combination of cash and
shares of Common Stock) equal in value to the excess of the Fair
Market Value of one share of Common Stock over the price per share
specified in the Stock Appreciation Right or related Option
multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Use of Authorized Shares. Upon the exercise of a
Stock Appreciation Right, any shares of Common Stock issued
thereunder or with respect to which a cash payment was made shall be
deemed to have been exercised for the purpose of the limitation set
forth in Section 3 of the Plan on the number of shares of Common
Stock to be issued under the Plan.
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(iv) Payment based on Change in Control Price. Unless
otherwise determined by the Committee at grant, in the event of a
Change in Control or a Potential Change in Control, the amount to be
paid upon the exercise of a Stock Appreciation Right shall be based
on the Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
(v) Restrictions on Exercise by Persons Subject to Section
16(a). The exercise of Stock Appreciation Rights held by grantees
who are subject to Section 16(a) of the Exchange Act shall comply
with Rule 16b-3(e) thereunder. In particular, such Stock
Appreciation Rights shall be exercisable only pursuant an
irrevocable election made at least six months prior to the date of
exercise or within the applicable ten business day "window" periods
specified in Rule 16b-3(e)(3). Stock Appreciation Rights held by
grantees who are subject to Section 16(a) of the Exchange Act shall
not be exercisable for the first six months after the date of grant.
(vi) Performance and Other Conditions. The Committee may
condition the exercise of any Stock Appreciation Right upon the
attainment of specified performance goals or other factors as the
Committee may determine, in its sole discretion. Unless
specifically provided in the applicable award agreement, any such
conditional Stock Appreciation Right shall vest immediately prior to
its expiration, if the conditions to exercise have not theretofore
been satisfied. A conditional Stock Appreciation Right held by a
grantee subject to Section 16(a) of the Exchange Act shall not be
exercisable until the expiration of six months following the
satisfaction of the condition giving rise to such Stock Appreciation
Right.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to or in tandem with other awards granted
under the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares of Restricted Stock to be awarded
to any person, the price (if any) to be paid by the recipient of
Restricted Stock (subject to Section 7(b) hereof), the time or times
within which such awards may be subject to forfeiture, and the other
terms, restrictions and conditions of the awards in addition to those
set forth in Section 7(c) hereof.
The Committee may condition the grant or vesting of Restricted Stock
upon the attainment of specified performance goals or other factors
as the Committee may determine, in its sole discretion.
(b) Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such
award, unless and until such recipient has executed
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an agreement evidencing the award and has delivered a fully executed
copy thereof to the Corporation, and has otherwise complied with the
applicable terms and conditions of such award.
(i) Purchase Price. The purchase price for shares of
Restricted Stock shall be established by the Committee and may be
zero.
(ii) Acceptance of Awards. Awards of Restricted Stock must be
accepted within a period of 60 days (or such shorter period as the
Committee may specify at grant) after the award date, by executing
a Restricted Stock award agreement and paying whatever price (if
any) is required under Section 7(b)(i) hereof.
(iii) Stock Certificates. Each participant receiving a
Restricted Stock award shall be issued a stock certificate in
respect of such shares of Restricted Stock. Such certificate shall
be registered in the name of such participant, and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) Custody of Stock Certificates. The Committee shall
require that the stock certificates evidencing such shares be held
in custody by the Corporation until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Stock award,
the participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Restriction Period. Subject to the provisions of this
Plan and the award agreement, during a period set by the Committee
commencing with the date of such award (the "Restriction Period"),
the participant shall not be permitted to sell, transfer, pledge,
assign or otherwise encumber shares of Restricted Stock awarded
under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole
or in part, based on service, performance or other factors or
criteria as the Committee may determine, in its sole discretion.
(ii) Dividends. Except as provided in this paragraph (ii),
Section 7(c)(i) hereof and the award agreement, the participant
shall have, with respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Corporation, including the right
to vote the shares, and the right to receive any cash dividends.
The Committee, in its sole discretion, as determined at the time of
award, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested, subject to
Section 12(e) hereof, in additional Restricted Stock to the extent
shares are available under Section 3 hereof, or otherwise
reinvested. Pursuant to Section 3 hereof, stock dividends issued
with respect to Restricted Stock shall be treated as additional
shares of Restricted Stock
14
that are subject to the same restrictions and other terms and
conditions that apply to the shares of Restricted Stock with respect
to which such dividends are issued.
(iii) Vesting and Forfeiture. Subject to the applicable
provisions of the award agreement and this Section 7, upon
termination of a participant's employment with the Corporation and
any Subsidiary or Affiliate for any reason during the Restriction
Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established
by the Committee at or after grant.
(iv) Delivery of Shares on Termination of Restriction Period.
If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction
Period, certificates for an appropriate number of unrestricted
shares shall be delivered to the participant promptly.
SECTION 8. Other Stock-Based Awards.
(a) Administration. Other Stock-Based Awards valued by reference
to shares of Common Stock may be granted either alone or in addition
to or in tandem with Options, Stock Appreciation Rights or Restricted
Stock granted under the Plan; provided that no such Other Stock-Based
Awards may be granted in tandem with Incentive Stock Options if that
would cause such Incentive Stock Options not to qualify as "incentive
stock options" pursuant to Section 422 of the Code.
Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at
which such awards shall be made, the number of shares of Common Stock
to be awarded pursuant to such awards, and all other conditions of
the awards. The Committee may also provide for the grant of shares
of Common Stock upon the completion of a specified performance
period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant
to this Section 8 shall be subject to the following terms and
conditions:
(i) Restriction on Transfer. Subject to the provisions of
this Plan and the award agreement referred to in Section 8(b)(v)
below, shares subject to awards under this Section 8 may not be
sold, assigned, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued, or, if later, the date
on which any applicable restriction, performance or deferral period
lapses.
15
(ii) Dividends and Interest. Subject to the provisions of this
Plan and the award agreement and unless otherwise determined by the
Committee at grant, the recipient of an award under this Section 8
shall be entitled to receive, currently or on a deferred basis,
interest or dividends or interest or dividend equivalents with
respect to the number of shares covered by the award, as determined
at the time of the award by the Committee, in its sole discretion,
and the Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional shares of Common Stock
or otherwise reinvested.
(iii) Vesting and Forfeiture. Any award under this Section
8 and any shares of Common Stock covered by any such award shall
vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) Waiver of Vesting or Forfeiture Provisions. In the event
of the participant's Retirement, Disability or death, or in cases of
special circumstances, the Committee may, in its sole discretion,
waive in whole or in part any or all of the remaining limitations
imposed hereunder (if any) with respect to any or all of an award
under this Section 8.
(v) Awards Agreements. Each award under this Section 8 shall
be confirmed by, and subject to the terms of, an agreement between
the Corporation and the participant.
(vi) Purchase Price. Shares of Common Stock (including
securities convertible into shares of Common Stock) issued on a
bonus basis under this Section 8 may be issued for no cash
consideration. The purchase price of shares of Common Stock
(including securities convertible into shares of Common Stock)
purchased pursuant to a purchase right awarded under this Section 8
shall be determined by the Committee in its sole discretion on the
date of grant.
SECTION 9. Change in Control Provisions.
(a) Impact of Event. In the event of a Change in Control or
Potential Change in Control, the following acceleration and valuation
provisions shall apply if so determined by the Committee in its sole
discretion:
(i) Acceleration of Vesting. Any Stock Appreciation Rights
and any Option awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested; provided, however,
that Stock Appreciation Rights held by persons subject to Section
16(a) under the Exchange Act shall not become exercisable until six
months after the date of grant.
(ii) Lapse of Other Restrictions. The restrictions and
deferral limitations applicable to any Restricted Stock and Other
Stock-Based Awards, in each case
<PAGE16)
to the extent not already vested under the Plan, shall lapse and
such shares and awards shall be deemed fully vested.
(iii) Cash-Out Provisions. Except as otherwise provided in
Section 9(a)(iv) below, the value of all outstanding Options, Stock
Appreciation Rights, Restricted Stock and Other Stock-Based Awards
shall, unless otherwise determined by the Committee in its sole
discretion at or (except in the case of an Incentive Stock Option)
after grant but prior to any Change in Control, be cashed out on the
basis of the Change in Control Price as of the date such Change in
Control or such Potential Change in Control is determined to have
occurred or such other date as the Committee may determine prior to
the Change in Control.
(iv) Cash-Out Provisions for Statutory Insiders. In the case
of any Options, Stock Appreciation Rights, Restricted Stock and
Other Stock-Based Awards held by any person subject to Section 16(a)
of the Exchange Act, the value of all such Options, Stock
Appreciation Rights, Restricted Stock or Other Stock-Based Awards,
in each case to the extent that they have been held for at least six
months, shall be cashed out on the basis of the Change in Control
Price as of the date of such Change in Control or such Potential
Change in Control is determined to have occurred. The Committee
shall have the right (A) to cause any right to receive the Change in
Control Price to be cancelled with respect to all or any grantee(s)
who are subject to Section 16(a) of the Exchange Act if payment of
the Change in Control Price to such grantee(s) would cause liability
under Section 16 of the Exchange Act, and (B) to determine whether
the change in Control Price shall be paid in cash or in shares of
capital stock (including the capital stock of any acquiring
corporation) to grantees who are subject to Section 16(a) of the
Exchange Act.
(b) Definition of Change in Control. A "Change in Control" means
the happening of any of the following:
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Exchange Act, other than the Corporation or
a wholly-owned subsidiary thereof or any employee benefit plan of
the Corporation or any of its Subsidiaries, becomes the beneficial
owner of the Corporation's securities having 20% or more of the
combined voting power of the then outstanding securities of the
Corporation that may be cast for the election of directors of the
Corporation (other than as a result of an issuance of securities
initiated by the Corporation in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of
the then outstanding securities of the Corporation or any successor
corporation or entity entitled to vote generally in the election of
the directors of the Corporation or such other corporation or entity
after such transaction are held in the aggregate by the
17
holders of the Corporation's securities entitled to vote generally
in the election of directors of the Corporation immediately prior to
such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the
Corporation's shareholders, of each director of the Corporation
first elected during such period was approved by a vote of at least
two-thirds of the directors of the Corporation then still in office
who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. A "Potential Change
in Control" means the happening of any one of the following:
(i) The approval by shareholders of an agreement by the
Corporation, the consummation of which would result in a Change in
Control of the Corporation; or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the
Corporation or a Subsidiary or any Corporation employee benefit plan
(including any trustee of such plan acting as such trustee)) of
securities of the Corporation representing 10% or more of the
combined voting power of the Corporation's outstanding securities
and the adoption by the Committee of a resolution to the effect that
a Potential Change in Control of the Corporation has occurred for
purposes of this Plan.
(d) Change in Control Price. The "Change in Control Price" means
the highest price per share paid in any transaction reported on The
New York Stock Exchange or such other exchange or market as is the
principal trading market for the Common Stock, or paid or offered in
any bona fide transaction related to a Change in Control or Potential
Change in Control of the Corporation at any time during the 60 day
period immediately preceding the occurrence of the Change in Control
(or, where applicable, the occurrence of the Potential Change in
Control event), in each case as determined by the Committee except
that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based
only on transactions reported for the date on which the optionee
exercises such Incentive Stock Option or Stock Appreciation Rights
or, where applicable, the date on which a cash out occurs under
Section 9(a)(iii) or (iv) hereof.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would
impair the rights of an optionee or participant under an Option,
Stock Appreciation Right, Restricted Stock award or Other Stock-Based
Award theretofore granted, without the optionee's or participant's
consent. In addition, no amendment
18
or alteration shall be made without the approval of the Corporation's
shareholders, if such amendment or alteration would:
(a) except as provided in Section 3(b) of the Plan, increase the
total number of shares of Common Stock reserved for the purpose of
the Plan;
(b) materially increase the benefits accruing to participants under
the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan.
The Committee may amend the terms of any Option or other award
theretofore granted, prospectively or retroactively, but, subject to
Section 3(b) above, no such amendment shall impair the rights of any
holder without the holder's consent. The Committee may also
substitute new Options for previously granted Options (on a one for
one or other basis), including previously granted Options having
higher option exercise prices.
Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as
other developments.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made
to a participant or optionee by the Corporation, nothing contained
herein shall give any such participant or optionee any rights that
are greater than those of a general creditor of the Corporation. In
its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under
the Plan to deliver shares of Common Stock or payments in lieu of or
with respect to awards hereunder; provided, however, that, unless the
Committee otherwise determines with the consent of the affected
participant, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
SECTION 12. General Provisions.
(a) Securities Law Restrictions. The Committee may require each
person purchasing shares of Common Stock pursuant to an Option or
other award under the Plan to represent to and agree with the
Corporation in writing that the optionee or participant is acquiring
the shares without a view to distribution thereof. The certificates
for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
19
All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) No Right to Continued Employment. The adoption of the Plan
shall not confer upon any employee of the Corporation or any
Subsidiary or Affiliate any right to continued employment with the
Corporation or a Subsidiary or Affiliate, as the case may be, nor
shall it interfere in any way with the right of the Corporation or a
Subsidiary or Affiliate to terminate the employment of any of its
employees at any time.
(d) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the participant for
Federal income tax purposes with respect to any award under the Plan,
the participant shall pay to the Corporation, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with
respect to such amount. The Committee may require withholding
obligations to be settled with shares of Common Stock, including
shares of Common Stock that are part of the award that gives rise to
the withholding requirement. The obligations of the Corporation
under the Plan shall be conditional on such payment or arrangements
and the Corporation and its Subsidiaries or Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from
any payment of any kind otherwise due to the participant.
(e) Dividends. The actual or deemed reinvestment of dividends or
dividend equivalents in additional Restricted Stock (or other types
of Plan awards) at the time of any dividend payment shall only be
permissible if sufficient shares of Common Stock are available under
Section 3 hereof for such reinvestment (taking into account then
outstanding Options and other Plan awards).
(f) Restrictions on Transfer. In addition to any other
restrictions on transfer that may be applicable under the terms of
this Plan or the applicable award agreement, no Option, Stock
Appreciation Right, Restricted Stock award, or Other Stock-Based
Award or other right issued under this Plan is transferable by the
participant other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended. The designation of a beneficiary
will not constitute a transfer.
20
(g) Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the
laws of the State of Tennessee, without regard to the principles of
conflicts of law thereof.
(h) Buyout Provisions. The Committee may at any time offer to buy
out for a payment in cash, shares of Common Stock, or Restricted
Stock an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
optionee at the time that such offer is made.
(i) Award Provisions May Differ. The provisions of awards need not
be the same with respect to each recipient.
(j) Liability and Indemnification of Board and Committee Members.
The members of the Committee and the Board shall not be liable to any
employee or other person with respect to any determination made
hereunder in a manner that is not inconsistent with their legal
obligations as members of the Board. In addition to such other
rights of indemnification a they may have as directors or as members
of the Committee, the members of the Committee shall be indemnified
by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with
any appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection
with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Corporation)
or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding, the Committee
member shall in writing offer the Corporation the opportunity, at its
own expense, to handle and defend the same.
SECTION 13. Effective Date of Plan.
The Plan was previously adopted by the Board, subject to approval by
the shareholders of the Corporation on June 5, 1995.
SECTION 14. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock award or
Other Stock-Based Award shall be granted pursuant to the Plan on or
after the tenth anniversary of the date of adoption of the Plan by
the Board, but awards granted prior to such tenth anniversary may be
extended beyond that date.
353578.01