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INGERSOLL-RAND COMPANY
Incentive Stock Plan of 1990
Section 1. Purposes: The purposes of the Plan are (a) to
provide additional incentive for such Key Employees of the
Company and its Subsidiaries, as may be designated for
participation in the Plan by authorizing the payment of bonus or
incentive compensation in shares of Common Stock and by
encouraging such Key Employees to invest in shares of Common
Stock, thereby furthering their identity of interest with the
interests of the Company's shareholders, increasing their stake
in the future growth and prosperity of the Company and
stimulating and sustaining constructive and imaginative thinking;
and (b) to enable the Company, by offering comparable incentives,
to induce the employment and continued employment of Key
Employees and to compete with other organizations in attracting
and retaining the services of competent executives.
Section 2. Definitions: Unless otherwise required by the
context, the following terms, when used in the Plan, shall have
the meanings set forth in this Section 2:
Act: The Securities Exchange Act of 1934, as amended.
Affiliate: Used to indicate a relationship with a
specified person, a person that directly, or indirectly
through one or more intermediaries, controls, or is
controlled by, or is under common control with, such a
specified person.
Associate: Used to indicate a relationship with a
specified person, (a) any corporation, partnership, or other
organization of which such specified person is an officer or
partner, (b) any trust or other estate in which such
specified person has a substantial beneficial interest or as
to which such specified person serves as trustee or in a
similar fiduciary capacity, (c) any relative or spouse of
such specified person, or any relative of such spouse who
has the same home as such specified person, or who is a
director or officer of the Company or any of its parents or
subsidiaries, and (d) any person who is a director, officer,
or partner of such specified person or of any corporation
(other than the Company or any wholly-owned subsidiary of
the Company), partnership or other entity which is an
Affiliate of such specified person.
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Beneficial Owner: As such term is defined by Rule 13d-3
under the Act (or any successor provision at the time in
effect); provided, however, that any individual,
corporation, partnership, group, association, or other
person or entity which has the right to acquire any of the
Company's outstanding securities entitled to vote generally
in the election of directors at any time in the future,
whether such right is contingent or absolute, pursuant to
any agreement, arrangement, or understanding or upon
exercise of conversion rights, warrants or options, or
otherwise, shall be deemed the Beneficial Owner of such
securities.
Board of Directors or Board: The Board of Directors of
the Company.
Change in Control of the Company: The occurrence of
either of the following:
(a) any individual, corporation, partnership, group,
association or other person or entity, together with its
Affiliates and Associates (other than a trustee or other
fiduciary holding securities under an employee benefit plan
of the Company), is or becomes the Beneficial Owner of
securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of
directors, unless a majority of the Continuing Directors
determines in their sole discretion that, for purposes of
the Plan, a Change in Control of the Company has not
occurred; or
(b) the Continuing Directors shall at any time fail to
constitute a majority of the members of the Board.
Change in Control Fair Market Value of the Common
Stock: The highest closing price of one share of Common
Stock as reported on the New York Stock Exchange-Composite
Tape. If the Common Stock is not listed or admitted to
trading on the New York Stock Exchange, the Change in
Control Fair Market Value of the Common Stock shall be the
closing price of one share of Common Stock on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading, or, if the Common Stock is
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not listed or admitted to trading on any national securities
exchange, the last quoted sale price, or if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market of the Common Stock, as reported by
the National Association of Securities Dealers, Inc.
Automated Quotations system or such other system then in
use, or, if on any such date the Common Stock is not quoted
by any such organization, the average of the closing bid and
asked prices of the Common Stock as furnished by a
professional market maker making a market in the Common
Stock selected by the Board. If on any such date no market
maker is making a market in the Common Stock, the Change in
Control Fair Market Value shall be determined in good faith
by the Continuing Directors.
Committee: Such committee or committees as shall be
appointed by the Board of Directors to administer the Plan
pursuant to the provisions of Section 11.
Common Stock: The Common Stock of the Company, par
value $2 per share, or such other class of shares or other
securities as may be applicable pursuant to the provisions
of paragraph (a) of Section 9.
Common Stock Equivalents: Common Stock Equivalents
shall provide the holder with such of the rights and
benefits of the actual owner of shares of Common Stock as
the Board of Directors may determine, including the right to
receive dividends and the right to receive the amount of
appreciation in value, if any, on such shares of Common
Stock from the date the grant of such Common Stock
Equivalents became effective until they become payable to
the holder.
Company: Ingersoll-Rand Company, a New Jersey
corporation.
Continuing Director: A director who either was a member
of the Board on April 26, 1990 or who became a member of the
Board subsequent to such date and whose election, or
nomination for election by the Company's shareholders, was
Duly Approved by the Continuing Directors on the Board at
the time of such nomination or election, either by a
specific vote or by approval of the proxy statement issued
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by the Company on behalf of the Board in which such person
is named as nominee for director, without due objection to
such nomination.
Disability: Such term as defined under the pension,
retirement or appropriate benefit plan or plans of the
Company or a Subsidiary applicable to the Key Employee.
Dividend Equivalents: A right to receive immediately or
on a deferred basis, whether or not subject to forfeiture,
an amount equivalent to all or part of dividends paid or
payable on a share of Common Stock subject to a Stock
Incentive.
Duly Approved by the Continuing Directors: An action
approved by the vote of at least a majority of the
Continuing Directors then on the Board, except, if the votes
of such Continuing Directors in favor of such action would
be insufficient to constitute an act of the Board if a vote
by all of its members were to have been taken, then such
term shall mean an action approved by the unanimous vote of
the Continuing Directors then on the Board so long as there
are at least three Continuing Directors on the Board at the
time of such unanimous vote.
Fair Market Value: As applied to any date, and except
as otherwise provided in paragraph (e) of Section 7, the
mean between the high and low sales prices of a share of
Common Stock on such date as reported on the New York Stock
Exchange-Composite Tape, or, if no such sales were made on
such date, on the next preceding date on which there were
such sales of Common Stock as reported on the Composite
Tape; provided, however, that if such method of determining
Fair Market Value shall not be consistent with regulations
of government agencies at the time applicable to the
determination of Fair Market Value in respect of a Stock
Incentive, Fair Market Value in the case of such Stock
Incentive shall be determined in accordance with such
regulations and shall mean the value as so determined.
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Incentive Compensation: Bonuses, extra and other
compensation payable in addition to a salary or other base
amount, whether contingent or not, whether discretionary or
required to be paid pursuant to an agreement, resolution,
arrangement, plan or practice and whether payable currently
or on a deferred basis, in cash, Common Stock or other
property, awarded by the Company or a Subsidiary, whether
prior or subsequent to the date of approval and adoption of
the Plan by the shareholders of the Company.
Key Employee: An employee of the Company or of a
Subsidiary, including an officer or director who is an
employee, who in the opinion of the Committee can contribute
significantly to the growth and successful operations of the
Company or a Subsidiary. The recommendation of the grant of
a Stock Incentive to an employee by the Committee shall be
deemed a determination by the Committee that such employee
is a Key Employee.
Management Incentive Unit: A unit credited to the
account of a participant under the Management Incentive Unit
Plan of the Company approved by the shareholders of the
Company on April 22, 1958, as amended.
Option: An option to purchase shares of Common Stock.
Performance Unit: A unit representing a cash sum or one
or more shares of Common Stock subject to a Stock Award the
payment, issuance, transfer or retention of which is
contingent, in whole or in part, upon attainment of a
specified performance objective or objectives, including,
without limitation, objectives determined by reference to or
changes in (a) book value or earnings per share of Common
Stock, or (b) sales and revenues, income, profits and
losses, return on capital employed, or net worth of the
Company or of any one or more of its groups, divisions,
Subsidiaries or departments (on a consolidated, partially
consolidated or unconsolidated basis), or (c) any
combination of the foregoing factors.
Plan: The Incentive Stock Plan of 1990 herein set forth
as the same may from time to time be amended.
Restricted Shares: Shares of Common Stock issued or
transferred subject to restrictions as authorized by
paragraph (d) of Section 5 or paragraph (a) of Section 12.
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Retirement: Such term as defined under the pension or
retirement plan or plans of the Company or a Subsidiary
applicable to the Key Employee, pursuant to which the Key
Employee is receiving or will, upon such retirement, be
entitled to receive retirement benefits.
Stock Appreciation Right: A right to receive a number
of shares of Common Stock, or, at the election of the
Company, cash, in either event based on the increase in the
Fair Market Value of the number of shares of Common Stock
subject to such right, as set forth in Section 7.
Stock Award: An issuance or transfer of shares of
Common Stock at the time a Stock Incentive is granted or as
soon thereafter as practicable, or an undertaking to issue
or transfer such shares in the future, including, without
limitation, such an issuance, transfer or undertaking with
respect to Performance Units.
Stock Incentive: A Stock Incentive granted under the
Plan in one of the forms provided for in Section 3.
Subsidiary: A corporation or other form of business
association of which shares (or other ownership interests)
having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.
Section 3. Grants of Stock Incentives:
(a) Subject to the provisions of the Plan, the Board of
Directors may at any time, or from time to time, grant Stock
Incentives under the Plan to, and only to, Key Employees;
provided, however, that no Stock Incentive shall be granted to a
Key Employee who at the time of such grant is a member of the
Board of Directors except by or upon the recommendation of the
Committee, or by a majority of disinterested members of the Board
as provided in paragraph (b) of Section 11.
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, in accordance with Section 5, or
(ii) an Option, in accordance with Section 6, or
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(iii) a Stock Appreciation Right, in accordance with
Section 7, or
(iv) any combination of the foregoing.
Section 4. Stock Subject to the Plan:
(a) Subject to the provisions of paragraph (c) of this
Section 4 and of paragraph (a) of Section 9, the aggregate number
of shares of Common Stock which may be issued or transferred
pursuant to Stock Incentives granted under the Plan shall not
exceed 3,000,000 shares of Common Stock.
(b) Authorized but unissued shares of Common Stock and
shares of Common Stock held in the treasury, whether acquired by
the Company specifically for use under the Plan or otherwise, may
be used, as the Board of Directors may from time to time
determine, for purposes of the Plan; provided, however, that any
shares acquired or held by the Company for the purposes of the
Plan shall, unless and until transferred to a Key Employee in
accordance with the terms and conditions of a Stock Incentive, be
and at all times remain treasury shares of the Company
irrespective of whether such shares are entered in a special
account for purposes of the Plan, and shall be available for any
corporate purpose.
(c) If any shares of Common Stock subject to a Stock
Incentive shall not be issued or transferred and shall cease to
be issuable or transferable because of the termination, in whole
or in part, of such Stock Incentive, or subject to the provisions
of paragraph (i) of Section 6 and paragraph (d) of Section 7, for
any other reason, or if any such shares shall, after issuance or
transfer, be reacquired by the Company or a Subsidiary because of
an employee's failure to comply with the terms and conditions of
a Stock Incentive, the shares not so issued or transferred, or
the shares so reacquired by the Company or a Subsidiary, shall no
longer be charged against the limitation provided for in
paragraph (a) of this Section 4 and may again be made subject to
Stock Incentives.
Section 5. Stock Awards: Stock Incentives in the form of
Stock Awards shall be subject to the following provisions:
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(a) A Stock Award shall be granted only (i) in payment of
Incentive Compensation that has been earned or (ii) as Incentive
Compensation to be earned, including, without limitation,
Incentive Compensation awarded concurrently with or prior to the
grant of the Stock Award and Incentive Compensation awarded
whether subsequent or prior to the approval and adoption of the
Plan by the shareholders of the Company.
(b) For the purposes of the Plan, in determining the value
of a Stock Award, all shares of Common Stock subject to such
Stock Award shall be valued at not less than 100% of the Fair
Market Value of such shares on the date such Stock Award is
granted, regardless of whether or when such shares are issued or
transferred to the Key Employee and whether or not such shares
are subject to restrictions which affect their value.
(c) Shares of Common Stock subject to a Stock Award may be
issued or transferred to a Key Employee at the time the Stock
Award is granted, or at any time subsequent thereto, or in
installments from time to time, as the Board of Directors shall
determine. In the event that any such issuance or transfer shall
not be made to the Key Employee at the time the Stock Award is
granted, the Board of Directors may provide for the payment or
crediting to such Key Employee of Dividend Equivalents. Any
amount payable in shares of Common Stock under the terms of a
Stock Award may, in the discretion of the Company, be paid in
cash on each date on which delivery of shares would otherwise
have been made, in an amount equal to the Fair Market Value on
such date of the shares which would otherwise have been
delivered.
(d) A Stock Award shall contain such terms and conditions as
the Board shall determine with respect to payment or forfeiture
of all or any part of the Stock Award upon termination of
employment or the occurrence of other circumstances.
(e) A Stock Award shall be subject to such other terms and
conditions, including, without limitation, restriction on sale or
other disposition of the Stock Award or of the shares issued or
transferred pursuant to such Stock Award, as the Board of
Directors shall determine; provided, however, that upon the
issuance or transfer of shares pursuant to a Stock Award, the
recipient shall, with respect to such shares, be and become a
shareholder of the Company fully entitled to receive dividends,
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to vote and to exercise all other rights of a shareholder except
to the extent otherwise provided in the Stock Award. Each Stock
Award shall be evidenced by a written instrument in such form as
the Board of Directors or the Committee shall determine, provided
the Stock Award is consistent with the Plan and incorporates it
by reference.
Section 6. Options: Stock Incentives in the form of Options
shall be subject to the following provisions:
(a) The price per share at which shares subject to an Option
may be purchased shall be determined by the Board of Directors,
but in no instance shall be less than the Fair Market Value of a
share of Common Stock on the date such Option is granted.
(b) Each Option shall expire at such time as the Board may
determine on the date such Option shall be granted, but no later
than ten years from the date such Option is granted. The Board
may, at any time prior to the expiration of the Option, extend
its term for a period ending not later than ten years from the
date such Option is granted and any such extension shall not be
deemed the grant of a new or additional Option for any purpose
under the Plan.
(c) The Option may be exercised solely by the person to whom
granted except as hereinafter provided in the case of such
person's death or Disability. During the lifetime of the
optionee, the Option and any rights and privileges pertaining
thereto shall not be transferred, assigned, pledged or
hypothecated in any way, whether by operation of law or
otherwise, and shall not be subject to execution, attachment or
similar process.
(d) Each optionee must complete twelve months of continuous
employment with the Company or Subsidiary, or both, before any
part of the Option may be exercised by him.
(e) After the completion of the required period of
employment, the Option may be exercised, in whole or in part, and
from time to time during the balance of the term of the Option,
subject to the terms and conditions specified in the Option or by
the Board of Directors.
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(f) Unless otherwise determined by the Board, each Option
shall terminate if and when the optionee shall terminate
employment with the Company and its Subsidiaries, except that if
the optionee shall die or become subject to a Disability while in
the employ of the Company or of a Subsidiary, then the Option
shall be exercisable within such period as shall be set forth in
the Option, by the optionee or by such person or persons as shall
have acquired the optionee's rights under the Option by will or
by the laws of descent and distribution, or by the optionee's
guardian, conservator or similar legal representative, but not
later than three years after the date of death or Disability. In
the event of the Retirement of the optionee, if the optionee
shall have completed at least twelve months of continuous
employment (or such shorter period as the Board may determine)
then the Option shall be exercisable within such period as shall
be set forth in the Option but not later than three years after
the date of Retirement (or such longer period as the Board may
determine).
(g) Shares purchased under the Option shall be paid for in
full at the time of the exercise of the Option as to such shares
upon such terms as the Board of Directors may approve, including
cash, secured or unsecured indebtedness, by exchange for other
property, including shares of Common Stock, or otherwise.
(h) The Board of Directors may at any time and from time to
time provide for the payment to an optionee of Dividend
Equivalents.
(i) The Option agreements or Option grants authorized by the
Plan may contain such other provisions as the Board of Directors
shall deem advisable. Without limiting the foregoing, if so
authorized by the Board of Directors and subject to such terms
and conditions as are specified in the Option or by the Board of
Directors, the Company may, with the consent of the holder of the
Option, and at any time or from time to time, cancel all or a
portion of the Option then subject to exercise and discharge its
obligation in respect of the Option either by payment to the
holder of an amount of money equal to the excess, if any, of the
Fair Market Value, at such time or times, of the shares subject
to the portion of the Option so cancelled over the aggregate
purchase price of such shares, or by the issuance or transfer to
the holder of shares of Common Stock with the Fair Market Value,
at such time or times equal to any such excess, or by a
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combination of cash and shares. The number of shares of Common
Stock subject to the Option, or portion thereof, so cancelled
shall, in the event that a payment of money or transfer of shares
is made by the Company in respect of such cancellation, be
charged against the maximum limitation set forth in paragraph (a)
of Section 4 of the Plan.
(j) Options may be granted under the Plan from time to time
in substitution for stock options held by employees of other
corporations who are about to become employees of the Company or
a Subsidiary as the result of a merger or consolidation of the
employing corporation with the Company or a Subsidiary, or the
acquisition by the Company or a Subsidiary of the assets of the
employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation as the result of
which it becomes a Subsidiary. The terms and conditions of the
substitute options so granted may vary from the terms and
conditions set forth in this Section 6 to such extent as the
Board of Directors at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the options in
substitution for which they are granted.
Section 7. Stock Appreciation Rights:
(a) Stock Appreciation Rights may be granted in connection
with any Option granted under the Plan, either at the time of the
grant of such Option or at any time thereafter during the term of
the Option, or may be granted independently of the grant of an
Option.
(b) If granted in connection with an Option, Stock
Appreciation Rights shall entitle the holder of the related
Option, upon surrender of the Option, or any portion thereof, to
exercise the Stock Appreciation Rights, to the extent
unexercised, and to receive a number of shares of Common Stock,
or cash, determined pursuant to paragraph (c)(iii) of this
Section 7. Such Option shall, to the extent so surrendered,
thereupon cease to be exercisable. If granted independently of an
Option, Stock Appreciation Rights shall entitle the holder of the
Stock Appreciation Rights to receive a number of shares of Common
Stock, or cash, determined pursuant to paragraph (c)(iii) of this
Section 7.
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(c) Stock Appreciation Rights shall be subject to the
following terms and conditions and to such other terms and
conditions not inconsistent with the Plan as shall from time to
time be approved by the Board of Directors:
(i) If granted in connection with an Option, Stock
Appreciation Rights shall be exercisable at such time or
times and to the extent, but only to the extent, that the
Option to which they relate shall be exercisable, except
that, at the time of granting such Stock Appreciation Right,
the Board may provide that the period during which such
Stock Appreciation Right may be exercised shall expire prior
to the expiration of the period during which the related
Option may be exercised. If granted independently of an
Option, Stock Appreciation Rights shall be exercisable at
such time or times as shall be determined by the Board of
Directors at the time of the grant of the Stock Appreciation
Rights but, unless otherwise determined by the Board of
Directors, in no event later than the date the employment of
the holder of the Stock Appreciation Rights shall have
terminated other than by reason of death, Disability or
Retirement. In the event of termination of employment by
reason of death or Disability, Stock Appreciation Rights
shall be exercisable for such period as the Board may
specify at the time of granting of the Stock Appreciation
Rights, but in no event later than three years after such
termination of employment by the holder of the Stock
Appreciation Rights or by the beneficiary designated
pursuant to paragraph (1) of Section 12, and in the case of
Retirement, no later than three years after the date of such
Retirement. Unless otherwise determined by the Board, each
Stock Appreciation Right shall terminate if and when the
holder thereof shall terminate employment with the Company
and its Subsidiaries for reasons other than the death,
Disability or Retirement of such holder.
(ii) Stock Appreciation Rights shall in no event be
exercisable unless and until the holder of the Stock
Appreciation Rights shall have completed at least twelve
months of continuous service with the Company or a
Subsidiary, or both, immediately following the date upon
which the Stock Appreciation Rights shall have been granted.
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(iii) Upon exercise of Stock Appreciation Rights, the
holder thereof shall be entitled to receive a number of
shares equal in Fair Market Value on the date of exercise to
the amount by which the Fair Market Value of one share of
Common Stock on the date of such exercise shall exceed the
Fair Market Value of a share of Common Stock on the date of
grant of such Stock Appreciation Rights multiplied by the
number of shares in respect of which the Stock Appreciation
Rights shall have been exercised. The Company may settle all
or any part of its obligation arising out of an exercise of
Stock Appreciation Rights by the payment of cash equal to
the aggregate value of shares of Common Stock (or a fraction
of a share) that it would otherwise be obligated to deliver
under the preceding sentence of this paragraph (c)(iii) of
Section 7.
(d) To the extent that Stock Appreciation Rights shall be
exercised, an Option in connection with which such Stock
Appreciation Rights shall have been granted shall be deemed to
have been exercised for the purpose of the maximum limitation set
forth in the Plan under which such Option shall have been
granted. In the case of Stock Appreciation Rights granted
independently of an Option, the number of shares of Common Stock
in respect of which such Stock Appreciation Rights shall be
exercised shall be charged against the maximum limitation set
forth in paragraph (a) of Section 4.
(e) Stock Appreciation Rights may be granted by the Board in
substitution for Management Incentive Units, with the consent of
the holder of such Management Incentive Units, but only if the
holder of such Management Incentive Units shall have been in the
employ of the Company or a Subsidiary, or both, for a period of
not less than five years from the date of the award of such
Management Incentive Units. Notwithstanding anything in Section 2
of the Plan or elsewhere in the Plan to the contrary, in the
event that Stock Appreciation Rights shall be granted in
substitution for Management Incentive Units, the Fair Market
Value of a share of Common Stock on the date that such Management
Incentive Units were credited to the account of the participant
shall be deemed the Fair Market Value of such shares on the date
of grant of Stock Appreciation Rights for the purpose of
paragraph (c)(iii) of this Section 7.
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(f) If so directed by the Board at any time and from time to
time, the grant of Stock Appreciation Rights may provide for
payment of Dividend Equivalents to the holder of the Stock
Appreciation Rights.
(g) Stock Appreciation Rights may provide that, upon
exercise of such Stock Appreciation Rights, the shares or cash,
as the case may be, which the holder of such Stock Appreciation
Rights shall be entitled to receive, shall be distributed or paid
in such installments and over such number of years as the Board
may direct, with distribution or payment of each such installment
contingent upon continued services of the employee to the Company
or a Subsidiary, or both (except for death, Disability,
Retirement or termination of employment by the Company or with
its consent), to the time for distribution or payment of such
installment.
Section 8. Dividend Equivalents: A grant of Dividend
Equivalents shall be made subject to such terms and conditions as
the Board of Directors may determine, and may be awarded only in
connection with a Stock Incentive granted under Section 5, 6 or
7. Dividend Equivalents may be awarded either at the time of
grant of a Stock Incentive or at any time thereafter during the
term of the Stock Incentive. Dividend Equivalents may be payable
or credited either in cash, shares of Common Stock, or in Common
Stock Equivalents. If credited in Common Stock or in Common Stock
Equivalents, they shall be credited at the Fair Market Value of a
share of Common Stock on the day of such crediting. The Committee
may provide that any amounts representing dividends earned by
Common Stock Equivalents may either be paid currently or credited
in cash or in Common Stock or that they may be represented by
further Common Stock Equivalents, or any combination thereof. The
Board of Directors may provide that when Common Stock Equivalents
shall become payable to the holder, they may be paid in cash or
in shares of Common Stock, or a combination of both. To the
extent that any payment to the holder with respect to Dividend
Equivalents is made in shares of Common Stock, the number of
shares of Common Stock used for such payment shall be charged
against the maximum limitation set forth in paragraph (a) of
Section 4.
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Section 9. Adjustment and Change in Control Provisions:
(a) In the event that any recapitalization,
reclassification, split-up or consolidation of shares of Common
Stock shall be effected, or the outstanding shares of Common
Stock are, in connection with a merger or consolidation of the
Company or a sale by the Company of all or a part of its assets,
exchanged for a different number or class of shares of stock or
other securities of the Company or for shares of the stock or
other securities of any other corporation, or a public offer by
the Company or an employee benefit plan sponsored by the Company
is made to purchase all or a substantial number of the
outstanding shares of Common Stock for cash or other securities,
or new, different or additional shares of other securities of the
Company or of another corporation are received by the holders of
Common Stock or any distribution is made to the holders of Common
Stock other than a cash dividend, (i) the number and class of
shares or other securities that may be issued or transferred
pursuant to Stock Incentives, (ii) the number and class of shares
or other securities which have not been issued or transferred
under outstanding Stock Incentives, (iii) the purchase price to
be paid per share under outstanding Options and other Stock
Incentives, (iv) the Fair Market Value of a share of Common Stock
on the date of grant of outstanding Stock Appreciation Rights,
(v) the dates or events upon which Options and Stock Appreciation
Rights may be exercised, which may, in appropriate instances, be
related to specific dates or events under any of the aforesaid
actions, and (vi) the price to be paid per share by the Company
or a Subsidiary for shares or other securities issued or
transferred pursuant to Stock Incentives which are subject to a
right of the Company or a Subsidiary to reacquire such share or
other securities, shall in each case be equitably adjusted. In
addition, the Board may, in its discretion, make the adjustments
described above in this paragraph (a) of Section 9 in the event
the Company pays a cash dividend in respect of the Common Stock
other than a regular quarterly dividend.
(b) Notwithstanding any other provision of the Plan to the
contrary (and notwithstanding any requirement that a holder of
Stock Awards, Options and Stock Appreciation Rights complete a
period of employment in order to be entitled to the benefits
thereof), in the event of a Change in Control of the Company the
holders of Stock Awards, Options and Stock Appreciation Rights
outstanding as of the date of the occurrence of the Change in
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Control of the Company shall have the right to surrender such
Stock Awards, Options and Stock Appreciation Rights within the
60-day period following the occurrence of the Change of Control
of the Company and to receive cash as consideration for such
surrender on the following basis:
(i) A holder of a Stock Award being surrendered shall
be entitled to the amount equal to the highest Change in
Control Fair Market Value of one share of Common Stock
during the 60 days preceding the date on which the Change in
Control occurs, multiplied by the number of shares in
respect of which the Stock Award shall have been
surrendered. (1)
(ii) A holder of an Option being surrendered shall be
entitled to the amount by which the highest Change in
Control Fair Market Value of one share of Common Stock
during the 60 days preceding the date on which the Change in
Control occurs exceeds the exercise price of one share of
Common Stock subject to such Option multiplied by the number
of shares in respect of which the Option shall have been
surrendered.
(iii) The holder of Stock Appreciation Rights being
surrendered shall be entitled to the amount by which the
highest Change in Control Fair Market Value of one share of
Common Stock during the 60 days preceding the date on which
the Change in Control occurs exceeds the Fair Market Value
of one share of Common Stock on the date of grant of such
Stock Appreciation Rights multiplied by the number of shares
in respect of which the Stock Appreciation Rights shall have
been surrendered. Stock Appreciation Rights granted in
connection with the grant of Options may be surrendered only
if surrendered together with the surrender of the related
Options and the holder thereof shall be entitled to the
payment described in this subparagraph (iii) only.
(1) Amended by Board of Directors May 1 1991.
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(iv) All payments to be made pursuant to this paragraph
(b) of Section 9 shall be made within 10 days of the
delivery of written notice of such surrender by the holder
to the Company except that payments to individuals subject
to Section 16 of the Act with respect to Stock Awards,
Options and Stock Appreciation Rights granted less than six
months prior to the occurrence of the Change in Control of
the Company shall be made within 10 days after the
expiration of such six month period.
Section 10. Term: The Plan shall be deemed adopted and shall
become effective on the date it is approved by the shareholders
of the Company. No Stock Incentives shall be granted under the
Plan after April 30, 1995.
Section 11. Administration:
(a) The Plan shall be administered by a Committee which
shall consist of not less than three directors of the Company
designated by the Board of Directors; provided, however, that no
director shall be designated as or continue to be a member of the
Committee, unless he shall at the time of designation and service
be a "disinterested person" within the meaning of Rule 16b-3
under the Act (or any successor provision at the time in effect).
In no event shall a member of the Committee be eligible to be
granted a Stock Incentive while serving on the Committee. Grants
of Stock Incentives may be recommended or made either with or
without consultation with employees, but, anything in the Plan to
the contrary notwithstanding, the Committee shall have full
authority to act in the matter of selection of all Key Employees
who are members of the Board of Directors and in recommending
Stock Incentives to be granted to them.
(b) The Board of Directors may delegate to the Committee any
or all its authority under the Plan, including the authority to
award Stock Incentives, except its authority to amend or
discontinue the Plan. Any powers conferred on the Committee by
this Section 11 or by any other provision of the Plan shall, to
the extent such authority shall not have been so delegated by the
Board of Directors, be exercised by the Board; provided, however,
that with respect to the participation in the Plan by any
director, unless his participation shall have been recommended by
the Committee, a majority of the members of the Board and a
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majority of its members acting in the matter shall, at the time
so acting, be "disinterested persons" within the meaning of Rule
16b-3 under the Act (or any successor provision at the time in
effect).
(c) The Committee may establish such rules and regulations,
not inconsistent with the provisions of the Plan, as it deems
necessary to determine eligibility to participate in the Plan and
for the proper administration of the Plan, and may amend or
revoke any rule or regulation so established. The Committee may
make such determinations and interpretations under or in
connection with the Plan as it deems necessary or advisable. All
such rules, regulations, determinations and interpretations shall
be binding and conclusive upon the Company, its Subsidiaries, its
shareholders and all employees, and upon their respective legal
representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
(d) Any action required or permitted to be taken by the
Committee under the Plan shall require the affirmative vote of a
majority of all the members of the Committee. The Committee may
act by written determination instead of by affirmative vote at a
meeting, provided that any written determination shall be signed
by all of the members of the Committee, and any such written
determination shall be as fully effective as a unanimous vote at
a meeting.
(e) Members of the Board of Directors and members of the
Committee acting under the Plan shall be fully protected in
relying in good faith upon the advice of counsel and shall incur
no liability except for gross negligence or willful misconduct in
the performance of their duties.
Section 12. General Provisions:
(a) With respect to any shares of Common Stock issued or
transferred under any provision of the Plan, such shares may be
issued or transferred subject to such conditions, in addition to
those specifically provided in the Plan, as the Board of
Directors or Committee may direct and, without limiting the
generality of the foregoing, provision may be made in the grant
of Stock Incentives that shares issued or transferred upon their
grant or exercise shall be Restricted Shares subject to
forfeiture upon failure to comply with conditions and
restrictions imposed in the grant of such Stock Incentives.
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(b) The Board of Directors may fix a uniform date, within
any specified period, either before or after the date so fixed,
as of which any exercise of an Option or Stock Appreciation
Rights shall be deemed to be effective.
(c) The Board of Directors may, in its discretion, in the
event of termination of employment with the consent of the
Company or death, Retirement or Disability, of the holder of a
Stock Incentive reduce the period of employment required before
such Stock Incentive may be exercised.
(d) In the event of the termination of employment of an
optionee or of a holder of Stock Appreciation Rights with the
consent of the Company, other than by death, Retirement or
Disability, the Board of Directors may extend the period during
which such Option or Stock Appreciation Rights may be exercised
after the date of termination of employment but not beyond the
expiration date of the term of the Option or Stock Appreciation
Right.
(e) Whether an authorized leave of absence or an absence for
military or government service shall constitute termination of
employment or interruption of required additional continuous
employment for the purpose of the Plan shall be determined by the
Board of Directors.
(f) Nothing in the Plan nor in any instrument executed
pursuant thereto shall confer upon any employee any right to
continue in the employ of the Company or any Subsidiary or shall
affect the right of the Company or of a Subsidiary to terminate
the employment of any employee with or without cause.
(g) No shares of Common Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal
requirements applicable to the issuance or transfer of such
shares have, in the opinion of counsel to the Company, been
complied with. In connection with any such issuance or transfer,
the person acquiring the shares shall, if requested by the
Company, give assurances satisfactory to counsel to the Company
that the shares are being acquired for investment and not with a
view to resale or distribution thereof and assurances in respect
of such other matters as the Company or a Subsidiary may deem
desirable to assure compliance with all applicable legal
requirements.
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(h) No employee (individually or as a member of a group),
and no beneficiary or other person claiming under or through the
employee, shall have any right, title or interest in or to any
shares of Common Stock allocated or reserved for the purposes of
the Plan or subject to any Stock Incentive except as to such
shares of Common Stock, if any, as shall have been issued or
transferred to him.
(i) The Company or a Subsidiary may, with the approval of
the Board of Directors, enter into an agreement or other
commitment to grant a Stock Incentive in the future to a person
who is or will be a Key Employee at the time of grant, and,
notwithstanding any other provision of the Plan, any such
agreement or commitment shall not be deemed the grant of a Stock
Incentive until the date on which the Board of Directors takes
action to implement such agreement or commitment.
(j) In the case of a grant of a Stock Incentive to any
employee of a Subsidiary, such grant may, if the Board of
Directors so directs, be implemented by the Company issuing or
transferring the shares, if any, covered by the Stock Incentive
to the Subsidiary, for such lawful consideration as the Board of
Directors may specify, upon the condition or understanding that
the Subsidiary will transfer the shares to the employee in
accordance with the terms of the Stock Incentive specified by the
Board of Directors pursuant to the provisions of the Plan.
Notwithstanding any other provision hereof, such Stock Incentive
may be issued by and in the name of the Subsidiary and shall be
deemed granted on the date it is approved by the Board of
Directors, on the date it is delivered by the Subsidiary, or on
such other date between such two dates, as the Board of Directors
shall specify.
(k) The Company or a Subsidiary may make such provisions as
it may deem appropriate for the withholding of any taxes which
the Company or Subsidiary determined it is required to withhold
in connection with any Stock Incentive.
(l) No Stock Incentive and no rights under the Plan,
contingent or otherwise, shall be assignable or subject to any
encumbrance, pledge or charge of any nature except that, under
such rules and regulations as the Board may establish, a
beneficiary may be designated in respect of a Stock Incentive in
the event of the death of the holder of such Stock Incentive and
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except that if such beneficiary shall be the executor or
administrator of the estate of the holder of such Stock
Incentive, any rights in respect of such Stock Incentive may be
transferred to the person or persons or entity (including a
trust) entitled thereto under the will of the holder of such
Stock Incentive or, in the case of intestacy, under the laws
relating to intestacy. A Stock Incentive shall be exercisable
during a Key Employee's lifetime only by the Key Employee or by
the Key Employee's guardian, conservator or similar legal
representative.
(m) Nothing in the Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of,
any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any
class or group of employees, which the Company or any Subsidiary
now has or may hereafter lawfully put into effect, including
without limitation, any retirement, pension, insurance, stock
purchase, incentive compensation or bonus plan.
(n) The place of administration of the Plan shall
conclusively be deemed to be within the State of New Jersey and
the validity, construction, interpretation and administration of
the Plan and of any rules and regulations or determinations or
decisions made thereunder, and the rights of any and all persons
having or claiming to have any interest therein or thereunder,
shall be governed by, and determined exclusively and solely in
accordance with, the laws of the State of New Jersey. Without
limiting the generality of the foregoing, the period within which
any action must be commenced arising under or in connection with
the Plan, or any payment or award made or purportedly made under
or in connection therewith, shall be governed by the laws of the
State of New Jersey, irrespective of the place where the act or
omission complained of took place and of the residence of any
party to such action and irrespective of the place where the
action may be brought.
Section 13. Amendment or Discontinuance of Plan:
(a) The Plan may be amended by the Board of Directors at any
time; provided, however, that without the approval of the
shareholders of the Company, no amendment shall be made which (i)
increases the aggregate number of shares of Common Stock that may
be issued or transferred pursuant to Stock Incentives as provided
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in paragraph (a) of Section 4, (ii) amends the provisions of
paragraph (a) of Section 11 with respect to eligibility and
disinterest of the members of the Committee or of paragraph (b)
of Section 11 with respect to eligibility and disinterest of a
majority of the members of the Board of Directors, (iii) permits
any person who is not determined to be a Key Employee at the time
to be granted a Stock Incentive, (iv) amends Section 10 to extend
the term of the Plan, or (v) amends this Section 13.
(b) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue the Plan.
(c) No amendment or discontinuance of the Plan by the Board
of Directors or the shareholders of the Company shall adversely
affect any Stock Incentive theretofore granted without the
consent of the holder thereof.
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