Exhibit 10.1
1994 STOCK INCENTIVE PLAN
(Amended March 19, 2004)
I. GENERAL
1. Purpose. The purpose of the Plan is to aid the Company and its
Subsidiaries in attracting, retaining, and motivating management employees.
2. Definitions. Whenever used herein, the following terms shall have the
meanings set forth below:
a. "Board" means the Board of Directors of the Company.
b. "Code" means the Internal Revenue Code of 1986, as amended.
c. "Committee" means a committee designated by the Board, which shall
consist of not less than three members of the Board who shall be appointed
by and serve at the pleasure of the Board and who shall be "non-employee"
directors within the meaning of Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, and who
shall be "outside" directors within the meaning of Section 162(m) of the
Code.
d. "Company" means The May Department Stores Company, a Delaware
corporation.
e. "Disability" means a permanent and total disability which enables
the Participant to be eligible for and receive a disability benefit under
the Federal Social Security Act.
f. "Fair Market Value" means, as applied to a specific date, the
average of the high and low prices of the Stock on the Composite Tape for
New York Stock Exchange listed companies as reported in the Wall Street
Journal or such other source as the Committee deems reliable, or, if no
sale or sales of the Stock occurred on that day, on the last preceding day
on which Stock was so traded.
g. "Incentive Stock Option" means an Option granted under the Plan
which constitutes and shall be treated as an "incentive stock option" as
defined in Section 422 of the Code.
h. "Non-Qualified Stock Option" means an Option granted under the
Plan which shall not constitute or be treated as an Incentive Stock Option.
i. "Non-Tandem Stock Appreciation Right" means a Right described in
Part III, Section 3.
j. "Option" means a right or rights to purchase shares of Stock
described in Part II.
k. "Option Agreement" means the agreement between the Company and a
Participant evidencing the grant of an Option and containing the terms and
conditions, not inconsistent with the Plan, that are applicable to such
Option.
l. "Participant" means an individual to whom an Option or Right is
granted or Restricted Stock Grant is made.
m. "Performance Restricted Stock" means Restricted Stock whose
provisions include the restrictions described in Part IV, Section 3(b).
n. "Plan" means the 1994 Stock Incentive Plan of the Company, as
amended from time to time.
o. "Related Option" means the Option in relation to which a Tandem
Stock Appreciation Right is granted.
p. "Restricted Stock Grant" means a grant described in Part IV.
q. "Retirement" means retirement as that word is defined in any
retirement plan sponsored by the Company or a Subsidiary which is
applicable to the Participant.
r. "Stock" means the Common Stock of the Company.
s. "Stock Appreciation Right" or "Right" means a right described in
Part III which provides for the payment of an amount in cash or Stock in
accordance with such terms and conditions as are provided in the Stock
Appreciation Right Agreement applicable to such Right; provided however,
that in Part III, Section 2, "Right" shall refer only to a "Tandem Stock
Appreciation Right" and that in Part III, Section 3, "Right" shall refer
only to a "Non-Tandem Stock Appreciation Right".
t. "Stock Appreciation Right Agreement" means the agreement between
the Company and a Participant evidencing the grant of a Stock Appreciation
Right and containing the terms and conditions, not inconsistent with the
Plan, that are applicable to such Right.
u. "Subsidiary" means a subsidiary of the Company or an
unincorporated organization controlled, directly or indirectly, by the
Company.
v. "Tandem Stock Appreciation Right" means a Right described in Part
III, Section 2.
3. Administration. The Plan shall be administered by the Committee.
Subject to all applicable provisions of the Plan, the Committee is authorized to
approve grants of Options or Rights or the making of Restricted Stock Grants in
accordance with the Plan, to construe and interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to the Plan and to make all
determinations and take all actions necessary or advisable for the Plan's
administration. The Committee shall act by vote or written consent of a
majority of its members. Whenever the Plan authorizes or requires the Committee
to take any action, make any determination or decision or form any opinion, then
any such action, determination, decision or opinion by or of the Committee shall
be in the absolute discretion of the Committee.
4. Shares Subject to the Plan.
(a) Maximum Number of Shares. Stock issued under the Plan shall be
treasury shares subject to the following limitations:
(i) Plan Maximum. The maximum number of shares of Stock which may
be issued under the Plan after March 21, 2003 is 44,727,304, of which
no more than 5,691,749 shares may be issued pursuant to Restricted
Stock Grants.
(ii) Participant Maximum. The maximum number of Options and
Stock Appreciation Rights which may be granted to any Participant during
the term of the Plan is 2,602,853; provided, however, that if a Stock
Appreciation Right is issued in substitution for an existing stock option
or in tandem with a stock option, then the grant of such a Stock
Appreciation Right shall not count against the limit. The maximum number
of shares of Stock which may be issued to each Participant free from
restrictions pursuant to a grant of Performance Restricted Stock is 100,000
per year.
(b) Expired Options or Rights. If an Option or Right expires,
terminates, ceases to be exercisable or is surrendered without having been
exercised in full, then the shares relating to the Option or Right shall,
unless the Plan has been terminated, again become available under the Plan.
(c) Lapse of Restrictions on Restricted Stock. If any shares of Stock
shall be returned to the Company pursuant to the provisions of Sections 2
or 3 of Part IV or in the instruments evidencing the making of Restricted
Stock Grants, then such shares shall, unless the Plan has been terminated,
again become available under the Plan.
5. Participants. Participants in the Plan shall be determined as follows:
(a) Eligibility. The individuals who are eligible to receive Options,
Rights or Restricted Stock Grants hereunder shall be limited to management
employees of the Company and its Subsidiaries (including employees who are
directors and/or officers).
(b) Determination. From time to time the Committee shall, in its sole
discretion, but subject to all of the provisions of the Plan, determine
which of those eligible employees shall receive Option(s), Stock
Appreciation Right(s) or Restricted Stock Grant(s) under the Plan and the
size, terms, conditions and/or restrictions of the Option(s), Right(s) or
Restricted Stock Grant(s).
(c) Differing Terms; Effect of Grant. The Committee may approve the
grant of Option(s) or Right(s) or the making of Restricted Stock Grant(s)
subject to differing terms, conditions and/or restrictions to any eligible
employee in any year. The Committee's decision to approve the grant of an
Option or Right or the making of a Restricted Stock Grant to an eligible
employee in any year shall not require the Committee to approve the grant
of an Option or Right or the making of a Restricted Stock Grant to that
employee in any other year or to any other employee in any year; nor shall
the Committee's decision with respect to the size, terms, conditions and/or
restrictions of any Option or Right to be granted to an employee or any
Restricted Stock Grant to be made to an employee in any year require the
Committee to approve the grant of an Option or Right or the making of a
Restricted Stock Grant of the same size or with the same terms, conditions
and/or restrictions to that employee in any other year or to any other
employee in any year. The Committee shall not be precluded from approving
the grant of an Option or Right or the making of a Restricted Stock Grant
to any eligible employee solely because such employee may previously have
been granted an Option or Right or may previously have received a
Restricted Stock Grant.
6. Rights with Respect to Shares of Stock. A Participant who has
exercised an Option or Right (payable all or in part in Stock) or to whom a
Restricted Stock Grant has been made shall have, after a certificate or
certificates for the number of shares of Stock granted have been issued in his
name, absolute ownership of such shares including the right to vote the same and
receive dividends thereon; provided, however that rights with respect to shares
issued in connection with a Restricted Stock Grant shall be subject to the
terms, conditions and restrictions described in the Plan and in the instrument
evidencing the making of the Restricted Stock Grant to such Participant.
7. Employment. In the absence of any specific agreement to the contrary,
no grant of an Option or Right or making of a Restricted Stock Grant to a
Participant under the Plan shall affect any right of the Company or its
Subsidiaries to terminate the Participant's employment at any time.
II. OPTIONS
1. General. Each employee chosen to receive an Option(s) may be granted
an Incentive Stock Option, a Non-Qualified Stock Option or both, subject to the
following terms, conditions and restrictions. Each Option granted under the
Plan shall be evidenced by an Option Agreement which shall contain such terms
and conditions consistent with the Plan as the Committee shall determine;
provided, however, that each Option shall satisfy the following requirements and
each Incentive Stock Option shall satisfy the requirement of Part II, Section 2:
(a) Option Price. The option price for each share purchased under any
Option shall be specified in the Option Agreement and, subject to the
provisions of Part V, Section 3, shall not be less than Fair Market Value
on the date the Option is granted; provided, however, that in no event
shall the option price per share be less than the par value thereof.
(b) Option Period.
(i) General. The period in which an Option may be exercised
shall not exceed ten years from the date the Option is granted;
provided, however, that the Option may be sooner terminated in
accordance with the provisions of this paragraph (b). Subject to the
foregoing, the Committee may provide that any Option may be exercised,
in whole or in part, at such time or times as the Committee may in its
discretion determine.
(ii) Termination of Employment. If the Participant ceases to be
an employee of the Company or a Subsidiary for any reason other than
Retirement, Disability, or death, all of such Participant's outstanding
Options shall immediately terminate.
(iii)Retirement or Disability. If a Participant's employment is
terminated by Retirement or Disability, the term of any then
outstanding Option held by the Participant shall extend for a period
specified by the Committee in the agreement pertaining to such Option,
and the number of shares in respect of which the Option may be
exercised after the Participant's Retirement or Disability shall be
determined by the agreement pertaining to such Option; provided,
however, that such agreement shall provide that the Committee may
cancel the Participant's Option during such period if the Participant's
Retirement was without the consent of the Company, or if the
Participant engages during such period of Retirement or Disability in
employment or activities contrary, in the opinion of the Committee, to
the best interests of the Company.
2. Incentive Stock Options. Each Option Agreement evidencing an
Incentive Stock Option shall satisfy the requirement that to the extent that the
aggregate Fair Market Value of Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Participant during any
calendar year (under the Plan and all stock option plans of the Company and its
Subsidiaries) exceeds $100,000, such Options shall be treated as Non-Qualified
Stock Options. For purposes of this Section 2, aggregate Fair Market Value of
Stock shall be determined as of the time the Option with respect to such Stock
is granted.
3. Death. If a Participant's employment is terminated by death at a time
when he or she has not fully exercised any then outstanding Option, or if a
Participant dies after Retirement or Disability without having fully exercised
any then outstanding Option, the beneficiary designated by the Participant (or,
in the absence of such designation, the executors or administrators or legatees
or distributees of the Participant's estate) shall have the right to exercise
such Option in whole or in part during such period following the Participant's
death as is set forth in the Option Agreement. The Company shall prescribe the
procedures and requirements for beneficiary designations not inconsistent with
this provision and has the right to review and approve such designations.
4. Nonassignability. Each Option shall not be transferable (other than,
upon the death of the Participant, by beneficiary designation, by last will and
testament or by the laws of descent and distribution) and shall be exercisable
during the Participant's lifetime only by the Participant.
5. Payment for Stock. Full payment in cash or, if the Committee
approves, in Stock, for shares purchased shall be made at the time of exercising
the Option in whole or in part. No certificates for shares so purchased shall
be issued until full payment therefor has been made, and a Participant shall
have none of the rights of a shareowner until such certificates are issued to
him or her. In addition, if the Committee approves, the Option Agreement may
provide that the Participant may elect, on terms set forth in the Option
Agreement, to have the Company withhold from the shares of Stock payable to the
Participant upon exercise of an Option the number of shares of Stock having a
fair market value equal to the amount of any required withholding taxes.
6. Use of Proceeds. The proceeds received by the Company from the sale
of Stock pursuant to the exercise of an Option may be used for general corporate
purposes.
7. Restrictions Upon Exercise of Option. The exercise of each Option
shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities under any state or Federal law, or that the listing,
registration or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or Federal law, or that
the consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of shares thereunder, then in any such event such exercise shall not be
effective unless such withholding, listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
8. Repricing Prohibited. There shall be no grant of an Option(s) to a
Participant in exchange for a Participant's agreement to cancellation of a
higher-priced Option(s) that was previously granted to such Participant.
III. STOCK APPRECIATION RIGHTS
1. General. Each employee chosen to receive a Stock Appreciation
Right(s) may be granted a Tandem Stock Appreciation Right, a Non-Tandem Stock
Appreciation Right or both, subject to the following terms, conditions and
restrictions and subject to such additional terms, conditions and restrictions
as may be determined by the Committee from time to time hereafter; provided
however, that no Right shall be subject to additional terms, conditions or
restrictions which are more favorable to a Participant than the terms,
conditions and restrictions set forth in the Plan.
2. Tandem Stock Appreciation Rights. Each Tandem Stock Appreciation
Right may be granted only with respect to a share(s) of Stock for which an
Option(s) has been granted under the Plan, and may be awarded concurrently with
the grant of such Option or at any time thereafter while the Option is
outstanding. If the Committee so determines, a Tandem Stock Appreciation Right
may also be granted with respect to a share(s) of Stock for which an option has
been granted and is outstanding under any other plan of the Company. A Stock
Appreciation Right shall be evidenced by a Stock Appreciation Right Agreement
which shall contain such terms and conditions (which may include limitations as
to the time when such Stock Appreciation Right becomes exercisable and when it
ceases to be exercisable that are more restrictive than the limitations
applicable to the Related Option(s)) not inconsistent with the Plan as the
Committee shall determine; provided, however, that each Tandem Stock
Appreciation Right shall satisfy the following requirements:
(a) Termination of a Right. If the Related Option is exercised, in
whole or in part, then the Right with respect to the shares of Stock
purchased pursuant to such exercise (but not with respect to any
unpurchased shares of Stock) shall terminate as of the date of the
exercise. If an unexercised Right is otherwise exercisable on the date
that the Related Option expires, and if the Fair Market Value of the shares
of Stock with respect to which such Right was granted, determined as of the
date of such expiration, exceeds the Option price of such shares, then,
notwithstanding Section 2(b), the Right shall automatically be deemed to
have been exercised as of the date of such expiration; otherwise, on the
date that the Related Option expires, any outstanding Right related thereto
shall be terminated as of the date of such expiration.
(b) Exercise. Tandem Stock Appreciation Rights may be exercised (i)
only at such time or times as, and to the extent that, the Related Options
shall be exercisable, (ii) only upon surrender of the Related Options with
respect to the shares for which the Rights are then being exercised, and
(iii) subject to the terms and conditions set forth in the Stock
Appreciation Right Agreement; provided that no Tandem Stock Appreciation
Right may be exercised prior to the expiration of six (6) months from the
date of the grant and can only be exercised during the ten-day period
beginning on the third business day following the release of the Company's
quarterly or annual statement of sales and earnings.
3. Non-Tandem Stock Appreciation Rights. Each Non-Tandem Stock
Appreciation Right may be granted with respect to a share(s) of Stock or, if the
Committee so determines, in exchange for an outstanding Option or an outstanding
stock option granted under any other plan of the Company. A Non-Tandem Stock
Appreciation Right shall be evidenced by a Stock Appreciation Right Agreement
which shall contain such terms and conditions not inconsistent with the Plan as
the Committee shall determine; provided, however, that each Non-Tandem Stock
Appreciation Right shall satisfy the following requirements:
(a) Termination of a Right. A Non-Tandem Stock Appreciation Right
shall terminate as of the earlier of (i) the date of exercise of such
Right, to the extent that it is exercised; or (ii) the termination date
specified in the Stock Appreciation Right Agreement. If an unexercised
Right is otherwise exercisable on the date that it expires, and if the Fair
Market Value of the shares of Stock with respect to which such Right was
granted, determined as of the date of such expiration, exceeds the exercise
price of such Right (set forth in the Stock Appreciation Right Agreement),
then the Right shall automatically be deemed to have been exercised as of
the date of such expiration.
(b) Exercise. Non-Tandem Stock Appreciation Rights may be exercised
in accordance with the terms and conditions set forth in the Stock
Appreciation Right Agreement; provided that (i) no Non-Tandem Stock
Appreciation Right that is payable all or in part in Stock may be exercised
prior to the expiration of six (6) months from the date of the grant; (ii)
the exercise price of any Non-Tandem Stock Appreciation Right granted in
exchange for an outstanding Option or for an outstanding stock option
granted under any other plan of the Company shall be the same exercise
price as that outstanding Option or option and (iii) the exercise price of
any Non-Tandem Stock Appreciation Right not granted in exchange for an
outstanding Option or for an outstanding stock option granted under any
other plan of the Company shall be the Fair Market Value of the Stock on
the date of the grant of the Right(s).
4. Payment.
(a) Amount. Upon the exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive the excess of the aggregate Fair
Market Value of the shares of Stock with respect to which the Right is
being exercised (determined as of the date of such exercise) over (i) the
aggregate option price of such shares in the case of Tandem Stock
Appreciation Rights; or (ii) the aggregate exercise price (set forth in the
Stock Appreciation Right Agreement) in the case of Non-Tandem Stock
Appreciation Rights.
(b) Form. Any amount which becomes payable upon exercise of a Stock
Appreciation Right under the Plan shall be paid entirely in cash, entirely
in Stock or partly in cash and partly in Stock in accordance with such
terms and conditions as are provided in the applicable Stock Appreciation
Right Agreement; provided, however, that notwithstanding any provision in
any Stock Appreciation Right Agreement, the Committee may determine in its
sole and absolute judgment that any amount which may become payable upon
exercise of a Right shall be paid entirely in cash.
5. Termination of Employment.
(a) General. If a Participant ceases to be an employee of the
Company or of a Subsidiary for any reason other than Retirement, Disability
or death, all of such Participant's outstanding Rights shall immediately
terminate.
(b) Retirement or Disability. If a Participant's employment is
terminated by Retirement or Disability, the Participant's right to exercise
all or any portion of any Right after the date of such Retirement or
Disability shall be determined by the provisions of the Stock Appreciation
Right Agreement; provided, however, that such Agreement shall provide that
the Committee may terminate the Participant's Right prior to the date on
which the Right is exercised if the Participant's Retirement was without
the consent of the Company, or if the Participant engages during such
period of Retirement or Disability in employment or activities contrary, in
the opinion of the Committee, to the best interests of the Company.
(c) Death. If a Participant's employment is terminated by death at a
time when the Participant has not fully exercised any then outstanding
Rights, or if a Participant dies after Retirement or Disability without
having fully exercised any then outstanding Rights, the beneficiary
designated by the Participant (or, in the absence of such designation, the
executors or administrators or legatees or distributees of the
Participant's estate) shall have the right to exercise such Right in
whole or in part during such period following the Participant's death as
set forth in the Stock Appreciation Right Agreement. The Company shall
prescribe the procedures and requirements for beneficiary designations not
inconsistent with this provision and has the right to review and approve
such designations.
6. Expiration. If the period in which a Stock Appreciation Right is
exercisable expires and the Right has not been exercised, then such Right shall
terminate as of the last day on which it was exercisable.
7. Nonassignability. Each Right shall not be transferable (other than,
upon the death of the Participant, by beneficiary designation, by last will and
testament or by the laws of descent and distribution) and shall be exercisable
during the Participant's lifetime only by the Participant.
8. Restrictions Upon Exercise of Rights. The exercise of each Right shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities under any state or Federal law, or that the consent or approval of
any regulatory body, is necessary or desirable as a condition of, or in
connection with, such exercise, then, in any such event, such exercise shall not
be effective unless such withholding, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
IV. RESTRICTED STOCK GRANTS
1. General. A Restricted Stock Grant made under the Plan shall contain
the following terms, conditions and restrictions and such additional terms,
conditions and restrictions as may be determined by the Committee from time to
time hereafter; provided, however, that no Restricted Stock Grant shall be
subject to additional terms, conditions or restrictions which are more favorable
to a Participant than the terms, conditions and restrictions set forth in the
Plan.
2. Restrictions. Subject to the provisions of Part IV, Section 3, shares
of Stock granted to a Participant pursuant to a Restricted Stock Grant:
(i) shall not be sold, assigned, conveyed, transferred, pledged,
hypothecated, or otherwise disposed of, and
(ii) shall be returned to the Company forthwith, and all the rights of
the Participant to such shares shall immediately terminate without any
payment or consideration by the Company, if the Participant's
continuous employment with the Company or any Subsidiary shall terminate
for any reason, except as provided in Part IV, Section 4. Such return of
such Stock shall be accomplished by the Participant's delivering or causing
to be delivered to the Secretary or any Assistant Secretary of the Company
the certificate(s) for such shares of Stock, accompanied by such
endorsement(s) and/or instrument(s) of transfer as may be required by the
Secretary or any Assistant Secretary of the Company.
3. Lapse of Restrictions.
(a) General. Subject to the provisions of Part IV, Sections 3(b) and
4 and of Part V, Section 4, the restrictions set forth in Part IV, Section
2 shall lapse on such date or dates on or after the first anniversary and
on or before the tenth anniversary of the date as of which the Restricted
Stock Grant is made, as the Committee shall determine at the time of the
Restricted Stock Grant.
(b) Performance Restricted Stock. If the Committee has designated
the Stock covered by a Restricted Stock Grant as Performance Restricted
Stock, then the Committee shall establish, at the time of the grant, the
Performance Period, Performance Formula, Performance Measures and
Performance Goals (all as defined in the Executive Incentive Compensation
Plan for Corporate Executives) that would determine the extent to which
restrictions set forth in Part IV, Section 2 shall lapse on any specified
date. No restrictions shall lapse on any Performance Restricted Stock
until the Committee certifies, in writing, that the requirements set forth
in this Part IV, Section 3(b) have been satisfied.
(c) Forfeiture. All shares of Stock forfeited under this Section 3
shall be returned to the Company forthwith, and all the rights of the
Participant to such shares shall immediately terminate without any payment
or consideration by the Company.
4. Termination of Employment By Reason of Death or Disability. If a
Participant who has been in the continuous employment of the Company or of a
Subsidiary since the date as of which a Restricted Stock Grant was made to such
Participant shall, while in such employment, die or become Disabled and such
Participant's death or Disability shall occur more than one year after the date
as of which the Restricted Stock Grant was made to such Participant, then the
restrictions set forth in Part IV, Section 2 shall lapse as to all shares of
Restricted Stock granted to such Participant pursuant to such Restricted Stock
Grant on the date of such event. A Participant may file a written designation
of beneficiary to receive, in the event of the Participant's death, any shares
for which restrictions lapse on the date of death. The Company shall prescribe
procedures and requirements for beneficiary designations not inconsistent with
this provision and has the right to review and approve such designations.
5. Agreement by Employee Regarding Withholding Taxes. Each Participant
shall agree that, subject to the provisions of Part IV, Section 6,
(i) no later than the date as of which the restrictions mentioned in
Part IV, Section 2 and in the instrument evidencing the making of the
Restricted Stock Grant shall lapse, such Participant will pay to the
Company in cash, or, if the Committee approves, in Stock, or make other
arrangements satisfactory to the Committee regarding payment of, any
Federal, state or local taxes of any kind required by law to be withheld
with respect to the shares of Stock subject to such Restricted Stock Grant,
and
(ii) the Company and its Subsidiaries shall, to the extent permitted
by law, have the right to deduct from any payment of any kind otherwise due
to the Participant any Federal, state or local taxes of any kind required
by law to be withheld with respect to the shares of Stock subject to such
Restricted Stock Grant.
6. Election to Recognize Gross Income in the Year of Grant. If any
Participant properly elects, within thirty (30) days of the date of grant, to
include in gross income for Federal income tax purposes an amount equal to the
air market value of the shares of Stock granted on the date of grant, such
Participant shall pay to the Company, or make arrangements satisfactory to the
Committee to pay to the Company in the year of such grant, any Federal, state or
local taxes required to be withheld with respect to such shares. If such
Participant shall fail to make such payments, the Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct from any payment
of any kind otherwise due to the employee any Federal, state or local taxes of
any kind required by law to be withheld with respect to such shares.
7. Restrictive Legend; Certificates May be Held in Custody. Each
certificate evidencing shares of Stock granted pursuant to a Restricted Stock
Grant shall, (i) if issued to any person other than the Company for safekeeping
while the restrictions apply, bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock Grant and (ii)
if issued to the Company for safekeeping while the restrictions apply, be noted
as restricted on the records of the transfer agent. Any attempt to dispose of
such shares of Stock in contravention of such terms, conditions and restrictions
shall be ineffective. The Committee may adopt rules which provide that the
certificates evidencing such shares may be held in custody by a bank or other
institution, or that the Company may itself hold such shares in custody, until
the restrictions thereon shall have lapsed.
8. Restrictions upon Making of Restricted Stock Grants. The listing upon
the New York Stock Exchange or the registration or qualification under any
Federal or state law of any shares of Stock to be granted pursuant to Restricted
Stock Grants (whether to permit the making of Restricted Stock Grants or the
resale or other disposition of any such shares of Stock by or on behalf of the
employees receiving such shares) may be necessary or desirable as a condition of
or in connection with such Restricted Stock Grants and if, in any such event,
the Board in its sole discretion so determines, delivery of the certificates for
such shares of Stock shall not be made until such listing, registration or
qualification shall have been completed. In such connection, the Company agrees
that it will use its best effort to effect any such listing, registration or
qualification; provided, however, the Company shall not be required to use its
best efforts to effect such registration under the Securities Act of 1933 other
than on Form S-8, as presently in effect, or such other forms as may be in
effect from time to time calling for information comparable to that presently
required to be furnished under Form S-8.
9. Restrictions upon Resale of Stock. If the shares of Stock that have
been granted to a Participant pursuant to the terms of the Plan are not
registered under the Securities Act of 1933, as amended, pursuant to an
effective registration statement, such Participant, if the Committee shall deem
it advisable, may be required to represent and agree in writing that (i) any
shares of Stock acquired by such employee pursuant to the Plan will not be sold
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended, or pursuant to an exemption from registration under said
Act and (ii) such Participant is acquiring such shares of Stock for the
Participant's own account and not with a view to the distribution thereof.
V. MISCELLANEOUS
1. Effective Date. The Plan became effective on March 18, 1994, subject
to approval by shareowners before March 18, 1995.
2. Duration of Plan. Unless sooner terminated, the Plan shall remain in
effect until March 21, 2013. Termination of the Plan shall not affect any
Options or Rights previously granted, which Options or Rights shall remain in
effect until exercised, surrendered, or cancelled, or until they have expired,
all in accordance with their terms. Termination of the Plan shall not affect
any Restricted Stock Grants previously made, or Stock previously granted
pursuant to a Restricted Stock Grant; the terms, conditions and restrictions
applicable to shares issued pursuant to a Restricted Stock Grant shall remain in
effect until such terms, conditions and restrictions shall have lapsed all in
accordance with their terms.
3. Changes in Capital Structure. In the event that there is any change in
the capital structure of the Company through merger, consolidation,
reorganization, recapitalization, spin-off or otherwise, or if there shall be
any dividend on the Company's Stock, payable in such Stock, or if there shall be
a Stock split or a combination of shares, then:
(i) the number of shares reserved for Options (both in the aggregate
and with respect to each Participant) and the number of shares subject to
outstanding Options and the price per share of each such Option;
(ii) the number of shares with respect to which Rights may be exercised
(both in the aggregate and with respect to each Participant); and
(iii)the number of shares of Stock reserved for Restricted Stock
Grants under the Plan shall be proportionately adjusted by the Board as it
deems equitable, in its absolute discretion, to prevent dilution or
enlargement of the rights of a Participant and any shares issued pursuant
to such change in capital structure shall be subject to the same terms,
conditions and restrictions as the shares of Stock with respect to which
newly issued shares are issued. The issuance of Stock for consideration
and the issuance of Stock rights shall not be considered a change in the
Company's capital structure. No adjustment provided for in this Section 3
shall require the issuance of any fractional share.
4. Change in Control. If while unexercised Options, Rights, or Restricted
Stock Grants remain outstanding under the Plan:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding
securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by the Board or nomination
for election by the Company's shareowners was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii)the shareowners of the Company approve a merger or consolidation
of the Company with any other Company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities; or
(iv) the shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
then (a) from and after the date of the first of the foregoing events to occur,
all Options and Rights held by active employees on such date shall be
exercisable in full, whether or not otherwise exercisable; and (b) on the date
of the first of the foregoing events to occur, the restrictions set forth in
Part IV, Section 2 on all outstanding Restricted Stock Grants, including
Performance Restricted Stock Grants, shall lapse.
5. Amendment or Termination. The Board may, by resolution, amend or
terminate the Plan at any time; provided, however, that
(i) shareowner approval shall be required for any changes to the Plan
which would require shareowner approval under the Delaware General
Corporation Law, Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, or Section 162(m) of the Code; and
(ii) the Board may not, without the written consent of the Participant,
alter, impair or adversely affect any right of such Participant with
respect to any Option or Right previously granted or Restricted Stock Grant
previously made to such Participant under the Plan except as authorized
herein.
Notwithstanding the foregoing, the Board may, by resolution, amend the Plan in
any way that it deems necessary or appropriate in order to make income with
respect to the Plan deductible for Federal income tax purposes under Section
162(m) of the Code without regard to the foregoing provisos (i) and (ii), and
any such amendment shall be effective as of such date as is necessary to make
such income under the Plan so deductible.
6. Unfunded Plan. The Plan shall be unfunded. Neither the Company nor
the Committee shall be required to segregate any assets that may at any time be
represented by Options or Rights under the Plan. Neither the Company nor the
Committee shall be deemed to be a trustee of any amounts to be paid under the
Plan. Any liability of the Company to any Participant with respect to a right
shall be based solely upon any contractual obligations created by the Plan or a
Stock Appreciation Right Agreement or Option Agreement; no such obligation shall
be deemed to be secured by any pledge or any encumbrance on any property of the
Company.
VI. CANCELLATION AND RESCISSION
1. Competition; Confidential Information; Termination for Cause
(a) Unless an Option Agreement or a Stock Appreciation Right Agreement
(any such agreement being referred to herein as an "Agreement") specifies
otherwise, the Committee may
(1) cancel at any time any unexercised Option or Right; or
(2) rescind any exercise of an Option or Right;
if the Participant is not in compliance with all other applicable
provisions of the Agreement or the Plan or if, prior to any such exercise
or within six months after such exercise, the Participant
(i) engages in a Competing Business, as such term is defined in
the Agreement; or
(ii) solicits for employment, hires or offers employment to, or
discloses information to or otherwise aids or assists any other person
or entity other than the Company in soliciting for employment, hiring
or offering employment to, any employee of the Company; or
(iii)takes any action which is intended to harm the Company or its
reputation, which the Company reasonably concludes could harm the
Company or its reputation or which the Company reasonably concludes
could lead to unwanted or unfavorable publicity to the Company;
(iv) discloses to anyone outside the Company, or uses in other
than the Company's business, any "confidential information", as such
term is defined in the Agreement; or
(v) is terminated by the Company for "cause".
(b) Upon exercise of an Option or Right, the Participant shall certify
on a form acceptable to the Committee that the Participant is in compliance
with the terms and conditions of the Agreement and the Plan.
(c) The Company shall immediately notify the Participant in writing of
any cancellation of any unexercised Option or Right. Following issuance of
such notice, the Participant shall have no further rights with respect to
such Option or Right.
(d) The Company shall notify the Participant in writing of any
rescission of an exercise of an Option or Right within one year after the
activity referred to in Part VI, Section 1(a). Within ten days after
receiving such a notice from the Company, the Participant shall either (i)
pay to the Company the excess of the fair market value of the Stock on the
date of exercise of an Option over the exercise price for the Option or the
fair market value of the Stock and/or cash distributed to the Participant
as a result of the exercise of a Right or (ii) return the Stock received
upon the exercise of an Option (in which case the Company will return the
exercise price to the Participant) or return the Stock and/or cash
distributed upon the exercise of a Right.
(e) The term "cause" shall mean (i) an intentional act of fraud,
embezzlement, theft or any other material violation of law in connection
with the Participant's duties or in the course of the Participant's
employment with the Company; or (ii) intentional damage to assets of the
Company; or (iii) intentional disclosure of confidential information of the
Company contrary to the policy of the Company; or (iv) breach of the
Participant's obligations the Company; or (v) intentional engagement in any
competitive activity which would constitute a breach of the Participant's
duty of loyalty or of the Participant's obligations under any written
contract of employment; or (vi) intentional breach of any policy of the
Company; or (vii) the willful and continued failure by the Participant to
substantially perform the Participant's duties with the Company (other than
any such failure resulting from the Participant's incapacity due to
physical or mental illness); or (viii) the willful engaging by the
Participant in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise.
2. Agreement by Participant Regarding Deduction. The Participant shall
agree and consent to a deduction from any amounts the Company owes to the
Participant from time to time (including amounts owed as wages or other
compensation, fringe benefits, or vacation pay, as well as any other amounts
owed to the Participant by the Company) to the extent of the amounts the
Participant owes the Company under this Part VI. Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount owned by the Participant, calculated as set
forth in this Part VI, then the Participant agrees to pay immediately the unpaid
balance to the Company.