CHEVRON CORPORATION
LONG-TERM INCENTIVE PLAN
(Including March 29, 2000 Amendments)
1. PURPOSE.
The purpose of the Chevron Corporation Long-Term Incentive
Plan is to promote and advance the interests of Chevron Corporation and its
stockholders by strengthening the ability of the Corporation and its
Subsidiaries to attract, motivate and retain managerial and other key employees,
and to strengthen the mutuality of interests between such employees and the
Corporation's stockholders. The Plan replaces the Management Contingent
Incentive Plan. Certain capitalized terms used in the Plan have the meaning set
forth in Section 2.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall have the
meanings set forth below:
(a) "Award" or "Awards" means a grant of a Stock Option,
Restricted Stock, a Stock Appreciation Right, an Other Share-Based Award or a
Nonstock Award under the Plan.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the committee appointed by the Board to
administer the Plan as provided in Section 3.
(e) "Common Stock" means the $1.50 par value common stock of
the Corporation or any security of the Corporation identified by the Committee
as having been issued in substitution, exchange or lieu thereof.
(f) "Corporation" means Chevron Corporation, a Delaware
corporation, or any successor corporation.
(g) "Disability" means that because of an injury or sickness
the Participant is unable to perform any occupation for which the Participant is
qualified or may reasonably become qualified by reason of education, training,
or experience, whether or not a job involving such occupation is available
within the Corporation.
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(h) "Employee" means any individual who is a salaried employee
on the payroll of the Corporation or any Subsidiary.
(i) "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, or any successor statute.
(j) "Fair Market Value" of a Share as of a specified date
means the price per share at which Shares were traded at the close of business
on such date as reported in the New York Stock Exchange composite transactions
published in the Western Edition of the Wall Street Journal or, if no trading of
Common Stock is reported for that day, the next preceding day on which trading
was reported.
(k) "Incentive Stock Option" means any Stock Option granted
pursuant to the Plan that is intended to be and is specifically designated as an
"Incentive Stock Option" within the meaning of section 422A of the Code.
(l) "Nonstatutory Stock Option" means any Stock Option granted
pursuant to the provisions of the Plan that is not an Incentive Stock Option.
(m) "Nonstock Award" means an Award under the Plan the amount,
value and denomination of which is not determined with reference to, or
expressed in, Shares. "Nonstock Award Agreement" means the agreement between the
Corporation and the recipient of a Nonstock Award that contains the terms and
conditions pertaining to the Nonstock Award.
(n) "Optionee" means an Employee who has received the grant of
a Stock Option.
(o) "Other Share-Based Award" means an Award granted pursuant
to Section 8 of the Plan. "Other Share-Based Award Agreement" means the
agreement between the Corporation and the recipient of an Other Share-Based
Award that contains the terms and conditions pertaining to the Other Share-Based
Award.
(p) "Participant" means an Employee who is granted an Award
under the Plan.
(q) "Plan" means the Chevron Corporation Long-Term Incentive
Plan, as amended from time to time.
(r) "Restricted Stock Award" means an Award granted pursuant
to the provisions of Section 7 of the Plan. "Restricted Stock" means Shares
granted pursuant to Section 7 of the Plan. "Restricted Stock Agreement" means
the agreement between the Corporation and the recipient of Restricted Stock that
contains the terms, conditions and restrictions pertaining to such Restricted
Stock.
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(s) "Rules" means regulations and rules adopted from time to
time by the Committee.
(t) "Share" means one share of Common Stock, adjusted in
accordance with Section 10 (if applicable).
(u) "Stock Option" means an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to Section 6 of the Plan. "Stock
Option Agreement" means the agreement between the Corporation and the Optionee
that contains the terms and conditions pertaining to a Stock Option.
(v) "Subsidiary" means any corporation or entity in which the
Corporation directly or indirectly controls more than 50% of the total voting
power of all classes of its stock having voting power and which the Board has
designated as a Subsidiary for purposes of the Plan.
In addition, the terms "Rule 16b-3" and "Restriction Period"
have the meanings set forth below in Sections 3(a) and 7(b) respectively.
3. ADMINISTRATION.
(a) Composition of the Committee.
The Plan shall be administered by a Committee appointed by the
Board, consisting of not less than a sufficient number of disinterested members
of the Board so as to qualify the Committee to administer the Plan as
contemplated by Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Exchange Act, or any successor or replacement rule adopted by
the Commission ("Rule 16b-3"). The Board may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board. The Board shall appoint one of the members
of the Committee as Chairman. The term "disinterested members of the Board"
shall be interpreted pursuant to Rule 16b-3. The Management Compensation
Committee of the Board shall serve as the Committee. The Board may at any time
replace the Management Compensation Committee with another Committee. In the
event that the Management Compensation Committee shall cease to satisfy the
requirements of Rule 16b-3, the Board shall appoint another Committee that shall
satisfy such requirements. If any member of the Committee does not qualify as an
"outside director" for purposes of section 162(m) of the Code, Awards under the
Plan for the chief executive officer and the four most highly compensated
officers of the Corporation (other than the chief executive officer) shall be
administered by a subcommittee of the Board consisting of each Committee member
who qualifies as an "outside director." If fewer than two Committee members
qualify as an "outside director," the Board shall appoint one or more other
members to such subcommittee who do qualify as "outside directors"
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so that it will at all times consist of at least two members who qualify as an
"outside director" for purposes of section 162(m) of the Code.
(b) Actions by the Committee.
The Committee shall hold meetings at such times and places as
it may determine. Acts approved by a majority of the members of the Committee
present at a meeting at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee.
(c) Powers of the Committee.
The Committee shall have the authority to administer the Plan
in its sole discretion. To this end, the Committee is authorized to construe and
interpret the Plan, to promulgate, amend and rescind Rules relating to the
implementation of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan, including the selection of
Employees who shall be granted Awards, the number of Shares or Share equivalents
to be subject to each Award, the Award price, if any, the vesting or duration of
Awards, the designation of Stock Options as Incentive Stock Options or
Nonstatutory Stock Options, other terms and conditions of Awards and the
disposition of Awards in the event of a Participant's divorce or dissolution of
marriage. Subject to the requirements of applicable law, the Committee may
designate persons other than members of the Committee to carry out its
responsibilities and may prescribe such conditions and limitations as it may
deem appropriate, except that the Committee may not delegate its authority with
regard to the selection for participation of or the granting of Awards to
persons subject to Section 16 of the Exchange Act. Any determination, decision
or action of the Committee in connection with the construction, interpretation,
administration, or application of the Plan shall be final, conclusive and
binding upon all persons participating in the Plan and any person validly
claiming under or through persons participating in the Plan.
(d) Liability of Committee Members.
No member of the Board or the Committee will be liable for any
action or determination made in good faith by the Board or the Committee with
respect to the Plan or any Award under it.
(e) Administration of the Plan Following a Change in Control.
Within 30 days after the occurrence of a "change of control"
of the Corporation as defined in Article VI of the bylaws of the Corporation, as
such bylaws may be amended from time to time (a "Change in Control"), the
Committee shall appoint an independent organization which shall thereafter
administer the Plan and have all of the powers and duties formerly held and
exercised by the Committee with respect to the Plan
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as provided in Section 3(c). Upon such appointment, the Committee shall cease to
have any responsibility with respect to the administration of the Plan.
4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN.
(a) Duration of the Plan.
The Plan was adopted by the Board on January 24, 1990, to be
effective upon the date it is approved by the stockholders of the Corporation.
The Plan shall remain in effect until terminated by the Board.
(b) Shares Subject to the Plan.
The maximum number of Shares for which Awards may be granted
under the Plan in each calendar year during any part of which the Plan is in
effect shall be one percent (1%) of the total issued and outstanding Shares as
of January 1 of such year; provided, however, that for the first ten years in
which the Plan is in effect, no more than ten million (10,000,000) Shares shall
be cumulatively available for the issuance of Shares upon the exercise of
Incentive Stock Options under the Plan. The limitations set forth in this
Section 4(b) shall be subject to adjustment as provided in Section 10.
(c) Accounting for Numbers of Shares.
For the purpose of computing the total number of Shares
available for Awards under the Plan in a calendar year there shall be counted
against the limitation for the current calendar year the number of Shares issued
or subject to issuance upon exercise or settlement of Stock Options (whether or
not granted in conjunction with a stock appreciation right) and Restricted Stock
Awards granted in that calendar year and the number of Shares that equals the
value of Other Share-Based Awards and Nonstock Awards granted in that calendar
year, determined as of the dates on which such Awards are granted. For this
purpose, Nonstock Awards shall be converted into Shares by dividing the cash
value (or target cash value, in the case of an Award with a fluctuating value)
of the Nonstock Award by the Fair Market Value on the date of grant of such
Award. In the case of a stock appreciation right not granted in connection with
a Stock Option, the full number of underlying Shares shall be counted against
the limitation. Dividends paid, dividend equivalents granted and interest or
other amounts credited with respect to any Award outstanding under the Plan
shall not be taken into consideration in applying the Plan limitation.
(d) Source of Stock Issued Under the Plan.
Common Stock issued under the Plan may be either authorized
and unissued Shares or issued Shares that have been reacquired by the
Corporation, as
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determined in the sole discretion of the Committee. No fractional Shares of
Common Stock shall be issued under the Plan.
5. PERSONS ELIGIBLE FOR AWARDS; LIMITS ON INDIVIDUAL AWARDS.
Persons eligible for Awards under the Plan shall consist of
managerial and other key Employees (including officers, whether or not they are
directors) of the Corporation and its Subsidiaries who hold positions of
significant responsibility or whose performance or potential contribution, in
the judgment of the Committee, would benefit the future success of the
Corporation. A Participant may receive more than one Award, including Awards of
the same type subject to the restrictions of the Plan.
The following limits shall apply to grants of Awards under the
Plan:
(a) Stock Options, Restricted Stock and Other Share-Based
Awards: The aggregate number of Shares that may be granted in the form
of Stock Options, Restricted Stock and Other Share-Based Awards in any
one calendar year to any Participant shall not exceed 0.15% of the
Shares outstanding on the date of grant.
(b) Nonstock Awards: The value of all Nonstock Awards granted
in any single calendar year to any Participant shall not exceed $1
million. For this purpose, the value of a Nonstock Award shall be
determined on the date of grant without regard to any conditions
imposed on the Nonstock Award.
6. STOCK OPTIONS.
Stock Options granted under the Plan may be in the form of
Incentive Stock Options or Nonstatutory Stock Options and shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the
Committee in its sole discretion shall deem desirable:
(a) Awards of Stock Options.
Subject to the terms of the Plan the Committee shall have
complete authority in its sole discretion to determine the persons to whom and
the time or times at which grants of Stock Options will be made. The terms of
each Stock Option shall be set forth in a Stock Agreement, which shall contain
such provisions not inconsistent with the terms of the Plan, including, without
limitation, restrictions upon the exercise of the Stock Option or restrictions
on the transferability of Shares issued upon the exercise of a Stock Option, as
the Committee shall deem advisable in its sole discretion. Stock Options may be
granted alone, in addition to, or in tandem with other Awards under the Plan.
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(b) Number of Shares.
Each Stock Option shall state the number of Shares to which it
pertains and shall provide for the adjustment thereof in accordance with the
provisions of Section 10. No fractional Shares will be issued pursuant to the
exercise of a Stock Option.
(c) Exercise Price.
Each Stock Option shall state the price per Share, determined
by the Committee in its sole discretion, at which the Stock Option may be
exercised; provided, however, that in the case of an Incentive Stock Option the
exercise price shall not be less than the Fair Market Value of a Share on the
date of grant; and provided that in the case of a Nonstatutory Stock Option the
exercise price shall not be less than fifty percent (50%) of the Fair Market
Value of a Share on the date of grant.
(d) Method of Payment.
A Stock Option may be exercised, in whole or in part, by
giving written notice of exercise to the Corporation specifying the number of
Shares to be purchased. Such notice shall be accompanied by payment in full of
the purchase price in cash or, if acceptable to the Committee in its sole
discretion, and in accordance with its Rules, (i) in Shares already owned by the
Participant or (ii) by the withholding and surrender of the Shares subject to
the Stock Option. The Committee in its sole discretion, and in accordance with
its Rules, may also permit payment to be made by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker approved by
the Committee to sell Shares and to deliver all or part of the sales proceeds to
the Corporation in payment of all or part of the purchase price and any
withholding taxes. The Committee in its sole discretion, and in accordance with
its Rules, may also permit payment to be made by the delivery (on a form
prescribed by the Committee) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Committee as security for a loan and
to deliver all or part of the loan proceeds to the Corporation in payment of all
or part of the purchase price and any withholding taxes. Payment may also be
made in any other form approved by the Committee, consistent with applicable
law, regulations and rules.
(e) Term and Exercise of Stock Options; Nontransferability
of Stock Options.
Each Stock Option shall state the time or times when it
becomes exercisable and the time or times when any stock appreciation right
granted with it may be exercised, which shall be determined by the Committee in
its sole discretion. No Stock Option shall be exercisable before six (6) months
have elapsed from the date it is granted (except in the case of death or
Disability) and no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it is granted. Except as otherwise
provided in the Rules or in a Stock Option Agreement, during the lifetime of
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the Optionee, the Stock Option shall be exercisable only by the Optionee and
shall not be assignable or transferable. In the event of the Optionee's death,
no Incentive Stock Option shall be transferable by the Optionee otherwise than
by will or the laws of descent and distribution. In the event of the Optionee's
death, any Nonstatutory Stock Option shall be transferred to the beneficiary
designated by the Optionee for this purpose pursuant to procedures adopted by
the Committee.
(f) Termination of Employment.
Each Stock Option Agreement shall set forth the extent to
which the Optionee shall have the right to exercise the Stock Option following
termination of the Optionee's employment with the Corporation and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Stock Options issued pursuant to the
Plan, and may reflect distinctions based on the reasons for termination of
employment.
(g) Rights as a Stockholder.
An Optionee or a transferee of an Optionee shall have no
rights as a stockholder with respect to any Shares covered by his or her Stock
Option until the date of the issuance of a stock certificate for such Shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 10.
(h) Stock Appreciation Rights.
In connection with the grant of any Stock Option pursuant to
the Plan, the Committee, in its sole discretion, may also grant a stock
appreciation right pursuant to which the Optionee shall have the right to
surrender all or part of the unexercised portion of such Stock Option, exercise
the stock appreciation right, and thereby obtain payment of an amount equal to
(or less than, if the Committee shall so determine in its sole discretion at the
time of grant) the difference obtained by subtracting the aggregate exercise
price of the Shares subject to the Stock Option (or the portion thereof) so
surrendered from the Fair Market Value of such Shares on the date of such
surrender. The exercise of such stock appreciation right shall be subject to
such limitations (including, but not limited to, limitations as to time and
amount) as the Committee shall deem appropriate. The payment of a stock
appreciation right may be made in Shares (determined with reference to its Fair
Market Value on the date of exercise), or in cash, or partly in cash and in
Shares, as determined in the sole discretion of the Committee. In the event of
the exercise of a stock appreciation right, the underlying Stock Option will be
deemed to have been exercised for all purposes under the Plan, including Section
4.
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7. RESTRICTED STOCK.
Restricted Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee in its
sole discretion shall deem desirable.
(a) Restricted Stock Awards.
Subject to the provisions of the Plan, the Committee shall
have complete authority in its sole discretion to determine the persons to whom,
and the time or times at which, grants of Restricted Stock will be made, the
number of Shares of Restricted Stock to be awarded, the price (if any) to be
paid by the recipient of Restricted Stock, the time or times within which such
Awards may be subject to forfeiture, and all other terms and conditions of the
Awards. Any price that the recipient shall be required to pay shall be either
(i) not less than 50% of the Fair Market Value of the Shares on the date the
award is made or (ii) the amount required to be received by the Corporation in
order to assure compliance with applicable state law. The Committee may
condition the grant of a Restricted Stock Award upon the attainment of specified
performance goals (such as earnings per share, total shareholder return or
return on capital employed) or such other factors as the Committee may
determine, in its sole discretion. Restricted Stock Awards may be granted alone,
in addition to or in tandem with other Awards under the Plan.
The terms of each Restricted Stock Award shall be set forth in
a Restricted Stock Agreement between the Corporation and the Employee, which
Agreement shall contain such provisions as the Committee determines to be
necessary or appropriate to carry out the intent of the Plan with respect to
such Award. Each Participant receiving a Restricted Stock Award shall be issued
a stock certificate in respect of such Shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award. The Committee shall require that stock certificates
evidencing such Shares be held by the Corporation until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock Award, the
Participant shall have delivered to the Corporation a stock power, endorsed in
blank, relating to the stock covered by such Award.
(b) Restrictions and Conditions.
The Shares of Restricted Stock awarded pursuant to this Section 7 shall be
subject to the following terms, conditions and restrictions:
(i) The Committee in its sole discretion shall specify the
terms, conditions and restrictions under which Shares of Restricted
Stock shall vest or be forfeited. These terms, conditions and
restrictions must include continued employment with the Corporation for
at least six (6) months except in the case
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of death or Disability, and
may include continued employment with the Corporation or a Subsidiary
for a specified period of time, termination of the Employee's
employment for specified reasons such as death or Disability prior to
the completion of the specified period, or the attainment of certain
performance objectives. The period of time commencing with the date of
such Award and ending on the date on which all Shares of Restricted
Stock in such Award either vest or are forfeited shall be known as the
"Restriction Period". With respect to the Restricted Stock during the
Restriction Period the Committee, in its sole discretion, may provide
for the lapse of any such term, condition or restriction in
installments and may accelerate or waive such term, condition or
restriction in whole or in part, based on service, performance, and/or
such other factors or criteria as the Committee may determine in its
sole discretion. Except as otherwise provided in the Rules or in a
Restricted Stock Agreement, during the Restriction Period the
Participant shall not be permitted to sell, transfer, pledge, assign or
encumber Shares of Restricted Stock awarded under the Plan.
(ii) Except as provided in this paragraph (ii) and paragraph (i)
above, the Participant shall have, with respect to the Shares of
Restricted Stock, all of the rights of a stockholder of the
Corporation, including the right to vote the Shares and the right to
receive any cash or stock dividends. The Committee, in its sole
discretion, as determined at the time of Award, may provide that the
payment of cash dividends shall or may be deferred. Any deferred cash
dividends may be reinvested as the Committee shall determine in its
sole discretion, including reinvestment in additional Shares of
Restricted Stock. Stock dividends issued with respect to Restricted
Stock shall be Restricted Stock and will be subject to the same terms,
conditions and restrictions that apply to the Shares with respect to
which such dividends are issued. Any additional shares of Restricted
Stock issued with respect to cash or stock dividends shall not be
counted against the maximum number of shares for which awards may be
granted under the Plan in each calendar year as set forth in Section 4.
(iii) If and when the Restriction Period applicable to Shares of
Restricted Stock expires without a prior forfeiture of the Restricted
Stock, certificates for an appropriate number of unrestricted Shares
shall be delivered promptly to the Participant, and the certificates
for the Shares of Restricted Stock shall be canceled.
8. OTHER SHARE-BASED AWARDS.
(a) Grants.
Other Share-Based Awards may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Any such Awards
are to be bonus awards, issued for no consideration other than services rendered
or to be rendered.
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The Committee may condition the grant of an Other Share-Based Award upon the
attainment of specified performance goals (such as earnings per share, total
shareholder return or return on capital employed) or such other factors as the
Committee may determine, in its sole discretion. Awards under this Section 8 may
include, but are not limited to, stock units, stock appreciation rights not
granted in connection with the grant of any Stock Option pursuant to Section 6,
dividend equivalents, the grant of Shares conditioned upon some specified event,
the ownership for a specified period of time of Shares obtained through the
exercise of a Stock Option or the lapse of restrictions on Restricted Stock, the
payment of cash based upon the performance of the Shares or the grant of
securities convertible into Shares.
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the persons to whom and the time
or times at which Other Share-Based Awards shall be made, the number of Shares
or other securities, if any, to be granted pursuant to Other Share-Based Awards,
and all other conditions of the Other Share-Based Awards. In making an Other
Share-Based Award, the Committee may determine that the recipient of an Other
Share-Based Award shall be entitled to receive, currently or on a deferred
basis, interest or dividends or dividend equivalents with respect to the Shares
or other securities covered by the Award, and the Committee may provide that
such amounts (if any) shall be deemed to have been reinvested in additional
Shares or otherwise reinvested. The terms of any Other Share-Based Award shall
be set forth in an Other Share-Based Award Agreement between the Corporation and
the Employee, which Agreement shall contain such provisions as the Committee
determines to be necessary or appropriate to carry out the intent of the Plan
with respect to such Award.
(b) Terms and Conditions.
In addition to the terms and conditions specified in the Other
Share-Based Award Agreement, Other Share-Based Awards made pursuant to this
Section 8 shall be subject to the following:
(i) Except as otherwise provided in the Rules or in an Other
Share-Based Award Agreement, any Other Share-Based Award may not be
sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the Shares are issued or the Award becomes payable,
or, if later, the date on which any applicable restriction, performance
or deferral period lapses.
(ii) The Other Share-Based Award Agreement shall contain provisions
dealing with the disposition of such Award in the event of a
termination of the Employee's employment prior to the exercise,
realization or payment of such Award.
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9. NONSTOCK AWARDS.
(a) Grants.
Nonstock Awards may be granted either alone or in addition to
or in conjunction with other Awards under the Plan. Any such Awards are to be
bonus awards, issued for no consideration other than services rendered or to be
rendered. Awards under this Section 9 may take any form that the Committee in
its sole discretion shall determine.
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the persons to whom and the time
or times at which Nonstock Awards shall be made, the amount of any Nonstock
Award and all other conditions of the Nonstock Awards. The Committee may
condition the grant of a Nonstock Award upon the attainment of specified
performance goals (such as earnings per share, total shareholder return or
return on capital employed) or such other factors as the Committee may
determine, in its sole discretion. The terms of any Nonstock Award shall be set
forth in Nonstock Award Agreement between the Corporation and the Employee,
which Agreement shall contain such provisions as the Committee determines to be
necessary or appropriate to carry out the intent of the Plan with respect to
such Award.
(b) Terms and Conditions.
In addition to the terms and conditions specified in the
Nonstock Award Agreement, Nonstock Awards made pursuant to this Section 9 shall
be subject to the following:
(i) Except as otherwise provided in the Rules or in a Nonstock
Award Agreement, any Nonstock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which
the Award becomes payable, or, if later, the date on which the
requirements of any applicable restriction, condition, performance goal
or deferral period is met or lapses.
(ii) The Nonstock Award Agreement shall contain provisions dealing
with the disposition of such Award in the event of a termination of the
Employee's employment prior to the exercise, realization or payment of
such Award.
10. RECAPITALIZATION.
Subject to any required action by the stockholders, the number
of Shares covered by the Plan as provided in Section 4, the number of Shares
covered by or referred to in each outstanding Award (other than an Award of
Restricted Stock that is
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outstanding at the time of the event described in this paragraph), and the
Exercise Price of each outstanding Stock Option and any price required to be
paid for Restricted Stock not yet outstanding at the time of the event described
in this paragraph or Other Share-Based Award shall be proportionately adjusted
for: (a) any increase or decrease in the number of issued Shares resulting from
a subdivision or consolidation of Shares, (b) the payment of a stock dividend
(but only of Common Stock) or any other increase or decrease in the number of
such Shares effected without receipt of consideration by the Corporation, or (c)
the declaration of a dividend payable in cash that has a material effect on the
price of issued Shares.
Subject to any required action by the stockholders, if the
Corporation shall be the surviving corporation in any merger, consolidation or
other reorganization, each outstanding Award (other than an Award of Restricted
Stock that is outstanding at such time) shall pertain and apply to the
securities to which a holder of the number of Shares subject to the Award would
have been entitled. In the event of a dissolution or liquidation of the
corporation or a merger, consolidation or other reorganization in which the
Corporation is not the surviving corporation, each outstanding Stock Option,
each unvested Restricted Stock Award or Other Share-Based Award and each
Nonstock Award shall be assumed by the surviving corporation and each Stock
Option, unvested Restricted Stock Award and Other Share-Based Award shall
pertain to a comparable number of shares in the surviving corporation, unless
the terms of the agreement of merger, consolidation or reorganization call for
the full vesting and cash out of such Awards.
In the event of a change in the Common Stock, which is limited
to a change of all of the Corporation's authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the Common Stock
within the meaning of the Plan.
The Committee may make appropriate adjustments in the number
of Shares covered by the Plan and the price or other value of any outstanding
Awards in the event of a spin-off or other distribution (other than normal cash
dividends) of Corporation assets to stockholders.
To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by the
Committee in its sole discretion, and its determination in that respect shall be
final, binding and conclusive, provided that each Incentive Stock Option granted
pursuant to the Plan shall not be adjusted in a manner that causes the Stock
Option to fail to continue to qualify as an incentive stock option within the
meaning of section 422A of the Code.
Except as expressly provided in this Section 10, a Participant
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation
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or spin-off of assets or stock of another corporation, and any issuance by the
Corporation of shares of stock of any class or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to
the Stock Option.
The grant of an Award pursuant to the Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
In the event that another corporation or business entity is
acquired by the Corporation and the Corporation agrees to assume outstanding
employee stock options, the aggregate number of Shares available for Awards
under Section 4 shall be increased accordingly.
The Committee shall prescribe rules governing the adjustment
of the number of shares covered by the Plan as provided in Section 4 and of
awards outstanding under the Plan in the event that the preferred stock purchase
rights issued pursuant to the Corporation's stockholder rights plan or any
successor rights plan detach from the Common Stock and become exercisable.
11. SECURITIES LAW REQUIREMENTS.
No Shares shall be issued and no Stock Options shall become
exercisable pursuant to the Plan unless and until the Corporation has determined
that: (i) it and the Participant have taken all actions required to register the
Shares under the Securities Act of 1933 or perfect an exemption from the
registration requirements thereof; (ii) any applicable listing requirement of
any stock exchange on which the Common Stock is listed has been satisfied; and
(iii) any other applicable provision of state or federal law has been satisfied.
12. AMENDMENTS OF THE PLAN AND AWARDS.
(a) Plan Amendments.
The Board may, insofar as permitted by law, from time to time,
with respect to any Shares at the time not subject to Awards, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever. However,
unless the Board specifically otherwise provides, any revision or amendment that
would cause the Plan to fail to comply with Rule 16b-3 or any other requirement
of applicable law or regulation if such amendment were not approved by the
holders of the Common Stock of the Corporation shall not be effective unless and
until the approval of the holders of Common Stock of the Corporation is
obtained. The foregoing notwithstanding, no amendment, revision, suspension or
discontinuation of the Plan (including any amendment to this Section 12)
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approved by the Board after six months prior to the public announcement of the
proposed transaction which, when effected, is a Change in Control or before the
date which is two years after the date of a Change in Control (the "Benefit
Protection Period") shall be valid or effective if such amendment, revision,
suspension or discontinuation would alter the provisions of this Section 12 or
adversely affect an Award outstanding under the Plan; provided, however, any
amendment, revision, suspension or discontinuation may be effected, even if so
approved after such a public announcement, if (a) the amendment or revision is
approved after any plans have been abandoned to effect the transaction which, if
effected, would have constituted a Change in Control and the event which would
have constituted the Change in Control has not occurred, and (b) within a period
of six months after such approval, no other event constituting a Change in
Control shall have occurred, and no public announcement of a proposed event
which would constitute a Change in Control shall have been made, unless
thereafter any plans to effect the Change in Control have been abandoned and the
event which would have constituted the Change in Control has not occurred. Any
amendment, revision, suspension or discontinuation of the Plan which is approved
by the Board prior to a Change in Control at the request of a third party who
effectuates a Change in Control shall be deemed to be an amendment, revision,
suspension or discontinuation of the Plan so approved during the Benefit
Protection Period.
(b) Amendments of Awards.
Subject to the terms and conditions and within the limitations
of the Plan, the Committee may amend, cancel, modify, extend or renew
outstanding Awards granted under the Plan, or accept the exchange of outstanding
Awards (to the extent not theretofore exercised) for the granting of new Awards
(at the same or a different price, if applicable) in substitution therefor.
(c) Rights of Participant.
No amendment, suspension or termination of the Plan nor any
amendment, cancellation or modification of any Award outstanding under it that
would adversely affect the right of any Participant in an Award previously
granted under the Plan will be effective without the written consent of the
affected Participant.
13. GENERAL PROVISIONS.
(a) Application of Funds.
The proceeds received by the Corporation from the sale of
Common Stock pursuant to the exercise of a Stock Option or the grant of
Restricted Stock will be used for general corporate purposes.
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(b) Employment Rights.
Neither the Plan nor any Award granted under the Plan shall be
deemed to give any individual a right to remain employed by the Corporation or a
Subsidiary. The Corporation and its Subsidiaries reserve the right to terminate
the employment of any employee at any time and for any reason, which right is
hereby reserved.
(c) Stockholders' Rights.
A Participant shall have no dividend rights, voting rights or
other rights as a stockholder with respect to any Shares covered by his or her
Award prior to the issuance of a stock certificate for such Shares. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date when such certificate is issued.
(d) Creditors' Rights.
A holder of an Other Share-Based Award or a Nonstock Award
shall have no rights other than those of a general creditor of the Corporation.
Other Share-Based Awards and Nonstock Awards shall represent unfunded and
unsecured obligations of the Corporation, subject to the terms and conditions of
the applicable Other Share-Based Award Agreement and of the Nonstock Award.
Notwithstanding the foregoing, the Committee is authorized to arrange for the
creation of one or more trusts to fund payments of Other Share-Based Awards or
Nonstock Awards payable or to become payable under the Plan. In such case the
rights of affected Participants shall be determined with reference to the terms
of the applicable trust agreement pursuant to which the trust was created.
(e) No Obligation to Exercise Stock Option.
The granting of a Stock Option shall impose no obligation upon
the Optionee to exercise such Stock Option.
(f) Deferral Elections.
The Committee may permit a Participant to elect to defer his
or her receipt of the payment of cash or the delivery of Shares that would
otherwise be due to such Participant by virtue of the exercise, the satisfaction
of any requirements or goals or lapse of restrictions of an Award made under the
Plan. If any such election is permitted, the Committee shall establish Rules and
procedures for such payment deferrals, including the possible (i) payment or
crediting, with respect to deferred amounts credited in cash, of reasonable
interest or other investment return determined with reference to any investment
performance measurement selected by the Committee from time to time, (ii)
payment or crediting of dividend equivalents in respect of deferrals credited in
units of Common Stock, and (iii) impact on a Participant's current tax
liability.
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(g) Withholding Taxes.
(i) General.
To the extent required by applicable federal, state, local or
foreign law, the recipient of any payment or distribution under the
Plan shall make arrangements satisfactory to the Corporation for the
satisfaction of any withholding tax obligations that arise by reason of
such payment or distribution. The Corporation shall not be required to
make such payment or distribution until such obligations are satisfied.
(ii) Stock Withholding.
The Committee in its sole discretion may permit a Participant
to satisfy all or part of his or her withholding tax obligations
incident to the exercise of a Nonstatutory Stock Option or the vesting
of Restricted Stock by having the Corporation withhold a portion of the
Shares that otherwise would be issued to him or her. Such Shares shall
be valued at their Fair Market Value on the date when taxes otherwise
would be withheld in cash. The payment of withholding taxes by
surrendering Shares to the Corporation, if permitted by the Committee,
shall be subject to such restrictions as the Committee may impose,
including any restrictions required by rules of the Securities and
Exchange Commission.
(h) Other Corporation Benefit and Compensation Programs.
Payments and other benefits received by a Participant under
the Plan shall not be deemed a part of a Participant's regular, recurring
compensation for purposes of the termination indemnity or severance pay law of
any country, state or political subdivision thereof and shall not be included
in, nor have any effect on, the determination of benefits under any other
employee benefit plan or similar arrangement provided by the Corporation or a
Subsidiary unless expressly so provided by such other plan or arrangement, or
except where the Committee expressly determines that inclusion of an Award or
portion of an Award is necessary to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual cash compensation. Awards under the Plan may be made in
combination with or in tandem with, or as alternatives to, grants, awards or
payments under any Corporation or Subsidiary plans. The Plan notwithstanding,
the Corporation or any Subsidiary may adopt such other compensation programs and
additional compensation arrangements as it deems necessary to attract, retain
and reward employees for their service with the Corporation and its
Subsidiaries.
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(i) Costs of the Plan.
The costs and expenses of administering the Plan shall be
borne by the Corporation.
(j) Participant's Beneficiary.
The Rules may provide that in the case of an Award that is not
forfeitable by its terms upon the death of the Participant, the Participant may
designate a beneficiary with respect to such Award in the event of death of a
Participant. If such beneficiary is the executor or administrator of the estate
of the Participant, any rights with respect to such Award may be transferred to
the person or persons or entity (including a trust, if permitted under rules or
procedures approved by the Committee) entitled thereto by bequest of or
inheritance from the holder of such Award.
(k) Awards in Foreign Countries.
The Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Corporation
or its Subsidiaries may operate to assure the viability of the benefits of
Awards made to Participants employed in such countries and to meet the intent of
the Plan.
(l) Severability.
The provisions of the Plan shall be deemed severable and the
validity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
(m) Binding Effect of Plan.
The Plan shall be binding upon and shall inure to the benefit
of the Corporation, its successors and assigns and the Corporation shall require
any successor or assign to expressly assume and agree to perform the Plan in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession or assignment had taken place. The term "the
Corporation" as used herein shall include such successors and assigns. The term
"successors and assigns" as used herein shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Corporation
(including the Plan) whether by operation of law or otherwise.
(n) No Waiver of Breach.
No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of the
Plan to be
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performed by such other party shall be deemed a waiver of similar or dissimilar
provisions of conditions at the same or at any prior or subsequent time.
(o) Authority to Establish Grantor Trust.
The Committee is authorized in its sole discretion to
establish a grantor trust for the purpose of providing security for the payment
of Awards under the Plan; provided, however, that no Participant shall be
considered to have a beneficial ownership interest (or any other sort of
interest) in any specific asset of the Corporation or of its subsidiaries or
affiliates as a result of the creation of such trust or the transfer of funds or
other property to such trust.
14. APPROVAL OF STOCKHOLDERS.
Adoption of the Plan shall be subject to approval by
affirmative vote of the stockholders of the Corporation in accordance with
applicable law.