AVONDALE INDUSTRIES, INC.
1997 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the 1997 Stock Incentive Plan
(the "Plan") of Avondale Industries, Inc. ("Avondale") is to
increase shareholder value and to advance the interests of
Avondale and its subsidiaries (collectively, the "Company") by
furnishing a variety of economic incentives (the "Incentives")
designed to attract, retain and motivate key employees, officers
and directors and to strengthen the mutuality of interests
between such persons and Avondale's shareholders. Incentives may
consist of opportunities to purchase or receive shares of common
stock, $1.00 par value per share, of Avondale (the "Common
Stock"), monetary payments or both, on terms determined under the
Plan. As used in the Plan, the term "subsidiary" means any
corporation of which Avondale owns (directly or indirectly)
within the meaning of Section 425(f) of the Internal Revenue Code
of 1986, as amended (the "Code"), 50% or more of the total
combined voting power of all classes of stock.
2. Administration.
1.11834 Composition. The Plan shall be administered
by the compensation committee (the "Committee") of the Board
of Directors of Avondale. The Committee shall consist of not
fewer than two members of the Board of Directors, each of
whom shall (a) qualify as a "non-employee director" under
Rule 16b-3 under the Securities Exchange Act of 1934 (the
"1934 Act"), as currently in effect or any successor rule,
and (b) qualify as an "outside director" under Section
162(m) of the Code.
2.11834 Authority. The Committee shall have plenary
authority to award Incentives under the Plan, to interpret
the Plan, to establish any rules or regulations relating to
the Plan that it determines to be appropriate, to enter into
agreements with participants as to the terms of the
Incentives (the "Incentive Agreements") and to make any
other determination that it believes necessary or advisable
for the proper administration of the Plan. Its decisions in
matters relating to the Plan shall be final and conclusive
on the Company and participants. The Committee may delegate
its authority hereunder to the extent provided elsewhere
herein. The Committee shall not have authority to award
Incentives under the Plan to directors of Avondale who are
not also full-time employees of the Company ("Outside
Directors"). Outside Directors may receive awards under the
Plan only as specifically provided in Section 10 hereof.
3. Eligible Employees. Key employees of the Company
(including officers and directors who are full-time employees of
the Company, but excluding Outside Directors) shall become
eligible to receive Incentives under the Plan when designated by
the Committee. Employees may be designated individually or by
groups or categories, as the Committee deems appropriate. With
respect to participants not subject to Section 16 of the 1934 Act
and not covered employees under Section 162(m) of the Code, the
Committee may delegate its authority to designate participants,
to determine the size and type of Incentive to be received by
those participants and to determine or modify performance
objectives for those participants.
4. Types of Incentives. Incentives may be granted under
the Plan in any of the following forms, either individually or in
combination: (a) incentive stock options and non-qualified stock
options; (b) stock appreciation rights ("SARs"); (c) restricted
stock; and (d) performance shares.
5. Shares Subject to the Plan.
1.11834 Number of Shares. Subject to adjustment as
provided in Section 11.5, a total of 1,430,000 shares of
Common Stock are authorized to be issued under the Plan.
Incentives with respect to no more than 45,000 shares of
Common Stock may be granted through the Plan to a single
participant in one calendar year. In the event that a stock
option, SAR or performance share granted hereunder expires
or is terminated or cancelled prior to exercise or payment,
any shares of Common Stock that were issuable thereunder may
be issued again under the Plan. In the event that shares of
Common Stock are issued as Incentives under the Plan and
thereafter are forfeited or reacquired by the Company
pursuant to rights reserved upon issuance thereof, such
forfeited and reacquired shares may be issued again under
the Plan. If an Incentive is to be paid in cash by its
terms, the Committee need not make a deduction from the
shares of Common Stock issuable under the Plan with respect
thereto. If and to the extent that an Incentive may be paid
in cash or shares of Common Stock, the total number of
shares available for issuance hereunder shall be decreased
by the number of shares payable under such Incentive,
provided that upon any payment of all or part of such
Incentive in cash, the total number of shares available for
issuance hereunder shall be increased by the appropriate
number of shares represented by the cash payment, as
determined in the sole discretion of the Committee.
Additional rules for determining the number of shares
granted under the Plan may be made by the Committee, as it
deems necessary or appropriate.
2.11834 Type of Common Stock. Common Stock issued
under the Plan may be authorized and unissued shares or
issued shares held as treasury shares.
6. Stock Options. A stock option is a right to purchase
shares of Common Stock from Avondale. Stock options granted
under this Plan may be incentive stock options or non-qualified
stock options. Any option that is designated as a non-qualified
stock option shall not be treated as an incentive stock option.
Each stock option granted by the Committee under this Plan shall
be subject to the following terms and conditions:
1.11834 Price. The exercise price per share shall be
determined by the Committee, subject to adjustment under
Section 11.5; provided that in no event shall the option
price be less than the Fair Market Value of a share of
Common Stock on the date of grant.
2.11834 Number. The number of shares of Common Stock
subject to the option shall be determined by the Committee,
subject to adjustment as provided in Section 11.5.
3.11834 Duration and Time for Exercise. The term of
each stock option shall be determined by the Committee.
Each stock option shall become exercisable at such time or
times during its term as shall be determined by the
Committee. The Committee may accelerate the exercisability
of any stock option.
4.11834 Repurchase. Upon approval of the Committee,
the Company may repurchase a previously granted stock option
from a participant by mutual agreement before such option
has been exercised by payment to the participant of the
amount per share by which: (i) the Fair Market Value (as
defined in Section 11.12) of the Common Stock subject to the
option on the date of purchase exceeds (ii) the exercise
price.
5.11834 Manner of Exercise. A stock option may be
exercised, in whole or in part, by giving written notice to
the Company, specifying the number of shares of Common Stock
to be purchased. The exercise notice shall be accompanied
by the full purchase price for such shares. The option
price shall be payable in United States dollars and may be
paid (a) by cash, uncertified or certified check or bank
draft, (b) by delivery of shares of Common Stock held by the
optionee for at least six months in payment of all or any
part of the option price, which shares shall be valued for
this purpose at the Fair Market Value on the date such
option is exercised, (c) by delivering a properly executed
exercise notice together with irrevocable instructions to a
broker approved by the Company (with a copy to the Company)
to promptly deliver to the Company the amount of sale or
loan proceeds to pay the exercise price or (d) in such other
manner as may be authorized from time to time by the
Committee. In the case of delivery of an uncertified check
upon exercise of a stock option, no shares shall be issued
until the check has been paid in full. Prior to the
issuance of shares of Common Stock upon the exercise of a
stock option, a participant shall have no rights as a
shareholder.
6.11834 Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following addi-
tional provisions shall apply to the grant of stock options
that are intended to qualify as Incentive Stock Options (as
such term is defined in Section 422A of the Code):
(1) Any Incentive Stock Option agreement
authorized under the Plan shall contain such other
provisions as the Committee shall deem advisable, but
shall in all events be consistent with and contain or
be deemed to contain all provisions required in order
to qualify the options as Incentive Stock Options.
(2) All Incentive Stock Options must be granted
within ten years from the date on which this Plan is
adopted by the Board of Directors.
(3) Unless sooner exercised, all Incentive Stock
Options shall expire no later than ten years after the
date of grant.
(4) The option price for Incentive Stock Options
shall be not less than the Fair Market Value of the
Common Stock subject to the option on the date of
grant.
(5) No Incentive Stock Options shall be granted
to any participant who, at the time such option is
granted, would own (within the meaning of Section 422A
of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of
the employer corporation or of its parent or subsidiary
corporation.
(6) The aggregate Fair Market Value (determined
with respect to each Incentive Stock Option as of the
time such Incentive Stock Option is granted) of the
Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a
participant during any calendar year (under the Plan or
any other plan of the Company or any of its
subsidiaries) shall not exceed $100,000. To the extent
this $100,000 limitation is exceeded, the options that
relate to the excess shall be treated as non-qualified
stock options.
7. Restricted Stock.
1.6 Grant of Restricted Stock. The Committee may award
shares of restricted stock to such key employees as the
Committee determines to be eligible pursuant to the terms of
Section 3. An award of restricted stock may be subject to
the attainment of specified performance goals or targets,
restrictions on transfer, forfeitability provisions and such
other terms and conditions as the Committee may determine,
subject to the provisions of the Plan. To the extent
restricted stock is intended to qualify as performance based
compensation under Section 162(m) of the Code, it must meet
the additional requirements imposed thereby.
2.6 The Restricted Period. At the time an award of
restricted stock is made, the Committee shall establish a
period of time during which the transfer of the shares of
restricted stock shall be restricted (the "Restricted
Period"). Each award of restricted stock may have a
different Restricted Period. A Restricted Period of at
least three years is required, except that if vesting of the
shares is subject to the attainment of specified performance
goals, a Restricted Period of one year or more is permitted.
The expiration of the Restricted Period shall also occur as
provided under Section 11.11.
3.6 Escrow. The participant receiving restricted stock
shall enter into an Incentive Agreement with the Company
setting forth the conditions of the grant. Certificates
representing shares of restricted stock shall be registered
in the name of the participant and deposited with the
Company, together with a stock power endorsed in blank by
the participant. Each such certificate shall bear a legend
in substantially the following form:
The transferability of this certificate and the
shares of Common Stock represented by it is
subject to the terms and conditions (including
conditions of forfeiture) contained in the
Avondale Industries, Inc. 1997 Stock Incentive
Plan (the "Plan") and an agreement entered into
between the registered owner and Avondale
Industries, Inc. thereunder. Copies of the Plan
and the agreement are on file and available for
inspection at the principal office of the Company.
4.6 Dividends on Restricted Stock. Any and all cash
and stock dividends paid with respect to the shares of
restricted stock shall be subject to any restrictions on
transfer, forfeitability provisions or reinvestment
requirements as the Committee may, in its discretion,
prescribe in the Incentive Agreement.
5.6 Forfeiture. In the event of the forfeiture of any
shares of restricted stock under the terms provided in the
Incentive Agreement (including any additional shares of
restricted stock that may result from the reinvestment of
cash and stock dividends, if so provided in the Incentive
Agreement), such forfeited shares shall be surrendered and
the certificates cancelled. The participants shall have the
same rights and privileges, and be subject to the same
forfeiture provisions, with respect to any additional shares
received pursuant to Section 11.5 due to a recapitalization,
merger or other change in capitalization.
6.6 Expiration of Restricted Period. Upon the
expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in Section
7.2 and in the Incentive Agreement or an amendment thereto,
the restrictions applicable to the restricted stock shall
lapse and a stock certificate for the number of shares of
restricted stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions and
legends other than those required by law, to the participant
or the participant's estate, as the case may be.
7.6 Rights as a Shareholder. Subject to the terms and
conditions of the Plan and subject to any restrictions on
the receipt of dividends that may be imposed in the
Incentive Agreement, each participant receiving restricted
stock shall have all the rights of a shareholder with
respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote
such shares.
8. Stock Appreciation Rights. A SAR is a right to
receive, without payment to the Company, a number of shares of
Common Stock, cash or any combination thereof, the amount of
which is determined pursuant to the formula set forth in Section
8.4. A SAR may be granted (a) with respect to any stock option
granted under the Plan, either concurrently with the grant of
such stock option or at such later time as determined by the
Committee (as to all or any portion of the shares of Common Stock
subject to the stock option), or (b) alone, without reference to
any related stock option. Each SAR granted by the Committee
under the Plan shall be subject to the following terms and
conditions:
1.6 Number. Each SAR granted to any participant shall
relate to such number of shares of Common Stock as shall be
determined by the Committee, subject to Section 5.1 and
subject to adjustment as provided in Section 11.5. In the
case of a SAR granted with respect to a stock option, the
number of shares of Common Stock to which the SAR pertains
shall be reduced in the same proportion that the holder of
the option exercises the related stock option.
2.6 Duration and Time for Exercise. The term and
exercisability of each SAR shall be determined by the
Committee. Unless otherwise provided by the Committee in
the Incentive Agreement, each SAR issued in connection with
a stock option shall become exercisable at the same time or
times, to the same extent and upon the same conditions as
the related stock option. The Committee may in its
discretion accelerate the exercisability of any SAR at any
time.
3.6 Exercise. A SAR may be exercised, in whole or in
part, by giving written notice to the Company, specifying
the number of SARs that the holder wishes to exercise. The
Company shall, within 30 days of receipt of notice of
exercise, deliver to the exercising holder certificates for
the shares of Common Stock or cash or both, as determined by
the Committee, to which the holder is entitled pursuant to
Section 8.4.
4.6 Payment. Subject to the right of the Committee to
deliver cash in lieu of shares of Common Stock, the number
of shares of Common Stock that shall be issuable upon the
exercise of an SAR shall be determined by dividing:
(1) the number of shares of Common Stock as to
which the SAR is exercised multiplied by the dollar
amount of the appreciation in such shares (for this
purpose, the "appreciation" shall be the amount by
which the Fair Market Value of the shares of Common
Stock subject to the SAR on the Exercise Date exceeds
(1) in the case of a SAR related to a stock option, the
purchase price of the shares of Common Stock under the
stock option or (2) in the case of a SAR granted alone,
without reference to a related stock option, an amount
equal to the Fair Market Value of a share of Common
Stock on the date of grant, which shall be determined
by the Committee at the time of grant, subject to
adjustment under Section 11.5); by
(2) the Fair Market Value of a share of Common
Stock on the Exercise Date.
In lieu of issuing shares of Common Stock upon the
exercise of a SAR, the Committee may elect to pay the holder
of the SAR cash equal to the Fair Market Value on the
Exercise Date of any or all of the shares that otherwise
would be issuable. No fractional shares of Common Stock
shall be issued upon the exercise of a SAR; instead, the
holder of a SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market
Value of a share of Common Stock on the Exercise Date or to
purchase the portion necessary to make a whole share at its
Fair Market Value on the Exercise Date.
9. Performance Shares. A performance share consists of an
award that may be paid in shares of Common Stock or in cash, as
described below. The award of performance shares shall be
subject to such terms and conditions as the Committee deems
appropriate.
1.2 Performance Objectives. Each performance share
will be subject to performance objectives for Avondale or
one of its subsidiaries, divisions or departments to be
achieved by the end of a specified period. The number of
performance shares awarded shall be determined by the
Committee and may be subject to such terms and conditions as
the Committee shall determine. If the performance objectives
are achieved, each participant will be paid (a) a number of
shares of Common Stock equal to the number of performance
shares initially granted to that participant; (b) a cash
payment equal to the Fair Market Value of such number of
shares of Common Stock on the date the performance
objectives are met or such other date as may be provided by
the Committee or (c) a combination of shares of Common Stock
and cash, as may be provided by the Committee. If such
objectives are not met, each award of performance shares may
provide for lesser payments in accordance with a pre-
established formula set forth in the Incentive Agreement.
Notwithstanding the foregoing, unless otherwise provided in
the Incentive Agreement, the Committee may in its discretion
declare the performance objectives achieved or waived. To
the extent a performance share is intended to qualify as
performance based compensation under Section 162(m) of the
Code, it must meet the additional requirements imposed
thereby.
2.2 Not a Shareholder. The award of performance shares
to a participant shall not create any rights in such partic-
ipant as a shareholder of the Company, until the payment of
shares of Common Stock with respect to an award, at which
time such stock shall be considered issued and outstanding.
3.2 Dividend Equivalent Payments. A performance share
award may be granted by the Committee in conjunction with
dividend equivalent payment rights or other such rights.
Dividend equivalent payments may be made to the participant
at the time of the payment of the dividend or issuance of
the other right or at the end of the specified performance
period or may be deemed to be invested in additional
performance shares at the Fair Market Value of a share of
Common Stock on the date of payment of the dividend or
issuance of the right.
10. Stock Options for Outside Directors
1.2 Eligibility. Each Outside Director shall be
automatically granted a non-qualified stock option to
acquire 1,065 shares of Common Stock on the day following
the annual meeting of shareholders beginning with the 1997
annual meeting of shareholders and thereafter on the day
following subsequent annual meetings of shareholders for as
long as the Plan remains in effect and shares of Common
Stock remain available for grant under Section 5.1 hereof.
2.2 Exercisability of Stock Options. The stock options
granted to Outside Directors under this Section 10 shall
become exercisable as follows:
25% of the total number of shares covered by
the stock options beginning one year after
the date of grant;
50% of the total number of shares covered by
the stock options beginning two years after
the date of grant, less any shares previously
issued;
75% of the total number of shares covered by
the stock options beginning three years after
the date of grant, less any shares previously
issued;
100% of the total number of shares covered by
the stock options beginning four years after
the date of grant, less any shares previously
issued;
provided, however, that such stock options shall become
immediately exercisable under 11.11 hereof and in the event
of retirement from the Board on or after reaching age 65,
death or disability. No stock option granted to an Outside
Director under the terms of this Section 10 may be exercised
more than ten years after the date of grant.
3.2 Exercise Price. The per share exercise price of
stock options granted to Outside Directors shall be equal to
100% of the Fair Market Value as defined in the Plan, of a
share of Common Stock on the date of grant.
4.2 Exercise after Termination of Board Service. In
the event that an Outside Director ceases to serve on the
Board of Directors for any reason, the stock options granted
hereunder must be exercised, to the extent otherwise
exercisable, within one year from the date of termination of
Board service, but in no event later than ten years after
the date of grant.
11. General.
1.2 Duration. Subject to Section 11.10, the Plan shall
remain in effect until all Incentives granted under the Plan
have either been satisfied by the issuance of shares of
Common Stock or the payment of cash or been terminated under
the terms of the Plan and all restrictions imposed on shares
of Common Stock in connection with their issuance under the
Plan have lapsed.
2.2 Transferability of Incentives. Options, SARs and
performance shares granted under the Plan may not be
transferred except:
(1) by will;
(2) by the laws of descent and distribution; or
(3) in the case of stock options only, if
permitted by the Committee and so provided in the
Incentive Agreement or an amendment thereto, (i)
pursuant to a domestic relations order, as defined in
the Code, (ii) to Immediate Family Members, (iii) to a
partnership in which Immediate Family Members, or
entities in which Immediate Family Members are the sole
owners, members or beneficiaries, as appropriate, are
the only partners, (iv) to a limited liability company
in which Immediate Family Members, or entities in which
Immediate Family Members are the sole owners, members
or beneficiaries, as appropriate, are the only members,
or (v) to a trust for the sole benefit of Immediate
Family Members. "Immediate Family Members" shall be
defined as the spouse and natural or adopted children
or grandchildren of the participant and their spouses.
To the extent that an incentive stock option is
permitted to be transferred during the lifetime of the
participant, it shall be treated thereafter as a non-
qualified stock option.
Stock options or SARs may be exercised during the lifetime
of a participant only by the participant, by the
participant's guardian or legal representative or, in the
case of stock options, by a permitted transferee as provided
in (c) above. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an Incentive, or levy
of attachment or similar process upon the Incentive not
specifically permitted herein, shall be null and void and
without effect.
3.3 Effect of Termination of Employment or Death. In
the event that an employee participant ceases to be an
employee of the Company for any reason, including death,
disability, early retirement or normal retirement, any
Incentives may be exercised, shall vest or shall expire at
such times as may be determined by the Committee in the
Incentive Agreement.
4.3 Additional Condition. Anything in this Plan to the
contrary notwithstanding: (a) the Company may, if it shall
determine it necessary or desirable for any reason, at the
time of award of any Incentive or the issuance of any shares
of Common Stock pursuant to any Incentive, require the
recipient of the Incentive, as a condition to the receipt
thereof or to the receipt of shares of Common Stock issued
pursuant thereto, to deliver to the Company a written
representation of present intention to acquire the Incentive
or the shares of Common Stock issued pursuant thereto for
his own account for investment and not for distribution; and
(b) if at any time the Company further determines, in its
sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any
Incentive or the shares of Common Stock issuable pursuant
thereto is necessary on any securities exchange or under any
federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection
with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any
restrictions imposed on such shares, such Incentive shall
not be awarded or such shares of Common Stock shall not be
issued or such restrictions shall not be removed, as the
case may be, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not
acceptable to the Company.
5.3 Adjustment. In the event of any merger,
consolidation or reorganization of the Company with any
other corporation or corporations, there shall be
substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to
restrictions, options, or achievement of performance share
objectives, the number and kind of shares of stock or other
securities to which the holders of the shares of Common
Stock will be entitled pursuant to the transaction. In the
event of any recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the
Plan, including shares subject to outstanding Incentives,
shall be adjusted in proportion to the change in outstanding
shares of Common Stock. In the event of any such
adjustments, the purchase price of any option, the
performance objectives of any Incentive, and the shares of
Common Stock issuable pursuant to any Incentive shall be
adjusted as and to the extent appropriate, in the reasonable
discretion of the Committee, to provide participants with
the same relative rights before and after such adjustment.
6.3 Incentive Agreements. The terms of each Incentive
shall be stated in an agreement approved by the Committee.
7.3 Withholding. At any time that a participant is
required to pay to the Company an amount required to be
withheld under the applicable income tax laws in connection
with the issuance of shares of Common Stock under the Plan
or upon the lapse of restrictions on shares of restricted
stock, the participant may, subject to the Committee's right
of disapproval, satisfy this obligation in whole or in part
by electing (the "Election") to have the Company withhold
from the distribution shares of Common Stock having a value
equal to the amount required to be withheld. The value of
the shares withheld shall be based on the Fair Market Value
of the Common Stock on the date that the amount of tax to be
withheld shall be determined (the "Tax Date").
Each Election must be made prior to the Tax Date. The
Committee may disapprove of any Election or may suspend or
terminate the right to make Elections. If a participant
makes an election under Section 83(b) of the Internal
Revenue Code with respect to shares of restricted stock, an
Election is not permitted to be made.
A participant may also satisfy his or her total tax
liability related to an Incentive by delivering shares of
Common Stock that have been owned by the participant for at
least six months. The value of the shares delivered shall
be based on the Fair Market Value of the Common Stock on the
Tax Date.
8.3 No Continued Employment. No participant under the
Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for
any period of time or to any right to continue his or her
present or any other rate of compensation.
9.3 Deferral Permitted. Payment of cash or
distribution of any shares of Common Stock to which a
participant is entitled under any Incentive shall be made as
provided in the Incentive Agreement. Payment may be
deferred at the option of the participant if provided in the
Incentive Agreement.
10.3 Amendment of the Plan. The Board may amend or
discontinue the Plan at any time; provided, however, that no
such amendment or discontinuance shall change or impair,
without the consent of the recipient, an Incentive
previously granted; and provided further, that an amendment
to materially increase the number of shares of Common Stock
issuable through the Plan, materially modify the eligibility
requirements or materially increase the benefits under the
Plan must be approved by the shareholders of the Company.
11.3. Change of Control.
(1) A Change of Control shall mean:
(1) the acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
1934 Act) of more than 25% of the outstanding shares of
the Common Stock; provided, however, that for purposes
of this subsection (i), the following acquisitions
shall not constitute a Change of Control:
a) any acquisition of Common Stock
directly from the Company,
b) any acquisition of Common Stock by
the Company,
c) any acquisition of Common Stock by
any employee benefit plan (or related trust)
sponsored or maintained by the Company or any
corporation controlled by the Company, or
d) any acquisition of Common Stock by
any corporation pursuant to a transaction that
complies with clauses a), b) and c) of subsection
(iii) of this Section 9.10(a); or
(2) individuals who, as of the date this Plan
was adopted by the Board of Directors (the "Approval
Date"), constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual
becoming a director subsequent to the Approval Date
whose election, or nomination for election by the
shareholders of the Company, was approved by a vote of
at least a majority of the directors then comprising
the Incumbent Board shall be considered a member of the
Incumbent Board, unless such individual's initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a person other than the Incumbent Board; or
(3) consummation of a reorganization, merger
or consolidation, or sale or other disposition of all
or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
following such Business Combination,
a) all or substantially all of the
individuals and entities who were the beneficial
owners of the outstanding Common Stock and the
voting securities of the Company entitled to vote
generally in the election of directors immediately
prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of
more than 50% of the then outstanding shares of
common stock, and more than 50% of the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, of the corporation
resulting from such Business Combination (which,
for purposes of this clause a) and clauses b) and
c), shall include a corporation that as a result
of such transaction owns the Company or all or
substantially all of the assets of the Company
either directly or through one or more
subsidiaries), and
b) except to the extent that such
ownership existed prior to the Business
Combination, no person (excluding any corporation
resulting from such Business Combination or any
employee benefit plan or related trust of the
Company or such corporation resulting from such
Business Combination) beneficially owns, directly
or indirectly, 20% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 20% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
c) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
(4) approval by the shareholders of the
Company of a plan of complete liquidation or
dissolution of the Company.
(2) Upon a Change of Control, or immediately prior
to the closing of a transaction that will result in a
Change of Control if consummated, all outstanding
options and SARs granted pursuant to the Plan shall
automatically become fully exercisable, all
restrictions or limitations on any Incentives shall
lapse and all performance criteria and other conditions
relating to the payment of Incentives shall be deemed
to be achieved and waived by the Company, without the
necessity of action by any person.
(3) The Committee may take such other action with
respect to an Option or Incentive as shall be provided
in an agreement with the holder thereof.
12.3 Definition of Fair Market Value. Whenever "Fair
Market Value" of Common Stock shall be determined for
purposes of this Plan, it shall be determined as follows:
(a) if the Common Stock is listed on an established stock
exchange or any automated quotation system that provides
sale quotations, the closing sale price for a share of the
Common Stock on such exchange or quotation system on the
applicable date, or if no sale of the Common Stock shall
have been made on that day, on the next preceding day on
which there was a sale of the Common Stock; (b) if the
Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published,
the mean between the quoted bid and asked prices on the
applicable date, and if bid and asked prices are not
available on such day, on the next preceding day on which
such prices were available; and (c) if the Common Stock is
not regularly quoted, the fair market value of a share of
Common Stock on the applicable date as established by the
Committee in good faith.
Adopted by the Board of Directors on December 9, 1996.
Approved by the Shareholders on May 23, 1997.