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EXHIBIT 10.3
SAFECO LONG-TERM INCENTIVE PLAN OF 1997
AS AMENDED AND RESTATED MAY 5, 1999
1. PURPOSE
The purpose of the SAFECO Long-Term Incentive Plan of 1997 (the "Plan") is to
enhance the long-term profitability and shareholder value of SAFECO Corporation
(the "Company") by offering incentives and rewards to non-employee directors of
the Company and selected eligible employees of the Company and its Subsidiaries
(as defined in Section 2) who are key to the Company's growth and success as an
inducement to them to remain in the service of the Company and to acquire and
maintain stock ownership in the Company.
2. DEFINITIONS
(a) "Affiliate" means a person controlling, controlled by or under
common control with the Company.
(b) "Award" shall mean any award or grant made pursuant to the Plan,
including, without limitation, awards or grants of stock options,
stock appreciation rights, restricted stock rights, performance
stock rights or any combination of the foregoing. Awards may be
granted singly, in combination, or in tandem so that the
settlement or payment of one automatically reduces or cancels the
other.
(c) "Award Agreement" means a written agreement between the Company
and a Plan participant evidencing an Award.
(d) "Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(e) "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs has occurred:
(i) Any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities beneficially owned by such
Person any securities acquired directly from the Company
or its Affiliates) representing 25% or more of the
combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in clause (x) of paragraph (iii) of this
Section 2(e); or
(ii) The following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on the date the Plan is
adopted by the Company's shareholders, constitute the
Board of Directors of the Company and any new director
(other than a director whose initial assumption of
office is in connection with an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the
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election of directors of the Company) whose appointment
or election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors then still
in office who either were directors on the date hereof
or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) There is consummated a merger or consolidation of the
Company or any Subsidiary with any other corporation,
other than (x) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior to such merger or
consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent
thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary
at least 75% of the combined voting power of the
securities of the Company or such surviving entity or
any parent thereof outstanding immediately after such
merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition
by the Company or its Affiliates of a business)
representing 25% or more of the combined voting power of
the Company's then outstanding securities; or
(iv) The shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially all
of the Company's assets, other than a sale or
disposition by the Company of all or substantially all
of the Company's assets to an entity, at least 75% of
the combined voting power of the voting securities of
which are owned by shareholders of the Company in
substantially the same proportions as their ownership of
the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record
holders of the Company's common stock immediately prior
to such transaction or series of transactions continue
to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the
Company's assets immediately following such transaction
or series of transactions.
(f) "Committee" shall mean the Company's Board of Directors or a
committee or sub-committee described in Section 3 selected by the
Company's Board of Directors to administer the Plan.
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(g) "Fair Market Value" shall mean, with respect to the Company's
common stock, the price at which the last trade of the Company's
common stock was made prior to 1:00 p.m. West Coast time on the
Nasdaq National Market on the date in question.
(h) "Person" for purposes of Section 2(e) means any person (as
defined in Section 2(a)(9) of the Exchange Act, as such term is
modified in Section 13(d) and 14(d) of the Exchange Act) other
than (i) any employee plan established by the Company, (ii) the
Company or any of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by shareholders of the Company in substantially the same
proportions as their ownership of the Company.
(i) "Retirement" shall mean a termination of employment with the
Company or a Subsidiary occurring on or after an individual
attains age 65, or such other termination of employment as the
Committee may approve as a retirement from time to time for
purposes of the Plan.
(j) "Subsidiary" shall mean any corporation of which more than 50% of
the total combined voting power of all classes of stock entitled
to vote is directly or indirectly owned by the Company.
3. ADMINISTRATION
(a) The Plan shall be administered by a Committee to be appointed
from time to time by the Company's Board of Directors and shall
consist of at least two members of the Board, each of whom is an
"outside director" as defined in regulations promulgated under
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). In addition, if the Committee does not also consist
solely of "non-employee directors" as defined in Rule 16b-3 under
the Exchange Act, the Plan shall be administered with respect to
officers subject to Section 16 of the Exchange Act by a
sub-committee of the Committee to be appointed from time to time
by the Company's Board of Directors and consisting of at least
two members of the Board, each of whom is a "non-employee
director."
(b) Except for the terms and conditions explicitly set forth in the
Plan, the Committee shall have the exclusive authority to
determine, in its sole discretion, all matters relating to Awards
under the Plan, including the selection of individuals to be
granted Awards; the type of Awards; the number of shares of
common stock subject to an Award; all terms, conditions,
restrictions and limitations, if any, of an Award; and the terms
of any instrument that evidences the Award. The Committee may, in
its discretion, accelerate the exercisability of or waive any or
all of the restrictions and conditions applicable to any Award
and may, with the consent of the holder, modify any agreement
governing an Award. The Committee may permit or require the
deferral of any Award payment, subject to such rules and
procedures as it may establish, which may include provisions for
the payment or crediting of interest or dividend equivalents on
the deferred payment. Any deferred payment
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may require the payment to be forfeited under certain
circumstances in accordance with Section 15. The Committee shall
also have exclusive authority to interpret the Plan and may
adopt, amend and rescind rules and procedures relating to the
Plan. The Committee may delegate administrative duties to such
of the Company's officers as it so determines; provided,
however, that decisions concerning the terms and conditions of
an Award and the selection of recipients of Awards shall not be
delegated.
(c) The Board of Directors shall designate one member of the
Committee as its Chair, and the Committee shall hold its meetings
at such times and places as it shall deem advisable. At least
one-half of its members shall constitute a quorum for the conduct
of business, and any decision or determination approved by a
majority of members present at any meeting in which a quorum
exists shall be deemed to have been made by the Committee. In
addition, any decision or determination reduced to writing and
signed by all of the members shall be deemed to have been made by
the Committee. The Committee may appoint a secretary, shall keep
minutes of its meetings, and may make such rules and regulations
for the conduct of its business and for the carrying out of the
Plan as it deems appropriate.
(d) The interpretation and construction by the Committee of any
provisions of the Plan and of Awards thereunder and all actions
taken and determinations made by the Committee pursuant to the
Plan shall be final and conclusive on all persons having any
interest therein.
(e) Notwithstanding anything in the Plan to the contrary, the
Committee, in its absolute discretion, may bifurcate the Plan so
as to restrict, limit or condition the use of any provision of
the Plan to participants who are subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the
Plan with respect to other participants in the Plan.
4. SHARES SUBJECT TO PLAN
(a) Subject to the provisions of Section 21 (relating to adjustments
due to changes in capital structure), a maximum of 6,000,000
shares of the Company's common stock shall be available for
issuance pursuant to Awards under the Plan. No more than
3,000,000 shares may be issued in connection with restricted
stock rights and performance stock rights granted under the
provisions of Sections 12 and 13.
(b) Any shares of the Company's common stock that have been made
subject to an Award and that subsequently cease to be subject to
the Award (other than by reason of exercise or payment of the
Award to the extent it is exercised for or settled in shares of
common stock) shall again be available for issuance in connection
with future grants of Awards under the Plan; provided, however,
that for purposes of Section 4(c), any such shares shall be
counted in accordance with the requirements of Section 162(m) of
the Code.
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(c) Subject to the provisions of Section 21 (relating to adjustments
due to changes in capital structure), the maximum number of
shares with respect to which options may be granted under the
Plan to any individual during any calendar year is 300,000, and
the maximum number of shares payable under a performance stock
right for any Performance Cycle (as defined in Section 13(a)) is
300,000 shares, or in the event the performance stock right is
paid in cash, the equivalent cash value on the date the
performance stock right would otherwise be settled in shares,
such limitations to be applied in a manner consistent with the
requirements of, and only to the extent required for compliance
with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.
5. ELIGIBILITY
Awards may be granted only to non-employee directors of the Company and salaried
key management employees of the Company or a Subsidiary (including salaried
employees who are also directors) who, in the judgment of the Committee, will
perform services of special importance in the management, operation and
development of the business of the Company or the businesses of one or more of
its Subsidiaries, provided the grant date for options and performance stock
rights for an employee shall not occur during or after the calendar year in
which the employee reaches the age of 65.
6. PRICE AND TERM OF OPTIONS
(a) The exercise price for shares purchased under each option will be
determined by the Committee but shall not be less than 100% of
the Fair Market Value of the shares of stock covered by the
option on the date of grant of the option.
(b) The term of each option shall be as determined by the Committee,
but not in excess of ten years from the date it is granted. An
option granted for an initial term of less than ten years may be
extended by amendment for a period of up to ten years from the
date of the initial grant, provided that no such amendment of an
incentive stock option shall be made without the prior consent of
the optionee.
7. LIMITATIONS ON EXERCISE OF OPTIONS
(a) Any minimum period during which an optionee must provide services
or be continuously employed prior to an option becoming
exercisable and the increments in which an option will become
exercisable shall be set forth in the Award Agreement evidencing
the option. Such provisions may be waived or modified by the
Committee at any time. Absence on leave shall not be deemed an
interruption of employment or services for purposes of the Plan,
except that with respect to incentive stock options a leave of
absence shall be subject to any requirements of Section 422 of
the Code.
(b) Incentive stock options shall be granted to employees only. To
the extent the aggregate Fair Market Value (determined at the
time the options are granted) of the stock with respect to which
any individual employee's incentive stock options are
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exercisable for the first time during any calendar year exceeds
$100,000, the portion in excess of $100,000 shall be treated as
a nonqualified stock option. For purposes of this determination,
incentive stock options granted under the Plan shall be
aggregated with those granted under any other stock option plan
of the Company.
8. METHOD OF EXERCISE
Each exercise of an option granted hereunder, whether in whole or in part, shall
be by written notice to the Chief Executive Officer of the Company designating
the number of shares as to which the option is exercised, and shall be
accompanied by payment in full for the number of shares so designated. Stock to
be purchased under an option may be paid for in cash, in shares of the Company's
common stock (either through physical delivery or by attestation) at their Fair
Market Value on the date of exercise, or in a combination thereof, or in such
other consideration as the Committee in its discretion may permit. Fractional
shares may not be purchased under an option, and fractional shares may not be
delivered to the Company for payment of the option price.
9. FORM OF OPTION AGREEMENT
Each Award Agreement evidencing an option shall contain the essential terms of
the option and such other provisions as the Committee shall from time to time
determine, but such Award Agreements need not be identical. If the option is an
incentive stock option, the Award Agreement shall contain such terms and
provisions relating to exercise and otherwise as may be necessary to render it
an incentive stock option under the applicable provisions of the Code (presently
Section 422 thereof), and the regulations thereunder.
10. FINANCING OF OPTIONS
The Company declares its belief that the purposes of the Plan can be fully
achieved only if those employees to whom options are granted hereunder are able
financially to purchase the stock covered by their options should they wish to
do so. Thus, within the limits of and in compliance with applicable statutes and
regulations, the Company and its Subsidiaries may extend credit, arrange credit,
guarantee obligations, and otherwise aid such employees in needed financing of
their purchases of stock pursuant to options.
11. STOCK APPRECIATION RIGHTS
(a) In connection with the grant of any stock option, the Committee
may grant a stock appreciation right ("SAR") pursuant to which
the optionee shall have the right to surrender all or part of
such stock option and to exercise the SAR and thereby obtain
payment of an amount equal to the difference between the
aggregate option price of the shares so surrendered and the Fair
Market Value of such shares on the date of surrender. In all
other respects, a SAR will have the same terms and provisions as
the related option.
(b) The exercise of a SAR shall be by written notice to the Chief
Executive Officer of the Company designating the number of shares
as to which the SAR is exercised
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and shall be subject to such limitations as the Committee may
deem appropriate. Payment to the holder upon the call of a SAR
may be made in shares of the Company's common stock (at their
Fair Market Value on the date of exercise), in cash, or partly
in shares and partly in cash, at the discretion of the
Committee.
12. RESTRICTED STOCK RIGHTS
(a) The Committee may grant any eligible employee restricted stock
rights ("RSRs") which entitle such employee to receive a stated
number of shares of the Company's common stock if the employee
for a stated period remains continuously employed by the Company
or a Subsidiary or, following the employee's Retirement, serves
on the Board of Directors of the Company or in another capacity
approved by the Committee (the "Restricted Period"). At the time
an RSR is issued, the Committee shall designate the length of the
Restricted Period and the service that will qualify under the
Restricted Period; provided, however, in no event may the
Restricted Period extend beyond the fifth anniversary date of the
employee's termination of employment. The Committee shall also
have full and final authority to select the employees who receive
RSRs, to specify the number of shares of stock subject to each
RSR, and to establish the other terms, conditions and definitions
that govern RSRs.
(b) The Company shall pay to each holder of an unexpired RSR during
the Restricted Period, as additional compensation, an amount of
cash equal to the dividends that would have been payable to the
holder of the RSR during the Restricted Period if the holder had
owned the stock subject to the RSR. Such amount shall be paid as
near in time as reasonably practical to the applicable dividend
payment dates.
(c) At the expiration of each Restricted Period and provided all
conditions relating to an RSR have been met, the Company shall
issue to the holder the shares of stock which relate to such
Restricted Period or, at the request of the holder, make a
payment of an amount equal to the Fair Market Value of such
shares (or any portion thereof) determined as of the settlement
date or, alternatively, over such period as may be established by
the Committee at the time of grant.
(d) Upon grant of an RSR, the Company shall deliver to the recipient
an Award Agreement which sets forth the terms and conditions of
the RSR.
13. PERFORMANCE STOCK RIGHTS
(a) The Committee may grant to an eligible employee performance stock
rights ("PSRs") which entitle such employee to receive a stated
number of shares of the Company's common stock if the employee
attains certain specified performance goals ("Performance Goals")
within a stated three-year performance period ( the "Performance
Cycle"). The Committee shall have full and final authority to
select the employees who receive PSRs, to specify the number of
shares of stock subject to each such right, to establish the
Performance Goals, to establish the Performance Cycle and to
establish the terms, conditions and definitions that govern such
rights.
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(b) The Committee shall establish Performance Goals for each
Performance Cycle on the basis of such criteria and to accomplish
such objectives as the Committee may from time to time select.
Performance Goals selected by the Committee may include
performance criteria for the Company, a Subsidiary, or an
operating group, division, or unit of the Company or a
Subsidiary. During any Performance Cycle, the Committee may
adjust the Performance Goals for such Performance Cycle as it
deems equitable in recognition of unusual or nonrecurring events
affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may
determine; provided, however, that the Committee may not adjust
Performance Goals for any participant who is a covered employee
for purposes of Section 162(m) of the Code for the year in which
such PSR (or any portion thereof) is settled in such a manner as
would increase the amount of compensation otherwise payable to
such covered employee.
(c) As soon as practical after the end of a Performance Cycle (or any
interim measurement period within the Performance Cycle), the
Committee shall determine the extent to which a PSR has been
earned on the basis of performance in relation to the established
Performance Goals. To the extent that the Performance Goals of a
PSR are satisfied, the Company shall settle the earned portion of
the PSR by the issuance and delivery of unrestricted shares equal
to the number of earned shares, by the payment of cash equal to
the Fair Market Value of the earned shares on the date the PSR
would otherwise be settled in shares, or by a combination of cash
and shares, as requested by the holder. If the Performance Goals
are not met by the expiration of the Performance Cycle, the PSR
shall expire and the holder thereof shall have no further rights
thereunder.
(d) Upon granting a PSR, the Company shall issue to the recipient an
Award Agreement which sets forth the terms and conditions of the
PSR.
(e) The Performance Goals shall be any one or a combination of net
income, earnings per share, return on equity, return on assets,
stock price appreciation, total shareholder return, cash flow,
revenues, item count, market share, assets, assets under
management, any profit-related ratio or calculation, or any
growth, concentration-of-business or market-share ratio or
calculation. Such Performance Goals may be measured on an
absolute basis or relative to a group of peer companies selected
by the Committee, relative to internal goals, or relative to
levels attained in prior years. The Committee will establish
specific Performance Goals for each PSR not later than 90 days
after the beginning of the Performance Cycle for the Award.
(f) The Company shall not make dividend equivalent payments with
respect to shares subject to PSRs.
14. TERMINATION OF EMPLOYMENT, RETIREMENT, DISABILITY AND DEATH
(a) In the event the employment of a Plan participant by the Company
or a Subsidiary terminates, then unless otherwise provided in the
Award Agreement, any
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unexercised option or SAR granted to such participant may be
exercised, but only to the extent exercisable on the date of
termination of employment, at any time within three months
following such termination of employment, except that:
(i) If the participant's termination of employment is on
account of Retirement, then the option or SAR, to the
extent exercisable at the date of termination of
employment, may be exercised at any time prior to the
expiration of its stated term, but in no event later than
the fifth anniversary date of the participant's
termination of employment.
(ii) If the participant's termination of employment is on
account of a permanent and total disability within the
meaning of Section 22(e)(3) of the Code, then the option
or SAR, to the extent exercisable at the date of
termination of employment, may be exercised at any time
within one year after the date of termination.
(iii) If the participant's termination of employment is caused
by the death of the participant, then the option or SAR
may be exercised at any time prior to the expiration of
the term stated in the Award Agreement by the person(s) to
whom the participant's rights pass by will or by operation
of law without regard to any requirements related to
continued employment or installment vesting.
(iv) If the participant dies following termination of
employment and during the period in which the option or
SAR is exercisable under paragraph (i) or (ii) of this
Section 14(a), then, to the extent the option or SAR was
vested at the date of the participant's termination of
employment, the option or SAR may be exercised at any time
prior to the expiration of the term stated in the Award
Agreement by the person(s) to whom the participant's
rights pass by will or by operation of law.
(b) Any portion of an option or SAR that is not exercisable on the
date of termination of the participant's employment shall
terminate on such date, unless the Committee determines
otherwise.
(c) To the extent that the option or SAR of any deceased or disabled
participant or of any participant whose employment has terminated
shall not have been exercised within the time periods provided
above, all further rights to exercise such option or SAR shall
terminate at the expiration of the applicable period.
(d) In the event a holder of an RSR issued under the provisions of
Section 12 fails to satisfy the employment or service
requirements of the RSR, such holder shall lose the right to
receive stock or cash under the provisions of the RSR, except
that in the event a holder of an RSR is unable to satisfy such
requirements because of death or disability within the meaning of
Section 22(e)(3) of the Code, then as soon as practical following
the date of death or the date of determination of disability (the
"Disability Determination Date"), the holder or the personal
representative of the
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holder's estate, as the case may be, shall be issued shares of
the Company's common stock equal in number to the total number
of unissued shares covered by such RSR or, in lieu thereof, at
the request of such holder or personal representative, receive a
cash payment equal to the Fair Market Value of such shares (or
any portion thereof) at the date of death or the Disability
Determination Date, as the case may be. Such shares shall be
issued or payment made without regard to any employment or other
service requirement stated in the RSR.
(e) Except as provided in Section 22, in the event the employment of
an employee who holds a PSR granted under the provisions of
Section 13 terminates for any reason prior to the expiration of
the Performance Cycle specified in the PSR, then, except to the
extent the Committee may decide otherwise in select situations,
such employee shall lose all rights to thereafter receive any
stock or payment under such PSR.
(f) If a corporation ceases to be a Subsidiary of the Company, then,
except to the extent the Committee determines otherwise,
employees of such corporation shall be deemed to have terminated
their employment with the Company or a Subsidiary of the Company
for purposes of this Section 14 as of the date such corporation's
status as a Subsidiary terminates.
15. FORFEITURE
Subject to the Committee's discretion, the grant of any Award under the Plan may
be conditioned on the participant's agreement to forfeit unexercised Awards and
pay the value of previously exercised or settled Awards to the Company in the
event that the participant engages in any activity in competition with the
Company or otherwise contrary to the Company's interests while employed by the
Company or a Subsidiary or within a specified period following termination of
employment or exercise or settlement of an Award.
16. TRANSFERABILITY
Except as otherwise provided in this Section 16, Awards shall not be
transferable other than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of a participant only by the
participant or, in the event the participant becomes legally incompetent, by the
participant's guardian or legal representative. Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Code, the Committee, in its
discretion, may provide in any Award Agreement or otherwise that the Award is
transferable, without payment of consideration, (i) to immediate family members
(including grandchildren) of the participant or (ii) to a trust or trusts for
the benefit of such family members or (iii) to a partnership or similar
organization composed of such family members ("Permitted Family Transferees").
Any Award assigned or transferred to Permitted Family Transferees shall be
subject to all the same terms and conditions contained in the Award Agreement,
and the events of termination of employment stated in Section 14 shall continue
to be applied with respect to the original Award recipient, following which
termination the Award shall be exercisable by the transferee only to the extent
and for the periods specified in Section 14.
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17. WITHHOLDING
The Company may require the holder of an Award to pay to the Company the amount
of any taxes that the Company is required to withhold with respect to the grant,
exercise, payment or settlement of an Award. The Company shall have the right to
withhold from any Award or any shares of stock issuable pursuant to an Award an
amount equal to such taxes.
18. RIGHTS AS SHAREHOLDER
Neither a person to whom an Award is granted, nor such person's legal
representative, heir, legatee, distributee or Permitted Family Transferee shall
be deemed to be the holder of, or to have any rights of a holder with respect
to, any shares subject to such Award until after the shares are issued.
19. AMENDMENTS TO THE PLAN
The Company's Board of Directors may from time to time make such amendments to
the Plan as it may deem proper and in the best interests of the Company or a
Subsidiary, provided that:
(a) No amendment shall be made which would impair, without the
consent of the applicable participant, any Award previously
granted under the Plan or deprive any participant of any shares
of stock of the Company which the participant may have acquired
through or as a result of the Plan.
(b) Any such amendment which would (i) increase the number of
securities which may be issued under the Plan or (ii) materially
modify the requirements as to eligibility for participation in
the Plan shall be submitted to the shareholders of the Company
for their approval at the next annual or special meeting after
adoption by the Board of Directors, and if such shareholder
approval is not obtained, the amendment, together with any
actions taken under the Plan on the necessary authority of such
amendment, shall be null and void.
20. TERMINATION OF THE PLAN
The Plan shall remain in effect until Awards have been granted covering all the
shares of the Company's common stock authorized under Section 4(a) or until the
Plan is otherwise terminated by the Company's Board of Directors; provided,
however, that no incentive stock option shall be granted more than ten years
after the date on which the Plan is approved by the shareholders of the Company,
i.e., the effective date of the Plan. Termination of the Plan shall not affect
outstanding Awards.
21. CHANGES IN CAPITAL STRUCTURE
Except as otherwise provided in Section 22, in the event the outstanding shares
of common stock of the Company are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split,
spin-off, combination of shares, dividend payable in shares, rights offering,
change in the corporate structure
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of the Company, or otherwise, then the Committee shall make proportional
adjustments to the maximum number and class of shares subject to the Plan and to
the maximum number and class of shares with respect to which Awards may be
granted or paid to any individual participant as set forth in Sections 4(a) and
(c). In addition, the Committee shall make an appropriate adjustment to the
number and class of shares as to which outstanding Awards, or portions thereof
then unexercised, shall be exercisable or settled and the per share price of
such shares, to the end that the participant's proportionate interest shall be
maintained as before the occurrence of such event, without any change in the
total price applicable to the unexercised portion of any Award. Any such
adjustment made by the Committee shall be conclusive.
22. CHANGE IN CONTROL
(a) Notwithstanding any other provision of the Plan to the contrary,
if, while any Awards remain outstanding under the Plan, a Change
in Control of the Company shall occur, then:
(i) All options and SARs granted under the Plan that are
outstanding at the time of such Change in Control shall
become exercisable in full immediately prior to the Change
in Control;
(ii) To the extent deemed earned, each outstanding PSR shall
become immediately payable in cash, and the remainder of
each outstanding PSR shall be canceled for no value. All
outstanding PSRs shall be deemed to have been earned to
the extent of the greater of:
(1) The number of shares of the Company's common stock
determined by the Committee based on the extent to
which the Performance Goals specified in the Award
Agreement have been achieved during the portion of
the Performance Cycle ending on the last day of the
last fiscal quarter of the Company ending on or
before the date of the Change in Control; or
(2) The number of shares of the Company's common stock
equal to the product of the target shares
identified in the Award Agreement multiplied by a
fraction with a numerator equal to the whole number
of calendar months beginning with the month in
which the Award was granted and ending on the date
of the Change in Control and a denominator equal to
the whole number of calendar months in the entire
Performance Cycle specified in the Award Agreement,
less any shares previously issued under the Award
Agreement.
(iii) All restrictions with respect to RSRs shall lapse and all
outstanding RSRs shall be settled by a payment in cash to
each holder of such Award; and
(iv) All other restrictions with respect to outstanding Awards
not described in paragraphs (i) through (iii) of this
Section 22(a) shall lapse, and such Awards shall be fully
vested and nonforfeitable.
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(b) For purposes of this Section 22, with respect to determining the
cash equivalent value of an RSR or PSR or the spread payable upon
exercise of a SAR, the Fair Market Value of a share of the
Company's stock shall be deemed to equal the greater of (i) the
Fair Market Value of a share of stock as of the date on which a
Change in Control occurs and (ii) the highest price of a share of
stock which is paid or offered to be paid, by any Person or
entity, in connection with any transaction which constitutes a
Change in Control.
(c) The phrase "immediately prior to the Change in Control" shall be
understood to mean sufficiently in advance of a Change in Control
to permit the holder of an Award to take all steps reasonably
necessary to exercise all options and SARs and take any actions
with respect to the shares of stock underlying Awards of any
nature so that such shares may be treated in the same manner as
the shares of stock of other shareholders in connection with the
Change in Control.
23. APPROVALS
The obligations of the Company under the Plan shall be subject to the approval
of such state or federal authorities or agencies, if any, as may have
jurisdiction in the matter. Shares shall not be issued with respect to an Award
unless the exercise and the issuance and delivery of the shares comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
Code, the respective rules and regulations promulgated thereunder, and the
requirements of any stock exchange or market on which the shares may then be
listed or traded, and shall be further subject to the approval of counsel for
the Company with respect to such compliance. Inability of the Company to obtain
from any regulatory body having jurisdiction the authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any shares
hereunder shall relieve the Company of any liability for the nonissuance or sale
of such shares. The Board of Directors may require any action or agreement by a
holder of an Award as may from time to time be necessary to comply with the
federal and state securities laws. The Company shall not be obliged to register
stock issued under the Plan or options or any other rights to acquire stock
granted under the Plan.
24. EMPLOYMENT RIGHTS
Nothing in this Plan or any Award granted pursuant hereto shall confer upon any
employee any right to be continued in the employment of the Company or any
Subsidiary of the Company or to interfere in any way with the right of the
Company, in its sole discretion, to terminate such employee's employment at any
time.
25. EFFECTIVE DATE OF THE PLAN
The effective date of this Plan is May 7, 1997.
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