BOLT BERANEK AND NEWMAN INC.
1986 STOCK INCENTIVE PLAN
SECTION 1. General Purpose of the Plan; Definitions.
The name of the plan is the Bolt Beranek and Newman Inc. 1986 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to secure for Bolt
Beranek and Newman Inc. (the "Company") and its stockholders the benefit of the
incentives of Common Stock ownership and the receipt of incentive awards by
directors of the Company and by selected key employees of the Company and its
subsidiaries, and by other key persons and entities, who contribute to and will
be responsible for continued long-term growth of the Company. The Plan is
intended to stimulate the efforts of such persons by providing an opportunity
for capital appreciation and giving suitable recognition for services which
contribute materially to the success of the Company.
The following terms shall be defined as set forth below:
a. "Act" means the Securities Exchange Act of 1934.
b. "Award" or "Awards" except where referring to a particular category
of grant under the Plan shall include Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted
Stock Awards, Deferred Stock Awards, Performance Unit Awards, and Other Stock-
based Awards.
c. "Board" means the Board of Directors of the Company.
d. "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations, and interpretations.
e. "Committee" means the Committee referred to in Section 2. If at any
time no Committee shall be in office, the functions of the Committee shall be
exercised by the Board.
f. "Deferred Stock Award" is defined in Section 9(a).
g. "Disability" means disability as determined in accordance with
standards and procedures similar to those used under the Company's long-term
disability program.
h. "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) promulgated under the Act, or any successor definition under the
Act.
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i. "Fair Market Value" on any given date means the last sale price
regular way at which Stock is traded on such date as reflected in the New York
Stock Exchange-Composite Transactions Index or, where applicable, the value of
a share of Stock as determined by the Committee in accordance with the
applicable provisions of the Code.
j. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" as defined in the Code.
k. "Non-employee Director" means an individual who is a director of the
Company but who is not a full-time employee of the Company or a Subsidiary.
l. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
m. "Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries on or after the normal retirement date specified
in the Bolt Beranek and Newman Inc. Retirement Trust Agreement.
n. "Other Stock-based Award" is defined in Section 11(a).
o. "Performance Unit Award" is defined in Section 10(a).
p. "Restricted Stock Award" is defined in Section 8(a).
q. "Stock" means the Common Stock, $1.00 par value, of the Company,
subject to adjustments pursuant to Section 3.
r. "Stock Appreciation Right" means a right described in Section 7(a)
and granted, either independently of other Awards or in tandem with the grant
of a Stock Option.
s. "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 6.
t. "Subsidiary" means any corporation or other entity (other than the
Company) in an unbroken chain beginning with the Company if each of the
entities (other than the last entity in the unbroken chain) owns stock or other
interests possessing 50% or more of the total combined voting power of all
classes of stock or other interest in one of the other corporations in the
chain.
u. "Unrestricted Stock Award" is defined in Section 8(f).
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SECTION 2. Committee Authority to Select Participants and Determine Awards,
Etc.
The Plan shall be administered by a Committee of Directors who are both
Disinterested Persons and "outside directors" within the meaning of Section
162(m)(4)(C)(i) of the Code (as construed and applied consistent with proposed
or final rules issued thereunder). The Committee shall be appointed by the
Board and shall serve at the pleasure of the Board.
The Committee shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and authority:
i. to select from among the eligible persons and entities
described in Section 4 those to whom Awards may from time to
time be granted;
ii. to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Unrestricted Stock,
Deferred Stock, Performance Units, and any Other Stock-based
Awards, or any combination of the foregoing, granted to any one
or more participants;
iii. to determine the number of shares to be covered by any Award;
iv. to determine the terms and conditions, including restrictions,
not inconsistent with the terms of the Plan, of any Award, which
terms and conditions may differ among individual Awards and
participants;
v. to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an
Award shall be deferred either automatically or at the election
of the participant and whether and to what extent the Company
shall pay or credit amounts equal to interest (at rates
determined by the Committee) or dividends or deemed dividends on
such deferrals; and
vi. to adopt, alter, and repeal such rules, guidelines and practices
for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms
and provisions of the Plan and any Award (including related
Award Agreements); to make all determinations it deems advisable
for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise
the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
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SECTION 3. Shares Issuable Under the Plan; Mergers; Substitution
a. Shares Issuable. The maximum number of shares of Stock reserved
and available for issuance under the Plan shall be 3,000,000,
including shares issued in lieu of or upon reinvestment of dividends
arising from Awards. Of this number, 150,000 are reserved and
available for issuance under stock options granted to Non-employee
Directors under Section 6(m). For purposes of the foregoing
limitations and to the maximum extent consistent with continued
qualification of the Plan under Section 422 of the Code and Rule
16b-3 promulgated under the Act, Awards and Stock which are
forfeited, reacquired by the Company, or satisfied without the
issuance of Stock shall not be counted. Subject to such overall
limitation, shares may be issued up to such maximum pursuant to any
type or types of Award, including Incentive Stock Options. Shares
issued under the Plan may be authorized but unissued shares or shares
reacquired by the Company.
The maximum number of shares of Stock for which any individual (other
than a Non-employee Director) may be issued Stock Options under the
Plan during the limitation period shall be 750,000 shares. The
maximum number of shares of Stock as to which any individual may be
issued Stock Appreciation Rights under the Plan during the limitation
period shall likewise be 750,000 shares. For purposes of the two
preceding sentences, (i) the limitation period shall be the period
beginning January 1, 1994 and ending December 1, 1999, and (ii) Stock
Options granted prior to January 1, 1994 but subject to shareholder
approval occurring after January 1, 1994 shall be treated as having
been granted during the limitation period. The limitations described
in this paragraph shall be construed and applied in accordance with
Section 162(m) of the Code and the regulations thereunder. Subject
to the foregoing, a Stock Option or Stock Appreciation Right that is
canceled and reissued, or repriced, shall be treated as a new Award,
and both the old Award and the new Award shall count against the
applicable limit described in this paragraph.
b. Stock Dividends, Mergers, etc. In the event of a stock
dividend, stock split, or similar change in capitalization affecting
the Stock, the Committee shall make appropriate adjustments in (i)
the number and kind of shares of stock or securities on which Awards
may thereafter be granted, (ii) the number and kind of shares
remaining subject to outstanding Awards, and (iii) the option or
purchase price in respect of such shares. In the event of any
merger, consolidation, dissolution, or liquidation of the Company,
the Committee in its sole discretion may, as to any outstanding
Awards, make such substitution or adjustment in the aggregate number
of shares reserved for issuance under the Plan and in the number and
purchase price (if any) of shares subject to such Awards as it may
determine, or accelerate, amend, or terminate such Awards upon such
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terms and conditions as it shall provide (which, in the case of the
termination of the vested portion of any Award, shall require payment
or other consideration which the Committee deems equitable in the
circumstances); provided, however, that no adjustment pursuant to
this sentence shall affect options granted under subsection (m) of
Section 6 of the Plan if the effect of such adjustment shall cause
the members of the Committee to fail to be disinterested persons
under Section 16(b) of the Act.
c. Substitute Awards. The Company may grant Awards under the Plan
in substitution for stock and stock based awards held by employees of
or other persons providing services to another corporation who
concurrently become employees of or providers of service to the
Company or a Subsidiary as the result of a merger or consolidation of
the employing corporation with the Company or a Subsidiary or the
acquisition by the Company or a Subsidiary of property or stock of
the employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the
Committee considers appropriate in the circumstances. The shares
which may be delivered under such substitute Awards shall be in
addition to the maximum number of shares provided for in the first
paragraph of Section 3(a) only to the extent that the substitute
Awards are both granted to persons whose relationship to the Company
does not make (and is not expected to make) them subject to
Section 16(b) of the Act and are granted in substitution for awards
issued under a plan approved, to the extent then required under
Rule 16b-3 (or any successor rule under the Act) by the stockholders
of the entity which issued such predecessor awards.
SECTION 4. Eligibility.
Participants in the Plan will be such full or part time officers and other
key employees of the Company and its Subsidiaries ("Employees") and other
persons or entities who are responsible for or contribute to the management,
growth, or profitability of the Company and its Subsidiaries and who are
selected from time to time by the Committee. Notwithstanding the foregoing,
persons who are directors of the Company, other than any such person who is a
full time employee, shall not be eligible for awards under the Plan except as
provided in Section 6(m).
SECTION 5. Limitations on Term and Dates of Awards.
a. Duration of Awards. Subject to Sections 15(a), 15(c), and 15(d)
below, no restrictions or limitations on Awards shall extend beyond
10 years (or 10 years and one day in the case of Non-Qualified Stock
Options) from the grant date, except that deferrals, elected by
participants, of the receipt of Stock or other benefits under the
Plan may extend beyond such date.
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b. Latest Grant Date. No Award shall be granted after December 1,
1999, but then-outstanding Awards may extend beyond such date.
SECTION 6. Stock Options.
Any stock option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. To the extent that any option does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
Incentive Stock Options may be granted only to Employees.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended, or altered,
nor shall any discretion or authority granted to the Committee under the Plan
be so exercised, so as to disqualify the Plan or, without the consent of the
optionee, any Incentive Stock Option under Section 422 of the Code.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as the Committee shall deem
desirable.
a. Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time
of grant but shall be, in the case of Incentive Stock Options, not
less than 100% of Fair Market Value on the date of grant and, in the
case of Non-Qualified Stock Options, not less than 50% of Fair Market
Value on the date of grant. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under Section 424(d)
of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Subsidiary or parent
corporation and an Incentive Stock Option is granted to such
employee, the option price shall be no less than 110% of Fair Market
Value on the date of grant.
b. Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable
more than 10 years after the date the option is granted and no Non-
Qualified Stock Option shall be exercisable more than 10 years and
one day after the date the option is granted. If an employee owns or
is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Subsidiary or parent
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corporation and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years
from the date of grant.
c. Exercisability. Stock Options shall be exercisable at such
future time or times, whether or not in installments, as shall be
determined by the Committee at or after the date of grant. The
Committee may at any time accelerate the exercisability of all or any
portion of any Stock Option.
d. [Intentionally left blank.]
e. Method of Exercise. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company
specifying the number of shares to be purchased. Such notice shall
be accompanied by payment in full of the purchase price, either by
certified or bank check or other instrument acceptable to the
Committee. As determined by the Committee, in its discretion, at
(or, in the case of Non-Qualified Stock Options, at or after) the
time of grant, payment in full or in part may also be made in the
form of shares of Stock not then subject to restrictions under any
Company plan (but which may include shares the disposition of which
constitutes a disqualifying disposition for purposes of obtaining
incentive stock option treatment for federal tax purposes), unless
the Board should in any case determine otherwise. Such surrendered
shares shall be valued at Fair Market Value on the exercise date. An
optionee shall have the rights of a shareholder only as to shares
acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
f. Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
g. Termination by Death. If an optionee's employment by or other
service relationship with the Company and its Subsidiaries terminates
by reason of death, the Stock Option may thereafter be exercised,
both as to that portion which was exercisable by the optionee
immediately prior to death and, except as otherwise determined by the
Committee, as to any remaining portion, by the legal representative
or legatee of the optionee, for a period of three years (or such
other period, not to exceed three years, as the Committee shall
specify at or after the time of grant) from the date of death or
until the expiration of the stated term of the option, if earlier.
h. Termination by Reason of Disability. Any Stock Option held by
an optionee whose employment by or whose service relationship with
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the Company and its Subsidiaries has terminated, or who has been
designated an inactive employee, by reason of Disability may
thereafter be exercised to the extent it was exercisable at the time
of the earlier of such termination or such designation (or on such
accelerated basis as the Committee shall at any time determine prior
to such termination or designation) for a period of three years (or
such other period, not to exceed three years, as the Committee shall
specify at or after the time of grant) from the date of such
termination of employment or other service relationship or
designation or until the expiration of the stated term of the option,
if earlier. Except as otherwise provided by the Committee at the
time of grant, the death of an optionee during the final year of such
exercise period shall extend such period for one year following
death, or until the expiration of the stated term of the option, if
earlier. The Committee shall have the authority to determine whether
a participant has been terminated or designated an inactive employee
by reason of Disability.
i. Termination by Reason of Normal Retirement. If an optionee's
employment by the Company and its Subsidiaries terminates by reason
of Normal Retirement, any Stock Option held by such optionee may
thereafter be exercised to the extent that it was then exercisable
(or on such accelerated basis as the Committee shall at any time
determine) for a period of three years (or such other period, not to
exceed three years, as the Committee shall specify at or after the
time of grant) from the date of Normal Retirement or until the
expiration of the stated term of the option, if earlier. Except as
otherwise provided by the Committee at the time of grant, the death
of an optionee during the final year of such exercise period shall
extend such period for one year following death, or until the
expiration of the stated term of the option, if earlier.
j. Other Termination. Unless otherwise determined by the
Committee, if an optionee's employment by or other service
relationship with the Company or its Subsidiaries terminates for any
reason other than death, Disability or Normal Retirement, any Stock
Option held by such optionee may thereafter be exercised to the
extent it was exercisable on the date of termination of employment or
other termination of the service relationship (or on such accelerated
basis as the Committee shall determine at or after the time of grant)
for a period of sixty (60) days (or such longer period up to three
years as the Committee shall specify at or after the time of grant)
from the date of termination of employment or other termination of
the service relationship or until the expiration of the stated term
of the option, if earlier, provided, that if the optionee's
employment or other service relationship is terminated for "cause" as
a result of the optionee's misconduct which, in the judgment of the
Committee, casts discredit on him or her, or is otherwise harmful to
the business, interests or reputation of the Company, its parent, or
a Subsidiary, all Stock Options shall terminate immediately.
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For purposes of the preceding paragraph, if an optionee's employment
by the Company or its Subsidiaries is terminated under circumstances
entitling the optionee to cash severance pay under any written
severance plan, program, policy, or agreement of the Company or its
Subsidiaries in force at the time of such termination of employment
(a "Severance Program"), then except as otherwise determined by the
Committee any Stock Option held by the optionee at termination of
employment shall be treated as "exercisable on the date of
termination of employment" as to those shares for which it was in
fact exercisable immediately prior to termination of employment plus
any additional shares for which it would have become exercisable
during the severance period (as hereinafter defined) had the optionee
remained employed by the Company or its Subsidiaries. For purposes
of the preceding sentence, the severance period in the case of any
terminated employee entitled to severance under a Severance Program
shall be the period of weeks over which his or her cash severance, if
paid as salary continuation, would have been paid (whether or not
such severance is in fact so paid in such form).
k. Incentive Stock Options. Notwithstanding any designation of a
Stock Option as an Incentive Stock Option, such Stock Option shall be
treated for tax purposes as a Non-Qualified Stock Option to the
extent prescribed under Section 422(d) of the Code.
l. Form of Settlement. Subject to Sections 15(a), 15(c), and 15(d)
below, shares of Stock issued upon exercise of a Stock Option shall
be free of all restrictions under the Plan, except as provided in the
following sentence. The Committee may provide at time of grant that
the shares to be issued upon the exercise of a Stock Option shall be
in the form of Restricted Stock or Deferred Stock, or may reserve the
right to so provide after time of grant.
m. Options Granted to Non-employee Directors. Subject to the
limits and adjustment provisions set forth in Section 3, each Non-
employee Director serving in such position on the third business day
following the date of each annual meeting of the stockholders of the
Company (such third day being hereinafter referred to as the
"determination date") shall be granted effective as of the
determination date a Non-Qualified Stock Option covering 3,000 shares
of Stock. The option price under such Stock Option shall be the fair
market value of the Stock on the determination date. If, on account
of the limit set forth in the second sentence of Section 3(a), there
are insufficient shares as of any determination date to permit the
grant of a Stock Option covering 3,000 shares (as adjusted) to each
Non-employee Director then eligible for a grant, the number of shares
available for grant shall be allocated evenly (disregarding any
fractional shares) among the Non-employee Directors then eligible for
a grant (an "incomplete grant"), and if additional shares later
become available under said limit while any such Non-employee
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Director who received an incomplete grant remains a Non-employee
Director and during the terms of the Plan, such Non-employee Director
shall be granted automatically upon such availability a supplemental
Non-Qualified Stock Option covering a number of shares equal to the
lesser of (a) 3,000 shares (appropriately adjusted pursuant to
Section 3) less the number of shares (as so adjusted) covered by the
incomplete grant, or (b) the number of shares then available under
Section 3, subject to allocation among Non-employee Directors in
accordance with the preceding provisions of this paragraph. The
option price of any supplemental Stock Option shall be the fair
market value of the Stock on the date of grant (i.e., the date of the
availability of additional shares).
Each Stock Option granted under this subsection (m) may be exercised
as follows:
(1) (A) 25% of the shares subject to such Stock Option may be
purchased commencing one year after the date of grant, and
(B) an additional 25% of such shares may be purchased commencing
on the second, third, and fourth anniversaries of the date of grant;
and
(2) subject to (1) above, such Stock Option may only be exercised
during the five-year period beginning on the date the Stock Option is
granted.
To the extent that a Stock Option granted hereunder to a Non-employee
Director is not exercised when it initially becomes exercisable, it
shall be carried forward and be exercisable until the expiration of
the term of such Stock Option as described in (2) above; provided,
that if the Non-employee Director ceases to be a Director for any
reason other than death, any Stock Option held by such Non-employee
Director may thereafter be exercised, as to that portion of the Stock
Option which was exercisable immediately prior to the date the
optionee ceased to be a Director, only within the three-month period
beginning from such date (but in no event beyond the five-year term
described in (2) above); and further provided, that if a Non-
employee Director ceases to be a Director by reason of death, any
Stock Option held by such Non-employee Director immediately prior to
death, whether or not then exercisable, shall be exercisable in whole
or in part at any time within the three-month period beginning from
the date of death (but in no event beyond the five-year term
described in (2) above) and then shall terminate.
All options granted under this subsection (m) may be exercised by
delivery of cash and/or Stock.
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Non-employee Directors shall not be granted any Award or Grant under
this Plan (including any Stock Appreciation Right or Supplemental
Grant) other than Stock Options as specifically provided hereunder.
SECTION 7. Stock Appreciation Rights; Discretionary Payments.
a. Nature of Stock Appreciation Right. A Stock Appreciation Right
is an Award entitling the recipient to receive an amount in cash or
shares of Stock (or forms of payment permitted under paragraph (e)
below) or a combination thereof having a value equal to (or if the
Committee shall so determine at time of grant, less than) the excess
of the Fair Market Value of a share of Stock on the date of exercise
over the Fair Market Value of a share of Stock on the date of grant
(or over the option exercise price, if the Stock Appreciation Right
was granted in tandem with a Stock Option) multiplied by the number
of shares with respect to which the Stock Appreciation Right shall
have been exercised, with the Committee having the right to determine
the form of payment.
b. Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted in tandem with, or independently
of, any Stock Option granted under the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock
Option, such Right may be granted either at or after the time of the
grant of such option. In the case of a Stock Appreciation Right
granted in tandem with an Incentive Stock Option, such Right may be
granted only at the time of the grant of the option.
A Stock Appreciation Right or applicable portion thereof granted in
tandem with a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock
Option, except that a Stock Appreciation Right granted with respect
to less than the full number of shares covered by a related Stock
Option shall not be reduced until the exercise or termination of the
related Stock Option exceeds the number of shares not covered by the
Stock Appreciation Right.
c. Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and conditions as
shall be determined from time to time by the Committee, subject to
the following:
i. Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable only at such time or times and to the
extent that the related Stock Options shall be exercisable.
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ii. Upon the exercise of a Stock Appreciation Right, the applicable
portion of any related Stock Option shall be surrendered.
iii. Stock Appreciation Rights granted in tandem with a Stock Option
shall be transferable only with such Stock Option. Stock
Appreciation Rights shall not be transferable otherwise than by
will or the laws of descent and distribution. All Stock
Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the
participant's legal representative.
iv. A Stock Appreciation Right granted in tandem with an Incentive
Stock Option may be exercised only when the market price of the
Stock subject to the Incentive Stock Option exceeds the exercise
price of such option.
d. Discretionary Payments. Notwithstanding that a Stock Option at
the time of exercise shall not be accompanied by a related Stock
Appreciation Right, if the market price of the shares subject to such
Stock Option exceeds the exercise price of such Stock Option at the
time of its exercise, the Committee may, in its discretion, cancel
such Stock Option, in which event the Company shall pay to the person
exercising such Stock Option an amount equal to the difference
between the Fair Market Value of the Stock to have been purchased
pursuant to such exercise of such Stock Option (determined on the
date the Stock Option is canceled) and the aggregate consideration to
have been paid by such person upon such exercise. Such payment shall
be by check or in Stock (or in a form of payment permitted under
paragraph (e) below) having a Fair Market Value (determined on the
date the payment is to be made) equal to the amount of such payments
or any combination thereof, as determined by the Committee. The
Committee may exercise its discretion under the first sentence of
this paragraph (d) only in the event of a written request of the
person exercising the option, which request shall not be binding on
the Committee.
e. Settlement in the Form of Restricted Shares or Rights to Receive
Deferred Stock. Subject to Sections 15(a), 15(c), and 15(d) below,
shares of Stock issued upon exercise of a Stock Appreciation Right or
as a Discretionary Payment shall be free of all restrictions under
the Plan, except as provided in the following sentence. The
Committee may provide at time of grant in the case of a Stock
Appreciation Right (and at the time of payment in the case of a
Discretionary Payment) that such shares shall be in the form of
shares of Restricted Stock or rights to acquire Deferred Stock, or in
the case of a Stock Appreciation Right may reserve the right to so
provide at any time after the time of grant. Any such shares and any
shares subject to rights to acquire Deferred Stock shall be valued at
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Fair Market Value on the date of exercise of the Stock Appreciation
Right or the date the Stock Option is cancelled in the case of
Discretionary Payments.
f. Rules Relating to Exercise. In the case of a participant
subject to the restrictions of Section 16(b) of the Act, no stock
appreciation right (as referred to in Rule 16b-3(e) or any successor
Rule under the Act) shall be exercised (and no request or payment
under paragraph (d) above shall be honored or made) except in
compliance with any applicable requirements of Rule 16b-3(e) or any
successor rule. Notwithstanding paragraph (a) above, in the event of
such exercise (or request and payment) during an exercise period
currently prescribed by such rule, the Committee may prescribe, by
rule of general application, such other measure of value as it may
determine but not in excess of the highest per share closing sale
price of the Common Stock reported on the New York Stock Exchange
Composite Transactions Index during such period and, where a Stock
Appreciation Right relates to an Incentive Stock Option, not in
excess of an amount consistent with the qualification of such Stock
Option as an "incentive stock option" under Section 422 of the Code.
SECTION 8. Restricted Stock; Unrestricted Stock.
a. Nature of Restricted Stock Award. A Restricted Stock Award is
an Award entitling the recipient to acquire shares of Stock for a
purchase price (which may be zero), subject to such conditions,
including a Company right during a specified period or periods to
repurchase such shares at their original purchase price (or to
require forfeiture of such shares, if the purchase price was zero)
upon the participant's termination of employment or other service
relationship, as the Committee may determine at the time of grant.
The original purchase price, if any, shall be determined by the
Committee, but if any purchase price is payable in an amount which
exceeds the lesser of the par value of the shares or 10% of the fair
market value of the Common Stock on the award date, it shall be equal
to at least 50% of the fair market value of the Common Stock on the
award date.
b. Award Agreement. A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless
the participant shall have accepted the Award within 60 days (or such
shorter date as the Committee may specify) following the award date
by making payment to the Company by certified or bank check or other
instrument acceptable to the Committee in an amount equal to the
specified purchase price, if any, of the shares covered by the Award
and by executing and delivering to the Company a Restricted Stock
Award Agreement in such form as the Committee shall determine.
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c. Rights as a Shareholder. Upon complying with paragraph (b)
above, a participant shall have all the rights of a shareholder with
respect to the Restricted Stock including voting and dividend rights,
subject to nontransferability restrictions and Company repurchase or
forfeiture rights described in this Section and subject to any other
conditions contained in the Award Agreement. Unless the Committee
shall otherwise determine, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until
such shares are free of any restrictions under the Plan.
d. Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or disposed
of except as specifically provided herein. In the event of
termination of employment or other service relationship of the
participant with the Company and its Subsidiaries for any reason,
such shares shall be resold to the Company at their purchase price,
or forfeited to the Company if the purchase price was zero, except as
set forth below.
i. The Committee at the time of grant shall specify the date or
dates (which may depend upon or be related to the attainment of
performance goals and other conditions) on which the
nontransferability of the Restricted Stock and the obligation to
resell such shares to the Company shall lapse. The Committee at
any time may accelerate such date or dates and otherwise waive
or, subject to Section 13, amend any conditions of the Award.
ii. Except as may otherwise be provided in the Award Agreement, in
the event of termination of employment or other service
relationship of a participant with the Company and its
Subsidiaries for any reason (including death), the participant
or the participant's legal representative shall offer to resell
to the Company, at the price paid therefor, all Restricted
Stock, and the Company shall have the right to purchase the
same at such price, or if the price was zero to require
forfeiture of the same, provided that except as provided in the
Award Agreement, the Company must exercise such right of
repurchase or forfeiture not later than the 60th day following
such termination of employment or other service relationship.
e. Waiver, Deferral, and Investment of Dividends. The Restricted
Stock Award Agreement may require or permit the immediate payment,
waiver, deferral, or investment of dividends paid on the Restricted
Stock.
f. Unrestricted Stock. The Committee may, in its sole discretion,
grant (or sell at a purchase price not to exceed the lesser of the
par value of the shares or 10% of the fair market value of the Common
Stock at the time of sale) to any participant shares of Stock free of
restrictions under the Plan ("Unrestricted Stock"). Shares of
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Unrestricted Stock may be granted or sold as described in the
preceding sentence in respect of past services or other valid
consideration. Any sale of Unrestricted Stock must take place within
60 days after the time of grant of the right to purchase such shares.
SECTION 9. Deferred Stock Awards.
a. Nature of Deferred Stock Award. A Deferred Stock Award is an
award entitling the recipient to acquire shares of Stock without
payment in one or more installments at a future date or dates, all as
determined by the Committee. The Committee may also condition such
acquisition on the attainment of specified performance goals.
b. Award Agreement. A participant who is granted a Deferred Stock
Award shall have no rights with respect to a such Award unless within
60 days of the grant of such Award or such shorter period as the
Committee may specify, the participant shall have accepted the Award
by executing and delivering to the Company a Deferred Stock Award
Agreement.
c. Restrictions on Transfer. Deferred Stock Awards and all rights
with respect to such Awards may not be sold, assigned, transferred,
pledged, or otherwise encumbered. Rights with respect to such Awards
shall be exercisable during the participant's lifetime only by the
participant or the participant's legal representative.
d. Rights as a Shareholder. A participant receiving a Deferred
Stock Award will have rights of a shareholder only as to shares
actually received by the participant under the Plan and not with
respect to shares subject to the Award but not actually received by
the participant. A participant shall be entitled to receive a stock
certificate for shares of Deferred Stock only upon satisfaction of
all conditions therefor specified in the Deferred Stock Award
Agreement.
e. Termination. Except as may otherwise be provided in the Award
Agreement, a participant's rights in all Deferred Stock Awards shall
automatically terminate upon the participant's termination of
employment by or other service relationship with the Company and its
Subsidiaries for any reason (including death).
f. Acceleration, Waiver, etc. At any time prior to the
participant's termination of employment or other service relationship
the Committee may in its discretion accelerate, waive, or, subject to
Section 13, amend any or all of the restrictions or conditions
imposed under any Deferred Stock Award.
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g. Payments in Respect of Deferred Stock. Without limiting the
right of the Committee to specify different terms, the Deferred Stock
Award Agreement may either make no provisions for, or may require or
permit the immediate payment, deferral, or investment of amounts
equal to, or less than, any cash dividends which would have been
payable on the Deferred Stock had such stock been outstanding, all as
determined by the Committee in its sole discretion.
SECTION 10. Performance Unit Awards.
a. Nature of Performance Units. A Performance Unit Award is an
award entitling the recipient to acquire cash or shares of Stock, or
a combination of cash and Stock, upon the attainment of specified
performance goals. The Committee in its sole discretion shall
determine whether and to whom Performance Unit Awards shall be made,
the performance goals applicable under each such Award, the periods
during which performance is to be measured, and all other limitations
and conditions applicable to the awarded Performance Unit.
Performance Units may be awarded independent of or in connection with
the granting of any other Award under the Plan.
b. Award Agreement. A participant shall have no rights with
respect to a Performance Unit Award unless within 60 days of the
grant of such Award or such shorter period as the Committee may
specify, the participant shall have accepted the Award by executing
and delivering to the Company a Performance Unit Award Agreement.
c. Restrictions on Transfer. Performance Unit Awards and all
rights with respect to such Awards may not be sold, assigned,
transferred, pledged, or otherwise encumbered, and if exercisable
over a specified period, shall be exercisable during the
participant's lifetime only by the participant or the participant's
legal representative.
d. Rights as a Shareholder. A participant receiving a Performance
Unit Award will have rights of a shareholder only as to shares
actually received by the participant under the Plan and not with
respect to shares subject to the Award but not actually received by
the participant. A participant shall be entitled to receive a stock
certificate evidencing the acquisition of shares of Stock under a
Performance Unit Award only upon satisfaction of all conditions
therefor specified in the Performance Unit Award Agreement.
e. Termination. Except as may otherwise be provided by the
Committee at any time prior to termination of employment or other
service relationship, a participant's rights in all Performance Unit
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Awards shall automatically terminate upon the participant's
termination of employment by or other service relationship with the
Company and its Subsidiaries for any reason (including death).
f. Acceleration, Waiver, etc. At any time prior to the
participant's termination of employment by or other service
relationship with the Company and its Subsidiaries, the Committee may
in its sole discretion accelerate, waive, or, subject to Section 13,
amend any or all of the goals, restrictions, or conditions imposed
under any Performance Unit Award.
g. Exercise. The Committee in its sole discretion shall establish
procedures to be followed in exercising any Performance Unit, which
procedures shall be set forth in the Performance Unit Award
Agreement. The Committee may at any time provide that payment under
a Performance Unit shall be made, upon satisfaction of the applicable
performance goals, without exercise by the participant. Except as
otherwise specified by the Committee, (i) a Performance Unit granted
in tandem with a Stock Option may be exercised only while the Stock
Option is exercisable, and (ii) the exercise of a Performance Unit
granted in tandem with any Award shall reduce the number of shares
subject to the related Award on such basis as is specified in the
Performance Unit Award Agreement.
SECTION 11. Other Stock-Based Awards; Supplemental Grants.
a. Nature of Awards. The Committee may grant other Awards under
which Stock is or may in the future be acquired ("Other Stock-based
Awards"). Such awards may include, without limitation, debt
securities convertible into or exchangeable for shares of Stock upon
such conditions, including attainment of performance goals, as the
Committee shall determine. Subject to the purchase price limitations
in paragraph (b) below, such convertible or exchangeable securities
may have such terms and conditions as the Committee may determine at
the time of grant. However, no convertible or exchangeable debt
shall be issued unless the Committee shall have provided (by Company
right of repurchase, right to require conversion or exchange, or
other means deemed appropriate by the Committee) a means of avoiding
any right of the holders of such debt to prevent a Company
transaction by reason of covenants in such debt.
b. Purchase Price; Form of Payment. The Committee may determine
the consideration, if any, payable upon the issuance or exercise of
an Other Stock-based Award. However, no shares of Stock (whether
acquired by purchase, conversion, or exchange or otherwise) shall be
issued unless (i) issued at no cost to the recipient (or for a
purchase price not in excess of the lesser of the par value of the
Shares or 10% of the Fair Market Value of the Stock as of the time of
sale), or (ii) sold, exchanged, or converted by the Company, and the
Company shall have received payment for such Stock or securities so
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sold, exchanged, or converted equal to at least 50% of Fair Market
Value of the Stock on the grant or effective date, or the exchange or
conversion date, under the Award, as specified by the Committee. The
Committee may permit payment by certified check or bank check or
other instrument acceptable to the Committee or by surrender of other
shares of Stock (excluding shares then subject to restrictions under
the Plan).
c. Forfeiture of Awards; Repurchase of Stock; Acceleration or
Waiver of Restrictions. The Committee may determine the conditions
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under which an Other Stock-based Award shall be forfeited or, in the
case of an Award involving a payment by the recipient, the conditions
under which the Company may or must repurchase such Award or related
Stock. At any time the Committee may in its sole discretion
accelerate, waive, or, subject to Section 13, amend any or all of the
limitations or conditions imposed under any Other Stock-based Award.
d. Award Agreements. A participant shall have no rights with
respect to any Other Stock-based Award unless within 60 days after
the grant of such Award (or such shorter period as the Committee may
specify) the participant shall have accepted the Award by executing
and delivering to the Company an Other Stock-based Award Agreement.
e. Nontransferability. Other Stock-based Awards may not be sold,
assigned, transferred, pledged, or encumbered except as may be
provided in the Other Stock-based Award Agreement. However, in no
event shall any Other Stock-based Award be transferred other than by
will or by the laws of descent and distribution or be exercisable
during the participant's lifetime by other than the participant or
the participant's legal representative.
f. Rights as a Shareholder. A recipient of any Other Stock-based
Award will have rights of a shareholder only at the time and to the
extent, if any, specified by the Committee in the Other Stock-based
Award Agreement.
g. Deemed Dividend Payments; Deferrals. Without limiting the right
of the Committee to specify different terms, an Other Stock-based
Award Agreement may require or permit the immediate payment, waiver,
deferral, or investment of dividends or deemed dividends payable or
deemed payable on Stock subject to the Award.
h. Supplemental Grants. The Company may in its sole discretion
make a loan to the recipient of an Award hereunder, either on or
after the date of grant of such Award. Such loans may be made either
in connection with the exercise of a Stock Option, a Stock
Appreciation Right, or an Other Stock-based Award, in connection with
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the purchase of shares under any Award, or in connection with the
payment of any federal income tax in respect of income recognized
under an Award. The Committee shall have full authority to decide
whether to make a loan hereunder and to determine the amount, term,
and provisions of any such loan, including the interest rate (which
may be zero) charged in respect of any such loan, whether the loan is
to be secured or unsecured, the terms on which the loan is to be
repaid and the conditions, if any, under which it may be forgiven.
However, no loan hereunder shall provide or reimburse to the borrower
the amount used by him for the payment of the par value of any shares
of Common Stock issued, have a term (including extensions) exceeding
ten years in duration, or be in an amount exceeding the total
exercise or purchase price paid by the borrower under an Award or for
related Stock under the Plan plus an amount equal to the cash payment
permitted in the following paragraph.
The Committee may at any time authorize a cash payment, in respect of
the grant or exercise of an Award under the Plan or the lapse or
waiver of restrictions under an Award which shall not exceed the
amount which would be required in order to pay in full the federal
income tax due as a result of income recognized by the recipient
under both the Award and such cash payment, in each case assuming
that such income is taxed at the regular maximum marginal rate
applicable to individuals under the Code as in effect at the time
such income is includable in the recipient's income. Subject to the
foregoing, the Committee shall have complete authority to decide
whether to make such cash payments in any case, to make provision for
such payments either simultaneously with or after the grant of the
associated Award, and to determine the amount of each such payment.
SECTION 12. Transfer, Leave of Absence, Etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
a. a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;
or
b. an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the employee's
right to reemployment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in writing.
For purposes of Section 6(j), Section 8(a), Section 8(d), Section
9(e), Section 9(f), Section 10(e) and Section 10(f), except as
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otherwise determined by the Committee an optionee employed as an
employee by the Company and its Subsidiaries shall be treated as
having incurred a termination of employment by or other service
relationship with the Company and its Subsidiaries on the date he or
she ceases to be an employee, whether or not he or she continues to
provide services to the Company or its Subsidiaries on some other
basis.
SECTION 13. Amendments and Termination.
The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially
granted under this Plan) for the purpose of satisfying changes in law or for
any other lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the holder's consent. However, no such
amendment, unless approved by stockholders, shall be effective if it would
cause the Plan to fail to satisfy the incentive stock option requirements of
the Code or the requirements of Rule 16b-3 or any successor rule under the Act
as in effect on the date of such amendment.
SECTION 14. Status of Plan.
With respect to the portion of any Award which has not been exercised and
any payments in cash, stock, or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the provision of the foregoing sentence.
SECTION 15. General Provisions.
a. No Distribution; Compliance with Legal Requirements, etc. The
Committee may require each person acquiring shares pursuant to an
Award to represent to and agree with the Company in writing that such
person is acquiring the shares without a view to distribution
thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities laws and other legal and stock exchange
requirements have been satisfied. The Committee may require the
placing of such stop-orders and restrictive legends on certificates
for Stock and Awards as it deems appropriate.
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b. Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases. The adoption of the Plan does not confer upon any
employee or other person any right to continued employment or the
continuation of any service relationship with the Company or a
Subsidiary, nor does it interfere in any way with the right of the
Company or a Subsidiary to terminate the employment or other service
relationship that may exist between it and any person.
c. Tax Withholding, etc. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other
amounts received thereunder first becomes includable in the gross
income of the participant for Federal income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee regarding
payment of, any Federal, state, or local taxes of any kind required
by law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise
due to the participant.
d. Cancellation of Awards. The Committee may provide, with respect
to any Award, that the Award shall be cancelled or rescinded and any
associated shares forfeited, and that the participant be obligated to
pay to the Company any gain received upon exercise or vesting, in the
event that the participant competes with the Company or its
Subsidiaries, discloses confidential information of the Company or
its Subsidiaries, or otherwise is not in compliance with any
provision of the Award, in each case on such terms and conditions as
the Committee considers appropriate in the circumstances.
SECTION 16. Effective Date of Plan.
The Plan shall not become effective unless approved by the vote of the
holders of a majority of the shares of capital stock of the Company represented
at a meeting of stockholders. Subject to such effectiveness, and to the
requirement that no Stock may be issued hereunder prior to such approval,
Options and other Awards may be granted hereunder on and after adoption of the
Plan by the Board.
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