BBN CORPORATION
1996 STOCK INCENTIVE PLAN
SECTION 1. General Purpose of the Plan; Definitions.
The name of the plan is the BBN Corporation 1996 Stock Incentive Plan (the
"Plan"). The Plan has been adopted with a view toward facilitating and
increasing the long-term growth and profitability of BBN Corporation (the
"Company") and its subsidiaries by promoting Common Stock ownership by key
employees whose efforts can contribute to such long-term growth and
profitability.
The following terms shall be defined as set forth below:
a. "Award" or "Awards" means either Stock Options or Restricted Stock
Awards or both, as the context requires.
b. "Board" means the Board of Directors of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations, and interpretations.
d. "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.
e. "Disability" means disability as determined in accordance with
standards and procedures similar to those used under the Company's long-term
disability program.
f. "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.
g. "Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries on or after the normal retirement date specified
in the Company's tax qualified Retirement Trust Agreement.
h. "Restricted Stock Award" is defined in Section 7(a).
i. "Stock" means the Common Stock, $1.00 par value, of the Company,
subject to adjustments pursuant to Section 3.
j. "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 6.
k. "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.
SECTION 2. Committee Authority to Select Participants and Determine Awards,
Etc.
The Plan shall be administered by the Compensation and Stock Option
Committee of the Board, which is appointed by the Board and serves 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 Awards and the extent to which
any Award will consist of Stock Options or Restricted Stock or
both;
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.
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 820,000, including
shares issued in lieu of or upon reinvestment of dividends arising
from Awards. Awards and Stock which are forfeited, reacquired by the
Company, or satisfied without the issuance of Stock shall not be
counted against this limit. Shares issued under the Plan shall
consist of previously issued shares that have been reacquired by the
Company.
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
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).
c. Substitute Awards. Subject to 3(a) above, 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 (including a corporation affiliated with the
Company) which corporation is merged into or consolidated with the
Company or a Subsidiary or the property or stock of which is acquired
by the Company or a Subsidiary. The Committee may direct that the
substitute awards be granted on such terms and conditions as the
Committee considers appropriate in the circumstances.
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. Persons who are directors of the
Company, other than any such person who is a full time employee or who is
providing (whether or not on a full time basis) consulting or similar services
to the Company in addition to services as a director, shall not be eligible for
awards under the Plan.
SECTION 5. Limitations on Term and Dates of Awards.
a. Duration of Awards. Subject to Sections 12(a), 12(c), and 12(d)
below, no restrictions or limitations on Awards shall extend beyond
10 years 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.
b. Latest Grant Date. No Award shall be granted after January 1,
2006, but then-outstanding Awards may extend beyond such date.
SECTION 6. Stock Options.
Each Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve. Only nonstatutory Stock Options --
i.e., Stock Options that do not qualify as "incentive stock options" within the
meaning of Section 422(b) of the Code -- may be granted under the Plan.
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 and may be
equal to or less than the Fair Market Value on the date of grant.
b. Option Term. The term of each Stock Option shall be fixed by
the Committee but shall not exceed 10 years from the date the option
is granted.
c. Exercisability. Stock Options shall be exercisable at such 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. 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
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.
e. 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.
f. 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.
g. Termination by Reason of Disability. Any Stock Option held by
an optionee whose employment by or other service relationship with
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.
h. 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.
i. 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.
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).
j. Form of Settlement. Subject to Sections 12(a), 12(c), and 12(d)
below, shares of Stock issued upon exercise of a Stock Option shall
be free of all restrictions under the Plan, except that the Committee
in its discretion 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 may reserve the right to so provide after time
of grant.
SECTION 7. 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.
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 such period
following the award date as the Committee may specify) 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.
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 or forfeit 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 10, amend any conditions
of the Award.
ii. Except as may otherwise be provided in the Award Agreement, in
the event of termination of employment by 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 such purchase price as the Committee determines) to
any participant shares of Stock free of restrictions under the Plan
("Unrestricted Stock"). Shares of Unrestricted Stock may be granted
or sold as described in the preceding sentence in respect of past
services or other valid consideration.
SECTION 8. Deemed Dividends; Deferrals; Supplemental Grants.
a. Deemed Dividend Payments; Deferrals. Without limiting the right
of the Committee to specify different terms, the Committee may
require or permit the immediate payment, waiver, deferral, or
investment of dividends or deemed dividends payable or deemed payable
on Stock subject to an Award.
b. 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 or in connection
with the payment of any federal income tax in respect of income
recognized with respect to Restricted Stock. 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 9. 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(i) and Section 7(a), except as 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 10. Amendment 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.
SECTION 11. 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 12. 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.
b. Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board 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. Without
limiting the foregoing, nothing herein shall be construed as limiting
the right of an individual receiving or holding an Award hereunder
from being awarded, or from continuing to hold, an award under the
Company's 1986 Stock Incentive Plan. The adoption of the Plan does
not confer upon any employee or other person any right to continued
employment by 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 canceled 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 13. Effective Date of Plan.
The Plan shall be effective as of January 17, 1996, the date of its
adoption by the Board.