Exhibit 10.16
THE ALLSTATE CORPORATION
EQUITY INCENTIVE PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF NOVEMBER 10, 1998
TABLE OF CONTENTS
Page
1. Purpose........................................................1
2. Definitions....................................................1
3. Scope of the Plan..............................................3
(a) Number of Shares Available For Delivery Under the Plan...3
(b) Effect of Expiration or Termination......................3
(c) Treasury Stock...........................................3
(d) Committee Discretion to Cancel Options...................4
4. Administration.................................................4
(a) Committee Administration................................4
(b) Board Reservation and Delegation........................4
(c) Committee Authority.....................................4
(d) Committee Determinations Final..........................5
5. Eligibility....................................................5
6. Conditions to Grants...........................................6
(a) General Conditions......................................6
(b) Grant of Options and Option Price.......................6
(c) Grant of Incentive Stock Options........................6
(d) Grant of Reload Options.................................8
(e) Grant of Shares of Restricted Stock.....................8
(f) Grant of Unrestricted Stock............................10
7. Limitations on Transferability................................11
8. Exercise......................................................11
(a) Exercise of Options....................................11
(b) Special Rules for Section 16 Grantees..................13
(c) Permissible Shares Issued..............................13
9. Loans and Guarantees..........................................13
10. Notification under Section 83(b)..............................14
11. Mandatory Withholding Taxes...................................14
12. Elective Share Withholding....................................14
13. Termination of Employment.....................................15
(a) Restricted Stock.......................................15
(b) Other Awards...........................................15
(c) Maximum Extension......................................16
14. Equity Incentive Plans of Foreign Subsidiaries................16
15. Substituted Awards............................................16
16. Securities Law Matters........................................16
17. No Funding Required...........................................17
18. No Employment Rights..........................................17
19. Rights as a Stockholder.......................................17
20. Nature of Payments............................................17
21. Non-Uniform Determinations....................................17
22. Adjustments...................................................18
23. Amendment of the Plan.........................................18
24. Termination of the Plan.......................................18
25. No Illegal Transactions.......................................18
26. Controlling Law...............................................19
27. Severability..................................................19
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THE PLAN. The Company established The Allstate Corporation
Equity Incentive Plan (as set forth herein and from time to time amended, the
"Plan"), effective June 2, 1993. Amendments to the Plan were approved by the
Company's stockholders on May 19, 1994 and on May 23, 1995. The Board of
Directors further amended the Plan on May 21, 1996, November 12, 1996 and August
14, 1997. On May 19, 1998, the Plan was amended and restated effective as of
July 2, 1998. The Plan was further amended and restated effective as of November
10, 1998.
1. PURPOSE. The primary purpose of the Plan is to provide a means by which
key employees of the Company and its Subsidiaries can acquire and maintain stock
ownership, thereby strengthening their commitment to the success of the Company
and its Subsidiaries and their desire to remain employed by the Company and its
Subsidiaries. The Plan also is intended to attract and retain key employees and
to provide such employees with additional incentive and reward opportunities
designed to encourage them to enhance the profitable growth of the Company and
its Subsidiaries.
2. DEFINITIONS. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions and the terms set forth below shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
(a) "Award" means options, shares of restricted Stock, or shares of
unrestricted Stock granted under the Plan.
(b) "Award Agreement" means the written agreement by which an Award is
evidenced.
(c) "Board" means the board of directors of the Company.
(d) "Committee" means the committee of the Board appointed pursuant to
Article 4.
(e) "Company" means The Allstate Corporation, a Delaware corporation.
(f) "Disability" means, as relates to the exercise of an incentive stock
option after Termination of Employment, a permanent and total disability within
the meaning of Section 22(e)(3) of the Internal Revenue Code, and for all other
purposes, a mental or physical condition which, in the opinion of the Committee,
renders a Grantee unable or incompetent to carry out the job responsibilities
which such Grantee held or the duties to which such Grantee was assigned at the
time the disability was incurred, and which is expected to be permanent or for
an indefinite duration.
(g) "Effective Date" means the date described in the first paragraph of
the Plan.
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(h) "Fair Market Value" of the Stock means, as of any applicable date
(other than on the Effective Date) the mean between the high and low prices of
the Stock as reported on the New York Stock Exchange Composite Tape, or if no
such reported sale of the Stock shall have occurred on such date, on the next
preceding date on which there was such a reported sale, PROVIDED, HOWEVER, that
if the Stock is acquired and sold in a simultaneous sale pursuant to the
provisions of Article 8(a)(iv), Fair Market Value means the price received upon
such sale. Solely as of the effective date of the IPO, Fair Market Value of the
Stock means the price to the public pursuant to the form of final prospectus
used in connection with the IPO, as indicated on the cover page of such
prospectus or otherwise.
(i) "Grant Date" means the date of grant of an Award determined in
accordance with Article 6.
(j) "Grantee" means an individual who has been granted an Award.
(k) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder. References to a particular
section of the Internal Revenue Code shall include references to successor
provisions.
(l) "IPO" means such term as defined in the first paragraph of the Plan.
(m) "Minimum Consideration" means the $.01 par value per share or such
larger amount determined pursuant to resolution of the Board to be capital
within the meaning of Section 154 of the Delaware General Corporation Law.
(n) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(o) "Option Price" means the per share purchase price of (i) Stock
subject to an option or (ii) restricted Stock subject to an option.
(p) [deleted]
(q) "Plan" has the meaning set forth in the introductory paragraph.
(r) "Reload Option" has the meaning specified in Article 6(d).
(s) "Retirement" means a Termination of Employment occurring on or after
an individual attains age 65, or a Termination of Employment approved by the
Company as an early retirement; provided that in the case of a Section 16
Grantee, such early retirement must be approved by the Committee.
(t) "SEC" means the Securities and Exchange Commission.
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(u) "Section 16 Grantee" means a person subject to potential liability
with respect to equity securities of the Company under Section 16(b) of the 1934
Act.
(v) "Stock" means common stock of the Company, par value $.01 per share.
(x) "Subsidiary" means a corporation as defined in Section 424(f) of the
Internal Revenue Code, with the Company being treated as the employer
corporation for purposes of this definition.
(y) "10% Owner" means a person who owns stock (including stock treated
as owned under Section 424(d) of the Internal Revenue Code) possessing more than
10% of the Voting Power of the Company.
(z) "Termination of Employment" occurs the first day on which an
individual is for any reason no longer employed by the Company or any of its
Subsidiaries, or with respect to an individual who is an employee of a
Subsidiary, the first day on which the Company no longer owns voting securities
possessing at least 50% of the Voting Power of such Subsidiary.
(aa) "Voting Power" means the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors.
3. SCOPE OF THE PLAN.
(a) NUMBER OF SHARES AVAILABLE FOR DELIVERY UNDER THE PLAN. A maximum of
36,000,000 shares of Stock may be awarded under the Plan. Awards may be made
from authorized but unissued shares of Stock or from Treasury Stock. No more
than an aggregate of 3,400,000 shares of the aforesaid 36,000,000 shares of
Stock may be granted under Article 6(e) and (f). No more than 1,600,000 shares
of Stock may be granted as stock options to any employee during the duration of
the Plan.
(b) EFFECT OF EXPIRATION OR TERMINATION. If and to the extent an Award,
other than an Award granted under Article 6(e) or (f),shall expire or terminate
for any reason without having been exercised in full (including, without
limitation, a cancellation and regrant of an option pursuant to Article
4(c)(vii)), or shall be forfeited, without, in either case, the Grantee having
enjoyed any of the benefits of stock ownership, the shares of Stock associated
with such Award shall become available for other Awards. Except in the case of a
Reload Option granted to a Section 16 Grantee, the grant of a Reload Option
shall not reduce the number of shares of Stock available for other Awards.
(c) TREASURY STOCK. The Committee shall have the authority to cause the
Company to purchase from time to time shares of Stock to be held as treasury
shares and used for or in connection with Awards.
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(d) COMMITTEE DISCRETION TO CANCEL OPTIONS. The Committee may, in its
discretion, elect at any time, should it determine it is in the best interest of
the Company's stockholders to cancel any options granted hereunder, to cancel
all or any of the options granted hereunder and pay the holders of any such
options an amount (payable in such proportion as the Committee may determine in
cash or in Stock (valued at the Fair Market Value of a share of Stock on the
date of cancellation of such option)) equal to the number of shares of Stock
subject to such cancelled option, multiplied by the amount (if any) by which the
Fair Market Value of Stock on the date of cancellation of the option exceeds the
Option Price; provided that if the Committee should determine that not making
payment of such amount to the holders of such option upon the cancellation would
be in the best interests of stockholders of the Company (ignoring in such
determination the cost of such payment and considering only other matters), the
Committee may void options granted hereunder and declare that no payment shall
be made to the holders of such options.
4. ADMINISTRATION.
(a) COMMITTEE ADMINISTRATION. Subject to Article 4(b), the Plan shall be
administered by the Committee, which shall consist of not less than two persons
appointed by the Board, who are directors of the Company and not employees of
the Company or any of its Subsidiaries. Membership on the Committee shall be
subject to such limitations (including, if appropriate, a change in the minimum
number of members of the Committee) as the Board deems appropriate to permit
transactions pursuant to the Plan to be exempt from potential liability under
Section 16(b) of the 1934 Act and to comply with Section 162 (m) of the Internal
Revenue Code.
(b) BOARD RESERVATION AND DELEGATION. The Board may, in its discretion,
reserve to itself or delegate to another committee of the Board any or all of
the authority and responsibility of the Committee with respect to Awards to
Grantees who are not Section 16 Grantees at the time any such delegated
authority or responsibility is exercised. Such other committee may consist of
one or more directors who may, but need not be, officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has reserved
to itself or delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to such
other committee.
(c) COMMITTEE AUTHORITY. The Committee shall have full and final authority,
in its sole and absolute discretion, but subject to the express provisions of
the Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and (B) whether or
not specific Awards shall be identified with other specific Awards, and if
so, whether they shall be exercisable cumulatively with, or alternatively
to, such other specific Awards,
(iii) to interpret the Plan and to make all determinations necessary
or advisable for
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the administration of the Plan,
(iv) to prescribe, amend, and rescind rules and regulations relating
to the Plan, including, without limitation, rules with respect to the
exercisability and nonforfeitability of Awards upon the Termination of
Employment of a Grantee,
(v) to determine the terms and provisions of the Award Agreements,
which need not be identical and, with the consent of the Grantee, to modify
any such Award Agreement at any time,
(vi) to cancel options in accordance with the provision of Section
3(d),
(vii) except as provided in Section 4(c)(vi) hereof, to cancel, with
the consent of the Grantee, outstanding Awards, and to grant new Awards in
substitution thereof,
(viii) to accelerate the exercisability of, and to accelerate or waive
any or all of the restrictions and conditions applicable to, any Award,
(ix) to authorize foreign Subsidiaries to adopt plans as provided in
Article 14,
(x) to make such adjustments or modifications to Awards to Grantees
working outside the United States as are necessary and advisable to fulfill
the purposes of the Plan,
(xi) to authorize any action of or make any determination by the
Company as the Committee shall deem necessary or advisable for carrying out
the purposes of the Plan,
(xii) to make appropriate adjustments to, cancel or continue Awards in
accordance with Article 22, and
(xiii) to impose such additional conditions, restrictions, and
limitations upon the grant, exercise or retention of Awards as the
Committee may, before or concurrently with the grant thereof, deem
appropriate, including, without limitation, requiring simultaneous exercise
of related identified Awards, and limiting the percentage of Awards which
may from time to time be exercised by a Grantee.
(d) COMMITTEE DETERMINATIONS FINAL. The determination of the Committee on
all matters relating to the Plan or any Award Agreement shall be conclusive and
final. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award.
5. ELIGIBILITY. Awards may be granted to any employee of the Company or any
of its Subsidiaries. In selecting the individuals to whom Awards may be granted,
as well as in determining the number of shares of Stock subject to, and the
other terms and conditions
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applicable to, each Award, the Committee shall take into consideration such
factors as it deems relevant in promoting the purposes of the Plan.
6. CONDITIONS TO GRANTS.
(a) GENERAL CONDITIONS.
(i) The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by
the Committee.
(ii) The term of each Award (subject to Articles 6(c) and 6(d)
with respect to incentive stock options and Reload Options,
respectively) shall be a period of not more than 12 years from the Grant
Date, and shall be subject to earlier termination as herein provided.
(iii) A Grantee may, if otherwise eligible, be granted additional
Awards in any combination.
(iv) The Committee may grant Awards with terms and conditions
which differ among the Grantees thereof. To the extent not set forth in
the Plan, the terms and conditions of each Award shall be set forth in
an Award Agreement.
(b) GRANT OF OPTIONS AND OPTION PRICE. The Committee may, in its
discretion, grant options (which may be options to acquire unrestricted Stock or
restricted Stock) to any employee eligible under Article 5 to receive Awards. No
later than the Grant Date of any option, the Committee shall determine the
Option Price; provided that the Option Price shall, except as provided in
subsection (c) below and in Article 15, not be less than 100% of the Fair Market
Value of the Stock on the Grant Date.
(c) GRANT OF INCENTIVE STOCK OPTIONS. At the time of the grant of any
option, the Committee may designate that such option shall be made subject to
additional restrictions to permit it to qualify as an "incentive stock option"
under the requirements of Section 422 of the Internal Revenue Code. Any option
designated as an incentive stock option:
(i) shall have an Option Price of (A) not less than 100% of the
Fair Market Value of the Stock on the Grant Date or (B) in the case of a
10% Owner, not less than 110% of the Fair Market Value of the Stock on
the Grant Date;
(ii) shall have a term of not more than 10 years (five years, in
the case of a 10% Owner) from the Grant Date, and shall be subject to
earlier termination as provided herein or in the applicable Award
Agreement;
(iii) shall not have an aggregate Fair Market Value (determined
for each incentive
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stock option at its Grant Date) of Stock with respect to which incentive
stock options are exercisable for the first time by such Grantee during
any calendar year (under the Plan and any other employee stock option
plan of the Grantee's employer or any parent or subsidiary thereof
("Other Plans")), determined in accordance with the provisions of
Section 422 of the Internal Revenue Code, which exceeds $100,000 (the
"$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of Stock
(determined on the Grant Date) with respect to all incentive stock
options previously granted under the Plan and any Other Plans ("Prior
Grants") and any incentive stock options under such grant (the "Current
Grant") which are exercisable for the first time during any calendar
year would exceed the $100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant exercisable for
the first time by the Grantee during any calendar year which
would be, when added to any portions of any Prior Grants
exercisable for the first time by the Grantee during such
calendar year with respect to stock which would have an
aggregate Fair Market Value (determined as of the respective
Grant Date for such options) in excess of the $100,000 Limit
shall, notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Grantee in the first
subsequent calendar year or years in which it could be
exercisable for the first time by the Grantee when added to all
Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
provisions of the immediately preceding sentence during any
calendar year commencing with the calendar year in which it is
first exercisable through and including the last calendar year
in which it may by its terms be exercised, such portion of the
Current Grant shall not be an incentive stock option, but shall
be exercisable as a separate option at such date or dates as are
provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the
date the Plan is adopted or the date the Plan is approved by the
stockholders of the Company; and
(vi) shall require the Grantee to notify the Committee of any
disposition of any Stock issued pursuant to the exercise of the
incentive stock option under the circumstances described in Section
421(b) of the Internal Revenue Code (relating to certain disqualifying
dispositions), within 10 days of such disposition.
Notwithstanding the foregoing and Article 4(c)(v), the Committee may take any
action with respect to any option, including but not limited to an incentive
stock option, without the consent of the Grantee, in order to prevent such
option from being treated as an incentive stock option.
(d) GRANT OF RELOAD OPTIONS. The Committee may provide in an Award
Agreement
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that a Grantee who exercises all or any portion of an option for shares of Stock
which have a Fair Market Value equal to not less than 100% of the Option Price
for such options ("Exercised Options") and who paid the Option Price with shares
of Stock shall be granted, subject to Article 3, an additional option ("Reload
Option") for a number of shares of stock equal to the sum ("Reload Number") of
the number of shares of Stock tendered or withheld in payment of the Option
Price for the Exercised Options plus, if so provided by the Committee, the
number of shares of Stock, if any, retained by the Company in connection with
the exercise of the Exercised Options to satisfy any federal, state or local tax
withholding requirements.
Reload Options shall be subject to the following terms and conditions:
(i) the Grant Date for each Reload Option shall be the date of
exercise of the Exercised Option to which it relates;
(ii) subject to Article 6(d)(iii) below, the Reload Option may
be exercised at any time during the unexpired term of the Exercised
Option (subject to earlier termination thereof as provided in the Plan
and in the applicable Award Agreement); and
(iii) the terms of the Reload Option shall be the same as the
terms of the Exercised Option to which it relates, except that (A) the
Option Price shall be the Fair Market Value of the Stock on the Grant
Date of the Reload Option and (B) no Reload Option may be exercised
within one year from the Grant Date thereof.
(e) GRANT OF SHARES OF RESTRICTED STOCK.
(i) The Committee may, in its discretion, grant shares of
restricted Stock to any employee eligible under Article 5 to receive
Awards.
(ii) Before the grant of any shares of restricted Stock, the
Committee shall determine, in its discretion:
(A) whether the certificates for such shares shall be
delivered to the Grantee or held (together with a stock power
executed in blank by the Grantee) in escrow by the Secretary of
the Company until such shares become nonforfeitable or are
forfeited,
(B) the per share purchase price of such shares, which may
be zero provided, however, that
(1) the per share purchase price of all such shares
(other than treasury shares) shall not be less than the
Minimum Consideration for each such share; and
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(2) if such shares are to be granted to a Section 16
Grantee, the per share purchase price of any such shares
shall also be at least 50% of the Fair Market Value of the
Stock on the Grant Date unless such shares are granted for
no monetary consideration (in which case treasury shares are
to be delivered) or with a purchase price per share equal to
the Minimum Consideration for the Stock, and
(C) the restrictions applicable to such grant;
(iii) Payment of the purchase price (if greater than zero) for
shares of restricted Stock shall be made in full by the Grantee before
the delivery of such shares and, in any event, no later than 10 days
after the Grant Date for such shares. Such payment may, at the election
of the Grantee, be made in any one or any combination of the following:
(A) cash,
(B) Stock valued at its Fair Market Value on the date
of payment or, if the date of payment is not a business day, the
next succeeding business day, or
(C) with the approval of the Committee, shares of
restricted Stock, each valued at the Fair Market Value of a
share of Stock on the date of payment or, if the date of payment
is not a business day, the next succeeding business day
provided, however, that, in the case of payment in Stock or restricted Stock,
(1) the use of Stock or restricted Stock in
payment of such purchase price by a Section 16 Grantee
is subject to (i) the availability of an exemption of
such use of stock from potential liability under
Section 16(b) of the 1934 Act, or (ii) the
inapplicability of such Section;
(2) in the discretion of the Committee and to
the extent permitted by law, payment may also be made
in accordance with Article 9; and
(3) if the purchase price for restricted Stock
("New Restricted Stock") is paid with shares of
restricted Stock ("Old Restricted Stock"), the
restrictions applicable to the New Restricted Stock
shall be the same as if the Grantee had paid for the
New Restricted Stock in cash unless, in the judgment of
the Committee, the Old Restricted Stock was subject to
a greater risk of forfeiture, in which case a number of
shares of New Restricted Stock equal to the number of
shares of Old Restricted Stock tendered in payment for
New Restricted Stock may in the discretion of the
Committee be subject to the same restrictions as the
Old Restricted Stock,
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determined immediately before such payment.
(iv) The Committee may, but need not, provide that all or any
portion of a Grantee's Award of restricted Stock shall be forfeited
(A) except as otherwise specified in the Award Agreement,
upon the Grantee's Termination of Employment within a specified
time period after the Grant Date, or
(B) if the Company or the Grantee does not achieve specified
performance goals within a specified time period after the Grant
Date and before the Grantee's Termination of Employment, or
(C) upon failure to satisfy such other restrictions as the
Committee may specify in the Award Agreement.
(v) If a share of restricted Stock is forfeited, then
(A) the Grantee shall be deemed to have resold such share of
restricted Stock to the Company at the lesser of (1) the purchase
price paid by the Grantee (such purchase price shall be deemed to
be zero dollars ($0) if no purchase price was paid) or (2) the
Fair Market Value of a share of Stock on the date of such
forfeiture;
(B) the Company shall pay to the Grantee the amount
determined under clause (A) of this sentence as soon as is
administratively practical; and
(C) such share of restricted Stock shall cease to be
outstanding, and shall no longer confer on the Grantee thereof
any rights as a stockholder of the Company, from and after the
date of the Company's tender of the payment specified in clause
(B) of this sentence, whether or not such tender is accepted by
the Grantee.
(vi) Any share of restricted Stock shall bear an appropriate
legend specifying that such share is non-transferable and subject to the
restrictions set forth in the Plan. If any shares of restricted Stock
become nonforfeitable, the Company shall cause certificates for such
shares to be issued or reissued without such legend and delivered to the
Grantee or, at the request of the Grantee, shall cause such shares to be
credited to a brokerage account specified by the Grantee.
(f) GRANT OF UNRESTRICTED STOCK. The Committee may, in its discretion,
grant shares of unrestricted Stock to any employee eligible under Article 5 to
receive Awards.
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7. LIMITATIONS ON TRANSFERABILITY. Except as otherwise provided in the
terms of a specific grant, each Award (other than unrestricted Stock) granted
hereunder shall by its terms not be assignable or transferable other than by
will or the laws of descent and distribution and may be exercised, during the
Grantee's lifetime, only by the Grantee. Each share of restricted Stock shall be
non-transferable until such share becomes nonforfeitable. Notwithstanding the
foregoing, the Committee shall have the authority, in its discretion, to grant
(or to sanction by way of amendment of an existing grant) nonqualified stock
options the vested portions of which may be transferred by the Grantee during
his lifetime to (a) any member of his immediate family, (b) to a trust
established for the exclusive benefit of himself or one or more members of his
immediate family, or (c) to a partnership, the partners of which are limited to
the Grantee and members of his immediate family. A transfer of a stock option
pursuant to this section 7 may only be effected by the Company at the written
request of a Grantee and shall become effective only when recorded in the
Company=s record of outstanding stock options. In the event a stock option is
transferred as contemplated in this section 7 any Reload Options associated with
such transferred stock option shall terminate, and such transferred stock option
may not be subsequently transferred by the transferee except by will or the laws
of descent and distribution. Otherwise, a transferred stock option shall
continue to be governed by and subject to the terms and limitations of the Plan
and the relevant grant, and the transferee shall be entitled to the same rights
as the Grantee, as if no transfer had taken place. As used in this section 7,
Aimmediate family@ shall mean, with respect to any person, his/her spouse, any
child, stepchild or grandchild, and shall include relationships arising from
legal adoption.
8. EXERCISE.
(a) EXERCISE OF OPTIONS. Subject to Articles 4(c)(vii), 14 and 17, and such
terms and conditions as the Committee may impose, each option shall be
exercisable in one or more installments commencing not earlier than the first
anniversary of the Grant Date of such option. Options shall not be exercisable
for twelve months following a hardship distribution that is subject to Treasury
Regulation ' 1.401(k)-1(d)(2)(iv)(B)(4), except to the extent permitted
thereunder. Options shall not be exercisable for less than 25 shares of Stock
unless the exercise represents the entire remaining balance of a grant or
grants. Each option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of shares of Stock or restricted
Stock subject to the option. The Option Price of any shares of Stock or
restricted Stock as to which an option shall be exercised shall be paid in full
at the time of the exercise. Payment may, at the election of the Grantee, be
made in any one or any combination of the following forms:
(i) check in such form as may be satisfactory to the Committee,
(ii) Stock valued at its Fair Market Value on the date of exercise or,
if the date of exercise is not a business day, the next succeeding business
day,
(iii) with the approval of the Committee, shares of restricted Stock,
each valued
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at the Fair Market Value of a share of Stock on the date of exercise or, if
the date of exercise is not a business day, the next succeeding business
day,
(iv) through simultaneous sale through a broker of shares of
unrestricted Stock acquired on exercise, as permitted under Regulation T of
the Federal Reserve Board, or
(v) by authorizing the Company in his or her written notice of
exercise to withhold from issuance a number of shares of Stock issuable
upon exercise of such option which, when multiplied by the Fair Market
Value of Common Stock on the date of exercise (or, if the date of exercise
is not a business day, the next succeeding business day), is equal to the
aggregate Option Price payable with respect to the option so exercised.
In the event a Grantee elects to pay the Option Price payable with
respect to an option pursuant to clause (ii) above, (A) only a whole number of
share(s) of Stock (and not fractional shares of Stock) may be tendered in
payment, (B) such Grantee must present evidence acceptable to the Company that
he or she has owned any such shares of Stock tendered in payment of the Option
Price (and that such shares of Stock tendered have not been subject to any
substantial risk of forfeiture) for at least six months prior to the date of
exercise, and (C) Stock must be delivered to the Company. Delivery may, at the
election of the Grantee, be made either by (I) delivery of the certificate(s)
for all such shares of Stock tendered in payment of the Option Price,
accompanied by duly executed instruments of transfer in a form acceptable to the
Company, or (II) direction to the Grantee=s broker to transfer, by book entry,
such shares of Stock from a brokerage account of the Grantee to a brokerage
account specified by the Company. When payment of the Option Price is made by
tender of Stock, the difference, if any, between the aggregate Option Price
payable with respect to the option being exercised and the Fair Market Value of
the share(s) of Stock tendered in payment (plus any applicable taxes) shall be
paid by check. No Grantee may tender shares of Stock having a Fair Market Value
exceeding the aggregate Option Price payable with respect to the Option being
exercised
In the event a Grantee elects to pay the Option Price payable with
respect to an option pursuant to clause (v) above, (A) only a whole number of
share(s) of Stock (and not fractional shares of Stock) may be withheld in
payment and (B) such Grantee must present evidence acceptable to the Company
that he or she has owned a number of shares of Stock at least equal to the
number of shares of Stock to be withheld in payment of the Option Price (and
that such owned shares of Stock have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise. When payment
of the Option Price is made by the withholding of shares of Stock, the
difference, if any, between the aggregate Option Price payable with respect to
the option being exercised and the Fair Market Value of the share(s) of Stock
withheld in payment (plus any applicable taxes) shall be paid by check. No
Grantee may authorize the withholding of shares of Stock having a Fair Market
Value exceeding the aggregate Option Price payable with respect to the option
being exercised. Any withheld shares of Stock shall no longer be issuable under
such option.
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If restricted Stock ("Tendered Restricted Stock") is used to pay the
Option Price for Stock, then a number of shares of Stock acquired on exercise of
the option equal to the number of shares of Tendered Restricted Stock shall be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the option. If the Option Price for restricted Stock
is paid with Tendered Restricted Stock, and if the Committee determines that the
restricted Stock acquired on exercise of the option is subject to restrictions
("Greater Restrictions") that cause it to have a greater risk of forfeiture than
the Tendered Restricted Stock, then notwithstanding the preceding sentence, all
the restricted Stock acquired on exercise of the option shall be subject to such
Greater Restrictions.
Shares of unrestricted Stock acquired by a Grantee on exercise of an
option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) SPECIAL RULES FOR SECTION 16 GRANTEES. Subject to Article 15, no option
shall be exercisable by a Section 16 Grantee during the first six months after
its Grant Date, if such exercise (or the sale of shares received upon exercise)
would result in the loss of an exemption for a grant under Section 16(b) of the
1934 Act.
(c) PERMISSIBLE SHARES ISSUED. No shares of Stock shall be issued hereunder
upon option exercise except shares of Stock available under Article 3(a). Each
Grantee, by acceptance of an award, waives all rights to specific performance or
injunctive or other equitable relief and acknowledges that he has an adequate
remedy at law in the form of damages.
9. LOANS AND GUARANTEES. The Committee may, in its discretion:
(a) allow a Grantee to defer payment to the Company of all or any portion
of (i) the Option Price of an option, (ii) the purchase price of a share of
restricted Stock, or (iii) any taxes associated with a benefit hereunder which
is not a cash benefit at the time such benefit is so taxable, or
(b) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option Price, purchase
price, or any related taxes.
Any such payment deferral or guarantee by the Company pursuant to this Article 9
shall be, on a secured or unsecured basis, for such periods, at such interest
rates, and on such other terms and conditions as the Committee may determine.
Notwithstanding the foregoing, a Grantee shall not be entitled to defer the
payment of such Option Price, purchase price, or any related taxes unless the
Grantee (i) enters into a binding obligation to pay the deferred amount and (ii)
except with respect to treasury shares, pays upon exercise of an option or grant
of shares of restricted Stock, as the case may be, an amount equal to or greater
than the aggregate Minimum Consideration therefor. If the Committee has
permitted a payment deferral or caused the Company to guarantee
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a loan pursuant to this Article 9, then the Committee may, in its discretion,
require the immediate payment of such deferred amount or the immediate release
of such guarantee upon the Grantee's Termination of Employment or if the Grantee
sells or otherwise transfers the Grantee's shares of Stock purchased pursuant to
such deferral or guarantee.
10. NOTIFICATION UNDER SECTION 83(B). The Committee may, on the Grant Date
or any later date, prohibit a Grantee from making the election described below.
If the Committee has not prohibited such Grantee from making such election, and
the Grantee shall, in connection with the exercise of any option, or the grant
of any share of restricted Stock, make the election permitted under Section
83(b) of the Internal Revenue Code (i.e., an election to include in such
Grantee's gross income in the year of transfer the amounts specified in Section
83(b) of the Internal Revenue Code), such Grantee shall notify the Company of
such election within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Internal Revenue
Code.
11. MANDATORY WITHHOLDING TAXES.
(a) Whenever under the Plan, cash or shares of Stock are to be delivered
upon exercise or payment of an Award or upon a share of restricted Stock
becoming nonforfeitable, or any other event with respect to rights and benefits
hereunder, the Company shall be entitled to require as a condition of delivery
(i) that the Grantee remit an amount sufficient to satisfy all federal, state,
and local withholding tax requirements related thereto, (ii) the withholding of
such sums from compensation otherwise due to the Grantee or from any shares of
Stock due to the Grantee under the Plan or (iii) any combination of the
foregoing.
(b) If any disqualifying disposition described in Article 6(c)(vi) is made
with respect to shares of Stock acquired under an incentive stock option granted
pursuant to the Plan or any election described in Article 10 is made, then the
person making such disqualifying disposition or election shall remit to the
Company an amount sufficient to satisfy all federal, state, and local
withholding taxes thereby incurred; provided that, in lieu of or in addition to
the foregoing, the Company shall have the right to withhold such sums from
compensation otherwise due to the Grantee or from any shares of Stock due to the
Grantee under the Plan.
12. ELECTIVE SHARE WITHHOLDING
(a) Subject to the prior approval of the Committee and to Article 12(b), a
Grantee may elect the withholding ("Share Withholding") by the Company of a
portion of the shares of Stock otherwise deliverable to such Grantee upon the
exercise or payment of an Award or upon a share of restricted Stock's becoming
nonforfeitable (each a "Taxable Event") having a Fair Market Value equal to
(i) the minimum amount necessary to satisfy required federal, state,
or local
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withholding tax liability attributable to the Taxable Event; or
(ii) with the Committee's prior approval, a greater amount, not to
exceed the estimated total amount of such Grantee's tax liability with
respect to the Taxable Event.
(b) Each Share Withholding election by a Grantee shall be subject to the
following restrictions:
(i) any Grantee's election shall be subject to the Committee's right
to revoke its approval of Share Withholding by such Grantee at any time
before the Grantee's election if the Committee has reserved the right to do
so at the time of its approval;
(ii) if the Grantee is a Section 16 Grantee, such Grantee's election
shall be subject to the disapproval of the Committee at any time, whether
or not the Committee has reserved the right to do so; and
(iii) the Grantee's election must be made before the date (the "Tax
Date") on which the amount of tax to be withheld is determined.
13. TERMINATION OF EMPLOYMENT.
(a) RESTRICTED STOCK. Except as otherwise provided by the Committee on
or after the Grant Date, a Grantee's shares of restricted Stock that are
forfeitable shall be forfeited upon the Grantee's Termination of
Employment.
(b) OTHER AWARDS. If a Grantee has a Termination of Employment, then,
unless otherwise provided in the Grant Agreement, any unexercised option to
the extent exercisable on the date of the Grantee's Termination of
Employment may be exercised by the Grantee, in whole or in part, at any
time within three months following such Termination of Employment, except
that
(i) if the Grantee's Termination of Employment is on account of
Disability, then any unexercised option to the extent exercisable at
the date of such Termination of Employment, may be exercised, in whole
or in part, by the Grantee at any time within two years after the date
of such Termination of Employment; and
(ii) if the Grantee's Termination of Employment is on account of
Retirement, then any unexercised option to the extent exercisable at
the date of such Termination of Employment, may be exercised, in whole
or in part, by the Grantee at any time within five years after the
date of such Termination of Employment; and
(iii) if the Grantee's Termination of Employment is caused by the
death of the Grantee or if the Grantee's death occurs during the
period following Termination of
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Employment during which the option would be exercisable under the
preceding clause of Article 13(b) or under Article 13(b)(i) or (ii),
then any unexercised option to the extent exercisable on the date of
the Grantee's death, may be exercised, in whole or in part, at any
time within two years after the Grantee's death by the Grantee's
personal representative or by the person to whom the option is
transferred by will or the applicable laws of descent and
distribution.
(c) Maximum Extension. Notwithstanding the foregoing, no Award shall be
exercisable beyond the maximum term permitted under the original Award Agreement
unless the Committee explicitly extends such original term, in which case such
term shall not be extended beyond the maximum term permitted by the Plan.
14. EQUITY INCENTIVE PLANS OF FOREIGN SUBSIDIARIES. The Committee may
authorize any foreign Subsidiary to adopt a plan for granting Awards ("Foreign
Equity Incentive Plan"). All awards granted under such Foreign Equity Incentive
Plans shall be treated as grants under the Plan. Such Foreign Equity Incentive
Plans shall have such terms and provisions as the Committee permits not
inconsistent with the provisions of the Plan and which may be more restrictive
than those contained in the Plan. Awards granted under such Foreign Equity
Incentive Plans shall be governed by the terms of the Plan except to the extent
that the provisions of the Foreign Equity Incentive Plans are more restrictive
than the terms of the Plan, in which case such terms of the Foreign Equity
Incentive Plans shall control.
15. SUBSTITUTED AWARDS. The Committee may grant substitute awards for any
cancelled Award granted under this Plan or any plan of any entity acquired by
the Company or any of its Subsidiaries in accordance with this Article 15. If
the Committee cancels any Award (granted under this Plan, or any plan of any
entity acquired by the Company or any of its Subsidiaries), and a new Award is
substituted therefor, then the Committee may, in its discretion, determine the
terms and conditions of such new Award, and may provide that the Grant Date of
the cancelled Award shall be the date used to determine the earliest date or
dates for exercising the new substituted Award under Article 8 hereof so that
the Grantee may exercise the substituted Award at the same time as if the
Grantee had held the substituted Award since the Grant Date of the cancelled
Award.
16. SECURITIES LAW MATTERS.
(a) If the Committee deems necessary to comply with the Securities Act of
1933, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.
(b) If based upon the opinion of counsel for the Company, the Committee
determines that the exercise or nonforfeitability of, or delivery of benefits
pursuant to, any Award could violate any applicable provision of (i) federal or
state securities law or regulations or (ii) the listing requirements of any
national securities exchange on which are listed any of the
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Company's equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall use its
best efforts to cause such exercise, nonforfeitability or delivery to comply
with all such provisions at the earliest practicable date.
17. NO FUNDING REQUIRED. Benefits payable under the Plan to any person
shall be paid directly by the Company. The Company shall not be required to
fund, or otherwise segregate assets to be used for payment of, benefits under
the Plan.
18. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
granting of any Award shall be construed to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits not
specifically provided by the Plan or (b) in any manner modify the right of the
Company or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.
19. RIGHTS AS A STOCKHOLDEr. A Grantee shall not, by reason of any Award
(other than restricted Stock) have any right as a stockholder of the Company
with respect to the shares of Stock which may be deliverable upon exercise or
payment of such Award until such shares have been delivered to him. Shares of
restricted Stock held by a Grantee or held in escrow by the Secretary of the
Company shall confer on the Grantee all rights of a stockholder of the Company,
except as otherwise provided in the Plan or the Award Agreement. The Committee,
in its discretion, at the time of grant of restricted Stock, may permit or
require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional restricted Stock to the extent
shares are available under Article 3, or otherwise reinvested in Stock. Stock
dividends, deferred cash dividends and dividends in the form of property other
than cash, issued with respect to restricted Stock shall, unless otherwise
provided in the Award Agreement, be treated as additional shares of restricted
Stock that are subject to the same restrictions and other terms as apply to the
shares with respect to which such dividends are issued. The Committee may, in
its discretion, provide for crediting and payment of interest on deferred cash
dividends.
20. NATURE OF PAYMENTS. Any and all grants, payments of cash, or deliveries
of shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company or
any Subsidiary, on the one hand, and the Grantee, on the other hand, except as
such plan or agreement shall otherwise expressly provide.
21. NON-UNIFORM DETERMINATIONS. Neither the Committee's nor the Board's
determinations under the Plan need be uniform and may be made by the Committee
or the Board selectively among persons who receive, or are eligible to receive,
Awards (whether or not such
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persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment, under Article 13, of
Terminations of Employment.
22. ADJUSTMENTS. The Committee may make such provision with respect to
Awards, including without limitation, equitable adjustment of
(a) the aggregate numbers of shares of Stock available under Articles 3(a)
and 3(b),
(b) the number of shares of Stock or shares of restricted Stock covered by
an Award, and
(c) the Option Price, or
the termination or continuation of an Award as it may determine to be
appropriate and equitable to reflect a stock dividend, stock split, reverse
stock split, share combination, recapitalization, merger, consolidation,
acquisition of property or shares, separation, spin-off, reorganization, stock
rights offering, liquidation, or similar event, of or by the Company.
23. AMENDMENT OF THE PLAN. The Board may from time to time in its
discretion amend or modify the Plan without the approval of the stockholders of
the Company, except as such stockholder approval may be required (a) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act, (b) to permit the Company to deduct, in
computing its income tax liability pursuant to the provisions of the Internal
Revenue Code, compensation resulting from Awards, (c) to retain incentive stock
option treatment under Section 422 of the Internal Revenue Code, or (d) under
the listing requirements of any securities exchange on which are listed any of
the Company's equity securities.
24. TERMINATION OF THE PLAN. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect (a)
any Award then outstanding under the Plan, or (b) the Company's ability to make
adjustments to or cancel or continue Awards in accordance with Article 22.
25. NO ILLEGAL TRANSACTIONS. The Plan and all Awards granted pursuant to it
are subject to all laws and regulations of any governmental authority which may
be applicable thereto; and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the benefits
thereof and the Company shall not be obligated to deliver any Stock or pay any
benefits to a Grantee if such exercise, delivery, receipt or payment of benefits
would constitute a violation by the Grantee or the Company of any provision of
any such law or regulation.
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26. CONTROLLING LAW. The law of the State of Delaware except its law with
respect to choice of law, shall be controlling in all matters relating to or
arising out of the Plan or any Award.
27. SEVERABILITY. If all or any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of the Plan not declared to
be unlawful or invalid. Any Article or part of an Article so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Article or part of an Article to the fullest extent
possible while remaining lawful and valid.
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