VALHI, INC.
1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE. The purpose of this Plan is to advance the interests
of Valhi and its stockholders by providing incentives to certain Eligible
Persons who contribute significantly to the strategic and long-term performance
objectives and growth of the Company.
SECTION 2. DEFINITIONS. The following terms shall have the meaning
indicated:
(a) `ACTUAL VALUE'' has the meaning set forth in SECTION 9.
(b) `ASSOCIATED AWARD'' shall mean an Award granted concurrently or
subsequently in conjunction with another Award.
(c) `AWARD'' shall mean an award of rights to an Eligible Person
under this Plan.
(d) `AWARD PERIOD'' has the meaning set forth in SUBSECTION 9(B).
(e) `BENEFICIARY'' has the meaning set forth in SECTION 16.
(f) `BOARD'' shall mean the board of directors of Valhi.
(g) `CODE'' shall mean the Internal Revenue Code of 1986, as it now
exists or may be amended from time to time, and the rules promulgated
thereunder, as they may exist or may be amended from time to time.
(h) `COMMITTEE'' shall mean a committee of the Board, if any,
designated by the Board to administer this Plan that is comprised of not
fewer than two directors and shall initially mean the Management,
Development & Compensation Committee of the Board. The membership of the
Committee or any successor committee (i) shall consist of `nonemployee
directors''(as defined in Rule 16b-3) and meet any other applicable
requirements so as to comply at all times with the applicable requirements
of Rule 16b-3, (ii) shall consist of `outside directors'' (as defined in
Treasury Regulation Section1.162-27(e)(3)(i) or any successor regulation)
and meet any other applicable requirements so as to comply at all times
with the applicable requirements of Section 162(m) and (iii) shall meet any
applicable requirements of any stock exchange or other market quotation
system on which Common Shares are listed. References to the Committee
hereunder shall include the Board or the Designated Administrator where
appropriate.
(i) `COMPANY'' shall mean Valhi and any parent or subsidiary of
Valhi.
(j) `COMMON SHARES'' shall mean shares of common stock, par value
$0.01 per share, of Valhi and stock of any other class into which such
shares may thereafter be changed.
(k) `DESIGNATED ADMINISTRATOR'' has the meaning set forth in SECTION
3.
(l) `EFFECTIVE DATE'' shall mean the date the Board adopts this Plan
(which adoption date may be a date subsequent to the date of the actual
action taken by the Board if the Board action sets forth such subsequent
adoption date).
(m) `ELIGIBLE PERSON(S)'' shall mean those persons who are key
employees of the Company or other key individuals who perform services for
the Company, including, without limitation, directors who are not employees
of the Company.
(n) `EXCHANGE ACT'' shall mean the Securities Exchange Act of 1934,
as it now exists or may be amended from time to time, and the rules
promulgated thereunder, as they may exist or may be amended from time to
time.
(o) `FAIR MARKET VALUE'' shall mean such value as determined by the
Committee in accordance with applicable law.
(p) `INCENTIVE STOCK OPTION'' shall mean a Stock Option that is an
incentive stock option as defined in Section 422 of the Code. Incentive
Stock Options are subject, in part, to the terms, conditions and
restrictions described in SECTION 6.
(q) `MAXIMUM VALUE'' has the meaning set forth in SUBSECTION 9(A).
(r) `NONQUALIFIED STOCK OPTION'' shall mean a Stock Option that is
not an incentive stock option as defined in Section 422 of the Code.
Nonqualified Stock Options are subject, in part, to the terms, conditions
and restrictions described in SECTION 6.
(s) `OTHER VALHI SECURITIES'' shall mean Valhi securities (which may
include, but need not be limited to, unbundled stock units or components
thereof, debentures, preferred stock, warrants, securities convertible into
Common Shares or other property) other than Common Shares.
(t) `PARTICIPANT'' shall mean an Eligible Person to whom an Award
has been granted under this Plan.
(u) `PERFORMANCE GRANT'' shall mean an Award subject, in part, to
the terms, conditions and restrictions described in SECTION 9, pursuant to
which the recipient may become entitled to receive cash, Common Shares,
Other Valhi Securities or property, or other forms of payment, or any
combination thereof, as determined by the Committee.
(v) `PLAN'' shall mean this Valhi, Inc. 1997 Long-Term Incentive
Plan.
(w) `PURCHASED OPTION'' shall mean a Stock Option that is sold to an
Eligible Person at a price determined by the Committee.
(x) `RESTRICTED PERIOD'' has the meaning set forth in SUBSECTION
8(B).
(y) `RESTRICTED STOCK'' shall mean an Award of Common Shares that
are issued subject, in part, to the terms, conditions and restrictions
described in SECTION 8.
(z) `RULE 16B-3'' shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act and any successor
rule.
(aa) `SECTION 162(M)'' shall mean Section162(m) of the Code, any
rules or regulations promulgated thereunder, as they may exist or may be
amended from time to time, or any successor to such section.
(bb) `STOCK APPRECIATION RIGHT'' shall mean an Award of a right to
receive (without payment to Valhi) cash, Common Shares, Other Valhi
Securities or property, or other forms of payment, or any combination
thereof, as determined by the Committee, based on the increase in the value
of the number of Common Shares specified in the Stock Appreciation Right.
Stock Appreciation Rights are subject, in part, to the terms, conditions
and restrictions described in SECTION 7.
(cc) `STOCK OPTION'' shall mean an Award of a right to purchase
Common Shares. The term Stock Option shall include Nonqualified Stock
Options, Incentive Stock Options and Purchased Options.
(dd) `TEN PERCENT EMPLOYEE'' shall mean an employee of the Company
who owns stock representing more than ten percent of the voting power of
all classes of stock of Valhi or any parent or subsidiary of Valhi.
(ee) `TREASURY REGULATION'' shall mean a permanent, proposed or
temporary regulation of the Department of Treasury under the Code and any
successor regulation.
(ff) `VALHI'' shall mean Valhi, Inc., a Delaware corporation.
SECTION 3. ADMINISTRATION. Unless the Board shall designate itself or a
Designated Administrator to administer this Plan, this Plan shall be
administered by the Committee. If at any time Rule 16b-3 so permits without
adversely affecting the ability of Awards to executive officers of Valhi to
comply with the conditions for Rule 16b-3 or Section 162(m), the Committee may
delegate the administration of this Plan and any of its power and authority in
whole or in part, on such terms and conditions, and to such person or persons as
it may determine in its discretion (a `DESIGNATED ADMINISTRATOR'').
The Committee has all the powers vested in it by the terms of this Plan,
such powers to include exclusive authority to select the Eligible Persons to be
granted Awards under this Plan, to determine the type, size and terms of the
Award to be made to each Eligible Person selected, to modify the terms of any
Award that has been granted, to determine the time when Awards will be granted,
to establish performance objectives, to make any adjustments necessary or
desirable as a result of the granting of Awards to Eligible Persons located
outside the United States and to prescribe the form of the agreements embodying
Awards made under this Plan. The Committee is authorized to interpret this Plan
and the Awards granted under this Plan, to establish, amend and rescind any
rules and regulations relating to this Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
this Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the manner and to
the extent the Committee deems necessary or desirable to carry it into effect.
Any decision of the Committee in the interpretation and administration of this
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their members or any officer of the
Company to execute and deliver documents or to take any other ministerial action
on behalf of the Committee with respect to Awards made or to be made to
Participants.
No member the Committee and no officer of the Company shall be liable for
anything done or omitted to be done by him, by any other member of the Committee
or by any officer of the Company in connection with the performance of duties
under this Plan, except for his own willful misconduct or as expressly provided
by statute. In addition to all other rights of indemnification and
reimbursement to which a member of the Committee and an officer of the Company
may be entitled, the Company shall indemnify and hold harmless each such member
or officer who was or is a party or is threatened to be made a party to any
threatened, pending or completed proceeding or suit in connection with the
performance of duties under this Plan against expenses (including reasonable
attorneys' fees), judgments, fines, liabilities, losses and amounts paid in
settlement actually and reasonably incurred by him in connection with such
proceeding or suit, except for his own willful misconduct or as expressly
provided otherwise by statute. Expenses (including reasonable attorneys' fees)
incurred by a such a member or officer in defending any such proceeding or suit
shall be paid by the Company in advance of the final disposition of such
proceeding or suit upon receipt of a written affirmation by such member or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification and a written undertaking by or on behalf of such
member or officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the Company as authorized in this
Section.
SECTION 4. PARTICIPATION. Consistent with the purposes of this Plan, the
Committee shall have exclusive power to select the Eligible Persons who may
participate in this Plan and be granted Awards under this Plan. Eligible Persons
may be selected individually or by groups or categories, as determined by the
Committee in its discretion.
SECTION 5. AWARDS UNDER THIS PLAN.
(a) Types of Awards. Awards under this Plan may include, but need
not be limited to, one or more of the following types, either alone or in
any combination thereof: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Performance Grants and (v) any other
type of Award deemed by the Committee in its discretion to be consistent
with the purposes of this Plan (including, but not limited to, Awards of or
options or similar rights granted with respect to unbundled stock units or
components thereof, and Awards to be made to Participants who are foreign
nationals or are employed or performing services outside the United
States).
(b) Maximum Number of Shares that May be Issued. There may be issued
under this Plan (as Restricted Stock, in payment of Performance Grants,
pursuant to the exercise of Stock Options or Stock Appreciation Rights or
in payment of or pursuant to the exercise of such other Awards as the
Committee, in its discretion, may determine) an aggregate of not more than
5,000,000 Common Shares, subject to adjustment as provided in SECTION 15.
No Eligible Person may receive Awards under this Plan for more than
1,000,000 Common Shares in any one fiscal year of Valhi, subject to
adjustment as provided in SECTION 15. Common Shares issued pursuant to
this Plan may be either authorized but unissued shares, treasury shares,
reacquired shares or any combination thereof. If any Common Shares issued
as Restricted Stock or otherwise subject to repurchase or forfeiture rights
are reacquired by the Company pursuant to such rights or, if any Award is
canceled, terminates or expires unexercised, any Common Shares that would
otherwise have been issuable pursuant thereto will be available for
issuance under new Awards.
(c) Rights with Respect to Common Shares and Other Securities.
Except as provided in SUBSECTION 8(C) with respect to Awards of Restricted
Stock and unless otherwise determined by the Committee in its discretion, a
Participant to whom an Award is made (and any person succeeding to such a
Participant's rights pursuant to this Plan) shall have no rights as a
stockholder with respect to any Common Shares or as a holder with respect
to other securities, if any, issuable pursuant to any such Award until the
date of the issuance of a stock certificate to him for such Common Shares
or other instrument of ownership, if any. Except as provided in SECTION 15,
no adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities, other
property or other forms of consideration, or any combination thereof) for
which the record date is prior to the date such stock certificate or other
instrument of ownership, if any, is issued. In all events, a Participant
with whom an Award agreement is made to issue Common Shares in the future,
shall have no rights as a stockholder with respect to Common Shares related
to such agreement until issuance to him of a stock certificate representing
such shares.
SECTION 6. STOCK OPTIONS. The Committee may sell Purchased Options or
grant other Stock Options either alone, or in conjunction with Associated
Awards, either at the time of grant or by amendment thereafter; provided that an
Incentive Stock Option may be granted only to Eligible Persons who are employees
of the Company. Each Stock Option granted or sold under this Plan shall be
evidenced by an agreement in such form as the Committee shall prescribe from
time to time in accordance with this Plan and shall comply with the applicable
terms and conditions of this Section and this Plan, and with such other terms
and conditions, including, but not limited to, restrictions upon the Stock
Option or the Common Shares issuable upon exercise thereof, as the Committee, in
its discretion, shall establish.
(a) The exercise price of a Stock Option may be less than, equal to,
or greater than, the Fair Market Value of the Common Shares subject to such
Stock Option at the time the Stock Option is granted, as determined by the
Committee; provided, however, that in the case of an Incentive Stock Option
granted to an employee of the Company, the exercise price shall not be less
than the Fair Market Value of the Common Shares subject to such Stock
Option at the time the Stock Option is granted, or if granted to a Ten
Percent Employee, such exercise price shall not be less than 110% of such
Fair Market Value at the time the Stock Option is granted; but in no event
will such exercise price be less than the par value of such Common Shares.
(b) The Committee shall determine the number of Common Shares to be
subject to each Stock Option. In the case of a Stock Option awarded in
conjunction with an Associated Award, the number of Common Shares subject
to an outstanding Stock Option may be reduced on an appropriate basis to
the extent that the Associated Award has been exercised, paid to or
otherwise received by the Participant, as determined by the Committee.
(c) The Stock Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten
Percent Employee, after the expiration of five years from the date it
is granted, and, in the case of any other Stock Option, after the
expiration of ten years from the date it is granted. Any Stock Option
may be exercised during such period only at such time or times and in
such installments as the Committee may establish; and
(ii) unless payment in full is made for the shares being acquired
thereunder at the time of exercise as provided in SUBSECTION 6(H); and
(d) The Committee shall determine in its discretion and specify in
each agreement embodying a Stock Option the effect, if any, the termination
of the Participant's employment with or performance of services for the
Company shall have on the exercisability of the Stock Option; provided,
however, that an Incentive Stock Option shall not be exercisable at a time
that is beyond the time an Incentive Stock Option may be exercised in order
to receive favorable treatment under the Code.
(e) In the case of an Incentive Stock Option, the amount of the
aggregate Fair Market Value of Common Shares (determined at the time of
grant of the Stock Option) with respect to which incentive stock options
are exercisable for the first time by an employee of the Company during any
calendar year (under all such plans of his employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.
(f) It is the intent of Valhi that Nonqualified Stock Options granted
under this Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under this Plan be consistent with and
contain or be deemed to contain all provisions required under Section 422
and the other appropriate provisions of the Code and any implementing
regulations (and any successor provisions thereof), and that any
ambiguities in construction shall be interpreted in order to effectuate
such intent.
(g) A Purchased Option may contain such additional terms not
inconsistent with this Plan, including but not limited to the circumstances
under which the purchase price of such Purchased Option may be returned to
the holder of the Purchased Option, as the Committee may determine in its
sole discretion.
(h) For purposes of payments made to exercise Stock Options, such
payment shall be made in such form (including, but not limited to, cash,
Common Shares, the surrender of another outstanding Award under this Plan
or any combination thereof) as the Committee may determine in its
discretion; provided, however, that for purposes of making such payment in
Common Shares, such shares shall be valued at their Fair Market Value on
the day of exercise and shall have been held by the Participant for a
period of at least six (6) months.
SECTION 7. STOCK APPRECIATION RIGHTS. The Committee may grant Stock
Appreciation Rights either alone, or in conjunction with Associated Awards,
either at the time of grant or by amendment thereafter. Each Award of Stock
Appreciation Rights granted under this Plan shall be evidenced by an agreement
in such form as the Committee shall prescribe from time to time in accordance
with this Plan and shall comply with the applicable terms and conditions of this
Section and this Plan, and with such other terms and conditions, including, but
no limited to, restrictions upon the Award of Stock Appreciation Rights or the
Common Shares issuable upon exercise thereof, as the Committee, in its
discretion, shall establish.
(a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. In the case of an
Award of Stock Appreciation Rights awarded in conjunction with an
Associated Award, the number of Common Shares subject to an outstanding
Award of Stock Appreciation Rights may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or
otherwise received by the Participant, as determined by the Committee.
(b) The Award of Stock Appreciation Rights shall not be exercisable:
(i) unless the Associated Award, if any, is at the time
exercisable; and
(ii) if the Associated Award is a Stock Option and the Fair
Market Value per share of the Common Shares on the exercise date does
not exceed the exercise price per share of such Stock Option.
(c) The Committee shall determine in its discretion and specify in
each agreement embodying an Award of Stock Appreciation Rights the effect,
if any, the termination of the Participant's employment with or performance
of services for the Company shall have on the exercisability of the Award
of Stock Appreciation Rights.
(d) An Award of Stock Appreciation Rights shall entitle the holder to
exercise such Award or to surrender unexercised an Associated Award (or any
portion of such Stock Option or Associated Award) to Valhi and to receive
from Valhi in exchange thereof, without payment to Valhi, that number of
Common Shares having an aggregate value equal to (or, in the discretion of
the Committee, less than) the excess of the Fair Market Value of one share,
at the time of such exercise, over the exercise price, times the number of
shares subject to the Award or the Associated Award, or portion thereof,
that is so exercised or surrendered, as the case may be. The Committee
shall be entitled in its discretion to elect to settle the obligation
arising out of the exercise of a Stock Appreciation Right by the payment of
cash or Other Valhi Securities or property, or other forms of payment or
any combination thereof, as determined by the Committee, equal to the
aggregate value of the Common Shares it would otherwise be obligated to
deliver. Any such election by the Committee shall be made as soon as
practicable after the receipt by the Committee of written notice of the
exercise of the Stock Appreciation Right.
(e) A Stock Appreciation Right may provide that it shall be deemed to
have been exercised at the close of business on the business day preceding
the expiration date of the Stock Appreciation Right or of the related Stock
Option (or other Award), or such other date as specified by the Committee,
if at such time such Stock Appreciation Right has a positive value. Such
deemed exercise shall be settled or paid in the same manner as a regular
exercise thereof as provided in SUBSECTION 7(D) hereof.
SECTION 8. RESTRICTED STOCK. The Committee may grant Awards of Restricted
Stock either alone, or in conjunction with Associated Awards, either at the time
of grant or by amendment thereafter. Each Award of Restricted Stock under this
Plan shall be evidenced by an agreement in such form as the Committee shall
prescribe from time to time in accordance with this Plan and shall comply with
the applicable terms and conditions of this Section and this Plan, and with such
other terms and conditions as the Committee, in its discretion, shall establish.
(a) The Committee shall determine the number of Common Shares to be
issued to a Participant pursuant to the Award of Restricted Stock, and the
extent, if any, to which they shall be issued in exchange for cash, other
consideration, or both.
(b) Until the expiration of such period as the Committee shall
determine from the date on which the Award is granted and subject to such
other terms and conditions as the Committee in its discretion shall
establish (the `RESTRICTED PERIOD''), a Participant to whom an Award of
Restricted Stock is made shall be issued, but shall not be entitled to the
delivery of, a stock certificate representing the Common Shares subject to
such Award.
(c) Unless otherwise determined by the Committee in its discretion, a
Participant to whom an Award of Restricted Stock has been made (and any
person succeeding to such a participant's rights pursuant to this Plan)
shall have, after issuance of a certificate for the number of Common Shares
awarded and prior to the expiration of the Restricted Period, ownership of
such Common Shares, including the right to vote such Common Shares and to
receive dividends or other distributions made or paid with respect to such
Common Shares (provided that such Common Shares, and any new, additional or
different shares, or Other Valhi Securities or property, or other forms of
consideration that the Participant may be entitled to receive with respect
to such Common Shares as a result of a stock split, stock dividend or any
other change in the corporation or capital structure of Valhi, shall be
subject to the restrictions hereinafter described as determined by the
Committee in its discretion), subject, however, to the options,
restrictions and limitations imposed thereon pursuant to this Plan.
(d) The Committee shall determine in its discretion and specify in
each agreement embodying an Award of Restricted Stock the effect, if any,
the termination of the Participant's employment with or performance of
services for the Company during the Restricted Period shall have on such
Award of Restricted Stock.
SECTION 9. PERFORMANCE GRANTS. The Committee may grant Awards of
Performance Grants either alone, or in conjunction with Associated Awards,
either at the time of grant or by amendment thereafter. The Award of a
Performance Grant to a Participant will entitle him to receive a specified
amount determined by the Committee (the `ACTUAL VALUE''), if the terms and
conditions specified in this Plan and in the Award are satisfied. Each Award of
a Performance Grant shall be subject to the applicable terms and conditions of
this Section and this Plan, and to such other terms and conditions, including
but not limited to, restrictions upon any cash, Common Shares, Other Valhi
Securities or property, or other forms of payment, or any combination thereof,
issued with respect to the Performance Grant, as the Committee, in its
discretion, shall establish, and shall be embodied in an agreement in such form
and substance as is determined by the Committee.
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each Participant selected for an Award
and whether or not such a Performance Grant is granted in conjunction with
an Associated Award. As determined by the Committee, the maximum value of
each Performance Grant (the `MAXIMUM VALUE'') shall be: (i) an amount
fixed by the Committee at the time the Award is made or amended thereafter,
(ii) an amount that varies from time to time based in whole or in part on
the then current value of the Common Shares, Other Valhi Securities or
property, or other securities or property, or any combination thereof or
(iii) an amount that is determinable from criteria specified by the
Committee. Performance Grants may be issued in different classes or series
having different names, terms and conditions. In the case of a Performance
Grant awarded in conjunction with an Associated Award, the Performance
Grant may be reduced on an appropriate basis to the extent that the
Associated Award has been exercised, paid to or otherwise received by the
Participant, as determined by the Committee.
(b) The award period (`AWARD PERIOD'') related to any Performance
Grant shall be a period determined by the Committee. At the time each
Award is made, the Committee shall establish performance objectives to be
attained within the Award Period as the means of determining the Actual
Value of such a Performance Grant. The performance objectives shall be
based on such measure or measures of performance, which may include, but
need not be limited to, the performance of the Participant, the Company or
one or more of its divisions or units, or any combination of the foregoing,
as the Committee shall determine, and may be applied on an absolute basis
or be relative to industry or other indices or any combination thereof.
The Actual Value of a Performance Grant shall be equal to its Maximum Value
only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants
shall be determined if the performance objectives are met in part. Such
performance measures, the Actual Value or the Maximum Value, or any
combination thereof, may be adjusted in any manner by the Committee in its
discretion at any time and from time to time during or as soon as
practicable after the Award Period, if it determines that such performance
measures, the Actual Value or the Maximum Value, or any combination
thereof, are not appropriate under the circumstances.
(c) The Committee shall determine in its discretion and specify in
each agreement embodying a Performance Grant the effect, if any, the
termination of the Participant's employment with or performance of services
for the Company during the Award Period shall have on such Performance
Grant.
(d) The Committee shall determine whether the conditions of a
Performance Grant have been met and, if so, shall ascertain the Actual
Value of the Performance Grant. If the Performance Grant has no Actual
Value, the Award and such Performance Grant shall be deemed to have been
canceled and the Associated Award, if any, may be canceled or permitted to
continue in effect in accordance with its terms. If the Performance Grant
has any Actual Value and:
(i) was not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the Actual Value of the
Performance Grant earned by the Participant to be paid to him or his
Beneficiary; or
(ii) was awarded in conjunction with an Associated Award, the
Committee shall determine, in accordance with criteria specified by
the Committee (A) to cancel the Performance Grant, in which event no
amount with respect thereto shall be paid to the Participant or his
Beneficiary, and the Associated Award may be permitted to continue in
effect in accordance with its terms, (B) to pay the Actual Value of
the Performance Grant to the Participant or his Beneficiary as
provided below, in which event the Associated Award may be canceled or
(C) to pay to the Participant or his Beneficiary, the Actual Value of
only a portion of the Performance Grants, in which event all or a
portion of the Associated Award may be permitted to continue in effect
in accordance with its terms or be canceled, as determined by the
Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time
or times as the Committee shall determine, and shall be made pursuant to
criteria specified by the Committee.
(e) Payment of any amount with respect to the Performance Grants that
the Committee determines to pay as provided above shall be made by Valhi as
promptly as practicable after the end of the Award Period or at such other
time or times as the Committee shall determine, and may be made in cash,
Common Shares, Other Valhi Securities or property, or other forms of
payment, or any combination thereof or in such other manner, as determined
by the Committee in its discretion. Notwithstanding anything in this
Section to the contrary, the Committee may, in its discretion, determine
and pay out the Actual Value of the Performance Grants at any time during
the Award Period.
SECTION 10. DEFERRAL OF COMPENSATION. The Committee shall determine
whether or not an Award shall be made in conjunction with the deferral of the
Participant's salary, bonus or other compensation, or any combination thereof,
and whether or not such deferred amounts may be:
(a) forfeited to the Company or to other Participants or any
combination thereof, under certain circumstances (which may include, but
need not be limited to, certain types of termination of employment or
performance of services for the Company);
(b) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures; and/or
(c) credited with income equivalents (which may include, but need not
be limited to, interest, dividends or other rates of return) until the date
or dates of payment of the Award, if any.
SECTION 11. DEFERRED PAYMENT OF AWARDS. The Committee may specify that
the payment of all or any portion of cash, Common Shares, Other Valhi Securities
or property, or any other form of payment, or any combination thereof, under an
Award shall be deferred until a later date. Deferrals shall be for such periods
or until the occurrence of such events, and upon such terms, as the Committee
shall determine in its discretion. Deferred payments of Awards may be made by
undertaking to make payment in the future based upon the performance of certain
investment equivalents (which may include, but need not be limited to,
government securities, Common Shares, other securities, property or
consideration, or any combination thereof), together with such additional
amounts of income equivalents (which may be compounded and may include, but need
not be limited to, interest, dividends or other rates of return or any
combination thereof) as may accrue thereon until the date or dates of payment,
such investment equivalents and such additional amounts of income equivalents to
be determined by the Committee in its discretion.
SECTION 12. TRANSFERABILITY OF AWARDS. Except as may be approved by the
Committee, a Participant's rights and interest under this Plan or any Award may
not be assigned or transferred, hypothecated or encumbered in whole or in part
either directly or by operation of law or otherwise (except in the event of a
Participant's death), including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, that any Incentive Stock Option granted pursuant to this Plan shall not
be transferable other than by will or the laws of descent and distribution and
shall be exercisable during the Participant's lifetime only by him.
SECTION 13. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THIS PLAN. The
terms of any outstanding Award under this Plan may be amended or modified from
time to time by the Committee in its discretion in any manner that it deems
appropriate and could have determined at the time of the original Award
(including, but not limited to, acceleration of the date of exercise of any
Award and/or payments thereunder); provided that no such amendment shall
adversely affect in a material manner any right of a Participant under the Award
without his written consent, unless the Committee determines in its discretion
that there have occurred or are about to occur significant changes in the
Participant's position, duties or responsibilities, or significant changes in
economic, legislative, regulatory, tax, accounting or cost/benefit conditions
that are determined by the Committee in its discretion to have or to be expected
to have a substantial effect on the performance of the Company, or any
affiliate, division or department thereof, on this Plan or on any Award under
this Plan. The Committee may, in its discretion, permit holders of Awards under
this Plan to surrender outstanding Awards in order to exercise or realize the
rights under other Awards, or in exchange for the grant of new Awards, or
require holders of Awards to surrender outstanding Awards as a condition
precedent to the grant of new Awards under this Plan.
SECTION 14. TERMINATION OF A PARTICIPANT. For all purposes under this
Plan, the Committee shall determine whether a Participant has terminated
employment with, or the performance of services for, the Company; provided,
however, an absence or leave approved by the Company shall not be considered an
interruption of employment or performance of services for any purpose under this
Plan.
SECTION 15. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in
the outstanding Common Shares by reason of any stock split, dividend, split-up,
split-off, spin-off, recapitalization, merger, consolidation, rights offering,
reorganization, combination or exchange of shares, a sale by Valhi of all or
substantially all of its assets, any distribution to stockholders other than a
normal cash dividend, or other extraordinary or unusual event, if the Committee
shall determine, in its discretion, that such change equitably requires an
adjustment in the terms of any Award or the number of Common Shares available
for Awards, such adjustment may be made by the Committee and shall be final,
conclusive and binding for all purposes of this Plan. Each adjustment made
pursuant to this Section shall be made with a view toward preserving the value
of the affected Award had prior to the event or transaction giving cause to such
adjustment.
In the event of the proposed dissolution or liquidation of Valhi, all
outstanding Awards shall terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee. In the event of a
proposed sale of all or substantially all of the assets of Valhi or the merger
of Valhi with or into another corporation, all restrictions on any outstanding
Awards shall lapse and Participants shall be entitled to the full benefit of all
such Awards immediately prior to the closing date of such sale or merger, unless
otherwise provided by the Committee.
SECTION 16. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A Participant may
name a beneficiary to receive any payment to which he may be entitled with
respect to any Award under this Plan in the event of his death, on a written
form to be provided by and filed with the Committee, and in a manner determined
by the Committee in its discretion (a `BENEFICIARY''). The Committee reserves
the right to review and approve Beneficiary designations. A Participant may
change his Beneficiary from time to time in the same manner, unless such
Participant has made an irrevocable designation. Any designation of a
Beneficiary under this Plan (to the extent it is valid and enforceable under
applicable law) shall be controlling over any other disposition, testamentary or
otherwise, as determined by the Committee in its discretion. If no designated
Beneficiary survives the Participant and is living on the date on which any
amount becomes payable to such a Participant's Beneficiary, such payment will be
made to the legal representatives of the Participant's estate, and the term
`BENEFICIARY'' as used in this Plan shall be deemed to include such person or
persons. If there are any questions as to the legal right of any Beneficiary to
receive a distribution under this Plan, the Committee in its discretion may
determine that the amount in question be paid to the legal representatives of
the estate of the Participant, in which event the Company, the Board, the
Committee, the Designated Administrator (if any), and the members thereof, will
have no further liability to anyone with respect to such amount.
SECTION 17. FINANCIAL ASSISTANCE. If the Committee determines that such
action is advisable, the Company may assist any Participant in obtaining
financing from the Company (or under any program of the Company approved
pursuant to applicable law), or from a bank or other third party, on such terms
as are determined by the Committee, and in such amount as is required to
accomplish the purposes of this Plan, including, but not limited to, to permit
the exercise of an Award, the participation therein, and/or the payment of any
taxes with respect thereto. Such assistance may take any form that the
Committee deems appropriate, including, but not limited to, a direct loan from
the Company, a guarantee of the obligation by the Company or the maintenance by
the Company of deposits with such bank or third party.
SECTION 18. MISCELLANEOUS PROVISIONS.
(a) Any proceeds from Awards shall constitute general funds of Valhi.
(b) No fractional shares may be delivered under an Award, but in lieu
thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.
(c) No Eligible Person or other person shall have any claim or right
to be granted an Award under this Plan. Determinations made by the
Committee under this Plan need not be uniform and may be made selectively
among Eligible Persons under this Plan, whether or not such Eligible
Persons are similarly situated. Neither this Plan nor any action taken
hereunder shall be construed as giving any Eligible Person any right to
continue to be employed by or perform services for the Company, and the
right to terminate the employment of or performance of services by Eligible
Persons at any time and for any reason is specifically reserved.
(d) No Participant or other person shall have any right with respect
to this Plan, the Common Shares reserved for issuance under this Plan or in
any Award, contingent or otherwise, until written evidence of the Award
shall have been delivered to the recipient and all the terms, conditions
and provisions of this Plan and the Award applicable to such recipient (and
each person claiming under or through him) have been met.
(e) No Common Shares, Other Valhi Securities or property, other
securities or property or other forms of payment shall be issued hereunder
with respect to any Award unless counsel for Valhi shall be satisfied that
such issuance will be in compliance with applicable law and any applicable
rules of any stock exchange or other market quotation system on which
Common Shares are listed.
(f) It is the intent of Valhi that this Plan comply in all respects
with Rule 16b-3 and Section 162(m) with respect to Awards granted to
executive officers of Valhi, that any ambiguities or inconsistencies in
construction of this Plan be interpreted to give effect to such intention
and that if any provision of this Plan is found not to be in compliance
with Rule 16b-3 or Section 162(m), such provision shall be deemed null and
void with respect to Awards granted to executive officers of Valhi to the
extent required to permit such Awards to comply with Rule 16b-3 and Section
162(m). It is also the intent of Valhi that this Plan comply in all
respects with the provisions of the Code providing favorable treatment to
Incentive Stock Options, that any ambiguities or inconsistencies in
construction of this Plan be interpreted to give effect to such intention
and that if any provision of this Plan is found not to be in compliance
with the Incentive Stock Option provisions of the Code, such provision
shall be deemed null and void with respect to Incentive Stock Options
granted to employees of the Company to the extent required to permit such
Incentive Stock Options to receive favorable treatment under the Code.
(g) The Company shall have the right to deduct from any payment made
under this Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of Valhi to issue Common Shares, Other Valhi
Securities or property, other securities or property, or other forms of
payment, or any combination thereof, upon exercise, settlement or payment
of any Award under this Plan, that the Participant (or any Beneficiary or
person entitled to act) pay to Valhi, upon its demand, such amount as may
be required by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the
amount requested is not paid, Valhi may refuse to issue Common Shares,
Other Valhi Securities or property, other securities or property, or other
forms of payment, or any combination thereof. Notwithstanding anything in
this Plan to the contrary, the Committee may, in its discretion, permit an
Eligible Person (or any Beneficiary or person entitled to act) to elect to
pay a portion or all of the amount requested by the Company for such taxes
with respect to such Award, at such time and in such manner as the
Committee shall deem to be appropriate (including, but not limited to, by
authorizing Valhi to withhold, or agreeing to surrender to Valhi on or
about the date such tax liability is determinable, Common Shares, Other
Valhi Securities or property, other securities or property, or other forms
of payment, or any combination thereof, owned by such person or a portion
of such forms of payment that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such Award to such person,
having a Fair Market Value equal to the amount of such taxes).
(h) The expenses of this Plan shall be borne by the Company;
provided, however, the Company may recover from a Participant or his
Beneficiary, heirs or assigns any and all damages, fees, expenses and costs
incurred by the Company arising out of any actions taken by a Participant
in breach of this Plan or any agreement evidencing such Participant's
Award.
(i) This Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation
of assets to assure the payment of any Award under this Plan, and rights to
the payment of Awards shall be no greater than the rights of the Company's
general creditors.
(j) By accepting any Award or other benefit under this Plan, each
Participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of,
and consent to, any action taken under this Plan by the Company, the Board,
the Committee or the Designated Administrator (if applicable).
(k) The appropriate officers of the Company shall cause to be filed
any reports, returns or other information regarding Awards hereunder of any
Common Shares issued pursuant hereto as may be required by applicable law
and any applicable rules of any stock exchange or other market quotation
system on which Common Shares are listed.
(l) The validity, construction, interpretation, administration and
effect of this Plan, and of its rules and regulations, and rights relating
to this Plan and to Awards granted under this Plan, shall be governed by
the substantive laws, but not the choice of law rules, of the State of
Delaware.
(m) Records of the Company shall be conclusive for all purposes under
this Plan or any Award, unless determined by the Committee to be incorrect.
(n) If any provision of this Plan or any Award is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Plan or any Award, but such provision
shall be fully severable, and this Plan or Award, as applicable, shall be
construed and enforced as if the illegal or invalid provision had never
been included in this Plan or Award, as applicable.
(o) The terms of this Plan shall govern all Awards under this Plan
and in no event shall the Committee have the power to grant any Award under
this Plan that is contrary to any of the provisions of this Plan.
(p) For purposes of interpretation of this Plan, the masculine
pronoun includes the feminine and the singular includes the plural wherever
appropriate.
SECTION 19. PLAN AMENDMENT OR SUSPENSION. This Plan may be amended or
suspended in whole or in part at any time from time to time by the Board. No
amendment of this Plan shall adversely affect in a material manner any right of
any Participant with respect to any Award previously granted without such
Participant's written consent, except as permitted under SECTION 13.
SECTION 20. PLAN TERMINATION. This Plan shall terminate upon the earlier
of the following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating this
Plan; or
(b) the tenth anniversary of the Effective Date; provided, however,
that the Board may, prior to such date, extend the term of this Plan for an
additional period of up to five years for the grant of Awards other than
Incentive Stock Options. No termination of this Plan shall materially
alter or impair any of the rights or obligations of any person, without his
consent, under any Award previously granted under this Plan, except that
subsequent to termination of this Plan, the Committee may make amendments
or modifications permitted under SECTION 13.
SECTION 21. EFFECTIVE DATE. This Plan shall be effective, and Awards may
be granted under this Plan, on or after the Effective Date; provided, however,
if this Plan is not approved by at least a majority of the votes cast by the
stockholders of Valhi at a meeting of stockholders at which a quorum is present
within one year after the Effective Date then, in such event, this Plan and all
Awards granted pursuant to this Plan shall be null and void.
ADOPTED BY THE BOARD: MAY , 1997 (BY ACTION OF THE BOARD ON FEBRUARY 13,
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1997)
APPROVED BY THE STOCKHOLDERS: MAY , 1997
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EFFECTIVE DATE: MAY , 1997
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EXECUTED to evidence this Valhi, Inc. 1997 Long-Term Incentive Plan adopted
by the Board on May , 1997 (by action of the Board on February 13, 1997) and
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the stockholders of Valhi on May , 1997.
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VALHI, INC.
By:
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