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EXHIBIT 10(c)
QUIXOTE CORPORATION
2001 EMPLOYEE STOCK INCENTIVE PLAN
1. PURPOSE. The purposes of this plan (the "Plan") are to
encourage selected employees of Quixote Corporation (the "Company") and its
Subsidiaries, who are capable of having an impact on the performance of the
Company, to acquire a long-term proprietary interest in the growth and
performance of the Company, to generate an increased incentive to contribute to
the Company's future success and prosperity (thus enhancing the value of the
Company for the benefit of its stockholders), and to enhance the ability of the
Company and its Subsidiaries to attract and retain qualified individuals upon
whom the sustained progress, growth, and profitability of the Company depend.
2. DEFINITIONS. As used in this Plan, terms defined 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) "Affiliate" has the meaning specified in Rule 12b-2
promulgated under the 1934 Act.
(b) "Award" means options or shares of Restricted Stock
granted under the Plan.
(c) "Award Agreement" has the meaning specified in
Section 4(c)(v).
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" includes termination based on the commission of
any act or acts involving dishonesty, breach of fiduciary duty, fraud,
illegality or moral turpitude.
(f) "Change in Control" has the meaning specified in
Section 14.
(g) "Code" means the Internal Revenue Code of 1986, as
amended. References to a particular section of the Code shall include references
to successor provisions.
(h) "Committee" means the committee of the Board appointed
pursuant to Section 4.
(i) "Continuing Members" has the meaning specified in
Section 14b(ii).
(j) "Disability" means 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 tasks 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 exceeding one year.
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(k) "Effective Date" means the date upon which this Plan is
approved by the stockholders of the Company.
(l) "Fair Market Value" of the Stock of the Company means, as
of any applicable date, except as otherwise determined by the Committee, (i) if
the Stock is listed on The New York Stock Exchange, the closing sale price of
the Stock on the immediately preceding date as reported on The New York Stock
Exchange Composite Tape, or if no such reported sale of the security shall have
occurred on such date, on the next preceding date on which there was such a
reported sale or (ii) if such Stock is traded on the Nasdaq National Market, the
average of the highest reported bid and the lowest reported asked price per
share of the Stock on the immediately preceding date on the Nasdaq National
Market. If the Stock ceases to be listed on The New York Stock Exchange or
traded on the Nasdaq National Market, as applicable, the Board shall designate
an alternative method of determining the Fair Market Value of the security.
(m) "Grant Date" means the date on which an Award shall be
duly granted, as determined in accordance with Section 6(a)(i).
(n) "Grantee" means an individual who has been granted an
Award.
(o) "Immediate Family" has the meaning specified in Section 7.
(p) "Including" or "includes" means "including, without
limitation," or "includes, without limitation."
(q) "1934 Act" means the Securities Exchange Act of 1934, as
amended. References to a particular section of, or rule under, the 1934 Act
shall include references to successor provisions.
(r) "Option Price" means the per share purchase price of Stock
subject to an option.
(s) "Permissible Transferee" has the meaning specified in
Section 7.
(t) "Plan" has the meaning specified in the introductory
paragraph.
(u) "Restricted Period" means the period, beginning with the
first day of the month in which Restricted Stock is granted, during which
restrictions on the transferability of the Restricted Stock are in effect.
(v) "Restricted Stock" means shares of Stock granted pursuant
to Section 6(d).
(w) "Retirement" means a termination of employment with the
Company and its Subsidiaries by a Grantee, other than for Cause or death, any
time after attaining age 55, provided that the sum of the Grantee's age and
years of service on the date of termination equals or exceeds sixty-five (65).
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(x) "SEC" means the U.S. Securities and Exchange Commission.
(y) "Section 16 Grantee" means a person subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of the Company.
(z) "Share Withholding" has the meaning specified in Section
12(a).
(aa) "Stock" means the Company's common stock authorized by
the Company's Certificate of Incorporation.
(bb) "Subsidiary" means any entity in which the Company
directly or through intervening subsidiaries owns at least a majority interest
of the total combined voting power or value of all classes of stock or, in the
case of an unincorporated entity, at least a majority in the capital and
profits.
(cc) "Tax Date" has the meaning specified in Section
12(b)(ii).
(dd) "Taxable Event" has the meaning specified in Section
12(a).
(ee) "Tendered Restricted Stock" has the meaning specified in
Section 8.
3. SCOPE OF THE PLAN.
(a) Subject to the provisions of Section 3(d) and Section 21,
the maximum number of shares of Stock that are available and reserved for
delivery on account of the exercise of Awards under this Plan as of the
Effective Date is a total of five hundred twenty-five thousand (525,000) shares
of Stock (of which Two Hundred Thousand (200,000) shares of Stock shall be
reserved for the grant of incentive stock options), and fifty thousand (50,000)
shall be reserved for the grant of Restricted Stock.
(b) Such shares may be treasury shares, newly issued shares,
or shares purchased on the open market (including private purchases) in
accordance with applicable securities laws, or any combination of the foregoing,
as may be determined from time to time by the Board or the Committee.
(c) Subject to adjustment as provided in Section 21, following
the Effective Date the maximum number of shares of Stock for which Awards may be
granted to any Grantee in any calendar year shall not exceed one hundred
thousand (100,000) shares.
(d) To the extent an Award shall expire or terminate for any
reason without having been exercised in full or shall be forfeited without in
either case, the Grantee having enjoyed any of the benefits of stock ownership
(other than voting rights or dividends that are also forfeited), the shares of
Stock (including Restricted Stock) associated with such Award shall become
available for other Awards.
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(e) For purposes of this Section 3,
(i) if an Award is denominated in shares of Stock,
the number of shares covered by such Award, or to which such Award
relates, shall be counted on the date of grant of such Award against
the aggregate number of shares of Stock available for granting Awards
under this Plan;
(ii) all outstanding shares of Stock issued under
this Plan, even if the Stock is subject to restrictions, shall be
counted on the date of grant of any Award against the aggregate number
of shares of Stock available for granting Awards under this Plan;
(iii) the shares of Stock underlying outstanding
options and similar Awards shall be counted while the Award is
outstanding against the aggregate number of shares of Stock available
for granting Awards under this Plan; and
(iv) in the event of a stock-for-stock exercise of an
option, the gross number of shares of Stock subject to the option
exercised, not the net number of shares actually issued upon exercise
shall be counted against the aggregate number of shares of Stock
available for granting Awards under this Plan.
4. ADMINISTRATION.
(a) Subject to Section 4(b), this Plan shall be administered
by a committee of the Board ("Committee") which shall consist of not less than
two persons who are Directors of the Company. Membership on the Committee may be
subject to such limitations as the Board deems appropriate to permit
transactions in Stock pursuant to the Plan to (i) be exempt from liability under
Section 16(b) of the 1934 Act pursuant to Rule 16b-3 thereunder and (ii) satisfy
the performance-based compensation exception to the $1 million limit under
Section 162(m) of the Code.
(b) The Board may, in its discretion, reserve to itself or
delegate to the Chief Executive Officer of the Company or 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 two 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 to the Chief Executive Officer or such
other committee the authority and responsibility of the Committee, all
references to the Committee in the Plan shall be to the Board, the Chief
Executive Officer or such other committee.
(c) The Committee shall have full and final authority, in its
discretion, but subject to the express provisions of this Plan, as follows:
(i) to grant Awards of Stock;
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(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 this Plan and to make all
determinations necessary or advisable for the administration of this
Plan;
(iv) to prescribe, amend, and rescind rules and
regulations relating to this Plan, including rules with respect to the
exercisability and non-forfeitability of Awards upon the termination of
employment of a Grantee;
(v) to determine the terms and provisions and any
restrictions or conditions (including specifying such performance
criteria as the Committee deems appropriate, and imposing restrictions
with respect to Stock acquired upon exercise of an option, which
restrictions may continue beyond the Grantee's termination of
employment) of the written agreements by which all Awards shall be
evidenced ("Award Agreements") which need not be identical.
(vi) to impose, incidental to an Award, conditions
with respect to competitive employment or other activities, to the
extent such conditions do not conflict with this Plan;
(vii) to delegate its duties and responsibilities
under this Plan, except its duties and responsibilities with respect to
Section 16 Grantees, and (A) the acts of such delegates shall be
treated hereunder as acts of the Committee, and (B) such delegates
shall report to the Committee regarding the delegated duties and
responsibilities;
(viii) subject to Section 6(a)(ii), to extend the
time during which any Award or group of Awards may be exercised;
(ix) 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 requiring simultaneous exercise of
related identified Awards, and limiting the percentage of Awards which
may from time to time be exercised by a Grantee; and
(x) to certify attainment of any performance criteria
to which Awards are subject, if any.
The determination of the Committee on all matters relating to this 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 this Plan or any Award.
5. ELIGIBILITY. Awards may be granted to any officer or full-time
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
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conditions applicable to, each Award, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of
this 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 by
the Committee at the time of granting the Award.
(ii) The term of each Award shall be a period of not
more than ten years from the Grant Date, and shall be subject to
earlier termination as herein established.
(iii) A Grantee may, if otherwise eligible, be
granted additional Awards in any combination.
(b) GRANT OF INCENTIVE STOCK OPTIONS.
(i) Options granted under this Section 6(b) shall be
"incentive stock options," that satisfy the requirements applicable to
"incentive stock options" described in section 422(b) of the Code. No
incentive stock option shall be issued to a Grantee who holds 10% or
more of the outstanding voting securities of the Company on the Grant
Date.
(ii) No later than the Grant Date of any option, the
Committee shall determine the Option Price of such option. The Option
Price of an option shall not be less than 100% of the Fair Market Value
of the Stock on the Grant Date. Such price shall be subject to
adjustment as provided in Section 21.
(iii) The Award Agreement may provide that the option
may be exercisable with Restricted Stock.
(iv) The Fair Market Value (determined at the time
the option is granted) of the Stock with respect to which incentive
stock options are exercisable for the first time by a Grantee during
any calendar year (under the Plan and under any other incentive stock
options of the Company) shall not exceed $100,000.
(v) The grant of any incentive stock option shall be
conditioned upon the Grantee agreeing to advise the Company when the
Grantee sells or transfers any shares of Stock acquired pursuant to the
exercise of an incentive stock option, and such agreement shall be
incorporated in the applicable Award Agreement. The Company may legend
any certificate representing Stock acquired pursuant to exercise of an
incentive stock option to reflect such restriction.
(c) GRANT OF NON-QUALIFIED STOCK OPTIONS.
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(i) Options granted under this Section 6(c)
shall be "non-qualified stock options," and are not intended
to be "incentive stock options" as that term is described in
section 422(b) of the Code.
(ii) No later than the Grant Date of any
option, the Committee shall determine the Option Price of such
option. The Option Price of an option shall not be less than
100% of the Fair Market Value of the Stock on the Grant Date.
(iii) The Award Agreement may provide that
the option may be exercisable with Restricted Stock.
(d) GRANT OF SHARES OF RESTRICTED STOCK.
(i) The Committee may in its discretion grant shares
of Restricted Stock to any individual eligible under Section 5 to
receive Awards, and shall establish the terms and conditions, including
such performance criteria, as shall be applicable to such Restricted
Stock; provided, however, that the restriction period for any
Restricted Stock Award shall be no less than three years or at least
one year if the Restricted Stock Award is performance based.
(ii) The Committee shall, in its discretion,
determine the amount, if any, that a Grantee shall pay for shares of
Restricted Stock. Awards shall be granted for no cash consideration or
for such minimal cash consideration as may be required by applicable
law. If any such cash consideration is required, payment shall be made
in full by the Grantee before the delivery of the shares and in any
event no later than 10 days after the Grant Date for such shares. In
the discretion of the Committee and to the extent permitted by law,
payment may also be made in accordance with Section 9.
(iii) The Committee may, but need not, provide that
all or any portion of a Grantee's Award of Restricted Stock, or
Restricted Stock acquired upon exercise of an option shall be
forfeited:
(A) except as otherwise specified in the
Award Agreement, upon the Grantee's termination of employment
for any reason specified in the Award Agreement within a
specified time period after the Grant Date, or
(B) if the Company or the Grantee does not
achieve specified performance objectives (if any) 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; provided that, subject to Sections 13 and 14, in no
case shall such Award become nonforfeitable before the first
anniversary of the Grant Date.
(iv) If a share of Restricted Stock is forfeited,
then:
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(A) if the Grantee was required to pay for
such share or acquired such Restricted Stock upon the exercise
of an option, the Grantee shall be deemed to have resold such
share of Restricted Stock to the Company at the lesser of (1)
the amount paid or, if the Restricted Stock was acquired on
exercise of an option, the Option Price paid by the Grantee
for such share of Restricted Stock, 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 later of the date the event causing the
forfeiture occurred or 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.
(v) The Committee may provide that any share of
Restricted Stock shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until
the expiration of the Restricted Period and/or such shares become
nonforfeitable or are forfeited. 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
and the Award Agreement. If any shares of Restricted Stock become
nonforfeitable, and any applicable Restricted Period has ended, the
Company shall cause certificates for such shares to be issued or
reissued without such legend.
(vi) The Committee may provide one or more Restricted
Periods applicable to Restricted Stock, at its discretion. Such
Restricted Period shall be measured from the first day of the month in
which Restricted Stock is granted with respect to such Restricted
Period.
(vii) Each grant of Restricted Stock shall be
evidenced by a written instrument stating the number of shares of
Restricted Stock granted, the Restriction Period, the restrictions
applicable to such Restricted Stock, the nature and terms of payment of
consideration, if any, the consequences of forfeiture that will apply
to such Restricted Stock, and any other terms, conditions and rights
with respect to such grant.
(viii) Any other provision of this Plan to the
contrary notwithstanding, the Committee may at any time shorten any
Restricted Period, if it determines that conditions, including but not
limited to, changes in the economy, changes in competitive conditions,
changes in laws or government or regulations, changes in generally
accepted accounting principles, changes in the Company's accounting
policies, acquisitions or dispositions, or the occurrence of other
unusual, unforeseen, or extraordinary events, so warrant.
7. NON-TRANSFERABILITY. Except for those assignments and
transfers that are approved by the Committee, each Award (other than Restricted
Stock) granted hereunder
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shall not be assignable or transferable other than by will or the laws of
descent and distribution; PROVIDED HOWEVER, that, with respect to Restricted
Stock and non-qualified stock options, a Grantee may (a) designate in writing a
beneficiary to exercise his/her Award after the Grantee's death, (b) transfer an
option (other than an incentive stock option) to a revocable, inter vivos trust
as to which the Grantee is both the settlor and trustee, and (c) transfer an
Award for no consideration to any of the following permissible transferees (each
a "Permissible Transferee"): (w) any member of the Immediate Family of the
Grantee to whom such Award was granted, (x) any trust solely for the benefit of
the Grantee and members of the Grantee's Immediate Family, (y) any partnership
or limited liability company whose only partners or members are the Grantee and
members of the Grantee's Immediate Family, or (z) any other transferee approved
by the Committee in advance of the transfer; and FURTHER PROVIDED THAT: (i) the
transfer of any Award shall not be effective on a date earlier than the date on
which the Award is first exercisable as set forth in this Plan; (ii) any
Permissible Transferee to whom an Award is transferred by a Grantee shall not be
entitled to transfer the Award, other than to the Grantee or by will or the laws
of descent and distribution; and (iii) the Permissible Transferee shall remain
subject to all of the terms and conditions applicable to such Award prior to
such transfer. For purposes of this Section 7, "Immediate Family" means, with
respect to a particular Grantee, such Grantee's spouse, children, stepchildren,
grandchildren, parents, stepparents, grandparents, siblings, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law,
and shall include relationships arising from legal adoption. Each share of
Restricted Stock shall be nontransferable until such share becomes
nonforfeitable and the Restricted Period, if any, lapses.
8. EXERCISE. Subject to Sections 4(c)(ix) and 13 and such terms
and conditions as the Committee may impose, each option shall be exercisable in
one or more installments.
Each option shall be exercised by delivery to the Company of
written notice of intent to purchase a specific number of shares of Stock
subject to the option. The Option Price of any shares of Stock or shares of
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:
(i) cash;
(ii) Stock held by the Grantee for at least 6 months
prior to exercise of the option, valued at its Fair Market Value on
the date of exercise;
(iii) by delivery of a properly executed exercise
notice to the Company, together with a copy of irrevocable instructions
to a broker or lending institution, accepted in writing, and
authorizing them to sell the Stock (or a sufficient portion thereof)
acquired upon exercise of an option, and assigning the delivery to the
Company of a sufficient amount of the sale proceeds to pay for all the
Stock acquired through such exercise and any tax withholding
obligations resulting from such exercise, all in such form and with
such security as the Company may require; or
(iv) in the discretion of the Committee and to the
extent permitted by law, payment may also be made in accordance with
Section 9.
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In the event the Grantee elects to make payment as provided in Section
8(a)(ii) above, delivery may be accomplished by means of an attestation by the
Grantee, at the time of exercise, as to the Grantee's ownership of the number of
shares of Stock required to cover the total required Option Price of the option
being exercised and the Company may deliver the net amount of shares covered by
the option after deducting the number of shares required to cover the total
Option Price; any attestation to be in form and substance, satisfactory to the
Committee.
9. LOANS AND GUARANTEES. The Committee may, in its discretion
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.
Any such payment or deferral by the Company pursuant to this
Section 9 shall be on such terms and conditions as the Committee may determine;
provided that the interest rate applicable to any such payment deferral shall
not be more favorable to the Grantee than the terms applicable to funds borrowed
from an unrelated party in an arms-length transacation. 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 enters into a full
recourse, binding obligation, secured against the assets of the Grantee
excluding the Grantee's shares of Stock purchased pursuant to this deferral, to
pay the deferred amount and the related interest. If the Committee has permitted
a payment deferral pursuant to this Section 9, then the Committee may, in its
discretion, require the immediate payment of such deferred amount 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.
10. NOTIFICATION UNDER CODE 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 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 Code), such Grantee shall notify the Company of such election
within ten (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 Code.
11. MANDATORY WITHHOLDING OF TAXES. Whenever under this 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
occurs which subjects the Grantee to income taxes 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 the minimum
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 this Plan, or (iii) any combination
of the foregoing.
12. ELECTIVE SHARE WITHHOLDING.
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(a) In addition to the specific provisions of Section 8 and
subject to Section 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 becoming nonforfeitable (each a "Taxable Event")
having a Fair Market Value equal to the minimum statutory amount necessary to
satisfy required federal, state, or local withholding tax liability attributable
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 such election of Share Withholding by such
Grantee at any time before the Grantee's election if the Committee has
reserved the right to do so in the Award Agreement;
(ii) the Grantee's election must be made before the
date (the "Tax Date") on which the amount of tax to be withheld is
determined;
(iii) the Grantee's election shall be irrevocable;
and
(iv) no election to have shares of Stock withheld
from any Award shall be effective with respect to an Award which was
transferred by the Grantee in accordance with this Plan.
13. TERMINATION OF EMPLOYMENT. Except as may otherwise be provided
in the Award Agreement, the following provisions shall govern in the event of a
termination of employment for any reason:
(a) FOR CAUSE. If a Grantee has a termination of employment
for Cause,
(i) The Grantee's shares of Restricted Stock that are
forfeitable shall thereupon be forfeited, subject to the provisions of
Section 6(d)(iv) regarding repayment of certain amounts to the Grantee.
(ii) Any unexercised option shall thereupon
terminate.
(b) ON ACCOUNT OF DEATH. If the Grantee has a termination of
employment by reason of death:
(i) All grants of Restricted Stock awarded to such
Grantee shall become nonforfeitable.
(ii) Any unexercised option may be exercised, to the
extent exercisable on the date of death, in whole or in part, at any
time within one year after such termination of employment and prior to
the stated expiration date of the option, by (A) his/her personal
representative, executor, administrator, or by the person to whom the
option is transferred by
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will or the applicable laws of descent and distribution, (B) the
Grantee's beneficiary designated in accordance with Section 7, or (C)
the then-acting trustee of the trust described in clause (b) of the
first sentence of Section 7 (but only if the condition set forth in
such clause (b) has been satisfied).
(c) ON ACCOUNT OF DISABILITY. If a Grantee has a termination
of active employment by reason of disability:
(i) Such termination shall not constitute a
termination of employment for purposes of Restricted Stock and such
Grantee shall not forfeit any Restricted Stock held by him/her,
provided that during the balance of the period in which the Restricted
Stock would otherwise remain forfeitable such Grantee does not engage
in or assist any business that the Company, in its sole discretion,
determines to be in competition with business engaged in by it. A
Grantee who does engage in or assist any business that the Company, in
its sole discretion, determines to be in competition with any business
engaged in by it, shall be deemed to have terminated employment.
(ii) Any unexercised option may be exercised, to the
extent exercisable on the date of termination of active employment, in
whole or in part, at any time within a one year period after such
termination of employment and prior to the stated expiration date of
the option, by the Grantor or by the Grantee's guardian or legal
representative provided that during such period the Grantee does not
engage in or assist any business that the Company, in its sole
discretion, determines to be in competition with a business engaged in
by it. If the Grantee dies within such one year period, then the
Grantee's options may be exercised within the one year period after his
or her death by the person specified in Section 13(b)(ii).
Notwithstanding the foregoing, however, in no event may an option be
exercised after the expiration of the Option Period.
(d) ON ACCOUNT OF RETIREMENT. If a Grantee has a termination
of employment on account of Retirement:
(i) Such termination shall not constitute a
termination of employment for purposes of Restricted Stock and the
provisions of Section 13(c)(i) shall apply as though the Grantee had
terminated active employment for reasons of disability.
(ii) Any unexercised option which is then
exercisable, may be exercised, in whole or in part, not later than the
close of business on the last business day of the 24th month following
the Grantee's Retirement; PROVIDED THAT, following Retirement, such
Grantee does not engage in or assist in any business that the Company,
in its sole discretion, determines to be in competition with the
business engaged in by it during such period and as is defined in the
Award Agreement. If the Grantee dies within the 24 month period after
Retirement, then the Grantee's options may be exercised within the one
year period after his or her death by the person specified in Section
13(b)(ii). Notwithstanding the foregoing, however, in no event may an
option be exercised after the expiration of its stated term.
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(e) ANY OTHER REASON. If a Grantee has a termination of
employment for a reason other than for Cause, death of the Grantee, the
Grantee's Disability, and the Grantee's Retirement:
(i) The Grantee's shares of Restricted Stock, to the
extent forfeitable on the date of the Grantee's termination of
employment, shall be forfeited on such date. If the termination of
employment occurs after the Restricted Stock becomes nonforfeitable but
prior to the end of a Restricted Period, such termination shall not
have any effect on any Restricted Period, unless the Committee, in its
sole discretion, finds that the circumstances so warrant and determines
that the Restricted Period shall end on an earlier date as determined
by the Committee, and that shares held by the Company shall be paid as
soon as practicable following such earlier date.
(ii) Any unexercised option to the extent exercisable
on the date of the Grantee's termination of employment, may be
exercised in whole or in part, not later than the three month
anniversary of the Grantee's termination of employment. If the Grantee
dies within the three month period, then the exercisability of the
Grantee's options shall be determined under Section 13(b) or the
balance remaining of the period specified in this Section 13(d)(ii),
whichever is longer.
(f) EXTENSION OF TERM. In the event of a termination of
employment other than for Cause, the Committee, in its sole discretion, may
extend the term, including vesting and the exercisability, of any Award;
provided, however, that in no event may the term of any Award expire or be
exercisable more than ten years after the Grant Date of such Award.
14. CHANGE IN CONTROL.
(a) Notwithstanding any other provision of this Plan to the
contrary, if, while any Awards remain outstanding under this Plan, a "Change in
Control" (as defined below) should occur, then (1) all options that are
outstanding at the time of such Change in Control shall become immediately
vested and exercisable in full; and (2) all restrictions with respect to shares
of Restricted Stock shall lapse, and such shares shall be fully vested and
nonforfeitable.
(b) A Change in Control means a change in control of the
Company of a nature that would be required to be reported in response to item
6(e) of Schedule 14A of Regulation14A promulgated under the 1934 Act; PROVIDED
THAT, without limitation, such change in control shall be deemed to have
occurred if the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) any person (as defined in Section 3(a)(9) of the
1934 Act, as such term is modified in Sections 13(d) and 14(d) of the
1934 Act), other than (1) any employee plan established by the Company
or any Subsidiary, (2) the Company or Subsidiary, (3) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as
their ownership of the Company), alone or with its Affiliates, is or
becomes the beneficial owner (within the meaning of Rule 13d-3
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promulgated under the 1934 Act), directly or indirectly, of Stock of
the Company representing 15% or more of either the then outstanding
shares of Stock or the combined voting power of the Company's then
outstanding voting securities;
(ii) a majority of the members of the Board shall
cease to be Continuing Members. For this purpose, "Continuing Member"
means a member of the Board who either (i) was a member of the Board on
the Effective Date hereof and has been such continuously thereafter or
(ii) became a member of such Board after the Effective Date and whose
election or nomination for election was approved by a vote of at least
two-thirds of the Continuing Members then members of the Company's
Board (other than a nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the members of the Board,
as such terms are used in Rule 14a-11 of Regulation 14A under the 1934
Act);
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any Affiliate or Subsidiary, at least 50% of the combined
voting power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger
or consolidation, or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no person (determined pursuant to clause (i) above) is or becomes
the beneficial owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company, its
Subsidiaries or its Affiliates) representing 15% or more of either the
then outstanding shares of Stock or the combined voting power of the
Company's then outstanding voting securities; or
(iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or of the Company's assets or earning
power aggregating more than 50% of the assets or the earning power of
the Company and its Subsidiaries, taken as a whole.
Notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of Stock
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns
substantially all of the assets of the Company immediately prior to such
transaction or series of transactions.
The Committee may also determine, in its discretion, that a
sale of a substantial portion of the Company's assets or one of its businesses
constitutes a "Change of Control" with respect to Awards held by Grantees
employed in the affected operation.
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15. 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 non-forfeitability of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of (i)
federal or state securities laws or (ii) the listing requirements of any
national securities exchange on which are listed any of the Company's equity
securities, then the Committee may postpone any such exercise,
non-forfeitability or delivery, as the case may be, but the Company shall use
its best efforts to cause such exercise, non-forfeitability or delivery to
comply with all such provisions at the earliest practicable date.
16. FUNDING. 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 this Plan.
17. 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. Further, the Company or Subsidiary may at any
time dismiss a Grantee from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in this Plan or in any Award
Agreement.
18. 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 issuable 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. 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 Section 3 or otherwise reinvested. Stock dividends and deferred
cash dividends issued with respect to Restricted Stock shall 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 to and
payment of interest on deferred cash dividends.
19. 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
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hand, and the Grantee, on the other hand, except as such plan or agreement shall
otherwise expressly provide.
20. 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 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 and 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
Section 13, of terminations of employment. Notwithstanding the foregoing, the
Committee's interpretation of Plan provisions shall be uniform as to similarly
situated Grantees.
21. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION. The Committee shall
make such adjustment, as it shall deem equitable, to any or all of:
(a) the aggregate numbers of shares of Stock and shares of
Restricted Stock;
(b) the number of shares of Stock and shares of Restricted
Stock covered by an outstanding Award;
(c) the Option Price; and
(d) any other terms or provisions of any outstanding grants of
stock options or Restricted Stock:
to reflect a stock dividend, stock split, reverse stock split, share
combination, re-capitalization, merger, consolidation, acquisition of property
or shares, separation, spin-off, reorganization, stock rights offering,
liquidation or similar event, of or by the Company, or, if deemed appropriate,
the Committee may make provisions for a cash payment to the holder of an
outstanding Award; provided, however, in each case, that the number of shares
subject to any Award denominated in shares of Stock shall always be a whole
number. Notwithstanding any part of the foregoing to the contrary, upon the
approval by the stockholders of the Company of a plan of liquidation for the
Company, any unexercised options previously granted shall become exercisable,
and any shares of Restricted Stock that have not become nonforfeitable shall
become nonforfeitable.
22. AMENDMENT OR TERMINATION OF THE PLAN. This Plan shall become
effective on the Effective Date and shall terminate on, and no Awards shall be
made after, November 1, 2011, unless terminated at an earlier date by action of
the Board. Any Awards then outstanding shall remain in effect until they have
been exercised, forfeited or expired. The Board may amend or terminate this Plan
at any time; except that, without approval of the stockholders, no such revision
or amendment shall: change the number of shares subject to the Plan; change the
designation of the class of employees eligible to receive awards; or materially
increase the benefits accruing to participants under the Plan. Subject to
Section 21, no amendment or termination may, in the absence of written consent
to the change by the affected Grantee (or, if the Grantee is not then living,
the affected beneficiary), adversely affect the rights of any Grantee
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or beneficiary under any Award granted under this Plan prior to the date such
amendment is adopted by the Board. Unless approved by the Company's
stockholders, no adjustments or reduction of the Option Price of any outstanding
options shall be made directly or by cancellation of outstanding options and a
subsequent regranting of options at a lower price to the same individual.
Furthermore, the Plan will not be amended without approval of the stockholders
in any way which would cause options to fail to qualify as incentive stock
options.
23. OTHER COMPENSATION PLANS. Nothing contained in this Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other
or additional compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
24. NO ILLEGAL TRANSACTIONS. This 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
this 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.
25. NO TRUST OR FUND CREATED. Neither this Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or Subsidiary and a Grantee or any
other person. To the extent that any person acquires a right to receive payments
from the Company or Subsidiary pursuant to an Award, such right shall be no
greater than the right of an unsecured general creditor of the Company or
Subsidiary.
26. CONTROLLING LAW. The law of the State of Illinois, except
its law with respect to choice of law and except as to matters relating to
corporate law (in which case the corporate law of the State of Delaware shall
control), shall be controlling in all matters relating to this Plan.
27. TAX LITIGATION. The Company shall have the right to contest,
at its expense, any tax ruling or decision, administrative or judicial, on any
issue that is related to this Plan and that the Company believes to be important
to Grantees and to conduct any such contest or any litigation arising therefrom
to a final decision.
28. SEVERABILITY. If all or any part of this 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 this Plan not
declared to be unlawful or invalid. Any Section or part of a Section so declared
to be unlawful or invalid shall, if possible, be construed in a manner in which
will give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
29. INDEMNIFICATION. Each person who is or at any time serves as
a member of the Board or the Committee or otherwise acts with respect to this
Plan pursuant to authority delegated to him/her in accordance with this Plan
shall be indemnified and held harmless by the
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Company against and from: (i) any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action or
failure to act under this Plan; and (ii) any and all amounts paid by such person
in satisfaction of judgment in any such action, suit or proceeding relating to
this Plan. Each person covered by this indemnification shall give the Company an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the By-Laws of this
Company, as a matter of law, or otherwise, or any power that the Company may
have to indemnify such person or hold such person harmless.
30. RELIANCE ON REPORTS. Each member of the Board and the
Committee shall be fully justified in relying or acting in good faith upon any
report made by the independent public accountants of, or counsel for, this
Company and upon any other information furnished in connection with the Plan. In
no event shall any person who is or shall have been a member of the Board or the
Committee be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
31. EXPENSES. The Company shall bear all expenses of administering
this Plan.
32. TITLES AND HEADINGS. The titles and headings of the Sections
in this Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
33. 1993 LONG-TERM STOCK OWNERSHIP PLAN. Upon approval by the
Company's stockholders of this Plan, the Company's 1993 Long-Term Stock
Ownership Plan shall terminate and, except with respect to shares reserved for
options and Retirement Awards granted thereunder which are by their contractual
terms outstanding, all shares of Stock reserved for such plan shall no longer be
reserved, and no other options or Retirement Awards shall be granted thereunder.
Option agreements and retirement agreements currently outstanding under the 1993
Long-Term Stock Ownership Plan shall remain in effect in accordance with their
terms notwithstanding termination of that Plan.
Approved by the Stockholders of
Quixote Corporation as of November
14, 2001
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