EXHIBIT 10.6
HILTON HOTELS CORPORATION
1996 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give the Corporation a competitive
advantage in attracting, retaining and motivating officers and employees
and to provide the Corporation and its subsidiaries with a stock plan
providing incentives more directly linked to the profitability of the
Corporation's businesses and increases in shareholder value.
For purposes of the Plan, the following terms are defined as set
forth below:
a. "AFFILIATE" means a corporation or other entity controlled by
the Corporation and designated by the Committee from time to time as
such.
b. "AWARD" means a Stock Appreciation Right or a Stock Option.
c. "BOARD" means the Board of Directors of the Corporation.
d. "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the meanings
set forth in Sections 7(b) and (c), respectively.
e. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
f. "COMMISSION" means the Securities and Exchange Commission or any
successor agency.
g. "COMMITTEE" means the Committee referred to in Section 2.
h. "COMMON STOCK" means common stock, par value $2.50 per share, of the
Corporation.
i. "CORPORATION" means Hilton Hotels Corporation, a Delaware
corporation.
j. "DISABILITY" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
k. "DISINTERESTED PERSON" means a member of the Board who qualifies
as a disinterested person as defined in Rule 16b-3(c)(2), as
promulgated by the Commission under the Exchange Act, or any
successor definition adopted by the Commission.
l. "RETIREMENT" means retirement from active employment with the
Corporation, a subsidiary or Affiliate at or after age 62.
m. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
n. "FAIR MARKET VALUE" means, except as provided in Section 6(b)(ii)(2),
as of any given date, the mean between the highest and
lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange,
on any other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public
trading market for such Common Stock, the Fair Market Value of the
Common Stock shall be determined by the Committee in good faith.
o. "INCENTIVE STOCK OPTION" means any Stock Option designated as,
and qualified as, an "incentive stock option" within the meaning of
Section 422 of the Code.
p. "NONQUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
q. "PLAN" means the Hilton Hotels Corporation 1996 Stock Incentive Plan,
as set forth herein and as hereinafter amended from time to time.
r. "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
s. "STOCK APPRECIATION RIGHT" means a right granted under Section 6.
t. "STOCK OPTION" means an option granted under Section 5.
u. "TERMINATION OF EMPLOYMENT" means the termination of the
participant's employment with the Corporation and any subsidiary or
Affiliate. A participant employed by a subsidiary or an Affiliate
shall also be deemed to incur a Termination of Employment if
the subsidiary or Affiliate ceases to be such a subsidiary or an
Affiliate, as the case may be, and the participant does not
immediately thereafter become an employee of the Corporation or
another subsidiary or Affiliate. Temporary absences from employment
because of illness, vacation or leave of absence and transfers among
the Corporation and its subsidiaries and Affiliates shall not be
considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Stock Option Committee or such
other committee of the Board as the Board may from time to time
designate (the "Committee"), which shall be composed of not less than
two Disinterested Persons, each of whom shall be an "outside director"
for purposes of Section 162(m)(4) of the Code, and shall be appointed by
and serve at the pleasure of the Board.
The Committee shall have authority to make recommendations to the Board
of Directors as to the granting of Awards pursuant to the terms of the
Plan to officers and employees of the Corporation and its subsidiaries and
Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) To select the officers and employees to whom Awards may from time to
time be granted;
(b) Determine whether and to what extent Incentive Stock
Options, Nonqualified Stock Options and Stock Appreciation Rights or any
combination thereof are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered by each
Award granted hereunder;
(d) Determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price (subject to
Section 5(a)), any vesting condition, restriction or limitation (which
may be related to the performance of the participant, the Corporation
or any subsidiary or Affiliate) and any vesting acceleration or
forfeiture waiver regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee shall determine;
(e) Modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time; and
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(f) Determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as
it shall from time to time deem advisable, to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of
the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may (i) delegate to an
officer of the Corporation the authority to make decisions pursuant to
paragraphs (c), (f), (g), (h) and (i) of Section 5 (provided that no such
delegation may be made that would cause Awards or other transactions under
the Plan to cease to be exempt from Section 16(b) of the Exchange Act)
and (ii) authorize any one or more of their number or any officer of the
Corporation to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award
shall be made in the sole discretion of the Committee or such delegate
at the time of the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions made by the
Committee or any appropriately delegated officer pursuant to the
provisions of the Plan shall be final and binding on all persons, including
the Corporation and Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available for
grant under the Plan shall be 1,500,000. No participant may be granted Awards
covering in excess of 150,000 shares of Common Stock in any calendar year.
Shares subject to an Award under the Plan may be authorized and unissued
shares or may be treasury shares.
If any Stock Option (and related Stock Appreciation Right, if
any) terminates without being exercised, shares subject to such Awards shall
again be available for distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes
within the definition of such term in Section 368 of the Code) or any partial
or complete liquidation of the Corporation, the Committee or Board may make
such substitution or adjustments in the aggregate number and kind of shares
reserved for issuance under the Plan, in the number, kind and option price of
shares subject to outstanding Stock Options and Stock Appreciation Rights,
in the number and kind of shares subject to other outstanding Awards granted
under the Plan and/or such other equitable substitution or adjustments as it
may determine to be appropriate in its sole discretion; PROVIDED, HOWEVER,
that the number of shares subject to any Award shall always be a whole
number. Such adjusted option price shall also be used to determine the amount
payable by the Corporation upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 4. ELIGIBILITY
Full-time (30 hours per week) officers and employees of the Corporation, its
subsidiaries and Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of the
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Corporation, its subsidiaries and Affiliates are eligible to be granted
Awards under the Plan. No grant shall be made under this Plan to a director
who is not an officer or a salaried employee of the Corporation, its
subsidiaries or Affiliates.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Nonqualified Stock Options. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Nonqualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); PROVIDED, HOWEVER,
that grants hereunder are subject to the aggregate limit on grants to
individual participants set forth in Section 3. Incentive Stock Options may
be granted only to employees of the Corporation and its subsidiaries
(within the meaning of Section 424(f) of the Code). To the extent that any
Stock Option is not designated as an Incentive Stock Option or even if
so designated does not qualify as an Incentive Stock Option, it shall
constitute a Nonqualified Stock Option.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its
face whether it is intended to be an agreement for an Incentive Stock Option
or a Nonqualified Stock Option. The grant of a Stock Option shall occur on
the date a majority of the independent directors of the Corporation ratify by
resolution the Committee's recommendation with respect to the individuals to
be participants in any grant of a Stock Option, the number of shares of
Common Stock to be subject to such Stock Option to be granted to such
individual and specifies the terms and provisions of the Stock Option. The
Corporation shall notify a participant of any grant of Stock Option, and a
written option agreement or agreements shall be duly executed and delivered
by the Corporation to the participant. Such agreement or agreements shall
become effective upon execution by the Corporation and the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the optionee affected, to disqualify any Incentive
Stock Option under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
and set forth in the option agreement, and shall not be less than the Fair
Market Value of the Common Stock subject to the Stock Option on the
date of grant.
(b) OPTION TERM. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more
than ten years after the date the Stock Option is granted.
(c) EXERCISABILITY. Except as otherwise provided herein, Stock
Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee. If the
Committee provides that any Stock Option is exercisable only in
installments, the Committee may at
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any time waive such installment exercise provisions, in whole or in
part,based on such factors as the Committee may determine. In
addition, the Committee may at any time accelerate the exercisability of
any Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this Section
5, Stock Options may be exercised, in whole or in part, at any time during
the option term by giving written notice of exercise to the Corporation
specifying the number of shares of Common Stock subject to the Stock
Option to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price by certified or bank check or such other instrument as
the Committee may accept. Payment, in full or in part, may also be
made in the form of unrestricted Common Stock already owned by the
optionee of the same class as the Common Stock subject to the Stock
Option (based on the Fair Market Value of the Common Stock on the date
the Stock Option is exercised).
Payment for any shares subject to a Stock Option may also be made
by delivering a properly executed exercise notice to the Corporation,
together with a copy of irrevocable instructions to a broker to deliver
promptly to the Corporation the amount of sale or loan proceeds to pay
the purchase price, and, if requested, by the amount of any federal,
state, local or foreign withholding taxes. To facilitate the foregoing,
the Corporation may enter into agreements for coordinated procedures with
one or more brokerage firms.
No shares of Common Stock shall be issued until full payment
therefor has been made. An optionee shall have all of the rights of a
shareholder of the Corporation holding the class or series of Common
Stock that is subject to such Stock Option (including, if applicable, the
right to vote the shares and the right to receive dividends), when the
optionee has given written notice of exercise, has paid in full for
such shares and, if requested, has given the representation described in
Section 11(a).
(e) NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of
descent and distribution; or (ii) in the case of a Nonqualified Stock
Option, pursuant to a qualified domestic relations order (as defined in the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder) whether directly or indirectly or by means
of a trust or partnership or otherwise, under the applicable option
agreement. All Stock Options shall be exercisable, subject to the terms of
this Plan, during the optionee's lifetime, only by the optionee or by the
guardian or legal representative of the optionee or, in the case of a
Nonqualified Stock Option, its alternative payee pursuant to such qualified
domestic relations order, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the optionee
named in the option agreement and any person to whom an option is
transferred by will or the laws of descent and distribution or, in the case
of a Nonqualified Stock Option, pursuant to a qualified domestic relations
order.
(f) TERMINATION BY DEATH. Unless otherwise determined by the Committee,
if an optionee's employment terminates by reason of death, any Stock Option
held by such optionee may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine,
for a period of one year (or such other period as the Committee may specify
in the option agreement) from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
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(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may determine,
for a period of six months(or such other period as the Committee may specify
in the option agreement) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that if the optionee dies within
such period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be exercisable to
the extent to which it was exercisable at the time of death for a period of
12 months from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Nonqualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
such Retirement, or on such accelerated basis as the Committee may
determine, for a period of two years (or such other period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee
dies within such period any unexercised Stock Option held by such optionee
shall, notwithstanding the expiration of such period, continue to be
exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Nonqualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee: (A)
if an optionee incurs a Termination of Employment, all Stock Options held
by such optionee shall thereupon terminate; and (B) if an optionee incurs
a Termination of Employment for any reason other than death, Disability
or Retirement, any Stock Option held by such optionee, to the extent then
exercisable, or on such accelerated basis as the Committee may determine,
may be exercised, with the consent of the Corporation, for the lesser of
three months from the date of such Termination of Employment or the
balance of such Stock Option's term; PROVIDED, HOWEVER, that if the
optionee dies within such three-month period, any unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of such
three-month period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. Notwithstanding the foregoing, if an
optionee incurs a Termination of Employment at or after a Change in Control
(as defined Section 7(b)), other than by reason of death, Disability or
Retirement, any Stock Option held by such optionee shall be exercisable for
the lesser of (1) six months and one day from the date of such Termination
of Employment, and (2) the balance of such Stock Option's term. In the event
of Termination of Employment, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
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(j) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control
(the "Exercise Period"), unless the Committee shall determine otherwise at
the time of grant, an optionee shall have the right, whether or not the
Stock Option is fully exercisable and in lieu of the payment of the exercise
price for the shares of Common Stock being purchased under the Stock Option
and by giving notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the Corporation and
to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the Change in Control Price per share of Common Stock on the
date of such election shall exceed the exercise price per share of Common
Stock under the Stock Option (the "Spread") multiplied by the number of
shares of Common Stock granted under the Stock Option as to which the right
granted under this Section 5(j) shall have been exercised; PROVIDED,
HOWEVER, that if the Change in Control is within six months of the date of
grant of a particular Stock Option held by an optionee who is an officer or
director of the Corporation and is subject to Section 16(b) of the Exchange
Act no such election shall be made by such optionee with respect to such
Stock Option prior to six months from the date of grant. However, if the end
of such 60-day period from and after a Change in Control is within six
months of the date of grant of a Stock Option held by an optionee who is an
officer or director of the Corporation and is subject to Section 16(b) of
the Exchange Act, such Stock Option shall be cancelled in exchange for a
cash payment to the optionee, effected on the day which is six months and
one day after the date of grant of such Option, equal to the Spread
multiplied by the number of shares of Common Stock granted under the Stock
Option. Notwithstanding the foregoing, if any right granted pursuant to this
Section 5(j) would make a Change in Control transaction ineligible for
pooling of interests accounting under APB No. 16 that but for this Section
5(j) would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute the cash payable pursuant to
this Section 5(j) with Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Nonqualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of grant
of such Stock Option. A Stock Appreciation Right shall terminate and no
longer be exercisable upon the termination or exercise of the related Stock
Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in
Section 6(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section
6; PROVIDED, HOWEVER, that a Stock Appreciation Right shall not be
exercisable during the first six months of its term by an optionee who is
actually or potentially subject to Section 16(b) of the Exchange Act, except
that this limitation shall not apply in the event of death or Disability of
the optionee prior to the expiration of the six-month period.
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(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall
be entitled to receive an amount in cash, shares of Common Stock or both,
equal in value to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified in the related Stock
Option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
In the case of Stock Appreciation Rights relating to Stock
Options held by optionees who are actually or potentially subject
to Section 16(b) of the Exchange Act, the Committee:
(1) May require that such Stock Appreciation Rights be exercised
for cash only in accordance with the applicable "window period"
provisions of Rule 16b-3; and
(2) In the case of Stock Appreciation Rights relating to
Nonqualified Stock Options, may provide that the amount to be paid in
cash upon exercise of such Stock Appreciation Rights during a Rule
16b-3 "window period" shall be based on the highest of the daily
means between the highest and lowest reported sales prices of the
Common Stock on the New York Stock Exchange or other national
securities exchange on which the shares are listed or on NASDAQ, as
applicable, on any day during such "window period."
(iii) Stock Appreciation Rights shall be transferable only to permitted
transferees of the underlying Stock Option in accordance with Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth in
Section 3 on the number of shares of Common Stock to be issued under the
Plan, but only to the extent of the number of shares covered by the Stock
Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
SECTION 7. CHANGE IN CONTROL PROVISIONS
(a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control, any Stock Options and
Stock Appreciation Rights outstanding as of the date such Change in Control
is determined to have occurred, and which are not then exercisable and
vested, shall become fully exercisable and vested to the full extent of the
original grant; PROVIDED, HOWEVER, that in the case of the holder of Stock
Appreciation Rights who is actually subject to Section 16(b) of the Exchange
Act, such Stock Appreciation Rights shall have been outstanding for at least
six months at the date such Change in control is determined to have occurred.
(b) DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a "Change
in Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding Corporation Common Stock")
or (2) the combined voting power of the then outstanding voting securities
of the Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities") (a "Control Purchase");
excluding, however, the following: (1) Any acquisition directly from the
Corporation, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself
acquired directly from the Corporation, (2) Any acquisition by the
Corporation,
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(3) Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled by
the Corporation, (4) Any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and (3) of subsection (iii)
of this Section 7(b), or (5) Any acquisition by Barron Hilton, the
Charitable Remainder Unitrust created by Barron Hilton to receive shares
from the Estate of Conrad N. Hilton, or the Conrad N. Hilton Fund; or
(ii) A change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; PROVIDED, HOWEVER,
for purposes of this Section 7(b), that any individual who becomes a member
of the Board subsequent to the effective date of the Plan, whose election,
or nomination for election by the Corporation's shareholders, was approved
by a vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, PROVIDED FURTHER, that any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board (a "Board Change"); or
(iii) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Corporation ("Corporate
Transaction"); excluding however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock, and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (2) no Person (other than
the Corporation, any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Corporate Transaction)
will beneficially own, directly or indirectly, 20% or more of, respectively,
the outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the outstanding
voting securities of such corporation entitled to vote generally in the
election of directors except to the extent that such ownership existed prior
to the Corporate Transaction, and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
(iv) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(c) CHANGE IN CONTROL PRICE. For purposes of the Plan, "Change in
Control Price" means the higher of (i) the highest reported sales price,
regular way, of a share of Common Stock in any transaction reported
on the New York Stock Exchange Composite Tape or other national exchange
on which such shares are listed or
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on NASDAQ during the 60-day period prior to and including the date of a
Change in Control or (ii) if the Change in Control is the result of a
tender or exchange offer or a Corporate Transaction, the highest price per
share of Common Stock paid in such tender or exchange offer or Corporate
Transaction; PROVIDED, HOWEVER, that (x) in the case of a Stock Option which
(A) is held by an optionee who is an officer or director of the Corporation
and is subject to Section 16(b) of the Exchange Act and (B) was granted
within 240 days of the Change in Control, then the Change in Control
Price for such Stock Option shall be the Fair Market Value of the Common
Stock on the date such Stock Option is exercised or deemed exercised and
(y) in the case of Incentive Stock Options and Stock Appreciation Rights
relating to Incentive Stock Options, the Change in Control Price shall be
in all cases the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is exercised. To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the
value of such securities or other noncash consideration shall be
determined in the sole discretion of the Board.
SECTION 8. TERM, AMENDMENT AND TERMINATION
The Plan will terminate ten years after the effective date of the
Plan. Under the Plan, Awards outstanding as of such date shall not be
affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would (i) impair
the rights of an optionee under a Stock Option or a recipient of a Stock
Appreciation Right theretofore granted without the optionee's or recipient's
consent, except such an amendment made to cause the Plan to qualify for
the exemption provided by Rule 16b-3, or (ii) disqualify the Plan from the
exemption provided by Rule 16b-3. In addition, no such amendment shall be
made without the approval of the Corporation's shareholders to the extent
such approval is required by law or agreement.
The Committee may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights of any holder without the holder's
consent except such an amendment made to cause the Plan or Award to
qualify for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
SECTION 9. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or make payments; PROVIDED,
HOWEVER, that unless the Committee otherwise determines, the existence
of such trusts or other arrangements is consistent with the "unfunded"
status of the Plan.
SECTION 10. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Corporation
in writing that such person is acquiring the shares without a view to
the distribution thereof. The certificates for such shares may include
any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
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Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(1) Listing or approval for listing upon notice of issuance, of such
shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be the principal market for the Common Stock;
(2) Any registration or other qualification of such shares of the
Corporation under any state or federal law or regulation, or the maintaining
in effect of any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice of counsel, deem
necessary or advisable; and
(3) Obtaining any other consent, approval, or permit from any state or
federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary
or advisable.
(b) Nothing contained in the Plan shall prevent the Corporation or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right to
continued employment, nor shall it interfere in any way with the right of the
Corporation or any subsidiary or Affiliate to terminate the employment of any
employee at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the Committee regarding
the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless otherwise
determined by the Corporation, withholding obligations may be settled with
Common Stock, including Common Stock that is part of the Award that gives
rise to the withholding requirement. The obligations of the Corporation under
the Plan shall be conditional on such payment or arrangements, and the
Corporation and its Affiliates shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due to the
participant. The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.
(e) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by whom
any rights of the participant, after the participant's death, may be
exercised.
(f) In the case of a grant of an Award to any employee of a subsidiary
of the Corporation, the Corporation may, if the Committee so directs,
issue or transfer the shares of Common Stock, if any, covered by the
Award to the subsidiary, for such lawful consideration as the Committee may
specify, upon the condition or understanding that the subsidiary will
transfer the shares of Common Stock to the employee in accordance with the
terms of the Award specified by the Committee pursuant to the provisions of
the Plan.
(g) The Plan and all Awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.
SECTION 11. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of January 18, 1996, provided that it
is approved and adopted by at least a majority of the shares voted of Common
Stock of the Corporation within 12 months after such date.
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