Exhibit 10(d)-1
QUIXOTE CORPORATION
1993 LONG-TERM STOCK OWNERSHIP INCENTIVE PLAN
As Amended August 28, 1997
THE PLAN. Quixote Corporation, a Delaware corporation (the "Company"),
hereby amends and restates the substantive provisions of the Quixote
Corporation 1991 Incentive Stock Option Plan (the "1991 Plan"), to establish
the Quixote Corporation 1993 Long-Term Stock Ownership Incentive Plan as set
forth herein and as may from time to time be amended (the "Plan"), in order
to add provisions which will provide the Company with the ability to provide
its senior executives with stock-based retirement benefits linked to
increases in the value of the Company's Stock. The Plan is effective as of
June 30, 1993 subject to the approval by a majority of the stockholders at
the first annual meeting of stockholders held after the Effective Date.
Until such time as stockholder approval of the Plan is obtained, the 1991
Plan will continue to exist and operate independently of the Plan. Options
granted and outstanding under the 1991 Plan following stockholder approval of
the Plan shall be governed by the provisions of the Plan. Nothing in this
Plan is intended to, or shall be deemed to, modify, amend or alter any of the
rights and benefits of holders of options granted under the 1991 Plan or
provide any additional benefits to such holders.
1. PURPOSE
The purposes of the Plan are to encourage selected employees of 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. It is further intended that options issued pursuant to
this Plan shall constitute "incentive stock options" within the meaning of
Sec. 422A of the Internal Revenue Code (such options are referred to herein
as "Incentive Stock Options"). In the event that stock options granted
pursuant to this Plan do not satisfy the requirements specified under
Internal Revenue Code Sec. 422A, such options shall be "nonqualified stock
options."
2. DEFINITIONS
As used in the 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" is a person that directly or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with the Company.
(b) "Award" means options, Retirement Stock Awards or Retirement
Cash Awards granted under the Plan.
(c) "Award Agreement" has the meaning specified in Section 4(b)(v).
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
References to a particular section of the Code shall include references to
successor provisions.
(f) "Committee" means the committee of the Board appointed pursuant
to Section 4.
(g) "Company" has the meaning set forth in the introductory
paragraph.
(h) "Current Market Price" of the Stock means at any date the
average of the daily closing prices for thirty (30) consecutive business days
commencing no more than forty-five (45) business days before the day in
question. The closing price for each day shall be the last reported sales
price determined in the regular way or, in case no such reported sales takes
place on such day, the average of the last reported bid and asked prices
determined in the regular way, in either case on the principal national
securities exchange on which the Stock is admitted to trading or listed, or
if not listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices as reported by NASDAQ or other
similar organization if NASDAQ is no longer reporting such information, or if
not so available, the fair market price as determined by the Board.
(i) "Disability" means, as relates to the exercise of an Incentive
Stock Option after termination of employment, a disability within the meaning
of Section 22(e)(3) of the Code, and for all other purposes, a mental or
physical condition which, in the opinion of the Committee, renders a Grantee
unable or incompetent to carry out the job responsibilities which such
Grantee held or the 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.
(j) "Effective Date" means June 30, 1993; provided that the Plan
and any Retirement Awards granted prior to the 1993 annual meeting of the
Company's stockholders are subject to approval of the Plan by the
stockholders at such annual meeting.
(k) "Grant Date" means the date on which the Committee grants the
Award or such later date as specified in advance by the Committee; provided
however, that references to the Grant Date of an option under this Plan
shall, with respect to options granted under the 1991 Plan prior to
stockholder approval of the Plan, refer to the date of grant of such option
under the 1991 Plan.
(l) "Grantee" means an individual who has been granted an Award.
(m) "Including" or "includes" means "including, without
limitation," or "includes, without limitation."
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(n) "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.
(o) "Option Price" means the per share purchase price of Stock
subject to an option.
p) "Plan" has the meaning set forth in the introductory paragraph.
(q) "Retirement" means a termination of employment with the Company
and its Subsidiaries any time after attaining age 60.
(r) "SEC" means the Securities and Exchange Commission.
(s) "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.
(t) "Stock" means the common stock of the Company, $0.01-2/3 par
value.
(u) "Subsidiary" means (i) with respect to Incentive Stock Options,
a corporation as defined in Section 424(f) of the Code with the Company being
treated as the employer corporation for purposes of this definition, and (ii)
for all other purposes 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.
(v) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the Company.
3. SCOPE OF THE PLAN
(a) An aggregate of One Million and Fifteen Thousand (1,015,000)
shares of Stock are hereby made available and reserved for delivery on
account of Awards and the exercise of Awards, with Six Hundred Sixty Five
Thousand (665,000) shares of Stock being made available and reserved for
delivery on account of options and Three Hundred Fifty Thousand (350,000)
shares of stock being made available and reserved for delivery on account of
Retirement Stock Awards. The limitations established by the preceding
sentences shall be subject to adjustment as provided in Section 18 of the
Plan.
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.
(b) To the extent an Award shall expire or terminate for any reason
without having been exercised in full (including a cancellation and re-grant of
an option), or shall be forfeited, without, in either case, the
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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 Retirement Stock) associated with such Award shall become
available for other Awards.
(c) For purposes of this Section 3,
(i) The aggregate number of shares covered by a Retirement
Award Agreement shall be counted on the Grant Date of such Award (without
respect to the timing of the Company's obligation to issue and deliver such
shares) against the aggregate number of shares of Stock available for
granting Retirement Stock Awards under the Plan; and
(ii) the shares of Stock underlying outstanding options
(without respect to any vesting schedule) shall be counted while the Award is
outstanding against the aggregate number of shares of Stock available for
granting Awards under the Plan; and
(iii) 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 the Plan.
4. ADMINISTRATION
(a) Subject to Section 4(b), the Plan shall be administered by a
committee ("Committee") which shall consist of not less than three persons
who are Directors of the Company and who are not employees of the Company.
Membership on the Committee shall be subject to such other limitations as the
Board deems appropriate to permit transactions in Stock pursuant to the Plan
to be exempt from liability under Section 16(b) of the 1934 Act pursuant to
Rule 16b-3 thereunder. Unless the Board adopts a resolution naming other
individuals to serve on the Committee, the Committee shall consist of all
Directors of the Company who are not employees of the Company. The Board may
from time to time remove members from, or add members to the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board.
The Committee shall select one of its members as Chairman, and shall hold
meetings at such times and places as it may determine. A majority of the
Committee at which a quorum is present, or acts approved in writing by all of
the members of the Committee, shall be the valid acts of the Committee. No
member of the Committee shall be eligible to receive any grant of any Awards
under this Plan.
(b) The Committee, unless otherwise determined by the Board, shall
have full and final authority, in its discretion, but subject to the express
provisions of the Plan, as follows:
(i) to grant Awards;
(ii) to determine (A) when Awards may be granted, and (B)
whether or not specific Awards shall be identified with other specific
Awards, and if so, whether they shall be exercisable cumulatively with or
alternatively to such other specific Awards;
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(iii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;
(iv) to prescribe, amend, and rescind rules and regulations
relating to the 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 or Retirement Award, 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 and, with the consent of the Grantee where required by
contract law, to modify any such Award Agreement at any time;
(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 the Plan;
(vii) to cancel, with the consent of the Grantee,
outstanding Awards and to grant new Awards in substitution therefor;
(viii) to accelerate the exercisability of, and to
accelerate or waive any or all of the restrictions and conditions applicable
to any Award or any group of Awards;
(ix) subject to Section 6(c), to extend the time during which
any Award or group of Awards may be exercised;
(x) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are necessary and advisable to
fulfill the purposes of the Plan which are not in conflict with the Plan; and
(xi) 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.
The determination of the Committee on all matters relating to the Plan or
any Award Agreement shall be conclusive and final. No member of the
Committee or the Board shall be liable for any action or determination made
in good faith with respect to the Plan or any Award.
(c) The Board may, in its discretion, reserve to itself or delegate
to another committee of the Board, any or all of the authority and
responsibility of the Committee with respect to Awards to Grantees who are
not Section 16 Grantees at the time any such delegated authority or
responsibility is exercised. Such other committee may consist of two or more
Directors who may, but need not be, officers or employees of the Company or
of any of its
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Subsidiaries. To the extent that the Board has reserved to itself or
delegated to such other committee the authority and responsibility of the
Committee, all references to the Committee in the Plan shall be to the Board
or such other committee.
5. ELIGIBILITY
Awards may be granted to any key employee (including any officer) of the
Company or any of its Subsidiaries; provided, however, that Retirement Awards
may be granted only to executive officers of the Company or its Subsidiaries
who have completed 10 years of continuous service for the Company or its
Subsidiaries; provided further that the Committee may, under appropriate
circumstances and in its discretion, waive the requirement of ten years
continuous service for a particular executive officer. In selecting the
individuals to whom Awards may be granted, as well as in determining the
number of shares of Stock subject to, and the other terms and conditions
applicable to, each Award, the Committee shall take into consideration such
factors as it deems relevant in promoting the purposes of the Plan.
6. TERMS AND CONDITIONS OF OPTION GRANTS
Stock options granted by the Committee pursuant to the Plan shall be
evidenced by Award Agreements in such form as the Committee shall from time
to time approve, which agreements shall comply with and be subject to the
following terms and conditions:
(a) Each option shall state the number of shares to which it
pertains.
(b) The Option Price of any option shall not be less than 100% of
the Current Market Price of the Stock on the Grant Date.
(c) Any option granted under this Plan may be considered a
Incentive Stock Option to the extent that it:
(i) shall only be granted to individuals who are employed by
the Company or any of its Subsidiaries on the Grant Date;
(ii) shall not be granted to a 10% Owner unless the Option
Price is at least 110% of the Current Market Price of the Stock subject to
such option on the Grant Date and shall be exercisable for a period of not
more than five (5) years from the Grant Date;
(iii) except as provided in (ii) above, shall be
exercisable for a period of not more than 10 years from the Grant Date, and
shall be subject to earlier termination as provided herein or in the
applicable Award Agreement;
(iv) shall not have an aggregate fair market value (determined
for each Incentive Stock Option at its Grant Date) of Stock with respect to
which Incentive Stock Options are exercisable for the first time by such
Grantee during any calendar year (under the Plan and any other employee stock
option plan of the Grantee's employer or any parent or Subsidiary
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thereof determined in accordance with the provisions of Section 422 of the
Code), which exceeds $100,000; and
(v) shall require the Grantee to notify the Company of any
disposition of any Stock issued pursuant to the exercise of the Incentive Stock
Option under the circumstances described in Section 421(b) of the Code (relating
to certain disqualifying dispositions), within 10 days of such disposition.
Subject to the foregoing, the Committee shall have full authority and
discretion in fixing the Option Price and the terms and conditions of the
option Awards and shall be fully protected in doing so.
(d) All options shall be granted on or before August 19, 2001.
(e) Options shall not be assignable or transferable other than by
will or the laws of descent and distribution and may be exercised during the
Grantee's lifetime only by the Grantee; provided, however, that the Grantee
may, to the extent provided in the Plan in any manner specified by the
Committee, designate in writing a beneficiary to exercise his/her option
after the Grantee's death.
(f) Subject to Section 4(b)(viii) 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 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) United States dollars in cash or by check;
(ii) Stock held by the Grantee for at least 6 months prior to
exercise of the option, valued at its Current Market Price on the date of
written notice of optionee's election to exercise the option; or
(iii) with the approval of the Committee, shares of
Retirement Stock held by the Grantee for at least 6 months prior to exercise of
the option, valued at the Current Market Price of a share of Stock on the date
of exercise.
(g) Except as expressly provided in this Plan or the Award
Agreement, no option may be exercised prior to twelve months from its Grant
Date. Subject to the right of cumulation provided in the next sentence of
this Section 6(g), each option shall be exercisable to the extent provided
for in the Award Agreement as determined by the Committee in its discretion.
To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, in any subsequent period, prior to the
expiration of the term described in the Award Agreement, provided that no
option may be exercised more than ten years from its Grant Date.
Notwithstanding the preceding sentence, in the event that the optionee is a
10% Owner (determined on the Grant Date) of the Company, no option intended
to qualify as an Incentive Stock Option may be exercised more than five years
from the date it
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is granted. During the lifetime of the optionee, the option shall be
exercisable only by him and shall not be assignable or transferable by him
and no other person shall acquire any rights therein.
(h) In the event that an optionee shall cease to be employed by the
Company for any reason other than his death, Disability, or Retirement,
subject to the condition that no option shall be exercisable after the
expiration of ten years from its Grant Date (five years for an option which
is intended to qualify as an Incentive Stock Option that is granted to a 10%
Owner on the Grant Date), such optionee may, at the discretion of the
Committee, be granted the right to exercise the option at any time within
thirty (30) days after such termination of employment to the extent his right
to exercise such option had not expired pursuant to Section 6(g) of this
Plan, had vested and had not previously been exercised; provided, however,
that if the employment of the optionee is terminated by the Company or any of
its Subsidiaries for cause, fraud, breach of fiduciary duty, or other
dishonesty, the optionee's rights to exercise the option otherwise provided
herein shall expire on the last day of his employment. Whether authorized
leave of absence or absence for military or governmental service, or any
other reason, shall constitute termination of employment, for the purposes of
the Plan, shall be determined by the Committee, which determination shall be
final and conclusive.
(i) (i) In the event an optionee terminates his employment with
the Company or any Subsidiary because of a Disability, the Disabled optionee
or a lawfully appointed custodian thereof may exercise an option granted
pursuant to this Plan for a period of twelve months from the date of
termination of employment to the extent his right to exercise such option had
not expired pursuant to Section 6(g) of this Plan and had not previously been
exercised at the date of such termination.
(ii) If the employment of an optionee with the Company or any
Subsidiary is terminated by reason of the optionee's Retirement and the
optionee has been in the employ of either the Company or a Subsidiary
continuously from the date such option was granted until such Retirement
(except for leaves of absence approved in writing by the President of the
Company or the President of the Subsidiary for which the optionee works), the
entire unexercised portion of such option may be exercised by the optionee at
any time or times in whole or in part during the three-month period after
such retirement to the extent that such three-month period is included in the
remainder of such option's term.
(j) If the optionee shall die while in the employ of the Company or
any Subsidiary and shall not have fully exercised the option, the unexercised
portion of an option may be exercised at any time within one year after the
optionee's death by the executors or administrators of the optionee or by any
person or persons who shall have acquired the option directly from the
optionee by bequest or inheritance, subject to the condition that no option
shall be exercisable after the expiration of ten years from its Grant Date
(five years for an optionee under an Incentive Stock Option who is a 10%
Owner on the Grant Date).
No option shall be transferable by the optionee otherwise than by
will or the laws of descent and distribution.
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7. TERMS AND CONDITIONS OF RETIREMENT AWARDS
Grants of Stock and cash Awards intended to fund retirement benefits for
senior executives (the "Retirement Stock Awards" and "Retirement Cash Awards"
(each more fully described below), respectively, and collectively the
"Retirement Awards") pursuant to the Plan shall be authorized by the
Committee and shall be evidenced by agreements in such form as the Committee
shall from time to time approve (each a "Retirement Award Agreement"), which
agreements shall comply with and be subject to the following terms and
conditions:
(a) The Committee may grant Retirement Awards to any individual
eligible under Section 5 to receive such Retirement Awards.
(b) The Committee shall, in its discretion, determine the amount,
if any, that a Grantee shall pay for shares of Retirement 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 11.
(c) Each Retirement Award Agreement shall state the number of
shares of Stock and the amount of cash to which it pertains.
(d) The Retirement Award Agreement shall provide for an aggregate
Award of Retirement Stock which the Company will agree to issue and deliver
to the Grantee. Such Retirement Stock Award will be issued and delivered to
the Grantee in equal annual installments commencing with the Grant Date and
continuing over a period of years to be determined by the Committee and set
forth in the Retirement Award Agreement, subject to the requirement that the
Grantee be employed by the Company or any Subsidiary on the last day of the
fiscal year in which Retirement Stock is issued and delivered; provided
however, the Retirement Award Agreement may include a provision which excepts
from this requirement the Grantee's death, disability or other involuntary
termination of employment (excluding for cause) which occurs during the same
fiscal year. Unless otherwise provided in the Agreement, the Retirement Award
Agreement will have an initial term of five (5) years. In its discretion,
the Committee may provide that the term of a Retirement Award Agreement be
automatically extended for additional one-year periods until the Company
gives the Grantee notice of its intention not to extend the Agreement at the
end of its then-current term.
(e) The Grantee may not sell, transfer, pledge, hypothecate, or
otherwise transfer any shares of Retirement Stock he or she receives under
the Plan during any period in which he or she is employed by the Company or
any Subsidiary; provided, however, that following the earlier of (i)
termination of the employment of the Grantee with the Company or any
Subsidiary or (ii) the Grantee's attainment of normal retirement age (whether
or not Grantee actually retires), all such restrictions with respect to
Retirement Stock which has been issued and delivered to such Grantee prior to
such time shall terminate. Notwithstanding the above, no Grantee may sell,
transfer, pledge,
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hypothecate any shares of Retirement Stock he or she receives during the six
months immediately following the later of Grant Date or the date the Plan is
approved by the Company's stockholders unless the Grantee dies before the
expiration of the six month period. Each share of Retirement Stock subject
to such restrictions shall bear an appropriate legend specifying that such
share is non-transferable and subject to the restrictions set forth in the
Plan and the Retirement Award Agreement. When all applicable restrictions
have ended, the Company shall cause certificates for such shares to be issued
or reissued without such legend.
(f) In connection with any Retirement Stock Award, the Committee
may grant cash bonus awards ("Retirement Cash Awards") to Grantees solely in
order to, and in an amount it determines will, cover the federal and state
income tax liability, and any other tax liability, to the Grantee, created
by, or arising in connection with, the receipt of the Retirement Award by the
Grantee. The Retirement Award Agreement shall provide that Retirement Cash
Awards will be calculated annually at the time of the issuance of an annual
installment of Retirement Stock to which the Retirement Cash Award relates by
using the same maximum marginal federal and state income tax percentage which
was used in the prior year and the Current Market Price of the Retirement
Stock being issued in such year on the date of such issuance (unless the
Committee approves an adjustment to that formula).
(g) The Retirement Award shall be issued and delivered to the
Grantee in accordance with the terms set forth in the Retirement Award
Agreement; provided, however, that the Company shall have no obligation to
issue or deliver any Retirement Award under a Retirement Award Agreement to
any Grantee following (i) the termination of his employment with the Company
or its Subsidiaries or (ii) any breach of the Grantee's obligations under the
Retirement Award Agreement.
(h) Any other provision of the Plan or the Retirement Award
Agreement to the contrary notwithstanding, the Committee may at any time
remove or limit any restrictions, if it determines that conditions, including
but not limited to, changes in the economy, changes in competitive
conditions, changes in laws or government regulations, changes in generally
accepted accounting principles, changes in the Company's accounting policies,
acquisitions or dispositions, or the occurrence of other unusual, unforseen,
or extraordinary events, so warrant.
(i) Notwithstanding the fact that the Company delivers notice of
its intention not to extend the term of a Retirement Award Agreement at the
end of its then current term (if such Agreement provides for such a notice),
the Company shall remain obligated to issue and deliver all scheduled annual
Retirement Awards in accordance with the Retirement Award Agreement.
8. 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 in this Section 8. If the
Committee has not prohibited such Grantee from making such election, and the
Grantee, in connection with the exercise of any option or the grant of
Retirement Stock, makes 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
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transfer the amounts specified in Section 83(b) of the Code), such Grantee
shall notify the Company of such election within 10 days of filing notice of
the election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of
Section 83(b) of the Code.
9. MANDATORY WITHHOLDING OF TAXES
(a) Whenever under the Plan, cash or shares of Stock are to be
delivered upon exercise or payment of an Award 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 of the Award (i) that the Grantee remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) the withholding of such sums from compensation otherwise due to
the Grantee or from any shares of Stock due to the Grantee under the Plan, or
(iii) any combination of the foregoing.
(b) If any disqualifying disposition described in Section 6(c)(v)
is made with respect to shares of Stock acquired by exercising an Incentive
Stock Option granted pursuant to the Plan or any election described in
Section 8 is made, then the person making such disqualifying disposition or
election shall remit to the Company an amount sufficient to satisfy all
federal, state, and local withholding taxes thereby incurred; provided that,
in lieu of or in addition to the foregoing, the Company shall have the right
to withhold such sums from compensation otherwise due to the Grantee or from
any shares of Stock due to the Grantee under the Plan.
10. LOANS
With the approval of the Committee, the Grantee may borrow from the
Company all or any portion of the funds needed to pay the Option Price or to
pay for Retirement Stock on such terms and conditions as the Committee deems
appropriate, provided that (i) the interest rate for any such loan by the
Company shall not be less than the "applicable federal rate" (as defined by
Code Section 1274(d)(1)(A)) in effect on the date of such loan or any other
rate as necessary to avoid the imputation of interest under the Code or other
applicable law, (ii) proceeds of the loan are used solely to pay either the
exercise price of an option or to pay for Retirement Stock granted pursuant
to this Plan, and (iii) the Grantee executes a promissory note and such other
documents as the Committee deems appropriate to evidence the Grantee's
indebtedness to the Company, and pledges the Stock received in exchange for
such borrowed funds as Collateral for such loan.
11. SECURITIES LAW MATTERS
(a) If the Committee deems it necessary to comply with the
Securities Act of 1933, 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
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(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.
(c) With respect to Section 16 Grantees, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the 1934 Act. To the extent that any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee.
12. FUNDING; RESERVES
Cash 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, cash benefits under the Plan.
Neither the 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 any Subsidiary and a Grantee or any other person. To the extent that any
person acquires a right to receive payments from the Company or any
Subsidiary pursuant to an Award, such right shall be no greater than the
right of an unsecured general creditor of the Company or any Subsidiary. The
Board shall cause the Company to reserve shares of Stock from its authorized
but unissued shares for the purpose of making available shares of Stock to
fund the Awards.
13. NO EMPLOYMENT RIGHTS
Neither the establishment of the Plan, nor the granting of any Award nor
the execution of an Award Agreement 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 an
Award Agreement, 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 the Plan or in any Award
Agreement.
14. RIGHTS AS A STOCKHOLDER
A Grantee shall not, by reason of any Award have any right as a
stockholder of the Company with respect to the shares of Stock which may be
deliverable in the future upon exercise of such Award, or otherwise as
provided in an Award Agreement, until Stock has been actually issued and
delivered to the Grantee. Shares of Retirement Stock issued and delivered to
a Grantee in accordance with the Retirement Award Agreement shall confer on
the Grantee all rights of a stockholder of the Company, except as otherwise
provided in the Plan or the specific Retirement Award Agreement.
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15. NATURE OF PAYMENTS
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and
shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company
or any Subsidiary, on the one hand, and the Grantee, on the other hand,
except as such plan or agreement shall otherwise expressly provide.
16. NON-UNIFORM DETERMINATIONS
Determinations made by the Committee or the Board under the Plan do not
need to 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.
17. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
(a) Subject to any required action by the Stockholders, the
Committee shall make such adjustment, as it shall deem equitable, to any or
all of:
(i) the aggregate numbers of shares of Stock available under
Sections 3(a) and 3(b);
(ii) the number of shares of Stock subject to an option or
shares of Retirement Stock covered by an Award;
(iii) the Option Price;
(iv) the Retirement Cash Award;
(v) any other terms or provisions of any outstanding grants of
options or Retirement Awards:
to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of property
or shares, separation, asset 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, if the Company shall be
the surviving corporation in any merger or consolidation, each outstanding
option or Award Agreement shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to the option or
Award Agreement would have been entitled; and provided further, upon a
dissolution or liquidation of the Company, or a merger or consolidation in
which the Company is not the
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surviving corporation, or a change in control of the Company, as defined in
subsection (b) below, each optionee shall have the right to exercise his
option in whole or in part notwithstanding the provisions of Section 6(g)
above: (i) immediately prior to such dissolution or liquidation or merger or
consolidation in which the Company is not the surviving corporation, and
thereafter; or (ii) after such change of control. However, with respect to
Awards of Incentive Stock Options no such adjustment shall be authorized to
the extent that the authority to make such adjustments would cause the Plan
to violate Section 422(b)(1) of the Code or any successor provision thereto
and the number of shares subject to any Award denominated in shares of Stock
shall always be a whole number.
(b) "Change of control" of the Company shall mean a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934 ("Exchange Act"); provided that, without limitation,
such a change in control shall be deemed to have occurred if: (i) any person
(as that term is defined in Section 13(d) and Section 14(d) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20 percent, or more of the combined
voting power of the Company's then outstanding securities; or (ii) during any
period of two consecutive years, individuals who at the beginning of such
period constitute all members of the Board who are not employed by the
Company (the "Outside Directors") shall cease for any reason to constitute at
least a majority of the Outside Directors, unless the election of each
Outside Director, who was not an Outside Director at the beginning of such
period, was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period; or, (iii)
there shall be consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant
to which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or, (iv) the stockholders
of the Company approve a plan or proposal for the liquidation or dissolution
of the Company.
(c) In the event of a change in the Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall
be deemed to be the Stock within the meaning of the Plan.
(d) Except as hereinbefore expressly provided in this Section 18,
the Grantee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any change of control, dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another
corporation, and any issue of the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect,
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and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Stock subject to Awards.
The grant of an Award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
18. AMENDMENT OF THE PLAN
Upon recommendation of the Committee, the Board of Directors of the
Company may insofar as permitted by law, from time to time, with respect to
any shares at the time not subject to options or Award Agreements, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever 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; decrease
the price at which Options may be granted; remove the administration of the
Plan from the Committee other than as expressly provided by the Plan; extend
the period during which Awards may be granted; or render any member of the
Committee eligible to receive an Awards under the Plan while serving thereon.
Furthermore, the Plan may not without the approval of the stockholders be
amended in any manner that will cause Options issued under it to fail to
qualify as Incentive Stock Options.
Except as provided in this Section 19, the Board shall, from time to
time, revise, modify, or amend the Plan, in part or in total, without
approval of the stockholders, as may be necessary to satisfy the requirements
of the Code and any amendments or revisions thereof, such that certain stock
options which are granted under the Plan may qualify as Incentive Stock
Options, and to satisfy all other applicable laws and regulations.
19. TERMINATION OF THE PLAN
The Plan shall terminate on the tenth (10th) anniversary of the Effective
Date or at such earlier time as the Board may determine. Any termination,
whether in whole or in part, shall not affect any Award then outstanding
under the Plan.
20. OTHER COMPENSATION PLANS
Nothing contained in the 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.
21. NO ILLEGAL TRANSACTIONS
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable
thereto; and notwithstanding any provision of the Plan or any Award, Grantees
shall not be entitled to exercise Awards or receive the benefits thereof and
the Company shall not be obligated to deliver any Stock or pay any benefits
to a
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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.
22. 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 the Plan.
23. TAX LITIGATION
The Company shall have the right, but not the obligation, to contest, at
its expense, any tax ruling or decision, administrative or judicial, on any
issue that is related to the 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.
24. SEVERABILITY
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate any portion of the Plan not declared to be unlawful
or invalid. Any 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.
25. INDEMNIFICATION
Each person who is or at any time serves as a member of the Board or the
Committee shall be indemnified and held harmless by the Company against and
from: (i) any loss, cost, liability or expense, including attorneys' fees
actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, 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 the Plan; and (ii) any and all amounts paid by
such person in satisfaction of judgment in any such action, suit or
proceeding relating to the Plan. Each person covered by this indemnification
provision 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 the 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.
26. 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
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accountants of, or counsel for, the 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 failure 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 done in good faith.
27. EXPENSES
The Company shall bear all expenses of administering the Plan.
28. TITLES AND HEADINGS
The titles and headings of the sections in the 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.
29. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock pursuant to any
Awards will be used for general corporate purposes.
Date Plan was adopted by Board of Directors: June 30, 1993
Date Plan was approved by Stockholders: November 16, 1993
Date Plan was amended by Board of Directors: June 25, 1997
Date Plan was amended by Board of Directors: August 28, 1997
Date amended Plan was approved by Stockholders: 1997
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