Exhibit 10.3
------------
THE SHAW GROUP INC.
1993 EMPLOYEE STOCK OPTION PLAN
(as amended and restated on July 21, 1997)
1. Purpose. This 1993 Employee Stock Option Plan (the Plan) of The
Shaw Group Inc. (the Company) for certain employees, including officers and
directors, is intended to advance the best interests of the Company by providing
such personnel, who have substantial responsibility for its management and
growth, with additional incentive and by increasing their proprietary interest
in the success of the Company, thereby encouraging them to remain in its employ.
2. Administration. The Plan shall be administered by a committee (the
Committee) consisting of two or more members of the Board of Directors of the
Company, all of whom shall be (a) Non-Employee Director as defined in Rule 16b-3
of the Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) or any similar or successor rule, and (b)
outside directors as defined in Section 162(m) of the Internal Revenue Code of
1986, as amended (the Code). For the purposes of the Plan, a majority of the
members of the Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of those members present at any meeting
shall decide any question brought before that meeting. In addition, the
Committee may take any action otherwise proper under the Plan by the affirmative
vote, taken without a meeting, of a majority of its members. The Committee shall
have the authority to take any and all actions as it deems necessary or
appropriate, in its sole discretion, to administer the Plan or to carry out the
Committee activities contemplated by the Plan. All questions of interpretation
and application of the Plan, or as to Awards (as defined in Paragraph 5 below)
made hereunder, shall be subject to the determination, which shall be final and
binding, of a majority of the whole Committee. When appropriate, the Plan shall
be administered in order to qualify certain of the Awards made hereunder as
incentive stock options described in Section 422 of the Code.
3. Eligibility. The individuals who shall be eligible to participate
in the Plan shall be such key employees, including officers and directors if
they are employees, of the Company, or of any parent or subsidiary corporation,
as the Committee shall determine from time to time. Except as otherwise
provided, for all purposes of the Plan, the term parent corporation shall mean
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, on the date of grant of the Option in question, each
of the corporations other than the Company owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain; and the term subsidiary corporation
shall mean any corporation in an unbroken chain of corporations, beginning with
the Company if, on the date of grant of the Option in question, each of the
corporations, other than the last corporation in the chain, owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
4. Shares Subject to the Plan. The stock subject to the Awards and
other provisions of the Plan shall be shares of the Company's common sock, no
par value per share (the Common Stock). The total number of shares of the Common
Stock with respect to which Awards may be granted shall not exceed in the
aggregate 850,000 shares; provided, that the class and aggregate number of
shares which may be subject to Awards granted hereunder shall be subject to
adjustment in accordance with the provisions of Paragraph 17 hereof. Such shares
may be treasury shares or authorized but unissued shares. The maximum number of
shares subject to Awards that can be made to any executive or employee under the
Plan is 405,000 shares.
1
In the event that any outstanding Award for any reason shall expire or
terminate by reason of the death or severance of employment of the participant,
the surrender of any such Award or any other cause, the shares of Common Stock
allocable to such Award may again be subject to an Award under the Plan.
5. Types of Awards Under the Plan. The Committee may make the
following types of awards (an "Award") from time to time to such eligible
employees of the Company as it shall from time to time determine:
(a) Incentive Stock Options. The Committee may grant to an eligible
employee an option (an "Option"), or Options, to buy a stated number
of shares of Common Stock under the terms and conditions of the Plan,
so that the Option will be an incentive stock option within the
meaning of Section 422 of the Code (an Incentive Stock Option).
(b) Non-statutory Stock Options. The Committee may grant to an eligible
employee an Option, or Options, to buy a stated number of shares of
Common Stock under the terms and conditions of the Plan, which do not
constitute an Incentive Stock Option within the meaning of Section 422
of the Code (a Non-statutory Stock Option).
(c) Restricted Stock. The Committee may award to an eligible employee
restricted shares of Common Stock (the "Restricted Stock") as set
forth in Paragraph 13 of the Plan.
Each Award shall be approved by the Committee, and with respect to
Options, the Committee shall specify whether each Option constitutes an
Incentive Stock Option or Non-statutory Stock Option.
6. Option Price. The price at which the shares may be purchased
pursuant to an Option shall be no less than the fair market value of the shares
of Common Stock on the date such Option is granted, and the Committee, in its
discretion, may provide that the price at which shares may be purchased shall be
more than such fair market value. For purposes of the Plan, the fair market
value of a share of Common Stock as of any particular date shall mean the
closing sale price of a share of Common Stock on that date as reported by the
principal national securities exchange on which the Common Stock is then listed
if the Common Stock is then listed on a national securities exchange, or the
average of the bid and asked price of a share of Common Stock on that date as
reported in the NASDAQ listing if the Common Stock is not then listed on a
national securities exchange, provided that if no such closing price or quotes
are so reported on that date or if, in the discretion of the Committee, any
means of determining the fair market value of a share of Common Stock at such
date shall be necessary or advisable, the Committee may provide for another
means for determining such fair market value. The option price as determined
pursuant to this Paragraph 6 shall be referred to herein as the Option Price.
7. Duration of Options. No Option which is an Incentive Stock Option
shall be exercisable after the expiration of ten (10) years from the date such
Option is granted; and the Committee, in its discretion, may provide that such
Option shall be exercisable throughout such ten-year period or during any lesser
period of time commencing on or after the date of grant of such Option and
ending upon or before the expiration of such ten-year period. No Option which is
a Non-statutory Stock Option shall be exercisable after the expiration of ten
(10) years from the date such Option is granted; and the Committee, in its
discretion, may provide that such Option shall be exercisable throughout such
ten-year period or during any lesser period of time commencing on or after the
date of grant of such Option and ending upon or before the expiration of such
ten-year period.
8. Amount Exercisable. The agreement with respect to each Option shall
set forth such terms and conditions, including vesting, with respect to the
exercise of such Option that are not inconsistent with the Plan and as may be
approved by the Committee. The Committee, in its discretion, may change the
terms of exercise so that any Option may be exercised so long as it is valid and
outstanding from time to time in part
2
or as a whole in such manner and subject to such conditions as it may set. In
addition, the Committee, in its discretion, may accelerate the time in which any
outstanding Option may be exercised. But in no event shall any Option be
exercisable after the tenth anniversary of the date of the grant.
9. Exercise of Options. A participant may exercise such participant's
Option by delivering to the Company a written notice stating (i) that such
participant wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of Common Stock with respect to which such
Option is to be exercised, (iii) the address to which the certificate
representing such shares of Common Stock should be mailed, and (iv) the social
security number of such participant. In order to be effective, such written
notice shall be accompanied by (a) payment of the Option Price of such shares of
Common Stock and (b) payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option. Each
such payment shall be made by check drawn on a national banking association and
payable to the order of the Company in United States dollars.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the participant, (ii) payment, in the form required by
the foregoing provisions of this Paragraph 9, of the Option Price of the shares
of Common Stock with respect to which such Option is to be exercised, and (iii)
payment, in the form required by the foregoing provisions of this Paragraph 9,
of an amount of money necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, the Company shall deliver to such
participant a certificate representing the number of shares of Common Stock with
respect to which such Option has been so exercised, such certificate to be
registered in the name of such participant, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such participant at the address specified for such purpose
in such written notice from the participant to the Company.
10. Special Provisions for Incentive Stock Options. Notwithstanding
any other provisions of the Plan to the contrary, the aggregate fair market
value (determined as of the date the Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any participant in any calendar year (under this Plan and any other incentive
stock option plan(s) of the Company and any parent or subsidiary corporation(s)
thereof) shall not exceed $100,000. In making this determination, Options shall
be taken into account in the order in which they were granted.
No participant who owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the corporation
employing the participant or of its parent or subsidiary corporation shall be
eligible to receive an Option which is an Incentive Stock Option unless at the
time that such Option is granted the Option Price is at least one hundred ten
percent (110%) of the fair market value of the Common Stock at the time such
Option is granted and such Option by its own terms is not exercisable after the
expiration of five years from the date such Option is granted.
For the purposes of the preceding paragraph, an employee will be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust will be considered as being owned
proportionately by or for its shareholders, partners, or beneficiaries.
11. Transferability of Options. Options shall not be transferable by
the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during the participant's lifetime, only
by the participant. Notwithstanding the foregoing, the Committee shall have the
authority, in its absolute discretion, to add (originally or by way of
amendment) as a term of any Non-statutory Stock Option awarded hereunder, that
such Non-statutory Stock Option may be transferred, no less than six (6) months
after it is
3
granted, to members of a participant's immediate family, including trusts for
the benefit of such family members and partnerships in which such family members
are the only partners as well as to charitable organizations that are approved
in advance by the Committee. A transfer pursuant to this Paragraph 11 may only
be effected by the Company at the written request of a participant and shall
become effective only when recorded in the Company's record of outstanding
Non-statutory Stock Options. In the event a Non-statutory Stock Option is
transferred pursuant to this Paragraph, such may not be subsequently transferred
by the transferee except by will or the laws of descent and distribution. In the
event of a transfer pursuant to this Paragraph 11, such Non-statutory Stock
Option shall continue to be governed by and subject to the terms and conditions
of the Plan and the relevant grant.
12. Exercise of Options; Termination of Employment. Except as may be
otherwise expressly provided herein, each Option, to the extent it shall not
previously have been exercised, shall terminate on the earlier of the date of
the expiration of the Option or one day less than three months after the date of
the severance, upon severance of the employment relationship between the Company
and the participant, whether with or without cause, for any reason other than
the death, disability, or retirement of the participant, during which period the
participant shall be entitled to exercise the Option in respect of the number of
shares that the participant would have been entitled to purchase had the
participant exercised the Option on the date of such severance of employment.
Whether authorized leave of absence, or absence on military or government
service, shall continue severance of the employment relationship between the
Company and the participant shall be determined by the Committee at the time
thereof.
In the event of severance because of the disability of the holder of
any Option while in the employ of the Company and before the date of expiration
of such Option, such Option shall terminate on the earlier of such date of
expiration or one year following the date of such severance because of
disability, during which period the participant shall be entitled to exercise
the Option in respect of the number of shares that the participant would have
been entitled to purchase had the participant exercised the Option on the date
of such severance because of disability.
In the event of the death of the holder of any Option while in the
employ of the Company and before the date of expiration of such Option, such
Option shall terminate on the earlier of such date of expiration or one year
following the date of death. After the death of the participant, his executors,
administrators, or any person or persons to whom his Option may be transferred
by will or by the laws of descent and distribution, shall have the right, at any
time prior to the expiration of an Option, to exercise the Option, in respect of
the number of shares that the participant would have been entitled to purchase
if he had exercised the Option on the date of his death while in employment.
In addition, in the event of the retirement of the holder of any
Non-statutory Stock Option, in accordance with the provisions of the Company's
then existing policies regarding retirement as applied by the Committee, before
the date of expiration of such Option, such Option shall terminate on the
earlier of such date of expiration or one year following the date of such
retirement and, if such participant should die within the one-year period, any
rights he may have to exercise the Option shall be exercisable by his executor
or administrator or the person or persons to whom the Option shall have been
transferred by his will or by the laws of descent or distribution, as
appropriate, for the remainder of the one-year period.
For purposes of Incentive Stock Options issued under this Plan, an
employment relationship between the Company and the participant shall be deemed
to exist during any period in which the participant is employed by the Company,
by any parent or subsidiary corporation, by a corporation issuing or assuming an
option in a transaction to which Section 424(a) of the Code applies, or by a
parent or subsidiary corporation of such corporation issuing or assuming an
option (and for this purpose, the phrase corporation issuing or assuming an
option shall be substituted for the word Company in the definitions of parent
and subsidiary
4
corporations specified in Paragraph 3 of this Plan, and the parent-subsidiary
relationship shall be determined at the time of the corporation action described
in Section 424(a) of the Code). For purposes of Non-statutory Stock Options
issued under this Plan, an employment relationship between the Company and the
participant will exist under the circumstances described above for Incentive
Stock Options and will also exist if the participant is transferred to an
affiliate corporation approved by the Committee.
13. Restricted Stock.
(a) Restricted Stock Awards. The Committee may, in its discretion,
grant one or more Awards of Restricted Stock to any participant. Each Award of
Restricted Stock shall be evidenced by a Restricted Stock agreement which shall
specify the number of shares of Restricted Stock to be issued to the
participant, the date of such issuance, the price (the "Purchase Price"), if
any, to be paid in cash for such shares by the participant, the time period
during which the Restricted Stock must be held before it becomes fully vested
(the "Restriction Period"), and any other conditions imposed on such shares as
the Committee, in its discretion, shall determine. Notwithstanding the
foregoing, the Committee shall impose upon each Award of Restricted Stock made
to a participant who is an executive officer of the Company a Restriction Period
expiring no earlier than six months after the date of grant of the Restricted
Stock. Shares of Restricted Stock shall be evidenced by a stock certificate
registered only in the name of the participant, which stock certificate shall be
held by the Company until the restrictions on such shares shall have lapsed and
those shares shall have thereby vested in full.
(b) Maximum Award of Restricted Stock. The maximum number of shares of
Common Stock may be allotted by the Committee pursuant to Restricted Stock
awarded to any individual participant shall not exceed, in any calendar year,
50,000 shares (subject to adjustment pursuant to Paragraph 17 of the Plan).
(c) Restrictions and Forfeitures.
(i) Shares included in Restricted Stock Awards may not be
sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such share have fully vested.
(ii) Participants receiving Restricted Stock shall be
entitled to dividend and voting rights for the shares issued even though they
are not vested, provided that such rights shall terminate immediately as to any
forfeited Restricted Stock.
(iii) In the event that the participant shall have paid any
cash for the Restricted Stock, the agreement shall specify whether and to what
extent such cash shall be returned upon a forfeiture (with or without an
earnings factor).
(iv) The Restricted Stock shall be evidenced by a stock
certificate registered only in the name of the participant, which stock
certificate shall be held by the Company until the Restricted Stock has fully
vested.
(v) The occurrence of any of the following events shall cause
the immediate vesting of the Restricted Stock:
A. the death of the participant;
B. the retirement of the participant in accordance with the then existing
policies of the Company as applied by the Committee;
5
C. the disability of the participant.
Notwithstanding the foregoing, to the extent a condition(s) other than a
Restriction Period has been imposed by the Committee upon the Restricted Stock,
the occurrence of the foregoing shall not cause immediate vesting unless and
until such condition(s) has been met.
(vi) A Restricted Stock Award shall be entirely forfeited by
the participant in the event that prior to vesting, the participant breaches any
terms or conditions of the Plan, the participant resigns from or is terminated
(with or without cause) by the Company, or any condition(s) imposed upon vesting
are not met.
(d) Performance or Other Conditions. The Committee may, in its
absolute discretion, make the vesting of any Restricted Stock Award subject to
the fulfillment of a performance or other condition. The Committee shall have
the absolute discretion in determining the terms of any such condition.
(e) Legend on Certificates. Each certificate evidencing a Restricted
Stock Award under the Plan shall be registered in the name of the participant
and deposited by the participant, together with a stock power endorsed in blank,
with the Company and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in The Shaw Group Inc. 1993 Employee Stock
Option Plan and a Restricted Stock Agreement entered into between the
registered owner and The Shaw Group Inc. Copies of such Plan and
Agreement are on file in the offices of the Secretary of The Shaw
Group Inc., 11100 Mead Road, 2nd Floor, Baton Rouge, Louisiana 70816."
(f) Section 83(b) Elections. Within 30 days after the issuance of
shares of Restricted Stock to a participant under the Plan, the participant
shall decide whether or not to file an election pursuant to Section 83(b) of the
Code and Treasury Regulation Section 1.83-2 (and state law counterparts) with
respect to such Restricted Stock. If the participant does file such an election,
the participant shall promptly furnish the Company with a copy of such election.
(g) Agreements to Award Restricted Stock. In amplification of the
Committee's authority under the Plan, but in no way limiting such authority, the
Committee, pursuant to this Paragraph 13, shall have the authority to enter into
agreements with participants to make, in the future, and subject to whatever
terms and conditions the Committee deems appropriate, an award of shares of
Restricted Stock. If an Award of Restricted Stock is made pursuant to an
agreement to make same, the Restricted Stock Award shall at the time granted be
subject to the terms and conditions of the Plan.
14. Requirements of Law. The Company shall not be required to sell or
issue any shares under any Award if the issuance of such shares shall constitute
a violation by the participant or the Company of any provisions of any law or
regulation of any governmental authority. Each Award granted under the Plan
shall be subject to the requirements that, if at any time the Board of Directors
of the Company or the Committee shall determine that the listing, registration,
or qualification of the shares subject thereto upon any securities exchange or
under any state or federal law of the United States or of any other country or
governmental subdivision thereof, or the consent or approval of any governmental
regulatory body, or investment or other representations, are necessary or
desirable in connection with the issue or purchase of shares subject thereto, no
Option may be exercised in whole or in part nor may Restricted Stock be issued
unless such listing,
6
registration, qualification, consent, approval, or representation shall have
been effected or obtained free of any conditions not acceptable to the Board of
Directors. If required at any time by the Board of Directors or the Committee,
an Option may not be exercised and Restricted Stock may not be issued until the
participant has delivered an investment letter to the Company. In addition,
specifically in connection with the Securities Act of 1933, as amended, upon
exercise of any Option, the Company shall not be required to issue the
underlying shares unless the Committee has received evidence satisfactory to it
to the effect that the holder of such Option will not transfer such shares
except pursuant to registration statement in effect under such Act or unless an
opinion of counsel satisfactory to the Committee has been received by the
Company to the effect that such registration is not required. Any determination
in this connection by the Committee shall be final, binding, and conclusive. In
the event the shares issuable on exercise of an Option are not registered under
the Securities Act of 1933, as amended, the Company may imprint on the
certificate for such shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933, as amended:
The shares of stock represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under the securities laws of
any state and may not be sold or transferred except upon such registration or
upon receipt by the Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the Corporation, that
registration is not required for such sale or transfer.
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933, as amended, and, in the
event any shares are so registered, the Company may remove any legend on
certificates representing such shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an Option,
the issuance of shares pursuant thereto or the issuance of shares of Restricted
Stock to comply with any law or regulation of any governmental authority.
15. No Rights of Option Holder as Shareholder. No participant shall
have rights as a shareholder with respect to shares covered by his Option until
the date of issuance of a stock certificate for such shares; and, except as
otherwise provided in Paragraph 17 hereof, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
16. Employment Obligation. The granting of any Award shall not impose
upon the Company any obligation to employ or continue to employ any participant;
and the right of the Company to terminate the employment of any officer or other
employee at will, with or without cause, shall not be diminished or affected by
reason of the fact that an Award has been granted to him.
17. Changes in the Company's Capital Structure. The existence of
outstanding Options or unvested shares of Restricted Stock shall not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares
or other capital adjustment of, or the payment of a dividend in capital stock or
other equity securities of the Company on, its Common Stock, or other increase
or reduction of the number of shares of the Common Stock without receiving
consideration therefor in money, services, or property, or the reclassification
of its Common Stock, in
7
whole or in part, into other equity securities of the Company, then (a) the
number, class, and per-share price of shares of Common Stock subject to
outstanding Options or unvested shares of Restricted Stock hereunder shall be
appropriately adjusted (or, in the case of the issuance of other equity
securities as a dividend on, or in a reclassification of, the Common Stock, the
Awards shall extend to such other securities) in such a manner as to entitle an
participant to receive (except to vesting and the conditions of the Award), for
the same aggregate cash consideration, the same total number and class or
classes of shares (or, in the case of a dividend of or reclassification into,
other equity securities, such other securities) he would have held after such
adjustment if he had exercised his Option in full (or if the shares of
Restricted Stock had fully vested) immediately prior to the event requiring the
adjustment, or, if applicable, the record date for determining shareholders to
be affected by such adjustment; and (b) the number and class of shares then
reserved for issuance under the Plan (or, in the case of a dividend of, or
reclassification into, other equity securities, such other securities) shall be
adjusted by classes of shares of stock (or, in the case of a dividend of, or
reclassification into, other equity securities, such other securities) that
would have been received by the owner of an equal number of outstanding shares
of Common Stock as a result of the event requiring the adjustment. Comparable
rights shall accrue to each participant in the event of successive subdivisions,
consolidations, capital adjustments, dividends, or reclassifications of the
character described above.
If the Company shall distribute to all holders of its shares of Common
Stock (including any such distribution made to non-dissenting shareholders in
connection with a consolidation or merger in which the Company is the surviving
corporation and in which holders of shares of Common Stock continue to hold
shares of Common Stock after such merger or consolidation) evidences of
indebtedness or cash or other assets (other than cash dividends payable out of
consolidated retained earnings not in excess of, in any one-year period, the
greater of (i) an amount per share of Common Stock equal to ten percent (10%) of
the then Current Market Price and (ii) two times the aggregate amount of
dividends per share paid during the preceding calendar year and dividends or
distributions payable in shares of Common Stock or other equity securities of
the Company described in the immediately preceding paragraph, but including
stock or other securities of any corporation or other entity owned by the
Company), then in each case the Option Price or the Purchase Price, as
applicable, shall be adjusted by reducing the Option Price or the Purchase
Price, as applicable, in effect immediately prior to the record date for the
determination of shareholders entitled to receive such distribution by the fair
market value, as determined in good faith by the Board of Directors of the
Company (whose determination shall be described in a statement filed in the
Company's corporate records and be available for inspection by any participant)
of the portion of the evidence of indebtedness or cash or other assets so to be
distributed applicable to one share of Common Stock; provided that in no event
shall the Option Price or the Purchase Price, as applicable, be less than the
par value of a share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective on the date of the
distribution retroactive to the record date for the determination of the
shareholders entitled to receive such distribution. Comparable adjustments shall
be made in the event of successive distributions of the character described
above.
After the merger of one or more corporations into the Company, after
any consolidation of the Company and any one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which the
Company shall be the surviving corporation, each participant, at no additional
cost, shall be entitled to receive in lieu of the number of shares as to which
the Award shall then be applicable, the number and class of shares of stock or
other equity securities to which the participant would have been entitled
pursuant to the terms of the agreement of merger or consolidation if at the time
of such merger or consolidation such participant had been a holder of a number
of shares of Common Stock equal to the number of shares as to which the Award
shall then be applicable and, if as a result of such merger, consolidation, or
other transaction, the holders of Common Stock are not entitled to receive any
shares of Common Stock pursuant to the terms thereof, each participant, at no
additional cost, shall
8
be entitled to receive, upon exercise of his option, such other assets and
property, including cash, to which he would have been entitled if at the time of
such merger, consolidation, or other transaction he had been the holder of the
number of shares of Common Stock equal to the number of shares as to which the
Award shall then be applicable. Comparable rights shall accrue to each
participant in the event of successive mergers or consolidations of the
character described above.
After a merger of the Company into one or more corporations, after any
consolidation of the Company and any one or more corporation, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each participant shall, at no
additional cost, be entitled, at the option of the surviving corporation, (i) to
have his then existing Award assumed or to have a new award substituted for the
existing Award by the surviving corporation to the transaction which is then
employing him, or a parent or subsidiary of such corporation, on a basis where
the excess of the aggregate fair market value of the shares subject to the award
immediately after the substitution or assumption over the aggregate option or
purchase price of such award is equal to the excess of the aggregate fair market
value of all shares subject to the Award immediately before such substitution or
assumption over the aggregate Option Price or Purchase Price, as applicable, of
such shares, provided that the shares subject to the new award must be traded on
the New York or American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotation System, or (ii) to receive in lieu of the
number of shares as to which the Award shall then be applicable, the securities,
property, and other assets, including cash, to which the participant would have
been entitled pursuant to the terms of the agreement of merger or consolidation
or the agreement giving rise to the other corporate transaction if at the time
of such merger, consolidation, or other transaction such participant had been
the holder of the number of shares of Common Stock equal to the number of shares
as to which the Award shall then be applicable.
For purposes of the Plan, Current Market Price per share of Common
Stock shall mean the closing price of a share of Common Stock as reported by the
principal national securities exchange on which the Common Stock is then listed
if the Common Stock is then listed on a national securities exchange, or the
average bid and asked prices of a share of Common Stock as reported in the
NASDAQ listing if the Common Stock is not then listed on a national securities
exchange, on the trading day immediately preceding the first trading day on
which, as a result of the establishment of a record date or otherwise, the
trading price reflects that an acquiror of Common Stock in the public market
will not participate in or receive the payment of any applicable dividend or
distribution.
Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to outstanding Awards.
18. Substitute Options. Options may be granted under the Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of the Company, or whose employer
is about to become a parent or subsidiary corporation of the Company,
conditioned in the case of an incentive stock option upon the employee becoming
an employee of the Company or a parent or subsidiary corporation of the Company,
as a result of the merger or consolidation of the Company with another
corporation, or the acquisition by the Company of the issued and outstanding
stock of another corporation as the result of which it becomes a subsidiary of
the Company. The terms and conditions of the substitute Options so granted may
vary from the terms and conditions set forth in the Plan to such extent as the
Board of Directors of the Company at the time of grant
9
may deem appropriate to conform, in whole or in part, to the provisions of the
stock options in substitution for which they are granted, but with respect to
stock options which are incentive stock options, no such variation shall be such
as to affect the status of any such substitute option as an incentive stock
option under Section 422 of the Code.
19. Amendment or Termination of Plan. The Board of Directors may
modify, revise, or terminate the Plan at any time and from time to time;
provided, however, that without the further approval of the holders of shares
representing a majority of the total voting power of the Company at a meeting of
shareholders or by written consent, or if the provisions of the corporate
charter, by-laws, or applicable state law prescribes a greater degree of
shareholder approval for this action, without the degree of shareholder approval
thus required, the Board of Directors may not (a) change the aggregate number of
shares which may be issued pursuant to Awards under the provisions of the Plan,
(b) extend the term during which an Option may be exercised or the termination
date of the Plan, or (c) materially change the class of employees eligible to
receive Awards under the Plan; unless, in each such case, the Board of Directors
of the Company shall obtain an opinion of legal counsel to the effect that
shareholder approval of the amendment is not required (i) by law, (ii) by the
applicable rules and regulations of, or any agreement with, any national
securities exchange on which the Common Stock is then listed, or if the Common
Stock is not so listed, the rules and regulations, or any agreement with, the
National Association of Securities Dealers, Inc., and (iii) in order to make
available to the participant with respect to any award granted under the Plan,
the benefits of rule 16b-3 of the Rules and Regulations under the Exchange Act,
or any similar or successor rule. In addition, the Board shall have the power to
make such changes in the Plan and in the regulations and administrative
provisions hereunder or in any outstanding Option as in the opinion of counsel
for the Company may be necessary or appropriate from time to time to enable any
Option granted pursuant to the Plan to qualify as incentive stock options under
Section 422 of the Code, and the regulations which may be issued thereunder as
in existence from time to time.
20. Written Agreement. Each Award granted hereunder shall be embodied
in a written agreement, which shall be subject to the terms and conditions
prescribed above and shall be signed by the participant and by the appropriate
officer of the Company for and in the name and on behalf of the Company. Such an
agreement shall contain such other provisions as the Committee, in its
discretion, shall deem advisable.
21. Indemnification of Committee. The Company shall, to the fullest
extent provided by law, indemnify each present and future member of the
Committee against, and each member of the Committee shall be entitled without
further act on his part to indemnity from the Company for all expenses
(including, without limitation, reasonable attorneys' fees, the amount of
judgments, and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Committee, whether or not he continues to be such
member of the Committee at the time of incurring such expenses. The foregoing
right of indemnification shall inure to the benefit of the heirs, executors, or
administrators of each such member of the Committee and shall be in addition to
all other rights to which such member of the Committee may be entitled as a
matter of law, contract, or otherwise. Nothing in this Paragraph 21, shall be
construed to limit or otherwise affect any right to indemnification or payment
of expense, or any provisions limiting the liability of any officer or director
of the Company or any member of the Committee, provided by law, the Articles of
Incorporation of the Company, or otherwise.
22. Effective Date of Plan. The Plan shall become effective and shall
be deemed to have been adopted on December 1, 1993.