1 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
1996 LONG TERM INCENTIVE PLAN
1. Purpose of Plan
The AT&T Capital Corporation 1996 Long Term Incentive Plan (the "Plan") is
designed:
(a) to promote the long term financial interests and growth of AT&T Capital
Corporation (the "Corporation") and its subsidiaries (the "Subsidiaries") by
attracting and retaining employees with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate selected employees by means of growth-related incentives to
achieve long range goals; and
(c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. Definitions
As used in the Plan, the following words shall have the following meanings:
(a) "Board of Directors" means the Board of Directors of the Corporation.
(b) "Committee" means the Compensation Committee of the Board of Directors
(c) "Common Stock" or "Share" means common stock of the Corporation which may be
authorized but unissued or issued and reacquired.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(e) "Fair Market Value" means, with respect to a share of Common Stock, (i)
prior to an IPO, the amount established at the immediately preceding
determination, which determination will have been made not less than annually,
by an independent U.S.-based investment banker (or, in the sole discretion of
the Board of Directors, an independent U.S.-based appraisal firm) selected by
the Board of Directors, as the fair market value of a Share without giving
effect to any discount attributable to the illiquidity of the Shares or the fact
that any such Shares may constitute a minority interest in the Corporation or
any premium attributable to any special rights of any holder with respect to its
Shares; provided that prior to the first such determination, Fair Market Value
shall the amount determined in good faith by the Committee and (ii) after an
IPO, the value of a Share as reported for stock exchange transactions and/or
determined in accordance with any applicable resolutions or regulations of the
Committee or the Board of Directors in effect at the relevant time.
Notwithstanding the foregoing, a Grant Agreement may set forth a more specific
or a different definition of "Fair Market Value" for the purpose or purposes set
forth in such Grant Agreement.
(f) "Grant" means an award made to a Participant pursuant to the Plan and
2 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or other Stock-Based Grant or any combination of the
foregoing.
(g) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(h) "IPO" means a sale of Shares to the public that results in an active trading
market in the Shares.
(i) "Member" means a person, including an officer, in the regular full-time
employment of the Corporation or one of its Subsidiaries.
(i) "Participant" means a Member, a non-employee director of the Corporation or
one of its Subsidiaries, or other person having a unique relationship with the
Corporation or one of its Subsidiaries, to whom one or more Grants have been
made and such Grants have not all been forfeited or terminated under the Plan.
(k) "Stock-Based Grants" means the collective reference to the grant of Stock
Appreciation Rights, Dividend Equivalent Rights, Restricted Stock, Performance
Units, Performance Shares and Other Stock Based Grants.
(1) "Stock Options" means the collective reference to "Incentive Stock Options"
and "Other Stock Options".
(m) "Subsidiary" means any corporation other than the Corporation in an unbroken
chain of corporations beginning with the Corporation if each of the corporations
other than the last corporation in the unbroken chain owns 50% or more of the
voting stock in one of the other corporations in such chain.
3. Administration of Plan
(a) The Plan shall be administered by the Committee. The Committee may adopt its
own rules of procedure, and the action of a majority of the Committee, taken at
a meeting or taken without a meeting by a writing signed by such majority, shall
constitute action by the Committee. The Committee shall have the power and
authority to administer, construe and interpret the Plan, to make rules for
carrying it out and to make changes in such rules. Any such interpretations,
rules, and administration shall be consistent with the basic purposes of the
Plan.
(b) The Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons. The Committee, the Corporation, and the officers and
directors of the Corporation shall be entitled to rely upon the advice, opinions
or valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Corporation and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Grants, and
all members
3 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
the Committee shall be fully protected by the Corporation with respect to any
such action, determination or interpretation.
(c) In its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan.
4. Eligibility
The Committee may from time to time make Grants under the Plan to such
Members, or other persons having a unique relationship with the Corporation or
any of its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. Grants may be granted singly, in
combination or in tandem. The terms, conditions and limitations of each Grant
under the Plan shall be set forth in a Grant Agreement, in a form approved by
the Committee, consistent, however, with the terms of the Plan; provided,
however, such Grant Agreement shall contain provisions dealing with the
treatment of Grants in the event of the termination, death or disability of a
Participant, and may also include provisions concerning the treatment of Grants
in the event of a change of control of the Corporation.
5. Grants
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) Incentive Stock Options - These are stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Paragraph 5(a), (i) may not be exercised less than
6 months or more than 10 years after the date it is granted, (ii) may not have
an option price less than the fair market value (as defined under the Code) of
Common Stock on the date the option is granted, (iii) must otherwise comply with
Section 422 of the Code and (iv) must be designated as an "Incentive Stock
Option" by the Committee. The maximum aggregate fair market value of Common
Stock (determined at the time of each Grant) with respect to which any
Participant may first exercise Incentive Stock Options under this Plan and any
Incentive Stock Options granted to the Participant for such year under any other
plans of the Corporation or any Subsidiary in any calendar year is $100,000.
Payment of the option price shall be made in cash or in shares of Common Stock,
or a combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time.
(b) Other Stock Options - These are options to purchase Common Stock which are
not designated by the Committee as "Incentive Stock Options." At the time of the
Grant the Committee shall determine, and shall have contained in the Grant
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the Grant or exercise of the Other
Stock Option as the Committee deems appropriate, which may include the
requirement that the Grant of Other Stock Options is predicated on the
acquisition of Purchase Stock under Paragraph 5(e) by the
4 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
Participant. In addition to other restrictions contained in the Plan, an option
granted under this Paragraph 5(b) may not be exercised less than 6 months or
more than 11 years after the date it is granted (or, if such Option is not then
exercisable in accordance with the applicable Grant Agreement or other Plan
rules, such later date that is 60 days following the date on which such option
shall have become exercisable). Payment of the option price shall be made in
cash or in shares of Common Stock, or a combination thereof in accordance with
the terms of the Plan and of any applicable guidelines of the Committee in
effect at the time.
(c) Stock Appreciation Rights - These are rights that on exercise entitle the
holder to receive the excess of (i) the Fair Market Value of a Share on the date
of exercise over (ii) the Fair Market Value of a Share on the date of Grant (the
"base value") multiplied by (iii) the number of rights exercised as determined
by the Committee. Stock Appreciation Rights granted under the Plan may, but need
not be, granted in conjunction with an Option under Paragraph 5 (a) or 5 (b) .
The Committee, in the Grant Agreement or by other Plan rules, may impose such
conditions or restrictions on the exercise of Stock Appreciation Rights as it
deems appropriate, and may terminate, amend, or suspend such Stock Appreciation
Rights at any time. No Stock Appreciation Right granted under this Plan may be
exercised less than 6 months or more than 11 years after the date it is granted
(or, if such Stock Appreciation Right is not then exercisable in accordance with
the applicable Grant Agreement or other Plan rules, such later date that is 60
days following the date on such Stock Appreciation Right shall have become
exercisable). To the extent that any Stock Appreciation Right that shall have
become exercisable, but shall not have been exercised or canceled or, by reason
of any termination of employment, become nonexercisable, such right shall be
deemed to have been exercised automatically, without any notice of exercise, on
the last day on which it is exercisable, provided that any conditions or
limitations on its exercise are satisfied (other than (i) notice of exercise and
(ii) exercise or election to exercise during the period prescribed) and the
Stock Appreciation Right shall then have value. Such exercise shall be deemed to
specify that the holder elects to receive cash and that such exercise of a Stock
Appreciation Right shall be effective as of the time of automatic exercise.
(d) Restricted Stock - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than the par value. If a Participant irrevocably
elects in writing in the calendar year preceding a Grant of Restricted Stock,
dividends paid on the Restricted Stock granted may be paid in shares of
Restricted. Stock equal to the cash dividend paid on Common Stock. The number of
shares of Restricted Stock and the restrictions or conditions on such shares
shall be as the Committee determines, in the Grant Agreement or by other Plan
rules, and the certificate for the Restricted Stock shall bear evidence of the
restrictions or conditions. No Restricted Stock may have a restriction period of
less than 6 months, other than in the case of death or disability.
(e) Purchase Stock.- Purchase Stock are shares of Common Stock offered to a
5 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
Participant at such price as determined by the Committee, the acquisition
of which will make the Participant eligible to receive Grants under the Plan of
(including, but not limited to) Other Stock Options; provided, however, that the
price of such Purchase Shares may not be less than the par value.
(f) Dividend Equivalent Rights - These are rights to receive cash payments from
the Corporation at the same time and in the same amount as any cash dividends
paid on an equal number of shares of Common Stock to shareholders of record
during the period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the Dividend Equivalent Rights, including the date such rights will terminate,
as it deems appropriate, and may terminate, amend, or suspend such Dividend
Equivalent Rights at any time.
(g) Performance Units - These are rights to receive at a specified future date,
payment in cash of an amount equal to all or a portion of the value of a unit
granted by the Committee. At the time of the Grant, in the Grant Agreement or by
other Plan rules, the Committee must determine the base value of the unit, the
performance factors applicable to the determination of the ultimate payment
value of the unit and the period over which the performance of the Corporation
will be measured. These factors must include a minimum performance standard for
the Corporation below which no payment will be made and a maximum performance
level above which no increased payment will be made. The term over which the
performance of the Corporation will be measured shall be not less than 6 months.
(h) Performance Shares - These are rights to receive at a specified future date,
payment in cash or Common Stock, as determined by the Committee, of an amount
equal to all or a portion of the Fair Market Value of a specified number of
shares of Common Stock for all days that such Common Stock is traded during the
last 45 days of a specified period of performance, at the end of, and based upon
the performance of the Corporation during, such period. At the time of the
Grant, the Committee, in the Grant Agreement or by Plan rules, will determine
the factors which will govern the portion of the rights so payable and the
period over which the performance of the Corporation will be measured. The
factors will be based on the performance of the Corporation and must include a
minimum performance standard for the Corporation below which no payment will be
made and a maximum performance level above which no increased payment will be
made. The term over which the performance of the Corporation will be measured
shall be not less than six months. Performance Shares will be granted for no
consideration.
(i) Other Stock-Based Grants - The Committee may make other Grants under the
Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5 (d) ) are or may in the
future be acquired, or Grants denominated in stock units, including ones valued
using measures other than market value. Other Stock-Based Grants may be granted
with or without consideration; provided, however, that the price of any such
Grant made for consideration that provides for the acquisition of shares of
Common Stock or other equity securities of the Corporation may not be less than
the par value, if any, of the Common Stock or such other equity securities. Such
Other Stock-Based Grants may be made alone, in addition to or in tandem with any
Grant of any type made under the Plan and must be consistent with the purposes
of the Plan.
6 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
6. Limitations and Conditions
(a) The number of Shares available for Grants under this Plan shall be
[15,000,0001 shares of the authorized Common Stock as of the effective date of
the Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than [1,000,000] shares. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated,
canceled or expire unexercised, shall immediately become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the effective
date of the Plan (the "Plan Expiration Date"), but the terms of Grants made on
or before the Plan Expiration Date may extend beyond such Plan Expiration Date
as specified in the applicable Grant Agreement. At the time a Grant is made or
amended or the terms or conditions of a Grant are changed, the Committee may
provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion of
the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, to the extent that any cost
or expense is or should be recognized for either financial accounting or income
tax purposes, the amounts of the Grants for any employee of a Subsidiary, along
with interest, dividend, and other expenses accrued on deferred Grants shall be
charged to the Participant's employer during the period for which the Grant is
made. If the Participant is employed by more than one Subsidiary or by both the
Corporation and a Subsidiary during the period for which the Grant is made, the
Participant's Grant and related expenses, if any, will be allocated between the
companies employing the Participant in a manner prescribed by the Committee.
(f) Other than as specifically provided with regard to the death of a
Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the Participant.
(g) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been. or are required to be, issued by the
Corporation to such Participants.
(h) No election as to benefits or exercise of Stock Options or Stock-Based
Grants may be made during a Participant's lifetime by anyone other than the
Participant except by a legal representative appointed for or by the
Participant.
7 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
(i) Absent express provisions to the contrary, any Grant under this Plan shall
not be deemed compensation to the Participant for purposes of computing benefits
or contributions under any retirement plan of the Corporation or its
Subsidiaries and shall not affect any benefits under any other benefit plan of
any kind or subsequently in effect under which the availability or amount of
benefits is related to the Participant's level of compensation. This Plan is not
a "retirement plan" or "welfare plan" under the Employee Retirement Income
Security Act of 1974, as amended.
(j) Unless the Committee determines otherwise, no benefit or promise under the
Plan shall be secured by any specific assets of the Corporation or any of its
Subsidiaries, nor shall any assets of the Corporation or any of its Subsidiaries
be designated as attributable or allocated to the satisfaction of the
Corporation's obligations under the Plan.
7. Financial Assistance
If the Committee determines that such action is advisable, the Corporation
may assist any Participant to whom a Grant has been made under the Plan in
obtaining financing from the Corporation or a Subsidiary or from a bank or other
third party, on such terms as are determined by the Committee, and in such
amount as is required to accomplish the purposes of the Plan, including, but not
limited to, to purchase Restricted Stock or Purchase Stock, to permit the
exercise of a Stock Option, the participation therein, and/or the payment of any
taxes in respect thereof. Such assistance may take any form that the Committee
deems appropriate, including, but not limited to, a direct loan from the
Corporation or a Subsidiary, a guarantee of the obligation by the Corporation or
a Subsidiary, or the maintenance by the Corporation or a Subsidiary of deposits
with such bank or third party.
8. Transfers and Leaves of Absence
For purposes of the Plan, unless the Committee determines otherwise: (a)
a transfer of a Participant's employment to a Subsidiary without an intervening
period of separation among the Corporation and any Subsidiary shall not be
deemed a termination of employment, and (b) a Participant who is granted in
writing a leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.
9. Adjustments
In the event of any change in the outstanding Common Stock by reason of
a stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such other revisions to outstanding Grants as it deems are equitably required.
10. Merger, Consolidation, Exchange, Acquisition, Liquidation Dissolution
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant (but after a Grant, subject to the terms of any
8 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
relevant Grant Agreement), the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of the
Corporation into another corporation, the exchange of all or substantially all
of the assets of the Corporation for the securities of another corporation, the
acquisition by another corporation of a specified percentage or more of the
Corporation's then outstanding shares of voting stock or the recapitalization,
reclassification, liquidation or dissolution of the Corporation, and if the
Committee so provides, it shall, on such terms and conditions as it deems
appropriate in its absolute discretion (but after a Grant, subject to the terms
of any relevant Grant Agreement) , also provide, either by the terms of such
Stock Option or Stock-Based Grant or by a resolution adopted prior to the
occurrence of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution, that, for some
period of time prior to such event, such Stock Option or Stock-Based Grant shall
be exercisable as to all shares subject thereto, notwithstanding anything to the
contrary herein (but subject to the provisions of Paragraph 6(b)) and that, upon
the occurrence of such event, such Stock Option or Stock-Based Grant shall
terminate and be of no further force or effect; provided, however, that the
Committee may also provide, in its absolute discretion, that even if the Stock
Option or Stock-Based Grant shall remain exercisable after any such event, from
and after such event, any such Stock Option or Stock-Based Grant shall be
exercisable only for the kind and amount of securities and/or other property, or
the cash equivalent thereof, receivable as a result of such event by the holder
of a number of shares of stock for which such Stock Option or Stock-Based Grant
could have been exercised immediately prior to such event.
11. Amendment and Termination
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 9 or 10 hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent unless such modification is provided for or
contemplated in the terms of the Grant Agreement.
The Board of Directors may amend, suspend or terminate the Plan except that
no such action, other than an action under Paragraph 9 or 10 hereof, may be
taken which would, without shareholder approval, increase the aggregate number
of Shares available for Grants under the Plan, decrease the price of outstanding
Stock Options or Stock Appreciation Rights, change the requirements relating to
the Committee or extend the term of the Plan.
12. Foreign Options and Rights
The Committee may make Grants to Members who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that differ from the terms thereof as provided elsewhere in the Plan for the
purpose of complying with foreign laws and practices.
13. Withholding Taxes
The Corporation shall have the right to deduct from any cash payment
9 EXHIBIT 10(h)
FORM 10-Q for the Quarter
Ended September 30, 1996
made under the Plan any federal, state or local income or other taxes required
by law to be withheld with respect to such payment, the amount of any such taxes
to be determined by the Corporation in its absolute discretion. It shall be a
condition to the obligation of the Corporation to deliver Shares upon the
exercise of a Stock Option or Stock Appreciation Right, upon payment of
Performance Units or Performance Shares, upon delivery of Restricted Stock or
upon exercise, settlement or payment of any Other Stock-Based Grant, that the
Participant pay to the Corporation such amount as may be requested by the
Corporation for the purpose of satisfying any liability for such withholding
taxes. Any Grant Agreement may provide that the Participant may elect, in
accordance with any conditions set forth in such Grant Agreement, to pay a
portion or all of such withholding taxes in shares of Common Stock.
14. Effective Date and Termination Dates
The Plan shall be effective on and as of the date of its approval by the
stockholders of the Corporation and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 11.