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EXHIBIT 10.40
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R.H. DONNELLEY CORPORATION
2001 STOCK AWARD AND INCENTIVE PLAN
Approved and adopted by the Board of Directors on February 27, 2001,
Approved and adopted by shareholders on May 1, 2001 and
Amended and Restated by the Board of Directors effective May 1, 2001
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R.H. DONNELLEY CORPORATION
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2001 STOCK AWARD AND INCENTIVE PLAN
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1. Purpose................................................................................. 1
2. Definitions............................................................................. 1
3. Administration.......................................................................... 4
4. Stock Subject to Plan................................................................... 5
5. Eligibility; Per-Person Award Limitations .............................................. 5
6. Specific Terms of Awards................................................................ 6
7. Performance Awards, Including Annual Incentive Awards.................................. 9
8. Non-Employee Director Awards............................................................ 12
9. Certain Provisions Applicable to Awards................................................. 19
10. Change in Control....................................................................... 20
11. Additional Award Forfeiture Provisions.................................................. 22
12. General Provisions...................................................................... 24
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R.H. DONNELLEY CORPORATION
2001 STOCK AWARD AND INCENTIVE PLAN
1. PURPOSE. The purpose of this 2001 Stock Award and Incentive Plan
(the "Plan") is to aid R.H. Donnelley Corporation, a Delaware corporation
(together with its successors and assigns, the "Company"), in attracting,
retaining, motivating and rewarding employees and non-employee directors of the
Company or its subsidiaries or affiliates, to provide for equitable and
competitive compensation opportunities, to recognize individual contributions
and reward achievement of Company goals, and promote the creation of long-term
value for stockholders by closely aligning the interests of Participants with
those of stockholders. The Plan authorizes stock-based and cash-based incentives
for Participants.
2. DEFINITIONS. In addition to the terms defined in Section 1 above
and elsewhere in the Plan, the following capitalized terms used in the Plan have
the respective meanings set forth in this Section:
(a) "Annual Incentive Award" means a type of Performance
Award granted to a Participant under Section 7(c) representing a
conditional right to receive cash, Stock or other Awards or payments, as
determined by the Committee, based on performance in a performance
period of one fiscal year or a portion thereof.
(b) "Annual Limit" shall have the meaning specified in
Section 5(b).
(c) "Award" means any Option, SAR, Restricted Stock,
Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or
Annual Incentive Award, together with any related right or interest,
granted to a Participant under the Plan.
(d) "Beneficiary" means the legal representatives of the
Participant's estate entitled by will or the laws of descent and
distribution to receive the benefits under a Participant's Award upon a
Participant's death, provided that, if and to the extent authorized by
the Committee, a Participant may be permitted to designate a
Beneficiary, in which case the "Beneficiary" instead will be the person,
persons, trust or trusts (if any are then surviving) which have been
designated by the Participant in his or her most recent written and duly
filed beneficiary designation to receive the benefits specified under
the Participant's Award upon such Participant's death. Unless otherwise
determined by the Committee, any designation of a Beneficiary other than
a Participant's spouse shall be subject to the written consent of such
spouse.
(e) "Board" means the Company's Board of Directors.
(f) "Cause" shall have the meaning defined in any employment
agreement or severance agreement between the Participant and the Company
or a subsidiary or affiliate then in effect or, if no such agreement is
then in effect, "Cause" shall mean (i) the Participant's willful and
continued failure substantially to perform the duties of his or her
position after notice and opportunity to cure; (ii) any willful act or
omission by the Participant constituting dishonesty, fraud or other
malfeasance, which in any such case is demonstrably injurious to the
financial condition or business reputation of the Company or any of its
subsidiaries or affiliates; or (iii) a felony conviction in a court of
law under the laws of the United States or any state thereof or any
other jurisdiction in which the Company or a subsidiary or affiliate
conducts business which materially impairs the value of the
Participant's service to the Company or any of its subsidiaries or
affiliates; provided, however, that for purposes of this definition, no
act or failure to act shall be deemed "willful" unless effected by the
Participant not in good faith and without a reasonable belief that such
action or failure to act was in or not opposed to the Company's best
interests, and no act or failure to act shall be deemed "willful" if it
results from any incapacity of the Participant due to physical or mental
illness.
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(g) "Change in Control" and related terms have the meanings
specified in Section 10.
(h) "Code" means the Internal Revenue Code of 1986, as
amended. References to any provision of the Code or regulation
(including a proposed regulation) thereunder shall include any successor
provisions and regulations.
(i) "Committee" means a committee of two or more directors
designated by the Board to administer the Plan; provided, however, that,
directors appointed or serving as members of a Board committee
designated as the Committee shall not be employees of the Company or any
subsidiary or affiliate. In appointing members of the Committee, the
Board will consider whether a member is or will be a Qualified Member,
but such members are not required to be Qualified Members at the time of
appointment or during their term of service on the Committee. The full
Board may perform any function of the Committee hereunder, in which case
the term "Committee" shall refer to the Board.
(j) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 12(j).
(k) "Deferral Account" means the account established and
maintained by the Company for Deferred Stock and/or deferred cash
credited under Section 8. A Deferral Account shall include one or more
subaccounts, including a Deferred Stock Account for forfeitable Deferred
Stock under Section 8(c), a Deferred Stock Account for shares of
Deferred Stock that have become nonforfeitable under Section 8(c) or
that are at all times nonforfeitable under Section 8(e)(iii), a Deferred
Stock Account for Deferred Stock resulting from Option exercises under
Section 8(f)(i), and a Deferred Cash Account described in Section
8(e)(iv). The Deferral Account and subaccounts, and Deferred Stock and
deferred cash credited thereto, will be maintained solely as bookkeeping
entries by the Company to evidence unfunded obligations of the Company.
(l) "Deferred Stock" means a right, granted under this Plan,
to receive Stock or other Awards or a combination thereof at the end of
a specified deferral period.
(m) "Disability" means, with respect to a non-employee
director, termination of service as a director of the Company due to a
physical or mental incapacity of long duration which renders the
Participant unable to perform the duties of a director of the Company.
(n) "Dividend Equivalent" means a right, granted under this
Plan, to receive cash, Stock, other Awards or other property equal in
value to all or a specified portion of the dividends paid with respect
to a specified number of shares of Stock.
(o) "Effective Date" means the effective date specified in
Section 12(p).
(p) "Eligible Person" has the meaning specified in
Section 5.
(q) "Exchange Act" means the Securities Exchange Act of
1934, as amended. References to any provision of the Exchange Act or
rule (including a proposed rule) thereunder shall include any successor
provisions and rules.
(r) "Fair Market Value" means the fair market value of
Stock, Awards or other property as determined by the Committee or under
procedures established by the Committee. Unless otherwise determined by
the Committee, the Fair Market Value of Stock shall be the average of
the high and low sales prices per share of Stock reported on a
consolidated basis for securities listed on the
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principal stock exchange or market on which Stock is traded on the day
immediately preceding the day as of which such value is being determined
or, if there is no sale on that day, then on the last previous day on
which a sale was reported.
(s) "Incentive Stock Option" or "ISO" means any Option
designated as an incentive stock option within the meaning of Code
Section 422 and qualifying thereunder.
(t) "Option" means a right, granted under this Plan, to
purchase Stock.
(u) "Option Valuation Methodology" means the method for
determining the number of shares to be subject to Options, and the
exercise price thereof, granted in payment of Retainer Fees under
Section 8(e)(ii).
(v) "Other Director Compensation" means fees payable to a
director in his or her capacity as such, other than Retainer Fees, for
attending meetings and other service on the Board and Board committees
or otherwise.
(w) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h).
(x) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who
is no longer an Eligible Person.
(y) "Performance Award" means a conditional right, granted
to a Participant under Sections 6(i) and 7, to receive cash, Stock or
other Awards or payments.
(z) "Plan Year" means, with respect to a non-employee
director, the period commencing at the time of election of the director
at an annual meeting of shareholders (or the election of a class of
directors if the Company then has a classified Board of Directors), or
the director's initial appointment to the Board if not at an annual
meeting of shareholders, and continuing until the close of business of
the day preceding the next annual meeting of shareholders; provided,
however, that the initial Plan Year shall begin on the day of the
Company's 2001 Annual Meeting of Stockholders.
(aa) "Preexisting Plans" means each of the following Company
plans: the 1991 Key Employees' Stock Option Plan, as amended and
restated; the Key Employees' Performance Unit Plan, as amended and
restated; the 1998 Directors' Stock Plan, as amended and restated; and
the Annual Incentive Plan, as amended and restated.
(bb) "Qualified Member" means a member of the Committee who
is a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and
an "outside director" within the meaning of Regulation 1.162-27 under
Code Section 162(m).
(cc) "Restricted Stock" means Stock granted under this Plan
which is subject to certain restrictions and to a risk of forfeiture.
(dd) "Retainer Fees" means annual Board and chair retainer
fees payable to a director in his or her capacity as such for service on
the Board and Board committees.
(ee) "Retirement" means, with respect to a non-employee
director, termination of service as a director of the Company at or
after age 65.
(ff) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect and applicable to Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
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(gg) "Stock" means the Company's Common Stock, par value
$1.00 per share, and any other equity securities of the Company that may
be substituted or resubstituted for Stock pursuant to Section 12(c).
(hh) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c).
(ii) "Valuation Date" shall mean the close of business on the
last business day of each calendar quarter and, in the case of any final
distribution from a Participant's Deferred Cash Account (described in
Section 8(f)(iv)), the day preceding such distribution.
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be
administered by the Committee, which shall have full and final
authority, in each case subject to and consistent with the provisions of
the Plan, to select Eligible Persons to become Participants; to grant
Awards; to determine the type and number of Awards, the dates on which
Awards may be exercised and on which the risk of forfeiture or deferral
period relating to Awards shall lapse or terminate, the acceleration of
any such dates, the expiration date of any Award, whether, to what
extent, and under what circumstances an Award may be settled, or the
exercise price of an Award may be paid, in cash, Stock, other Awards, or
other property, and other terms and conditions of, and all other matters
relating to, Awards; to prescribe documents evidencing or setting terms
of Awards (such Award documents need not be identical for each
Participant), amendments thereto, and rules and regulations for the
administration of the Plan and amendments thereto; to construe and
interpret the Plan and Award documents and correct defects, supply
omissions or reconcile inconsistencies therein; and to make all other
decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan. Decisions of the Committee
with respect to the administration and interpretation of the Plan shall
be final, conclusive, and binding upon all persons interested in the
Plan, including Participants, Beneficiaries, transferees under Section
12(b) and other persons claiming rights from or through a Participant,
and stockholders. The foregoing notwithstanding, the Board shall perform
the functions of the Committee for purposes of granting Awards under the
Plan to non-employee directors (the functions of the Committee with
respect to other aspects of non-employee director awards is not
exclusive to the Board, however).
(b) Manner of Exercise of Committee Authority. The express
grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or
managers of the Company or any subsidiary or affiliate, or committees
thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative
functions, as the Committee may determine, to the extent (x) that such
delegation will not result in the loss of an exemption under Rule
16b-3(d) for Awards granted to Participants subject to Section 16 of the
Exchange Act in respect of the Company and will not cause Awards
intended to qualify as "performance-based compensation" under Code
Section 162(m) to fail to so qualify, and (y) permitted by the Delaware
General Corporation Law.
(c) Limitation of Liability. The Committee and each member
thereof, and any person acting pursuant to authority delegated by the
Committee, shall be entitled, in good faith, to rely or act upon any
report or other information furnished by any executive officer, other
officer or employee of the Company or a subsidiary or affiliate, the
Company's independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Committee,
any person acting pursuant to authority delegated by the Committee, and
any officer or employee of the Company or a subsidiary or affiliate
acting at the direction or on behalf of the Committee or a delegee shall
not be
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personally liable for any action or determination taken or made in good
faith with respect to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect to
any such action or determination.
4. STOCK SUBJECT TO PLAN.
(a) Overall Number of Shares Available for Delivery. Subject
to adjustment as provided in Section 12(c), the total number of shares
of Stock reserved and available for delivery in connection with Awards
under the Plan shall be (i) four million shares, plus (ii) the number of
shares subject to awards under the Preexisting Plans which become
available in accordance with Section 4(b) after the Effective Date, plus
(iii) 10% of the number of shares issued or delivered by the Company
during the term of the Plan other than issuances or deliveries under the
Plan or other incentive compensation plans of the Company; provided,
however, that the total number of shares with respect to which ISOs may
be granted shall not exceed the number specified under clause (i) above;
and provided further, that the total number of shares which may be
issued and delivered in connection with Awards other than Options and
SARs shall not exceed one million shares. Any shares of Stock delivered
under the Plan shall consist of authorized and unissued shares or
treasury shares.
(b) Share Counting Rules. The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards)
and make adjustments if the number of shares of Stock actually delivered
differs from the number of shares previously counted in connection with
an Award. Shares subject to an Award or an award under the Preexisting
Plans that is canceled, expired, forfeited, settled in cash or otherwise
terminated without a delivery of shares to the Participant will again be
available for Awards, and shares withheld in payment of the exercise
price or taxes relating to an Award or Preexisting Plan award and shares
equal to the number surrendered in payment of any exercise price or
taxes relating to an Award or Preexisting Plan award shall be deemed to
constitute shares not delivered to the Participant and shall be deemed
to again be available for Awards under the Plan. In addition, in the
case of any Award granted in assumption of or in substitution for an
award of a company or business acquired by the Company or a subsidiary
or affiliate or with which the Company or a subsidiary or affiliate
combines, shares issued or issuable in connection with such substitute
Award shall not be counted against the number of shares reserved under
the Plan. This Section 4(b) shall apply to the number of shares reserved
and available for ISOs only to the extent consistent with applicable
regulations relating to ISOs under the Code.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS.
(a) Eligibility. Awards may be granted under the Plan only
to Eligible Persons. For purposes of the Plan, an "Eligible Person"
means an employee of the Company or any subsidiary or affiliate,
including any executive officer or non-employee director of the Company
or a subsidiary or affiliate, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that
such prospective employee may not receive any payment or exercise any
right relating to an Award until such person has commenced employment
with the Company or a subsidiary or affiliate. An employee on leave of
absence may be considered as still in the employ of the Company or a
subsidiary or affiliate for purposes of eligibility for participation in
the Plan. For purposes of the Plan, a joint venture in which the Company
or a subsidiary has a substantial direct or indirect equity investment
shall be deemed an affiliate, if so determined by the Committee. Holders
of awards granted by a company or business acquired by the Company or a
subsidiary or affiliate, or with which the Company or a subsidiary or
affiliate combines, are eligible for grants of substitute awards granted
in assumption of or in substitution for such outstanding awards
previously granted under the Plan in connection with such acquisition or
combination transaction.
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(b) Per-Person Award Limitations. In each calendar year
during any part of which the Plan is in effect, an Eligible Person may
be granted Awards intended to qualify as "performance-based
compensation" under Code Section 162(m) under each of Section 6(b),
6(c), 6(d), 6(e), 6(f), 6(g) or 6(h) relating to up to his or her Annual
Limit (such Annual Limit to apply separately to the type of Award
authorized under each specified subsection, except that the limitation
applies to Dividend Equivalents under Section 6(g) only if such Dividend
Equivalents are granted separately from and not as a feature of another
Award). A Participant's Annual Limit, in any year during any part of
which the Participant is then eligible under the Plan, shall equal two
million shares plus the amount of the Participant's unused Annual Limit
relating to the same type of Award as of the close of the previous year,
subject to adjustment as provided in Section 12(c). In the case of an
Award which is not valued in a way in which the limitation set forth in
the preceding sentence would operate as an effective limitation
satisfying applicable law (including Treasury Regulation
1.162-27(e)(4)), an Eligible Person may not be granted Awards
authorizing the earning during any calendar year of an amount that
exceeds the Eligible Person's Annual Limit, which for this purpose shall
equal $4 million plus the amount of the Eligible Person's unused cash
Annual Limit as of the close of the previous year (this limitation is
separate and not affected by the number of Awards granted during such
calendar year subject to the limitation in the preceding sentence). For
this purpose, (i) "earning" means satisfying performance conditions so
that an amount becomes payable, without regard to whether it is to be
paid currently or on a deferred basis or continues to be subject to any
service requirement or other non-performance condition, and (ii) a
Participant's Annual Limit is used to the extent an amount or number of
shares may be potentially earned or paid under an Award, regardless of
whether such amount or shares are in fact earned or paid.
6. SPECIFIC TERMS OF AWARDS.
(a) General. Awards may be granted on the terms and
conditions set forth in this Section 6. In addition, the Committee may
impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Section 12(e)), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment or service by the
Participant and terms permitting a Participant to make elections
relating to his or her Award. The Committee shall retain full power and
discretion with respect to any term or condition of an Award that is not
mandatory under the Plan. The Committee shall require the payment of
lawful consideration for an Award to the extent necessary to satisfy the
requirements of the Delaware General Corporation Law, and may otherwise
require payment of consideration for an Award except as limited by the
Plan.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of
Stock purchasable under an Option (including both ISOs and
non-qualified Options) shall be determined by the Committee,
provided that such exercise price shall be not less than the
Fair Market Value of a share of Stock on the date of grant of
such Option, subject to Section 9(a). Notwithstanding the
foregoing, any substitute award granted in assumption of or in
substitution for an outstanding award granted by a company or
business acquired by the Company or a subsidiary or affiliate,
or with which the Company or a subsidiary or affiliate combines
may be granted with an exercise price per share of Stock other
than as required above.
(ii) Option Term; Time and Method of Exercise. The
Committee shall determine the term of each Option, provided that
in no event shall the term of any ISO or SAR in tandem therewith
exceed a period of ten years from the date of grant. The
Committee shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or
in part (including based on achievement of performance goals
and/or future service
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requirements), the methods by which such exercise price may be
paid or deemed to be paid and the form of such payment (subject
to Section 12(k)), including, without limitation, cash, Stock,
other Awards or awards granted under other plans of the Company
or any subsidiary or affiliate, or other property (including
notes and other contractual obligations of Participants to make
payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and
the methods by or forms in which Stock will be delivered or
deemed to be delivered in satisfaction of Options to
Participants (including deferred delivery of shares representing
the Option "profit," at the election of the Participant or as
mandated by the Committee, with such deferred shares subject to
any vesting, forfeiture or other terms as the Committee may
specify).
(iii) ISOs. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Code
Section 422, including but not limited to the requirement that
no ISO shall be granted more than ten years after the Effective
Date.
(c) Stock Appreciation Rights. The Committee is authorized
to grant SAR's to Participants on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the
Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one
share of Stock on the date of exercise (or, in the case of a
"Limited SAR," the Fair Market Value determined by reference to
the Change in Control Price, as defined under Section 10(d)
hereof) over (B) the grant price of the SAR as determined by the
Committee.
(ii) Other Terms. The Committee shall determine at
the date of grant or thereafter, the time or times at which and
the circumstances under which a SAR may be exercised in whole or
in part (including based on achievement of performance goals
and/or future service requirements), the method of exercise,
method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered
or deemed to be delivered to Participants, and whether or not a
SAR shall be free-standing or in tandem or combination with any
other Award. Limited SARs that may only be exercised in
connection with a Change in Control or other event as specified
by the Committee may be granted on such terms, not inconsistent
with this Section 6(c), as the Committee may determine.
(d) Restricted Stock. Subject to Section 9(d), the Committee
is authorized to grant Restricted Stock to Participants on the following
terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall
be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may
impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including
based on achievement of performance goals and/or future service
requirements), in such installments or otherwise and under such
other circumstances as the Committee may determine at the date
of grant or thereafter. Except to the extent restricted under
the terms of the Plan and any Award document relating to the
Restricted Stock, a Participant granted Restricted Stock shall
have all of the rights of a stockholder, including the right to
vote the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee).
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment or service during
the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited and
reacquired by the Company; provided that the Committee may
provide, by rule or regulation or in any Award document, or may
determine in
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any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock will lapse in whole or in part,
including in the event of terminations resulting from specified
causes.
(iii) Certificates for Stock. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee
shall determine. If certificates representing Restricted Stock
are registered in the name of the Participant, the Committee may
require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to such Restricted Stock, that the Company retain physical
possession of the certificates, and that the Participant deliver
a stock power to the Company, endorsed in blank, relating to the
Restricted Stock.
(iv) Dividends and Splits. As a condition to the
grant of an Award of Restricted Stock, the Committee may require
that any dividends paid on a share of Restricted Stock shall be
either (A) paid with respect to such Restricted Stock at the
dividend payment date in cash, in kind, or in a number of shares
of unrestricted Stock having a Fair Market Value equal to the
amount of such dividends, or (B) automatically reinvested in
additional Restricted Stock or held in kind, which shall be
subject to the same terms as applied to the original Restricted
Stock to which it relates, or (C) deferred as to payment, either
as a cash deferral or with the amount or value thereof
automatically deemed reinvested in shares of Deferred Stock,
other Awards or other investment vehicles, subject to such terms
as the Committee shall determine or permit a Participant to
elect. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend,
and other property distributed as a dividend, shall be subject
to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other
property has been distributed.
(e) Deferred Stock. The Committee is authorized to grant
Deferred Stock to Participants, subject to the following terms and
conditions:
(i) Award and Restrictions. Issuance of Stock will
occur upon expiration of the deferral period specified for an
Award of Deferred Stock by the Committee (or, if permitted by
the Committee, as elected by the Participant). In addition,
Deferred Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse
at the expiration of the deferral period or at earlier specified
times (including based on achievement of performance goals
and/or future service requirements), separately or in
combination, in installments or otherwise, and under such other
circumstances as the Committee may determine at the date of
grant or thereafter. Deferred Stock may be satisfied by delivery
of Stock, other Awards, or a combination thereof (subject to
Section 12(k)), as determined by the Committee at the date of
grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment or service during
the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award document
evidencing the Deferred Stock), all Deferred Stock that is at
that time subject to such forfeiture conditions shall be
forfeited; provided that the Committee may provide, by rule or
regulation or in any Award document, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Deferred Stock will lapse in whole or in part,
including in the event of terminations resulting from specified
causes.
(iii) Dividend Equivalents. Unless otherwise
determined by the Committee, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of
Deferred Stock shall be either (A) paid with respect to such
Deferred Stock at the dividend payment date in cash or in shares
of unrestricted Stock having a Fair Market Value equal to the
amount of such dividends, or (B) deferred with respect to such
Deferred Stock, either as a cash deferral
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or with the amount or value thereof automatically deemed
reinvested in additional Deferred Stock, other Awards or other
investment vehicles having a Fair Market Value equal to the
amount of such dividends, as the Committee shall determine or
permit a Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of obligations of the Company or a subsidiary or
affiliate to pay cash or deliver other property under the Plan or under
other plans or compensatory arrangements, subject to such terms as shall
be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to
grant Dividend Equivalents to a Participant, which may be awarded on a
free-standing basis or in connection with another Award. The Committee
may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to restrictions on
transferability, risks of forfeiture and such other terms as the
Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants
such other Awards that may be denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to, Stock
or factors that may influence the value of Stock, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock,
Awards with value and payment contingent upon performance of the Company
or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or
the value of securities of or the performance of specified subsidiaries
or affiliates or other business units. The Committee shall determine the
terms and conditions of such Awards. Stock delivered pursuant to an
Award in the nature of a purchase right granted under this Section 6(h)
shall be purchased for such consideration, paid for at such times, by
such methods, and in such forms, including, without limitation, cash,
Stock, other Awards, notes, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other
Award under the Plan, may also be granted pursuant to this Section 6(h).
(i) Performance Awards. Performance Awards, denominated in
cash or in Stock or other Awards, may be granted by the Committee in
accordance with Section 7.
7. PERFORMANCE AWARDS, INCLUDING ANNUAL INCENTIVE AWARDS.
(a) Performance Awards Generally. Performance Awards may be
denominated as a cash amount, number of shares of Stock, or specified
number of other Awards (or a combination) which may be earned upon
achievement or satisfaction of performance conditions specified by the
Committee. In addition, the Committee may specify that any other Award
shall constitute a Performance Award by conditioning the right of a
Participant to exercise the Award or have it settled, and the timing
thereof, upon achievement or satisfaction of such performance conditions
as may be specified by the Committee. The Committee may use such
business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise
its discretion to reduce or increase the amounts payable under any Award
subject to performance conditions, except as limited under Sections 7(b)
and 7(c) in the case of a Performance Award intended to qualify as
"performance-based compensation" under Code Section 162(m).
(b) Performance Awards Granted to Covered Employees. If the
Committee determines that a Performance Award to be granted to an
Eligible Person who is designated by the Committee as likely to be a
Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement
of such Performance Award shall be
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contingent upon achievement of a preestablished performance goal and
other terms set forth in this Section 7(b).
(i) Performance Goal Generally. The performance goal
for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the
Committee consistent with this Section 7(b). The performance
goal shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder,
including the requirement that the level or levels of
performance targeted by the Committee result in the achievement
of performance goals being "substantially uncertain." The
Committee may determine that such Performance Awards shall be
granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals
must be achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or
to different Participants.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis,
and/or for specified subsidiaries or affiliates or other
business units of the Company shall be used by the Committee in
establishing performance goals for such Performance Awards: (1)
advertising sales (either calendar cycle or publication cycle
basis) or other sales or revenue measures; (2) operating income,
earnings from operations, earnings before or after taxes,
earnings before or after interest, depreciation, amortization,
or extraordinary or special items, (3) net income or net income
per common share (basic or diluted); (4) return on assets,
return on investment, return on capital, or return on equity;
(5) cash flow, free cash flow, cash flow return on investment,
or net cash provided by operations; (6) interest expense after
taxes; (7) economic profit or value created; (8) operating
margin; (9) stock price or total stockholder return; and (10)
strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration,
geographic business expansion goals, cost targets, customer
satisfaction, employee satisfaction, management of employment
practices and employee benefits, supervision of litigation and
information technology, and goals relating to acquisitions or
divestitures of subsidiaries, affiliates or joint ventures. The
targeted level or levels of performance with respect to such
business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion,
including in absolute terms, as a goal relative to performance
in prior periods, or as a goal compared to the performance of
one or more comparable companies or an index covering multiple
companies.
(iii) Performance Period; Timing for Establishing
Performance Goals. Achievement of performance goals in respect
of such Performance Awards shall be measured over a performance
period of up to one year or more than one year, as specified by
the Committee. A performance goal shall be established not later
than the earlier of (A) 90 days after the beginning of any
performance period applicable to such Performance Award or (B)
the time 25% of such performance period has elapsed.
(iv) Performance Award Pool. The Committee may
establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of the Company in
connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business
criteria set forth in Section 7(b)(ii) during the given
performance period, as specified by the Committee in accordance
with Section 7(b)(iv). The Committee may specify the amount of
the Performance Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
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(v) Settlement of Performance Awards; Other Terms.
Settlement of Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee.
The Committee may, in its discretion, increase or reduce the
amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in
respect of a Performance Award subject to this Section 7(b). Any
settlement which changes the form of payment from that
originally specified shall be implemented in a manner such that
the Performance Award and other related Awards do not, solely
for that reason, fail to qualify as "performance-based
compensation" for purposes of Code Section 162(m). The Committee
shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of
employment by the Participant or other event (including a Change
in Control) prior to the end of a performance period or
settlement of such Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered
Employees. The Committee may grant an Annual Incentive Award to an
Eligible Person who is designated by the Committee as likely to be a
Covered Employee. Such Annual Incentive Award will be intended to
qualify as "performance-based compensation" for purposes of Code Section
162(m), and its grant, exercise and/or settlement shall be contingent
upon achievement of preestablished performance goals and other terms set
forth in this Section 7(c).
(i) Grant of Annual Incentive Awards. Not later than
the earlier of 90 days after the beginning of any performance
period applicable to such Annual Incentive Award or the time 25%
of such performance period has elapsed, the Committee shall
determine the Covered Employees who will potentially receive
Annual Incentive Awards, and the amount(s) potentially payable
thereunder, for that performance period. The amount(s)
potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business
criteria set forth in Section 7(b)(ii) in the given performance
period, as specified by the Committee. The Committee may
designate an annual incentive award pool as the means by which
Annual Incentive Awards will be measured, which pool shall
conform to the provisions of Section 7(b)(iv). In such case, the
portion of the Annual Incentive Award pool potentially payable
to each Covered Employee shall be preestablished by the
Committee. In all cases, the maximum Annual Incentive Award of
any Participant shall be subject to the limitation set forth in
Section 5.
(ii) Payout of Annual Incentive Awards. After the end
of each performance period, the Committee shall determine the
amount, if any, of the Annual Incentive Award for that
performance period payable to each Participant. The Committee
may, in its discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever, but
may not exercise discretion to increase any such amount. The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant or other event
prior to the end of a performance period or settlement of such
Annual Incentive Award.
(d) Written Determinations. Determinations by the Committee
as to the establishment of performance goals, the amount potentially
payable in respect of Performance Awards and Annual Incentive Awards,
the level of actual achievement of the specified performance goals
relating to Performance Awards and Annual Incentive Awards, and the
amount of any final Performance Award and Annual Incentive Award shall
be recorded in writing in the case of Performance Awards intended to
qualify under Section 162(m). Specifically, the Committee shall certify
in writing, in a manner conforming to applicable regulations under
Section 162(m), prior to settlement of each such Award
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granted to a Covered Employee, that the performance objective relating
to the Performance Award and other material terms of the Award upon
which settlement of the Award was conditioned have been satisfied.
8. NON-EMPLOYEE DIRECTOR AWARDS. Options, Deferred Stock,
Restricted Stock and other Awards (which other Awards, if granted, will
be governed by Sections 6 and 7 of this Plan) shall be granted to
non-employee directors of the Company or a subsidiary or an affiliate in
accordance with policies established from time to time by the Board
specifying the classes of non-employee directors to be granted such
Awards, the number of shares to be subject to each Award, and the time
or times at which such Awards shall be granted. All Options granted to
non-employee directors shall be non-qualified stock options.
(a) Initial Policy -- Option Grants. The initial
policy with respect to Options granted under this Section 8(a),
effective as of the Effective Date and continuing until modified
or revoked by the Board from time to time, shall be as follows:
(i) Initial Grants. At the date of a
person's initial election or appointment as a member of
the Board after the Effective Date, such person, if he
or she is a non-employee director of the Company
eligible to participate upon such election or
appointment, shall be granted an Option to purchase
1,500 shares of Stock, subject to adjustment as provided
in Section 12(c). At the Effective Date, each person who
is a non-employee director of the Company eligible to
participate at that date shall be granted an Option to
purchase 1,500 shares of Stock, subject to adjustment as
provided in Section 12(c).
(ii) Annual Grants. At the date of each
annual meeting of shareholders following the Effective
Date at which a director is elected or reelected as a
member of the Board (or at which members of another
class of directors are elected or reelected, if the
Company then has a classified Board), such director, if
he or she is a non-employee director of the Company
eligible to participate at that date and if he or she
has not been granted an Option under this Section 8(a)
previously during the same calendar year, shall be
granted an Option to purchase 1,500 shares of Stock,
subject to adjustment as provided in Section 12(c).
(b) Terms of Options Granted Under Section 8(a).
Each Option granted under Section 8(a) shall be subject to the
following terms and conditions:
(i) Exercise Price. The exercise price per
share of Stock purchasable under an Option shall be
equal to 100% of the Fair Market Value of Stock on the
date of grant of the Option, subject to Section 9(a).
(ii) Option Term. Each Option shall expire
ten years after the date of grant, or such earlier date
as the Option may no longer be exercised and cannot, by
its terms, thereafter become exercisable.
(iii) Vesting and Exercisability. The Board
may establish terms regarding the times at which Options
shall become vested and exercisable. Unless otherwise
determined by the Board, an Option granted under this
Section 8(a) and not previously forfeited shall vest and
become exercisable by a Participant as to one-third of
the number of shares subject to the Option at the close
of business on the day preceding each of the three
annual meetings of shareholders following the date of
grant of the Option, rounded to the nearest number of
whole shares. The foregoing notwithstanding, an Option
not previously forfeited shall vest and become
exercisable on an accelerated
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basis upon a Change in Control or upon the termination
of the Participant's service as a director due to death,
Disability or Retirement. Unless otherwise determined by
the Board, an Option will cease to vest and become
exercisable upon the termination of the Participant's
service prior to a Change in Control for any reason
other than death, Disability or Retirement, and such
portion that has not vested and become exercisable at
the time of such termination shall be forfeited.
(iv) Payment. The exercise price of an Option
shall be paid to the Company either in cash or by the
surrender of Stock, or any combination thereof, or in
such other form or manner as may be consistent with
Section 6(b)(ii).
(c) Initial Policy -- Grant of Deferred Stock and
Restricted Stock. The initial policy with respect to Awards
granted under this Section 8(c), effective as of the Effective
Date and continuing until modified or revoked by the Board from
time to time, shall be as follows:
(i) Initial Grant. At the date of a person's
initial election or appointment as a member of the Board
after the Effective Date, such person, if he or she is a
non-employee director of the Company eligible to
participate upon such election or appointment, shall be
granted 1,500 shares of Deferred Stock, subject to
adjustment as provided in Section 12(c). At the
Effective Date, each person who is a non-employee
director of the Company eligible to participate at that
date shall be granted 1,500 shares of Deferred Stock,
subject to adjustment as provided in Section 12(c).
(ii) Annual Grants. At the date of each
annual meeting of shareholders following the Effective
Date at which a director is elected or reelected as a
member of the Board (or at which members of another
class of directors are elected or reelected, if the
Company then has a classified Board), such director, if
he or she is a non-employee director of the Company
eligible to participate at that date and if he or she
has not been granted Deferred Stock or Restricted Stock
under Section 8(c) previously during the same calendar
year, shall be granted 1,500 shares of Deferred Stock,
unless the director has elected, prior to such annual
meeting of shareholders, to receive such grant in the
form of an equal number of shares of Restricted Stock.
The number of shares subject to such annual grants shall
be subject to adjustment as provided in Section 12(c).
(d) Terms of Deferred Stock and Restricted Stock
Granted Under Section 8(c). Deferred Stock granted under Section
8(c) shall be subject to the terms and conditions of Deferred
Stock specified in Sections 8(f)(ii), (iii), and (iv), unless
otherwise determined by the Board. Deferred Stock and Restricted
Stock granted under this Section 8(c) shall also be subject to
the following additional terms and conditions:
(i) Vesting and Forfeiture. The Board may
establish terms regarding the times at which Deferred
Stock and Restricted Stock shall become vested and
non-forfeitable. Unless otherwise determined by the
Board, an Award granted under Section 8(c) and not
previously forfeited shall become vested and
non-forfeitable as to one-third of the number of shares
of Deferred Stock or Restricted Stock at the close of
business on the day preceding each of the three annual
meetings of shareholders following the date of grant of
such Award, rounded to the nearest number of whole
shares. The foregoing notwithstanding, an Award of
Deferred Stock or Restricted Stock not previously vested
or forfeited shall vest and become non-forfeitable on an
accelerated basis upon a Change in Control or upon the
termination of the Participant's service as a director
due to death, Disability or Retirement. Unless otherwise
determined by the Board, an Award of Deferred Stock or
Restricted Stock not previously vested or forfeited will
cease to vest
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and will be forfeited upon the termination of the
Participant's service prior to a Change in Control for
any reason other than death, Disability or Retirement.
(ii) Deferred Stock Credited as a Result of
Dividend Equivalents. Unless otherwise determined by the
Board, Deferred Stock credited as a result of Dividend
Equivalents under Section 8(f)(ii) shall be subject to
the same terms, including risk of forfeiture, as the
Deferred Stock with respect to which the dividend
equivalents were credited.
(iii) Dividends on Restricted Stock. Unless
otherwise determined by the Board, dividends on
Restricted Stock declared and paid prior to the lapse of
the risk of forfeiture on such Restricted Stock shall be
automatically reinvested in additional shares of
Restricted Stock, which shall be subject to the same
terms, including risk of forfeiture, as the Restricted
Stock on which the dividend was paid.
(iv) Awards Nontransferable. Deferred Stock
and Restricted Stock shall be nontransferable by the
Participant at any time that the Award remains subject
to a risk of forfeiture.
(e) Options Granted in Payment of Fees and Deferral
of Fees in Deferred Stock and Deferred Cash. Each non-employee
director of the Company may elect, in accordance with Section
8(e)(i), to be paid Retainer Fees in the form of Options under
Section 8(e)(ii) or to defer receipt of Retainer Fees and Other
Director Compensation in the form of Deferred Stock under
Section 8(e)(iii) or deferred cash under Section 8(e)(iv).
(i) Elections. A director shall elect to
participate and the terms of such participation by
filing an election with the Company prior to the
beginning of a Plan Year (the initial Plan Year will
begin August 14, 1998 and Plan Years thereafter
generally will begin at each annual meeting of
shareholders or, in the case of a new director, upon
initial appointment) or at such other date as may be
specified by the Board, provided that any date so
specified shall ensure effective deferral of taxation
and otherwise comply with applicable laws.
(A) Effect and Irrevocability of
Elections. Elections shall be deemed continuing,
and therefore applicable to Plan Years after the
initial Plan Year covered by the election, until
the election is modified or superseded by the
Participant. Elections other than those subject
to Section 8(f)(iv) shall become irrevocable at
the commencement of the Plan Year to which an
election relates, unless the Board specifies a
different time. Elections relating to the time
of settlement of a Deferral Account shall become
irrevocable at the time specified in Section
8(f)(iv). Elections may be modified or revoked
by filing a new election prior to the time the
election to be modified or revoked has become
irrevocable. The latest election filed with the
Board shall be deemed to revoke all prior
inconsistent elections that remain revocable at
the time of filing of the latest election.
(B) Matters To Be Elected. The
Company will provide a form of election which
will permit a director to make appropriate
elections with respect to all relevant matters
under this Section 8.
(C) Time of Filing Elections. An
election must be received by the Company prior
to the date specified by the Board. Under no
circumstances may a
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Participant defer compensation to which the
Participant has attained, at the time of
deferral, a legally enforceable right to current
receipt of such compensation.
(ii) Options Granted in Payment of Retainer
Fees. A Participant who has elected to be paid a
specified amount of Retainer Fees in the form of Options
shall be granted, at the close of business on the day
the Participant's Plan Year commences an Option to
purchase the number of whole shares of Stock determined
in accordance with the Option Valuation Methodology
specified by the Board. Each Option granted under this
Section 8(e)(ii) shall be subject to the following terms
and conditions:
(A) Option Valuation Methodology.
The Board shall determine the Option Valuation
Methodology which will be used to determine the
number of Options granted and the Option
exercise price. The Option Valuation Methodology
may be based upon a valuation of the Option, a
discounting of the aggregate exercise price of
the Options by the amount of Retainer Fees to be
paid in the form of Options, or such other
methodology as may be deemed reasonable for
purposes of this Section 8(e)(ii).
(B) Option Term. Each Option will
expire ten years after the date of grant;
provided, however, that, unless otherwise
determined by the Board, any portion of an
Option that is not yet exercisable as of the
date a Participant ceases to serve as a director
for any reason will expire at the date such
service ceases.
(C) Vesting and Exercisability.
Unless otherwise determined by the Board, each
Option will vest and become exercisable as to
25% of the underlying shares on the June 30,
September 30, December 31, and March 31
following the date of grant; provided, however,
that, in the case of a Plan Year which begins on
or after June 30 and before September 30, the
vesting percentage shall be 33%, and in the case
of a Plan Year which begins on or after
September 30 and before December 31, the vesting
percentage shall be 50%; and provided further,
that an Option will become fully vested and
exercisable at the close of business on the last
day of the Plan Year in which it was granted.
The number of shares as to which the Option
becomes vested and exercisable will be rounded
to the nearest whole number. The foregoing
notwithstanding, (i) upon a Change in Control a
Participant's Option not previously forfeited
shall vest and become exercisable in full, and
(ii) upon termination of the Participant's
service as a director due to death, Disability,
or Retirement, that portion of the Option which
would become vested and exercisable on the last
day of the calendar quarter in which such death,
Disability, or Retirement occurred will become
immediately vested and exercisable.
(D) Exercise Price. The exercise
price per share of Stock purchasable under an
Option will be determined in accordance with the
Option Valuation Methodology. The exercise price
of an Option shall be paid to the Company either
in cash or by the surrender of Stock, or any
combination thereof, or in such other form or
manner as may be established by the Board;
provided, however, that, unless otherwise
determined by the Board, shares shall not be
surrendered in payment of the exercise price if
such surrender would result in additional
accounting expense to the Company.
(E) Changes in Fees; Changes in
Service as a Committee Chair. If the amount of
Retainer Fees is increased during a Plan Year,
or if a Director is appointed chair of a Board
committee such that an additional Retainer Fee
is
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payable during a Plan Year, such increased or
additional fees will not be paid in the form of
Options. If a Director has been granted an
Option in respect of a Plan Year in payment of
Retainer Fees which included committee-related
fees for service as chair or a member of any
Board committee, and during such Plan Year he or
she ceases such service but remains on the
Board, the Option will expire in part at the
time such service ceases, to the extent of that
portion of the Option which is not yet
exercisable multiplied by a fraction the
numerator of which is the amount of
committee-related fees included in such Retainer
Fees and the denominator of which is the total
amount of such Retainer Fees.
(F) Service During Part of a
Quarter. If a Participant ceases to serve as a
director or on committee at a date other than a
vesting date for the Option and if the Board
does not exercise its discretion to permit
vesting of the Participant's Option in
consideration for the Participant's service in
that final quarterly period, the Participant
shall be entitled to payment in cash for his or
her service in that final quarterly period if
and to the extent then provided in the Company's
regular non-employee director compensation
policies.
(iii) Deferral of Retainer Fees and Other
Director Compensation in the Form of Deferred Stock. If
a Participant has elected to defer receipt of a
specified amount of Retainer Fees or Other Director
Compensation in the form of Deferred Stock, a number of
shares of Deferred Stock shall be credited to the
Participant's Deferred Stock Account, as of the date
such Retainer Fees or Other Director Compensation
otherwise would have been payable to the Participant but
for such election to defer, equal to (i) such amount
otherwise payable divided by (ii) the Fair Market Value
of a share of Stock at that date. Deferred Shares
credited under this Section 8(e)(iii) shall be subject
to the terms and conditions of Deferred Stock specified
in Sections 8(f)(ii), (iii) and (iv). The right and
interest of each Participant in Deferred Stock credited
to the Participant's Deferred Stock Account under this
Section 8(e)(iii) at all times will be nonforfeitable.
(iv) Deferral of Retainer Fees and Other
Director Compensation in the Form of Deferred Cash. If a
Participant has elected to defer receipt of a specified
amount of Retainer Fees or Other Director Compensation
in the form of deferred cash, an amount equal to such
specified amount shall be credited to the Participant's
Deferred Cash Account as of the date such Retainer Fees
or Other Director Compensation otherwise would have been
payable to the Participant but for such election to
defer. Each Participant shall be entitled to direct the
manner in which his or her Deferred Cash Account will be
deemed to be invested, selecting among the same
investment alternatives (other than Company common
stock) as are offered from time to time to participants
in the Company's Deferred Compensation Plan. The right
and interest of each Participant relating to his or her
Deferred Cash Account at all times will be
nonforfeitable.
(v) Cessation of Service as a Director. If
any Retainer Fee or Other Director Compensation
otherwise subject to an election would be paid to a
Participant after he or she has ceased to serve as a
director, such payment shall not be subject to deferral
under this Section 8(e), but shall instead be paid in
accordance with the Company's regular non-employee
director compensation policies.
(f) Other Deferrals and Terms of Deferral Accounts.
(i) Deferral of Certain Option Shares. Upon
any exercise of an Option or an option granted under any
other plan or program of the Company by a non-employee
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director, if the exercise price of such option is paid
by surrender of shares of Stock to the Company, the
director may elect to defer receipt of all or a portion
of the shares deliverable upon exercise of the option in
excess of the number surrendered in payment of the
exercise price. In such case, the number of shares
deferred shall be credited to the Participant's Deferred
Stock Account.
(ii) Dividend Equivalents on Deferred Stock.
Dividend Equivalents will be credited on Deferred Stock
credited to a Participant's Deferred Stock Account(s) as
follows:
(A) Cash and Non-Share Dividends. If
the Company declares and pays a dividend on
Stock in the form of cash or property other than
shares of Stock, then a number of additional
shares of Deferred Stock shall be credited to a
Participant's Deferred Stock Account(s) as of
the payment date for such dividend equal to (i)
the number of shares of Deferred Stock credited
to the respective Account as of the record date
for such dividend, multiplied by (ii) the amount
of cash plus the Fair Market Value of any
property other than shares actually paid as a
dividend on each share at such payment date,
divided by (iii) the Fair Market Value of a
share of Stock at such payment date.
(B) Share Dividends and Splits. If
the Company declares and pays a dividend on
Stock in the form of additional shares of Stock,
or there occurs a forward split of Stock, then a
number of additional shares of Deferred Stock
shall be credited to the Participant's Deferred
Stock Account(s) as of the payment date for such
dividend or forward Stock split equal to (i) the
number of shares of Deferred Stock credited to
the respective Account as of the record date for
such dividend or split multiplied by (ii) the
number of additional shares actually paid as a
dividend or issued in such split in respect of
each share of Stock.
(iii) Reallocation of Accounts. A Participant
may allocate amounts credited to his or her Deferred
Cash Account to one or more of the investment vehicles
authorized under the Company's Deferred Compensation
Plan. Subject to the rules established by the Board and
subject to the provisions of this Section 8(f), a
Participant may reallocate amounts credited to his or
her Deferred Cash Account as of the Valuation Date
following the Participant's election, to one or more of
such investment vehicles, by filing with the Company a
notice, in such form, and in accordance with such
procedures, as the Board shall determine from time to
time. The Board may, in its discretion, restrict
allocation into or reallocation by specified
Participants into or out of special investment vehicles
or specify minimum or maximum amounts that may be
allocated or reallocated by Participants.
Notwithstanding the foregoing, a Participant shall have
no right to have amounts credited as cash to the
Participant's Deferred Cash Account reallocated or
switched to his or her Deferred Stock Account or amounts
credited to the Participant's Deferred Stock Account
reallocated or switched to his or her Deferred Cash
Account, except as may be permitted by the Board.
(iv) Elections as to Settlement. Each
Participant, while still a director of the Company,
shall file an election with the Company specifying the
time or times at which the Participant's Deferral
Account will be settled, following the Participant's
termination of service as a director of the Company, and
whether distribution will be in a single lump sum or in
a number of annual installments not exceeding ten (or
such other number as may be determined by the Board);
provided, however, that, if no valid election has been
filed as to the time of settlement of a Participant's
Deferral Account or any portion thereof, such Deferral
Account or portion thereof shall be distributed in a
single lump sum
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on the first business day of the year following the year
in which the Participant ceases to serve as a director.
If installments are elected, such installments must be
annual installments, unless otherwise determined by the
Board, commencing not later than the first year
following the year in which the Participant ceases to
serve as a director (on such annual installment date as
may be specified by the Board) and extending over a
period not to exceed ten years, unless otherwise
determined by the Board.
(A) Matters Covered by Election.
Subject to the terms of the Plan, the Board
shall determine whether all deferrals under the
Plan must be subject to a single election as to
the time or times of settlement, or whether
settlement elections may relate to a specified
sub-account (i.e., the Deferred Stock Account or
the Deferred Cash Account) and/or a specified
Plan Year. If the Board permits elections to
relate to a specified Plan Year, such election
shall apply to the amounts originally credited
to the specified subaccount in respect of such
Plan Year and to any additional amounts credited
as Dividend Equivalents or interest in respect
of such originally credited amounts and
previously credited additional amounts.
(B) Modifying Elections. A
Participant may modify a prior election as to
the time at which a Participant's Deferral
Account (including a specified subaccount) will
be settled at any time prior to the time the
Participant ceases to serve as a director,
subject to such requirements as may be specified
by the Company. Such modification shall be made
by filing a new election with the Company. The
foregoing notwithstanding, the Board may
disapprove or limit elections under this Section
8(f)(iv) in order to ensure that the Participant
will not be deemed to have constructively
received compensation in respect of the
Participant's Deferral Account prior to
settlement.
(v) Election Forms. Elections under the Plan
shall be made in writing on such form or forms as may be
specified from time to time by the Board.
(vi) Statements. The Company will furnish
statements to each Participant reflecting the amount
credited to a Participant's Deferral Account,
transactions therein, and other related information no
less frequently than once each calendar year.
(vii) Fractional Shares. The amount of
Deferred Stock credited to a Deferred Stock Account
shall include fractional shares calculated to at least
three decimal places.
(g) Settlement of Deferral Accounts. The Company
will settle a Participant's Deferral Account by making one or
more distributions to the Participant (or his or her
Beneficiary, following Participant's death) at the time or
times, in a lump sum or installments, as specified in the
Participant's election filed in accordance with Section
8(f)(iv); provided, however, that a Deferral Account will be
settled at times earlier than those specified in such election
in accordance with Sections 8(g)(ii), (iii), and (iv).
(i) Form of Distribution. Distributions in
respect of a Participant's Deferred Stock Account shall
be made only in shares of Stock, together with cash in
lieu of any fractional share remaining at a time that
less than one whole share of Deferred Stock is credited
to such Deferred Stock Account. Shares may be delivered
in certificate form to a Participant (or his or her
Beneficiary) or to a nominee for the account of the
Participant (or his or her Beneficiary), or in such
other manner as the Board may determine. Distributions
in respect of a Participant's Deferred Cash Account
shall be made only in cash.
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(ii) Death. If a Participant ceases to serve
as a director due to death or dies prior to distribution
of all amounts from his or her Deferral Account, the
Company shall make a single lump-sum distribution to the
Participant's Beneficiary. Any such distribution shall
be made as soon as practicable following notification to
the Company of the Participant's death.
(iii) Financial Emergency and Other Payments.
Other provisions of the Plan notwithstanding, if, upon
the written application of a Participant, the Board
determines that the Participant has a financial
emergency of such a substantial nature and beyond the
Participant's control that payment of amounts previously
deferred under the Plan is warranted, the Board may
direct the payment to the Participant of all or a
portion of the balance of a Deferral Account and the
time and manner of such payment.
(iv) Change in Control. In the event of a
Change in Control, payments in settlement of any
Deferral Account (including a Deferral Account with
respect to which one or more installment payments have
previously been made) shall be made within fifteen (15)
business days following such Change in Control.
9. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under
another plan of the Company, any subsidiary or affiliate, or any
business entity to be acquired by the Company or a subsidiary or
affiliate, or any other right of a Participant to receive payment from
the Company or any subsidiary or affiliate. Awards granted in addition
to or in tandem with other Awards or awards may be granted either as of
the same time as or a different time from the grant of such other Awards
or awards. Subject to Section 12(k), the Committee may determine that,
in granting a new Award, the in-the-money value of any surrendered Award
or award or the value of any other right to payment surrendered by the
Participant may be applied to reduce the exercise price of any Option,
grant price of any SAR, or purchase price of any other Award.
(b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee, subject to the express
limitations set forth in Sections 6(b)(ii) and 8 or elsewhere in the
Plan.
(c) Form and Timing of Payment under Awards; Deferrals.
Subject to the terms of the Plan (including Section 12(k)) and any
applicable Award document, payments to be made by the Company or a
subsidiary or affiliate upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or
other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one
or more specified events (subject to Section 12(k)). Installment or
deferred payments may be required by the Committee (subject to Section
12(e)) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting
of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) Limitation on Vesting of Certain Awards. Subject to
Section 8, Restricted Stock will vest over a minimum period of three
years except in the event of a Participant's death, disability, or
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retirement, or in the event of a Change in Control or other special
circumstances. The foregoing notwithstanding, (i) Restricted Stock as to
which either the grant or vesting is based on, among other things, the
achievement of one or more performance conditions generally will vest
over a minimum period of one year except in the event of a Participant's
death, disability, or retirement, or in the event of a Change in Control
or other special circumstances, and (ii) up to 5% of the shares of Stock
authorized under the Plan may be granted as Restricted Stock without any
minimum vesting requirements. For purposes of this Section 9(d), vesting
over a three-year period or one-year period will include periodic
vesting over such period if the rate of such vesting is proportional
throughout such period.
10. CHANGE IN CONTROL.
(a) Effect of "Change in Control" on Non-Performance Based
Awards. In the event of a "Change in Control," the following provisions
shall apply to non-performance based Awards, including Awards as to
which performance conditions previously have been satisfied or are
deemed satisfied under Section 10(b), unless otherwise provided by the
Committee in the Award document:
(i) All deferral of settlement, forfeiture
conditions and other restrictions applicable to Awards granted
under the Plan shall lapse and such Awards shall be fully
payable as of the time of the Change in Control without regard
to deferral and vesting conditions, except to the extent of any
waiver by the Participant or other express election to defer
beyond a Change in Control and subject to applicable
restrictions set forth in Section 12(a);
(ii) Any Award carrying a right to exercise that was
not previously exercisable and vested shall become fully
exercisable and vested as of the time of the Change in Control
and shall remain exercisable and vested for the balance of the
stated term of such Award without regard to any termination of
employment or service by the Participant other than a
termination for Cause, subject only to applicable restrictions
set forth in Section 12(a); and
(iii) The Committee may, in its discretion, determine
to extend to any Participant who holds an Option the right to
elect, during the 60-day period immediately following the Change
in Control, in lieu of acquiring the shares of Stock covered by
such Option, to receive in cash the excess of the Change in
Control Price over the exercise price of such Option, multiplied
by the number of shares of Stock covered by such Option, and to
extend to any Participant who holds other types of Awards
denominated in shares the right to elect, during the 60-day
period immediately following the Change in Control, in lieu of
receiving the shares of Stock covered by such Award, to receive
in cash the Change in Control Price multiplied by the number of
shares of Stock covered by such Award.
(b) Effect of "Change in Control" on Performance-Based
Awards. In the event of a "Change in Control," with respect to an
outstanding Award subject to achievement of performance goals and
conditions, such performance goals and conditions shall be deemed to be
met or exceeded if and to the extent so provided by the Committee in the
Award document governing such Award or other agreement with the
Participant.
(c) Definition of "Change in Control." A "Change in Control"
shall be deemed to have occurred if, after the Effective Date, there
shall have occurred any of the following:
(i) Any "person," as such term is used in Section
13(d) and 14(d) of the Exchange Act (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the
Company), acquires voting securities of the Company and
immediately thereafter is a "20%
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Beneficial Owner." For purposes of this provision, a "20%
Beneficial Owner" shall mean a person who is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then-outstanding voting securities; provided that the
term "20% Beneficial Owner" shall not include any person who, at
all times following such an acquisition of securities, remains
eligible to file a Schedule 13G pursuant to Rule 13d-1(b) under
the Exchange Act, or remains exempt from filing a Schedule 13D
under Section 13(d)(6)(b) of the Exchange Act, with respect to
all classes of Company voting securities;
(ii) During any period of two consecutive years
commencing on or after the Effective Date, individuals who at
the beginning of such period constitute the Board, and any new
director (other than a director designated by a person (as
defined above) who has entered into an agreement with the
Company to effect a transaction described in subsections (i),
(iii) or (iv) of this definition) whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved (the "Continuing Directors") cease for
any reason to constitute at least a majority thereof;
(iii) The shareholders of the Company have approved a
merger, consolidation, recapitalization, or reorganization of
the Company, or a reverse stock split of any class of voting
securities of the Company, or the consummation of any such
transaction if shareholder approval is not obtained, other than
any such transaction which would result in at least 60% of the
combined voting power of the voting securities of the Company or
the surviving entity outstanding immediately after such
transaction being beneficially owned by persons who together
beneficially owned at least 80% of the combined voting power of
the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of
each such continuing holder compared to the voting power of each
other continuing holder not substantially altered as a result of
the transaction; provided that, for purposes of this paragraph
(iii), such continuity of ownership (and preservation of
relative voting power) shall be deemed to be satisfied if the
failure to meet such 60% threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of
voting securities by an employee benefit plan of the Company,
such surviving entity or a subsidiary thereof; and provided
further, that, if consummation of the corporate transaction
referred to in this Section 10(c)(iii) is subject, at the time
of such approval by shareholders, to the consent of any
government or governmental agency or approval of the
shareholders of another entity or other material contingency, no
Change in Control shall occur until such time as such consent
and approval has been obtained and any other material
contingency has been satisfied;
(iv) The shareholders of the Company have approved a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a similar
effect); provided that, if consummation of the transaction
referred to in this Section 10(c)(iv) is subject, at the time of
such approval by shareholders, to the consent of any government
or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change in
Control shall occur until such time as such consent and approval
has been obtained and any other material contingency has been
satisfied; and
(v) any other event which the Board of Directors of
the Company determines shall constitute a Change in Control for
purposes of this Plan.
(d) Definition of "Change in Control Price." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the
amount of cash and fair market value of property that is the
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highest price per share paid (including extraordinary dividends) in any
transaction triggering the Change in Control or any liquidation of
shares following a sale of substantially all assets of the Company, or
(ii) the highest Fair Market Value per share at any time during the
60-day period preceding and 60-day period following the Change in
Control.
(e) Termination of Employment After Change in Control
Negotiations Have Commenced. For purposes of this Section 10, a
termination of a Participant's employment by the Company without Cause
after the commencement of negotiations with a potential acquirer or
business combination partner will be deemed to be a termination of
employment immediately after a Change in Control if such negotiations
result in a transaction constituting a Change in Control within 24
months of the commencement date of such negotiations.
11. ADDITIONAL AWARD FORFEITURE PROVISIONS.
(a) Forfeiture of Options and Other Awards and Gains
Realized Upon Prior Option Exercises or Award Settlements. Unless
otherwise determined by the Committee, each Award granted hereunder,
other than Awards granted to non-employee directors, shall be subject to
the following additional forfeiture conditions, to which the
Participant, by accepting an Award hereunder, agrees. If any of the
events specified in Section 11(b)(i), (ii), or (iii) occurs (a
"Forfeiture Event"), all of the following forfeitures will result:
(i) The unexercised portion of the Option, whether
or not vested, and any other Award not then settled (except for
an Award that has not been settled solely due to an elective
deferral by the Participant and otherwise is not forfeitable in
the event of any termination of service of the Participant) will
be immediately forfeited and canceled upon the occurrence of the
Forfeiture Event; and
(ii) The Participant will be obligated to repay to
the Company, in cash, within five business days after demand is
made therefor by the Company, the total amount of Award Gain (as
defined herein) realized by the Participant upon each exercise
of an Option or settlement of an Award (regardless of any
elective deferral) that occurred on or after (A) the date that
is six months prior to the occurrence of the Forfeiture Event,
if the Forfeiture Event occurred while the Participant was
employed by the Company or a subsidiary or affiliate, or (B) the
date that is six months prior to the date the Participant's
employment by the Company or a subsidiary or affiliate
terminated, if the Forfeiture Event occurred after the
Participant ceased to be so employed. For purposes of this
Section, the term "Award Gain" shall mean (i), in respect of a
given Option exercise, the product of (X) the Fair Market Value
per share of Stock at the date of such exercise (without regard
to any subsequent change in the market price of shares) minus
the exercise price times (Y) the number of shares as to which
the Option was exercised at that date, and (ii), in respect of
any other settlement of an Award granted to the Participant, the
Fair Market Value of the cash or Stock paid or payable to
Participant (regardless of any elective deferral) less any cash
or the Fair Market Value of any Stock or property (other than an
Award or award which would have itself then been forfeitable
hereunder and excluding any payment of tax withholding) paid by
the Participant to the Company as a condition of or in
connection such settlement.
(b) Events Triggering Forfeiture. The forfeitures specified
in Section 11(a) will be triggered upon the occurrence of any one of the
following Forfeiture Events at any time during the Participant's
employment by the Company or a subsidiary or affiliate and resulting in
his or her termination of employment, or during the one-year period
following termination of such employment:
(i) The Participant, acting alone or with others,
directly or indirectly, prior to a Change in Control, (A)
engages, either as employee, employer, consultant, advisor, or
director, or as an
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owner, investor, partner, or stockholder unless the
Participant's interest is insubstantial, in any business in an
area or region in which the Company conducts business at the
date the event occurs, which is directly in competition with a
business then conducted by the Company or a subsidiary or
affiliate; (B) induces any customer or supplier of the Company
or a subsidiary or affiliate, or telephone company with which
the Company or a subsidiary or affiliate has a business
relationship, to curtail, cancel, not renew, or not continue his
or her or its business with the Company or any subsidiary or
affiliate; or (C) induces, or attempts to influence, any
employee of or service provider to the Company or a subsidiary
or affiliate to terminate such employment or service. The
Committee shall, in its discretion, determine which lines of
business the Company conducts on any particular date and which
third parties may reasonably be deemed to be in competition with
the Company. For purposes of this Section 11(b)(i), a
Participant's interest as a stockholder is insubstantial if it
represents beneficial ownership of less than five percent of the
outstanding class of stock, and a Participant's interest as an
owner, investor, or partner is insubstantial if it represents
ownership, as determined by the Committee in its discretion, of
less than five percent of the outstanding equity of the entity;
(ii) The Participant discloses, uses, sells, or
otherwise transfers, except in the course of employment with or
other service to the Company or any subsidiary or affiliate, any
confidential or proprietary information of the Company or any
subsidiary or affiliate, including but not limited to
information regarding the Company's current and potential
customers, organization, employees, finances, and methods of
operations and investments, so long as such information has not
otherwise been disclosed to the public or is not otherwise in
the public domain, except as required by law or pursuant to
legal process, or the Participant makes statements or
representations, or otherwise communicates, directly or
indirectly, in writing, orally, or otherwise, or takes any other
action which may, directly or indirectly, disparage or be
damaging to the Company or any of its subsidiaries or affiliates
or their respective officers, directors, employees, advisors,
businesses or reputations, except as required by law or pursuant
to legal process; or
(iii) The Participant fails to cooperate with the
Company or any subsidiary or affiliate in any way, including,
without limitation, by making himself or herself available to
testify on behalf of the Company or such subsidiary or affiliate
in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, or otherwise fails to assist
the Company or any subsidiary or affiliate in any way,
including, without limitation, in connection with any such
action, suit, or proceeding by providing information and meeting
and consulting with members of management of, other
representatives of, or counsel to, the Company or such
subsidiary or affiliate, as reasonably requested.
(c) Agreement Does Not Prohibit Competition or Other
Participant Activities. Although the conditions set forth in this
Section 11 shall be deemed to be incorporated into an Award, a
Participant is not thereby prohibited from engaging in any activity,
including but not limited to competition with the Company and its
subsidiaries and affiliates. Rather, the non-occurrence of the
Forfeiture Events set forth in Section 11(b) is a condition to the
Participant's right to realize and retain value from his or her
compensatory Options and Awards, and the consequence under the Plan if
the Participant engages in an activity giving rise to any such
Forfeiture Event are the forfeitures specified herein. The Company and
the Participant shall not be precluded by this provision or otherwise
from entering into other agreements concerning the subject matter of
Sections 11(a) and 11(b).
(d) Committee Discretion. The Committee may, in its
discretion, waive in whole or in part the Company's right to forfeiture
under this Section, but no such waiver shall be effective unless
evidenced by a writing signed by a duly authorized officer of the
Company. In addition, the Committee may impose additional conditions on
Awards, by inclusion of appropriate provisions in the document
evidencing or governing any such Award.
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12. GENERAL PROVISIONS.
(a) Compliance with Legal and Other Requirements. The
Company may, to the extent deemed necessary or advisable by the
Committee, postpone the issuance or delivery of Stock or payment of
other benefits under any Award until completion of such registration or
qualification of such Stock or other required action under any federal
or state law, rule or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which
the Stock or other securities of the Company are listed or quoted, or
compliance with any other obligation of the Company, as the Committee
may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject
to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Stock or payment of other benefits in
compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in
connection with a Change in Control, the Company shall take or cause to
be taken no action, and shall undertake or permit to arise no legal or
contractual obligation, that results or would result in any postponement
of the issuance or delivery of Stock or payment of benefits under any
Award or the imposition of any other conditions on such issuance,
delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed
on the 90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or
other right or interest of a Participant under the Plan shall be
pledged, hypothecated or otherwise encumbered or subject to any lien,
obligation or liability of such Participant to any party (other than the
Company or a subsidiary or affiliate thereof), or assigned or
transferred by such Participant otherwise than by will or the laws of
descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant
or his or her guardian or legal representative, except that Awards and
other rights (other than ISOs and SARs in tandem therewith) may be
transferred to one or more transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with
the terms of such Award, but only if and to the extent such transfers
are permitted by the Committee, subject to any terms and conditions
which the Committee may impose thereon (including limitations the
Committee may deem appropriate in order that offers and sales under the
Plan will meet applicable requirements of registration forms under the
Securities Act of 1933 specified by the Securities and Exchange
Commission). A Beneficiary, transferee, or other person claiming any
rights under the Plan from or through any Participant shall be subject
to all terms and conditions of the Plan and any Award document
applicable to such Participant, except as otherwise determined by the
Committee, and to any additional terms and conditions deemed necessary
or appropriate by the Committee.
(c) Adjustments. In the event that any large, special and
non-recurring dividend or other distribution (whether in the form of
cash or property other than Stock), recapitalization, forward or reverse
split, Stock dividend, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or
other similar corporate transaction or event affects the Stock such that
an adjustment is determined by the Committee to be appropriate under the
Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of shares of Stock which
may be delivered in connection with Awards granted thereafter, (ii) the
number and kind of shares of Stock by which annual per-person Award
limitations are measured under Section 5, (iii) the number and kind of
shares of Stock subject to or deliverable in respect of outstanding
Awards and (iv) the exercise price, grant price or purchase price
relating to any Award or, if deemed appropriate, the Committee may make
provision for a payment of cash or property to the holder of an
outstanding Option (subject to Section 12(k)). In addition, the
Committee is authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards (including Performance Awards
and performance goals and any hypothetical funding pool relating
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thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well
as acquisitions and dispositions of businesses and assets) affecting the
Company, any subsidiary or affiliate or other business unit, or the
financial statements of the Company or any subsidiary or affiliate, or
in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in view
of the Committee's assessment of the business strategy of the Company,
any subsidiary or affiliate or business unit thereof, performance of
comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made
if and to the extent that the existence of such authority (i) would
cause Options, SARs, or Performance Awards granted under the Plan to
Participants designated by the Committee as Covered Employees and
intended to qualify as "performance-based compensation" under Code
Section 162(m) and regulations thereunder to otherwise fail to qualify
as "performance-based compensation" under Code Section 162(m) and
regulations thereunder, or (ii) would cause the Committee to be deemed
to have authority to change the targets, within the meaning of Treasury
Regulation 1.162-27(e)(4)(vi), under the performance goals relating to
Options or SARs granted to Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and
regulations thereunder.
(d) Tax Provisions.
(i) Withholding. The Company and any subsidiary or
affiliate is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a
distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving
an Award, and to take such other action as the Committee may
deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to
make cash payments in respect thereof in satisfaction of a
Participant's withholding obligations, either on a mandatory or
elective basis in the discretion of the Committee. Other
provisions of the Plan notwithstanding, only the minimum amount
of Stock deliverable in connection with an Award necessary to
satisfy statutory withholding requirements will be withheld.
(ii) Required Consent to and Notification of Code
Section 83(b) Election. No election under Section 83(b) of the
Code (to include in gross income in the year of transfer the
amounts specified in Code Section 83(b)) or under a similar
provision of the laws of a jurisdiction outside the United
States may be made unless expressly permitted by the terms of
the Award document or by action of the Committee in writing
prior to the making of such election. In any case in which a
Participant is permitted to make such an election in connection
with an Award, the Participant shall notify the Company of such
election within ten days of filing notice of the election with
the Internal Revenue Service or other governmental authority, in
addition to any filing and notification required pursuant to
regulations issued under Code Section 83(b) or other applicable
provision.
(iii) Requirement of Notification Upon Disqualifying
Disposition Under Code Section 421(b). If any Participant shall
make any disposition of shares of Stock delivered pursuant to
the exercise of an Incentive Stock Option under the
circumstances described in Code Section 421(b), such Participant
shall notify the Company of such disposition within ten days
thereof.
(e) Changes to the Plan. The Board may amend, suspend or
terminate the Plan or the Committee's authority to grant Awards under
the Plan without the consent of stockholders or Participants; provided,
however, that any amendment to the Plan shall be submitted to the
Company's stockholders for approval not later than the earliest annual
meeting for which the record
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date is after the date of such Board action if such stockholder approval
is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Stock may
then be listed or quoted, or if such amendment would:
(i) materially increase the number of shares
reserved for issuance and delivery under Section 4 of the Plan;
(ii) expand the class of Eligible Persons under
Section 5(a) of the Plan;
(iii) increase the per-person Annual Limits under
Section 5(b) of the Plan;
(iv) increase the number of shares that may be issued
and delivered under the Plan in connection with awards other
than Options and SARs under Section 4(a) of the Plan;
(v) permit unrestricted Stock to be granted other
than in lieu of such payments under the Plan or other incentive
plans and programs of the Company and its subsidiaries and
affiliates;
(vi) allow for the creation of additional types of
awards;
(vii) with respect to Restricted Stock, permit
shortening or lapsing of restrictions or waiving of performance
goals, except to the extent specified in Section 9(d) of the
Plan;
(viii) amend or replace previously granted Options in a
transaction that constitutes a "repricing," as such term is used
in Instruction 3 to Item 402(b)(2)(iv) of Regulation S-K, as
promulgated by the Securities and Exchange Commission; or
(ix) amend any of the terms and conditions of this
Section 12(e);
and the Board may otherwise, in its discretion, determine to submit
other amendments to the Plan to stockholders for approval. In addition,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
outstanding Award, except any such amendment made to cause the Plan to
comply with applicable law, stock exchange rules and regulations or
accounting or tax rules and regulations. With regard to other terms of
Awards, the Committee shall have no authority to waive or modify any
such Award term after the Award has been granted to the extent the
waived or modified term would be mandatory under the Plan for any Award
newly granted at the date of the waiver or modification
(f) Right of Setoff. The Company or any subsidiary or
affiliate may, to the extent permitted by applicable law, deduct from
and set off against any amounts the Company or a subsidiary or affiliate
may owe to the Participant from time to time, including amounts payable
in connection with any Award, owed as wages, fringe benefits, or other
compensation owed to the Participant, such amounts as may be owed by the
Participant to the Company, including but not limited to amounts owed
under Section 11(a), although the Participant shall remain liable for
any part of the Participant's payment obligation not satisfied through
such deduction and setoff. By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 12(f).
(g) Unfunded Status of Awards; Creation of Trusts. The Plan
is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant
or obligation to deliver Stock pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that
are greater than those of a general creditor of the Company; provided
that the Committee may authorize the creation of trusts and deposit
therein cash, Stock, other Awards or other property, or make other
arrangements to meet the
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Company's obligations under the Plan. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the
Committee otherwise determines with the consent of each affected
Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company
for approval shall be construed as creating any limitations on the power
of the Board or a committee thereof to adopt such other incentive
arrangements, apart from the Plan, as it may deem desirable, including
incentive arrangements and awards which do not qualify under Code
Section 162(m), and such other arrangements may be either applicable
generally or only in specific cases.
(i) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee, in the event of a
forfeiture of an Award with respect to which a Participant paid cash
consideration, the Participant shall be repaid the amount of such cash
consideration. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards or other property shall be issued
or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of
the Company that Options and SARs granted to Covered Employees and other
Awards designated as Awards to Covered Employees subject to Section 7
shall constitute qualified "performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder, unless
otherwise determined by the Committee at the time of allocation of an
Award. Accordingly, the terms of Sections 7(b), (c), and (d), including
the definitions of Covered Employee and other terms used therein, shall
be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant
will be a Covered Employee with respect to a fiscal year that has not
yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee as likely to be a Covered
Employee with respect to a specified fiscal year. If any provision of
the Plan or any Award document relating to a Performance Award that is
designated as intended to comply with Code Section 162(m) does not
comply or is inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other
person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the
applicable performance objectives.
(k) Certain Limitations Relating to Accounting Treatment of
Awards. Other provisions of the Plan notwithstanding, the Committee's
authority under the Plan (including under Sections 9(c), 12(c) and
12(d)) is limited to the extent necessary to ensure that any Option or
other Award of a type that the Committee has intended to be subject to
fixed accounting with a measurement date at the date of grant or the
date performance conditions are satisfied under APB 25 shall not become
subject to "variable" accounting solely due to the existence of such
authority, unless the Committee specifically determines that the Award
shall remain outstanding despite such "variable" accounting. In
addition, other provisions of the Plan notwithstanding, (i) if any right
under this Plan would cause a transaction to be ineligible for
pooling-of-interests accounting that would, but for the right hereunder,
be eligible for such accounting treatment, such right shall be
automatically adjusted so that pooling-of-interests accounting shall be
available, including by substituting Stock or cash having a Fair Market
Value equal to any cash or Stock otherwise payable in respect of any
right to cash which would cause the transaction to be ineligible for
pooling-of-interests accounting, and (ii) if any authority under Section
10 would cause a transaction to be ineligible for pooling-of-interests
accounting that would, but for
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such authority, be eligible for such accounting treatment, such
authority shall be limited to the extent necessary so that such
transaction would be eligible for pooling-of-interests accounting.
(l) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
document shall be determined in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of laws, and
applicable provisions of federal law.
(m) Awards to Participants Outside the United States. The
Committee may modify the terms of any Award under the Plan made to or
held by a Participant who is then resident or primarily employed outside
of the United States in any manner deemed by the Committee to be
necessary or appropriate in order that such Award shall conform to laws,
regulations, and customs of the country in which the Participant is then
resident or primarily employed, or so that the value and other benefits
of the Award to the Participant, as affected by foreign tax laws and
other restrictions applicable as a result of the Participant's residence
or employment abroad shall be comparable to the value of such an Award
to a Participant who is resident or primarily employed in the United
States. An Award may be modified under this Section 12(m) in a manner
that is inconsistent with the express terms of the Plan, so long as such
modifications will not contravene any applicable law or regulation or
result in actual liability under Section 16(b) for the Participant whose
Award is modified.
(n) Limitation on Rights Conferred under Plan. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible
Person or Participant or in the employ or service of the Company or a
subsidiary or affiliate, (ii) interfering in any way with the right of
the Company or a subsidiary or affiliate to terminate any Eligible
Person's or Participant's employment or service at any time (subject to
the terms and provisions of any separate written agreements), (iii)
giving an Eligible Person or Participant any claim to be granted any
Award under the Plan or to be treated uniformly with other Participants
and employees, or (iv) conferring on a Participant any of the rights of
a stockholder of the Company unless and until the Participant is duly
issued or transferred shares of Stock in accordance with the terms of an
Award or an Option is duly exercised. Except as expressly provided in
the Plan and an Award document, neither the Plan nor any Award document
shall confer on any person other than the Company and the Participant
any rights or remedies thereunder.
(o) Severability; Entire Agreement. If any of the provisions
of this Plan or any Award document is finally held to be invalid,
illegal or unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability, and the remaining provisions
shall not be affected thereby; provided, that, if any of such provisions
is finally held to be invalid, illegal, or unenforceable because it
exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be
modified to the minimum extent necessary to modify such scope in order
to make such provision enforceable hereunder. The Plan and any Award
documents contain the entire agreement of the parties with respect to
the subject matter thereof and supersede all prior agreements, promises,
covenants, arrangements, communications, representations and warranties
between them, whether written or oral with respect to the subject matter
thereof.
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(p) Plan Effective Date and Termination. The Plan shall
become effective if, and at such time as, the stockholders of the
Company have approved it by the affirmative votes of the holders of a
majority of the voting securities of the Company present, or
represented, and entitled to vote on the subject matter at a duly held
meeting of stockholders. Upon such approval of the Plan by the
stockholders of the Company, no further awards shall be granted under
the Preexisting Plans, but any outstanding awards under the Preexisting
Plans shall continue in accordance with their terms. Any elections made
by non-employee directors and their respective Deferral Accounts
established pursuant to the 1998 Directors' Stock Plan shall continue as
if made or established pursuant to the Plan until any such election is
changed by such Participant in accordance with the provisions of this
Plan. Unless earlier terminated by action of the Board of Directors, the
Plan will remain in effect until such time as no Stock remains available
for delivery under the Plan and the Company has no further rights or
obligations under the Plan with respect to outstanding Awards under the
Plan.
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