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CHARTER COMMUNICATIONS, INC.
2001 STOCK INCENTIVE PLAN
(As Adopted February 12, 2001)
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CHARTER COMMUNICATIONS, INC.
2001 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Charter Communications,
Inc., a Delaware corporation (the "Company"), by providing an incentive to the
employees, officers, consultants and directors of the Company, its Subsidiaries
and Affiliates and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to employees (including future
employees who have received a written offer of employment), officers,
consultants and directors of the Company, its Subsidiaries and Affiliates an
added long-term incentive for high levels of performance and unusual efforts
through the grant of Nonqualified Stock Options, Stock Appreciation Rights,
Dividend Equivalent Rights, Performance Units and Performance Shares, Share
Awards, Phantom Stock and Restricted Stock (as each term is herein defined).
2. Definitions.
For purposes of the Plan:
2.1 "Affiliate" means, with respect to any person or entity, any
entity, directly or indirectly, controlled by, controlling or under common
control with such person or entity.
2.2 "Agreement" means the written agreement between the Company
and an Optionee or Grantee evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, Phantom Stock, a
Stock Appreciation Right, a Performance Award, a Dividend Equivalent Right, a
Share Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is subject to the terms of an employment
agreement
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between such Optionee or Grantee and the Company or Subsidiary, which employment
agreement includes a definition of "Cause", the term "Cause" as used in this
Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect;
and
(b) in all other cases, the Optionee or Grantee (i) has
committed any crime, (ii) has committed any act of fraud, embezzlement or gross
dishonesty, (iii) has committed any act of sex discrimination or sexual
harassment under the provisions of any Federal, state or local law, resulting in
any of the above cases in a material financial loss to the Company or damage to
the reputation of the Company, (iv) has refused to comply with the lawful
directives of the Board or of the Optionee's or Grantee's supervisors, within
ten (10) days after written notice thereof from the Board or the Company, or (v)
has engaged in conduct which constitutes gross negligence or willful misconduct,
which conduct is not cured within ten (10) days after written notice thereof
from the Board or the Company.
2.6 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but not limited to,
in the case of a spin-off, dividend or other distribution in respect of Shares,
a change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, property
dividend, combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence of any of the
following:
(a) An acquisition of any voting securities of the Company
by any "Person" or "Group" (as those terms are used for purposes of Section
13(d) or 14(d) of the Exchange Act), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the combined voting power of the
Company's then outstanding voting securities; provided, however, in determining
whether a Change in Control has occurred pursuant to this Section 2.7(a), Shares
or voting securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i)
an employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any Subsidiary or Affiliate of the Company, (ii) the Company
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or any Subsidiary or Affiliate of the Company, or (iii) any Person in connection
with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of February 12,2001 are members
of the Board (the "Incumbent Board"), cease for any reason to constitute at
least one half of the members of the Board or, following a Merger which results
in a Parent Corporation, the board of directors of the Parent Corporation (as
defined in paragraph (c)(i)(A) below); provided, however, that if the election,
or nomination for election by the Company's common stockholders, of any new
director was approved by a vote of at least one half of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy Contest")
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are issued (a "Merger"),
unless such Merger is a "Non-Control Transaction." A "Non-Control Transaction"
shall mean a Merger where:
(A) (1) the stockholders of the Company,
immediately before such Merger own directly or indirectly immediately following
such Merger more than fifty percent (50%) of the combined voting power of the
outstanding voting securities of (x) the corporation resulting from such Merger
(the "Surviving Corporation"), or (y) if any Person or Group, directly or
indirectly, owns fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of the Surviving Corporation (such Person or
Group a "Parent Corporation"), the Parent Corporation; and,
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such Merger constitute at least a majority of the members of the board of
directors of (x) the Surviving Corporation, or (y) the Parent Corporation, if
the Parent Corporation, directly or indirectly, owns fifty percent (50%) or more
of the combined voting power of the then outstanding voting securities of the
Surviving Corporation; and
(3) no Person other than (a) the Company, (b)
any Subsidiary or Affiliate of the Company, (c) any employee benefit plan (or
any trust forming a part thereof) that, immediately prior to such Merger was
maintained by the
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Company or any Subsidiary or Affiliate of the Company, or (d) any Person who,
immediately prior to such Merger had Beneficial Ownership of fifty percent (50%)
or more of the then outstanding voting securities or Shares, has Beneficial
Ownership of fifty percent (50%) or more of the combined voting power of the
outstanding voting securities or common stock of (x) the Surviving Corporation,
or (y) the Parent Corporation, if the Parent Corporation, directly or
indirectly, owns 50% or more of the combined voting power of the then
outstanding voting securities of the Surviving Corporation; or
(B) immediately following such Merger, the "Allen
Entities" (as defined in the Restated Certificate of Incorporation of the
Company) retain "Effective Voting Control." "Effective Voting Control" shall be
deemed to be held by the Allen Entities if (x) they own in the aggregate,
directly or indirectly, at least forty percent (40%) of the voting power of (1)
the Surviving Corporation, or (2) the Parent Corporation, if the Parent
Corporation, directly or indirectly, owns fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the Surviving
Corporation, and (y) no other Person or Group owns, directly or indirectly, an
amount equal to or greater than one half of the voting power held in the
aggregate, directly or indirectly, by the Allen Entities;
(ii) A complete liquidation or dissolution of the Company
(other than where assets of the Company are transferred to or remain with
Subsidiaries of the Company); or
(iii) The sale or other disposition of all or substantially
all of the assets of the Company, directly or indirectly, to any Person (other
than a transfer to a Subsidiary or Affiliate of the Company, including, without
limitation, the Allen Entities, if and only if the Allen Entities are Affiliates
(individually or collectively) of the Company immediately prior to such sale or
other disposition, or under conditions that would constitute a Non-Control
Transaction with the disposition of assets being regarded as a Merger for this
purpose or the distribution to the Company's stockholders of the stock of a
Subsidiary or Affiliate of the Company or any other assets).
Notwithstanding the foregoing a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Shares or voting securities as a result of the acquisition of Shares or voting
securities by the Company which, by reducing the number of Shares or voting
securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or voting securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any
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additional Shares or voting securities which increases the percentage of the
then outstanding Shares or voting securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
If an Eligible Individual's employment is terminated (A) by the
Company without Cause within the thirty (30) day period immediately preceding a
Change in Control or (B) at the written request of a third party (or such third
party's agent) who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control, such termination shall be deemed to
have occurred after a Change in Control for purposes of this Plan provided a
Change in Control shall actually have occurred.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means at least one committee, as described in
Section 3.1, appointed by the Board from time to time to administer the Plan and
to perform the functions set forth herein.
2.10 "Company" means Charter Communications, Inc.
2.11 "Director" means a director of the Company.
2.12 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary, which
employment agreement includes a definition of "Disability", the term
"Disability" as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; or
(b) in all other cases, the term "Disability" as used in
this Plan or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially his or her
duties, and for which the Optionee or Grantee is also receiving benefits under
the Company's long-term disability plan, if any, then in effect.
2.13 "Division" means any of the operating units or divisions of
the Company or Subsidiary designated as a Division by the Committee in its
discretion.
2.14 "Dividend Equivalent Right" means a right to receive all or
some portion of the cash dividends that are or would be payable with respect to
Shares.
2.15 "Eligible Director" means a director of the Company who is not
an employee of the Company, or any Subsidiary or Affiliate of the Company.
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2.16 "Eligible Individual" means any of the following individuals
who is designated by the Committee in its discretion as eligible to receive
Options or Awards subject to the conditions set forth herein: (a) any director,
officer or employee of the Company or a Subsidiary or Affiliate of the Company,
(b) any individual to whom the Company, or a Subsidiary or an Affiliate of the
Company, has extended a formal offer of employment, or (c) any consultant or
advisor of the Company or a Subsidiary. Notwithstanding the foregoing, an
Eligible Individual shall not include a member of a collective bargaining unit,
when, as a result of good faith bargaining between such member's designated
collective bargaining representative and such member's employer (or predecessor
employer) either (a) such member has been excluded from participation, or (b)
such member's participation has not been expressly provided pursuant to the
provisions of the collective bargaining agreement applicable to such member.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the high
and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to trading, or,
if such Shares are not so listed or admitted to trading, the average of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith.
2.19 Good Reason. (a) "Good Reason" means the occurrence after a
Change in Control of any of the events or conditions described in subsections
(1) through (8) hereof:
(1) a change in the Optionee's or Grantee's status, title,
position or responsibilities (including reporting responsibilities) which
represents an adverse change from his status, title, position or
responsibilities as in effect at any time within ninety days preceding the date
of a Change in Control or at any time thereafter; the assignment to the Optionee
or Grantee of any duties or responsibilities which are inconsistent with his
status, title, position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at any time thereafter;
or any removal of the Optionee or Grantee from or failure to reappoint or
reelect him to any of such offices or positions, except in connection with the
termination of his employment for Disability, Cause, as a result of his death or
by the Optionee or Grantee other than for Good Reason;
(2) a reduction in the Optionee's or Grantee's base salary or any
failure
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to pay the Optionee or Grantee any compensation or benefits to which he is
entitled within five days of notice thereof;
(3) a termination or reduction, without consent, of the facilities
(including office space and general location) and staff reporting available to
the Optionee or Grantee;
(4) the Company's or the Subsidiary's requiring the Optionee or
Grantee to be based at any place more than fifty (50) miles from the Optionee's
or Grantee's principal place of employment, except for reasonably required
travel on the Company's business which is not materially greater than such
travel requirements prior to the Change in Control or relocation pursuant to a
voluntary change in position;
(5) the failure by the Company or Subsidiary to provide the
Optionee or Grantee with compensation and benefits, in the aggregate, at least
equal (in terms of benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and practice in which the
Optionee or Grantee was participating at any time within ninety days preceding
the date of a Change in Control or at any time thereafter;
(6) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company or Subsidiary, which
petition is not dismissed within sixty days;
(7) any purported termination of the Optionee or Grantee's
employment for Cause by the Company which does not comply with the terms of
Section 2.5; or
(8) the failure of the Company or Successor to obtain an
agreement, satisfactory to the Optionee or Grantee, from any Successors and
Assigns to assume and agree to perform this Agreement, as contemplated in
Section 17 hereof.
(b) Any event or condition described in this Section 2.19(a)(1)
through (8) which occurs prior to a Change in Control but which the Optionee or
Grantee reasonably demonstrates (1) was at the request of a third party, or (2)
otherwise arose in connection with, or in anticipation of, a Change in Control
which actually occurs, shall constitute Good Reason for purposes of the Plan
notwithstanding that it occurred prior to the Change in Control.
2.20 "Grantee" means a person to whom an Award has been granted
under the Plan.
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2.21 "Nonemployee Director" means a director of the Company who is
a "nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.22 "Nonqualified Stock Option" means an Option which is not an
incentive stock option as defined under Section 422 of the Code.
2.23 "Option" means a Nonqualified Stock Option.
2.24 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.25 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.26 "Performance Awards" means Performance Units, Performance
Shares or either or both of them.
2.27 "Performance-Based Compensation" means any Option or Award
that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.
2.28 "Performance Cycle" means the time period specified by the
Committee in its discretion at the time Performance Awards are granted during
which the performance of the Company, a Subsidiary or a Division will be
measured.
2.29 "Performance Objectives" has the meaning set forth in Section
11.
2.30 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 10.
2.31 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 10.
2.32 "Phantom Stock" means a right granted to an Eligible
Individual under Section 11 representing a number of hypothetical Shares.
2.33 "Plan" means this Charter Communications, Inc. 2001 Stock
Incentive Plan, as amended and restated from time to time.
2.34 "Plan Administrator" means the individual so designated by the
Committee in its discretion, or, in the absence of such designation, the head of
the compensation department of the Company.
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2.35 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.36 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 9.
2.37 "Retirement" means a termination of employment with the
Company or a Subsidiary (i) after age 55, (ii) with the sum of the employee's
age and years of service equaling 70 or more, and (iii) following one or more
years of service from the date of grant. For the purposes of this section,
"years of service" shall include years of service with the Company, as well as
any years of service with an Affiliate or Subsidiary but only during such time
as those entities are Affiliates or Subsidiaries.
2.38 "Share Award" means an Award of Shares granted pursuant to
Section 11.
2.39 "Shares" means the Class A Common Stock, par value $.01 per
share, of the Company and any other securities into which such shares are
changed or for which such shares are exchanged.
2.40 "Stock Appreciation Right" means a right to receive all or
some portion of the increase in the value of the Shares as provided in Section 7
hereof.
2.41 "Subsidiary" means any entity, whether or not incorporated, in
which the Company, directly or indirectly, (i) owns 35% or more of the
outstanding equity or other ownership interests, (ii) owns 35% or more of the
outstanding voting power, or (iii) has sole management responsibility.
2.42 "Successors and Assigns" for purposes of the Plan, shall mean
a corporation or other entity acquiring all or substantially all the assets and
business of the Company or a Subsidiary whether by operation of law or
otherwise, and any affiliate of such Successors and Assigns.
3. Administration.
3.1 The Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. If the Committee
consists of more than one (1) member, a quorum shall consist of not fewer than
two (2) members of the Committee and a majority of a quorum may authorize any
action. Any decision or determination reduced to writing and signed by a
majority of all of the members of the Committee shall be as fully effective as
if made by a majority vote at a meeting duly
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called and held. The Committee shall consist of one (1) or more Directors and
may consist of the entire Board; provided, however, (A) if the Committee
consists of less than the entire Board, then with respect to any Option or Award
to an Eligible Individual who is subject to Section 16 of the Exchange Act, the
Committee shall consist of at least two (2) Directors each of whom shall be a
Nonemployee Director and (B) to the extent necessary for any Option or Award
intended to qualify as Performance-Based Compensation to so qualify, the
Committee shall consist of at least two (2) Directors each of whom shall be an
Outside Director. For purposes of the preceding sentence, if one or more members
of the Committee is not a Nonemployee Director and an Outside Director but
recuses himself or herself or abstains from voting with respect to a particular
action taken by the Committee, then the Committee, with respect to that action,
shall be deemed to consist only of the members of the Committee who have not
recused themselves or abstained from voting. Subject to applicable law, the
Committee may delegate its authority under the Plan to any other person or
persons.
3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power and the discretion from time to time to:
(a) determine those Eligible Individuals to whom Options
shall be granted under the Plan and the number of such Options to be granted and
to prescribe the terms and conditions (which need not be identical) of each such
Option, including the exercise price per Share, the vesting schedule and the
duration of each Option, and make any amendment or modification to any Option
Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall
be granted under the Plan and to determine the number of Shares in respect of
which each Award is granted, the terms and conditions (which need not be
identical) of each such Award, and make any amendment or modification to any
Award Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the
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administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable, including so that the Plan and the operation of the Plan complies
with Rule 16b-3 under the Exchange Act, the Code to the extent applicable and
other applicable law, and otherwise to make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries, the
Optionees and Grantees, and all other persons having any interest therein;
(d) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;
(e) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
Notwithstanding the foregoing, the participation of an Eligible
Individual represented by a collective-bargaining representative shall also be
governed by the results of good-faith collective bargaining and/or any
collective bargaining agreement resulting therefrom.
4. Stock Subject to the Plan; Grant Limitations.
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 38,895,911 plus up to 21,068,102
Shares based on forfeitures, cancellations and terminations under Charter
Communications Option Plan; provided, however, that in the aggregate, not more
than 3,000,000 of the number of allotted Shares may be made the subject of
Restricted Stock Awards under Section 10 of the Plan (other than shares of
Restricted Stock made in settlement of Performance Units pursuant to Section
11.1(b). The maximum number of Shares that may be the subject of Options and
Stock Appreciation Rights granted to an Eligible Individual in any one calendar
year period may not exceed 3,889,591 Shares. The maximum dollar amount of cash
or the Fair Market Value of Shares that any Eligible Individual may receive in
any calendar year in respect of Performance Units denominated in dollars may not
exceed $15,000,000. The Company shall reserve for the purposes of the Plan, out
of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board
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in its discretion. If an Option or Stock Appreciation Right expires or
terminates for any reason without having been exercised in full, the unpurchased
Shares will continue to count against the maximum number of Shares for which
Options and Stock Appreciation Rights may be granted to an Eligible Individual
in any one calendar year.
4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated; provided, however, that if any
Option is exercised by tendering Shares, either actually or by attestation, to
the Company as full or partial payment of the exercise price, the maximum number
of Shares available under Section 4.1 shall be increased by the number of Shares
so tendered.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled, is settled in cash (including the settlement of tax
withholding obligations using Shares) or is otherwise terminated for any reason
without having been exercised or payment having been made in respect of the
entire Option or Award, the Shares allocable to the expired, canceled, settled
or otherwise terminated portion of the Option or Award may again be the subject
of Options or Awards granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement.
5.2 Exercise Price. The purchase price or the manner in which the
exercise price is to be determined for Shares under each Option shall be
determined by the Committee in its discretion and set forth in the Agreement;
provided, however, that the exercise price per Share under each Option shall not
be less than 100% of the Fair Market Value of a Share on the date the Option is
granted unless the Options are substituted for options issued by another company
where the Company or a Subsidiary acquires (whether by purchase, merger, or
otherwise) all or substantially all of
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outstanding capital stock or assets of another company or in the event of any
reorganization or other transaction qualifying under Code Section 424.
5.3 Maximum Duration. Options granted hereunder shall be for such
term as the Committee shall determine in its discretion, provided that a
Nonqualified Stock Option shall not be exercisable after the expiration of ten
(10) years from the date it is granted. Unless the Committee provides otherwise
in the Agreement, an Option (i) may, upon the death, Disability or Retirement of
the Optionee prior to the expiration of the Option, be exercised for up to two
(2) years following the date of the Optionee's death, Disability or Retirement,
as applicable, (ii) may, following the voluntary termination of service by the
Optionee or a termination other than for Cause, be exercised for up to sixty
(60) days following the date of termination, and (iii) shall, in the event of a
termination of service for Cause, be terminated effective immediately prior to
such termination, whether or not such Option was then exercisable. The Committee
may, in its discretion, subsequent to the granting of any Option, extend the
term thereof, but in no event shall the term as so extended exceed the maximum
term provided for in the first sentence hereof.
5.4 Vesting. Subject to Section 6.4, each Option shall entitle the
Employee to purchase, in whole at any time or in part from time to time, 25% of
the total number of Shares covered by the Option as of the first anniversary of
the date of grant and an additional 25% of the total number of Shares covered by
the Option after the expiration of each of the second, third and fourth
anniversaries of the date of grant; provided however, that Options may become
exercisable in such other installments (which need not be equal) and at such
times as may be designated by the Committee in its discretion and set forth in
the Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires. The Committee may, in its
discretion, accelerate the exercisability of any Option or portion thereof at
any time.
5.5 Deferred Delivery of Option Shares. The Committee may, in its
discretion, permit Optionees to elect to defer the issuance of Shares upon the
exercise of one or more Nonqualified Stock Options granted pursuant to the Plan.
The terms and conditions of such deferral shall be determined at the time of the
grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.
6. Terms and Conditions Applicable to All Options.
6.1 Non-Transferability. (a) No Option shall be transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
or pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and an Option shall be exercisable during
the lifetime of such Optionee
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15
only by the Optionee or his or her guardian or legal representative.
Notwithstanding the foregoing, the Committee may, in its discretion, set forth
in the Agreement evidencing an Option at the time of grant or thereafter, that
the Option may be transferred to members of the Optionee's immediate family, to
trusts solely for the benefit of such immediate family members and to
partnerships in which such family members and/or trusts are the only partners,
and for purposes of this Plan, a transferee of an Option shall be deemed to be
the Optionee. For this purpose, immediate family means the Optionee's spouse,
parents, children, stepchildren and grandchildren and the spouses of such
parents, children, stepchildren and grandchildren. The terms of an Option shall
be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.
(b) Notwithstanding any thing to the contrary herein,
including, without limitation, the provisions of Section 5.3, if an Option has
been transferred in accordance with this Section 6.1, the Option shall be
exercisable solely by the transferee. The Option shall remain subject to the
provisions of the Plan, including that it shall be exercisable only to the
extent that the Optionee or Optionee's estate would have been entitled to
exercise it if the Optionee had not transferred the Option. In the event of the
death of the Optionee prior to the expiration of the right to exercise the
transferred Option, the period during which the Option shall be exercisable
shall terminate on the date one (1) year following the date of the Optionee's
death. In the event of the death of the transferee prior to the expiration of
the right to exercise the Option, the period during which the Option shall be
exercisable by the executors, administrators, legatees and distributees of the
transferree's estate, as the case may be, shall terminate on the date one (1)
year following the date of the transferee's death. In no event, however, shall
the Option be exercisable after the expiration of the Option period set forth in
the terms and conditions of the Agreement. The Option shall be subject to such
other rules as the Committee shall determine in its discretion.
6.2 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person, electronically or by mail to the
Plan Administrator (or his or her designee) specifying the number of Shares to
be exercised and, to the extent applicable, accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the Option was
granted; provided, however, that Options may not be exercised by an Optionee for
twelve months following a hardship distribution to the Optionee, to the extent
such exercise is prohibited under Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(4). The exercise price for any Shares purchased pursuant
to the exercise of an Option shall be paid, in any of the following forms (or
any combination thereof): (a) cash, (b) the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser period as may be permitted by the Committee
in its discretion) prior to the exercise of the
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16
Option, such transfer to be upon such terms and conditions as determined by the
Committee in its discretion or (c) a combination of cash and the transfer of
Shares or such other methods as determined by the Committee in its discretion;
provided, however, that the Committee may determine at any time in its
discretion that the exercise price shall be paid only in cash. In addition,
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures which are, from time to time, deemed acceptable by
the Committee in its discretion. Any Shares transferred to the Company as
payment of the exercise price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such Option. If
requested by the Committee in its discretion, the Optionee shall deliver the
Agreement evidencing the Option to the Plan Administrator (or his or her
designee) who shall endorse thereon a notation of such exercise and return such
Agreement to the Optionee. Unless otherwise determined by the Committee in its
discretion, no fractional Shares (or cash in lieu thereof) shall be issued upon
exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
6.3 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
6.4 Effect of Change in Control. Notwithstanding any other
provision contained in this Plan, in the event of a Change in Control, any
unvested Options issued under this Plan to any Optionee shall vest and become
fully exercisable, subject to the provisions of Section 12.2, upon (i) the
termination by the Company, Subsidiary, or Affiliate of the Optionee's
employment other than for Cause or (ii) the termination of the Optionee's
employment for Good Reason, during the 12-month period following the Change in
Control. In the event of a Change in Control, the Committee may, in its
discretion, do one or more of the following: (i) shorten the period during which
Options are exercisable (provided they remain exercisable for at least 30 days
after the date on which notice of such shortening is given to the Optionees);
(ii) arrange to have the surviving or successor entity assume the Options or
grant replacement options with appropriate adjustments in the option prices and
adjustments in the number and kind of securities issuable upon exercise so that
the Options or their replacements represent the right to purchase the shares of
stock, securities or other property (including cash) as may be issuable or
payable as a result of a Change in Control with respect to or in exchange for
the number of Shares purchasable and receivable upon the exercise of the Options
had such exercise occurred in full prior to such Change in Control, or (iii)
cancel Options
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17
upon the payment to the Optionee in cash, with respect to each Option to the
extent then exercisable (including any Options as to which the exercise has been
accelerated in accordance with this Section), of an amount that is equal to the
Fair Market Value of the Shares subject to the option or portion thereof over
the aggregate exercise price for such Shares under Option or portion thereof
surrendered at the effective time of the Change in Control. The Committee may,
in its discretion, also provide for one or more of the foregoing alternatives in
any particular Option Agreement.
6.5 Relocation. If the Company shall relocate its existing
headquarters outside the greater St. Louis, Missouri area on or before December
23, 2001 without the prior written consent of Jerald L. Kent, or of Barry L.
Babcock or Howard L. Wood if Mr. Kent is not surviving at the time such consent
is sought (a "Headquarters Breach"):
(a) unless otherwise provided in the Optionee's Agreement,
with respect to any Optionee who is a member of the corporate staff and is
employed and located at the St. Louis corporate headquarters and to whom Options
have been granted and who does not relocate, if less than forty percent (40%) of
the Options held by such Optionee have vested, then for purposes of this
paragraph (a) of Section 6.5, forty percent (40%) of all Options held by such
Optionee, less: (i) the Options the Optionee has exercised, and (ii) the Options
actually vested, will be deemed to have vested. With respect to such Optionee's
Options which have vested and have not been exercised, and the Options which are
deemed to have been vested pursuant to this paragraph (a) of Section 6.5, the
Company shall pay, to each such Optionee in full satisfaction of such Options an
amount equal to (A) the Fair Market Value of the Shares subject to the Options
or portion thereof surrendered, over (B) the aggregate exercise price for such
Shares under the Options or portion thereof surrendered;
(b) if the sum of the payments to the Optionee under
Sections 6.5(a), 7.8(a), 9.7(a) and 10.6(a) equals an amount less than the
Optionee's annual base salary at the time of the Headquarters Breach, then the
Optionee shall receive a single additional payment in an amount equal to the
difference between the Optionee's annual base salary and the sum of the payments
under such Sections; and
(c) if any payment is made to any Optionee pursuant to
paragraph (a) of Section 6.5 above, then all Options granted to such Optionee
shall be automatically canceled.
7. Stock Appreciation Rights.
The Committee may, in its discretion, either alone or in connection
with the grant of an Option, grant Stock Appreciation Rights in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
If granted in
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18
connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine in its discretion) and shall, except as provided in this Section
7, be subject to the same terms and conditions as the related Option.
7.1 Time of Grant. A Stock Appreciation Right may be granted (a)
at any time if unrelated to an Option, or (b) if related to an Option, either at
the time of grant or at any time thereafter during the term of the Option.
7.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be transferable.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (i) the excess of the Fair Market
Value of a Share on the date preceding the date of exercise of such Stock
Appreciation Right over the per Share exercise price under the related Option,
by (ii) the number of Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may, in its discretion,
limit in any manner the amount payable with respect to any Stock Appreciation
Right by including such a limit in the Agreement evidencing the Stock
Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
7.3 Stock Appreciation Right Unrelated to an Option. The Committee
may, in its discretion, grant to Eligible Individuals Stock Appreciation Rights
unrelated to Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability (subject to Section 7.7),
vesting and duration as the Committee shall determine in its discretion, but in
no event shall they have a term of greater than ten (10) years. Unless the
Committee provides otherwise in the Agreement, a Stock Appreciation Right (i)
may, upon the death, Disability or Retirement of the Grantee prior to the
expiration of the Stock Appreciation Right, be exercised for up to two (2)
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19
years following the date of the Grantee's death, Disability or Retirement, as
applicable, (ii) may, following the voluntary termination of service by the
Grantee or a termination other than for Cause, be exercised for up to sixty (60)
days following the date of termination, and (iii) shall, in the event of a
termination of service for Cause, be terminated effective immediately prior to
such termination, whether or not such Stock Appreciation Right was then
exercisable. Upon exercise of a Stock Appreciation Right unrelated to an Option,
the Grantee shall be entitled to receive an amount determined by multiplying (a)
the excess of the Fair Market Value of a Share on the date preceding the date of
exercise of such Stock Appreciation Right over the Fair Market Value of a Share
on the date the Stock Appreciation Right was granted, by (b) the number of
Shares as to which the Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may, in its discretion, limit in
any manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
7.4 Non-Transferability. No Stock Appreciation Right shall be
transferable by the Grantee otherwise than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act), and such Stock Appreciation
Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative. The terms of such Stock
Appreciation Right shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Grantee.
7.5 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person,
electronically or by mail to the Plan Administrator (or his or her designee)
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee in its discretion, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Plan
Administrator (or his or her designee) who shall endorse thereon a notation of
such exercise and return such Agreement to the Grantee.
7.6 Form of Payment. Payment of the amount determined under
Sections 7.2(b) or 7.3 may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee in its discretion
decides to make full payment in Shares and the amount payable results in a
fractional Share, payment for the fractional Share will be made in cash.
7.7 Effect of Change in Control. Notwithstanding any other
provision
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20
contained in this Plan, in the event of a Change in Control, any unvested Stock
Appreciation Rights issued under this Plan to any Grantee shall vest and become
fully exercisable, subject to the provisions of Section 12.2, upon (i) the
termination by the Company, Subsidiary, or Affiliate of the Grantee's employment
other than for Cause or (ii) the termination of the Grantee's employment for
Good Reason, during the 12 month period following the Change in Control. In the
event of a Change the Committee may, in its discretion, do one or more of the
following: (i) shorten the period during which Stock Appreciate Rights are
exercisable (provided they remain exercisable for at least thirty (30) days
after the date on which notice of such shortening is given to the Grantees);
(ii) arrange to have the surviving or successor entity assume the Stock
Appreciation Rights or grant replacement Stock Appreciation Rights with
appropriate adjustments so that the Stock Appreciation Rights or their
replacements represent the right to receive cash as may be payable as a result
of a Change in Control with respect to the amount of cash receivable upon the
exercise of the Stock Appreciation Rights had such exercise occurred in full
prior to such Change in Control, or (iii) cancel Stock Appreciation Rights upon
the payment to the Grantees in cash, with respect to each Stock Appreciation
Rights to the extent then exercisable (including any Stock Appreciation Rights
as to which the exercise has been accelerated in accordance with this Section),
of an amount that is equal to the Fair Market Value of the Shares subject to the
Stock Appreciation Right or portion thereof over the aggregate exercise price
for such Shares under the Stock Appreciation Right or portion thereof
surrendered at the effective time of the Change in Control. The Committee may,
in its discretion, also provide for one or more of the foregoing alternatives in
any particular Agreement.
7.8 Relocation. If the Company shall relocate its existing
headquarters outside the greater St. Louis, Missouri area on or before December
23, 2001 without the prior written consent of Jerald L. Kent, or of Barry L.
Babcock or Howard L. Wood if Kent is not surviving at the time such consent is
sought (a "Headquarters Breach"):
(a) unless otherwise provided in the Agreement, with respect
to any Grantee who is a member of the corporate staff and is employed and
located at the St. Louis corporate headquarters and to whom Stock Appreciation
Rights have been granted and who does not relocate, if less than forty percent
(40%) of the Stock Appreciation Rights held by such Grantee have vested, then
for purposes of this paragraph (a) of Section 7.8, forty percent (40%) of all
Stock Appreciation Rights held by such Grantee, less: (i) the Stock Appreciation
Rights the Grantee has exercised, and (ii) the Stock Appreciation Rights
actually vested, will be deemed to have vested. With respect to such Grantee's
Stock Appreciation Rights which have vested and have not been exercised, and the
Stock Appreciation Rights which are deemed to have been vested pursuant to this
paragraph (a) of Section 7.8, the Company shall pay, to each such Grantee in
full satisfaction of such Stock Appreciation Rights an amount equal to (I)(A)
the Fair Market
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21
Value of the Shares subject to the Stock Appreciation Rights or portion thereof
surrendered, over (B) the aggregate exercise price for such Shares under the
Stock Appreciation Rights or portion thereof surrendered, and (II) the amount,
if any, specified in Section 6.5(b); and
(b) if any payment is made to any Grantee pursuant to
paragraph (a) of Section 7.8 above, then all Stock Appreciation Rights granted
to such Grantee shall be automatically canceled.
8. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals in
tandem with an Option or Award or as a separate Award. The terms and conditions
applicable to each Dividend Equivalent Right shall be specified in the Agreement
under which the Dividend Equivalent Right is granted. Amounts payable in respect
of Dividend Equivalent Rights may be payable currently or deferred until the
lapsing of restrictions on such Dividend Equivalent Rights or until the vesting,
exercise, payment, settlement or other lapse of restrictions on the Option or
Award to which the Dividend Equivalent Rights relate. In the event that the
amount payable in respect of Dividend Equivalent Rights is to be deferred, the
Committee shall, in its discretion, determine whether such amount is to be held
in cash or reinvested in Shares or deemed (notionally) to be reinvested in
Shares. If amounts payable in respect of Dividend Equivalent Rights are to be
held in cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee may, in its discretion, determine. Dividend Equivalent
Rights may be settled in cash or Shares or a combination thereof, in a single
installment or multiple installments as the Committee, in its discretion,
determines.
9. Restricted Stock.
9.1 Grant. The Committee may, in its discretion, grant Awards to
Eligible Individuals of Restricted Stock, which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the
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22
discretion of the Committee, an escrow agreement and any other documents which
the Committee may, in its discretion, require as a condition to the issuance of
such Shares. If a Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, or any documents which the Committee may, in its
discretion, require within the time period prescribed by the Committee at the
time the Award is granted, the Award shall be null and void. At the discretion
of the Committee, Shares issued in connection with a Restricted Stock Award
shall be deposited together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. Unless the Committee in its
discretion determines otherwise and as set forth in the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.
9.3 Non-Transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated.
9.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine in its discretion. The Agreement
evidencing the Award shall set forth any such restrictions.
(b) Effect of Change in Control. Notwithstanding any other
provision contained in this Plan, in the event of a Change in Control, any
restrictions with respect to Restricted Stock issued under this Plan to any
Grantee shall lapse, subject to the provisions of Section 12.2, upon (i) the
termination by the Company, Subsidiary, or Affiliate of the Optionee's
employment other than for Cause or (ii) the termination of the Optionee's
employment for Good Reason, during the 12 month period following the Change in
Control. In the event of a Change the Committee may, in its discretion, do one
or more of the following: (i) arrange to have the surviving or successor entity
assume the Restricted Stock or grant replacement Restricted Stock with
appropriate adjustments in the number and kind of securities so that the
Restricted Stock Award or its replacement represents the right to the shares of
stock, securities or other property (including cash) as may be issuable or
payable as a result of a Change in Control with respect to or in exchange for
the number of Shares receivable upon the lapse of restrictions had such lapse of
restrictions occurred in full prior to such Change in Control, or (ii) cancel
the Restricted Stock Award upon the payment to the Grantees in cash, with
respect to each Restricted Stock Award to the extent then lapsed (including any
Restricted Stock as to which the lapse of restrictions has been accelerated in
accordance with this Section), of an
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23
amount that is equal to the Fair Market Value of the Shares subject to the
Restricted Stock Award surrendered at the effective time of the Change in
Control. The Committee may, in its discretion, also provide for one or more of
the foregoing alternatives in any particular Agreement.
9.5 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall, in its discretion, determine whether such
dividends are to be reinvested in Shares (which shall be held as additional
Shares of Restricted Stock) or held in cash. If deferred dividends are to be
held in cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee may, in its discretion, determine. Payment of deferred
dividends in respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest accrued thereon,
if any, shall be made upon the lapsing of restrictions imposed on the Shares in
respect of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.
9.6 Delivery of Shares. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
9.7 Relocation. If the Company shall relocate its existing
headquarters outside the greater St. Louis, Missouri area on or before December
23, 2001 without the prior written consent of Jerald L. Kent, or of Barry L
Babcock or Howard L. Wood if Kent is not surviving at the time such consent is
sought (a "Headquarters Breach"):
(a) unless otherwise provided in the Agreement, with respect
to any Grantee who is a member of the corporate staff and is employed and
located at the St. Louis corporate headquarters and to whom Restricted Stock
Awards have been granted and who does not relocate, if less than forty percent
(40%) of the restrictions have lapsed with respect to Restricted Stock held by
such Grantee, then for purposes of this paragraph (a) of Section 9.7, the
restrictions with respect to forty percent (40%) of all Restricted Stock held by
such Grantee will be deemed to have lapsed. With respect to such Grantee's
Restricted Stock with lapsed restrictions and restrictions which are deemed to
have been lapsed pursuant to this paragraph (a) of Section 9.7, the Company
shall pay, to each such Grantee in full satisfaction of such Restricted Stock
Award an amount equal to
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(I) the Fair Market Value of Shares subject to such Award and (II) the amount,
if any, specified in Section 6.5(b); and
(b) if any payment is made to any Grantee pursuant to
paragraph (a) of Section 9.7 above, then all Restricted Stock granted to such
Grantee shall be automatically canceled.
10. Performance Awards.
10.1 Performance Units. The Committee may, in its discretion, grant
Awards of Performance Units to Eligible Individuals, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
10.3(c) of (i) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee
in its discretion, (ii) in the case of dollar-denominated Performance Units, the
specified dollar amount or (iii) a percentage (which may be more than 100%) of
the amount described in clause (i) or (ii) depending on the level of Performance
Objective attainment; provided, however, that, the Committee may, in its
discretion, at the time a Performance Unit is granted specify a maximum amount
payable in respect of a vested Performance Unit. Each Agreement shall specify
the number of Performance Units to which it relates, the Performance Objectives
which must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 10.3(c) and
10.4, a Grantee shall become vested with respect to the Performance Units to the
extent that the Performance Objectives set forth in the Agreement are satisfied
for the Performance Cycle.
(b) Payment of Awards. Subject to Section 10.3(c), payment
to Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 10.4, such payments may be made
entirely in Shares valued at their Fair Market Value, entirely in cash, or in
such combination of Shares and cash as the Committee shall, in its discretion,
determine at any time prior to such payment; provided, however, that if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such
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25
payment will be in Shares of Restricted Stock and the terms of such Restricted
Stock at the time the Award is granted.
10.2 Performance Shares. The Committee may, in its discretion,
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the
time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued until the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Performance Shares. If a Grantee shall fail to execute the
Agreement evidencing an Award of Performance Shares, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with an Award of Performance Shares shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-Transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 10.2(c) or 10.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may, in
its discretion, also impose such other restrictions and conditions on the
Performance Shares, if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 10.3(c) and
10.4, restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on such
terms, conditions and satisfaction of Performance Objectives as the Committee
may, in its discretion, determine at the time an Award is granted.
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(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on Shares represented by such Award which have been issued by
the Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the Committee
may, in its discretion, determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance Shares),
together with interest accrued thereon, if any, shall be made upon the lapsing
of restrictions imposed on the Performance Shares in respect of which the
deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions
on Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.
10.3 Performance Objectives
(a) Establishment. Performance Objectives for Performance
Awards may based on and expressed in terms of one or more of the following
business criteria: (i) revenue, (ii) net income, (iii) operating income, (iv)
earnings, (v) net earnings, (vi) Share price, (vii) cash flow, (viii) EBITDA,
(ix) total shareholder return, (x) total shareholder return relative to peers,
(xi) financial returns (including, without limitation, return on assets, return
on equity and return on investment), (xii) cost reduction targets, (xiii)
customer satisfaction, (xiv) customer growth, (xv) employee satisfaction, (xvi)
pre-tax profits, (xvii) net earnings, or (xiii) any combination of the
foregoing. Performance Objectives (and underlying business criteria, as
applicable) may be in respect of: (i) the performance of the Company, (ii) the
performance of any of its Subsidiaries, (iii) the performance of any of its
Divisions, (iv) a per Share basis, (v) a per subscriber basis, or (vi) any
combination of the foregoing. Performance Objectives may be absolute or relative
(to prior performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a progression
within a specified range. The formula for determining Performance Objectives may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary, unusual or nonrecurring gains and
losses, the cumulative effect of accounting changes, acquisitions or
divestitures, core process redesigns, structural
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changes/outsourcing, and foreign exchange impacts. The Performance Objectives
with respect to a Performance Cycle shall be established in writing by the
Committee by the earlier of (x) the date on which a quarter of the Performance
Cycle has elapsed or (y) the date which is ninety (90) days after the
commencement of the Performance Cycle, and in any event while the performance
relating to the Performance Objectives remain substantially uncertain.
(b) Effect of Certain Events. At the time of the granting of
a Performance Award, or at any time thereafter, in either case to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may, in its discretion, provide
for the manner in which performance will be measured against the Performance
Objectives (or may adjust the Performance Objectives) to reflect the impact of
specified corporate transactions, accounting or tax law changes and other
extraordinary or nonrecurring events.
(c) Determination of Performance. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
Performance Award that is intended to constitute Performance-Based Compensation
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied to the extent necessary for such Award to qualify as Performance Based
Compensation.
10.4 Effect of Change in Control. In the event of a Change in
Control, unless otherwise determined by the Committee in its discretion and set
forth in the Agreement evidencing the Award, and subject to the provisions of
Section 12.2, upon (i) the termination by the Company, Subsidiary, or Affiliate
of the Optionee's employment other than for Cause or (ii) the termination of the
Optionee's employment for Good Reason, during the 12 month period following the
Change in Control;
(a) With respect to Performance Units, the Grantee shall (i)
become vested in all outstanding Performance Units as if all Performance
Objectives had been satisfied at the maximum level and (ii) be entitled to
receive in respect of all Performance Units which become vested as a result of a
Change in Control a cash payment within ten (10) days after termination of
employment.
(b) With respect to Performance Shares, all restrictions
shall lapse immediately on all outstanding Performance Shares as if all
Performance Objectives had been satisfied at the maximum level.
(c) The Agreements evidencing Performance Shares and
Performance Units shall provide for the treatment of such Awards (or portions
thereof), if
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any, which do not become vested as the result of a Change in Control, including,
but not limited to, provisions for the adjustment of applicable Performance
Objectives.
(d) Notwithstanding the above, the Committee may, in its
discretion, do one or more of the following: (i) arrange to have the surviving
or successor entity assume the Performance Units or Performance Shares or grant
replacement Performance Units or Performance Shares, as applicable, with
appropriate adjustments so that such Awards or their replacements represent the
right to receive cash or Shares as may be payable as a result of a Change in
Control with respect to the amount of cash or Shares receivable pursuant to such
Awards had payment under such Awards occurred in full prior to such Change in
Control, or (ii) cancel the Performance Units or Performance Shares upon the
payment to the Grantees in cash with respect to each such Award to the extent
then otherwise payable in cash or in Shares (including any Awards as to which
vesting or lapse of restrictions has taken place in accordance with (a) and (b)
of this Section), of an amount, with respect to Performance Units, that is equal
to the amount of cash payable as if all Performance Objectives had been
satisfied at the maximum level, and, with respect to Performance Shares, that is
equal to the Fair Market Value of the Shares payable as if all Performance
Objectives had been satisfied at the maximum level.
10.5 Non-Transferability. Until the vesting of Performance Units or
the lapsing of any restrictions on Performance Shares, as the case may be, such
Performance Units or Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
10.6 Relocation. If the Company shall relocate its existing
headquarters outside the greater St. Louis, Missouri area on or before December
23, 2001 without the prior written consent of Jerald L. Kent, or of Barry L
Babcock or Howard L. Wood if Kent is not surviving at the time such consent is
sought (a "Headquarters Breach"):
(a) unless otherwise provided in the Agreement, with respect
to any Grantee who is a member of the corporate staff and is employed and
located at the St. Louis corporate headquarters and to whom Performance Units or
Performance Shares have been granted and who does not relocate, if less than
forty percent (40%)of the performance levels with respect to such Awards have
been met, then for purposes of this paragraph (a) of Section 10.6, (i) with
respect to Performance Units, the Grantee shall (A) become vested in all
outstanding Performance Units as if all Performance Objectives had been
satisfied at forty percent (40%) of the maximum level and (B) be entitled to
receive in respect of all such Performance Units which become vested a cash
payment within ten (10) days after such Headquarters Breach, and (ii) with
respect to Performance Shares, restrictions shall lapse immediately on
outstanding Performance Shares as if Performance Objectives had been satisfied
at forty percent (40%) of the maximum level. With respect to such Grantee's
Awards with vesting or lapsed restrictions pursuant to this
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paragraph (a) of Section 10.6, the Company shall pay, to each such Grantee in
full satisfaction of such Awards an amount equal to (I) the Fair Market Value of
Shares subject to such Award and (II) the amount, if any, specified in Section
6.5(b); and
(b) if any payment is made to any Grantee pursuant to
paragraph (a) of Section 10.6 above, then all Restricted Stock granted to such
Grantee shall be automatically canceled.
11. Other Share Based Awards.
11.1 Share Awards. The Committee may, in its discretion, grant a
Share Award to any Eligible Individual on such terms and conditions as the
Committee may determine in its sole discretion. Share Awards may be made as
additional compensation for services rendered by the Eligible Individual or may
be in lieu of cash or other compensation to which the Eligible Individual is
entitled from the Company.
11.2 Phantom Stock Awards.
(a) Grant. The Committee may, in its discretion, grant
shares of Phantom Stock to any Eligible Individuals. Such Phantom Stock shall be
subject to the terms and conditions established by the Committee in its
discretion and set forth in the applicable Agreement.
(b) Payment of Awards. Upon the vesting of a Phantom Stock
Award, the Grantee shall be entitled to receive a cash payment in respect of
each share of Phantom Stock which shall be equal to the Fair Market Value of a
Share as of the date the Phantom Stock Award was granted, or such other date as
determined by the Committee in its discretion at the time the Phantom Stock
Award was granted. The Committee may, in its discretion, at the time a Phantom
Stock Award is granted, provide a limitation on the amount payable in respect of
each share of Phantom Stock. In lieu of a cash payment, the Committee may, in
its discretion, settle Phantom Stock Awards with Shares having a Fair Market
Value equal to the cash payment to which the Grantee has become entitled.
12. Effect of a Termination of Employment.
12.1 The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division),
which shall be as the Committee may, in its discretion, determine at the time
the Option or Award is granted or thereafter.
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12.2 Excise Tax Limitation.
(a) Notwithstanding anything contained in this Plan to the
contrary, to the extent that any payment, distribution or acceleration of
vesting to or for the benefit of the Optionee or Grantee by the Company (within
the meaning of Section 280G of the Code and the regulations thereunder), whether
paid or payable or distributed or distributable pursuant to the terms of this
Plan or otherwise (the "Total Payments") is or will be subject to the excise tax
imposed under Section 4999 of the Code (the "Excise Tax"), then the Total
Payments shall be reduced (but not below zero) if and to the extent that a
reduction in the Total Payments would result in the Optionee or Grantee
retaining a larger amount, on an after-tax basis (taking into account federal,
state and local income taxes and the Excise Tax), than if the Optionee or
Grantee received the entire amount of such Total Payments. Unless the Optionee
or Grantee shall have given prior written notice specifying a different order to
the Company to effectuate the foregoing, the Company shall reduce or eliminate
the Total Payments, by first reducing or eliminating the portion of the Total
Payments which are payable in cash and then by reducing or eliminating non-cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as hereinafter
defined). Any notice given by the Optionee or Grantee pursuant to the preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Executive's rights and entitlements to
any benefits or compensation.
(b) The determination of whether the Total Payments shall be
reduced as provided in Section 12.2 (a) and the amount of such reduction shall
be made at the Company's expense by an accounting firm selected by the Optionee
or Grantee from among the six largest accounting firms in the United States or
at the Optionee's or Grantee's expense by an attorney selected by the Optionee
or Grantee. Such accounting firm or attorney (the "Determining Party") shall
provide its determination (the "Determination"), together with detailed
supporting calculations and documentation to the Company and the Optionee or
Grantee within ten (10) days of the termination of Optionee's or Grantee's
employment. If the Determining Party determines that no Excise Tax is payable by
the Optionee or Grantee with respect to the Total Payments, it shall furnish the
Optionee or Grantee with an opinion reasonably acceptable to the Optionee or
Grantee that no Excise Tax will be imposed with respect to any such payments
and, absent manifest error, such Determination shall be binding, final and
conclusive upon the Company and the Optionee or Grantee. If the Determining
Party determines that an Excise Tax would be payable, the Company shall have the
right to accept the Determination of the Determining Party as to the extent of
the reduction, if any, pursuant to Section 12.2 (a), or to have such
Determination reviewed by an accounting firm selected by the Company, at the
Company's expense.
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If the Company's accounting firm and the Determining Party do not agree, a third
accounting firm shall be jointly chosen by the Determining Party and the
Company, in which case the determination of such third accounting firm shall be
binding, final and conclusive upon the Company and the Optionee or Grantee.
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate proportional adjustments,
if any, to (i) the maximum number and class of Shares or other stock or
securities with respect to which Options or Awards may be granted under the
Plan, (ii) the maximum number and class of Shares or other stock or securities
with respect to which Options or Awards may be granted to any Eligible
Individual in any one calendar year period, (iii) the number and class of Shares
or other stock or securities which are subject to outstanding Options or Awards
granted under the Plan and the exercise price therefor, if applicable, (iv) for
Stock Appreciation Rights unrelated to an Option, the Fair Market Value of a
Share on the date the Stock Appreciation Right was granted, and (v) the
Performance Objectives.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Options or Awards that are intended to qualify
as Performance-Based Compensation shall be made in such a manner as not to
adversely affect the treatment of the Options or Awards as Performance-Based
Compensation.
(c) If, by reason of a Change in Capitalization, a Grantee
of an Award shall be entitled to, or an Optionee shall be entitled to exercise
an Option with respect to, new, additional or different shares of stock or
securities of the Company or any other corporation, such new, additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the Shares
subject to the Award or Option, as the case may be, prior to such Change in
Capitalization.
14. Effect of Certain Transactions.
Subject to Sections 6.4, 7.7, 9.4(b) and 10.4 or as otherwise
provided in an Agreement, in the event of (a) the liquidation or dissolution of
the Company or (b) a merger or consolidation of the Company (a "Transaction")
that does not constitute a Change in Control, the Plan and the Options and
Awards issued hereunder shall continue in effect in accordance with their
respective terms, except that the Committee may, in its discretion, do one or
more of the following: (i) shorten the period during which Options and Awards
are exercisable (provided they remain exercisable for at least thirty (30) days
after the date on which notice of such shortening is given to the Optionees or
Grantees); (ii) accelerate the vesting schedule or the lapse of any restrictions
with respect to Options
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and Awards, (iii) arrange to have the surviving or successor entity assume the
Options and Awards or grant replacement Options and Awards with appropriate
adjustments in the exercise prices, and adjustments in the number and kind of
securities issuable upon exercise or lapse of restrictions or adjustments so
that the Options and Awards or their replacements represent the right to
purchase or receive the stock, securities or other property (including cash) as
may be issuable or payable as a result of such Transaction with respect to or in
exchange for the number of Shares purchasable and receivable upon the exercise
of the Options and Awards had such exercise occurred in full prior to the
Transaction, or (iv) with the prior written consent of the Optionee or Grantee
(unless otherwise stated in the Agreement), cancel the Options and Awards upon
the payment to the Grantees in cash (A) with respect to each Options and Award
to the extent exercisable for or payable in Shares, of an amount that is equal
to the Fair Market Value of the Shares subject to the Award or portion thereof
over the aggregate exercise price for such Shares under the Award or portion
thereof surrendered at the effective time of the Transaction, or (B) with
respect to each Award to the extent not exercisable for or payable in Shares, of
an amount that is equal to the cash value of the Award or portion thereof
surrendered at the effective time of the Transaction. The Committee may, in its
discretion, also provide for one or more of the following alternatives in any
particular Agreement. The treatment of any Option or Award as provided in this
Section 14 shall be conclusively presumed to be appropriate for purposes of
Section 10.
15. Interpretation.
Following the required registration of any equity security of the
Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award granted
under the Plan is intended to be Performance-Based Compensation. The Committee
shall not be entitled to exercise any discretion otherwise authorized hereunder
with respect to such Options or Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation.
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16. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
as are specifically recommended by an independent accounting firm retained by
the Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (a)
deferring the vesting, exercise, payment, settlement or lapsing of restrictions
with respect to any Option or Award, (b) providing that the payment or
settlement in respect of any Option or Award be made in the form of cash, Shares
or securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (c) providing for the extension of the term of any Option or
Award to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option or Award.
17. Successors; Binding Agreement.
17.1 This Plan shall be binding upon and shall inure to the benefit
of the Company, its Successors and Assigns, and the Company shall require any
Successors and Assigns to expressly assume and agree to comply with the terms of
the Plan in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
18. Termination and Amendment of the Plan or Modification of Options and
Awards.
18.1 Plan Amendment or Termination. The Plan shall terminate as of
the tenth anniversary of the date of its adoption by the Board and no Option or
Award may be granted thereafter. The Board may sooner terminate the Plan and the
Board may at any time and from time to time amend, modify or suspend the Plan;
provided, however, that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards theretofore
granted under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through or
as a result of the Plan; and
(b) to the extent necessary under any applicable law,
regulation or exchange requirement, no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law,
regulation or exchange requirement.
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18.2 Modification of Options and Awards. Subject to the provisions
of the Plan, no modification of an Option or Award shall adversely alter or
impair any rights or obligations under the Option or Award without the consent
of the Optionee or Grantee, as the case may be.
19. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
20. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(a) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
21. Regulations and Other Approvals; Governing Law.
21.1 Except as to matters of federal law, the Plan and the rights
of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
21.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee in its
discretion.
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21.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority.
21.4 Each Option and Award is subject to the requirement that, if
at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee in its discretion.
21.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may, in its discretion, require any
individual receiving Shares pursuant to an Option or Award granted under the
Plan, as a condition precedent to receipt of such Shares, to represent and
warrant to the Company in writing that the Shares acquired by such individual
are acquired without a view to any distribution thereof and will not be sold or
transferred other than pursuant to an effective registration thereof under said
Act or pursuant to an exemption applicable under the Securities Act or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended or have an appropriate legend placed
thereon to reflect their status as restricted securities as aforesaid.
22. Miscellaneous.
22.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may, in its discretion, also grant more than
one Option or Award to a given Eligible Individual during the term of the Plan,
either in addition to, or in substitution for, one or more Options or Awards
previously granted to that Eligible Individual.
22.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes
taxable income in connection with the receipt of Shares or cash hereunder (a
"Taxable Event"),
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the Optionee or Grantee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to him or her having an aggregate Fair
Market Value equal to the Withholding Taxes. Notwithstanding the foregoing, the
Committee may, in its discretion, provide that an Optionee or Grantee shall not
be entitled to exercise or receive an Award, as applicable, for which cash has
not been provided by the Optionee or Grantee with respect to the Withholding
Taxes applicable to such Award.
(b) Notwithstanding the foregoing, if Options have been
transferred pursuant to the provisions of Section 6.1 the Optionee shall provide
the Company with funds sufficient to pay such tax withholding when such
withholding is due. Furthermore, if such Optionee does not satisfy the
applicable tax withholding obligation, the transferee may provide the funds
sufficient to enable the Company to pay the tax withholding. However, if Options
have been transferred, the Company shall have no right to retain or sell without
notice, or to demand surrender from the transferee of, shares of Stock in order
to pay such tax withholding.
22.3 Effective Date. The effective date of this Plan shall be as
determined by the Board in its discretion, subject only to the approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Delaware within
twelve (12) months of the adoption of the Plan by the Board.
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FORM OF
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the ___ day of ____________ , 2001 (the "Grant
Date"), between Charter Communications, Inc., a Delaware corporation (the
"Company"), and ____________________ (the "Optionee").
Unless otherwise defined herein, terms defined in the Charter
Communications, Inc. 2001 Stock Incentive Plan (the "Plan") shall have the same
defined meanings in this Nonqualified Stock Option Agreement (the "Agreement").
Certain Terms
Optionee:
-------------------
Address:
-------------------
-------------------
-------------------
The undersigned Optionee has been granted an Option to purchase Shares of
the Company, subject to the terms and conditions of the Plan and this Agreement,
as follows:
Vesting Schedule: 25% each year as of the 1st, 2nd, 3rd, and 4th
anniversary of the Grant Date
Exercise Price per Share: $
Total Number of Shares under Option:
Total Exercise Price: $
Exercise Expiration Date: The 10th anniversary of the Grant Date
Charter Communications, Inc.
By:
-----------------------------
I, the undersigned, agree to this grant of an Option to purchase Shares of
the Company, acknowledge that this grant is subject to the terms and conditions
of the Plan and this Agreement, and have read and understand the terms and
conditions set forth in Sections 1 through 20 of this Agreement.
----------------------------------
Optionee
38
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the right and option
(the "Option") to purchase all or any part of the Total Number of Shares under
Option set forth above, subject to, and in accordance with, the terms and
conditions set forth in this Agreement.
1.2 The Option is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
1.3 This Agreement shall be construed in accordance and consistent
with, and subject to, the provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise expressly set forth
herein, the capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.
2. Purchase Price.
The price at which the Employee shall be entitled to purchase Shares
upon the exercise of the Option shall be the Exercise Price per Share set forth
above.
3. Duration of Option.
The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten years from the Grant Date (the "Exercise
Term") and shall expire as of the tenth (10th) anniversary of the Grant Date
("Exercise Expiration Date"); provided, however, that the Option may be earlier
or later terminated as provided under the terms of the Plan and this Agreement.
4. Exercisability of Option.
Unless otherwise provided in this Agreement or the Plan, the Vesting
Schedule shall be as set forth on page 1. Each right of purchase shall be
cumulative and shall continue, unless sooner exercised or terminated as herein
provided, during the remaining period of the Exercise Term. Any fractional
number of Shares resulting from the application of the foregoing percentages
shall be rounded (up or down) to a whole number of Shares.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement and the
Plan, the Option may be exercised by delivery of written notice in person,
electronically or by mail to the Plan Administrator (or his or her designee).
Such notice shall state that the Optionee is electing to exercise the Option and
the number of Shares in respect of which the Option is being exercised and shall
be signed by the person or persons exercising the Option. If requested by the
Committee, such person or persons shall (i) deliver this Agreement to the Plan
Administrator (or
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39
his or her designee) who shall endorse thereon a notation of such exercise and
(ii) provide satisfactory proof as to the right of such person or persons to
exercise the Option.
5.2 The notice of exercise described in Section 5.1 hereof shall
be accompanied by (a) the full purchase price for the Shares in respect of which
the Option is being exercised, in cash, by check, by transferring Shares to the
Company having a Fair Market Value on the day preceding the date of exercise
equal to the cash amount for which such Shares are substituted, or in such other
manner as may be permitted by the Committee in its discretion, and (b) payment
of the Withholding Taxes as provided by Section 12 of this Agreement, and in the
manner as may be permitted by the Committee its discretion pursuant to Section
12 of this Agreement.
5.3 Upon receipt of notice of exercise and full payment for the
Shares in respect of which the Option is being exercised, the Company shall,
subject to the terms of the Plan, take such action as may be necessary to effect
the transfer to the Optionee of the number of Shares as to which such exercise
was effective.
5.4 The Optionee shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to any Shares subject to the
Option until (i) the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full purchase price for the
number of Shares in respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company, whereupon the Optionee shall have full voting and other
ownership rights with respect to such Shares.
6. Termination of Employment.
6.1 Vesting upon Death, Disability or Retirement. If the
employment of the Optionee is terminated as a result of his death, Disability or
Retirement, the Option shall immediately vest and become fully exercisable. In
the event of the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the legatee or legatees under
his will, or by his personal representatives or distributees and such person or
persons shall be substituted for the Optionee each time the Optionee is referred
to herein.
6.2 Exercisability upon Termination of Employment. If the
employment of the Optionee is terminated as a result of death, Disability or
Retirement, the option shall continue to be exercisable in whole or in part at
any time, but in no event after the Exercise Expiration Date, within two (2)
years after the date of such termination. If the employment of the Optionee is
terminated for Cause, the Option shall terminate effective immediately prior to
the Optionee's termination of employment, whether or not such Option is then
exercisable. If the employment of the Optionee is terminated for any reason
other than death, Disability or Retirement or for Cause (including the
Optionee's ceasing to be employed by a Subsidiary or Division as a result of the
sale of such Subsidiary or Division or an interest in such Subsidiary or
Division), then,
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subject to Section 7 hereof, the Option shall terminate as of the sixtieth
(60th) day following the date of the Optionee's termination of employment
whether or not exercisable.
7. Effect of Change in Control.
Notwithstanding anything contained in this Agreement to the contrary, in
the event of a Change in Control, any unvested Options issued under this
Agreement to any Optionee shall vest and become fully exercisable, subject to
the provisions of Section 13 hereof, upon (i) the termination by the Company,
Subsidiary or Affiliate employer of the Optionee's employment other than for
Cause or (ii) the termination of the Optionee's employment for Good Reason,
during the 12-month period following the Change in Control. In the event of a
Change in Control, the Committee may, in its discretion, do one or more of the
following: (i) shorten the period during which Options are exercisable (provided
they remain exercisable for at least 30 days after the date on which notice of
such shortening is given to Optionee); (ii) arrange to have the surviving or
successor entity assume the Options or grant replacement options with
appropriate adjustments in the option prices and adjustments in the number and
kind of securities issuable upon exercise or their replacements represent the
right to purchase the shares of stock, securities or other property (including
cash) as may be issuable or payable as a result of a Change in Control with
respect to or in exchange for the number of Shares purchasable and receivable
upon the exercise of the Options had such exercise occurred in full prior to
such Change in Control, or (iii) cancel Options upon the payment to the Optionee
in cash, with respect to each Option to the extent then exercisable (including
any Options as to which the exercise has been accelerated in accordance with
this Section), of an amount that is equal to the Fair Market Value of the Shares
subject to the option or portion thereof over the aggregate exercise price for
such Shares under Option or portion thereof surrendered at the effective time of
the Change in Control.
8. Nontransferability.
[The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee.] OR
[The Option shall be transferable by will or by the laws of descent
and distribution. During the lifetime of the Optionee, the Option may be
transferred to members of the Optionee's immediate family, to trusts solely for
the benefit of such immediate family members and to partnerships in which such
family members and/or trusts are the only partners, and for purposes of this
Agreement, a transferee of an Option shall be deemed to be the Optionee. For
this purpose, immediate family means the Optionee's spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents, children,
stepchildren and grandchildren. The terms of an Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee. If an Option has been transferred in accordance with
this Section, the Option shall be exercisable solely by the
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transferee. The Option shall remain subject to the provisions of the Plan,
including that it shall be exercisable only to the extent that the Optionee or
Optionee's estate would have been entitled to exercise it if the Optionee had
not transferred the Option. In the event of the death of the Optionee prior to
the expiration of the right to exercise the transferred Option, the period
during which the Option shall be exercisable shall terminate on the date one (1)
year following the date of the Optionee's death. In the event of the death of
the transferee prior to the expiration of the right to exercise the Option, the
period during which the Option shall be exercisable by the executors,
administrators, legatees and distributees of the transferree's estate, as the
case may be, shall terminate on the date one (1) year following the date of the
transferee's death. In no event, however, shall the Option be exercisable after
the expiration of the Option period set forth in the terms and conditions of
this Agreement. The Option shall be subject to such other rules as the Committee
shall determine in its discretion.
9. No Right to Continued Employment.
Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance of
employment by the Company, or any Subsidiary or Affiliate of the Company, nor
shall this Agreement or the Plan interfere in any way with the right of the
Company to terminate the Optionee's employment at any time.
10. Adjustments.
In the event of a Change in Capitalization, the Committee may, in
its discretion, make appropriate adjustments to the number and class of Shares
or other stock or securities subject to the Option and the purchase price for
such Shares or other stock or securities. The Committee's adjustment shall be
made in accordance with the provisions of the Plan and shall be effective and
final, binding and conclusive for all purposes of the Plan and this Agreement.
11. Effect of a Merger, Consolidation or Liquidation.
Subject to the terms of the Plan and this Agreement, in the event of
(a) the liquidation or dissolution of the Company or (b) a merger or
consolidation of the Company (a "Transaction") that does not constitute a Change
in Control, the Options shall continue in effect in accordance with their
respective terms, except that the Committee may, in its discretion, do one or
more of the following: (i) shorten the period during which the Options are
exercisable (provided they remain exercisable for at least thirty (30) days
after the date on which notice of such shortening is given to the); (ii)
accelerate the vesting schedule with respect to the Options, (iii) arrange to
have the surviving or successor entity assume the Options or grant replacement
Options with appropriate adjustments in the exercise prices, and adjustments in
the number and kind of securities issuable upon exercise or adjustments so that
the Options or their replacements represent the right to purchase or receive the
stock, securities or other property (including cash) as may be issuable or
payable as a result of such Transaction with respect to or in exchange for the
number of Shares purchasable and receivable upon the exercise of the Options had
such exercise occurred in full prior to the Transaction, or (iv) with the prior
written consent of the
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Optionee, cancel the Options upon the payment to the Optionees in cash of an
amount that is equal to the Fair Market Value of the Shares subject to the
Option or portion thereof over the aggregate exercise price for such Shares
under the Option or portion thereof surrendered at the effective time of the
Transaction. The treatment of any Option as provided in this Section 11 shall be
conclusively presumed to be appropriate for purposes of Section 10 of the Plan.
12. Withholding of Taxes.
At such times as the Optionee recognizes taxable income in
connection with the receipt of Shares hereunder (a "Taxable Event"), the
Optionee shall pay to the Company an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld by
the Company in connection with the Taxable Event (the "Withholding Taxes") prior
to the issuance, or release from escrow, of such Shares. The Company shall have
the right to deduct from any payment to an Optionee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee may make a written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee, to have withheld a portion of
the Shares then issuable to him or her having an aggregate Fair Market Value
equal to the Withholding Taxes. Notwithstanding the foregoing, the Committee
may, in its discretion, provide that an Optionee shall not be entitled to
exercise his or her Options for which cash has not been provided by the Optionee
with respect to the applicable Withholding Taxes.
[If the Option has been transferred pursuant to the provisions of
Section 8, the Optionee shall provide the Company with funds sufficient to pay
such tax withholding when such withholding is due. Furthermore, if such Optionee
does not satisfy the applicable tax withholding obligation, the transferee may
provide the funds sufficient to enable the Company to pay the tax withholding.
However, if Options have been transferred, the Company shall have no right to
retain or sell without notice, or to demand surrender from the transferee of,
shares of Stock in order to pay such tax withholding.]
13. Excise Tax Limitation.
(a) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that any payment, distribution or acceleration of
vesting to or for the benefit of the Optionee by the Company (within the meaning
of Section 280G of the Code and the regulations thereunder), whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the "Total Payments") is or will be subject to the excise tax
imposed under Section 4999 of the Code (the "Excise Tax"), then the Total
Payments shall be reduced (but not below zero) if and to the extent that a
reduction in the Total Payments would result in the Optionee retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the Excise Tax), than if the Optionee received the entire
amount of such Total Payments. Unless the Optionee shall have given
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prior written notice specifying a different order to the Company to effectuate
the foregoing, the Company shall reduce or eliminate the Total Payments, by
first reducing or eliminating the portion of the Total Payments which are
payable in cash and then by reducing or eliminating non-cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the Determination (as hereinafter defined). Any notice
given by the Optionee pursuant to the preceding sentence shall take precedence
over the provisions of any other plan, arrangement or agreement governing the
Executive's rights and entitlements to any benefits or compensation.
(b) The determination of whether the Total Payments shall be reduced as
provided in Section 12.2 (a) of the Plan and the amount of such reduction shall
be made at the Company's expense by an accounting firm selected by the Optionee
from among the six largest accounting firms in the United States or at the
Optionee's expense by an attorney selected by the Optionee. Such accounting firm
or attorney (the "Determining Party") shall provide its determination (the
"Determination"), together with detailed supporting calculations and
documentation to the Company and the Optionee within ten (10) days of the
termination of Optionee's employment. If the Determining Party determines that
no Excise Tax is payable by the Optionee with respect to the Total Payments, it
shall furnish the Optionee with an opinion reasonably acceptable to the Optionee
that no Excise Tax will be imposed with respect to any such payments and, absent
manifest error, such Determination shall be binding, final and conclusive upon
the Company and the Optionee. If the Determining Party determines that an Excise
Tax would be payable, the Company shall have the right to accept the
Determination of the Determining Party as to the extent of the reduction, if
any, pursuant to Section 12.2 (a) of the Plan, or to have such Determination
reviewed by an accounting firm selected by the Company, at the Company's
expense. If the Company's accounting firm and the Determining Party do not
agree, a third accounting firm shall be jointly chosen by the Determining Party
and the Company, in which case the determination of such third accounting firm
shall be binding, final and conclusive upon the Company and the Optionee.
14. Employee Bound by the Plan.
The Optionee hereby acknowledges that the Optionee may receive a
copy of the Plan upon request to the Plan Administrator and agrees to be bound
by all the terms and provisions of the Plan.
15. Modification of Agreement.
This Agreement may be modified, amended, suspended or terminated by
the Committee in its discretion at any time, and any terms or conditions may be
waived by the Committee in its discretion at any time; provided, however, that
all such modifications, amendments, suspensions, terminations or waivers that
shall adversely effect an Optionee shall only be effective pursuant to a written
instrument executed by the parties hereto.
16. Severability.
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Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
17. Governing Law.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without giving
effect to the conflicts of laws principles thereof.
18. Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon any
successor to the Company. This Agreement shall inure to the benefit of the
Optionee's legal representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be final, binding
and conclusive upon the Optionee's heirs, executors, administrators, successors.
19. Resolution of Disputes.
Any dispute or disagreement which may arise under, or as a result
of, or in any way relate to, the interpretation, construction or application of
this Agreement shall be determined by the Committee. Any determination made
hereunder shall be final, binding and conclusive on the Optionee and Company for
all purposes.
20. Shareholder Approval.
The effectiveness of this Agreement and of the grant of the Option
pursuant hereto is subject to the approval of the Plan by the stockholders of
the Company in accordance with the terms of the Plan.
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