Exhibit 10.12
As Amended
December 11, 1996
1995 Stock Incentive Plan of
J.P. Morgan & Co. Incorporated and Affiliated Companies
Article I
Purpose
The purpose of the 1995 Stock Incentive Plan (the "Plan") is to afford
an incentive to key employees of J.P. Morgan & Co. Incorporated (the "Company")
and its affiliates to acquire a proprietary interest in the Company, to
encourage such employees to increase their efforts on behalf of the Company and
remain in its employ, and to more closely align the interests of such key
employees with those of the Company's stockholders.
Article II
Definitions
2.1. The following terms shall have the meanings described below when used in
the Plan:
(a) "Award" shall refer to a Restricted Stock Award granted under
Article VIII or a Stock Unit Award granted under Article IX.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d ) "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan pursuant to Article III.
(e) "Common Stock" shall mean common stock, par value $2.50, of the
Company.
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(f) "Company" shall mean J.P. Morgan & Co. Incorporated or any
successor to it in ownership of all or substantially all of its assets.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Fair Market Value" of Common Stock on any day shall mean the
average of the highest and lowest price of Common Stock as reported on the
composite tape for such day, unless the Committee determines that another
procedure for determining Fair Market Value would be more appropriate.
(i) "Incentive Stock Option" shall mean a stock option granted under
Article VI which is intended to meet the requirements of Section 422 of the
Code.
(j) "Nonqualified Stock Option" shall mean a stock option granted under
Article VI which is not intended to be an Incentive Stock Option.
(k) "Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
(l) "Optionee" shall mean a Participant who is granted an Option.
(m) "Participant" shall mean an eligible employee who has been granted
an Option, Stock Appreciation Right or Award under the Plan.
(n) "Participating Company" shall mean the Company, the Trust Company
or any subsidiary or other affiliated entity (whether or not incorporated).
(o) "Plan" shall mean this 1995 Stock Incentive Plan of J.P. Morgan &
Co. Incorporated and Affiliated Companies.
(p) "Related Right" shall mean a Stock Appreciation Right described in
Section 7.2.
(q) "Restricted Period" shall mean the period during which a Restricted
Stock Award is being earned in accordance with Section 8.3.
(r) "Restricted Stock Award" shall mean an award granted under Article
VIII.
(s) "Stand Alone Right" shall mean a Stock Appreciation Right described
in Section 7.3.
(t) "Stock Appreciation Right" shall mean a right granted under Article
VII.
(u) "Stock Unit Award" shall mean an award granted under Article IX.
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(v) "Trust Company" shall mean Morgan Guaranty Trust Company of New
York or any successor to it in ownership of all or substantially all of its
assets.
Article III
3.1. (a) The Board of Directors shall appoint not less than three
Directors to the Committee which shall administer the Plan. With respect to
determinations regarding the grant, amount, acceleration or forfeiture of
Options, Stock Appreciation Rights or awards with respect to an eligible
employee who is a member of the Board of Directors, the Committee shall be
composed of all directors of the Company who are not employees of the Company or
any other Participating Company. No individual shall be a member of the
Committee unless such individual is disinterested within the meaning of Rule
16b-3 under the Exchange Act. The Committee shall have full power and authority,
subject to such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be issued or adopted by the Board of
Directors, to grant to eligible persons Options, Stock Appreciation Rights and
Awards under the Plan; to waive any restrictions or limitations, or impose
additional limitations or restrictions, on previously granted Options, Stock
Appreciation Rights, or Awards (within the parameters of the Plan); to interpret
the provisions of the Plan and any agreements relating to Options, Stock
Appreciation Rights or Awards granted under the Plan; to supervise the
administration of the Plan and to delegate to senior officers of the Company or
the Trust Company the power to act for the Committee as the Committee shall
specify.
(b) All decisions made by the Committee (or such persons acting under a
delegation by the Committee pursuant to subsection 3.1 (a) ) pursuant to the
provisions of the Plan and related orders of the Board of Directors shall be
within the absolute discretion of the Committee or its delegate, as the case may
be, and shall be conclusive and binding on all persons, including the Company,
stockholders, employees and beneficiaries of employees.
Article IV
Shares Subject To The Plan
4.1. (a) Subject to adjustment pursuant to subsection 4.1 (d), the
maximum number of shares of Common Stock with respect to which Options, Stock
Appreciation Rights and Awards may be granted shall be 28,000,000 shares of
Common Stock. Shares of Common Stock may be made available from the authorized
but unissued shares of the Company or from shares reacquired by the Company,
including shares purchased in the open market. If an Option, Stock Appreciation
Right or Award granted under the Plan shall expire or terminate for any reason
other than the exercise of a Related Right (to the extent set forth in
subsection 7.2(c) ), the shares subject to such Option, Stock Appreciation Right
or Award shall be
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available for other Options, Stock Appreciation Rights and Awards to the same
Participant or other eligible employees. Any shares delivered in payment of the
exercise price of an Option shall be available for other Options, Stock
Appreciation Rights and Awards to the same Participant or other eligible
employees.
(b) Subject to adjustment pursuant to subsection 4.1 (d), of the total
shares of Common Stock referred to in subsection 4.1 (a), the number of shares
of Common Stock with respect to which Awards may be granted shall not exceed
7,000,000 shares of Common Stock.
(c) Subject to adjustment pursuant to subsection 4.1 (d), of the total
shares of Common Stock referred to in subsection 4.1 (a), the number of shares
of Common Stock with respect to which Options or Stock Appreciation Rights may
be granted to any Participant during the term of the Plan shall not exceed
2,800,000 shares of Common Stock.
(d) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under this Plan, then the Committee
shall, in its sole discretion, and in such manner as the Committee may deem
equitable, adjust any or all of ( 1 ) the number and kind of shares which
thereafter may be awarded or optioned and sold or made the subject of Stock
Appreciation Rights under the Plan, (2) the number and kind of shares subject to
outstanding Options, Stock Appreciation Rights and Awards, and (3) the option
price with respect to any of the foregoing and/or, if deemed appropriate, make
provision for a cash payment to a Participant. The number of shares subject to
any Option, Stock Appreciation Right or Award shall always be a whole number.
Article V
Eligibility
5.1. The employees eligible to participate in the Plan and receive
Options, Stock Appreciation Rights and Awards under the Plan shall consist of
key employees of the Company and other Participating Companies.
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Article VI
Stock Options
6.1. Grant of Options. Subject to the limitations of the Plan, the
Committee shall, after such consultation with and consideration of the
recommendations of management as the Committee considers desirable, select from
eligible employees those Participants to be granted Options and determine the
time when each Option shall be granted and the number of shares subject to each
Option. Options may be either Incentive Stock Options or Nonqualified Stock
Options and more than one Option may be granted to the same person. Options
shall be evidenced in such manner as may be approved by the Committee. Options
may be amended or supplemented from time to time as approved by the Committee,
provided that the terms of such Options after being amended or supplemented
conform to the terms of the Plan.
6.2. Option Price. The price at which shares may be purchased upon
exercise of a particular Option shall be not less than 100% of the Fair Market
Value of such shares on the date such Option is granted.
6.3. Medium and Time of Payment. No shares shall be delivered pursuant
to any exercise of an Option until payment in full of the Option price therefor
is received by the Company. Such payment shall be made in cash or, unless
prohibited by the Committee, through the delivery of shares of Common Stock of
the Company with a Fair Market Value equal to the total Option price or a
combination of cash and shares. The Committee may prescribe additional methods
of payment to the extent permitted by applicable law. Any shares so delivered
shall be valued at their Fair Market Value on the exercise date, or on such
other date as determined by the Committee for administrative convenience. No
Optionee, transferee, legal representative, legatee or distributee of any
Optionee shall be deemed to be a holder of any shares subject to any Option
prior to the issuance of such shares upon exercise of such Option or any related
Stock Appreciation Right.
6.4. Term and Exercisability of Options. An Option shall be exercisable
ratably on each of the first three anniversaries of the date of grant of such
Option or as otherwise determined by the Committee, but in no event shall such
Option be exercised earlier than one year or later than ten years from the date
the Option is granted. The Committee may require that an Option only be
exercised upon the achievement of such performance objectives as the Committee
shall designate. An Option shall be subject to earlier termination as provided
in Section 6.6 with respect to death, retirement and termination of employment
or as provided in Section 10.6.
6.5. Transferability of Options. (a) Except as provided in subsection
(b) below, an Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution and, during the lifetime of the
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Optionee, may be exercised only by such Optionee.
(b) Notwithstanding subsection (a) above, the Committee may determine
that an Option may be transferred by the Optionee to one or more members of the
Optionee's immediate family, to a partnership of which the only partners are
members of the Optionee's immediate family, or to a trust established by the
Optionee for the benefit of one or more members of the Optionee's immediate
family. For this purpose immediate family means the Optionee's spouse, parents,
children, grandchildren and the spouses of such parents, children and
grandchildren. A transferee described in this subsection may not further
transfer an Option. An Option transferred pursuant to this subsection shall
remain subject to the provisions of the Plan, including, but not limited to, the
provisions of Section 6.6 relating to the exercise of the Option upon the death,
retirement or termination of employment of the Optionee, and shall be subject to
such other rules as the Committee shall determine.
6.6. Death, Retirement and Termination of Employment. Subject to the
condition that no Option be exercised in whole or in part after the expiration
of the Option period specified by the Committee, and subject to the Committee's
right to cancel any Option in accordance with Section 10.6, unless otherwise
determined by the Committee:
(a) Upon termination of employment prior to an Optionee's attainment of
age 55 but after the Optionee is eligible for retirement pursuant to a
retirement plan of the Company or any of its subsidiaries, an Optionee or a
transferee described in subsection 6.5(b), may, within three years after the
date of such termination, purchase any or all of the shares subject to an Option
granted at least one year prior to such termination of employment, at or after
the time or times the Optionee would have been entitled to purchase such shares
had the Optionee not terminated employment;
(b) Upon termination of employment on or after an Optionee's attainment
of age 55 and after the Optionee is eligible for retirement pursuant to a
retirement plan of the Company or any of its subsidiaries, an Optionee or a
transferee described in subsection 6.5(b), may, at any time prior to the
expiration of the Option period, purchase any or all of the shares subject to an
Option granted at least one year prior to such termination of employment, at or
after the time or times the Optionee would have been entitled to purchase such
shares had the Optionee not terminated employment;
(c) Upon the death of an Optionee after a termination of employment
described in subsections (a) or (b) above, the Optionee's designated
beneficiary, or if none, the person or persons to whom such Optionee's rights
under the Option are transferred by will or the laws of descent and
distribution, or a transferee described in subsection 6.5(b), may, at any time
prior to the expiration of the Option period determined under subsection (a) or
(b), as the case may be, purchase any or all of the shares subject to an Option
at or after the time the Optionee would have been entitled to purchase such
shares had the Optionee survived;
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(d) Upon the death of an Optionee while employed, the Optionee's
designated beneficiary, or if none, the person or persons to whom such
Optionee's rights under the Option are transferred by will or the laws of
descent and distribution, or a transferee described in subsection 6.5(b), may,
within three years after the date of such death, but no later than the
expiration of the Option period, purchase any or all of the shares subject to an
Option at or after the time the Optionee would have been entitled to purchase
such shares had the Optionee survived; and
(e) Upon termination of employment for any reason other than death or
retirement as aforesaid, an Optionee's Options, including any Options
transferred pursuant to subsection 6.5(b), shall be cancelled to the extent not
theretofore exercised. In addition, the Optionee shall repay to the Company the
value of the difference between the Fair Market Value on the date of exercise
over the Option price of any Options exercised within the six month period
preceding the date of such termination and the value of any Related Right
described in Section 7.2 exercised during such period.
Article VII
Stock Appreciation Rights
7.1. Grant of Stock Appreciation Rights. Subject to the limitations of
the Plan, the Committee shall, after such consultation with and consideration of
the recommendations of management as the Committee considers desirable, select
from eligible employees those Participants to be granted Stock Appreciation
Rights and determine the time when each Stock Appreciation Right shall be
granted and such other terms of each Stock Appreciation Right pursuant to this
Article VII. Stock Appreciation Rights may be granted either alone ("Stand Alone
Rights") or in conjunction with all or part of any Option granted under the Plan
( "Related Rights" ) . In the case of a Nonqualified Stock Option, Related
Rights may be granted either at or after the time of the grant of the
Nonqualified Stock Option. In the case of an Incentive Stock Option, Related
Rights may be granted only at the time of the grant of the Incentive Stock
Option.
7.2. Related Rights. (a) A Related Right shall be exercisable only at
such time or times and to the extent that the Option to which it relates shall
be exercisable in accordance with Article 6, provided that the Committee may,
for administrative convenience, determine that, for any Related Right which can
only be exercised during a limited period of time in order to satisfy rules
imposed by the Securities and Exchange Commission, the exercise of any such
Related Right for cash during such limited period shall be deemed to occur for
all purposes hereunder on the day during such limited period on which the Fair
Market Value of the Common Stock is the highest. A Related Right granted with
respect to an Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, provided that, unless otherwise
provided by the Committee, a Related Right granted with
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respect to less than the full number of shares covered by a related Option shall
only be reduced if and to the extent that the number of shares covered by the
exercise or termination of the related Option exceeds the number of shares not
covered by the Related Right, provided further that, in the event of the death
of the Participant, the Related Right shall be cancelled to the extent not
theretofore exercised, whether or not the related Option is cancelled.
(b) Upon the exercise of a Related Right, a Participant shall be
entitled to receive up to, but not more than, an amount in cash or shares of
Common Stock equal in value to the excess of the Fair Market Value of one share
of Common Stock over the Option price per share of Common Stock of the related
Option multiplied by the number of shares of Common Stock in respect of which
the Related Right shall have been exercised. The Committee shall have the right
to determine the form of payment. Any shares delivered in payment shall be
valued at their Fair Market Value on the date of exercise. No fractional shares
shall be issued and the Participant shall receive cash in lieu thereof.
(c) Upon the exercise of a Related Right, the Option or part thereof to
which such Related Right is related shall be deemed to have been exercised for
the purpose of the limitations set forth in Section 4.1 on the number of shares
of Common Stock to be issued under the Plan, but only to the extent of the
number of shares of Common Stock issued under the Related Right.
7.3. Stand Alone Rights. (a) A Stand Alone Right shall be exercisable
ratably on each of the first three anniversaries of the grant of such Stand
Alone Right or as otherwise determined by the Committee, but in no event shall
such Stand Alone Right be exercised earlier than one year or later than ten
years from the date the Stand Alone Right is granted. The Committee may require
that a Stand Alone Right only be exercised upon the achievement of such
performance objectives as the Committee shall designate. The Committee may, for
administrative convenience, determine that, for any Stand Alone Right which can
only be exercised during a limited period of time in order to satisfy rules
imposed by the Securities and Exchange Commission, the exercise of any such
Stand Alone Right for cash during such limited period shall be deemed to occur
for all purposes hereunder on the day during such limited period on which the
Fair Market Value of the Common Stock is the highest. A Stand Alone Right shall
be subject to earlier termination as provided in subsection 7.3(c) with respect
to death, retirement and termination of employment.
(b) Upon the exercise of a Stand Alone Right, a Participant shall be
entitled to receive up to, but not more than, an amount in cash or shares of
Common Stock equal in value to the excess of the Fair Market Value of one share
of Common Stock on the date of exercise over the Fair Market Value of one share
of Common Stock on the date of grant multiplied by the number of shares in
respect of which the right is being exercised. The Committee shall have the
right to determine the form of payment. Any shares delivered in payment shall be
valued at their Fair Market Value on the date of exercise. No fractional shares
shall be issued and the
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Participant shall receive cash in lieu thereof.
(c) Subject to the condition that no Stand Alone Right may be exercised
in whole or in part after the expiration of the period specified by the
Committee, and subject to the Committee's right to cancel any Stock Appreciation
Right in accordance with Section 10.6, unless otherwise determined by the
Committee:
(i) Upon termination of employment prior to a Participant's attainment
of age 55 but after the Participant is eligible for retirement pursuant to a
retirement plan of the Company or any of its subsidiaries, a Participant may,
within three years after the date of such termination, exercise any or all of
the Stand Alone Right granted at least one year prior to such termination of
employment, at or after the time or times the Participant would have been
entitled to exercise such Stand Alone Right had the Participant not terminated
employment;
(ii) Upon termination of employment on or after a Participant's
attainment of age 55 and after the Participant is eligible for retirement
pursuant to a retirement plan of the Company or any of its subsidiaries, a
Participant may, at any time prior to the expiration of the Stock Appreciation
Right exercise period, exercise any or all of the Stand Alone Right granted at
least one year prior to such termination of employment, at or after the time or
times the Participant would have been entitled to exercise such Stand Alone
Right had the Participant not terminated employment; and
(iii) Upon termination of employment for any reason other than
retirement as aforesaid, a Participant's Stand Alone Rights shall be cancelled
to the extent not theretofore exercised. In addition, except in the event of
death, the Participant shall repay to the Company the value of any Stand Alone
Right exercised within the six month period preceding the date of such
termination.
7.4. Transfer of Stock Appreciation Rights. A Stock Appreciation Right
may not be transferred to anyone and may only be exercised by the Participant to
whom it is granted
Article VIII
Restricted Stock Awards
8.1. Grant of Restricted Stock Awards. Subject to the limitations of
the Plan, the Committee shall, after such consultation with and consideration of
the recommendations of management as the Committee considers desirable, select
from eligible employees those Participants to be granted Restricted Stock Awards
and determine the time when each Award shall be granted, the vesting date or
vesting dates for each Award, the time or times as of which vested Awards shall
be paid and the number of share credits (each of which shall be equivalent to
one share of Common Stock) subject to each Award. Restricted Stock Awards
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shall be evidenced in such manner as may be approved by the Committee.
Restricted Stock Awards may be amended or supplemented from time to time as
approved by the Committee, provided that the terms of such Awards after being
amended or supplemented conform to the terms of the Plan. No provision of this
Plan shall be interpreted to prohibit the grant of a Restricted Stock Award
hereunder in connection with awards granted pursuant to the 1995 Executive
Officer Performance Plan of J.P. Morgan & Co. Incorporated and Affiliated
Companies or any other plan of the Company, provided that any such Award
conforms to the terms of this Plan.
8.2. Number of Share Credits. Each Restricted Stock Award shall state
the number of share credits to be subject to the Award.
8.3. Restrictions. A Restricted Stock Award may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, for a period of five years from the date
of grant of the Award or such other period as the Committee shall determine, and
for such further period as the payment of Awards may be deferred pursuant to
Section 8.5. The Committee may define the Restricted Period in terms of the
passage of time, the satisfaction of performance criteria, a combination of time
and performance, or in any other manner it deems appropriate. Restricted Stock
Awards shall not be paid until the successful completion of the Restricted
Period except as may be otherwise provided in circumstances of death or
retirement pursuant to Section 8.4, or until the end of any deferral period
described in subsection 8.5(b).
8.4. Death, Retirement and Termination of Employment. Unless otherwise
determined by the Committee:
(a) Upon termination of a Participant's employment prior to the end of
the Restricted Period for any reason except for death, as described below, the
Participant's Awards shall be forfeited and the Participant shall have no right
with respect to such Award.
(b) Upon the death of a Participant, an Award granted to such
Participant shall be (i) 100% (or such other percentage as the Committee shall
have determined at the time of grant of such Award) vested and nonforfeitable
and (ii) shall be payable to the Participant's beneficiary, or if none, the
person or persons to whom such Participant's rights under the Award are
transferred by will or the laws of descent and distribution, subject to any
further deferral of the Award in accordance with subsection 8.5(b), provided
that with respect to an Award subject to performance restrictions, the Committee
shall make such determination with respect to such Award as it deems
appropriate.
8.5. Payment of Awards. (a) Subject to the provisions of subsection (b)
hereof, as soon as practicable after the successful completion of the Restricted
Period, such Award shall be paid to the Participant or, in the case of the death
of the Participant, the Participant's beneficiary, or if none, the person or
persons to whom such Participant's rights under the
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Award are transferred by will or the laws of descent and distribution.
(b) The Committee may, in its discretion, provide that payment of
Awards be deferred until such time or times as the Committee shall specify, or
such time or times as the Participant may elect. Any election of a Participant
pursuant to the preceding sentence shall be filed with the Committee in
accordance with such rules and regulations, including any deadline for the
making of such an election, as the Committee may provide.
(c) Except as otherwise determined pursuant to subsection 8.6(c),
payments pursuant to this Section 8.5, including any dividend equivalents
determined under subsection 8.6(b), shall be made in shares of Common Stock,
except there may be paid in cash the value of any partial shares of Common Stock
and that part of the total payment determined by the Company to be necessary to
satisfy tax withholding requirements.
8.6. Dividend Equivalents. (a) Except as may be otherwise determined by
the Committee, in addition to the payment provided for in Section 8.5, each
Participant (or beneficiary) entitled to payment under Section 8.5 shall receive
the dividend equivalent amount calculated under subsection (b) hereof.
(b) The dividend equivalent amount is the number of additional share
credits attributable to the number of share credits awarded plus additional
share credits calculated hereunder. Such additional share credits shall be
determined and credited as of the end of each calendar year by dividing (1) the
aggregate cash dividends which would have been paid had the share credits
awarded or credited under this subsection (b), as the case may be, been actual
shares of Common Stock on the record date for each such dividend during such
calendar year by (2) the average market prices per shares of Common Stock on the
last trading day of each calendar month during the 12 months ending on the
November 30 preceding the date such determination is being made. For this
purpose, the market price on any day shall be the average of the highest and
lowest price of a share of Common Stock as reported on the composite tape for
such day. The Committee may designate any other manner for determining and
crediting dividend equivalents as it deems appropriate.
(c) In such cases as the Committee may deem advisable, the Committee
may, in lieu of the crediting provided for in subsection (b), determine to pay
all or part of the dividend equivalent amount in cash or stock as dividends are
actually paid on Common Stock, or at such other time or times as the Committee
may otherwise determine.
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Article IX
Stock Unit Awards
9.1. Grant of Stock Unit Awards. The Committee shall have authority to
grant to eligible employees Stock Unit Awards which can be in the form of Common
Stock or units, the value of which is based, in whole or in part, on the value
of Common Stock. Subject to the provisions of the Plan, including Section 9.2
below, Stock Unit Awards shall be subject to such terms, restrictions,
conditions, vesting requirements and payment rules (all of which are sometimes
hereinafter collectively referred to as "rules" ) as the Committee may determine
in its sole discretion, all such rules applicable to a particular Stock Unit
Award to be reflected in writing and furnished to the Participant. In no event
shall any Award vest less than one year from the date of grant. The rules need
not be identical for each Stock Unit Award. No provision of this Plan shall be
interpreted to prohibit the grant of a Stock Unit Award hereunder in connection
with awards granted pursuant to the 1995 Executive Officer Performance Plan or
any other plan of the Company, provided that any such Award conforms to the
terms of the Plan.
9.2. Rules. In the sole discretion of the Committee, a Stock Unit Award
shall be granted subject to the following rules
(a) Any shares of Common Stock which are part of a Stock Unit Award may
not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, prior to the date
on which the shares are issued or such other date provided by the Committee at
the time of grant of the Award or thereafter.
(b) Stock Unit Awards may provide for the payment of cash consideration
by the person to whom such Award is granted or provide that the Award, and
Common Stock to be issued in connection therewith, if applicable, shall be
delivered without the payment of cash consideration.
(c) Stock Unit Awards may relate in whole or in part to performance
criteria established by the Committee at the time of grant.
(d) Stock Unit Awards may provide for deferred payment schedules,
vesting over a specified period of employment, the payment (on a current or
deferred basis) of dividend equivalent amounts, with respect to the number of
shares of Common Stock covered by the Award, and elections by the Participant to
defer payment of the Award or the lifting of restrictions on the Award, if any.
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Article X
General Provisions
10.1. Change in Control. (a) (i) In the case of a Change in Control (as
defined below) of the Company, each Option and Stock Appreciation Right then
outstanding shall (unless the Committee determines otherwise) immediately be
nonforfeitable and exercisable in full;
(ii) In the case of a Change in Control (as defined below) of the
Company, each Award shall (unless the Committee determines otherwise)
immediately be fully vested and nonforfeitable and shall thereupon be paid as
soon as practicable.
(b) Any determination by the Committee made pursuant to this Section
10.1 may be made as to all outstanding Options, Stock Appreciation Rights or
Awards or only as to certain Options, Stock Appreciation Rights or Awards
specified by the Committee, and all such determinations shall be made in cases
covered by paragraphs (c) (i) or (ii) below, prior to or as soon as practicable
after the occurrence of such event and in the cases covered by paragraphs (c)
(iii) and (iv) below, prior to the occurrence of such event.
(c) A Change in Control shall occur if:
(i) any "person" or "group of persons" as such terms are used in
Section 13(d) and 14(d) of the Exchange Act directly or indirectly purchases or
otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) or has the right to acquire such beneficial ownership (whether or
not such right is exercisable immediately, with the passage of time, or subject
to any condition), of voting securities representing 25% or more of the combined
voting power of all outstanding voting securities of the Company;
(ii) during any period of two consecutive years, the individuals who at
the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority of the members thereof, unless ( 1 )
there are seven or more directors then still in office who were directors at the
beginning of the period, and (2) the election, or the nomination for election by
the Company's stockholders, of each new director was approved by at least
two-thirds of the directors then still in office who were directors at the
beginning of the period;
(iii) the stockholders of the Company shall approve an agreement to
merge or consolidate the Company with or into another corporation as a result of
which less than 50% of the outstanding voting securities of the surviving or
resulting entity are or are to be owned by the former shareholders of the
Company (excluding from former shareholders, a shareholder who is or, as a
result of the transaction in question, becomes an "affiliate," as defined in
Rule 12b-2 under the Exchange Act, of any party to such consolidation or
merger); or
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(iv) the stockholders of the Company shall approve the sale of all or
substantially all of the Company's business and/or assets to a person or entity
which is not a wholly-owned subsidiary of the Company.
10.2. Designation of Beneficiary. Subject to such rules and regulations
as the Committee may prescribe, including the right of the Committee to limit
the types of designations which are acceptable for purposes of the Plan, each
Participant who shall be granted an Option or Award under the Plan may designate
a beneficiary or beneficiaries and may change such designation from time to time
by filing a written designation of beneficiaries with the Committee on a form to
be prescribed by it, provided that no such designation shall be effective unless
so filed prior to the death of such Participant.
10.3. No Right of Continued Employment. Neither the establishment of
the Plan, the granting of Options, Stock Appreciation Rights or Awards, nor the
payment of any benefits hereunder nor any action of the Company or of the Board
of Directors or of the Committee shall be held or construed to confer upon any
person any legal right to be continued in the employ of the Company or its
subsidiaries, each of which expressly reserves the right to discharge any
employee whenever the interest of any such company in its sole discretion may so
require without liability to such company, the Board of Directors or the
Committee except as to any rights which may be expressly conferred upon such
employee under the Plan.
10.4. No Segregation of Cash or Shares. The Company shall not be
required to segregate any cash or any shares of Common Stock which may at any
time be represented by Options, Stock Appreciation Rights, Awards, share credits
or dividend equivalent amounts and the Plan shall constitute an "unfunded" plan
of the Company. No employee shall have voting or other rights with respect to
shares of Common Stock prior to the delivery of such shares. The Company shall
not, by any provisions of the Plan, be deemed to be a trustee of any Common
Stock or any other property, and the liabilities of the Company to any employee
pursuant to the Plan shall be those of a debtor pursuant to such contract
obligations as are created by or pursuant to the Plan, and the rights of any
employee, former employee or beneficiary under the Plan shall be limited to
those of a general creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
obligations of the Company and each other Participating Company under the Plan,
provided, however, that existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.
10.5. Delivery of Shares. No shares shall be delivered pursuant to any
exercise of an Option or Stock Appreciation Right or pursuant to the payment of
any Award until the requirements of such laws and regulations as may be deemed
by the Committee to be applicable thereto are satisfied.
10.6. Cancellation of Options, Stock Appreciation Rights and Awards.
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(a) Prior to the occurrence of a Change in Control, but not thereafter,
the Committee may, in its sole discretion and with or without cause, cancel any
Option, Stock Appreciation Right or Award in whole or in part to the extent it
has not theretofore been exercised or, in the case of Awards, become vested.
Such cancellation shall be effective as of the date specified by the Committee.
(b) Notwithstanding subsection (a) above, prior to payment of any
Award, the Committee may, in its sole discretion, in cases involving a serious
breach of conduct by an employee or former employee, or activity of a former
employee in competition with the business of a Participating Company, cancel any
Award, whether or not vested, in whole or in part. Such cancellation shall be
effective as of the date specified by the Committee. The determination of
whether an employee or former employee has engaged in a serious breach of
conduct or activity in competition with the business of a Participating Company
shall be determined by the Committee in good faith and in its sole discretion.
10.7. Transfer, Leave of Absence, etc. For purposes of the Plan: (1 ) a
transfer of a Participant from a Participating Company to an affiliated company,
(2) a leave of absence, duly authorized in writing by the Participating Company,
for military service or sickness, or for any other purpose approved by the
Participating Company H the period of such leave does not exceed ninety days,
and (3) a leave of absence in excess of ninety days, duly authorized in writing
by the Participating Company, provided the Participant's right to reemployment
is guaranteed either by a statute or by contract, shall not be deemed a
termination of employment.
10.8. New York Law to Govern. All questions pertaining to the
construction, regulation, validity and effect of the provisions of the Plan
shall be determined in accordance with the laws of the State of New York.
10.9. Payments and Tax Withholding. The delivery of any shares of
Common Stock and the payment of any amount in respect of a Stock Appreciation
Right or Award shall be of the account of the applicable Participating Company
and any such delivery or payment shall not be made until the recipient shall
have made satisfactory arrangements for the payment of any applicable
withholding taxes.
Article XI
Amendment and Termination
11.1. Amendments, Suspension or Discontinuance. The Board of Directors
may amend, suspend or discontinue the Plan, provided, however, that the Board of
Directors may not, without the prior approval of the stockholders of the
Company, make any amendment for which stockholder approval is necessary to
comply with any applicable tax
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or regulatory requirement, including for these purposes any approval requirement
which is a prerequisite for exemptive relief under Section 16(b) of the Exchange
Act, and provided, further, that upon or following the occurrence of a Change in
Control no amendment may adversely affect the rights of any person in connection
with any Option, Stock Appreciation Right or Award previously granted.
11.2. Termination. No Option, Stock Appreciation Right or Award shall
be granted under the Plan after expiration of ten years from the date upon which
the Plan is approved by vote of the stockholders of the Company.
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