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McGRAW-HILL, INC.
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1987 Key Employee Stock Incentive Plan
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McGRAW-HILL, INC.
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1987 Key Employee Stock Incentive Plan
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SECTION CONTENTS PAGE
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1. Purpose; Definitions 1
2. Administration 4
3. Stock Subject to Plan 6
4. Eligibility 7
5. Stock Options 8
6. Stock Appreciation Rights 13
7. Restricted Stock 15
8. Deferred Stock 18
9. Other Stock-Based Awards 20
10. Change in Control Provisions 22
11. Amendments and Termination 24
12. Unfunded Status of Plan 25
13. General Provisions 26
14. Effective Date of Plan 28
15. Term of Plan 29
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McGRAW-HILL, INC.
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1987 Key Employee Stock Incentive Plan
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SECTION 1. PURPOSE; DEFINITIONS.
The purpose of this McGraw-Hill, Inc. 1987 Key Employee Stock Incentive
Plan (the "Plan") is to enable McGraw-Hill, Inc. (the "Company") to offer key
employees of the Company long term performance-based stock incentives and/or
other equity interests in the Company, thereby attracting, retaining and
rewarding such key employees, and strengthening the mutuality of interests
between key employees and the Company's shareholders.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of McGraw-Hill, Inc.
b. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
c. "Committee" means the Management Compensation Committee of the
Board. If at any time no Committee shall be in office, then the
functions of the Committee specified in the Plan shall be
exercised by the Board or by a committee of Board members
consisting of Disinterested Persons.
d. "Company" means McGraw-Hill, Inc., a corporation organized under
the laws of the State of New York, or any successor corporation,
and includes all domestic and foreign corporations, partnerships
and other legal entities in which at least 40% of the voting
securities or ownership interests are owned directly or
indirectly by McGraw-Hill, Inc.
e. "Deferred Stock" means an award made pursuant to Section 8 below
of the right to receive Stock at the end of a specified deferral
period.
f. "Disability" means disability as determined under procedures
stablished by the Committee for purposes of this Plan.
g. "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of
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1934, or any successor definition adopted by the Commission.
h. "Early Retirement" means retirement, with the approval of the
Committee for purposes of one or more award(s) hereunder, from
active employment with the Company prior to age 65, provided that
the Committee may establish rules and procedures pursuant to
which the Committee's approval shall be deemed to have been
given.
i. "Fair Market Value" for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any
regulations issued thereunder, shall mean, as of any given date,
the mean between the highest and lowest prices at which the Stock
is actually traded on such date as reflected in the New York
Stock Exchange Composite Transactions, or, if there is no sale of
the Stock on such date, the mean between the bid and asked prices
on such Exchange at the close of the market on such date or, if
there is no bid and asked activity on such date, such value as
may be determined by the Committee in good faith.
j. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the meaning
of Section 422A of the Code.
k. "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
l. "Normal Retirement" means retirement from active employment with
the Company on or after age 65.
m. "Other Stock-Based Award" means an award under Section 9 below
that is valued in whole or in part by reference to, or is
otherwise based on, Stock.
n. "Plan" means this McGraw-Hill, Inc. 1987 Key Employee Stock
Incentive Plan, as hereinafter amended from time to time.
o. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7 below.
p. "Retirement" means Normal or Early Retirement.
q. "Stock" means the Common Stock, $1.00 par value per share, of the
Company.
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r. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Company all
(or a portion) of a Stock Option in exchange for an amount equal
to the difference between (i) the Fair Market Value, as of the
date such Stock Option (or such portion thereof) is surrendered,
of the shares of Stock covered by such Stock Option (or such
portion thereof), and (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
s. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the
Committee so determines) granted pursuant to Section 5 below.
t. "Cause" shall mean the employee's serious, willful misconduct in
but not limited to, conviction for a felony or perpetration of a
common law fraud).
In addition, the terms "Change in Control" and "Change in Control Price"
shall have meanings set forth, respectively, in Sections 10(b) and (c) below.
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Section 2. ADMINISTRATION.
The Plan shall be administered by the Committee.
The Committee shall have full authority to grant,
pursuant to the terms of the Plan, to officers and other key employees eligible
under Section 4: (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, (iv) Deferred Stock, and/or (v) Other Stock-Based Awards.
In particular, the Committee shall have the
authority:
(i) to select the officers and other key
employees of the Company to whom Stock
Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock and/or Other
Stock-Based Awards may from time to time be
granted hereunder;
(ii) to determine whether and to what extent
Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock and/or Other
Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one
or more eligible employees;
(iii) to determine the number of shares to be
covered by each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of
any award granted hereunder (including, but
not limited to, the share price, any
restriction or limitation, or any vesting
acceleration or forfeiture waiver regarding
any Stock Option or other award and/or the
shares of Stock relating thereto, based on
such factors as the Committee shall
determine, in its sole discretion);
(v) to determine whether, to what extent and
under what circumstances grants of Options
and/or other awards under this Plan are to
operate on a tandem basis and/or in
conjunction with or apart from other cash
awards made by the Company outside of this
Plan;
(vi) to determine whether and under what
circumstances a Stock Option may be settled
in cash, Deferred Stock, and/or Restricted
Stock under Section 5(k); and
(vii) to determine whether, to what extent and
under what circumstances Stock and other
amounts payable with respect to an award
under this Plan shall be deferred either
automatically or at the election of the
participant.
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Subject to Section 11 hereof, the Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time,
deem advisable; to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.
Subject to Section 11 hereof, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and Plan participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and
available for distribution under the Plan shall be 2,300,000 shares. Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
Subject to Section 6(b)(iv) below, if any shares of
Stock that have been optioned cease to be subject to a Stock Option, or if any
such shares of Stock that are subject to any Restricted Stock or Deferred Stock
award or Other Stock-Based Award granted hereunder are forfeited or any such
award otherwise terminates without a payment being made to the participant in
the form of Stock, such shares shall again be available for distribution in
connection with future grants and awards under the Plan.
In the event of any merger, reorganization,
consolidation, recapitalization, dividend (other than a dividend or its
equivalent which is credited to a Plan participant or a regular cash dividend),
Stock split, or other change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan, and in the number of
shares subject to other outstanding awards (including but not limited to awards
of Restricted Stock, Deferred Stock and Other Stock-Based Awards) granted under
the Plan as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
No optionee will be granted Stock Options or Stock
Appreciation Rights under both the Plan and the Company's 1993 Key Employee
Stock Incentive plan to receive more than 230,000 shares of Stock in the
aggregate over the term of the Plan and the term of the 1993 Key Employee Stock
Incentive Plan. With respect to the Plan, however, the aforesaid limitation
shall apply only to Options or Rights not heretofore issued and therefore still
available for issuance. The foregoing limitation set forth in this paragraph
is intended to satisfy certain requirements applicable to Stock Options and
Stock Appreciation Rights to qualify as performance-based compensation within
the meaning of Section 162(k) of the Code. In the event that Code regulations
are issued which eliminate the requirement for such limitation to qualify Stock
Options and Stock Appreciation Rights as performance-based compensation, then
this paragraph of Section 3 shall no longer be operative.
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SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company (but
excluding members of the Committee and any person who serves only as a
director) who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company are eligible to be granted
options and awards under the Plan. Eligibility under the Plan shall be
determined by the Committee.
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SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to
other awards granted under the Plan. Any Stock Option granted under the Plan
shall be in such form as the Committee may from time to time approve.
Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant to
any optionee Incentive Stock Options, Non-Qualified Stock Options, or both
types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422A of the Code, or, without the consent of the optionee(s) affected,
to disqualify any Incentive Stock Option under such Section 422A.
Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(a) OPTION PRICE. The option price per share
of Stock purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be not less than 100% of the Fair Market Value
of the Stock at grant.
(b) OPTION TERM. The term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock Option shall be
exercisable more than ten years after the date the Option is granted, and no
Non-Qualified Stock Option shall be exercisable more than ten years and one day
after the date the Option is granted.
(c) EXERCISABILITY. Stock Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at or after grant provided, however, that,
except as provided in Sections 5(f) and (g) and Section 10, unless otherwise
determined by the Committee at or after grant, no Stock Option shall be
exercisable prior to the first anniversary date of the granting of the Option.
If the Committee provides, in its discretion, that any Stock Option is
exercisable only in installments, the Committee may waive such installment
exercise provisions at any time at or after grant in whole or in part,
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based on such factors as the Committee shall determine, in its sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever
installment exercise and waiting period provisions apply under Section 5(c),
Stock Options may be exercised in whole or in part at any time during the
option period, by giving written notice of exercise to the Company specifying
the number of shares to be purchased.
Such notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept. If and to the
extent determined by the Committee in its sole discretion at or after grant,
payment in full or in part may also be made in the form of unrestricted Stock
duly owned by the optionee (and for which the optionee has good title free and
clear of any liens and encumbrances) based, in each case, on the Fair Market
Value of the Stock on the last trading date preceding payment, as determined by
the Committee.
No shares of Stock shall be issued until payment, as
provided herein, therefore has been made. An optionee shall generally have the
rights to dividends or other rights of a shareholder with respect to shares
subject to the Option when the optionee has given written notice of exercise,
has paid for such shares as provided herein, and, if requested, has given the
representation described in Section 13(a).
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock
Option shall be transferable by the optionee otherwise than by will or by the
laws of descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
(f) TERMINATION BY DEATH. Subject to Section
5(j), if an optionee's employment by the Company terminates by reason of death,
any Stock Option held by such optionee, unless otherwise determined by the
Committee at grant, shall be fully vested and may thereafter be exercised by
the legal representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such other period as the
Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(g) TERMINATION BY REASON OF DISABILITY.
Subject to Section 5(j), if an optionee's employment by the Company terminates
by reason of Disability, any Stock Option held by such optionee, unless
otherwise determined by the Committee at grant, shall be fully vested and may
thereafter be exercised by the optionee for a period of three years (or such
other period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however, that, if the
optionee dies
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within such three-year period (or such other period as the Committee shall
specify at grant), any unexercised Stock Option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a period of twelve months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422A of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT.
Subject to Section 5(j), if an optionee's employment by the Company terminates
by reason of Normal Retirement, any Stock Option held by such optionee, unless
otherwise determined by the Committee at grant, shall be fully vested and may
thereafter be exercised by the optionee for a period of three years (or such
other period as the Committee may specify at grant) from the date of such
termination of employment or the expiration of the stated term of such Stock
Option, whichever period is the shorter; provided, however, that, if the
optionee dies within such three-year period, any unexercised Stock Option held
by such optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of twelve months from the date
of such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. Unless the Committee otherwise determines at
the time of grant, if an optionee's employment with the Company terminates by
reason of Early Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee to the extent it was exercisable at the
date of retirement for a period of thirty-six (36) months (or such other period
as the Committee may specify at grant) from the date of such termination of
employment or the expiration of the stated term of such Stock Option, whichever
period is shorter; provided, however, if the optionee dies within such
thirty-six (36) month period, any unexercised Stock Option held by such
optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of twelve months from the date
of such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter. If and only if the Committee so approves at the
time of Early Retirement, if an optionee's employment with the Company
terminates by reason of Early Retirement, any Stock Option held by the optionee
shall be fully vested and may thereafter be exercised by the optionee as
provided above in connection with termination of employment by reason of Normal
Retirement. In the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422A of the Code, the option will
thereafter be treated as a Non-Qualified Stock Option.
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(i) OTHER TERMINATION. Unless otherwise
determined by the Committee at the time of grant, if an optionee's employment
terminates for any reason other than Death, Disability, Retirement or for
Cause, any Stock Option held by such optionee, unless otherwise determined by
the Committee at grant, may thereafter be exercised by the optionee to the
extent it was exercisable at the date of termination for a period of six months
(or such other period as the Committee may specify at grant) from the date of
such termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however, if the
optionee dies within such six-month period (or such other period as the
Committee shall specify at grant), any unexercised Stock Option held by such
optionee shall thereafter be exercisable to the extent that it was exercisable
at the date of termination for a period of twelve months from the time of such
death, or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. If an optionee's employment with the Company
is involuntarily terminated by the Company for Cause, the Stock Option shall
thereupon terminate and shall not be exercisable thereafter.
(j) INCENTIVE STOCK OPTION LIMITATIONS. To the
extent required for "incentive stock option" status under Section 422A(b)(7) of
the Code, this Plan shall be deemed to provide that the aggregate Fair Market
Value (determined as of the time of grant) of the Stock with respect to which
Incentive Stock Options granted after 1986 are exercisable for the first time
by the optionee during any calendar year under the Plan and/or any other stock
option plan of the Company or any subsidiary or parent corporation (within the
meaning of Section 425 of the Code) after 1986 shall not exceed $100,000. If
Section 422A is hereafter amended to delete the requirement now in Section
422A(b)(7) that the plan text expressly provide for the $100,000 limitation set
forth in Section 422A(b)(7), then this first paragraph of Section 5(j) shall no
longer be operative.
To the extent (if any) permitted under
Section 422A of the Code, or the applicable regulations thereunder or any
applicable Internal Revenue Service pronouncement, if (i) a participant's
employment with the Company is terminated by reason of death, Disability or
Retirement and (ii) the portion of any Incentive Stock Option that is otherwise
exercisable during the post-termination period specified under Section 5(f),
(g) or (h), applied without regard to the $100,000 limitation currently
contained in Section 422A(b)(7) of the Code, is greater than the portion of
such option that is immediately exercisable as an "incentive stock option"
during such post-termination period under Section 422A, such excess shall be
treated as a Non-Qualified Stock Option. If the exercise of an Incentive Stock
Option is accelerated by reason of a Change In Control, any portion of such
option that is not exercisable as an Incentive Stock Option by reason of the
$100,000 limitation contained in Section 422A(b)(7) of the Code shall be
treated as a Non-Qualified Stock Option.
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(k) BUYOUT AND SETTLEMENT PROVISIONS. The
Committee may at any time offer to buy out an option previously granted, based
on such terms and conditions as the Committee shall establish and communicate
to the optionee at the time that such offer is made.
In addition, if the option agreement so
provides at grant or is amended after grant and prior to exercise to so provide
(with the optionee's consent), the Committee may require that all or part of
the shares to be issued with respect to the spread value of an exercised Option
take the form of Deferred or Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value of such Deferred or
Restricted Stock determined without regard to the deferral limitations and/or
forfeiture restrictions involved.
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SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of the grant of such Stock Option.
A Stock Appreciation Right or applicable
portion thereof granted with respect to a given Stock Option shall terminate
and no longer be exercisable upon the termination or exercise of the related
Stock Option, except that, unless otherwise determined by the Committee, in its
sole discretion, at the time of grant, a Stock Appreciation Right granted with
respect to less than the full number of shares covered by a related Stock
Option shall not be reduced until the number of shares covered by an exercise
or termination of the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised
by an optionee, in accordance with Section 6(b), by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in Section 6(b). Stock Options which have been so surrendered, in
whole or in part, shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation
Rights shall be subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times
and to the extent that the Stock
Options to which they relate shall be
exercisable in accordance with the
provisions of Section 5 and this
Section 6 of the Plan; provided,
however, that any Stock Appreciation
Right granted subsequent to the grant
of the related Stock Option shall not
be exercisable during the first six
months of its term, except that this
special limitation shall not apply in
the event of death or Disability of
the optionee prior to the expiration
of the six-month period.
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(ii) Upon the exercise of a Stock
Appreciation Right, an optionee shall
be entitled to receive up to, but not
more than, an amount in cash and/or
shares of Stock equal in value to the
excess of the Fair Market Value of one
share of Stock over the option price
per share specified in the related
Stock Option multiplied by the number
of shares in respect of which the
Stock Appreciation Right shall have
been exercised, with the Committee
having the right to determine the form
of payment, subject however to Section
6(b)(v) below.
(iii) Stock Appreciation Rights shall be
transferable only when and to the
extent that the underlying Stock
Option would be transferable under
Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock
Appreciation Right, the Stock Option
or part thereof to which such Stock
Appreciation Right is related shall be
deemed to have been exercised for the
purpose of the limitation set forth in
Section 3 of the Plan on the number of
shares of Stock to be issued under the
Plan, but only to the extent of the
number of shares issued under the
Stock Appreciation Right at the time
of exercise based on the value of the
Stock Appreciation Right at such time.
(v) In its sole discretion, the Committee
may grant "Limited Stock Appreciation
Rights" i.e., Stock Appreciation
Rights that become exercisable only in
the event of a Change in Control,
subject to such terms and conditions
as the Committee may specify at grant.
Said Limited Stock Appreciation Rights
shall be settled solely in cash.
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SECTION 7. RESTRICTED STOCK.
(a) ADMINISTRATION. Shares of Restricted Stock
may be issued either alone or in addition to other awards granted under the
Plan. The Committee shall determine the eligible persons to whom, and the time
or times at which, grants of Restricted Stock will be made, the number of
shares to be awarded, the price (if any) to be paid by the recipient (subject
to Section 7(b)), the time or times within which such awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the awards.
The Committee may condition the grant of
Restricted Stock upon the attainment of specified performance goals or such
other factors as the Committee may determine, in its sole discretion.
The provisions of Restricted Stock awards
need not be the same with respect to each recipient, and such awards to
individual recipients need not be the same in subsequent years.
(b) AWARDS AND CERTIFICATES. The prospective
recipient of a Restricted Stock award shall not have any rights with respect to
such award, unless and until such recipient has executed an agreement
evidencing the award and has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
such award. Further, such award shall be subject to the following conditions:
(i) The purchase price for shares of
Restricted Stock shall be equal to or
less than their par value and may be
zero.
(ii) Awards of Restricted Stock must be
accepted within a period of 60 days
(or such shorter period as the
Committee may specify at grant) after
the award date, by executing a
Restricted Stock Award Agreement and
by paying whatever price (if any) is
required under Section 7(b)(i).
(iii) Each participant receiving a
Restricted Stock award shall be issued
a stock certificate in respect of such
shares of Restricted Stock. Such
certificate shall be registered in the
name of such participant, and shall
bear an appropriate legend referring
to the terms, conditions, and
restrictions applicable to such award,
substantially in the following form:
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"The transferability of this
certificate and the shares of stock
represented hereby are subject to the
terms and conditions (including
forfeiture) of the McGraw-Hill, Inc.
1987 Key Employee Stock Incentive Plan
and an Agreement entered into between
the registered owner and McGraw-Hill,
Inc. dated -------------. Copies of
such Plan and Agreement are on file in
the offices of McGraw-Hill, Inc., 1221
Avenue of the Americas, New York, NY
10020."
(iv) The Committee shall require that the
stock certificates evidencing such
shares be held in custody by the
Company until the restrictions thereon
shall have lapsed, and that, as a
condition of any Restricted Stock
award, the participant shall have
delivered a duly signed stock power,
endorsed in blank, relating to the
Stock covered by such award.
(c) RESTRICTIONS AND CONDITIONS. The shares of
Restricted Stock awarded pursuant to this Section 7 shall be subject to the
following restrictions and conditions:
(i) Subject to the provisions of this Plan
and the award agreement, during a
period set by the Committee commencing
with the date of such award (the
"Restriction Period"), the participant
shall not be permitted to sell,
transfer, pledge or assign shares of
Restricted Stock awarded under the
Plan. Within these limits, the
Committee, in its sole discretion, may
provide for the lapse of such
restrictions in installments and may
accelerate or waive such restrictions
in whole or in part, based on service,
performance and/or such other factors
or criteria as the Committee may
determine, in its sole discretion.
(ii) Except as provided in this paragraph
(ii) and Section 7(c)(i), the
participant shall have, with respect
to the shares of Restricted Stock, all
of the rights of a shareholder of the
Company, including the right to vote
the shares, and the right to receive
any dividends. The Committee, in its
sole discretion, as determined at the
time of award, may permit or require
the payment of dividends to be
deferred and, if the Committee so
permits or determines, reinvested,
subject to Section 13(e), in
additional Restricted Stock to the
extent shares are available under
Section 3, or otherwise reinvested.
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(iii) Subject to the applicable provisions
of the award agreement and this
Section 7, upon termination of a
participant's employment with the
Company for any reason during the
Restriction Period, all shares still
subject to restriction will vest or be
forfeited in accordance with the terms
and conditions established by the
Committee at or after grant.
(iv) In the event of hardship or other
special circumstances of a participant
whose employment with the Company is
involuntarily terminated (other than
for Cause), the Committee may, in its
sole discretion, waive in whole or in
part any or all remaining restrictions
with respect to such participant's
shares of Restricted Stock based on
such factors as the Committee may deem
appropriate.
(v) If and when the Restriction Period
expires without a prior forfeiture of
the Restricted Stock subject to such
Restriction Period, the certificates
for such shares shall be delivered to
the participant. All legends shall be
removed from said certificates at the
time of delivery to the participant.
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SECTION 8. DEFERRED STOCK.
(a) ADMINISTRATION. Deferred Stock may be
awarded either alone or in addition to other awards granted under the Plan.
The Committee shall determine the eligible persons to whom and the time or
times at which Deferred Stock shall be awarded, the number of shares of
Deferred Stock to be awarded to any person, the duration of the period (the
"Deferral Period") during which, and the conditions under which, receipt of the
Stock will be deferred, and the other terms and conditions of the award in
addition to those set forth in Section 8(b).
The Committee may condition the grant of
Deferred Stock upon the attainment of specified performance goals or
such other factors or criteria as the Committee shall determine, in its sole
discretion.
The provisions of Deferred Stock awards need not
be the same with respect to each recipient.
(b) TERMS AND CONDITIONS. The shares of
Deferred Stock awarded pursuant to this Section 8 shall be subject to the
following terms and conditions:
(i) Subject to the provisions of this Plan
and the award agreement referred to in
Section 8(b)(vii) below, Deferred
Stock awards may not be sold,
assigned, transferred, pledged or
otherwise encumbered during the
Deferral Period. At the expiration of
the Deferral Period (or the Elective
Deferral Period referred to in Section
8(b)(vi), where applicable), share
certificates shall be delivered to the
participant, or his legal
representative, in a number equal to
the shares covered by the Deferred
Stock award.
(ii) Unless otherwise determined by the
Committee at the time of award,
amounts equal to any dividends
declared during the Deferral Period
with respect to the number of shares
covered by a Deferred Stock award will
be paid to the participant currently,
or deferred and deemed to be
reinvested in additional Deferred
Stock, or otherwise reinvested, all as
determined at the time of the award by
the Committee, in its sole discretion.
(iii) Subject to the provisions of the award
agreement and this Section 8, upon
termination of a participant's
employment with the Company for any
reason during the Deferral Period for
a given award, the Deferred Stock in
question will vest or be forfeited in
accordance with the terms and
conditions established by the
Committee at or after grant.
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(iv) Based on service, performance and/or
such other factors or criteria as the
Committee may determine, the Committee
may, at or after grant, accelerate the
vesting of all or any part of any
Deferred Stock award and/or waive the
deferral limitations for all or any
part of such award.
(v) In the event of hardship or other
special circumstances of a participant
whose employment with the Company is
involuntarily terminated (other than
for Cause), the Committee may, in its
sole discretion, based on such factors
as the Committee may deem appropriate,
waive in whole or in part any or all
of the remaining deferral limitations
imposed hereunder with respect to any
or all of the participant's Deferred
Stock, based on such factors as the
Committee deems appropriate.
(vi) A participant may elect to further
defer receipt of an award (or an
installment of an award) for a
specified period or until a specified
event (the "Elective Deferral
Period"), subject in each case to the
Committee's approval and to such terms
as are determined by the Committee,
all in its sole discretion. Subject
to any exceptions adopted by the
Committee, such election must
generally be made at least one full
calendar year prior to completion of
the Deferral Period for such Deferred
Stock award (or such installment).
(vii) Each award shall be confirmed by, and
subject to the terms of, a Deferred
Stock agreement executed by the
Company and the participant.
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SECTION 9. OTHER STOCK-BASED AWARDS.
(a) ADMINISTRATION. Other awards of Stock and other awards that
are valued in whole or in part by reference to, or are otherwise based on, Stock
("Other Stock-Based Awards"), including, without limitation, performance shares,
and shares valued by reference to subsidiary performance, may be granted either
alone or in addition to or in tandem with Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock.
Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Stock to be awarded pursuant to
such awards, and all other conditions of the awards. The Committee may also
provide for the grant of Stock under such awards upon the completion of a
specified performance period.
The provisions of Other Stock-Based Awards need not be the same
with respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made
pursuant to this Section 9 shall be subject to the following terms and
conditions:
(i) Subject to the provisions of this
Plan and the award agreement
referred to in Section 9(b)(v)
below, shares subject to awards
made under this Section 9 may not
be sold, assigned, transferred,
pledged or otherwise encumbered
prior to the date on which the
shares are issued, or, if later,
the date on which any applicable
restriction, performance or
deferral period lapses.
(ii) Unless otherwise determined by the
Committee at the time of award,
subject to the provisions of this
Plan and the award agreement, the
recipient of an award under this
Section 9 shall be entitled to
receive, currently or on a deferred
basis, dividends or dividend
equivalents with respect to the
number of shares covered by the
award, as determined at the time of
the award by the Committee, in its
sole discretion, and the Committee
may provide that such amounts (if
any) shall be deemed to have been
reinvested in additional Stock or
otherwise reinvested.
(iii) Any award under this Section 9 and
any Stock covered by any such award
shall vest or be forfeited to the
extent so provided in the award
agreement, as determined by the
Committee, in its sole discretion.
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(iv) In the event of the participant's
Retirement, Disability or death, or
in cases of special circumstances,
the Committee may, in its sole
discretion, waive in whole or in
part any or all of the limitations
imposed hereunder (if any) with
respect to any or all of an award
under this Section 9.
(v) Each award under this Section 9
shall be confirmed by, and subject
to the terms of, an agreement or
other instrument by the Company and
by the participant.
(vi) Stock issued on a bonus basis under
this Section 9 may be issued for no
cash consideration; Stock purchased
pursuant to a purchase right
awarded under this Section 9 shall
be priced at at least 50% of the
Fair Market Value of the Stock on
the date of grant.
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SECTION 10. CHANGE IN CONTROL PROVISIONS.
(a) IMPACT OF EVENT. In the event of a "Change
in Control" as defined in Section 10(b), the following acceleration and
valuation provisions shall apply:
(i) Any Stock Appreciation Rights
(including, without limitation, any
Limited Stock Appreciation Rights)
outstanding for at least 6 months
and any Stock Options awarded under
the Plan not previously exercisable
and vested shall become fully
exercisable and vested.
(ii) The restrictions and deferral
limitations applicable to any
Restricted Stock, Deferred Stock
and Other Stock Based Awards, in
each case to the extent not already
vested under the Plan, shall lapse
and such shares and awards shall be
deemed fully vested.
(iii) All outstanding Stock Options,
Stock Appreciation Rights,
Restricted Stock, Deferred Stock
and Other Stock Based Awards, shall
be cashed out on the basis of the
"Change in Control Price" as
defined in Section 10(c) as of the
date such Change in Control is
determined to have occurred.
(b) DEFINITION OF "CHANGE IN CONTROL". For
purposes of this Plan, the term "Change in Control" shall mean any of the
following events:
(i) The acquisition (other than from
the Company) by any person, entity
or "group", within the meaning of
Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934
(the "Exchange Act"), (excluding,
for this purpose, the Company or
its subsidiaries, or any employee
benefit plan of the Company or its
subsidiaries) of beneficial
ownership (within the meaning of
Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of
either the then outstanding shares
of common stock or the combined
voting power of the Company's then
outstanding voting securities
entitled to vote generally in the
election of directors; or
(ii) Individuals who, as of the date
hereof, constitute the Board (as of
the date hereof the "Incumbent
Board") cease for any reason to
constitute at least a majority of
the Board, provided that any person
becoming a director subsequent to
the date hereof whose election, or
nomination for election by the
Company's shareholders, was
approved by a vote of at least a
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majority of the directors then
comprising the Incumbent Board
(other than an election or
nomination of an individual whose
initial assumption of office is in
connection with an actual or
threatened election contest
relating to the election of the
Directors of the Company, as such
terms are used in Rule 14a-11 of
Regulation 14A promulgated under
the Exchange Act) shall be, for
purposes of this Plan, considered
as though such person were a member
of the Incumbent Board; or
(iii) Approval by the stockholders of the
Company of a reorganization,
merger, or consolidation, in each
case, with respect to which persons
who were the stockholders of the
Company immediately prior to such
reorganization, merger or
consolidation do not, immediately
thereafter, own, directly or
indirectly, more than 50% of the
combined voting power entitled to
vote generally in the election of
directors of the reorganized,
merged or consolidated company's
then outstanding voting securities,
or a liquidation or dissolution of
the Company or of the sales of all
or substantially all of the assets
of the Company.
(c) CHANGE IN CONTROL PRICE. For purposes of
this Section 10, "Change in Control Price" means the highest price per share
paid in any transaction reported on the New York Stock Exchange Composite
Index, or paid or offered in any bona fide transaction related to a Change in
Control of the Company at any time during the preceding sixty-day period as
determined by the Committee except that, in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on transactions reported for the date on which the optionee
exercises such Stock Appreciation Rights (or, where applicable, the date on
which a cashout occurs under Section 10(a)(iii)).
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SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan,
but no amendment, alteration, or discontinuation shall be made which would
impair the rights of an optionee or participant under a Stock Option, Stock
Appreciation Right, Limited Stock Appreciation Right, Restricted or Deferred
Stock award or Other Stock-Based Award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's shareholders, would:
(a) except as expressly provided in this Plan,
increase the total number of shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock
Option to less than 100% of the Fair Market Value on the date of grant; or
(c) change the employees or class of employees
eligible to participate in the Plan; or
(d) extend the maximum option period under
Section 5(b) of the Plan.
The Committee may amend the terms of any Stock
Option or other award theretofore granted, prospectively or retroactively, but,
subject to Section 3 above, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent. The
Committee may also substitute new Stock Options for previously granted Stock
Options having higher option exercise prices.
Subject to the above provisions, the Board shall
have broad authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as other
developments.
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SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a participant or optionee by the Company, nothing contained herein
shall give any such participant or optionee any rights that are greater than
those of a general creditor of the Company.
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SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person
purchasing shares pursuant to a Stock Option or other award under the Plan to
represent to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution thereof.
The certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, any applicable Federal or state securities law,
and any applicable corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to
such restrictions.
(b) Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
(c) The adoption of the Plan shall not confer
upon any employee of the Company any right to continued employment with the
Company as the case may be, nor shall it interfere in any way with the right of
the Company to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an
amount first becomes includible in the gross income of the participant for
Federal income tax purposes with respect to any option or other award under the
Plan, the participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state, or
local taxes of any kind required by law to be withheld or paid with respect to
such amount. Unless otherwise determined by the Committee, tax withholding or
payment obligations may be settled with Stock, including Stock that is part of
the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of
dividends or dividend equivalents in additional Restricted Stock (or in
Deferred Stock or other types of Plan awards) at the time of any dividend
payment shall only be permissible if sufficient shares of Stock are available
under Section 3 for such reinvestment (taking into
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account then outstanding Stock Options and other Plan awards).
(f) The Plan and all awards made and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of New York.
(g) Any award payment under this Plan shall not
be deemed compensation for purposes of computing benefits under any retirement
plan of the Company and shall not affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.
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SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of December 2, 1987,
subject to the approval of the Plan by the holders of a majority of the shares
of the Company's Stock at the next annual shareholders' meeting in 1988. Any
grants made under the Plan prior to such approval shall be effective when made
(unless otherwise specified by the Committee at the time of grant), but shall
be conditioned on, and subject to, such approval of the Plan by shareholders.
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SECTION 15. TERM OF PLAN.
No Stock Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock or Other Stock-Based Award shall be granted
pursuant to the Plan on or after the tenth anniversary of the date of
shareholder approval, but awards granted prior to such tenth anniversary may
extend beyond that date.
Board Approval: December 2, 1987
As Amended: September 28, 1988
December 7, 1988
December 1, 1993
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