EXHIBIT 4.3
COMPUTER GENERATED SOLUTIONS, INC.
1997 LONG-TERM INCENTIVE PLAN
1. Purpose of Plan
The purpose of this 1997 Long-Term Incentive Plan (the "Plan") is to
aid Computer Generated Solutions, Inc. and its Subsidiaries (the "Company") in
securing and retaining Key Employees of outstanding ability by making it
possible to offer them increased incentives, which may include a proprietary
interest in the Company, to join or continue in the service of the Company and
to increase their efforts for its welfare.
2. Definitions
As used in the Plan, the following words shall have the following
meanings:
(a) "CGS" means Computer Generated Solutions, Inc.;
(b) "Award" means an award or grant made to a Participant pursuant to
the Plan, including, without limitation, an award or grant of an Option,
Right, Restricted Stock, Performance Award or Other Stock-Based Award, or any
combination of the foregoing;
(c) "Award Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable
to an Award;
(d) "Board of Directors" means the Board of Directors of CGS;
(e) "Committee" means the Compensation Committee of the Board of
Directors;
(f) "Common Stock" means common stock of CGS;
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended;
(h) "Incentive Stock Option" means a stock option to purchase shares
of Common Stock which is intended to qualify as an incentive stock option as
defined in Section 422(b) of the Internal Revenue Code;
(i) "Key Employee" means any person, including an officer or director,
in the regular full-time employment of the Company who, in the opinion of the
Committee, is or is expected to be primarily responsible for the management,
growth or protection of some part or all of the business of the Company;
(j) "Limited Right" means a right to receive cash in lieu of the
exercise of an Option or Right as set forth in Section 12(b);
(k) "Nonqualified Stock Option" means a stock option to purchase
shares of Common Stock which is intended not to qualify as an incentive stock
option as defined in Section 422 of the Internal Revenue Code;
(l) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option;
(m) "Other Stock-Based Award" means an Award pursuant to Section 8;
(n) "Participant" means a person to whom one or more Awards have been
granted that have not all been forfeited or terminated under the Plan;
(o) "Performance Period" means the period specified with respect to a
Performance Award during which specified performance criteria are to be
measured;
(p) "Performance Award" means an Award granted pursuant to Section 7;
(q) "Restricted Stock" means shares of Common Stock granted pursuant
to Section 6 or as part of a Performance Award or an Other Stock-Based Award;
(r) "Right" means a stock appreciation right to elect to receive
shares of Common Stock with a fair market value, at the time of any exercise
of such stock appreciation right, equal to the amount by which the fair market
value of all shares (or where issued pursuant to Section 5, the shares subject
to the Option (or part thereof)) in respect of which such stock appreciation
right was granted exceeds the exercise price of said Option (or part thereof)
or in the Committee's discretion to receive from CGS, in lieu of such shares,
the fair market value in cash, or to receive a combination of such shares and
cash, as provided in Section 5; and
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(s) "Subsidiary" means any corporation other than CGS in an unbroken
chain of corporations beginning with CGS where each of the corporations other
than the last corporation in the unbroken chain owns 50% or more of the voting
stock in one of the other corporations in such chain.
3. Administration of Plan
The Plan shall be administered by the Committee, whose members shall
be appointed by the Board of Directors and consist of at least two members of
the Board of Directors. Members of the Committee shall qualify to administer
the Plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated
under Section 16(b) of the Exchange Act. The Committee may adopt its own rules
of procedure, and the action of a majority of the Committee, taken at a meeting,
or taken without a meeting by unanimous written consent of the members of the
Committee, shall constitute action by the Committee. The Committee shall have
the power and authority to administer, construe and interpret the Plan, to make
rules for carrying it out and to make changes in such rules.
4. Awards
The Committee (or prior to the formation of the Committee, the Board
of Directors) may from time to time make such Awards under the Plan to such Key
Employees and in such form and having such terms, conditions and limitations as
the Committee may determine. Awards may be granted singly, in combination or in
tandem. The terms, conditions and limitations of each Award under the Plan
shall be set forth in an Award Agreement, in a form approved by the Committee,
consistent, however, with the terms of the Plan.
5. Awards of Options and Rights
(a) The terms and conditions with respect to each Award of Options
under the Plan shall be consistent with the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall deem desirable:
(i) The Option price per share shall be determined by the Committee at
the time of grant, but in no event shall the exercise price of an Incentive
Stock Option be less than 100 percent of the fair
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market value of the shares at the time the Option is granted.
(ii) The Option shall be exercisable at such time or times and subject
to such terms and conditions (including vesting and forfeiture provisions)
as shall be determined by the Committee at the date of grant, but in no
event shall an Option be exercisable prior to the Participant named therein
having remained in the employ of the Company for at least one year after
the date of the grant of the Option; provided, however, that the one-year
employment requirement shall not be applicable in the event of the death or
disability of the Participant within such year or as otherwise provided in
Section 12(b). The Option may contain performance goals and measurements
consistent with the provisions in Section 7, and the provisions with
respect to any Option need not be the same as the provisions with respect
to any other Option. The Option shall be exercisable in whole or in part
from time to time during the period beginning at the completion of the
required employment time stated in the Option and ending at the expiration
of ten years from the date of grant of the Option, unless an earlier
expiration date shall be stated in the Option or the Option shall cease to
be exercisable pursuant to Section 5(a)(iv) or because of the exercise of
the Limited Right pertaining thereto as provided in Section 12(b). To the
extent that the aggregate fair market value of shares with respect to which
Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year exceeds $100,000, such Options shall
be treated as Nonqualified Stock Options. The foregoing shall be applied
by taking Options into account in the order in which they were granted.
For purposes of the foregoing, the fair market value of any share shall be
determined at the time of the grant of the Option. In the event the
foregoing results in a portion of an Incentive Stock Option exceeding the
$100,000 limitation, only such excess shall be treated as a Nonqualified
Stock Option.
(iii) Payment in full of the Option price shall be made upon exercise
of each Option and may be made in cash, by the delivery of shares of Common
Stock with a fair market value equal to the Option price, provided that any
such shares acquired by the Participant pursuant to the exercise of an
Incentive Stock Option shall have been held by the Participant for a period
of
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at least one year, or by a combination of cash and such shares that have
been held by the Participant for a period of at least one year whose fair
market value together with such cash shall equal the Option price. The
Committee may also permit Participants, either on a selective or aggregate
basis, simultaneously to exercise Options and sell the shares of Common
Stock thereby acquired pursuant to a brokerage or similar arrangement,
approved in advance by the Committee, and use the proceeds from such sale
as payment of the purchase price of such shares.
(iv) If a Participant's employment with the Company terminates other
than by reason of the Participant's death, disability or retirement under a
retirement plan of the Company, the Participant's Option shall terminate
and cease to be exercisable except as otherwise provided in Section 12(b).
If a Participant's employment with the Company terminates by reason of
death, disability or retirement under a retirement plan of the Company, the
Participant's Option shall continue to be exercisable until the expiration
date stated in the Option, provided that a Nonqualified Stock Option may be
exercised within one year from the date of death even if later than such
expiration date. In the case of a Participant whose principal employer is
a Subsidiary, then such Participant's employment shall be deemed to be
terminated for purposes of this Section 5 as of the date on which such
principal employer ceases to be a Subsidiary.
(v) Each Option shall contain a Limited Right to receive cash in lieu
of shares under the circumstances set forth in Section 12(b).
(b) The Committee, at the time of grant of an Option or at any time
prior to the expiration of its term, may also grant, subject to the terms and
conditions of the Plan, Rights in respect of all or part of such Option to the
Participant who has been granted the Option, provided that at such time the
Participant is a Key Employee.
(c) The holder of an Option or Right who decides to exercise the
Option or Right in whole or in part shall give notice to the Secretary of CGS of
such exercise in writing on a form approved by the Committee. A notice
exercising a Right shall also specify the extent, if any, to which the
Participant elects to receive cash, and shall be
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subject to the determination by the Committee as provided in Section 5(f). Any
exercise shall be effective as of the date specified in the notice of exercise,
but not earlier than the date the notice of exercise, together with, in the case
of exercise of an Option, payment in full of the Option price, is actually
received and in the hands of the Secretary of CGS.
(d) To the extent an Option is exercised in whole or in part, any
Right granted in respect of such Option (or part thereof) shall terminate and
cease to be exercisable. To the extent a Right is exercised in whole or in
part, the Option (or part thereof) in respect of which such Right was granted
shall terminate and cease to be exercisable.
(e) Subject to Sections 5(b), a Right granted with an accompanying
Option shall be exercisable only during the period in which the Option (or part
thereof) in respect of which such Right was granted is exercisable.
(f) The Committee shall have sole discretion to determine the form in
which payment will be made following exercise of a Right. All or any part of
the obligation arising out of an exercise of a Right may be settled
(i) by payment in shares of Common Stock with a fair market value
equal to the cash that would otherwise be paid,
(ii) by payment in cash, or
(iii) by payment in a combination of such shares and cash.
(g) To the extent that any Right that shall have become exercisable
shall not have been exercised or canceled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day on
which its related Option is exercisable, provided that any conditions or
limitations on its exercise (other than (i) notice of exercise and (ii) exercise
or election to exercise during the period prescribed in Section 5(e)) are
satisfied and the Right shall then have value. Such exercise shall be deemed to
specify that, subject to determination by the Committee as provided in Section
5(f), the holder elects to receive cash and that such exercise of a Right shall
be effective as of the time of the exercise.
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6. Awards of Restricted Stock
The terms and conditions with respect to each Award of Restricted
Stock under the Plan shall be consistent with the following:
(a) The provisions of Awards of Restricted Stock need not be the same
with respect to each Participant. Each Award of Restricted Stock shall be
subject to forfeiture as set forth in the Plan and may be otherwise subject to
forfeiture as set forth in the provisions of such Award.
(b) Each Participant receiving an Award of Restricted Stock shall be
issued a 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. The Committee may require that the certificates
evidencing such shares be held in custody by CGS until the restrictions thereon
shall have lapsed and that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
(c) Shares of Restricted Stock shall be subject to the restrictions
set forth in this Section 6(c).
(i) Subject to the provisions of the Plan and the applicable Award
Agreement, during the period established by the Committee commencing on the
date of such Award (the "Restriction Period"), the Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber such
shares of Restricted Stock. Within these limits, the Committee may provide
for the lapse of such restrictions in installments and may accelerate or
waive any or all of such restrictions, in whole or in part, based on
service, performance and such other factors or criteria as the Committee
may determine.
(ii) Subject to Section 10(e) and except as provided in this Section
6(c), the Participant shall have, with respect to shares of Restricted
Stock issued to such Participant under the Plan, all of the rights of a
holder of Common Stock of CGS, including the right to vote the shares and
the right to receive any cash dividends. Unless otherwise determined by
the Committee, cash dividends shall be automatically
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reinvested in additional shares of Common Stock which shall be treated as
Restricted Stock under this Section 6 and dividends payable in Common Stock
shall be treated as additional shares of Restricted Stock subject to the
same restrictions and other terms and conditions that apply to the shares
with respect to which such dividends are issued.
(iii) Except to the extent otherwise provided in this Section 6(c), in
Section 12(c) or 12(d) or in the applicable Award Agreement, upon
termination of a Participant's employment with the Company for any reason
during the Restriction Period, all shares still subject to restriction
shall be forfeited by the Participant. Except to the extent otherwise
provided in the applicable Award Agreement, if the Participant's employment
shall terminate and cease by reason of disability, retirement under a
retirement plan of the Company or death, the Restriction Period with
respect to any shares of Restricted Stock then held shall expire as of the
date of such disability, retirement or death.
(iv) Upon expiration of the Restriction Period with respect to any
shares of the Restricted Stock without a prior forfeiture thereof, the
holder of such shares shall have the right to receive in exchange for the
certificates representing such shares unlegended certificates for such
shares.
7. Performance Awards
The terms and conditions with respect to each Performance Award under
the Plan shall be consistent with the following:
(a) Performance Awards may be paid in cash, shares of Common Stock
(which may, but need not, be shares of Restricted Stock pursuant to Section 6),
Rights or any combination thereof. The Committee shall determine the nature,
length and starting date of the Performance Period for each Performance Award
which shall be at least two years (subject to Sections 12(c) and 12(d)) and
shall determine the performance objectives to be used in valuing Performance
Awards and determining the extent to which such Performance Awards have been
earned. Performance objectives may vary from Participant to Participant and
between groups of Participants and shall be based upon revenues, operating
income, operating company contribution, cash flow, income
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before income taxes, net income, earnings per share, return on equity or assets
or total return to stockholders, whether applicable to the Company or any
relevant Subsidiary or business unit, or any combination thereof, as the
Committee may deem appropriate. Performance Periods may overlap and Participants
may participate simultaneously with respect to Performance Awards that are
subject to different Performance Periods and different performance factors and
criteria. The terms of Performance Awards need not be the same with respect to
each Participant. The Committee shall determine for each Performance Award
subject to such Performance Period the range of dollar values or number of
shares of Common Stock (which may, but need not, be shares of Restricted Stock
pursuant to Section 6), or combination thereof, to be received by the
Participant at the end of the Performance Period if and to the extent that the
relevant measures of performance for such Performance Awards are met. The
factors must include a minimum performance standard below which no payment will
be made and a maximum performance level above which no increased payment will be
made. Such dollar values or number of shares may be fixed or may vary in
accordance with such performance or other criteria as may be determined by the
Committee.
(b) The Committee may adjust the performance goals and measurements
applicable to Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the inclusion or exclusion of the impact of
extraordinary or unusual items, events or circumstances, provided that no
adjustment shall be made which would result in an increase in the compensation
of any Participant whose compensation is subject to the limitation on
deductibility under Section 162(m) of the Internal Revenue Code, as amended, or
any successor provision, for the applicable year. The Committee also may adjust
the performance goals and measurements applicable to Performance Awards and
thereby reduce the amount to be received by any Participant pursuant to such
Awards if and to the extent that the Committee deems it appropriate, provided
that no such reduction shall be made on or after the date of a Change in Control
(as defined in Section 12(b)(iii)).
(c) Except as otherwise provided in the applicable Award Agreement, if
during a Performance Period a Participant's employment with the Company
terminates by reason of the Participant's death, disability or retirement under
a retirement plan of the Company, such Participant
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shall be entitled to a payment with respect to each outstanding Performance
Award at the end of the applicable Performance Period (i) based, to the extent
relevant under the terms of the Award, upon the Participant's performance for
the portion of such Performance Period ending on the date of termination and
(ii) prorated for the portion of the Performance Period during which the
Participant was employed by the Company, all as determined by the Committee. The
Committee may provide for an earlier payment in settlement of such Performance
Award discounted at a reasonable interest rate and otherwise in such amount and
under such terms and conditions as the Committee deems appropriate. Except as
otherwise provided in Section 12(c) or 12(d) or in the applicable Award
Agreement, if during a Performance Period a Participant's employment with the
Company terminates other than by reason of the Participant's death, disability
or retirement under a retirement plan of the Company, then such Participant
shall not be entitled to any payment with respect to the Performance Awards
relating to such Performance Period, unless the Committee shall otherwise
determine.
(d) The earned portion of a Performance Award may be paid currently or
on a deferred basis with such interest or earnings equivalent as may be
determined by the Committee. Payment shall be made in the form of cash or whole
shares of Common Stock, either in a single payment or in annual installments,
all as the Committee shall determine.
(e) If a Participant engages in detrimental activity (as hereinafter
defined) at any time (whether before or after termination of employment), any
Performance Award that has not been paid to such Participant (or is not payable
as provided in Section 12(c) or 12(d)) prior to the date such activity has been
determined by the Committee to constitute detrimental activity shall be
forfeited and shall never become payable. For purposes of this Section 7(e),
"detrimental activity" shall mean willful, reckless or grossly negligent
activity that is determined by the Committee, on a case-by-case basis, to be
detrimental to or destructive of the business or property of CGS or any
Subsidiary. Any such determination of the Committee shall be conclusive and
binding for all purposes of the Plan. Notwithstanding the foregoing, no
Performance Award shall be forfeited or become not payable by virtue of this
Section 7(e) on or after the date of a Change in Control (as defined in Section
12(b)(iii)).
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8. Other Stock-Based Awards
The Committee may grant other Awards under the Plan pursuant to which
shares of Common Stock (which may, but need not, be shares of Restricted Stock
pursuant to Section 6) are or may in the future be acquired, or Awards
denominated in stock units, including ones valued using measures other than
market value. The Committee may also grant stock appreciation rights without
the grant of an accompanying Option, which Rights shall permit the Participants
to receive, at the time of any exercise of such Rights, cash equal to the amount
by which the fair market value of all shares of Common Stock in respect to which
the Right was granted exceeds the exercise price thereof. Such Other Stock-
Based Awards may be granted alone, in addition to or in tandem with any Award of
any type granted under the Plan and must be consistent with the purposes of the
Plan.
9. Dividend Equivalents
Any Awards (other than Awards of Options or Rights) under the Plan
may, in the discretion of the Committee, earn dividend equivalents. In respect
of any such Award which is outstanding on a dividend record date for Common
Stock the Participant may be credited with an amount equal to the cash or stock
dividends or other distributions that would have been paid on the shares of
Common Stock covered by such Award had such covered shares been issued and
outstanding on such dividend record date. The Committee shall establish such
rules and procedures governing the crediting of dividend equivalents, including
the timing, form of payment and payment contingencies of such dividend
equivalents, as it deems are appropriate or necessary.
10. Limitations and Conditions
(a) The total number of shares of Common Stock that may be made
subject to Awards under the Plan is 1,270,000 shares. Such total number of
shares may consist, in whole or in part, of unissued shares or reacquired
shares. Not more than 250,000 shares of Common Stock may be made subject to
Awards under the Plan to any individual Participant, which limitation shall be
applied in a manner consistent with the requirements of Section 162(m) of the
Internal Revenue Code, as amended. The foregoing numbers of shares are based on
the capitalization of CGS immediately
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following a proposed 1300.2 to one Stock Split in connection with a contemplated
initial public offering (the "Stock Split") and may be increased or decreased by
the events set forth in Section 12(a). In the event that the Company makes an
acquisition or is a party to a merger or consolidation and CGS assumes the
options or other awards consistent with the purpose of this Plan of the company
acquired, merged or consolidated which are administered pursuant to this Plan,
shares of Common Stock subject to the assumed options or other awards shall not
count as part of the total number of shares of Common Stock that may be made
subject to Awards under this Plan.
(b) Any shares that have been made subject to an Award that cease to
be subject to the Award (other than by reason of exercise or payment of the
Award to the extent it is settled in shares) shall again be available for award
and shall not be considered as having been theretofore made subject to award.
Any shares subject to option under an Option (or part thereof) that is canceled
upon exercise of a Right when settled wholly or partially in shares shall to the
extent of such settlement in shares be treated as if the Option itself were
exercised and such shares received in settlement of the Right shall no longer be
available for grant.
(c) No Awards shall be made under the Plan after February 28, 2007,
but the terms of Awards granted on or before the expiration thereof may extend
beyond such expiration. At the time an Award is granted or amended or the terms
or conditions of an Award are changed, the Committee may provide for limitations
or conditions on such Award.
(d) No Award or portion thereof shall be transferable by the
Participant unless permitted in the applicable Award Agreement. A Right shall
never be transferred except to the transferee of the related Option.
(e) No person who receives an Award under the Plan which includes
shares of Common Stock or the right to acquire shares of Common Stock (which may
include shares of Restricted Stock pursuant to Section 6) shall have any rights
of a stockholder (i) as to shares under option until, after proper exercise of
the Option, such shares have been recorded on CGS's official stockholder records
as having been issued or transferred, (ii) as to shares to be delivered
following exercise of a Right until, after proper exercise of the Right and
determination by the Committee to
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make payment therefor in shares, such shares shall have been recorded on CGS's
official stockholder records as having been issued or transferred, or (iii) as
to shares included in Awards of Restricted Stock, Performance Awards or Other
Stock-Based Awards, until such shares shall have been recorded on CGS's official
stockholder records as having been issued or transferred.
(f) CGS shall not be obligated to deliver any shares until they have
been listed (or authorized for listing upon official notice of issuance) upon
the Nasdaq National Market or each stock exchange upon which outstanding shares
of such class at the time are listed nor until there has been compliance with
such laws or regulations as CGS may deem applicable. CGS shall use its best
efforts to effect such listing and compliance. No fractional shares shall be
delivered.
(g) Nothing contained herein shall affect the right of the Company to
terminate any Participant's employment at any time or for any reason.
11. Transfers and Leaves of Absence
For purposes of the Plan: (a) a transfer of a Participant's employment
without an intervening period from CGS to a Subsidiary or vice versa, or from
one Subsidiary to another, shall not be deemed a termination of employment, and
(b) a Key Employee who is granted in writing a leave of absence shall be deemed
to have remained in the employ of the Company during such leave of absence.
12. Stock Adjustments, Change in Control and Divestitures
(a) In the event of any merger, consolidation, stock or other non-cash
dividend, extraordinary cash dividend, split-up, spin-off, combination or
exchange of shares, reorganization or recapitalization or change in
capitalization, or any other similar corporate event, other than the stock
split, the Committee may make such adjustments in (i) the aggregate number of
shares subject to the Plan and the number of shares that may be made subject to
Awards to any individual Participant as set forth in Section 10(a), (ii) the
number and kind of shares that are subject to any Option (including any Option
outstanding after termination of employment) and the Option price per share
without any change in the aggregate Option price to be paid therefor upon
exercise of the Option, (iii) the number and kind of Rights granted or that may
be granted under the
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Plan, (iv) the number and kind of shares of outstanding Restricted Stock, (v)
the number and kind of shares of Common Stock covered by a Performance Award or
Other Stock-Based Award and (vi) the number of outstanding dividend equivalents,
as the Committee shall deem appropriate in the circumstances. The determination
by the Committee as to the terms of any of the foregoing adjustments shall be
conclusive and binding.
(b) (i) In the event of a Change in Control (as defined in Section
12(b)(iii)), then unless the Committee otherwise determines at any time prior to
such Change in Control, each Option or Right held by a Participant that is not
then exercisable shall become immediately exercisable and shall remain
exercisable as provided in Section 5 notwithstanding anything to the contrary in
the first sentence of Section 5(a)(ii) or in Section 5(b). In addition, unless
the Committee otherwise determines at the time of grant or at any time
thereafter but prior to such Change in Control, each Limited Right in respect of
an Option or Right then exercisable by a Participant that is outstanding at the
time of such Change in Control shall be deemed to be automatically exercised as
of the date of such Change in Control or as of such other date during the 60-day
period beginning on the date of such Change in Control as the Committee may
determine prior to such Change in Control. In the event that the Limited Right
is not automatically exercised, the Participant may during the 60-day period
beginning on the date of the Change in Control (such 60-day period being herein
referred to as the "Limited Right Exercise Period"), in lieu of exercising such
Option or Right in whole or in part, exercise the Limited Right (or part
thereof) pertaining to such Option. Such Participant, whether the exercise is
pursuant to his election or automatic pursuant to the terms hereof, shall be
entitled to receive in cash an amount determined by multiplying the number of
shares subject to such Option (or part thereof) by the amount by which the
exercise price of each share is exceeded by (A) if such Option is an Incentive
Stock Option, the fair market value of such shares at the date of exercise or
(B) if such Option is a Nonqualified Stock Option, the greater of (x) the
highest purchase price per share paid for the shares of the Company beneficially
acquired in the transaction or series of transactions resulting in the Change in
Control by the person or persons deemed to have acquired control pursuant to the
Change in Control and (y) the highest fair market value of shares of Common
Stock during the Limited Right Exercise Period prior to the time of exercise. A
Limited Right shall be exercised in whole or
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in part by giving written notice of such exercise on a form approved by the
Committee to the Secretary of CGS, except that no such written notice shall be
required in the event such Limited Right is automatically exercised pursuant to
the terms hereof. The exercise shall be effective as of the date specified in
the notice of exercise, but not earlier than the date the notice of exercise is
actually received and in the hands of the Secretary of CGS. In the event the
last day of a Limited Right Exercise Period shall fall on a day that is not a
business day, then the last day thereof shall be deemed to be the next following
business day. To the extent an Option or a Right pertaining thereto is exercised
in whole or in part, the Limited Right in respect of such Option shall terminate
and cease to be exercisable. To the extent a Limited Right is exercised in whole
or in part, the Option (or part thereof) to which such Limited Right pertains
and the Right (or part thereof) pertaining to such Option (or part thereof)
shall terminate and cease to be exercisable.
(ii) Notwithstanding anything to the contrary in the first sentence of
Section 5(a)(ii) or in 5(a)(iv) or 5(b), the provisions of this Section
12(b)(ii) will be applicable in the event of a termination of a
Participant's employment on or after a Change in Control and prior to the
expiration of the Limited Right Exercise Period applicable thereto. No
Option, Right or Limited Right held by a Participant shall terminate or
cease to be exercisable as a result of his termination of employment on or
after a Change in Control and prior to the expiration of the Limited Right
Exercise Period applicable thereto, but shall be exercisable throughout the
Limited Right Exercise Period applicable thereto; provided, however, that
in no event shall any Option or Right be exercisable after ten years from
its date of grant (except in the event of death as provided in Section
5(a)(iv)).
(iii) A "Change in Control" shall be deemed to have occurred if (A)
any person (as that term is used in Sections 13(d) and 14(d) of the
Exchange Act, as in effect on February 28, 1997) is or becomes the
beneficial owner (as that term is used in Section 13(d) of the Exchange
Act, and the rules and regulations promulgated thereunder, as in effect on
February 28, 1997) of stock of the Company entitled to cast more than the
greater of (x) 20% or (y) the largest percentage owned by any other person
of the votes at the time entitled to be cast generally for the election
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of directors, (B) more than 50% of the members of the Board of Directors
shall not be Continuing Directors (which term, as used herein, means the
directors of CGS (x) who are members of the Board of Directors on February
28, 1997 or (y) who subsequently became directors of CGS and who were
elected or designated to be candidates for election as nominees of the
Board of Directors, or whose election or nomination for election by CGS's
stockholders was otherwise approved, by a vote of a majority of the
Continuing Directors then on the Board of Directors), (C) CGS shall be
merged or consolidated with, or, in any transaction or series of
transactions, substantially all of the business or assets of CGS shall be
sold or otherwise acquired by, another corporation or entity and, as a
result thereof, either (1) the stockholders of CGS immediately prior
thereto shall not directly or indirectly have at least 50% or more of the
combined voting power of the surviving, resulting or transferee corporation
or entity immediately thereafter or (2) any person (as that term is used in
Sections 13(d) and 14(d) of the Exchange Act, as in effect on February 28,
1997) is or becomes the beneficial owner (as that term is used in Section
13(d) of the Exchange Act, and the rules and regulations promulgated
thereunder, as in effect on February 28, 1997) of more than the greater of
(x) 20% or (y) the largest percentage owned by any other person of combined
voting power of the surviving, resulting or transferee corporation or
entity, or (D) any change in control of CGS shall have occurred of a nature
that would be required to be reported in response to Item 1(a) of Form 8-K
promulgated under the Exchange Act as in effect on February 28, 1997,
regardless of whether CGS is at the time of such change in control subject
to the reporting requirement thereof. Notwithstanding the foregoing, a
Change in Control shall not be deemed to have occurred if an acquisition of
stock that would otherwise constitute a Change in Control pursuant to
clause (A) or (D) of the preceding sentence is made by the Company, by any
corporation in a merger or consolidation that does not constitute a Change
in Control pursuant to clause (C) of the preceding sentence or by any
employee benefit plan (or related trust) sponsored or maintained by the
Company.
(c) Notwithstanding any other provision of the Plan, in the event that
a Participant's employment is terminated on or after a Change in Control (as
defined in Section 12(b)(iii)) (x) by the Company or (y) by the
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Participant because the Participant in good faith believes that as a result of
such Change in Control he is unable effectively to discharge his duties or the
duties of the position he occupied immediately prior to such Change in Control
or because of a diminution in his aggregate compensation or in his aggregate
benefits below that in effect immediately prior to such Change in Control:
(i) with respect to shares of Restricted Stock then outstanding, the
Restriction Period with respect to such shares shall be deemed satisfied as
of the date such Participant's employment is so terminated, but only as to
that portion of such shares as is equivalent to the portion of the
Restriction Period applicable thereto that has been satisfied as of such
date without regard to this Section 12(c)(i); as of such date, the portion
of such shares as to which the Restriction Period is deemed satisfied
pursuant to this Section 12(c)(i) shall become nonforfeitable and all other
of such shares shall be forfeited; and
(ii) with respect to Performance Awards and Other Stock-Based Awards,
including shares of Common Stock covered thereby, all such Performance
Awards and Other Stock-Based Awards shall become nonforfeitable and shall
be paid out on the date such Participant's employment is so terminated (A)
as if all Performance Periods or other conditions or restrictions
applicable thereto had been completed or satisfied, the maximum performance
or other objectives with respect thereto had been attained and all Awards
granted with respect thereto had been fully earned, but (B) prorated for
the portion of any relevant Performance Period or other period ending on
the date such Participant's employment is so terminated, unless prior to
the Change in Control the Committee otherwise so provides.
(d) In the case of a Participant whose principal employer is a
Subsidiary, then such Participant's employment shall be deemed to be terminated
for purposes of Sections 6 through 9 as of the date on which such principal
employer ceases to be a Subsidiary (the "Divestiture Date") and, except to the
extent otherwise determined by the Committee and set forth in the applicable
Award Agreement:
(i) with respect to shares of Restricted Stock held by such
Participant, the Restriction Period shall be deemed satisfied as of the
Divestiture Date, but only as to that portion of such shares as is
equivalent
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to the portion of the Restriction Period applicable thereto that has been
satisfied as of the Divestiture Date without regard to this Section
12(d)(i); as of the Divestiture Date, the portion of such shares as to
which the Restriction Period is deemed satisfied pursuant to this Section
12(d)(i) shall become nonforfeitable and all other of such shares shall be
forfeited; and
(ii) with respect to Performance Awards and Other Stock-Based Awards,
including shares of Common Stock covered thereby, all such Performance
Awards and Other Stock-Based Awards shall become nonforfeitable and shall
be paid out on the Divestiture Date (A) as if all Performance Periods or
other conditions or restrictions applicable thereto had been completed or
satisfied, the maximum performance or other objectives with respect thereto
had been attained and all Awards granted with respect thereto had been
fully earned, but (B) prorated for the portion of the relevant Performance
Period or other period ending on the Divestiture Date, all as determined by
the Committee.
In the event of a termination of the Plan, then each Participant's employment
shall be deemed to be terminated for purposes of Sections 6 through 9 as of the
date of such termination of the Plan and, except to the extent otherwise
determined by the Committee and set forth in the applicable Award Agreement, the
foregoing provisions of clauses (i) and (ii) of this Section 12(d) shall apply
to such Participant's shares of Restricted Stock, Performance Awards and Other
Stock-Based Awards with the same effect as if the date of such termination of
the Plan were a Divestiture Date.
13. Amendment and Termination
(a) The Board of Directors shall have the power to amend the Plan,
including the power to change the amount of the aggregate fair market value of
the shares subject to Incentive Stock Options first exercisable in any calendar
year under Section 5 to the extent provided in Section 422, or any successor
provision, of the Internal Revenue Code. It shall not, however, except as
otherwise provided in the Plan, increase the maximum number of shares authorized
for the Plan, nor change the class of eligible employees to other than Key
Employees, nor reduce the basis upon which the minimum Option price is
determined, nor extend the period within which Awards under the Plan may be
granted, nor provide for an Option that is exercisable more than ten
18
years from the date it is granted except in the event of death. It shall have no
power to change the terms of any Award theretofore granted under the Plan so as
to impair the rights of a Participant without the consent of the Participant
whose rights would be affected by such change except to the extent, if any,
provided in the Plan or in the Award.
(b) The Board of Directors may suspend or terminate the Plan at any
time. No such suspension or termination shall affect Options, Rights or Limited
Rights then in effect.
14. Withholding Taxes
The Company shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of CGS to deliver shares upon the exercise of an Option or Right,
upon payment of a Performance Award, upon delivery of Restricted Stock or upon
exercise, settlement or payment of any Other Stock-Based Award that the
Participant pay to the Company such amount as may be requested by the Company
for the purpose of satisfying any liability for such withholding taxes. Any
Award Agreement may provide that the Participant may elect, in accordance with
any conditions set forth in such Award Agreement, to pay any withholding taxes
in shares of Common Stock.
15. Effective Date
The Plan shall be effective on and as of March __, 1997.
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