EXHIBIT 10.2
DEAN WITTER, DISCOVER & CO.
EMPLOYEES' EQUITY ACCUMULATION PLAN
(AMENDED AS OF APRIL 7, 1997)
SECTION 1 PURPOSE.
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The purposes of the Dean Witter, Discover & Co. Employees' Equity
Accumulation Plan are to attract, retain and motivate key employees of the
Company and to align the interests of key employees with stockholders through
equity-based compensation and enhanced opportunities for ownership of Stock. It
is the further purpose of this Plan to permit the granting of Awards that will
constitute performance based compensation for certain executive officers, as
described in section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") and regulations promulgated thereunder.
SECTION 2 DEFINITIONS.
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2.1 "Act" shall mean the Securities Exchange Act of 1934, as amended, and any
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successor thereto.
2.2 "Award" shall mean a grant of Stock or Cash, or the right to acquire Stock
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or Cash, under such terms and conditions as shall be determined by the Committee
consistent with the terms of the Plan.
2.3 "Award Certificate" shall mean a written document described in Section
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6.3, setting forth the terms and conditions of an Award made pursuant to the
Plan.
2.4 "Cash" shall mean United States currency.
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2.5 "Cash Unit" shall mean a general, unsecured obligation of the Company to
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pay Cash to a Participant pursuant to an Award recorded by the Company as a
bookkeeping entry.
2.6 "Board" shall mean the Board of Directors of DWD.
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2.7 "Code" shall mean the Internal Revenue Code of 1986, as amended, and any
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successor thereto.
2.8 "Committee" shall mean a committee of two or more directors of DWD, as
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described in Section 3.1.
2.9 "Company" shall mean DWD and any corporation, trade or business which at
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the time of reference, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with DWD.
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2.10 "Consent" shall mean, with respect to the granting of any Award under the
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Plan, the acquisition, issuance or purchase of Stock or other rights hereunder
or the taking of any other action hereunder:
(i) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or other self-regulatory organi-
zation or under any federal, state or local law, rule or regulation,
(ii) the expiration, elimination or satisfaction of any prohibitions,
restrictions or limitations under any federal, state or local law,
rule or regulation or the rules of any securities exchange or other
self-regulatory organization,
(iii) any and all written agreements and representations by the
Participant with respect to the disposition of Stock, or with respect
to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration
or qualification or to obtain an exemption from the requirement that
any such listing, qualification or registration be made, and
(iv) any and all consents, clearances and approvals in respect of the
granting of an Award, the acquisition, issuance or purchase of Stock
or other rights hereunder or the taking of any other action under the
Plan, by any governmental agencies or other regulatory bodies or any
parties to any loan agreements or other contractual obligations of the
Company.
2.11 "Disability" shall mean the termination of a Participant's employment
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with the Company under circumstances (i) that entitle the Participant to
receive benefits under any long term disability plan sponsored by the Company,
or (ii) if the Participant does not participate in such a plan, are determined
by the Committee to have been caused by a physical or mental condition that
would have entitled the Participant (if the Participant had been eligible to
participate) to receive benefits under the DWD Long Term Disability Plan or any
successor thereto.
2.12 "DWD" shall mean Dean Witter, Discover & Co., a Delaware corporation, or
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any successor thereto.
2.13 "Executive Officer" shall mean an executive officer of DWD within the
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meaning of Rule 3b-7 promulgated under the Act.
2.14 "Fair Market Value" shall mean, with respect to a share of Stock, the fair
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market value thereof as determined by the Committee as follows:
(a) if Stock is listed for trading on the New York Stock Exchange, the
closing price, regular way, of the Stock as reported on the New York Stock
Exchange Composite Tape on the date of reference or, if no such reported sale of
the Stock shall have occurred on such date, on the next preceding date on which
there was such a reported sale; or
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(b) if Stock is not so listed but is listed on another national securities
exchange or authorized for quotation on the National Association of Securities
Dealers Inc.'s NASDAQ National Market System ("NNM"), the closing price, regular
way of the Stock on such date on such exchange or NNM, as the case may be, on
which the largest number of shares of Stock have been traded in the aggregate on
the preceding twenty trading days or, if no such reported sale of the Stock
shall have occurred on such date on such exchange or NNM, as the case may be, on
the preceding date on which there was such a reported sale on such exchange or
NNM, as the case may be; or
(c) if Stock is not listed for trading on a national securities exchange or
authorized for quotation on NNM, the average of the closing bid and asked prices
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if no such prices shall have been so reported for such
date, on the next preceding date for which such prices were so reported; or
(d) if no Fair Market Value may be determined from the foregoing, the value
of a share of Stock as determined in good faith by the Committee.
2.15 "Option" shall mean a right to acquire Stock.
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2.16 "Participant" shall mean an individual who has been granted an Award
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under the Plan.
2.17 "Plan" shall mean the Dean Witter, Discover & Co. Employees' Equity
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Accumulation Plan, as amended from time to time.
2.18 "Related Employment" shall mean the employment of an individual by an
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employer other than the Company, provided:
(a) such employment is undertaken by the individual at the request or with
the consent of the Company;
(b) immediately prior to undertaking such employment the individual was an
employee of the Company, or was engaged in Related Employment as defined herein;
and
(c) such employment is recognized by the Committee, in its discretion, as
Related Employment.
2.19 "Restricted Stock" shall mean an Award of Stock subject to conditions
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determined by the Committee pursuant to Section 8.
2.20 "Restricted Stock Unit" shall mean an Award of Stock Units subject to
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conditions determined by the Committee pursuant to Section 8.
2.21 "Retirement" shall mean the termination of employment with the Company
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under circumstances giving rise to an entitlement to a retirement benefit,
including a benefit payable by reason of Disability, under any employee pension
benefit plan maintained by the Company which plan is intended to be qualified
under Code section 401(a), provided, however, that, if the Participant has not
accrued a benefit under any such pension plan, the term "Retirement" shall have
the meaning given
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to such term under the Dean Witter Reynolds Inc. Pension Plan or any successor
thereto; provided further, that, notwithstanding the foregoing, the transfer of
an individual to Related Employment shall not be treated as a termination of
employment due to Retirement.
2.22 "Rule 16b-3" shall mean Rule 16b-3 under the Act and any successor
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provision thereto.
2.23 "SAR" shall mean a stock appreciation right as described in Section 7.3.
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2.24 "SEC" shall mean the U.S. Securities and Exchange Commission, or any
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United States federal governmental body that succeeds to its responsibilities.
2.25 "Section 162(m) Award" shall mean an Award described in Section 6.2.
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2.26 "Stock" shall mean the common stock of DWD, par value $.01 per share, and
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any stock into which such stock is transformed as a result of a corporate
reorganization or other transaction.
2.27 "Stock Unit" shall mean a general, unsecured obligation of the Company to
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deliver one share of Stock (or the value thereof) to a Participant pursuant to
an Award recorded by the Company as a bookkeeping entry.
SECTION 3 ADMINISTRATION.
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3.1 The Plan shall be administered by the Committee. It is intended that the
directors appointed to serve on the Committee shall qualify (i) as "non-employee
directors" (within the meaning of Rule 16b-3), (ii) as "outside directors"
(within the meaning of Code section 162(m) and the regulations thereunder) and
(iii) under any similar statute or rule; in each case to the extent applicable.
The fact that a Committee member shall fail to qualify under any of these
requirements shall not invalidate any Award made by the Committee which Award is
otherwise validly made under the Plan.
3.2 The Committee shall have the authority:
(i) to exercise all of the powers granted to it under the Plan,
(ii) to construe, interpret and implement the Plan and any written
documents setting forth Awards under the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan,
(iv) to make any determination necessary or advisable in admini-
stering the Plan,
(v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan or in any Award made under the Plan.
(vi) to delegate any of its powers to DWD's chief executive
officer except with respect to any person subject to the provisions
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of Section 16 of the Act, with respect to a Section 162(m) Award
or which by law may not be so delegated.
3.3 The determination of the Committee on all matters relating to the Plan or
any Award made under the Plan shall be final, binding and conclusive for all
purposes and upon all persons interested herein.
3.4 No member of the Committee shall be liable, individually or jointly and
severally with any other Committee member, for any action, determination or
omission made in good faith with respect to the Plan or any Award hereunder. In
the performance of their duties hereunder, Committee members shall be entitled
to rely upon information and advice furnished: (a) by the Company and its
officers, directors, employees, accountants, counsel and consultants; (b) by
Participants and their heirs, assigns and representatives; and (c) by any other
party whose information or advice is determined by the Committee to be
reasonable and necessary for the administration of the Plan.
3.5 The members of the Committee shall be appointed by, and serve at the
pleasure of, the Board. Notwithstanding anything to the contrary contained
herein, the Board may, in its sole discretion, at any time and from time to
time, resolve to administer the Plan, in which case, the term Committee as used
herein shall be deemed to refer to the Board.
SECTION 4 SHARES AVAILABLE FOR AWARDS.
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4.1 Subject to Section 10.4 (relating to adjustments upon changes in
capitalization), as of any date, the total number of shares of Stock with
respect to which Awards may be granted under the Plan, shall equal :
(a) 30,000,000 shares;
(b) reduced by the sum (without duplication) of:
(i) the number of shares of Stock subject to outstanding Awards;
(ii) the number of shares of Stock in respect of which Awards
have been exercised;
(iii) the number of shares of Stock issued without forfeiture or
similar restrictions or issued with forfeiture or similar restrictions
which have lapsed;
(c) increased by the sum of:
(i) shares of Stock subject to previously granted Awards that have
expired, terminated, been canceled or forfeited for any reason (other
than by reason of exercise or vesting);
(ii) shares of Stock delivered or withheld (or deliverable or
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required to be withheld as a condition of exercise of an Award) in
payment of the exercise or purchase price of an Award granted
under the Plan or under any other employee benefit plan of the
Company.
4.2 Without limiting the generality of the foregoing, the Committee may cancel
any Award under the Plan and issue a new Award in substitution therefor upon
such terms as the Committee may in its sole discretion determine, provided that
the substituted Award shall satisfy all applicable Plan requirements as of the
date such new Award is made. Notwithstanding the foregoing or any other
provision of the Plan, in no event shall an Option or SAR be granted in
substitution for a previously granted Option or SAR with the old Award being
canceled or surrendered as a condition of receiving the new Award, if the new
Award would have a lower Option exercise price or SAR appreciation base than the
Award it replaces. The foregoing is not intended to prevent equitable adjustment
of Awards upon the occurrence of certain events as herein provided, including
without limitation, adjustments pursuant to Section 10.4.
SECTION 5 PERSONS ELIGIBLE FOR AWARDS.
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Subject to Section 6.2(a), Awards under the Plan may be made to such
employees of the Company as the Committee shall from time to time, in its sole
discretion, select.
SECTION 6 TYPES OF AWARDS UNDER THE PLAN.
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6.1 In General.
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Awards may be made under the Plan in the form of:
(i) Options,
(ii) SARs,
(iii) Restricted Stock or Restricted Stock Units,
(iv) Other Stock-based Awards,
(v) Section 162(m) Awards; or
(vi) any other type of Award deemed by the Committee in its
discretion to be consistent with the purposes of the Plan, including
but not limited to Awards granted in connection with or in lieu of
awards or payments under any other employee benefit plan or
compensation arrangement of the Company (other than a plan
qualified under Code Section 401(a) or an excess benefit plan
related to a plan qualified under Section 401(a)) and Awards made
to eligible employees who are foreign nationals or are employed
outside the United States.
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6.2 Section 162(m) Awards.
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In the discretion of the Committee, any Award made under the Plan may be
designated a Section 162(m) Award. A Section 162(m) Award is an Award under
which all payments are intended to constitute qualified performance-based
compensation which, if recognized by persons with respect to whom the limits on
deductibility of Code section 162(m) apply (generally, DWD's chief executive
officer and four other highest-paid Executive Officers, hereafter referred to as
the "162(m) Covered Employees"), would be excluded from the Section 162(m) limit
on deductibility. Section 162(m) Awards shall consist of Awards that will vest,
become exercisable, cause the delivery of Stock, result in the payment of Cash
or serve as the basis for one or more other Awards under the Plan, upon the
attainment of one or more objective performance goals established by the
Committee at a time described in Section 6.2(c) below. An objective performance
goal shall be based upon one or more of the business criteria described in
Section 6.2(b) below. Section 162(m) Awards may also consist of Options and SARs
granted with a per share exercise price or appreciation base, as the case may
be, not less than the Fair Market Value of a share of Stock on the grant date
subject to the limit set forth in 7.8 below, whether or not the vesting or
exercisability of such Options and SARs is also subject to the attainment of one
or more performance goals. Notwithstanding anything to the contrary provided
herein, (i) an Award not designated a Section 162(m) Award may nevertheless be
intended to generate compensation deductible under Code section 162(m) and (ii)
unless an applicable Award Certificate otherwise provides, the failure of a
Section 162(m) Award to meet the requirements of Code section 162(m) shall not
invalidate such Award, provided it was otherwise properly granted under the
Plan.
(a) All Executive Officers and other members of the Company's senior
management group shall be eligible to receive Section 162(m) Awards under the
Plan.
(b) For purposes of Awards under this Section 6.2, performance goals shall
be based upon one or more of the following business criteria:
(i) earnings per share;
(ii) Stock price per share;
(iii) return on average equity, assets or investments;
(iv) pre-tax income;
(v) net revenue;
(vi) net income;
(vii) book value per share;
(viii) earnings available to Stockholders;
(ix) market share;
(x) operating income;
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(xi) cash flow;
(xii) number of credit cardholders or any group of cardholders
identified by geographic area, income, trade or occupation;
(xiii) number of merchants or any group of merchants identified by
geographic area, industry or trade, accepting the Company's
proprietary or general purpose credit cards or both;
(xiv) assets under management and administration; and
(xv) number or value of managed loans.
(c) The Committee shall, not later than 90 days after the start of the
period of service to which the performance goal(s) relate(s) (or, if such period
is less than a year, the first 25% of such period) and at a time when the
attainment of such goal(s) is substantially uncertain:
(i) identify the Executive Officers and/or any other senior
management employees who will receive Section 162(m) Awards for such
measuring period;
(ii) select one or more business criteria from among those listed in
Section 6.2(b) above upon which performance goal(s) will be based;
(iii) determine the length of the measuring period;
(iv) determine the terms and conditions of the Awards underlying the
Section 162(m) Awards;
(v) establish the various objective thresholds and targets that
constitute the performance goals and the amounts that shall be paid to
each Participant on attainment of such performance goals, which
amounts may be denominated in Stock, Stock Units, Cash or Cash Units;
and
(vi) make such other determinations deemed by the Committee to be
necessary or advisable to ensure compliance with Code Section 162(m)
in connection with the granting of a Section 162(m) Award.
(d) In making the determinations described in (c) above, the Committee may
specify that a Section 162(m ) Award will vest, become exercisable or be paid if
the applicable target is achieved for one performance goal, for any one of a
number of performance goals or for more than one performance goal. The Committee
may also provide that a Section 162(m) Award will vest, become exercisable or be
paid in full only upon the attainment of a specified performance goal or goals
or vest, become exercisable or be paid in varying percentages or amounts based
upon different levels of
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achievement of the applicable performance goal or goals. Performance goals can
be based on one or more business criteria that apply to the eligible employee, a
business segment or the Company as a whole. The Committee may establish
different performance goals for each Section 162(m) Award or may use the same
goals for more than one Award and may establish different objective thresholds
and targets for one or more eligible employees resulting in different payments
under each such Award.
(e) After the end of each measuring period, the Committee shall certify, in
writing, the performance results under each Section 162(m) Award (other than
Options or SARs granted with a per share exercise price or appreciation base, as
the case may be, not less than the Fair Market Value of a share of Stock) made
for such period and determine the amount of Stock, Stock Units, Cash or Cash
Units available to vest, become exercisable or be delivered or paid under each
such Award. The Committee may, in its sole discretion, cause the delivery or
payment of the amounts so determined, or reduce such amounts based on such
factors as may be determined by the Committee, including a determination that
such reduction is appropriate based upon:
(i) the pay practices of competitors;
(ii) the Company's or a business segment's (A) performance
relative to competitors, (B) performance with respect to strategic
business goals, (C) performance with respect to the business plan or
(D) achievement of market share goals; or
(iii) a Participant's individual performance.
With respect to any Participant granted a Section 162(m) Award who the
Committee determines is not or will not be a 162(m) Covered Employee in the
calendar year in which such Participant receives or is scheduled to receive
compensation under such Section 162(m) Award, the Committee may determine to
make an Award under the Plan or under any other plan or arrangement of the
Company in excess of, in addition to, or in lieu of such Section 162(m) Award.
(f) The Committee, in its sole discretion, may make Section 162(m) Awards
that are not valued, in whole or part, by reference to, or otherwise based on,
the Fair Market Value of Stock ("Cash-based Section 162(m) Awards"). Under the
procedures and subject to the terms and conditions described in Section 6.2(a)-
(e), Cash-based Section 162(m) Awards shall be awarded in such amounts and paid
pursuant to such terms and conditions as shall be determined by the Committee,
including but not limited to such business criteria, performance-based goals and
other conditions as shall be intended to assure that payments made under a Cash-
based Section 162(m) Award shall be qualified performance-based compensation
within the meaning of Code section 162(m).
(g) Notwithstanding anything else contained herein, in any calendar year
the maximum number of shares of Stock (or the equivalent value thereof) a
Participant may be awarded under a Section 162(m) Award other than an Option,
SAR or Cash-based Section 162(m) Award, shall be 100,000 shares multiplied by
the number of years in the relevant measuring period but in no event more than
500,000 shares, subject to adjustment under Section 10.4. The maximum value a
Participant may receive, in any calendar year, under a Cash-based Section 162(m)
Award shall be $2,000,000 multiplied by the number of years in the relevant
measuring period but in no event more than $10,000,000. The maximum number of
shares of Stock underlying Options or SARs awarded to any
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individual under the Plan, including Options and SARs that are Section 162(m)
Awards, shall not exceed the limit set forth in Section 7.8.
6.3 Award Certificates. The terms and conditions of all Options, SARs and
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Section 162(m) Awards shall be set forth in Award Certificates. Other Awards
granted under the Plan shall be evidenced by Award Certificates to the extent
deemed necessary or desirable by the Committee. An Award Certificate shall be
executed by an officer of the Company authorized by the Committee. A copy of the
Award Certificate, if any, shall be delivered to the Participant as soon as
practicable after the grant of an Award. The Committee may, in its sole
discretion, require a Participant to execute and return a copy of the Award
Certificate to the Company as a condition of receiving payment on account of an
Award.
6.4 Awards may be granted alone or in conjunction with one or more other
Awards, provided that Options intended to qualify as incentive stock options
shall only be granted in compliance with Section 7.1 and applicable provisions
of the Code.
6.5 In granting an Award, including, without limitation, a Section 162(m)
Award, the Committee may provide that, irrespective of whether an Award is
denominated, in whole or in part, by reference to shares of Stock, an Award may
be paid at the election of the Committee or, if permitted by the Committee, the
Participant, in whole or in part, in Stock, Stock Units, Cash, Cash Units or
other Awards.
6.6 Awards under the Plan, including, without limitation, Section 162(m)
Awards, may, in the discretion of the Committee, be made in substitution, in
whole or in part, for Cash or other compensation that would otherwise become
payable to an eligible individual. An Award Certificate may provide that an
eligible individual may elect to receive one form of Award permitted under the
Plan in lieu of any other form of Award, or may elect to receive an Award under
the Plan in lieu of all or part of any compensation which otherwise might have
been paid to such eligible individual, provided however, that any such election
shall not require the Committee to make any Award to such eligible individual.
Any such substitute or elective Awards shall have terms and conditions
consistent with the provisions of the Plan applicable to such Award.
6.7 With respect to any dividend or distribution on shares of Stock
corresponding to an Award other than an Option or a SAR, the Committee may, in
its discretion, authorize current or deferred payments (payable in Cash or Stock
or a combination thereof) or appropriate adjustments to the outstanding Award to
reflect such dividend or distribution, including the reinvestment of dividends
into additional shares of Stock or Stock Units, provided, however, that non-Cash
(i.e., property) dividends received with respect to Stock or Stock Units shall
be subject to the same restrictions, vesting and earnout rules as the underlying
Award.
6.8 Deferred Compensation.
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(a) Plan Awards. The Committee may, in an Award Certificate or by
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appropriate action at any time before an Award is vested, paid or exercised, or,
subject to the approval of the Committee, give Participants the opportunity to
defer the payment or settlement of the Award in accordance with procedures
specified by the Committee. The Committee shall have the right at any time to
accelerate
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the payment or settlement of any Award granted under the Plan, including,
without limitation, any Award subject to a prior deferral election, provided,
however, that the amount payable on account of such Award may be discounted to
reflect the time value of the accelerated payment. The Committee may provide
that a Participant exercising an Option other than an incentive stock option may
defer the compensation to be received upon such exercise provided that the
Participant pays the exercise price by tendering shares of Stock held by the
Participant for at least 6 months or such other period of time as may be
determined by the Committee as necessary to avoid a charge to the Company's
earnings for financial statement purposes.
(b) Other Deferred Compensation. The Committee shall determine whether or
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not an Award shall be made in conjunction with deferral of a Participant's
salary, bonus or other compensation, or any combination thereof and whether or
not such deferred amounts may be:
(i) forfeited to the Company or, in the case of Awards other
than Section 162(m) Awards, other Participants, or any combina-
tion thereof under certain circumstances (which may include but
need not be limited to, certain types of termination of employ-
met or performance of services for the Company); and/or
(ii) subject to increase or decrease in value based upon the
attainment of, or failure to attain, respectively, certain performance
measures.
6.9 Unfunded Status of Plan.
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The Plan is intended to constitute an "unfunded and unsecured" plan for
incentive compensation. With respect to any payments in either Cash, Stock that
is not Restricted Stock or other property, not yet made to a Participant by the
Company, nothing herein contained shall give any Participant any rights that are
greater than those of a general, unsecured creditor of the Company. In its sole
discretion, the Committee may set aside assets (in trust or otherwise) to assist
the Company in meeting its obligations under the Plan (either alone or in
conjunction with one or more other compensation plans); provided however, that
the existence of such trusts or other arrangements shall be consistent with the
unfunded status of the Plan.
SECTION 7 OPTIONS AND SARS.
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7.1 Options.
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(a) Subject to Sections 7.8 and 7.9, the Committee may grant Options in
such amounts and subject to such conditions as the Committee shall from time to
time in its sole discretion determine, subject to the terms of the Plan. Such
terms and conditions may include, but shall not be limited to, restrictions on
the transferability and the forfeiture of Stock acquired by a Participant upon
the exercise of an Option. Unless the applicable Award Certificate provides
otherwise, no Option may be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered or disposed of by the Participant.
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(b) Each Award Certificate relating to an Option shall specify whether the
Option is a non-qualified stock option, is intended to be an incentive stock
option described in Code section 422 or is intended to be any other type of
option that may be described in the Code. No Option shall be treated as an
incentive stock or other tax-qualified option unless the Award Certificate
specifically states that the Award is intended to be an incentive stock option
or other tax-qualified option.
(c) In the case of incentive stock options, the terms and conditions of
any such grant shall be subject to and comply with the requirements of Code
sections 421, 422 and 424, any regulations thereunder and any successors
thereto, including, but not limited to, the requirement that such Options be
exercisable during the participant's lifetime only by the Participant, that no
such Option shall be granted more than ten years after the date the Board adopts
the Plan nor exercisable more than ten years after the date of grant. In no
event shall incentive stock options be granted under the Plan in respect of more
than 20,000,000 shares of Stock, subject to adjustment under Section 10.4. If an
Option is intended to be an incentive stock option and if, for any reason, such
option shall fail to so qualify as an incentive stock option, such option shall
be considered to be a nonqualified stock option appropriately granted under the
Plan, to the extent such option meets the Plan's requirements applicable to
nonqualified stock options.
7.2 Restoration Option Rights.
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(a) Subject to Sections 7.8 and 7.9, the Committee may grant to a
Participant, as a feature of an Option (under this Plan) or separately in
connection with an option under any other plan of the Company (in either case,
an "Original Option") a right to acquire Stock (a "Restoration Option Right")
pursuant to which a Participant who pays the exercise price of the Original
Option by tendering shares of Stock shall automatically be granted an option (a
"Restoration Option") to acquire a number of shares of Stock equal to the sum
of: (i) the number of shares tendered by the Participant to pay the exercise
price; and (ii) the number of shares tendered by the Participant or, pursuant to
the Participant's exercise of a tax withholding right described in Section
10.3(b)(ii), withheld by the Company from the shares being acquired upon the
exercise of the Original Option to pay income or other taxes required to be
withheld from the Participant's compensation as a result of the exercise of the
Original Option.
(b) The Committee may grant Restoration Option Rights in connection with
an Original Option at the time the Original Option is granted or at any later
time on or before the date on which the Original Option is exercised.
(c) The Committee may, in its discretion, provide in an Award Certificate
that a Restoration Option shall not be granted or, if granted, shall not become
exercisable, unless the Fair Market Value of a share of Stock shall, on the date
of such grant or exercise, be equal to or exceed a minimum amount determined by
the Committee.
(d) The Restoration Option exercise price shall not be less than the Fair
Market Value of a share of Stock on the Original Option's exercise date.
Restoration Options shall be subject to the terms and provisions contained in
the Plan and such other terms, conditions and limitations as the Committee shall
determine from time to time regarding the exercisability, forfeiture, payment
provisions and other features of Restoration Options. All Restoration Options
shall expire not later
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than the expiration date of the Original Option with respect to which the
Restoration Option was granted.
7.3 SARs.
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(a) Related SARs. Subject to Sections 7.8 and 7.9, the Committee may
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grant a SAR in connection with all or any part of an Option granted under the
Plan (a "Related SAR"), either at the time the related Option is granted or any
time thereafter prior to the exercise, termination or cancellation of such
Option, and subject to such terms and conditions as the Committee shall from
time to time in its sole discretion determine, subject to the terms of the Plan.
The grantee of a Related SAR shall, subject to the terms of the Plan and the
applicable Award Certificate, have the right to surrender to the Company for
cancellation all or a portion of the related SAR granted under the Plan, but
only to the extent that such related Option is then exercisable, and to be paid
therefor an amount equal to the excess (if any) of :
(i) the aggregate Fair Market Value of the shares of Stock
subject to the related Option or portion thereof (determined as
of the date of exercise of such Related SAR), over
(ii) the aggregate exercise price of the related Option or
portion thereof.
(b) Unrelated SARs. Subject to Sections 7.8 and 7.9, the Committee may
--------------
grant a SAR that is not connected with an Option (an "Unrelated SAR") in such
amount and subject to such terms and conditions as the Committee shall from time
to time in its sole discretion determine, subject to the terms of the Plan. The
grantee of an Unrelated SAR shall, subject to the terms of the Plan and the
applicable Award Certificate, have the right to surrender to the Company for
cancellation all or a portion of such SAR, but only to the extent that such SAR
is then exercisable, and to be paid therefor an amount equal to the excess (if
any) of:
(i) the aggregate Fair Market Value of the shares of Stock
underlying such SAR or portion thereof (determined as of the date
of exercise of such SAR) over,
(ii) the aggregate appreciation base of the shares of Stock underlying
such SAR or portion thereof.
(c) Payment due to a Participant upon exercise of a SAR shall be made in
Cash, Cash Units, Stock or Stock Units (Stock or Stock Units to be valued at the
Fair Market Value thereof as of the date of exercise), currently or deferred
under Section 6.8, as determined by the Committee in its sole discretion
consistent with the relevant Award Certificate and the Plan.
7.4 Exercise of Related SAR Reduces Shares Subject to Option.
--------------------------------------------------------
Upon any exercise of a Related SAR, or any portion thereof, the number of
shares of Stock subject to the related Option shall be reduced by the number of
shares of Stock in respect of which the Related SAR shall have been exercised.
13
7.5 Exercisability of Options and SARs. Subject to the other provisions of the
-----------------------------------
Plan:
(a) Exercisability Determined by Award Certificate. Each Award Certificate
----------------------------------------------
shall set forth the period during which and the conditions subject to which the
Option or SAR evidenced thereby shall be exercisable, as determined by the
Committee in its discretion, provided, however, that no Option or SAR shall be
exercisable until twelve months following the grant date thereof, except in the
case of the Participant's death and excluding Restoration Options, and no Option
shall be exercisable until twelve months following a hardship distribution from
any plan of the Company subject to Treasury Regulations (S)1.401(k)-
1(d)(2)(iv)(B)(4) or any successor provision.
(b) Exercise of Related SAR. Unless the applicable Award Certificate
-----------------------
otherwise provides, a Related SAR shall be exercisable at any time during the
period that the related Option may be exercised.
(c) Partial Exercise Permitted. Unless the applicable Award Certificate
--------------------------
otherwise provides, an Option or SAR granted under the Plan may be exercised
from time to time as to all or part of the full number of shares as to which
such Option or SAR shall then be exercisable.
(d) Notice of Exercise; Exercise Date.
----------------------------------
(i) An Option or SAR shall be exercisable by the filing of a
written notice of exercise with the Company, on such form and
in such manner as the Committee shall in its sole discretion pre-
scribe, and, in the case of an Option, by payment in accordance
with Section 7.6.
(ii) Unless the applicable Award Certificate otherwise provides,
or the Committee in its sole discretion otherwise determines, the
date of exercise of an Option or SAR shall be the date the Company
receives such written notice of exercise and payment.
7.6 Payment of Option Price.
------------------------
(a) Tender Due Upon Notice of Exercise. Unless the applicable Award
----------------------------------
Certificate otherwise provides or the Committee in its sole discretion otherwise
determines, any written notice of exercise of an Option shall be accompanied by
payment of the full purchase price for the shares being purchased.
(b) Manner of Payment. Payment of the Option exercise price shall be made
-----------------
in any combination of the following:
(i) by certified or official bank check payable to the
Company (or the equivalent thereof acceptable to the
Committee);
(ii) by personal check (subject to collection), which may
14
in the Committee's discretion be deemed conditional;
(iii) if and to the extent authorized by the Committee, by
delivery of previously acquired shares of Stock owned by
the Participant for such period of time as may be required
to avoid a charge to the Company's earnings for financial
statement purposes (as determined by the Committee)
having a Fair Market Value (determined as of the Option
exercise date) equal to the portion of the Option exercise
price being paid thereby, provided that the Committee may
require the Participant to furnish an opinion of counsel accept-
able to the Committee to the effect that such delivery would not
result in the Participant incurring any liability under Section 16
of the Act and does not require any Consent; and
(iv) if and to the extent authorized by the Committee, by delivery
to the Company of an assignment of a sufficient amount of the
proceeds from the sale of Stock acquired upon exercise to pay
for all of the Stock acquired upon exercise and an authorization to
the broker or selling agent to pay that amount to the Company,
which sale shall be made at the Participant's direction at the time
of exercise, provided that the Committee may require the Parti-
cipant to furnish an opinion of counsel acceptable to the Commit-
tee to the effect that such delivery would not result in the Parti-
cipant incurring any liability under Section 16 of the Act and does
not require any Consent.
(c) Issuance of Shares. As soon as practicable after receipt of full
------------------
payment, the Company shall, subject to the provisions of Section 10.2, deliver
to the Participant one or more certificates for the shares of Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with the terms of the relevant Award Certificate, the Plan and
applicable securities laws, rules and regulations or otherwise, provided,
however, that in the event compensation received as a result of an Option
exercise is deferred pursuant to Section 6.8, such delivery shall take place as
soon as practicable following the end of the relevant deferral period.
7.7 Proof of Beneficial Ownership. Wherever in this Plan or any Award
------------------------------
Certificate a Participant is permitted to pay the exercise price of an Award or
taxes relating to the exercise of an Award by delivering shares of Stock, the
Participant may, subject to procedures satisfactory to the Committee, satisfy
such delivery requirement by presenting proof of beneficial ownership of such
shares of Stock, in which case the Company shall treat the Award as exercised
without further payment and shall withhold such number of shares from the shares
acquired by the exercise of the Award (or if the Award is paid in Cash, Cash in
an amount equal to the Fair Market Value of such shares).
15
7.8 Maximum Number of Shares Subject to Awards
------------------------------------------
Grants of Options and SARs to any Participant in any five consecutive
calendar years may not be made with respect to more than 3,000,000 shares of
Stock, subject to adjustment under Section 10.4.
7.9 Exercise Price and Expiration Date
----------------------------------
No Option or SAR shall be granted hereunder at an exercise or base
appreciation price, as the case may be, lower than 100% of the Fair Market Value
of a share of Stock on the grant date thereof and no Option or SAR granted
hereunder shall remain exercisable for more than 10 years after the grant date
thereof.
SECTION 8 RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS.
- ------------------------------------------------------------
8.1 Grant of Awards.
---------------
The Committee may grant Restricted Stock or Restricted Stock Unit Awards,
alone or in tandem with other Award made under the Plan or made under any other
plan or arrangement of the Company, in such amounts and subject to such terms
and conditions as the Committee shall from time to time in its sole discretion
determine and set forth in an Award Certificate; provided, however, that no
Award of Restricted Stock or Restricted Stock Units shall vest less than one
year after the grant date thereof; and provided further, that the total number
of shares of Stock with respect to which the aggregate number of shares covered
by Awards made to all Participants under Sections 8 and 9 of the Plan which may
vest shall not exceed 10,000,000, subject to adjustment under Section 10.4. The
vesting of a Restricted Stock or Restricted Stock Unit Award granted under the
Plan may be conditioned upon (i) the completion of a specified period of
employment with the Company, (ii) the attainment of specified performance goals
including but not limited to such performance goals as would qualify the
Restricted Stock or Restricted Stock Unit Award as a Section 162(m) Award under
Section 6.2, and/or (iii) such other criteria as the Committee may determine in
its sole discretion. The forfeiture of a Restricted Stock or Restricted Stock
Unit Award shall be governed by such terms and conditions as are set forth in
the Award Certificate.
8.2 Payment.
-------
Each Award Certificate with respect to a Restricted Stock or Restricted
Stock Unit Award shall set forth the amount (if any) to be paid by the
Participant with respect to such Award. If a Participant makes any payment to
the Company (other than for taxes) for a Restricted Stock or Restricted Stock
Unit Award which does not vest, a refund of such payment may be made to the
Participant following the forfeiture of such Award on such terms and conditions
as the Committee may determine. Any payment required to be made by a Participant
shall be made in a form described in Section 7.6(b).
8.3 Issuance of Shares.
------------------
The Committee may provide that one or more certificates or other evidence
of ownership representing Restricted Stock Awards shall be registered in the
Participant's name and bear an appropriate legend specifying that such shares
are not transferable and are subject to the terms and
16
conditions of the Plan and the applicable Award Certificate, or that such
certificate or certificates shall be held in escrow by the Company on behalf of
the Participant until such shares vest or are forfeited, all on such terms and
conditions as the Committee may determine. Unless the applicable Award
Certificate otherwise provides, no share of Restricted Stock may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of by the Participant until such share has vested in accordance with the terms
of such Award. Subject to the provisions of Section 10.2, as soon as practicable
after any Restricted Stock Award becomes unrestricted the Company shall issue or
reissue to the Participant (or to the Participant's designated beneficiary in
the event of the Participant's death) one or more certificates for the Stock
represented by such Restricted Stock Award.
8.4 Participants' Rights Regarding Restricted Stock. Unless the applicable
-----------------------------------------------
Award Certificate otherwise provides: (i) a Participant may vote and receive
dividends on Restricted Stock awarded under the Plan; and (ii) any Stock
received as a distribution with respect to shares of Restricted Stock (or
credited to an Award of Restricted Stock Units) shall be subject to the same
restrictions as such shares of Restricted Stock (or Restricted Stock Units).
SECTION 9 OTHER STOCK-BASED AWARDS.
- -----------------------------------
9.1 The Committee may grant other Awards of Stock and Awards that are valued,
in whole or in part, by reference to, or are otherwise based on, the Fair Market
Value of Stock ("Other Stock-Based Awards") under such terms and conditions as
the Committee shall determine, provided, however, that that the total number of
shares of Stock with respect to which the aggregate of Awards under Sections 8
and 9 of the Plan may vest shall not exceed 10,000,000, subject to adjustment
under Section 10.4.
9.2 The Committee may grant Other Stock-Based Awards alone or in addition to
any other Awards made under the Plan or any other plan or arrangement of the
Company. Subject to the provisions of the Plan, the Committee shall have sole
and absolute discretion to determine to whom and when such Other Stock-Based
Awards will be made, the number of shares of Stock to be Awarded under (or
otherwise related to) such Other Stock-Based Awards and all other terms and
conditions of such Awards. The Committee shall determine whether Other Stock-
Based Awards shall be denominated in Stock, Stock Units, Cash, Cash Units or a
combination thereof, or settled on a deferred basis pursuant to Section 6.8. The
Committee may, in its discretion, impose such performance goals or other
conditions upon an Other Stock-Based Award as shall qualify it as a Section
162(m) Award under Section 6.2.
9.3 Unless the applicable Award Certificate otherwise provides, a Participant
may vote and receive dividends on Other Stock-Based Awards awarded under the
Plan.
17
SECTION 10 MISCELLANEOUS.
- -------------------------
10.1 Amendment of the Plan; Modification of Awards.
----------------------------------------------
(a) Amendments to the Plan. The Board may amend, alter, suspend,
----------------------
discontinue or terminate the Plan, or any portion thereof, at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval to the extent such approval is
necessary to comply with any tax or regulatory requirement, including but not
limited to any approval requirement which is a prerequisite for exemptive relief
from Section 16(b) of the Act, necessary to qualify Awards granted hereunder as
performance based compensation for purposes of Code section 162(m) or necessary
to satisfy listing or other requirements of any self-regulatory organization
(provided that the Company is subject to the requirements of Section 16 of the
Act, Code Section 162(m) or the jurisdiction of such self-regulatory
organization, as the case may be, as of the date of such action). No amendment
to the Plan shall impair any rights under an Award without the consent of the
affected Participant.
(b) Award Modifications. Subject to the terms and conditions of the Plan
-------------------
(including Section 10.1(a)), the Committee may amend outstanding Award
Certificates including, without limitation, any amendment which would:
(i) accelerate the time or times at which an Award may vest or
become exercisable; and/or
(ii) extend the scheduled termination or expiration date of the Award,
provided, however, that no modification having a material adverse
effect upon the interest of a Participant in an Award shall be made
without the consent of such Participant.
10.2 Consent Requirements.
--------------------
If the Committee shall at any time determine that any Consent is necessary
or desirable as a condition of, or in connection with, the granting of any Award
under the Plan, the acquisition, issuance or purchase of Stock or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not be
taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee.
10.3 Withholding Taxes.
------------------
(a) Whenever under the Plan shares of Stock are to be delivered pursuant to
an Award, the Committee may require as a condition of delivery that the
Participant remit to the Company an amount sufficient to enable the Company to
satisfy all federal, state and other governmental withholding tax requirements
related thereto. Whenever Cash is to be paid under the Plan (whether upon the
exercise of a SAR or otherwise), the Company may, as a condition of its payment,
deduct therefrom, or from any salary or other payments due to the Participant,
an amount sufficient to enable the Company to satisfy all federal, state and
other governmental withholding tax requirements related thereto or to the
delivery of any shares of Stock under the Plan.
18
(b) Without limiting the generality of the foregoing, if authorized by the
Committee:
(i) a Participant may elect to satisfy all or part of the
foregoing withholding requirements by delivery of unrestricted shares
of Stock owned by the Participant for such period of time as may be
required to avoid a charge to the Company's earnings for financial
statement purposes (as determined by the Committee) having a Fair
Market Value (determined as of the date of such delivery by the
Participant) equal to all or part of the amount to be so withheld,
provided that the Committee may require, as a condition of accepting
any such delivery, the Participant to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not
result in the Participant incurring any liability under Section 16(b)
of the Act and does not require any Consent; and
(ii) the Committee may, from time to time and upon such
terms and conditions as it may in its discretion determine, grant
rights ("tax withholding rights") under the Plan to have the
Company withhold from the receipt of proceeds on the settlement
or exercise of any Award a number of shares of Stock of sufficient
Fair Market Value to pay the amount of taxes the Company is
required to collect or withhold on the settlement or exercise
of the Award. Tax withholding rights shall be exercised simulta-
neously with the exercise or receipt of an Award, giving rise to a
tax withholding obligation. Shares of Stock withheld shall be
deemed to have been delivered to the Company on the exercise or
Award date, as appropriate.
10.4 Adjustments Upon Changes in Capitalization.
------------------------------------------
If and to the extent specified by the Committee, the number of shares of
Stock which may be issued pursuant to Awards under the Plan, the maximum number
of Options and/or unrelated SARs which may be granted to any one person in any
period, the maximum number of shares of Stock with respect to which the
aggregate of Awards made under Sections 8 and 9 may vest, the number of shares
of Stock that may be subject to incentive stock options, the number of shares of
Stock subject to Awards, the exercise price and appreciation base of Options and
SARs granted under the Plan, the maximum number of shares of Stock which may be
paid pursuant to a Section 162(m) Award, the amount payable by a Participant in
respect of an Award and any appropriate feature of any Other Stock-Based Award
shall be appropriately adjusted (as the Committee may determine) for any change
in the number of issued shares of Stock resulting from the subdivision or
combination of shares of Stock or other capital adjustments, or the payment of a
stock dividend after the effective date of the Plan, or other change in such
shares of Stock effected without receipt of consideration by the Company;
provided that any Awards covering fractional shares of Stock resulting from any
such adjustment shall be eliminated and provided further, that no Option granted
under the Plan shall be adjusted in a manner that causes such Option to fail to
continue to qualify as an "incentive stock option" within the meaning of Code
section 422 (and no
19
Section 162(m) Award shall be adjusted pursuant to this Section 10.4 in a manner
that causes such Award to fail to meet the requirements of Code section 162(m)).
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
10.5 No Right of Employment or Continued Participation.
-------------------------------------------------
Nothing in the Plan or in any Award Certificate shall confer upon any
person the right to continue in the employment or other service of the Company
or a Subsidiary or affect any right which the Company may have to terminate the
employment or other service of such person. Nothing in the Plan shall confer
upon any person a claim or right to the grant of an Award.
10.6 No Rights as a Stockholder.
--------------------------
Except as otherwise provided in an applicable Award Certificate, no
Participant or other person shall have any of the rights of a stockholder of the
Company with respect to shares of Stock subject to an Award until the issuance
of a stock certificate to the Participant for such shares or, in the case of a
Restricted Stock Award granting dividend and/or voting rights to the
Participant, to the escrow agent, custodian or trustee designated to hold such
shares. Except as otherwise provided in an applicable Award Certificate or in
Section 10.4, or with respect to Restricted Stock, no adjustment shall be made
for dividends, distributions or other rights (whether ordinary or extraordinary,
and whether in Cash, securities or other property) for which the record date is
prior to the date such stock certificate is issued.
10.7 Nature of Payments.
-------------------
(a) Any and all Awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company by the Participant.
(b) All Awards and payments granted or made hereunder shall be considered
special incentive payments to the Participant. Except as specifically provided
in such plan or agreement, no Awards or payments shall be taken into account in
computing the Participant's salary or compensation for the purposes of
determining any benefits under any pension, retirement, life insurance or other
benefit plan of the Company or any agreement between the Company and the
Participant.
(c) By exercising or accepting payment of an Award under the Plan, the
Participant shall thereby waive any claim to continued exercise or vesting of an
Award or to damages or severance entitlement related to non-continuation of the
Award beyond the period provided herein or in the applicable Award Certificate,
notwithstanding any contrary provision in any written employment contract with
the Participant, whether any such contract is executed before or after the grant
date of the Award.
20
10.8 Non-Uniform Determinations.
--------------------------
Except for adjustments pursuant to Section 10.4, the Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Awards under
the Plan (whether or not such persons are similarly situated).
Without limiting the generality of the foregoing, the Committee shall be
entitled, among other things, to make non-uniform and selective determinations,
and to enter into non-uniform and selective Award Certificates, as to:
(a) the persons receiving Awards under the Plan, and
(b) the terms and provisions of Awards under the Plan.
10.9 Other Payments or Awards.
------------------------
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company, or the Committee from making any Award or payment to any
person under any other plan, arrangement or understanding, whether now existing
or hereafter in effect.
10.10 Change in Control.
------------------
The Committee may, in its discretion, include in any Award Certificate a
provision pursuant to which the Award will become exercisable, vest, be paid,
have restrictions on the Stock underlying the Award removed, be canceled or
forfeited, be replaced or otherwise become subject to special vesting, exercise
and forfeiture rules upon the occurrence of a "change in control" (as defined by
the Committee from time to time).
10.11 Section Headings.
----------------
The section headings contained herein are for the purposes of convenience
only and are not intended to define or limit the contents of said sections.
10.12 Effective Date .
----------------
The Plan shall be deemed adopted and become effective upon the approval
thereof by the stockholders of DWD.
10.13 Governing Law.
-------------
The Plan shall be governed by the laws of the State of Delaware applicable
to agreements made and to be performed entirely within such state.
10.14 Plan Expenses.
--------------
The expenses of the Plan shall be borne by the Company.
21
10.15 Related Employment.
-------------------
The commencement of Related Employment by a Participant shall not be
treated, for purposes of the Plan and any Award hereunder, as a termination of
employment. The Retirement, Disability or death of an individual during a period
of Related Employment shall be treated, for purposes of the Plan and any Award
hereunder, as if such event had occurred while the individual was an employee of
the Company.
10.16 Arbitration.
------------
All claims and disputes between a Participant and the Company arising out
of the Plan or any Award granted hereunder shall be submitted to arbitration in
accordance with the then current arbitration policy of the Company. Notice of
demand for arbitration shall be given in writing to the other party and shall be
made within a reasonable time after the claim or dispute has arisen, but in no
event later than the end of the applicable limitation period under applicable
law. The Award rendered by the arbitrator shall be made in accordance with the
provisions of the Plan, shall be final and judgment may be entered upon it, in
accordance with applicable law in any court having jurisdiction thereof. The
provisions of this Section 10.16 shall be specifically enforceable under
applicable law in any court having jurisdiction thereof.
22