EXHIBIT 10.1
MORGAN STANLEY DEAN WITTER & CO.
TAX DEFERRED EQUITY PARTICIPATION PLAN
Amended and Restated June 26, 1998
TABLE OF CONTENTS
SECTION PAGE
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Purposes of the Plan................................................... 1
Definitions............................................................ 1
Election by a Company to Participate in the Plan....................... 5
Stock Subject to the Plan.............................................. 5
Administration of the Plan............................................. 5
Eligibility............................................................ 6
Awards under the Plan.................................................. 7
Funding of the Plan.................................................... 8
Maintenance of Accounts................................................ 8
Payments under the Plan................................................ 9
Securities Matters.....................................................10
Adjustment of Accounts in Certain Events...............................10
Certain Divestitures...................................................11
No Special Employment Rights...........................................12
Payroll and Withholding Taxes..........................................12
Termination and Amendment..............................................13
Payments Upon the Death of a Participant...............................14
Shareholder Approval Required..........................................14
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Effect of Revocation Event.............................................14
Miscellaneous..........................................................15
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MORGAN STANLEY DEAN WITTER & CO.
TAX DEFERRED EQUITY PARTICIPATION PLAN
(AMENDED AND RESTATED JUNE 26, 1998)
1. PURPOSES OF THE PLAN.
Morgan Stanley Dean Witter & Co., a Delaware corporation ("MWD"),
hereby adopts the Morgan Stanley Dean Witter & Co. Tax Deferred Equity
Participation Plan. The purpose of this Plan is to promote the long-term growth
and financial success of MWD by attracting and retaining employees of
outstanding ability and assisting MWD in promoting a greater identity of
interest between Participants and MWD's shareholders. The Plan is intended to
be an unfunded "bonus program" (within the meaning of 29 CFR Part 2510.3-2(c))
designed primarily to provide deferred bonuses to a select group of highly
compensated or management employees.
2. DEFINITIONS.
As used in the Plan, the following terms have the following meanings:
(a) "Accounts" means a Participant's Cash Account and Stock Account.
(b) "Administrator" means the individual or individuals to whom the
Committee delegates authority under the Plan in accordance with Section 5.
(c) "Affiliate" means any corporation which is a member of a "controlled
group of corporations" (as defined in Code section 414(b)) of which MWD is a
member and any trade or business (whether or not incorporated) under "common
control" (as defined in Code section 414(c)) with MWD.
(d) "Award" means an award granted to a Participant by the Committee
pursuant to Section 7. An Award shall be deemed to have been made for the fiscal
year in which a Company would, in the absence of the Plan, have accrued a
compensation expense for accounting purposes for the value of the Award.
(e) "Award Certificate" means a written certificate issued by the Company
which is approved in accordance with Section 7, executed on behalf of the
Company and sets forth the terms and conditions of the Award.
(f) "Beneficiary" means the person or entity determined to be a
Participant's beneficiary under Section 18.
(g) "Board" means the Board of Directors of MWD.
(h) "Cash Account" means a book account maintained by a Company reflecting,
with respect to shares of Stock credited to a Participant's Stock Account which
are treated as if tendered, the cash amount to be distributed to a Participant
upon a Realization Event.
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(i) Definition of "Change in Control":
(A) In respect of each Award having an effective date on or before
December 31, 1997, "Change in Control" means: (i) The acquisition by any person
(including a group, within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), other than (I) any employee plan established by a Company or (II)
any of MWD's affiliates (as defined in Rule 12b-2 promulgated under the Exchange
Act), without the prior approval of the Board, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either the then outstanding shares of Stock or the combined voting power of
MWD's then outstanding voting securities in a transaction or series of
transactions not approved by a majority of the Directors as of the Effective
Date; or
(ii) A change in the composition of the Board such that individuals
who, as of the Effective Date, constitute the Board cease for any reason to
constitute at least a majority thereof, provided that any person who becomes a
Director subsequent to the Effective Date and whose nomination for election is
approved by at least a majority of the Directors as of the Effective Date,
(other than a nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of the Directors of MWD, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act) shall be deemed a Director as of the
Effective Date.
(B) In respect of each Award having an effective date on or after
January 1, 1998, "Change in Control" shall have the meaning ascribed to such
term by the Committee in respect of such Award.
(j) "Code" means the Internal Revenue Code of 1986, as amended.
(k) "Committee" means such committee of two or more persons as the Board
shall appoint from time to time to administer the Plan. It is intended that the
members of the Committee shall be "non-employee directors" within the meaning of
Rule 16b-3 and "outside directors" within the meaning of Code Section 162(m);
however, the mere fact that a Committee member shall fail to qualify under
either of these requirements shall not invalidate any Award made by the
Committee that is otherwise valid.
(l) "Company" means each of MWD, its Affiliates and any Subsidiary of MWD
that has adopted the Plan pursuant to Section 3(a), while such Subsidiary
remains a participant in the Plan.
(m) "Compensation" for a year means the annual rate of salary payable to
the Participant as of April 1 of such year (disregarding any salary reduction
agreements under any deferred compensation plan, including plans described in
Code section 125 or 401(k)) plus the annual incentive bonus payable to such
Participant for such year. Compensation shall not include the amount of any
contribution payable under the Plan.
(n) Unless the Committee otherwise determines, "Disability" means any
physical or mental condition that would qualify a Participant for a disability
benefit under any long-term disability plan maintained by any Company and
applicable to the Participant.
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(o) "Effective Date" means January 1, 1994.
(p) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(r) Unless the Committee otherwise determines, "Fair Market Value" means:
(i) for purposes of determining the number of shares of Stock to be
allocated to an Award made pursuant to Section 7 and to a Participant's Stock
Account pursuant to Section 9(a)(i), the fair market value thereof as of the
relevant date of determination, as determined in accordance with a valuation
methodology approved by the Committee; and
(ii) for purposes of crediting a Participant's Stock Account with
shares of Stock based upon cash dividends paid or deemed to be paid on shares of
Stock credited to the Participant's Stock Account pursuant to Section 9(a)(ii),
the average of the high and low sales prices, regular way, of a share of Stock
as reported on the New York Stock Exchange Composite Tape (the "High/Low Price")
on the relevant dividend payment date, or, if Stock is not traded on public
markets on the relevant dividend payment date, the first preceding date on which
Stock is traded on public markets; provided, however, that in the event a "Fair
Market Value" cannot be determined pursuant to the foregoing, the fair market
value thereof as of the relevant date of determination, as determined in
accordance with a valuation methodology approved by the Committee; and
(iii) for purposes of distributing cash, either in lieu of a
fractional share following a Realization Event pursuant to Section 10, in lieu
of Stock pursuant to Section 11(b) or in lieu of Stock following a Revocation
Event pursuant to Section 20, the High/Low Price on the date of the Realization
Event or the Revocation Event, as applicable, or, if Stock is not traded on
public markets on the date of the Realization Event or the Revocation Event, the
first preceding date on which Stock is traded on public markets; provided,
however, that in the event a "Fair Market Value" cannot be determined pursuant
to the foregoing, the fair market value thereof as of the relevant date of
determination, as determined in accordance with a valuation methodology approved
by the Committee.
(s) "Investment Period", with respect to an Award, means: (A) in respect of
each Award having an effective date on or before December 31, 1997, the five-
year period beginning on the date as of which such Award is granted; and (B) in
respect of each Award having an effective date on or after January 1, 1998, the
period beginning on the date as of which the Award is granted and concluding on
the date specified by the Committee as the conclusion of the Investment Period
in respect of such Award.
(t) "Minimum Eligible Compensation" means $100,000 with respect to the
calendar year ending December 31, 1997, and with respect to each fiscal year of
the Company beginning on or after December 1, 1997, $100,000 or such greater
amount as the Committee shall determine.
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(u) "Participant" means a key employee of any Company who is determined by
the Committee to be eligible to participate in the Plan and who is designated as
a Participant pursuant to Sec tion 6.
(v) "Plan" means the Morgan Stanley Dean Witter & Co. Tax Deferred Equity
Participation Plan.
(w) In respect of each Award having an effective date on or before
December 31, 1997, "Realization Event" means the first to occur of (i) the
expiration of the Investment Period with respect to such Award, (ii) the
occurrence of a Change of Control or (iii) the termination of the Plan pursuant
to Section 17. In respect of each Award having an effective date on or after
January 1, 1998, "Realization Event" shall have the meaning ascribed to such
term by the Committee in respect of such Award.
(x) "Retirement" means a Participant's termination of employment with all
Companies on or after: (i) the date (the "Pension Retirement Date") on which
the Participant would first be eligible to retire under any tax-qualified
defined benefit pension plan maintained by a Company in which the Participant
participates; or (ii) in respect of any Award as the Committee determines, such
date preceding the Pension Retirement Date as the Committee may determine.
(y) "Revocation Event" means a determination by the Board in its sole
discretion that any of the following has occurred or is likely to occur:
(i) A determination by the Department of Labor or a court of
competent jurisdiction that the assets of the Trust are subject to Part 4 of
Subtitle B of Title I of ERISA or that the Plan is a "pension plan" (within the
meaning of ERISA section 3(2)) subject to Parts 2, 3 and 4 of Subtitle B of
Title I of ERISA;
(ii) A determination by the Internal Revenue Service or a court of
competent jurisdiction that any amount deposited in the Trust is taxable to any
Participant or Beneficiary prior to the distribution of such amount; or
(iii) A determination by the Company's independent public accountants
that the accounting expense to the Companies of maintaining the Trust under the
Plan is based on a value of the shares of Stock other than such value on the
date shares of Stock are (A) acquired by the Trust or (B) credited to a
Participant's Accounts.
(z) "Rule 16b-3" means Rule 16b-3 promulgated under Section 16 of the
Exchange Act.
(aa) "Securities Act" means the Securities Act of 1933, as amended from
time to time.
(ab) "Stock" means the common stock, par value $.01 per share, of MWD, or
the common stock of any successor thereto.
(ac) "Stock Account" means a book account maintained by MWD reflecting,
with respect to each Award, the number of shares of Stock to be distributed to
each Participant upon a Realization Event.
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(ad) "Subsidiary" means (i) a corporation or other entity with respect to
which MWD, directly or indirectly, has the power, whether through the ownership
of voting securities, by contract or otherwise, to elect at least a majority of
the members of such corporation's board of directors or analogous governing
body, or (ii) any other corporation or other entity in which MWD, directly or
indirectly, has an equity or similar interest and which the Committee designates
as a Subsidiary for purposes of the Plan.
(ae) "Trust" means any trust established in connection with the Plan or any
other employee benefit plan of the Company under which current or former
employees of the Company constitute the principal beneficiaries.
(af) "Trustee" means the trustee of the Trust.
3. ELECTION BY A COMPANY TO PARTICIPATE IN THE PLAN.
(a) By appropriate action, subject to the approval of the Board, any
Subsidiary may adopt the Plan. Such Subsidiary may recommend to the Committee
which of its employees should be eligible to participate in the Plan.
(b) By appropriate action, a Company may terminate its participation in the
Plan.
(c) No Subsidiary that participates in the Plan shall have any power with
respect to the Plan except as specifically provided in the Plan.
(d) MWD may require each Company (other than MWD), as a condition of
participation in the Plan, to enter into an agreement obligating such Company to
pay to MWD, in cash, the appropriate value, as determined by the Board, of any
Stock that MWD contributes to the Trust in respect of Participants employed by
such Company and/or to reimburse MWD for any other amounts paid by MWD
hereunder, directly or indirectly, in respect of Participants employed by such
Company.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 13, the Committee may
grant Awards under the Plan with respect to a number of shares of Stock that, in
the aggregate, does not exceed 7,000,000 shares. In the event that any Award is
forfeited for any reason, the number of shares of Stock making up such forfeited
Award (other than shares of Stock credited to such Participant's Accounts solely
as a result of earnings on such Award) shall again be available for grant under
the Plan.
5. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee may, but
need not, from time to time delegate some or all of its authority under the Plan
to an Administrator consisting of one or more members of the Committee or one or
more directors or officers of the Company; provided, however, that the Committee
may not delegate its authority (i) to make Awards to key
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employees (A) who are subject as of the effective date of the Award to the
reporting rules under Section 16(a) of the Exchange Act, (B) who are, as of the
effective date of the Award, one of MWD's "covered employees" within the meaning
of Section 162(m) of the Code, or any regulations thereunder (or any successor
provision thereto) or (C) who are officers of the Company who are delegated
authority by the Committee hereunder, (ii) to construe and interpret the Plan or
(iii) under Section 17(a) of the Plan. Any delegation hereunder shall be subject
to the restrictions and limits that the Committee specifies at the time of such
delegation or thereafter. Nothing in the Plan shall be construed as obligating
the Committee to delegate authority to an Administrator, and the Committee may
at any time rescind or modify the authority delegated to an Administrator
hereunder or appoint a new Administrator. At all times, the Administrator
appointed hereunder shall serve in such capacity at the pleasure of the
Committee. Any action undertaken by the Administrator in accordance with the
Committee's delegation of authority shall have the same force and effect as if
undertaken directly by the Committee, and any reference to the Committee in the
Plan shall, to the extent consistent with the terms and limitations of such
delegation, be deemed to include a reference to the Administrator.
The Committee shall have full authority, consistent with the Plan, to
administer the Plan, including authority to interpret and construe any Plan
provision and to adopt such rules and regulations and such forms of elections as
it may deem necessary or appropriate. Decisions of the Committee shall be final
and binding on all parties. In the event of a disagreement between the
Committee and the Administrator, the Committee's determination on such matter
shall be final and binding on all parties, including the Administrator. Subject
to Section 3(d), all expenses of the Plan shall be paid by MWD.
No member of the Committee or any Administrator shall be liable for any
action, omission or determination relating to the Plan, and the Companies shall
indemnify and hold harmless each member of the Committee, each Administrator and
each other director or employee of the Companies to whom any duty or power
relating to the Plan has been delegated, against any cost, expense (including
counsel fees, which fees shall be paid as incurred) or liability (including any
sum paid in settlement of a claim with the approval of the Board) arising out of
any action, omission or determination relating to the Plan, if made in good
faith in a manner reasonably believed to be in or not opposed to the best
interests of the Companies, and with respect to any criminal action or
proceeding, if made with reasonable cause to believe that such conduct was
lawful.
6. ELIGIBILITY.
The persons eligible to participate in the Plan with respect to a
fiscal year shall be key employees of the Companies, as determined by the
Committee. The Committee shall grant Awards to such Participants as it shall,
in its sole discretion, determine, provided that no Award shall be made in any
fiscal year to any eligible employee whose annualized Compensation with respect
to such fiscal year is not at least equal to the Minimum Eligible Compensation.
The Committee may from time to time add to or exclude from participation one or
more eligible employees. Each eligible employee shall become a Participant
effective on the date as of which the employee is designated as a Participant or
members of a class of employees including the employee are designated as
Participants.
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7. AWARDS UNDER THE PLAN.
(a) Awards.
(i) The Committee shall grant Awards to Participants which shall be based
on a percentage of a Participant's Compensation or cash bonus with respect to a
fiscal year, be denominated in a number of shares of Stock determined under
Section 9(a) and reduce the Participant's cash bonus that would otherwise be
payable with respect to such fiscal year, provided that in respect of each Award
having an effective date on or after January 1, 1998, (A) the Award shall be
subject to any terms and conditions as may be established by the Committee in
connection with the Award and specified in the applicable Award Certificate and
(B) the terms, conditions and other provisions of the Award shall be set forth
in an Award Certificate approved by the Committee and delivered or made
available to the Participant as soon as practicable after the effective date of
the Award.
(ii) Unless otherwise determined by the Committee, no Award with respect
to a fiscal year shall be granted to a Participant whose employment with the
Companies and Affiliates terminates prior to the end of such fiscal year.
(b) Vesting.
(i) In respect of each Award having an effective date on or before
December 31, 1997, a Participant shall have a vested interest in the Award upon
the first to occur of: (A) completion of two years of service for the Companies
and the Affiliates following the grant of such Award; (B) the Participant's
termination of employment with all Companies and the Affiliates as a result of
Disability or Retirement; (C) the Participant's termination of employment with
all Companies and the Affiliates which is initiated by a Company by reason of
the Company's decision to close permanently a branch office or other facility,
or to reduce permanently the number of employees which it employs due to
substantial change in economic conditions; or (D) the Participant's death while
employed by a Company or one of the Affiliates; provided, however, that any
vested Award shall be canceled if a Participant's employment with any Company or
any Affiliate is terminated for cause, the Participant resigns for cause or the
Committee determines that the Participant has committed an act or omission upon
which a Company would have terminated the Participant's employment for cause.
(ii) In respect of each Award having an effective date on or after
January 1, 1998, (A) a Participant shall have a vested interest in the Award
upon the satisfaction of such terms and conditions as the Committee may
determine applicable to such Award and (B) the Committee may provide that such
Award shall be subject to forfeiture, cancellation or termination on such terms
and conditions as the Committee may determine.
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8. FUNDING OF THE PLAN.
The Plan shall be unfunded. Benefits under the Plan shall be paid
from the general assets of MWD. MWD shall establish the Trust, which shall be
intended to be a "grantor trust" within the meaning of Code section 671, to
assist MWD in meeting its obligations hereunder. MWD intends to contribute to
the Trust from time to time Stock or cash (which shall be used by the Trustee to
purchase Stock) to enable MWD to satisfy its obligations under the Plan, but
shall not be obligated to do so.
9. MAINTENANCE OF ACCOUNTS.
(a) Stock Account. With respect to each Participant, the Committee shall
maintain a Stock Account as follows:
(i) In respect of each Award having an effective date on or before
December 31, 1997, such Participant's Stock Account shall be credited as of the
date of each Award with a number of shares of Stock equal to: (I) the dollar
amount of such Participant's Award divided by (II) the product of the Fair
Market Value of a share of Stock multiplied by .80. In respect of each Award
having an effective date on or after January 1, 1998, each such Participant's
Stock Account shall be credited as of the date of each Award with a number of
shares of Stock equal to: (I) the dollar amount of such Participant's Award
divided by (II) the product of the Fair Market Value of a share of Stock
multiplied by a fraction determined by the Committee to reflect the various
restrictions, conditions and limitations applicable to such Award.
(ii) In respect of each Award having an effective date on or before
December 31, 1997, such Participant's Stock Account shall be credited as soon as
practicable following the payment date of cash dividends on Stock with a number
of shares of Stock, the Fair Market Value of which equals the dollar amount of
dividends that would have been paid with respect to Stock credited to such
Participant's Stock Account had the Participant held such Stock as of the record
date applicable to such dividends. In respect of each Award having an effective
date on or after January 1, 1998, unless the Committee otherwise determines,
each such Participant's Stock Account shall be credited as soon as practicable
following the payment date of cash dividends on Stock with a number of shares of
Stock, the Fair Market Value of which equals the dollar amount of dividends that
would have been paid with respect to Stock credited to such Participant's Stock
Account had the Participant held such Stock as of the record date applicable to
such dividends; provided, however, that the Committee may determine, in respect
of each Award having an effective date on or after January 1, 1998, in lieu of
so crediting a Participant's Stock Account, to (I) make cash payments to the
Participant equal to the dollar amount of dividends that would have been paid
with respect to Stock credited to such Participant's Stock Account had the
Participant held such Stock as of the record date applicable to such dividends
("Dividend Equivalents") or (II) allow the Participant to elect between having
MWD so credit the Participant's Stock Account and receiving Dividend
Equivalents, all on such terms and conditions as the Committee may determine.
(iii) Each Participant's Stock Account shall be reduced by the number
of shares of Stock distributed to the Participant in respect of such Account,
whether such shares are distributed from the Trust or directly from MWD.
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(b) Cash Account. If the Trustee tenders shares of Stock held in the Trust
in respect of a Participant's Stock Account, the number of shares of Stock
credited to such Participant's Stock Account that are tendered shall be
converted to a dollar amount per share equal to the consideration received in
respect of such tendered shares. Such dollar amount shall thereafter be
credited to the Participant's Cash Account and shall be credited with interest
during the period beginning on the date as of which such shares were tendered
and ending on the last day of the month immediately preceding the month in which
such amounts are paid to the Participant at a rate which, through the end of the
first fiscal month in such period shall equal the London Interbank Offered Rate
(LIBOR) for 1-month deposits that appears in the Wall Street Journal on the date
immediately preceding the date that such shares were tendered, and which shall
be recalculated for each successive 1-month period based on the London Interbank
Offered Rate (LIBOR) for 1-month deposits published in the Wall Street Journal
on the last day of each preceding fiscal month. If such rate does not appear in
the Wall Street Journal on any date as provided above, then such rate shall be
the last such rate that appeared in the Wall Street Journal prior to the date of
determination set forth above.
10. PAYMENTS UNDER THE PLAN.
Within 30 days after the occurrence of a Realization Event with
respect to an Award, MWD shall deliver or cause to be delivered to the
Participant (a) the number of whole shares of Stock credited to such
Participant's Stock Account as of the date of the Realization Event as a result
of such Award (including shares reflecting the reinvestment of dividends paid
thereon), and cash with respect to any fractional shares of Stock credited to
such Participant's Stock Account in an amount equal to the Fair Market Value of
such fractional shares as of the date of the Realization Event and (b) the
dollar amount credited to a Participant's Cash Account as of the date of the
Realization Event in respect of such Award. Notwithstanding the fact that MWD
establishes the Trust for the purpose of assisting it in meeting its obligations
under the Plan, MWD shall remain obligated to pay the amounts credited to
Participants' Accounts. Nothing shall relieve MWD of its liabilities under the
Plan except to the extent amounts are paid from Trust assets or otherwise.
In order to accomplish the purposes of the Plan, amounts allocated to
Participants' Accounts generally must track the performance of the Stock until
the occurrence of the Realization Event with respect to such amounts.
Accordingly, if a court of competent jurisdiction finally determines that MWD is
obligated to distribute to any person shares of Stock credited to a
Participant's Accounts prior to the occurrence of a Realization Event with
respect to such shares, the Stock so distributed shall be restricted as to
transferability until the date that a Realization Event would have occurred with
respect to such shares had they not been distributed and remained subject to the
Plan, and if certificated shall bear any legend determined appropriate by the
Committee and the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture and restrictions against transfer) contained in the
Morgan Stanley Dean Witter & Co. Tax Deferred Equity Participation Plan. A
copy of the Plan is on file in the office of the Secretary of Morgan
Stanley Dean Witter & Co., 1585 Broadway, New York, New York 10036."
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11. SECURITIES MATTERS.
(a) Subject to Section 10, MWD shall use its best efforts to assure that
any securities distributed to Participants hereunder are freely transferable at
the time of distribution, including, to the extent required under applicable
law, effecting the registration pursuant to the Securities Act of any shares of
Stock to be distributed hereunder or effecting similar compliance under any
state laws; provided, however, that with respect to any Award having an
effective date on or after January 1, 1998, securities distributed to
Participants hereunder may be subject to such restrictions on transfer as the
Committee may determine. Notwithstanding anything herein to the contrary, MWD
shall not be obligated to cause to be issued or delivered any shares of Stock
pursuant to the Plan unless and until MWD is advised by its counsel that the
issuance and delivery of such shares complies with all applicable laws,
regulations of governmental authorities and the requirements of any securities
exchange on which Stock is listed. The Committee may require, as a condition of
the issuance and delivery of shares of Stock pursuant to the terms hereof, the
recipient of such shares to make such covenants, agreements and representations,
and that if certificated, the certificates representing such shares bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) Without limitation on the Committee's powers pursuant to Section 11(a),
if and to the extent required by Rule 16b-3 or any comparable or successor
exemption under which the Board believes it is appropriate for the Plan to
qualify, the Committee may (i) restrict a Participant's ability to sell any
shares of Stock distributed to such Participant hereunder until the expiration
of six months (or such other period as the Committee deems appropriate) after
the date as of which such shares were credited to the Participant's Accounts,
(ii) in lieu of distributing shares of Stock that were credited to a
Participant's Accounts within six months (or such other period as the Committee
deems appropriate) prior to the Realization Event, distribute a cash amount
equal to the Fair Market Value of such Stock as of the Realization Event or
(iii) impose such other conditions on the exercise of any election under the
Plan or in connection with any distribution under the Plan as the Committee
deems appropriate.
12. [INTENTIONALLY OMITTED]
13. ADJUSTMENT OF ACCOUNTS IN CERTAIN EVENTS.
(a) Unless the Committee otherwise determines, a Participant's Accounts
shall be adjusted to reflect the amount of any securities, cash and other
property that would have been received with respect to shares of Stock credited
to such Participant's Accounts if such Stock were held by the Participant as a
result of any stock dividend or split, recapitalization, extraordinary dividend,
merger, consolidation, combination or exchange of shares or similar corporate
change or any other event that the Committee, in its sole discretion, deems
appropriate.
(b) In the event of any change in the number of shares of Stock outstanding
by reason of any stock dividend or split, recapitalization, extraordinary
dividend, merger, consolidation, combination or exchange of shares or similar
corporate change or any other event that the Committee, in its sole discretion,
deems appropriate, the maximum aggregate number of shares of Stock subject to
the Plan shall be appropriately adjusted by the Committee. In the event of any
change in the number of shares of Stock outstanding by reason of any other event
or
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transaction, the Committee may, but need not, make such adjustments in the
number and class of shares of Stock subject to the Plan as the Committee may
deem appropriate.
(c) Except as expressly provided in this Section, a Participant shall have
no rights as a result of any stock dividend or split, recapitalization,
extraordinary dividend, merger, consolidation, combination or exchange of shares
or similar corporate change.
14. CERTAIN DIVESTITURES.
(a) Company with Publicly Traded Stock that No Longer is a 50% Affiliate.
In the event of any transaction immediately after which any Company both ceases
to be a member of a "controlled group of corporations" of which MWD is a member
(as defined in Code section 414(b) but substituting the phrase "at least 50%"
for the phrase "at least 80%" in each place that it appears in Code section
1563(a)) and either has stock that is publicly traded or is a member of a
"controlled group of corporations" (as defined in Code section 414(b)) with any
trade or business which has publicly traded stock as a result of the
transaction:
(i) the Stock credited to the Accounts of (A) Participants who are
employed by such Company immediately after the transaction and (B) terminated
Participants who are not so employed, but who were employed by such Company on
the date that their employment with the Companies and Affiliates terminated,
shall be converted to equivalent amounts of such publicly traded stock based on
the relative values of such publicly traded stock and Stock immediately after
the transaction. Thereafter, each such Participant's Accounts shall be
maintained in such publicly traded stock or its economic equivalent, as the case
may be, and such Company shall cease to participate in the Plans with respect to
future Awards;
(ii) the Board of Directors of the affected Company shall succeed to the
powers of the Committee and the Board under the Plan with respect to the
Participants described in Section 14(a)(i); and
(iii) a separate trust containing the Accounts of such Participants may be
created in the Committee's discretion to hold any stock allocated to the
Participants' Accounts. Such trust shall be substantially the same as the Trust
and shall be created pursuant to a trust agreement between the affected Company
and the Trustee.
(b) Company with Publicly Traded Stock that Remains a 50% Affiliate. In
the event that a public market develops for the stock of any Company and
immediately after such public market develops such Company remains a member of a
"controlled group of corporations" of which MWD is a member (as defined in Code
section 414(b) but substituting the phrase "at least 50%" for the phrase "at
least 80%" in each place that it appears in Code section 1563(a)), the Stock
credited to the Accounts of (i) the Participants who are employed by such
Company immediately after such public market develops and (ii) terminated
Participants who are not so employed, but who were employed by such Company on
the date that their employment with the Companies and Affiliates terminated,
shall be converted to equivalent amounts of the publicly traded stock of such
Company based on the principles described in Section 14(a)(i) or its economic
equivalent, as the Committee deems appropriate, unless the Committee and MWD
determine that such a conversion would be financially detrimental to any Company
or Affiliate or such Participants. Thereafter, each
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such Participant's Accounts shall be maintained in such publicly traded stock or
its economic equivalent, as the case may be.
(c) Satisfaction of Obligations After a Divestiture. In the event of a
divestiture described in this Section 14, any distributions in respect of the
shares credited to the affected Participants' Accounts as of the date of the
divestiture shall be deemed to be payments in respect of MWD's obligations under
the Plan, except to the extent such obligations are assumed and discharged by
the affected Company.
15. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing in the Plan shall confer upon any Participant any right to
continue in the service of any Company or Affiliate or affect any right that any
Company or Affiliate may have to terminate the service of the Participant.
Nothing in the Plan shall be deemed to give any employee of any Company or
Affiliate any right to participate in the Plan.
16. PAYROLL AND WITHHOLDING TAXES.
All federal, state, local and other withholding tax requirements, if
any, relating to the Plan shall be met pursuant to procedures determined by the
Committee which may include:
(a) Withholding from any cash amounts payable to a Participant or under the
Plan (including salary, bonus or any other amounts payable from any Company or
Affiliate);
(b) Requiring Participants to remit to MWD an amount in cash prior to the
delivery of any certificate for Stock or other payments under the Plan;
(c) At the election of the Participant, tendering to MWD a number of shares
of Stock;
(d) At the election of the Participant, withholding by MWD of shares of
Stock. In the event that the Trustee withholds shares pursuant to this
Paragraph, the Trustee shall distribute such shares from the Trust to MWD and
MWD shall make appropriate withholding tax payments; and
(e) If a Participant is subject to Section 16(b) of the Exchange Act, the
Committee may prescribe such requirements or limitations on the Participant's
ability to elect the withholding options contained in Section 16(c) and (d) of
the Plan as may be required by Rule 16b-3 or by any comparable or successor
exemption.
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17. TERMINATION AND AMENDMENT.
(a) The Plan may be terminated in whole or in part with respect to
any or all Participants at any time by the Board. Subject to Sections 19 and
20, upon such termination, the assets of the Trust with respect to whom the Plan
has been terminated shall be distributed to each affected Participant in order
to meet the benefit obligations under the Plan with respect to each such
Participant. In the event the entire Plan is terminated, the remaining assets
related to the Plan, if any, in the Trust after the payment of such benefits
shall be paid to MWD. The Plan may be amended by the Board from time to time in
any respect; provided, however, that if and to the extent required by Rule 16b-3
or by any comparable or successor exemption under which the Board believes it is
appropriate for the Plan to qualify, no amendment shall be effective without the
approval of the shareholders of MWD, which (a) except as provided in Section 13,
increases the number of shares of Stock that may be distributed under the Plan,
(b) materially increases the benefits accruing to individuals under the Plan or
(c) materially modifies the requirements as to eligibility for participation in
the Plan. No amendment or termination shall be made that would materially
impair the rights of any Participant in any Award theretofore granted or made,
or any earnings with respect thereto, without such Participant's prior written
consent; provided, however, that MWD may amend the Plan and the Trust from time
to time in such a manner as may be necessary to avoid having the trust agreement
pursuant to which the Trust is created, the Plan or the Trust being subject to
ERISA and to avoid the current taxation of the assets held in the trusts
established in connection with the Plan to Participants. Neither a
Participant's incurring any income tax liability nor the loss of an investment
opportunity as a result of the termination of the Plan shall be considered an
impairment of the rights of a Participant.
(b) Subject to the terms and conditions of the Plan, the Committee may amend
outstanding Awards, including, without limitation, by any amendment which would
accelerate the time or times at which the Award may vest or become payable and
by any other amendment to any other term or condition of the Award; provided,
however, that no amendment shall be made that would materially impair the rights
of any Participant in any outstanding Award, or any earnings with respect
thereto, without the prior written consent of such Participant. Neither a
Participant's incurring any income tax liability nor the loss of an investment
opportunity as a result of an amendment to an Award shall be considered an
impairment of the rights of a Participant in the Award.
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18. PAYMENTS UPON THE DEATH OF A PARTICIPANT.
Each Participant may designate in writing from time to time one or
more Beneficiaries by filing a written notice of such designation with MWD. A
Participant's designation of any Beneficiary may be revoked by filing with MWD
an instrument of revocation or a later designation. Any designation or
revocation shall be effective when received by MWD. In the event of a
Participant's death, any payment required to be made hereunder to such
Participant shall be made to such Participant's Beneficiary. Unless the
Participant's Beneficiary designation provides otherwise, no person shall be
entitled to benefits upon the death of the Participant unless such person
survives the Participant. If the Beneficiary designated by a Participant does
not survive the Participant or if the Participant has not made a valid
Beneficiary designation, such Participant's Beneficiary shall be such
Participant's estate. If the Participant's Beneficiary is the Participant's
estate, no payment shall be made unless the Committee shall have been furnished
with such evidence as the Committee may deem necessary to establish the validity
of the payment.
19. SHAREHOLDER APPROVAL REQUIRED.
The Plan's adoption is subject to approval by the shareholders of MWD
in accordance with applicable law, the rules of the New York Stock Exchange and
the requirements of Rule 16b-3. Awards may be granted under the Plan at any time
prior to the receipt of such shareholder approval; provided, however, that each
such Award shall be subject to such approval. Without limitation on the
foregoing, no share certificate shall be distributed pursuant to an Award and no
share shall be voted prior to the receipt of such approval. If the Plan is not
so approved prior to December 31, 1999, then the Plan shall forthwith
automatically terminate and be of no force and effect. In the event of such
termination of the Plan, in consideration of and as soon as practicable after
MWD's providing the Trustee with a written undertaking to pay to Participants
the amount required to be paid under this Section, the Trustee shall distribute
any amounts related to the Plan held in the Trust to MWD and MWD shall pay to
each Participant a lump sum in cash equal to the original dollar value of any
Award credited to such Participant's Accounts plus interest, credited from the
date as of which such Award was credited to the Participant's Accounts through
the last day of the month immediately preceding the month in which such amounts
are paid to the Participant, the effective annual yield of which equals 9%.
20. EFFECT OF REVOCATION EVENT.
Upon the occurrence of a Revocation Event, the Board may, in its sole
discretion, elect to terminate the Plan and/or the Trust in whole or in part.
In the event that the Board elects to so terminate the Plan, the Trust or any
Participant's Accounts as a result of a Revocation Event, in consideration of
and as soon as practicable after MWD's providing the Trustee with a written
undertaking to pay to Participants the amount required to be paid under this
Section, all amounts related to the Plan held in the Trust (or if the entire
Trust is not terminated, any terminated Accounts) shall be distributed to MWD.
MWD shall, in its sole discretion, (a) pay to each Participant whose Accounts
are terminated, as soon as practicable after the date of such termination, a
lump sum in cash equal to the Fair Market Value multiplied by the number of
shares of Stock and cash amounts reflected in each Participant's Accounts as of
the date of such termination, (b) distribute to each Participant whose Accounts
are terminated, as soon as practicable after the date of such termination, that
number of shares of Stock that would have been distributable to
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such Participant under the Plan and pay to such Participant at such time any
cash allocated to the Participant's Cash Account or (c) distribute to each
Participant whose Accounts are terminated that number of shares of Stock and
that amount of cash that would have been distributable to such Participant at
such time as shares and cash would have been distributable to such Participant
under the Plan, had the Plan continued. If it is finally determined in a
proceeding, which MWD either controls or was offered the right to control and
declines, that the Participant's interest in the Trust was taxable to the
Participant notwithstanding any termination of such Participant's Accounts in
the Trust, MWD shall pay or distribute the Participant's interest (whether or
not the Board has previously elected to terminate the Plan, the Trust or the
Participant's Accounts) in accordance with either (a) or (b) of the preceding
sentence.
21. MISCELLANEOUS.
(a) No transfer (other than any transfer made by will or by the laws of
descent and distribution) by a Participant of any right to any payment
hereunder, whether voluntary or involuntary, by operation of law or otherwise,
shall vest the transferee with any interest or right in or with respect to such
payment, and the transfer shall be of no force and effect.
(b) The Plan and all rights hereunder shall be subject to and interpreted
in accordance with the laws of the State of Delaware without reference to the
principles of conflicts of law.
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