Exhibit 10.8
1997 ITT EDUCATIONAL SERVICES, INC. INCENTIVE STOCK PLAN
The following is the text of the 1997 ITT Educational Services, Inc. Incentive
Stock Plan:
1. Purpose
The purpose of the 1997 ITT Educational Services, Inc. Incentive Stock Plan
is to motivate and reward superior performance on the part of employees of ITT
Educational Services, Inc. and its subsidiaries and to thereby attract and
retain employees of superior ability. In addition, the Plan is intended to
further opportunities for stock ownership by such employees in order to increase
their proprietary interest in ITT Educational Services, Inc. and, as a result,
their interest in the success of the Company. Awards will be made, in the
discretion of the Committee, to Key Employees (including officers and directors
who are also employees) whose responsibilities and decisions directly affect the
performance of any Participating Company and its subsidiaries. Such incentive
awards may consist of stock options, stock appreciation rights payable in stock
or cash, performance shares, restricted stock or any combination of the
foregoing, as the Committee may determine.
2. Definitions
When used herein, the following terms shall have the following meanings:
"Acceleration Event" means the occurrence of an event defined in Section 9
of the Plan.
"Act" means the Securities Exchange Act of 1934.
"Annual Limit" means the maximum number of shares of Stock for which Awards
may be granted under the Plan in each Plan Year as provided in Section 3 of the
Plan.
"Award" means an award granted to any Key Employee in accordance with the
provisions of the Plan in the form of Options, Rights, Performance Shares or
Restricted Stock, or any combination of the foregoing.
"Award Agreement" means the written agreement evidencing each Award granted
to a Key Employee under the Plan.
"Beneficiary" means the beneficiary or beneficiaries designated pursuant to
Section 10 to receive the amount, if any, payable under the Plan upon the death
of a Key Employee.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.)
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"Committee" means the Compensation Committee of the Board or such other
committee as may be designated by the Board to administer the Plan.
"Company" means ITT Educational Services, Inc. and its successors and
assigns.
"Fair Market Value", unless otherwise indicated in the provisions of this
Plan, means, as of any date, the composite closing price for one share of Stock
on the New York Stock Exchange or, of no sales of Stock have taken place on such
date, the composite closing price on the most recent date on which selling
prices were quoted, the determination to be made in the discretion of the
Committee.
"Incentive Stock Option" means a stock option qualified under Section 422
of the Code.
"Key Employee" means an employee (including any officer or director who is
also an employee) of any Participating Company whose responsibilities and
decisions, in the judgment of the Committee, directly affect the performance of
the Company and its subsidiaries.
"Limited Stock Appreciation Right" means a stock appreciation right which
shall become exercisable automatically upon the occurrence of an Acceleration
Event as described in Section 9 of the Plan.
"Option" means an option awarded under Section 5 of the Plan to purchase
Stock of the Company, which may be an Incentive Stock Option or a non-qualified
stock option.
"Participating Company" means the Company or any subsidiary or other
affiliate of the Company; provided, however, for Incentive Stock Options only,
"Participating Company" means the Company or any corporation which at the time
such Option is granted qualifies as a "subsidiary" of the Company under Section
425(f) of the Code.
"Performance Share" means a performance share awarded under Section 6 of
the Plan.
"Plan" means the 1997 ITT Educational Services, Inc. Incentive Stock Plan,
as the same may be amended, administered or interpreted from time to time.
"Plan Year" means the calendar year.
"Retirement" means eligibility to receive immediate retirement benefits
under a Participating Company pension plan.
"Restricted Stock" means Stock awarded under Section 7 of the Plan subject
to such restrictions as the Committee deems appropriate or desirable.
"Right" means a stock appreciation right awarded in connection with an
Option under Section 5 of the Plan.
"Stock" means the common stock ($0.01 par value) of the Company.
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"Total Disability" means the complete and permanent inability of a Key
Employee to perform all of his or her duties under the terms of his or her
employment with any Participating Company, as determined by the Committee upon
the basis of such evidence, including independent medical reports and data, as
the Committee deems appropriate or necessary.
3. Shares Subject to the Plan
The aggregate number of shares of Stock which may be awarded under the Plan
in any Plan Year shall be subject to an annual limit. The maximum number of
shares of Stock for which Awards may be granted under the Plan in each Plan Year
shall be 1.5 percent (1.5%) of the total of the issued and outstanding shares of
Stock as reported in the Annual Report on Form 10-K of the Company for the
fiscal year ending immediately prior to any Plan Year. Any unused portion of
the Annual Limit for any Plan Year shall be carried forward and be made
available for awards in succeeding Plan Years.
In addition to the foregoing: (i) in no event shall more than four million
fifty thousand (4,050,000) shares of Stock be cumulatively available for Awards
of incentive stock options under the Plan; (ii) no more than twenty percent
(20%) of the total number of shares on a cumulative basis shall be available for
restricted stock and performance share Awards; (iii) for any Plan Year, no
individual employee may receive an Award of stock options for more than sixty-
seven thousand five hundred (67,500) shares; and (iv) until such time as ITT
Corporation, in a transaction or series of transactions approved by the ITT
Corporation Board of Directors, ceases to own at least 80.1% of the issued and
outstanding Stock, in no event shall the number of shares of Stock available for
Awards under the Plan be equal to or greater than a number which could cause ITT
Corporation to own less than 80.1% of the issued and outstanding Stock.
Subject to the above limitations, shares of Stock to be issued under the
Plan may be made available from the authorized but unissued shares or shares
held by the Company in treasury or from shares purchased in the open market.
For the purpose of computing the total number of shares of Stock available
for Awards under the Plan, there shall be counted against the foregoing
limitations the number of shares of Stock which equal the value of performance
share Awards, in each case determined as of the dates on which such Awards are
granted. If any Awards under the Plan are forfeited, terminated, expire
unexercised, are settled in cash in lieu of Stock or are exchanged for other
Awards, the shares of Stock which were theretofore subject to such Awards shall
again be available for Awards under the Plan to the extent of such forfeiture or
expiration of such Awards. Further, any shares that are exchanged (either
actually or constructively) by optionees as full or partial payment to the
Company of the purchase price of shares being acquired through the exercise of a
stock option granted under the Plan may be available for subsequent Awards;
provided, however, that such shares may be awarded only to those participants
who are not directors or executive officers (as that term is defined in the
rules and regulations under Section 16 of the Act).
4. Grant of Awards and Award Agreements
(a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees or groups of Key
Employees to whom Awards are to be granted; (ii) determine the form or forms of
Award to be granted to any Key Employee; (iii) determine the amount or number of
shares of Stock subject to each Award; and (iv) determine the terms and
conditions of each Award.
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(b) Each Award granted under the Plan shall be evidenced by a written Award
Agreement. Such agreement shall be subject to and incorporate the express terms
and conditions of each Award.
5. Stock Options and Rights
(a) With respect to Options and Rights, the Committee shall: (i) authorize
the granting of Incentive Stock Options, non-qualified stock options or a
combination of Incentive Stock Options and non-qualified stock options; (ii)
authorize the granting of Rights which may be granted in connection with all or
part of any Option granted under this Plan, either concurrently with the grant
of the Option or at any time thereafter during the term of the Option; (iii)
determine the number of shares of Stock subject to each Option or the number of
shares of Stock that shall be used to determine the value of a Right; and (iv)
determine the time or times when and the manner in which each Option or Right
shall be exercisable and the duration of the exercise period.
(b) Any option issued hereunder which is intended to qualify as an
Incentive Stock Option shall be subject to such limitations or requirements as
may be necessary for the purposes of Section 422 of the Code or any regulations
and rulings thereunder to the extent and in such form as determined by the
Committee in its discretion.
(c) Rights may be granted only to Key Employees who may be considered
directors or officers of the Company for purposes of Section 16 of the Act.
(d) The exercise period for a non-qualified stock option and any related
Right shall not exceed ten years and two days from the date of grant, and the
exercise period for an Incentive Stock Option and any related Right shall not
exceed ten years from the date of grant.
(e) The exercise price per share shall be determined by the Committee at
the time any Option is granted and shall be not less than the Fair Market Value
of one share of Stock on the date the Option is granted.
(f) No part of any Option or Right may be exercised until the Key Employee
who has been granted the Award shall have remained in the employ of a
Participating Company for such period after the date of grant as the Committee
may specify, if any, and the Committee may further require exercisability in
installments; provided, however, the period during which a Right is exercisable
shall commence no earlier than six months following the date the Option or Right
is granted.
(g) The exercise price of the shares as to which an Option shall be
exercised shall be paid to the Company at the time of exercise either in cash or
Stock already owned by the optionee having a total Fair Market Value equal to
the purchase price, or a combination of cash and Stock having a total fair
market value, as so determined, equal to the purchase price. The Committee shall
determine acceptable methods for tendering Stock as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of Stock to
exercise an Option as it deems appropriate.
(h) Unless Section 9 shall provide otherwise, Rights granted to a director
or officer shall terminate when such person ceases to be considered a director
or officer of the Company subject to Section 16 of the Act.
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(i) In case of termination of employment, the following provisions shall
apply:
(A) If a Key Employee who has been granted an Option shall die before
such Option has expired, his or her Option may be exercised in full by the
person or persons to whom the Key Employee's rights under the Option pass by
will, or if no such person has such right, by his or her executors or
administrators, at any time, or from time to time, within five years after
the date of the Key Employee's death or within such other period, and subject
to such terms and conditions as the Committee may specify, but not later than
the expiration date specified in Section 5(d) above.
(B) If the Key Employee's employment by any Participating Company
terminates because of his or her Retirement or Total Disability, he or she
may exercise his or her Options in full at any time, or from time to time,
within five years after the date of the termination of his or her employment
or within such other period, and subject to such terms and conditions as the
Committee may specify, but not later than the expiration date specified in
Section 5(d) above. Any such Options not fully exercisable immediately prior
to such optionee's retirement shall become fully exercisable upon such
retirement unless the Committee, in its sole discretion, shall otherwise
determine.
(C) Except as provided in Section 9, if the Key Employee shall
voluntarily resign before eligibility for Retirement or he or she is
terminated for cause as determined by the Committee, the Options or Rights
shall be canceled coincident with the effective date of the termination of
employment.
(D) If the Key Employee's employment terminates for any other reason, he
or she may exercise his or her Options, to the extent that he or she shall
have been entitled to do so at the date of the termination of his or her
employment, at any time, or from time to time, within three months after the
date of the termination of his or her employment or within such other period,
and subject to such terms and conditions as the Committee may specify, but
not later than the expiration date specified in Section 5(d) above.
(j) No Option or Right granted under the Plan shall be transferable other
than by will or by the laws of descent and distribution. During the lifetime of
the optionee, an Option or Right shall be exercisable only by the Key Employee
to whom the Option or Right is granted (or his or her estate or designated
beneficiary).
(k) With respect to an Incentive Stock Option, the Committee shall specify
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify such Option as an "incentive stock option" within
the meaning of Section 422 of the Code. No Incentive Stock Option shall be
granted which would permit a Key Employee to acquire, through the exercise of
Incentive Stock Options in any calendar year, shares of any capital stock of the
Company or any Participating Company having an aggregate Fair Market Value
(determined as of the time any Incentive Stock Option is granted) in excess of
$100,000. The foregoing limitation shall be determined by assuming that the Key
Employee will exercise each Incentive Stock Option on the date that such Option
first becomes exercisable. Notwithstanding the foregoing, in the case of any Key
Employee who, at the date of grant, owns stock possessing more than 10% of the
total combined voting power of all classes of capital stock of the Company or
any Participating Company, the exercise price of any Incentive Stock Option
shall not be less than 110% of the Fair Market Value per share on the date such
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Incentive Stock Option is granted and such Incentive Stock Option shall not be
exercisable more than five years from the date such Incentive Stock Option is
granted.
(l) With respect to the exercisability and settlement of Rights:
(i) Upon exercise of a Right, the Key Employee shall be entitled,
subject to such terms and conditions the Committee may specify, to receive
upon exercise thereof all or a portion of the excess of (A) the Fair Market
Value of a specified number of shares of Stock at the time of exercise, as
determined by the Committee, over (B) a specified amount which shall not,
subject to Section 5(e), be less than the Fair Market Value of such
specified number of shares of Stock at the time the Right is granted. Upon
exercise of a Right, payment of such excess shall be made as the Committee
shall specify in cash, the issuance or transfer to the Key Employee of
whole shares of Stock with a Fair Market Value at such time equal to any
excess, or a combination of cash and shares of Stock with a combined Fair
Market Value at such time equal to any such excess, all as determined by
the Committee. The Company will not issue a fractional share of Stock and,
if a fractional share would otherwise be issuable, the Company shall pay
cash equal to the Fair Market Value of the fractional share of Stock at
such time.
(ii) For the purposes of Subsection (i) of this Section 5(l), in
the case of any such Right or portion thereof, other than a Right related
to an Incentive Stock Option, exercised for cash during a "window period"
specified by Rule 16b-3 under the Act, the Fair Market Value of the Stock
at the time of such exercise shall be the highest composite daily closing
price of the Stock during such window period.
(iii) In the event of the exercise of such Right, the Company's
obligation in respect of any related Option or such portion thereof will be
discharged by payment of the Right so exercised.
6. Performance Shares
(a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees or groups of Key
Employees to whom Awards of Performance Shares are to be made; (ii) determine
the performance period (the "Performance Period") and performance objectives
(the "Performance Objectives") applicable to such Awards; (iii) determine the
form of settlement of a Performance Share; and (iv) generally determine the
terms and conditions of each such Award. At any date, each Performance Share
shall have a value equal to the Fair Market Value of a share of Stock at such
date; provided that the Committee may limit the aggregate amount payable upon
the settlement of any Award. The maximum award for any individual employee in
any given year shall be one hundred thousand (100,000) Performance Shares.
(b) The Committee shall determine a Performance Period of not less than two
nor more than five years. Performance Periods may overlap and Key Employees may
participate simultaneously with respect to Performance Shares for which
different Performance Periods are prescribed.
(c) The Committee shall determine the Performance Objectives of Awards of
Performance Shares. Performance Objectives may vary from Key Employee to Key
Employee and between groups of Key
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Employees and shall be based upon one or more of the following objective
criteria, as the Committee deems appropriate: earnings per share, return on
equity, cash flow or total shareholder return of the Company. If, during the
course of a Performance Period, there shall occur significant events which the
Committee expects to have a substantial effect on the applicable Performance
Objectives during such period, the Committee may revise such Performance
Objectives.
(d) At the beginning of a Performance Period, the Committee shall determine
for each Key Employee or group of Key Employees the number of Performance Shares
or the percentage of Performance Shares which shall be paid to the Key Employee
or member of the group of Key Employees if the applicable Performance Objectives
are met in whole or in part.
(e) If a Key Employee terminates service with all Participating Companies
during a Performance Period because of death, Total Disability, Retirement or
under other circumstances where the Committee in its sole discretion finds that
a waiver would be in the best interests of the Company, that Key Employee may,
as determined by the Committee, be entitled to payment in settlement of such
Performance Shares at the end of the Performance Period based upon the extent to
which the Performance Objectives were satisfied at the end of such period and
prorated for the portion of the Performance Period during which the Key Employee
was employed by any Participating Company; provided, however, the Committee may
provide for an earlier payment in settlement of such Performance Shares in such
amount and under such terms and conditions as the Committee deems appropriate or
desirable. If a Key Employee terminates service with all Participating Companies
during a Performance Period for any other reason, then such Key Employee shall
not be entitled to any Award with respect to that Performance Period unless the
Committee shall otherwise determine.
(f) Each Award of a Performance Share shall be paid in whole shares of
Stock, or cash, or a combination of Stock and cash either as a lump sum payment
or in annual installments, all as the Committee shall determine, with payment to
commence as soon as practicable after the end of the relevant Performance
Period.
7. Restricted Stock
(a) Restricted Stock shall be subject to a restriction period (after which
restrictions will lapse) which shall mean a period commencing on the date the
Award is granted and ending on such date as the Committee shall determine (the
"Restriction Period"). The Committee may provide for the lapse of restrictions
in installments where deemed appropriate and it may also require the achievement
of predetermined performance objectives in order for such shares to vest.
(b) Except when the Committee determines otherwise pursuant to Section
7(d), if a Key Employee terminates employment with all Participating Companies
for any reason before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the Key
Employee and shall be reacquired by the Company.
(c) Except as otherwise provided in this Section 7, no shares of Restricted
Stock received by a Key Employee shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Restriction Period.
(d) In cases of death, Total Disability or Retirement or in cases of
special circumstances, the
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Committee may, in its sole discretion when it finds that a waiver would be in
the best interests of the Company, elect to waive any or all remaining
restrictions with respect to such Key Employee's Restricted Stock.
(e) The Committee may require, under such terms and conditions as it deems
appropriate or desirable, that the certificates for Stock delivered under the
Plan may be held in custody by a bank or other institution, or that the Company
may itself hold such shares in custody until the Restriction Period expires or
until restrictions thereon otherwise lapse, and may require, as a condition of
any Award of Restricted Stock that the Key Employee shall have delivered a stock
power endorsed in blank relating to the Restricted Stock.
(f) Nothing in this Section 7 shall preclude a Key Employee from exchanging
any shares of Restricted Stock subject to the restrictions contained herein for
any other shares of Stock that are similarly restricted.
(g) Subject to Section 7(e) and Section 8, each Key Employee entitled to
receive Restricted Stock under the Plan shall be issued a certificate for the
shares of Stock. Such certificate shall be registered in the name of the Key
Employee, bear an appropriate legend reciting the terms, conditions and
restrictions, if any, applicable to such Award and be subject to appropriate
stop-transfer orders.
8. Certificates for Awards of Stock
(a) The Company shall not be required to issue or deliver any certificates
for shares of Stock prior to: (i) the listing of such shares on any stock
exchange on which the Stock may then be listed; and (ii) the completion of any
registration or qualification of such shares under any federal or state law, or
any ruling or regulation of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable.
(b) All certificates for shares of Stock delivered under the Plan shall
also be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Stock is then listed and any applicable federal or state securities laws, and
the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. In making such
determination, the Committee may rely upon an opinion of counsel for the
Company.
(c) Except for the restrictions on Restricted Stock under Section 7, each
Key Employee who receives Stock in settlement of an Award of Stock, shall have
all of the rights of a shareholder with respect to such shares, including the
right to vote the shares and receive dividends and other distributions. No Key
Employee awarded an Option, a Right or Performance Share shall have any right as
a shareholder with respect to any shares covered by his or her Option, Right or
Performance Share prior to the date of issuance to him or her of a certificate
or certificates for such shares.
9. Acceleration Events
(a) For the purposes of this Plan, an Acceleration Event shall occur if:
(i) a report on Schedule
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13D shall be filed with the Securities and Exchange Commission pursuant to
Section 13(d) of the Act disclosing that any person (within the meaning of
Section 13(d) of the Act), other than the Company, ITT Corporation or a
subsidiary of the Company, or any employee benefit plan sponsored by the
Company, ITT Corporation or a subsidiary of the Company, is the beneficial owner
directly or indirectly of 20 percent or more of the outstanding Stock of the
Company; (ii) any person (within the meaning of Section 13(d) of the Act), other
than the Company, ITT Corporation or a subsidiary of the Company, or any
employee benefit plan sponsored by the Company, ITT Corporation or a subsidiary
of the Company, shall purchase shares pursuant to a tender offer or exchange
offer to acquire any Stock of the Company (or securities convertible into Stock)
for cash, securities or any other consideration, provided that after
consummation of the offer, the person in question is the beneficial owner (as
such term is defined in Rule 13d-3 under the Act), directly or indirectly, of 15
percent or more of the outstanding Stock of the Company (calculated as provided
in paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire
Stock); (iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Stock of the
Company would be converted into cash, securities or other property, other than a
merger of the Company in which holders of Stock of the Company immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger as immediately before, or (B)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company; or
(iv) there shall have been a change in a majority of the members of the Board
within a 12-month period, unless the election or nomination for election by the
Company's stockholders of each new director during such 12-month period was
approved by the vote of two-thirds of the directors then still in office who
were directors at the beginning of such 12-month period.
(b) Notwithstanding any provisions in this Plan to the contrary:
(i) Each outstanding Option granted under the Plan shall become
immediately exercisable in full for the aggregate number of shares covered
thereby and all related Rights shall also become exercisable upon the
occurrence of an Acceleration Event described in this Section 9 and shall
continue to be exercisable in full for cash for a period of 60 calendar
days beginning on the date that such Acceleration Event occurs and ending
on the 60th calendar day following that date; provided, however, that (A)
no Right shall become exercisable earlier than six months following the
date the Right is granted, and (B) no Option or Right shall be exercisable
beyond the expiration date of its original term.
(ii) Options and Rights shall not terminate and shall continue to
be fully exercisable for a period of seven months following the occurrence
of an Acceleration Event in the case of an employee who is terminated other
than for just cause or who voluntarily terminates his or her employment
because he or she in good faith believes that as a result of such
Acceleration Event he or she is unable effectively to discharge his or her
present duties or the duties of the position he or she occupied just prior
to the occurrence of such Acceleration Event. For purposes of Section 9
only, termination shall be for "just cause" only if such termination is
based on fraud, misappropriation or embezzlement on the part of the
employee which results in a final conviction of a felony. Under no
circumstances, however, shall any Option or Right be exercised beyond the
expiration date of its original term.
(iii) Any Right or portion thereof may be exercised for cash within
the 60-calendar-day
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period following the occurrence of an Acceleration Event with settlement,
except in the case of a Right related to an Incentive Stock Option, based
on the "Formula Price" which shall be the highest of (A) the highest
composite daily closing price of the Stock during the period beginning on
the 60th calendar day prior to the date on which the Right is exercised and
ending on the date such Right is exercised, (B) the highest gross price
paid for the Stock during the same period of time, as reported in a report
on Schedule 13D filed with the Securities and Exchange Commission or (C)
the highest gross price paid or to be paid for a share of Stock (whether by
way of exchange, conversion, distribution upon merger, liquidation or
otherwise) in any of the transactions set forth in this Section 9 as
constituting an Acceleration Event.
(iv) Upon the occurrence of an Acceleration Event, Limited Stock
Appreciation Rights shall automatically be granted as to any Option with
respect to which Rights are not then outstanding; provided, however, that
Limited Stock Appreciation Rights shall be provided at the time of grant of
any Incentive Stock Option subject to exercisability upon the occurrence of
an Acceleration Event. Limited Stock Appreciation Rights shall entitle the
holder thereof, upon exercise of such rights and surrender of the related
Option or any portion thereof, to receive, without payment to the Company
(except for applicable withholding taxes), an amount in cash equal to the
excess, if any, of the Formula Price as that term is defined in Section 9
over the option price of the Stock as provided in such Option; provided
that in the case of the exercise of any such Limited Stock Appreciation
Right or portion thereof related to an Incentive Stock Option, the Fair
Market Value of the Stock at the time of such exercise shall be substituted
for the Formula Price. Each such Limited Stock Appreciation Right shall be
exercisable only during the period beginning on the first business day
following the occurrence of such Acceleration Event and ending on the 60th
day following such date and only to the same extent the related Option is
exercisable. In the case of persons who are considered directors or
officers of the Company for purposes of Section 16 of the Act, Limited
Stock Appreciation Rights shall not be so exercisable until they have been
outstanding for at least six months. Upon exercise of a Limited Stock
Appreciation Right and surrender of the related Option, or portion thereof,
such Option, to the extent surrendered, shall not thereafter be
exercisable.
(v) The restrictions applicable to Awards of Restricted Stock
issued pursuant to Section 7 shall lapse upon the occurrence of an
Acceleration Event and the Company shall issue stock certificates without a
restrictive legend. Key Employees holding Restricted Stock on the date of
an Acceleration Event may tender such Restricted Stock to the Company which
shall pay the Formula Price as that term is defined in Section 9; provided,
such Restricted Stock must be tendered to the Company within 60 calendar
days of the Acceleration Event.
(vi) If an Acceleration Event occurs during the course of a
Performance Period applicable to an Award of Performance Shares pursuant to
Section 6, then the Key Employee shall be deemed to have satisfied the
Performance Objectives and settlement of such Performance Shares shall be
based on the Formula Price, as defined in this Section 9.
10. Beneficiary
(a) Each Key Employee shall file with the Company a written designation of
one or more persons as the Beneficiary who shall be entitled to receive the
Award, if any, payable under the Plan upon his or her death. A Key Employee may
from time to time revoke or change his or her Beneficiary
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designation without the consent of any prior Beneficiary by filing a new
designation with the Company. The last such designation received by the Company
shall be controlling; provided, however, that no designation, or change or
revocation thereof, shall be effective unless received by the Company prior to
the Key Employee's death, and in no event shall it be effective as of a date
prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of a Key
Employee's death, or if no designated Beneficiary survives the Key Employee or
if such designation conflicts with law, the Key Employee's estate shall be
entitled to receive the Award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive
such Award, the Company may retain such Award, without liability for any
interest thereon, until the Committee determines the rights thereto, or the
Company may pay such Award into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.
11. Administration of the Plan
(a) Each member of the Committee shall be both a member of the Board and a
"disinterested person" within the meaning of Rule 16b-3 under the Act or
successor rule or regulation. No member of the Committee shall be, or shall have
been, eligible to receive an Award under the Plan or any other plan maintained
by any Participating Company to acquire stock, stock options, stock appreciation
rights, performance shares or restricted stock of a Participating Company at any
time within the one year immediately preceding the member's appointment to the
Committee.
(b) All decisions, determinations or actions of the Committee made or taken
pursuant to grants of authority under the Plan shall be made or taken in the
sole discretion of the Committee and shall be final, conclusive and binding on
all persons for all purposes.
(c) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof, and its
interpretations and constructions thereof and actions taken thereunder shall be,
except as otherwise determined by the Board, final, conclusive and binding on
all persons for all purposes.
(d) The Committee's decisions and determinations under the Plan need not be
uniform and may be made selectively among Key Employees, whether or not such Key
Employees are similarly situated.
(e) The Committee may, in its sole discretion, delegate such of its powers
as it deems appropriate to the chief executive officer or other members of
senior management, except that Awards to Key Employees who are executive
officers or directors shall be made solely by the Committee and subject to
compliance with Rule 16b-3 of the Act.
(f) If an Acceleration Event has not occurred and if the Committee
determines that a Key Employee has taken action inimical to the best interests
of any Participating Company, the Committee may, in its sole discretion,
terminate in whole or in part such portion of any Option (including any related
Right) as has not yet become exercisable at the time of termination, terminate
any Performance Share Award for which the Performance Period has not been
completed or terminate any Award of Restricted Stock for which the Restriction
Period has not lapsed.
12. Amendment, Extension or Termination
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The Board may, at any time, amend or terminate the Plan and, specifically,
may make such modifications to the Plan as it deems necessary to avoid the
application of Section 162(m) of the Code and the Treasury regulations issued
thereunder. However, no amendment shall, without approval by a majority of the
Company's stockholders: (a) alter the group of persons eligible to participate
in the Plan; (b) except as provided in Section 13, increase the maximum number
of shares of Stock which are available for Awards under the Plan; (c) materially
increase the benefits accruing to participants under the Plan; or (d) extend the
period during which awards may be granted beyond ten years and two days from the
effective date of this Plan, as provided below in Section 15. If an Acceleration
Event has occurred, no amendment or termination shall impair the rights of any
person with respect to a prior Award.
13. Adjustments in Event of Change in Common Stock
In the event of any reorganization, merger, recapitalization,
consolidation, liquidation, stock dividend, stock split, reclassification,
combination of shares, rights offering, split-up or extraordinary dividend
(including a spin-off) or divestiture, or any other change in the corporate
structure or shares, the Committee may make such adjustment in the Stock subject
to Awards, including Stock subject to purchase by an Option, or the terms,
conditions or restrictions on Stock or Awards, including the price payable upon
the exercise of such Option and the number of shares subject to restricted stock
awards, as the Committee deems equitable.
14. Miscellaneous
(a) Except as provided in Section 9, nothing in this Plan or any Award
granted hereunder shall confer upon any employee any right to continue in the
employ of any Participating Company or interfere in any way with the right of
any Participating Company to terminate his or her employment at any time. No
Award payable under the Plan shall be deemed salary or compensation for the
purpose of computing benefits under any employee benefit plan or other
arrangement of any Participating Company for the benefit of its employees,
unless the Company shall determine otherwise. No Key Employee shall have any
claim to an Award until it is actually granted under the Plan. To the extent
that any person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from
the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as provided in Section 7(e) with respect to Restricted Stock.
(b) The Committee may cause to be made, as a condition precedent to the
payment of any Award, or otherwise, appropriate arrangements with the Key
Employee or his or her Beneficiary, for the withholding of any federal, state,
local or foreign taxes.
(c) The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
government or regulatory agency as may be required.
(d) The terms of the Plan shall be binding on the Company and its
successors and assigns.
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(e) Captions preceding the sections hereof are inserted solely as a matter
of convenience and in no way define or limit the scope or intent of any
provision hereof.
(f) Insofar as Key Employees who are directors or officers subject to
Section 16 of the Act are concerned (i) the Plan is intended to comply with all
applicable conditions of Rule 16b-3 and its successors; (ii) all transactions
involving Key Employees who are directors or officers are subject to such
conditions, regardless of whether such conditions are expressly set forth in the
Plan; and (iii) any provision of the Plan that is contrary to a condition of
Rule 16b-3 shall not apply to Key Employees who are directors or officers.
15. Effective Date and Term of Plan
The Plan shall become effective upon its adoption by the Board of Directors
and shareholders of the Company. No Award shall be granted under this Plan after
the Plan's termination date. The Plan's termination date shall be ten years and
two days from the effective date, unless sooner terminated under Section 12
hereof. The Plan will continue in effect for existing Awards as long as any such
Award is outstanding.
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