Exhibit (10)-9
Unicom Corporation and Commonwealth Edison Company
Form 10-K File Nos. 1-11375 and 1-1839
UNICOM CORPORATION
General Provisions Regarding Stock Option Awards
Granted Under the Unicom Corporation Long-Term Incentive Plan
Effective July 10, 1997
The purpose of these General Provisions Regarding Stock Option Awards Granted
Under the Unicom Corporation Long-Term Incentive Plan (the "General Provisions")
is to set forth certain provisions which shall be deemed a part of, and to
govern, options to purchase shares of the Common Stock, without par value (the
"Common Stock"), of Unicom Corporation, an Illinois corporation (the "Company"),
granted by the Company on or after July 10, 1997 under the provisions of the
Unicom Corporation Long-Term Incentive Plan (the "Plan"), unless otherwise
provided in the Option Agreement (as hereinafter defined) evidencing any such
option or options.
1. Form of Stock Option Grant. Each such stock option ("Option") shall be
in writing (an "Option Agreement") and shall specify (i) the name of
the recipient of the Option (the "Optionee"), (ii) the number of
shares of Common Stock subject to such Option, and (iii) the terms
applicable to the exercise of such Option, including the exercise
price, any restrictions applicable to such exercise and the expiration
date (the "Expiration Date") for such exercise.
2. Time and Manner of Exercise.
2.1. Exercise of Option.
(a) Except as otherwise provided herein, an Option shall become
exercisable as described under the caption "When
Exercisable" in the Option Agreement.
(b) If an Optionee's employment by the Company terminates by
reason of Retirement, death or Disability, then on the date
of such Retirement, death or Disability, such Optionee's
Option shall, notwithstanding Section 2.1(a) hereof, become
exercisable as to all of the shares of Common Stock
remaining subject to such Option and may (1) in the cases
of Retirement or Disability, be exercised by such Optionee
or his or her Legal Representative or Permitted
Transferees, as the case may be, until the Expiration Date
or (2) in the case of death, be exercised by such
Optionee's Legal Representative or Permitted Transferees,
as the case may be, until 11:59 p.m. (Chicago time) on the
third anniversary of the date of death; provided, however,
that in any case such exercisability is conditioned upon
such Optionee's or his or her Legal Representative's or
Permitted Transferees', as the case may be, continued
"acceptable conduct," as determined by the Committee in its
sole discretion. For purposes of the foregoing, "acceptable
conduct" shall mean, without limitation, refraining from
engaging in activities which (i) are competitive to the
business of the Company or its subsidiaries, (ii) promote
or assist
competitors of the Company or its subsidiaries, or (iii)
reflect negatively on the Company, its subsidiaries or any
of their directors, officers, employees or agents.
(c) If an Optionee's employment by the Company terminates
either for cause or by voluntary action of such Optionee
(other than Retirement), such Optionee's Option shall
expire on the effective date of such termination of
employment and shall not thereafter be exercisable.
(d) If an Optionee's employment by the Company terminates for
any reason other than Retirement, Disability, death or as
specified in Section 2.1(c) hereof, such Optionee's Option
shall be exercisable only to the extent it is exercisable
on the effective date of such termination of employment and
may thereafter be exercised by such Optionee or his or her
Legal Representative until and including the earlier to
occur of (i) the date which is three months after the
effective date of such termination of employment and (ii)
the Expiration Date.
2.2. Method of Exercise. Subject to the limitations set forth in the
Option Agreement and these General Provisions, an Option may be
exercised by the Optionee:
(a) by giving written notice to the Company specifying the
number of whole shares of Common Stock to be purchased and
accompanied by payment therefor in full (or arrangement
made for such payment to the Company's satisfaction) (1) in
cash, (2) by delivery of previously owned whole shares of
Common Stock (which such Optionee has held for at least six
months prior to the delivery of such shares or which such
Optionee purchased on the open market and for which such
Optionee has good title, free and clear of all liens and
encumbrances) having an aggregate Fair Market Value,
determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to such Option by
reason of such exercise, (3) in cash by a broker-dealer
acceptable to the Company to whom such Optionee has
submitted an irrevocable notice of exercise or (4) a
combination of (1) and (2), and
(b) by executing such documents as the Company may reasonably
request.
The Company shall have sole discretion to disapprove of an
election pursuant to any of subclauses (2) through (4) of clause
(a) of this Section 2.2. Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be
disregarded and the remaining amount due shall be paid in cash
by the Optionee. No certificate representing a share of Common
Stock shall be delivered until the full purchase price therefor
has been paid.
2.3. Termination of Option.
(a) In no event may an Option be exercised after it terminates
as set forth in this Section 2.3. An Option shall
terminate, to the extent not exercised
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pursuant to Section 2.2 or earlier terminated pursuant to
Section 2.1, on the Expiration Date stated in the Option
Agreement.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to an Option expire or
are exercised, cancelled or forfeited, the Optionee shall,
upon the Company's request, promptly return the related
Option Agreement to the Company for full or partial
cancellation, as the case may be. Such cancellation shall
be effective regardless of whether the Optionee returns
said Option Agreement. If the Optionee continues to have
rights to purchase shares of Common Stock under said Option
Agreement, the Company shall, within 10 days of the
Optionee's delivery of said Option Agreement to the
Company, either (i) mark said Option Agreement to indicate
the extent to which said Option has expired or been
exercised, cancelled or forfeited or (ii) issue to the
Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially
similar to said Option Agreement in form and substance.
3. Additional Terms and Conditions of Options.
3.1. Nontransferability of Options. Except as may otherwise be
permitted by the Plan or authorized in accordance with the terms
of the Plan, an Option may not be transferred by the Optionee
other than by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing
sentence, during the Optionee's lifetime such Optionee's Option
is exercisable only by the Optionee or his or her Legal
Representative. Except to the extent permitted by the foregoing,
an Option may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt so to sell,
transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of an Option, such Option and all rights thereunder
shall immediately become null and void.
3.2. Withholding Taxes.
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of an Option, the Optionee
shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares, such amount
of cash as the Company may be required, under all
applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other
withholding taxes (the "Required Tax Payments") with
respect to such exercise of such Option. If the Optionee
shall fail to advance the Required Tax Payments after
request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following
means: (1) a cash
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payment to the Company pursuant to Section 3.2(a), (2)
delivery to the Company of previously owned whole shares of
Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares or which the
Optionee purchased on the open market and for which the
Optionee has good title, free and clear of all liens and
encumbrances) having an aggregate Fair Market Value,
determined as of the date the obligation to withhold or pay
taxes first arises in connection with such Optionee's
Option (the "Tax Date"), equal to the Required Tax
Payments, (3) authorizing the Company to withhold whole
shares of Common Stock which would otherwise be delivered
to the Optionee upon exercise of such Option having an
aggregate Fair Market Value, determined as of the Tax Date,
equal to the Required Tax Payments, (4) a cash payment by a
broker-dealer acceptable to the Company to whom the
Optionee has submitted an irrevocable notice of exercise or
(5) any combination of (1), (2) and (3). The Company shall
have sole discretion to disapprove of an election pursuant
to any of clauses (2) through (5). Shares of Common Stock
to be delivered or withheld may not have an aggregate Fair
Market Value in excess of the minimum amount of the
Required Tax Payments. Any fraction of a share of Common
Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount
due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered
until the Required Tax Payments have been satisfied in
full.
(c) Unless the Committee otherwise determines, if an Optionee
is subject to Section 16 of the Exchange Act, the following
provisions shall apply to such Optionee's election to
deliver to the Company whole shares of Common Stock or to
authorize the Company to withhold whole shares of Common
Stock purchasable upon exercise of such Optionee's Option
in payment of all or a portion of such Optionee's tax
liability in connection with such exercise:
(1) Such Optionee may deliver to the Company previously
owned whole shares of Common Stock in accordance with
Section 3.2(b), if such delivery is in connection with the
delivery of shares of Common Stock in payment of the
exercise price of such Optionee's Option.
(2) Such Optionee may authorize the Company to withhold
whole shares of Common Stock purchasable upon exercise of
such Optionee's Option in accordance with Section 3.2(b);
provided that the following provisions shall apply to such
election:
(i) such election may apply only to such Option or
any or all other options held by such Optionee, shall
be filed with the Secretary at least six months prior
to the exercise date of such Option and may not take
effect during the six-month period beginning on the
Grant Date (as specified in the Option Agreement) of
such Option (other than in the event of such
Optionee's death) or
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(ii) such election (A) shall be subject to approval
by the Committee, (B) may not take effect during the
six-month period beginning on the Grant Date (as
specified in the Option Agreement) of such Option
(other than in the event of such Optionee's death),
(C) must be filed with the Secretary during (or must
be filed with the Secretary in advance of, but take
effect during) the ten business day period beginning
on the third business day following the date of
release of the Company's quarterly or annual summary
statements of sales and earnings and (D) the exercise
of such Option must occur during such ten business day
period.
Unless the Committee otherwise determines, any election pursuant
to clause (i) may be revoked or changed only if such revocation
or change is made at least six months prior to the exercise of
the Option. Any election made pursuant to clause (ii) may be
revoked or changed prior to the exercise of the Option during
the ten business day period.
3.3. Adjustment. The number and class of securities subject to an
Option and the purchase price per security shall be subject to
adjustment as provided in Section 4.2 of the Plan. If any such
adjustment would result in a fractional security being subject
to such Option, the Company shall pay the Optionee, in
connection with the first exercise of such Option, in whole or
in part, occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any,
of (A) the Fair Market Value on the exercise date over (B) the
exercise price per share of such Option. The decision of the
Committee regarding any such adjustment shall be final, binding
and conclusive.
3.4. Compliance with Applicable Law. Each Option is subject to the
condition that if the listing, registration or qualification of
the shares subject to such Option upon any securities exchange
or under any law, or the consent or approval of any governmental
body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, such Option may not be
exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to
effect or obtain any such listing, registration, qualification,
consent or approval.
3.5. Delivery of Certificates. Upon the exercise of an Option, in
whole or in part, the Company shall credit to a book-entry or
other electronic account maintained for the Optionee, or deliver
or cause to be delivered one or more certificates representing,
the number of shares purchased against full payment therefor.
The Company shall pay all original issue or transfer taxes and
all fees and expenses incident to such delivery, except as
otherwise provided in Section 3.2.
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3.6. Rights as a Stockholder. An Optionee shall not be entitled to
any privileges of ownership with respect to shares of Common
Stock subject to an Option unless and until purchased and
credited to an account maintained for such Optionee or delivered
to such Optionee upon the exercise of such Option, in whole or
in part, and such Optionee becomes a stockholder of record with
respect to such shares; and such Optionee shall not be
considered a stockholder of the Company with respect to any such
shares not so purchased and credited or delivered.
3.7. Company to Reserve Shares. The Company shall at all times prior
to the expiration or termination of an Option reserve and keep
available, either in its treasury or out of its authorized but
unissued shares of Common Stock, the full number of shares
subject to such Option from time to time.
3.8. Agreement Subject to the Plan. Each Option Agreement, and the
Option thereby granted, are subject to the provisions of the
Plan, including, without limitation, Sections 5.1 and 13.2 of
the Plan, and shall be interpreted in accordance therewith.
4. Change in Control.
(a) Notwithstanding any provision in the Plan or any Option
Agreement, in the event of a Change in Control, all outstanding
Options shall immediately become exercisable in full.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 20% or more of
either (i) the then outstanding shares of Common Stock (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding securities of the
Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (A) any acquisition
directly from the Company (excluding any acquisition
resulting from the exercise of an exercise, conversion or
exchange privilege unless the security being so exercised,
converted or exchanged was acquired directly from the
Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this
Section 4(b); provided further, that for purposes of clause
(B), if any Person (other than the Company or any employee
benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company)
shall become the beneficial owner of 20% or more of the
Outstanding Company Common Stock or 20% or more of the
Outstanding Company Voting Securities by reason of an
acquisition by the Company, and such Person shall, after
such
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acquisition by the Company, become the beneficial owner of
any additional shares of the Outstanding Company Common
Stock or any additional Outstanding Company Voting
Securities (other than pursuant to any dividend
reinvestment plan or arrangement maintained by the Company)
and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change
in Control;
(2) individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board;
provided that any individual who becomes a director of the
Company subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was
approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be
deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a
director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange
Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other
than the Board shall not be deemed a member of the
Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of
the Company (a "Corporate Transaction"); excluding,
however, a Corporate Transaction pursuant to which (i) all
or substantially all of the individuals or entities who are
the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Corporate Transaction
will beneficially own, directly or indirectly, more than
60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly
or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than:
the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from
such Corporate Transaction; and any Person which
beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) will beneficially
own, directly or indirectly, 20% or more of, respectively,
the outstanding shares of common stock of the corporation
resulting from such Corporate
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Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally
in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
5. Miscellaneous Provisions.
5.1. Meaning of Certain Terms.
(a) As used herein, employment by the Company shall include
employment by a corporation which is a "subsidiary
corporation" of the Company, as such term is defined in
section 424 of the Code. References in these General
Provisions to sections of the Code shall be deemed to refer
to any successor section of the Code or any successor
internal revenue law.
(b) As used herein, the terms defined elsewhere in these
General Provisions shall have the respective specified
meanings and the following terms shall have the following
respective meanings:
"Committee" shall have the meaning specified in the Plan.
"Disability" shall have the meaning specified in any long-
term disability plan or arrangement maintained by the
Company or, if no such plan or arrangement is then in
effect, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Fair Market Value" means the closing transaction price of
a share of Common Stock, as reported on the New York Stock
Exchange Composite Transactions on the date of exercise or,
if there shall be no reported transaction for such date, on
the next preceding date for which a transaction was
reported.
"Legal Representative" shall include an executor,
administrator, legal representative, guardian or similar
person.
"Permitted Transferee" shall include any transferee (i)
pursuant to a transfer permitted under Section 13.5 of the
Plan and Section 3.1 of these General Provisions or (ii)
designated pursuant to beneficiary designation procedures
approved by the Company.
"Retirement" shall mean retirement from the employment of
the Company (as defined in Section 5.1(a) hereof) on or
after attaining the minimum age specified for early or
normal retirement in any then effective retirement
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policy of the Company, after a minimum of ten years
employment with the Company.
5.2. Successors. These General Provisions shall be binding upon and
inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of
an Optionee, acquire any rights under such Optionee's Option
Agreement in accordance with such Option Agreement, these
General Provisions or the Plan.
5.3. Notices. All notices, requests or other communications provided
for in an Option Agreement shall be made, if to the Company, to
Unicom Corporation, 10 South Dearborn Street - 37th Floor, P.O.
Box A-3007, Chicago, Illinois 60690-3007, Attention: Secretary,
and if to the Optionee under such Option Agreement, to the
address for such Optionee set forth in the records of the
Company. All notices, requests or other communications provided
for in an Option Agreement shall be made in writing either (a)
by personal delivery to the party entitled thereto, (b) by
facsimile transmission with confirmation of receipt, (c) by
mailing in the United States mails to the last known address of
the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of
facsimile transmission or upon receipt by the party entitled
thereto if sent by United States mail or express courier
service; provided, however, that if a notice, request or other
communication is not received during regular business hours, it
shall be deemed to be received on the next succeeding business
day of the Company.
5.4. Governing Law. Each Option Agreement (including these General
Provisions) and all determinations made and actions taken
pursuant thereto, to the extent not governed by the laws of the
United States, shall be governed by the laws of the State of
Illinois and construed in accordance therewith without giving
effect to principles of conflicts of laws.
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