1
EXHIBIT 10.9
CAPITAL ONE FINANCIAL CORPORATION
1994 STOCK INCENTIVE PLAN
(AS AMENDED OCTOBER 24, 1996)
1. PURPOSE. The purpose of the Capital One Financial Corporation
1994 Stock Incentive Plan (the "Plan") is to further the long term stability
and financial success of Capital One Financial Corporation (the "Company") by
attracting and retaining key employees of the Company through the use of stock
incentives. It is believed that ownership of Company Stock will stimulate the
efforts of those employees of the Company upon whose judgment and interest the
Company is and will be largely dependent for the successful conduct of its
business. It is also believed that Awards granted to such employees under this
Plan will strengthen their desire to remain with the Company and will further
the identification of those employees' interests with those of the Company's
shareholders. The Plan was adopted by the Board of Directors and approved by
the Company's sole shareholder on October 28, 1994.
The Plan is intended to satisfy the requirements of Securities and
Exchange Commission Rule 16b-3 ("Rule 16b-3").
2
2. DEFINITIONS. As used in the Plan, the following terms have
the meanings indicated:
(a) "Award" means, collectively, the award of an Option,
Stock Appreciation Right, Restricted Stock or Incentive Stock under
the Plan.
(b) "Board" means the board of directors of the Company.
(c) "Change of Control" means:
(i) The acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% (or, if such
shares are purchased from the Company, 40%) or more of either
(A) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), provided,
however, that any acquisition
-2-
3
by (x) the Company or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries or (y) any corporation with
respect to which, immediately following such acquisition, more
than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Company Voting
Securities, as the case may be, shall not constitute a Change
of Control; or
(ii) Individuals who constitute the Board as of
September 1, 1995 (the "Incumbent Board") cease for any
-3-
4
reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to
September 1, 1995 whose appointment to fill a vacancy or to
fill a new Board position or whose nomination for election by
the Company's shareholders was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(iii) Approval by the shareholders of the Company
of a reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such
Business
-4-
5
Combination do not in the aggregate, immediately following
such Business Combination, beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination in substantially the same proportion as their
ownership immediately prior to such Business Combination of
the Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
(iv) (A) a complete liquidation or
dissolution of the Company or (B) sale or other disposition of
all or substantially all of the assets of the Company other
than to a corporation with respect to which, immediately
following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors is then
-5-
6
beneficially owned, directly or indirectly, in the aggregate
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially
the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
(v) Neither the sale of Company common stock in
an initial public offering, nor the distribution of Company
common stock by Capital One Financial Corporation's parent
corporation to its shareholders in a transaction to which
Section 355 of the Internal Revenue Code applies, nor any
restructuring of the Company or its Board of Directors in
contemplation of or as the result of either of such events,
shall constitute a Change of Control.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
-6-
7
(e) "Company" means Capital One Financial Corporation, a
Delaware corporation.
(f) "Company Stock" means Common Stock of the Company.
If the par value of the Company Stock is changed, or in the event of a
change in the capital structure of the Company (as provided in Section
15), the shares resulting from such a change shall be deemed to be
Company Stock within the meaning of the Plan.
(g) "Date of Grant" means the date on which an Award is
granted by the Committee or such later date specified by the Committee
as the date as of which the Award is to be effective.
(h) "Disability" or "Disabled" means, as to an Incentive
Stock Option, a Disability within the meaning of Code section
22(e)(3). As to all other Awards, the Committee shall determine
whether a Disability exists and such determination shall be
conclusive.
(i) "Distribution" means the distribution of the
Company's common stock to shareholders of the Company's parent
corporation in a transaction to which Code Section 355 applies.
-7-
8
(j) "Distribution Date" means the date on which the
Distribution occurs.
(k) "Fair Market Value" means, on the date shares of the
Company Stock are offered in an initial public offering, the offering
price, and on any given date thereafter, the average of the high and
low price on such date as reported on The New York Stock
Exchange-Composite Transactions Tape. In the absence of any such
sale, fair market value means the average of the highest bid and
lowest asked prices of a share of Company Stock on such date as
reported by such source. In the absence of such average or if shares
of Company Stock are no longer traded on The New York Stock Exchange,
the fair market value shall be determined by the Committee using any
reasonable method in good faith.
(l) "Incentive Stock" means Company Stock awarded when
performance goals are achieved pursuant to an incentive plan as
provided in Section 9.
(m) "Incentive Stock Option" means an Option intended to
meet the requirements of, and qualify for favorable Federal income tax
treatment under, Code section 422.
-8-
9
(n) "Insider" means a person subject to Section 16(b) of
the Securities Exchange Act of 1934.
(o) "Nonstatutory Stock Option" means an Option, which
does not meet the requirements of Code section 422, or even if meeting
the requirements of Code section 422, is not intended to be an
Incentive Stock Option and is so designated.
(p) "Option" means a right to purchase Company Stock
granted under the Plan, at a price determined in accordance with the
Plan.
(q) "Parent" means, with respect to any corporation, a
"parent corporation" of that corporation within the meaning of Code
section 424(e).
(r) "Participant" means any employee who receives an
Award under the Plan.
(s) "Reload Feature" means a feature of an Option
described in an employee's stock option agreement that provides for
the automatic grant of a Reload Option in accordance with the
provisions described in Section 10(d).
(t) "Reload Option" means an Option granted to an
employee equal to the number of shares of already owned
-9-
10
Company Stock delivered by the employee to exercise an Option
described in Section 10(d).
(u) "Restricted Stock" means Company Stock awarded upon
the terms and subject to the restrictions set forth in Section 8.
(v) "Restricted Stock Award" means an award of Restricted
Stock granted under the Plan.
(w) "Rule 16b-3" means Rule 16b-3 of the Securities
Exchange Act of 1934. A reference in the Plan to Rule 16b-3 shall
include a reference to any corresponding rule (or number
redesignation) of any amendments to Rule 16b-3 enacted after the
effective date of the Plan's adoption.
(x) "Stock Appreciation Right" means a right granted
under the Plan to receive from the Company amounts in cash or shares
of Company Stock upon the surrender of an Option.
(y) "Stock Option Committee" or "Committee" means the
committee appointed by the Board as described under Section 16.
(z) "Subsidiary" means, with respect to any corporation,
a "subsidiary corporation" of that corporation within the meaning of
Code section 424(f).
-10-
11
(aa) "10% Shareholder" means a person who owns, directly
or indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code section 424(d).
3. GENERAL. The following types of Awards may be granted under
the Plan: Options, Stock Appreciation Rights, Restricted Stock or Incentive
Stock. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options.
4. STOCK. Subject to Section 15 of the Plan, there shall be
reserved for issuance under the Plan an aggregate of 7,370,880 shares of
Company Stock, which shall be authorized, but unissued shares. Shares granted
under the Plan that expire or otherwise terminate unexercised and shares
forfeited pursuant to restrictions on Restricted Stock or Incentive Stock may
again be subjected to an Award under the Plan. The Committee is expressly
authorized to make an Award to a Participant conditioned upon the surrender for
cancellation of an existing Award. For purposes of determining the number of
shares that are available for Awards under the Plan, such number shall include
the number of shares
-11-
12
surrendered by an optionee or retained by the Company in payment of federal and
state income tax withholding liabilities upon exercise of a Nonstatutory Stock
Option or a Stock Appreciation Right.
5. ELIGIBILITY.
(a) Any key employee of the Company (or Parent or
Subsidiary of the Company) who, in the judgment of the Committee has
contributed or can be expected to contribute to the profits or growth of the
Company (or Parent or Subsidiary) shall be eligible to receive Awards under the
Plan. Directors of the Company who are employees and are not members of the
Committee are eligible to participate in the Plan. The Committee shall have
the power and complete discretion, as provided in Section 16, to select
eligible employees to receive Awards and to determine for each employee the
terms and conditions, the nature of the award and the number of shares to be
allocated to each employee as part of each Award.
(b) The grant of an Award shall not obligate the Company
or any Parent or Subsidiary of the Company to pay an employee any particular
amount of remuneration, to continue the
-12-
13
employment of the employee after the grant or to make further grants to the
employee at any time thereafter.
6. STOCK OPTIONS.
(a) Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the eligible employee stating the number of
shares for which Options are granted, the Option price per share, whether the
Options are Incentive Stock Options or Nonstatutory Stock Options, the extent
to which Stock Appreciation Rights are granted (as provided in Section 7), and
the conditions to which the grant and exercise of the Options are subject.
This notice, when duly accepted in writing by the eligible employee, shall
become a stock option agreement between the Company and the eligible employee.
(b) The exercise price of shares of Company Stock covered
by an Option shall be not less than 100% of the Fair Market Value of such
shares on the Date of Grant. If the employee is a 10% Shareholder and the
Option is an Incentive Stock Option, the exercise price shall be not less than
110% of the Fair Market Value of such shares on the Date of Grant.
(c) Options may be exercised in whole or in part at such
times as may be specified by the Committee in the employee's
-13-
14
stock option agreement; provided that the exercise provisions for Incentive
Stock Options shall in all events not be more liberal than the following
provisions:
(i) No Incentive Stock Option may be exercised after
the first to occur of (x) ten years (or, in the case of an
Incentive Stock Option granted to a 10% Shareholder, five
years) from the Date of Grant, (y) three months from the
employee's retirement or termination of employment with the
Company and its Parent and Subsidiary corporations for reasons
other than Disability or death, or (z) one year from the
employee's termination of employment on account of Disability
or death.
(ii) Except as otherwise provided in this paragraph,
no Incentive Stock Option may be exercised unless the employee
is employed by the Company or a Parent or Subsidiary of the
Company at the time of the exercise (or was so employed not
more than three months before the time of the exercise) and
has been employed by the Company or a Parent or Subsidiary of
the Company at all times since the Date of Grant. If an
employee's
-14-
15
employment is terminated other than by reason of his
Disability or death at a time when the employee holds an
Incentive Stock Option that is exercisable (in whole or in
part), the employee may exercise any or all of the exercisable
portion of the Incentive Stock Option (to the extent
exercisable on the date of termination) within three months
after the employee's termination of employment. If an
employee's employment is terminated by reason of his
Disability at a time when the employee holds an Incentive
Stock Option that is exercisable (in whole or in part), the
employee may exercise any or all of the exercisable portion of
the Incentive Stock Option (to the extent exercisable on the
date of Disability) within one year after the employee's
termination of employment. If an employee's employment is
terminated by reason of his death at a time when the employee
holds an Incentive Stock Option that is exercisable (in whole
or in part), the Incentive Stock Option may be exercised (to
the extent exercisable on the date of death) within one year
after the employee's death by the person to whom the
employee's rights under
-15-
16
the Incentive Stock Option shall have passed by will or by the
laws of descent and distribution.
(iii) An Incentive Stock Option by its terms, shall
be exercisable in any calendar year only to the extent that
the aggregate Fair Market Value (determined at the Date of
Grant) of the Company Stock with respect to which incentive
stock options are exercisable for the first time during the
calendar year does not exceed $100,000 (the "Limitation
Amount"). Incentive Stock Options granted under the Plan and
similar incentive options granted after 1986 under all other
plans of the Company and any Parent or Subsidiary of the
Company shall be aggregated for purposes of determining
whether the Limitation Amount has been exceeded. The Board
may impose such conditions as it deems appropriate on an
Incentive Stock Option to ensure that the foregoing
requirement is met. If Incentive Stock Options that first
become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory
Stock Options to the extent permitted by law.
-16-
17
(d) The Committee may, in its discretion, grant Options
which by their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option
agreement.
(e) The maximum number of shares with respect to which
Nonstatutory Options or Stock Appreciation Rights may be granted in any
calendar year to an employee eligible to participate in the Plan is as follows:
the Chief Executive Officer, 1,500,000; each of the next four most highly
compensated employees, 1,000,000; each other eligible employee, 500,000.
(f) The Committee may, in its discretion, grant Options
containing or amend Options previously granted to provide for a Reload Feature
subject to the limitations of Section 10(d).
(g) Notwithstanding paragraph (c) above, the Committee
may, in its discretion, amend a previously granted Incentive Stock Option to
provide for more liberal exercise provisions; provided however if the Incentive
Stock Option as amended no longer meets the requirements of Code section 422,
and as a result such Option no longer qualifies for favorable Federal income
tax treatment under Code section 422, the amendments shall not become effective
without the written consent of the
-17-
18
Participant and provided further that no Incentive Stock Option may be
exercised after ten (10) years (or, in the case of an Incentive Stock Option
granted to a 10% Shareholder, five (5) years) from the Date of Grant.
7. STOCK APPRECIATION RIGHTS.
(a) Whenever the Committee deems it appropriate, Stock
Appreciation Rights may be granted in connection with all or any part of an
Incentive Stock Option. At the discretion of the Committee, Stock Appreciation
Rights may also be granted in connection with all or any part of a Nonstatutory
Stock Option, either concurrently with the grant of the Nonstatutory Stock
Option or at any time thereafter during the term of the Nonstatutory Stock
Option. The following provisions apply to all Stock Appreciation Rights that
are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the
employee, upon exercise of all or any part of the Stock
Appreciation Rights, to surrender to the Company unexercised
that portion of the underlying Option relating to the same
number of shares of Company Stock as is covered by the Stock
Appreciation Rights (or the
-18-
19
portion of the Stock Appreciation Rights so exercised) and to
receive in exchange from the Company an amount in cash or
shares of Company Stock (as provided in the Stock Appreciation
Right) equal to the excess of (x) the Fair Market Value on the
date of exercise of the Company Stock covered by the
surrendered portion of the underlying Option over (y) the
exercise price of the Company Stock covered by the surrendered
portion of the underlying Option. The Committee may limit the
amount that the employee will be entitled to receive upon
exercise of the Stock Appreciation Right.
(ii) Upon the exercise of a Stock Appreciation
Right and surrender of the related portion of the underlying
Option, the Option, to the extent surrendered, shall not
thereafter be exercisable.
(iii) Subject to any further conditions upon
exercise imposed by the Committee, a Stock Appreciation Right
issued in tandem with an Option shall be exercisable only to
the extent that the related Option is exercisable and shall
expire no later than the date on which the related Option
expires.
-19-
20
(iv) A Stock Appreciation Right may only be
exercised at a time when the Fair Market Value of the Company
Stock covered by the Stock Appreciation Right exceeds the
exercise price of the Company Stock covered by the underlying
Option.
(b) The manner in which the Company's obligation arising
upon the exercise of a Stock Appreciation Right shall be paid shall be
determined by the Committee and shall be set forth in the employee's Option or
the related Stock Appreciation Rights agreement. The Committee may provide for
payment in Company Stock or cash, or a fixed combination of Company Stock or
cash, or the Committee may reserve the right to determine the manner of payment
at the time the Stock Appreciation Right is exercised. Shares of Company Stock
issued upon the exercise of a Stock Appreciation Right shall be valued at their
Fair Market Value on the date of exercise.
8. RESTRICTED STOCK AWARDS.
(a) Whenever the Committee deems it appropriate to grant a
Restricted Stock Award, notice shall be given to the Participant stating the
number of shares of Restricted Stock for which the Restricted Stock Award is
granted and the terms and
-20-
21
conditions to which the Restricted Stock Award is subject. This notice, when
accepted in writing by the Participant shall become an award agreement between
the Company and the Participant and certificates representing the shares shall
be issued and delivered to the Participant. A Restricted Stock Award may be
made by the Committee in its discretion without cash consideration.
(b) Restricted Stock issued pursuant to the Plan shall be
subject to the following restrictions:
(i) Unless otherwise provided by the Committee,
Restricted Stock may not be sold, assigned, transferred or
disposed of within a six-month period beginning on the Date of
Grant.
(ii) None of such shares may be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered or
disposed of until the restrictions on such shares shall have
lapsed or shall have been removed pursuant to paragraph (d) or
(e) below.
(iii) If a Participant ceases to be employed by the
Company or a Parent or Subsidiary of the Company, the
Participant shall forfeit to the Company any shares of
-21-
22
Restricted Stock, the restrictions on which shall not have
lapsed or shall not have been removed pursuant to paragraph
(d) or (e) below, on the date such Participant ceases to be so
employed.
(c) Upon the acceptance by a Participant of a Restricted
Stock Award, such Participant shall, subject to the restrictions set forth in
paragraph (b) above, have all the rights of a shareholder with respect to the
shares of Restricted Stock subject to such Restricted Stock Award, including,
but not limited to, the right to vote such shares of Restricted Stock and the
right to receive all dividends and other distributions paid thereon.
Certificates representing Restricted Stock shall bear a legend referring to the
restrictions set forth in the Plan and the Participant's award agreement.
(d) The Committee shall establish as to each Restricted
Stock Award the terms and conditions upon which the restrictions set forth in
paragraph (b) above shall lapse. Such terms and conditions may include,
without limitation, the passage of time, the meeting of performance goals, the
lapsing of such restrictions as a result of the Disability, death or retirement
of the Participant, or the occurrence of a Change of Control.
-22-
23
(e) Notwithstanding the forfeiture provisions of
paragraph (b)(iii) above, the Committee may at any time, in its sole
discretion, accelerate the time at which any or all restrictions will lapse or
remove any and all such restrictions.
(f) Each Participant shall agree at the time his
Restricted Stock Award is granted, and as a condition thereof, to pay to the
Company, or make arrangements satisfactory to the Company regarding the payment
to the Company of, the aggregate amount of any Federal, state or local taxes of
any kind required by law to be withheld with respect to the shares of
Restricted Stock subject to the Restricted Stock Award. Until such amount has
been paid or arrangements satisfactory to the Company have been made, no stock
certificate free of a legend reflecting the restrictions set forth in paragraph
(b) above shall be issued to such Participant.
(g) The Company may place on any certificate representing
Company Stock issued in connection with an Incentive Award any legend deemed
desirable by the Company's counsel to comply with Federal or state securities
laws, and the Company may require a customary written indication of the
Participant's investment intent.
-23-
24
9. INCENTIVE STOCK AWARDS.
(a) Incentive Stock may be issued pursuant to the Plan in
connection with incentive programs established from time to time by the
Committee when performance criteria established by the Committee as part of the
incentive program have been achieved. If the objectives established by the
Committee as a prerequisite to the receipt of Incentive Stock have not been
achieved, no stock will be issued, except as provided in (c). A Participant
eligible for the receipt or issuance of incentive shares will have no rights as
a stockholder before actual receipt of the Incentive Stock.
(b) Whenever the Committee deems it appropriate, the
Committee may establish an incentive program and notify Participants of their
participation in and the terms of the incentive program. More than one
incentive program may be established by the Committee and they may operate
concurrently or for varied periods of time and a Participant may be permitted
to participate in more than one incentive program at the same time. Incentive
Stock will be issued only subject to the incentive program and the Plan and
consistent with meeting the performance
-24-
25
goals set by the Committee. Incentive Stock may be issued without cash
consideration.
(c) The Committee may provide in the incentive program,
or subsequently, that Incentive Stock will be issued if a Change of Control
occurs even though the performance goals set by the Committee have not been
met.
(d) A Participant's interest in an incentive program may
not be sold, assigned, transferred, pledged, hypothecated, or otherwise
encumbered.
(e) Each Participant shall agree as a condition of his
participation in an incentive program and the receipt of Incentive Stock, to
pay to the Company, or make arrangements satisfactory to the Company regarding
the payment to the Company of, the aggregate amount of any Federal, state or
local taxes of any kind required by law to be withheld with respect to the
shares of Incentive Stock received. Until such amount has been paid or
arrangements satisfactory to the Company have been made, no stock certificate
free of a legend reflecting the restrictions set forth in paragraph (b) above
shall be issued to such Participant.
-25-
26
(f) The Company may place on any certificate representing
Company Stock issued in connection with an Incentive Award any legend deemed
desirable by the Company's counsel to comply with Federal or state securities
laws, and the Company may require a customary written indication of the
Participant's investment intent.
10. METHOD OF EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Options and Stock Appreciation Rights may be
exercised by the employee giving written notice of the exercise to the Company,
stating the number of shares the employee has elected to purchase under the
Option or the number of Stock Appreciation Rights he has elected to exercise.
In the case of the purchase of shares under an Option, such notice shall be
effective only if accompanied by the exercise price in full in cash; provided
that if the terms of an Option so permit, the employee may (i) deliver Company
Stock that the Participant has owned for at least six (6) months (valued at
Fair Market Value on the date of exercise) in satisfaction of all or any part
of the exercise price, (ii) deliver a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
-26-
27
deliver to the Company the amount of the sale or loan proceeds to pay the
exercise price, or (iii) deliver an interest bearing promissory note, payable
to the Company, in payment of all or part of the exercise price together with
such collateral as may be required by the Committee at the time of exercise.
The interest rate under any such promissory note shall be equal to the minimum
interest rate required at the time to avoid imputed interest to the Participant
under the Code.
(b) Options and Stock Appreciation Rights may also be
exercised by the employee in accordance with any other method or methods of
exercise as may be approved from time to time by the Committee;
(c) The Company may place on any certificate representing
Company Stock issued upon the exercise of an Option or Stock Appreciation Right
any legend deemed desirable by the Company's counsel to comply with Federal or
state securities laws, and the Company may require of the employee a customary
written indication of his investment intent. Until the employee has made any
required payment, including any applicable Federal, state and local withholding
taxes, and has had issued to him a
-27-
28
certificate for the shares of Company Stock acquired, he shall possess no
shareholder rights with respect to the shares.
(d) If an employee exercises an Option that has a Reload
Feature by delivering already owned shares of Company Stock, the employee shall
automatically be granted a Reload Option. The Reload Option shall be subject
to the following provisions:
(i) The Reload Option shall cover the number of
shares of Company Stock delivered by the employee to the
Company to exercise the Option with the Reload Feature;
(ii) The Reload Option will not have a Reload
Feature;
(iii) The exercise price of shares of Company Stock
covered by a Reload Option shall be 100% of the Fair Market
Value of such shares on the date the employee delivers shares
of Company Stock to the Company to exercise the Option that
has a Reload Feature;
(iv) The Reload Option shall be subject to the
same restrictions on exercisability as those imposed on the
underlying Option (possessing the Reload Feature);
-28-
29
(v) The Reload Option shall not be exercisable
until the expiration of any retention holding period imposed
on the disposition of any shares of Company Stock covered by
the underlying Option (possessing the Reload Feature).
The Committee may, in its discretion, cause the Company to place on any
certificate representing Company Stock issued to a Participant upon the
exercise of an underlying Option (possessing a Reload Feature as evidenced by
the stock option agreement for such Option) delivered pursuant to this
subsection (d), a legend restricting the sale or other disposition of such
Company Stock.
(e) Notwithstanding anything herein to the contrary,
Awards shall always be granted and exercised in such a manner as to conform to
the provisions of Rule 16b-3, or any replacement rule adopted, as the same now
exists or may, from time to time, be amended.
11. APPLICABLE WITHHOLDING TAXES. As an alternative to making a
cash payment to the Company to satisfy tax withholding obligations, the
Committee may establish procedures permitting the Participant to elect to (a)
deliver shares of already owned Company Stock or (b) have the Company retain
that number of
-29-
30
shares of Company Stock that would satisfy all or a specified portion of the
Federal, state and local tax liabilities of the Participant arising in the year
the Award becomes subject to tax. Any such election shall be made only in
accordance with procedures established by the Committee.
12. TRANSFERABILITY OF AWARDS AND OPTIONS. To the extent required
by the Code, Awards, by their terms, shall not be transferable by the
Participant except by will or by the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by the Participant or
by his guardian or legal representative. The Committee is expressly
authorized, in its discretion, to provide that all or a portion of a
Nonstatutory Stock Option or Stock Appreciation Right may be granted to a
Participant upon terms that permit transfer of the Nonstatutory Stock Option or
Stock Appreciation Right in a form and manner determined by the Committee.
13. EFFECTIVE DATE OF THE PLAN. This Plan having been adopted by
the Company's Board and approved by the Company's sole shareholder shall be
effective on October 28, 1994. Until the requirements of any applicable
federal and state securities laws have been met, no Option or Stock
Appreciation Right shall be
-30-
31
exercisable and no award of Restricted Stock or Incentive Stock shall be made.
14. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated
by the Board, this Plan shall terminate at the close of business on October 27,
2004. No Awards shall be made under the Plan after its termination. The Board
may terminate the Plan or may amend the Plan in such respects as it shall deem
advisable; provided, that, if and to the extent required by the Code, no change
shall be made that materially increases the total number of shares of Company
Stock reserved for issuance pursuant to Awards granted under the Plan (except
pursuant to Section 15), materially expands the class of persons eligible to
receive Awards, or materially increases the benefits accruing to Participants
under the Plan, unless such change is authorized by the shareholders of the
Company. Notwithstanding the foregoing, the Board may amend the Plan and
unilaterally amend Awards as it deems appropriate to ensure compliance with
Rule 16b-3 and to cause Incentive Stock Options to meet the requirements of the
Code and regulations thereunder. Except as provided in the preceding sentence,
a termination or amendment of the Plan shall
-31-
32
not, without the consent of the Participant, detrimentally affect a
Participant's rights under an Award previously granted to him.
15. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or
combination of shares, spin-off, recapitalization or merger in which the
Company is the surviving corporation or other change in the Company's capital
stock (including, but not limited to, the creation or issuance to shareholders
generally of rights, options or warrants for the purchase of common stock or
preferred stock of the Company), the number and kind of shares of stock or
securities of the Company to be subject to the Plan and to Awards then
outstanding or to be granted under the Plan, the maximum number of shares or
securities which may be delivered under the Plan, the exercise price and other
relevant provisions shall be appropriately adjusted by the Committee, whose
determination shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any unexercised Option, the Committee may
adjust appropriately the number of shares covered by the Option so as to
eliminate the fractional shares.
(b) If the Company is a party to a consolidation or a
merger in which the Company is not the surviving corporation, a
-32-
33
transaction that results in the acquisition of substantially all of the
Company's outstanding stock by a single person or entity, or a sale or transfer
of substantially all of the Company's assets, the Committee may take such
actions with respect to outstanding Incentive Awards as the Committee deems
appropriate.
(c) Notwithstanding anything in the Plan to the contrary,
the Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and binding
on all persons for all purposes.
16. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Committee consisting solely of two or more nonemployee directors of the
Company (within the meaning of Rule 16b-3), who shall be appointed by the
Board. The Committee shall have general authority to impose any limitation or
condition upon an Award the Committee deems appropriate to achieve the
objectives of the Award and the Plan and, in addition, and without limitation
and in addition to powers set forth elsewhere in the Plan, shall have the
following specific authority:
(a) The Committee shall have the power and complete
discretion to determine (i) which eligible employees shall receive an
Award and the nature of the Award, (ii) the
-33-
34
number of shares of Company Stock to be covered by each Award, (iii)
whether Options shall be Incentive Stock Options or Nonstatutory Stock
Options, (iv) when, whether and to what extent Stock Appreciation
Rights shall be granted in connection with Options, (v) whether to
include a Reload Feature in an Option and to impose limitations on the
use of shares acquired through the exercise of a Reload Option to
exercise Options, (vi) the fair market value of Company Stock, (vii)
the time or times when an Award shall be granted, (viii) whether an
Award shall become vested over a period of time and when it shall be
fully vested, (ix) conditions relating to the length of time before
disposition of Company Stock received in connection with an Award is
permitted, (x) the terms and conditions on which restrictions upon
Restricted Stock shall lapse, (xi) whether to accelerate the time of
receipt of Incentive Stock or the time when any or all restrictions
with respect to Restricted Stock will lapse or be removed, (xii) the
terms of incentive programs, performance criteria and other factors
relevant to the issuance of Incentive Stock or the lapse of
restrictions on Restricted Stock, (xiii) when Options and Stock
-34-
35
Appreciation Rights may be exercised, (xiv) whether a Disability
exists, (xv) the manner in which payment will be made upon the
exercise of Options or Stock Appreciation Rights, (xvi) whether to
approve a Participant's election (x) to deliver shares of already
owned Company Stock to satisfy tax liabilities arising upon the
exercise of a Nonstatutory Stock Option or Stock Appreciation Right or
(y) to have the Company withhold from the shares to be issued upon the
exercise or receipt of an Award that number of shares necessary to
satisfy tax liabilities arising from such exercise or receipt, (xvii)
notice provisions relating to the sale of Company Stock acquired under
the Plan, and (xviii) any additional requirements relating to Awards
that the Committee deems appropriate. Notwithstanding the foregoing,
no "tandem stock options" (where two stock options are issued together
and the exercise of one option affects the right to exercise the other
option) may be issued in connection with Incentive Stock Options. The
Committee shall also have the power to amend the terms of previously
granted Awards so long as the terms as amended are consistent with the
terms of the Plan and provided that
-35-
36
the consent of the Participant is obtained with respect to any
amendment that would be detrimental to him, except that such consent
will not be required if such amendment is for the purpose of complying
with Rule 16b-3 or any requirement of the Code applicable to the
Award.
(b) The Committee may adopt rules and regulations for
carrying out the Plan. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive.
The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in
good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall
constitute a quorum, and all actions of the Committee shall be taken
by a majority of the members present. Any action may be taken by a
written instrument signed by all of the members, and any action so
taken shall be fully effective as if it had been taken at a meeting.
(d) The Board of Directors from time to time may appoint
members previously appointed and may fill vacancies, however caused,
in the Committee.
-36-
37
17. NOTICE. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be deemed
to have been duly given if delivered personally or mailed first class, postage
prepaid, as follows (a) if to the Company - at its principal business address
to the attention of the Company's Director of Human Resources; (b) if to any
Participant - at the last address of the Participant known to the sender at the
time the notice or other communication is sent.
18. INTERPRETATION. The terms of this Plan are subject to all
present and future regulations and rulings of the Secretary of the Treasury or
his delegate relating to the qualification of Incentive Stock Options under the
Code. If any provision of the Plan conflicts with any such regulation or
ruling, then that provision of the Plan shall be void and of no effect.
19. FOREIGN EQUITY INCENTIVE PLANS. The Committee may authorize
any foreign Subsidiary or any foreign unincorporated division of the Company or
of a Subsidiary to adopt a plan for granting Awards (a "Foreign Equity
Incentive Plan"). All Awards granted under a Foreign Equity Incentive Plan
shall be treated as grants under this Plan. A Foreign Equity Incentive Plan
shall have such terms as the Committee permits; provided that such
-37-
38
terms are not inconsistent with the provisions of this Plan; and provided
further that such terms may be more restrictive than those in this Plan.
Awards granted under a Foreign Equity Incentive Plan shall be governed by the
terms of this Plan except to the extent that the terms of the Foreign Equity
Incentive Plan are more restrictive than the terms of this Plan, in which case
such terms of the Foreign Equity Incentive Plan shall control.
-38-