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EXHIBIT 10.2
WASHINGTON GAS LIGHT COMPANY
LONG-TERM
INCENTIVE COMPENSATION PLAN
Adopted June 28, 1989
As Amended December 18, 1996
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WASHINGTON GAS LIGHT COMPANY
LONG-TERM INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of the Washington Gas Light Company Long-Term Incentive
Compensation Plan is to promote the long-term viability and financial success
of the Company and its Affiliates by assisting in the recruiting and retention
of key employees. The Plan is designed to enable key employees to acquire or
increase a proprietary interest in the Company.
ARTICLE II
DEFINITIONS
2.01 Affiliate means any entity that is (i) a member of a
controlled group of corporations as defined in Code Section 1563 (a),
determined without regard to Code Sections 1563 (a) (4) and 1563 (e) (3) (c),
of which the Company is a member according to Code Section 414(b); (ii) an
unincorporated trade or business that is under common control with the Company,
as determined according to Code Section 414(c); (iii) a member of an affiliated
service group of which the Company is a member according to Code Section
414(m); or (iv) any other subsidiary corporation or business in which the
Company has a substantial interest or business relation.
2.02 Agreement means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of an Award.
2.03 Award means Options, Restricted Stock, Stock Appreciation
Rights, Performance Shares, and Dividend Units.
2.04 Board means the Board of Directors of the Company.
2.05 Code means the Internal Revenue Code of 1986, as amended.
2.06 Committee means the Compensation Committee of the Board or any
other Committee of the Board appointed to administer the Plan, provided that
the composition of such Committee shall at all times meet the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
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2.07 Common Stock means the Common Stock of the Company, par
value $1.00 per share.
2.08 Company means the Washington Gas Light Company.
2.09 Dividend Unit means an Award granted under Article X of the
Plan.
2.10 Fair Market Value means, on any given date, the closing
price of a share Common Stock as reported on the New York Stock Exchange
composite tape on such day or, if the Common Stock was not traded on such day,
then on the next preceding day that the Common Stock was traded, all as
reported by such source as the Committee may select.
2.11 Option means an Award granted under Article VI of the Plan.
2.12 Participant means a key employee of the Company or of an
Affiliate, including a key employee who is a member of the Board, who
satisfies the requirements of Article IV of the Plan.
2.13 Performance Shares means an Award granted under Article IX
of the Plan.
2.14 Plan means the Washington Gas Light Company Long-Term
Incentive Compensation Plan herein set forth, as the same may from time to time
be amended.
2.15 Restricted Stock means shares of Common Stock awarded to a
Participant under Article VII of the Plan.
2.16 Stock Appreciation Rights means an Award granted under
Article VIII of the Plan.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. Except for the
initial Awards as provided for in Section 7.01 (I), the Committee shall
have authority to grant Awards upon such terms (not inconsistent with the
provisions of the Plan) as the Committee may consider appropriate. Such terms
may include conditions (in addition to those contained in the Plan) on the
exercisability of all or any part of an Option or of Stock Appreciation Rights
or on the transferability or forfeitability of Restricted Stock. In addition,
the Committee shall have complete authority to interpret all provisions of the
Plan; to prescribe the form of Agree-
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ments; to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of the Plan. The express grant in the Plan of
any specific power to the Committee shall not be construed as limiting any
power or authority of the Committee. Any decision made, or action taken, by
the Committee shall not be construed as limiting any power or authority of the
Committee. Any decision made, or action taken, by the Committee in connection
with the administration of the Plan shall be final, conclusive, and binding
with respect to all persons including all Participants. No member of the
Committee shall be liable for any act done, or for any failure to act, if such
act or failure to act was done or omitted in good faith with respect to the
Plan or any Agreement or Award.
ARTICLE IV
ELIGIBILITY
Key employees of the Company or of any Affiliate are eligible to
receive Awards under the Plan. An individual may receive more than one
Award. The Committee shall, in its discretion, select the eligible key
employees and shall base its selection on the employees' job responsibilities
and present and potential contributions to the success of the Company and its
Affiliates.
ARTICLE V
GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards to one or more
eligible employees, provided that (i) subject to any adjustment pursuant to
Article XI, the aggregate number of shares of Common Stock subject to Awards
under the Plan may not exceed four hundred thousand (400,000) shares; (ii) to
the extent that an Award lapses or the rights of the Participant to whom it was
granted terminate, any shares of Common Stock subject to such Award shall again
be available for the grant of an Award under the Plan; and (iii) shares
delivered by the Company under the Plan may be authorized and unissued Common
Stock, Common Stock held in the treasury of the Company, or Common Stock
purchased on the open market (including private purchases) in accordance with
applicable securities laws. In determining the size of Awards, the Committee
shall take into account a Participant's responsibility level, performance,
potential, and cash compensation level, and the Fair Market Value at the time
of the Award, as well as such other considerations as it deems appropriate.
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ARTICLE VI
STOCK OPTIONS
6.01 GRANT OF OPTIONS. One or more Options may be granted to any
eligible employee. Options shall be embodied in an Agreement in a form
approved by the Committee.
6.02 INCENTIVE STOCK OPTIONS/NONQUALIFIED STOCK OPTIONS. The
Agreement may provide for "incentive stock options" that are intended to
satisfy the requirements of Section 422A of the Code, or such other options
that are not intended to satisfy the requirements of Section 422A of the Code
(hereinafter described as "nonqualified stock options"), that entitle the
holder to purchase from the Company a stated number of shares of Common Stock
at the price set forth in the Agreement. Each Option shall be an incentive
stock option or a nonqualified stock option as specified in the Agreement. All
Options that are not identified as incentive stock options in the Agreement are
intended to be nonqualified stock options.
6.03 OPTION PRICE. Except as provided in Section 6.04, the
exercise price per share of an Option shall be an amount not less than 100%
of the Fair Market Value per share of the Common Stock on the date of grant of
such Option (or, in the case of a grant of an incentive stock option to a
prospective employee, the date the grant becomes effective).
6.04 ADDITIONAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS.
The aggregate Fair Market Value (determined at the time any incentive stock
option is granted) of the Common Stock with respect to any Participant's
incentive stock options, together with incentive stock options granted under
any other plan of the Company or any subsidiary (as defined in Code Section 425
(f)), that are exercisable for the first time by such Participant during any
calendar year shall not exceed $100,000. In the event that a Participant holds
incentive stock options that become first exercisable (as a result of
acceleration of exercisability under the Plan or an Agreement, or otherwise) in
any one calendar year for shares having a Fair Market Value at the date of
grant in excess of $100,000, then the most recently granted of such incentive
stock options, to the extent that they are exercisable for shares having an
aggregate Fair Market Value in excess of $100,000, shall be deemed to be
nonqualified stock options.
No incentive stock option may be granted under the Plan to any
person who owns, directly or indirectly, within the meaning of Sections 422A(b)
(6) and 425(d) of the Code, at the time the incentive stock option is granted,
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any subsidiary (as defined in Code Section
425(f)) unless the exercise price is at least 110% of the Fair Market Value of
the shares subject to the incentive stock option, determined on the date of the
grant, and
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the incentive stock option by its terms is not exercisable after the expiration
of five years from the date such incentive stock option is granted.
6.05 OPTION EXERCISE PERIOD. No Option shall be exercisable less
than one year nor more than ten years from the date the Option was granted.
6.06 EMPLOYEE STATUS. In the event that the terms of any Option
provide that it may be exercised only during employment or within a specified
period of time after termination of employment, the Committee may decide in
each case to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be deemed
terminations of employment.
6.07 NONTRANSFERABILITY. Any Option granted under the Plan shall
not be transferable by the Participant except by will or the laws of descent
and distribution and shall be exercisable during the Participant's lifetime
only by the Participant or, in the event of the Participant's mental or
physical incapacity, by his legal representative.
6.08 EXERCISABILITY.
(i) GENERALLY. Subject to the other provisions of the Plan, an
Option may be exercised in whole at any time or in part, from time to time, at
such times and in compliance with such requirements as set forth in the
Agreement. An Option granted under the Plan may be exercised with respect to
any number of whole shares less than the full number for which the Option could
be exercised. Such partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with the Plan with respect
to remaining shares subject to the Option. Upon the exercise of an Option
granted in connection with Stock Appreciation Rights, the Participant shall
surrender unexercised the Stock Appreciation Rights or, if the Option is not
exercised in full, any portion of the Stock Appreciation Rights to which the
exercised portion of the Option is related.
(ii) DEATH, DISABILITY, OR RETIREMENT. In the event of a
Participant's death or disability, Options shall become exercisable either
according to the terms of the Agreement or on a pro-rata basis based upon the
vesting period specified in the Agreement, whichever permits the Participant or
beneficiary to exercise Options for a greater number of shares of Common Stock.
For purposes of this provision, "disability" means a physical or mental
condition which prevents the Participant from engaging in any substantially
gainful activity. In the event of normal retirement or early retirement as
provided under the Company's Employees' Pension Plan, the Committee may
accelerate the exercisability of Options.
6.09 EXERCISE; PAYMENT.
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(i) EXERCISE. Unless provided otherwise in an Agreement, an
Option shall be exercised, in whole or in part, by a written notice delivered
to the Committee, which notice shall contain the provision or authorization
with respect to tax withholding required by Section 14.06(I). The Option shall
be deemed to have been exercised when such notice is received by the Committee.
(ii) PAYMENT. Payment of the Option exercise price shall be made
in cash or a cash equivalent acceptable to the Committee. If the Agreement so
provides, payment of all or part of the Option exercise price may be made in
shares of Common Stock, or through such other arrangements as specified in the
Agreement. If Common Stock is used to pay all or part of the Option exercise
price, the shares surrendered must have a Fair Market Value (determined as of
the day of exercise) that is not less than such price or part thereof.
6.10 SHAREHOLDER RIGHTS. No Participant shall, as a result of
having been granted any Option, have any rights as a shareholder until the
date the Participant becomes a shareholder of record of shares of Common Stock
upon exercise of such Option.
ARTICLE VII
RESTRICTED STOCK
7.01 AWARDS.
(i) INITIAL AWARDS. The initial Awards of Restricted Stock shall
be by action of the Board taken on June 28, 1989, effective July 3, 1989.
(ii) SUBSEQUENT AWARDS. In accordance with the provisions of
Article IV of the Plan, the Committee may designate individuals to whom any
subsequent Awards of Restricted Stock are to be made and shall specify the
number of shares of Common Stock covered by the Awards.
7.02 GRANT; FORFEITURE OF RESTRICTED STOCK.
(i) GRANT. An Award of Restricted Stock shall be granted for no
consideration other than services.
(ii) FORFEITURE OF RESTRICTED STOCK. In the event that a
Participant granted an Award of Restricted Stock shall cease to be an employee
of the Company and all Affiliates for any reason, including but not limited to
an employing Affiliate's ceasing to be such, other than death, disability, or
retirement prior to the lapse of all restrictions applicable to such
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Restricted Stock, the shares of Restricted Stock awarded to the Participant
shall be forfeited to the Company, effective with the effective date of the
Participant's termination of employment. The Committee may decide in each case
to what extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed a termination of
employment.
7.03 RESTRICTION PERIOD.
(i) INITIAL AWARDS. For those initial Awards of Restricted
Stock granted by the Board on June 28, 1989, there shall be a five-year
restriction period during which restrictions shall lapse as follows: 50% after
the third anniversary of the granting of the Award; 25% after the fourth
anniversary of the granting of the Award; and the final 25% after the fifth
anniversary of the granting of the Award.
(ii) SUBSEQUENT AWARDS. The Committee shall establish
restriction periods applicable to any Award made subsequent to the initial
Awards described in Section 7.01 (I).
7.04 DEATH OR DISABILITY; RETIREMENT.
(i) DEATH OR DISABILITY. Restrictions on Restricted Stock shall
lapse on a pro-rata basis in the event of a Participant's death or disability.
On the basis of a five-year restriction period, the restrictions will lapse at
the rate of 2O% for each anniversary of the granting of the Award that has
passed before the occurrence of the Participant's death or disability. For
purposes of this provision, "disability" means a physical or mental condition
which prevents the Participant from engaging in any substantially gainful
activity.
(ii) RETIREMENT. In the event of normal retirement or early
retirement as provided under the Company's Employees' Pension Plan, the
Committee may terminate any remaining restrictions on Restricted Stock.
7.05 SHAREHOLDER RIGHTS. While the shares are Restricted
Stock, a Participant shall have all rights of a shareholder with respect to
such shares, including the right to receive dividends and to vote the shares;
provided, however, that (i) a Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of shares of Restricted Stock and
(ii) the Company shall retain custody of the certificates evidencing shares of
Restricted Stock.
7.06 WITHHOLDING NOTICE. Unless provided otherwise in an
Agreement, at the time at which shares become freely transferable upon the
lapse of restrictions, the Participant shall provide written notice to the
Committee setting forth the provision or authorization with
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respect to tax withholding required by Section 14.06(I).
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.01 GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted under the Plan in connection with an Option either at
the time of grant or by amendment, or may be separately awarded. Stock
Appreciation Rights shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose.
8.02 EXERCISABILITY. Stock Appreciation Rights granted in
connection with an Option shall be exercisable to the extent the Option is
exercisable. Stock Appreciation Rights not granted in connection with an
Option shall be exercisable pursuant to such terms and conditions established
by the Committee in the Award.
8.03 FAILURE TO EXERCISE. If a Participant who has been granted
Stock Appreciation Rights has not exercised such rights as of the day the Stock
Appreciation Rights expire due to passage of time, then such rights shall be
deemed to have been exercised by the Participant on such day. The foregoing
sentence applies only if the Fair Market Value of one share of Common Stock on
such day exceeds the Fair Market Value of one share of Common Stock on the day
the Stock Appreciation Rights were granted.
8.04 EXERCISE; FORM OF PAYMENT.
(i) EXERCISE. Unless otherwise provided otherwise in an
Agreement, Stock Appreciation Rights shall be exercised, in whole or in part,
by a written notice delivered to the Committee, which notice shall contain the
provision or authorization with respect to tax withholding required by Section
14.06(I). The Stock Appreciation Rights shall be deemed to have been exercised
when such notice is received by the Committee.
(ii) FORM OF PAYMENT. Upon the exercise of Stock Appreciation
Rights granted in connection with an Option, the Participant shall surrender
unexercised the Option or, if the Stock Appreciation Rights are not exercised
in full, any portion of the Option to which the Stock Appreciation Rights are
related, and shall be entitled to receive payment (in cash or shares of Common
Stock or a combination thereof as set forth in the Agreement at the time of
grant) equal to the product of the excess of the Fair Market Value of one share
of Common Stock at the date of exercise over the Option price, multiplied by
the number of shares called for by the Stock Appreciation Rights (or portion
thereof) which are so exercised. Upon exercise of Stock Appreciation Rights
not granted in connection with an
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Option, the Participant shall be entitled to payment (in cash or shares of
Common Stock or a combination thereof as set forth in the Agreement at the time
of grant) equal to the product of the excess of the Fair Market Value of one
share of Common Stock at the date of exercise over the Fair Market Value of one
share of Common Stock at the date of grant of the Stock Appreciation Rights,
multiplied by the number of shares called for by the Stock Appreciation Rights
(or portion thereof) which are so exercised. The value of any Common Stock
payable upon exercise of Stock Appreciation Rights shall be the Fair Market
Value of the Common Stock on the day on which the Stock Appreciation Rights are
exercised. Solely for purposes of Article V of the Plan, to the extent that
Stock Appreciation Rights granted in connection with an Option are exercised,
such Option shall be deemed to have been exercised, and shall not be deemed to
have lapsed.
8.05 NONTRANSFERABILITY. Stock Appreciation Rights granted under
the Plan shall not be transferable by the Participant except by will or the
laws of descent and distribution and shall be exercisable during the
Participant's lifetime only by the Participant or, in the event of the
Participant's mental or physical incapacity, by his legal representative.
8.06 LAPSE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights granted in connection with an Option shall lapse in accordance with the
same terms and conditions specified in the underlying Option. Stock
Appreciation Rights not granted in connection with an Option shall lapse in
accordance with the terms and conditions specified by the Committee in the
Award.
8.07 SHAREHOLDER RIGHTS. No Participant shall, as a result of
having been granted Stock Appreciation Rights, have any rights as a shareholder
until the date the Participant becomes a shareholder of record of shares of
Common Stock upon exercise of the Stock Appreciation Rights if shares of Common
Stock are issued to such Participant as a result of such exercise.
ARTICLE IX
PERFORMANCE SHARES
9.01 GRANT OF PERFORMANCE SHARES. Awards made pursuant to
this Article IX shall be granted in the form of bookkeeping entries called
Performance Shares, subject to such terms and conditions not inconsistent with
the Plan as the Committee shall impose. Each Performance Share Award shall
define performance related objectives which shall be specified by the Committee
in the Agreement for the Award. The Agreement shall specify the extent to
which satisfaction of such specified objectives will entitle the Participant to
receive shares of Common Stock of the Company or cash at the end of the
performance period.
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9.02 PERFORMANCE PERIOD. The measuring period to establish the
performance objectives set forth in a Performance Share Agreement shall be no
less than three years.
9.03 FORM OF PAYMENT. Upon the completion of the applicable
performance period, a determination shall be made as to the number of shares of
Common Stock or cash equal to the share value to be paid to the Participant for
no consideration other than services. Unless provided otherwise in an
Agreement, at the time of payment under the Performance Share Award the
Participant shall provide written notice to the Committee setting forth the
provision or authorization with respect to tax withholding required by Section
14.06(I).
9.04 SHAREHOLDER RIGHTS. No Participant shall, as a result of
having been awarded Performance Shares, have any rights as a shareholder until
the date the Participant becomes a shareholder of record of shares of Common
Stock upon payment of the Performance Shares if shares of Common Stock are
issued to such Participant as a result of such payment.
ARTICLE X
DIVIDEND UNITS
The Committee may grant Dividend Units equal to a specified number of
shares of Common Stock on which Participants will receive cash payments equal
to the dividends paid on the underlying number of shares when, as, and if paid.
An Award of Dividend Units shall entitle the Participant to payment of an
amount of cash equal to such cash dividends only and not to any right to the
actual dividends on the underlying shares or to the underlying shares
themselves. Such Awards of Dividend Units may be combined with other Awards.
Payments in respect of Dividend Units will be made at dividend payment dates
and not accumulated.
ARTICLE XI
ADJUSTMENT UPON CHANGE IN CAPITALIZATION
Should the Company effect one or more Common Stock dividends, stock
split-ups, subdivisions, or consolidations of shares or other changes in
capitalization, then the maximum number of shares that may be subject to Awards
under the Plan shall be proportionately adjusted, and the terms of outstanding
Awards shall be adjusted, as the Committee in its discretion shall determine to
be equitably required.
The issuance by the Company of shares of Common Stock of any class, or
securities
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convertible into shares of Common Stock of any class, for cash or property or
for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares that may be subject to Awards under the Plan or to the
terms of outstanding Awards.
ARTICLE XII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES; LEGENDS
No Option or Stock Appreciation Rights shall be exercisable, no
Common Stock shall be issued, no certificates for shares of Common Stock shall
be delivered, and no payment shall be made under the Plan except in compliance
with all applicable federal and state laws and regulations (including, without
limitation, tax withholding requirements) and the rules of all stock exchanges
on which the Common Stock may be listed. The Company shall have the right to
rely on an opinion of its counsel as to such compliance. No Option or Stock
Appreciation Rights shall be exercisable, no Common Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall be made under
the Plan until the Company has obtained such consent or approval as the Company
may deem advisable from regulatory bodies having jurisdiction over such
matters. Any share certificate issued to evidence Common Stock or Restricted
Stock may bear such legends and statements as the Company may deem advisable to
assure compliance with the Plan and all federal and state laws and regulations.
ARTICLE XIII
ACCELERATION OF AWARDS; CHANGE OF CONTROL
13.01 ACCELERATION OF AWARDS. Any other provision to the contrary
in the Plan or any Award or Agreement notwithstanding, in the event that an
Award pursuant to the terms of its grant is not immediately exercisable, is
subject to restrictions, or is subject to the meeting of specified performance
objectives, the Award may initially provide, or the Committee may at any time
amend it to provide, for accelerated exercisability, termination of
restrictions, or waiver or modification of performance objectives, subject to
such terms and conditions and upon the occurrence of such events determined by
the Committee in its sole discretion to justify such acceleration.
13.02 CHANGE OF CONTROL - ACCELERATION; AUTOMATIC VESTING OF AWARDS.
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(i) ACCELERATION. Subject to the limitations in Section 13.03,
any other provision to the contrary in the Plan or any Award or Agreement
notwithstanding, all Options and Stock Appreciation Rights shall automatically
become fully exercisable, all restrictions applicable to Restricted Stock shall
automatically terminate and all performance objectives in Performance Share
Awards shall be waived upon the occurrence of any one or more of the triggering
events specified below:
(a) The acquisition by any 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") (a "Person") 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 of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv)
any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 13.02; or
(b) Individuals who, as of December 18, 1996, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a Director
subsequent to December 18, 1996 whose election, or 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 occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company
(a "Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially owned, directly or indirectly, more than 50%
of, respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally
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in the election of the directors, as the case may be, of the Corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Companies assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Persons (excluding any Corporations resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such Corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the Corporation resulting from such Business
Combination, or the Combined Voting Power of the then-outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the business Combination and (iii) at least a majority of the members
of the Board of Directors of the Corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(ii) VESTING OF AWARDS. Except as provided below, upon the
occurrence of any of the triggering events described in Section 13.02 (i)
above, all outstanding Awards shall automatically vest and be surrendered, and
the Participants shall receive in full satisfaction therefor, distribution in
the form of shares of Common Stock.
13.03 CERTAIN REDUCTION OF PAYMENTS. Anything in this Plan to
the contrary notwithstanding, in the event the Company determines that
any payment by it to a Participant (whether paid pursuant to the terms of this
Plan or otherwise) would be nondeductible by the Company for federal income tax
purposes because of Section 28OG of the Code, then any amounts payable to a
Participant pursuant to this Plan shall be reduced automatically to an amount
that maximizes the payments under the Plan without causing any payments to be
nondeductible by the Company because of Section 28OG of the Code.
ARTICLE XIV
GENERAL PROVISIONS
14.01 EFFECT ON EMPLOYMENT. Neither the adoption of the Plan,
nor the receipt of any Award under the Plan, nor any documents under the
Plan (or any part thereof), including but not limited to any Agreement, shall
confer upon any employee any right to continue in
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the employ of the Company or any Affiliate, or in any way affect any right and
power of the Company or any Affiliate to terminate the employment of any
employee at any time with or without assigning a reason therefor.
14.02 UNFUNDED PLAN. The Plan shall be unfunded, and neither the
Company nor any Affiliate shall be required to segregate any assets that may at
any time be represented by Awards under the Plan. Any liability of the Company
or any Affiliate to any person with respect to any Award under the Plan shall
be based solely upon contractual obligations created pursuant to the Plan. No
such obligation of the Company or any Affiliate shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Company or any
Affiliate.
14.03 RULES OF CONSTRUCTION. Headings are given to the articles
and sections of the Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
14.04 FRACTIONAL SHARES. Any fractional shares concerning
Awards shall be eliminated by rounding down for fractions less than one-half
and rounding up for fractions equal to or more than one-half. No cash
settlements shall be made with respect to fractional shares eliminated by
rounding.
14.05 NONALIENATION. No benefit provided under the Plan
shall be subject to alienation or assignment by a Participant (or by any person
entitled to such benefit pursuant to the terms of the Plan), nor shall it be
subject to attachment or other legal process of whatever nature. Any attempted
alienation, assignment, or attachment shall be void and of no effect
whatsoever. Payment shall be made only to the Participant entitled to receive
the same or the Participant's authorized legal representative. Deposit of any
sum in any financial institution to the credit of any Participant (or a person
entitled to such sum pursuant to the terms of the Plan) shall constitute
payment to that Participant (or such person).
14.06 TAX WITHHOLDING.
(i) GENERALLY. Either the Company or an Affiliate, as
appropriate, shall have the right to deduct from all Awards paid in cash any
federal, state, or local taxes as it deems to be required by law to be withheld
with respect to such cash payments. In the case of Awards paid in shares of
Common Stock, the Participant receiving such Common Stock may be required to
pay to the Company or an Affiliate, as appropriate, the amount of any such
taxes which the Company or Affiliate is required to withhold with respect to
such Common Stock. At the request of a Participant, or as required by law,
such sums as may be required for the payment of any estimated or accrued income
tax liability may be withheld or paid to the
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Company or an Affiliate, as appropriate, and paid over to the governmental
entity entitled to receive the same.
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(ii) CASHLESS WITHHOLDING. Participants may elect (an "Election")
to have withheld shares of Common Stock (A) to be issued pursuant to the
exercise of an Option or Stock Appreciation Rights, (B) which have become
freely transferable pursuant to the termination of restrictions on Restricted
Stock, or (C) which are issued pursuant to a Performance Share Award, or the
Participant may make an Election to surrender to the Company shares already
owned by the Participant (which may be shares of Common Stock previously
received pursuant to an Award), which shall be sufficient in value to satisfy
applicable tax withholding obligations, or such other withholding arrangements
requested by the Participant or otherwise required as specified above, in
connection with shares received pursuant to an Award. For purposes of such
withholding or surrender, the shares withheld or surrendered shall be valued at
their Fair Market Value on the date as of which the Participant first becomes
subject to taxation for federal income tax purposes in respect of shares of
Common Stock received upon exercise of the Option or Stock Appreciation Rights,
which have become freely transferable upon the termination of restrictions on
Restricted Stock, or which are issued under a Performance Share Award,
whichever is applicable (the "Tax Date"). If the Fair Market Value on the Tax
Date of the number of whole shares of Common Stock withheld or surrendered
pursuant to an Election exceeds the withholding or other applicable tax
obligations, a fractional share shall not be issued or returned for the excess,
but an amount equal to the excess shall be paid to the Participant by the
Company in cash as soon as reasonably practicable after the amount of such
excess is determined by the Company. An Election may be made by a Participant
with respect to all or part of a particular Option or Stock Appreciation Rights
exercise, termination of restrictions on Restricted Stock, or issuance of
shares under a Performance Share Award, to all or a specified class of
previously granted Options, Stock Appreciation Rights, Restricted Stock, or
Performance Share Awards, and/or to all or a specified class of Options, Stock
Appreciation Rights, Restricted Stock, or Performance Share Awards which may be
granted in the future. The Election shall specify whether the Participant
elects to have withheld shares issued pursuant to the Award to which the
Election relates, or to surrender already-owned shares of Common Stock. If the
Participant elects to surrender already-owned shares of Common Stock, the
Election shall be accompanied by certificates, with accompanying stock powers
signed in blank, for a sufficient number of such shares of Common Stock.
An Election by a Participant shall be made prior to the applicable
Tax Date and also shall meet each of the following additional requirements:
(1) The Election, once made, shall be irrevocable;
(2) The Election must be made either (a) during
one of the ten business-day periods beginning on the third
business day following the date of release of the
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Company's quarterly or annual summary statements of sales and
earnings and ending on the twelfth business day following such
date; or (b) at least six months prior to the Tax Date for the
Award to which the Election applies;
(3) No Election may be made with respect to any
Award during the first six months after the grant of the
Award, with respect to any Option or Stock Appreciation Rights
which have been exercised during the first six months after
their date of grant, or with respect to any Restricted Stock
for which restrictions have terminated, or any Performance
Share Awards for which shares have been issued, during the
first six months after the date of grant, and, if any Option
or Stock Appreciation Rights with respect to which an Election
is already in effect shall be exercised during the first six
months after the date of grant, or if any Common Stock is
received upon the termination of restrictions on Restricted
Stock or issued pursuant to a Performance Share Award with
respect to which an Election is already in effect during the
first six months after the date of grant of such Award, such
Election shall to the extent of such exercise, termination, or
issuance be deemed void, except that such limitations shall
not apply if such Participant dies or is disabled prior to the
expiration of such six-month period;
(4) No Election shall be made with respect to
shares of Common Stock issued pursuant to an Award if the
Participant has previously filed an election under Section 83
(b) of the Code in connection with such Award or in connection
with the receipt of shares under such Award; and
(5) The Committee shall have sole discretion to
consent or disapprove any Election made by a Participant, and
if the Committee disapproves such an Election, shares shall
not be issued to the Participant upon the exercise of an
Option or Stock Appreciation Rights, become freely
transferable pursuant to the termination of restrictions on
Restricted Stock, or be issued pursuant to a Performance Share
Award to which the disapproved Election applies until the
Participant shall have complied with Section 14.06(i) for
satisfying tax withholding obligations. The Committee by
resolution may approve in advance specified classes of
Elections whether by a given Participant or category of
Awards, or by type of Election; provided, however, that any
such resolution must expressly reserve to the Committee the
right both to disapprove any such Election and to revoke or
modify its advance approval of any such class of Elections.
14.07 GOVERNMENT AND OTHER REGULATIONS. The obligation of
the Company to make payment of Awards in Common Stock or otherwise shall be
subject to all applicable laws, miss, and regulations, and to such approvals by
any government agencies as may be required. The Company shall be under no
obligation to register under the Securities Act of 1933, as
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amended, or under any state securities or Blue Sky laws any of the shares of
Common Stock issued, delivered, or paid in settlement under the Plan. If
Common Stock awarded under the Plan may in certain circumstances be exempt from
such registration, the Company may restrict its transfer in such manner as it
deems advisable to ensure such exempt status.
14.08 RELIANCE ON REPORTS. Each member of the Committee shall be
fully justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company and upon any other information
furnished in connection with the Plan. In no event shall any person who is or
shall have been a member of the Committee be liable for any determination made,
any other action taken, or any omission to act in reliance upon any such report
or information.
14.09 COMPANY SUCCESSORS. In the event the Company becomes
a party to a merger, consolidation, sale of substantially all of its assets, or
any other corporate reorganization in which the Company will not be the
surviving corporation or in which the holders of the Common Stock will receive
securities of another corporation (in any such case, the "New Company"), then
the New Company shall assume the rights and obligations of the Company under
the Plan.
14.10 GOVERNING LAW. All matters relating to the Plan, any
Awards, or any Agreements, shall be governed by the laws of the District of
Columbia, without regard to the principles of conflict of laws.
14.11 RELATIONSHIP TO OTHER BENEFITS. No payment under the
Plan shall be taken into account in determining any benefits under any other
pension, retirement, profit-sharing, or other employee benefit plan of the
Company or any Affiliate.
14.12 EXPENSES. The expenses of administering the Plan shall be
borne by the Company.
14.13 PROCEEDS. Any cash proceeds received by the Company
under the Plan shall be used for general corporate purposes, and any shares of
Common Stock withheld by or paid to the Company under the Plan shall be held by
the Company as treasury stock or shall be canceled, as the Company in its
discretion shall determine.
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ARTICLE XV
AMENDMENT
The Board may amend the Plan from time to time. No amendment may
become effective until shareholder approval is obtained if such approval is
required by any federal or state law or regulation or the rates of any stock
exchange on which the Common Stock may be listed, or if the Board in its
discretion determines that the obtaining of such shareholder approval is for
any reason advisable. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any Award outstanding at
the time such amendment is made.
ARTICLE XVI
EFFECTIVE DATE; DURATION OF THE PLAN
The effective date of the Plan is June 28, 1989, subject to
shareholder approval. Unless sooner terminated by the Board, the Plan shall
terminate on June 27, 1999; provided, however, that any Award outstanding at
the time of such termination shall continue in full force and effect and shall
continue to be governed by the Plan and its applicable Agreement until the
Award expires or is discharged by its terms.
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