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EXHIBIT 4.3
1991 LONG-TERM INCENTIVE PERFORMANCE PLAN OF
EMPLOYEE BENEFIT PLANS, INC.
1. PURPOSE
The purpose of the 1991 Long-Term Incentive Performance Plan ("Plan") of
Employee Benefit Plans, Inc. ("Company") is to amend and restate the Employee
Benefit Plans, Inc. 1991 Stock Option Plan and to provide a means through which
the Company and its Subsidiaries may attract able persons to enter and remain
in the employ of the Company and to provide a means whereby those employees and
other persons whose present and potential contributions to the welfare of the
Company are of importance, can acquire and maintain equity ownership, thereby
strengthening their commitment to the welfare of the Company and promoting an
identity of interest between stockholders and these individuals.
A further purpose of the Plan is to provide such key employees with
additional incentive and reward opportunities designed to enhance the
profitable growth of the Company. So that the appropriate incentive can be
provided, the Plan provides for granting Incentive Stock options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom
Stock Unit Awards, Cash Incentive Awards and Performance Share Units, or any
combination of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
"Appreciation Date" means the date designated by a Holder of Stock
Appreciation Rights for measurement of the appreciation in the value of rights
awarded to him, which date shall be the date notice of such designation is
received by the Committee, or its designee.
"Award" means, individually or collectively, any Incentive Stock Option,
Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock Award,
Phantom Stock Unit Award, Cash Incentive Award or Performance Share Unit Award.
"Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
"Board" means the Board of Directors of the Company.
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"Change in-Control" shall, unless the Board otherwise directs by
resolution adopted prior thereto, be deemed to occur if (i) any "person" (as
that term is used in Sections 13 and 14(d)(2) of the Securities Exchange Act of
1934 as amended ("Exchange Act")) is or becomes the beneficial owner (as that
term is used in Section 13(d) of the Exchange Act), directly or indirectly, of
50% or more of the voting stock ("Voting Stock") or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at least
three-quarters of the directors then still in office who were directors at the
beginning of the period. Any merger, consolidation or corporate reorganization
in which the owners of the Company's capital stock entitled to vote in the
election of directors prior to said combination, own 50% or more of the
resulting entity's Voting Stock shall not, by itself, be considered a change in
control for the purposes of this Plan.
"Code" means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
"Committee" means the Compensation Committee of the Board of Directors or
such other committee as the Board may appoint to administer the Plan.
"Common Stock" means the common stock par value $.01 per share, of the
Company.
"Company" means Employee Benefit Plans, Inc.
"Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
"Disability" means the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced or, if the Participant
was retired when such disability commenced, the inability to engage in any
substantial gainful activity, as determined by the Committee based upon medical
evidence acceptable to it.
"Disinterested Person" means a person who is a "disinterested person"
within the meaning of Rule 16b-3 of the Exchange Act, or any successor rule or
regulation.
"Eligible Person" means any officer, director, employee or other person
or entity designated by the Company or a Subsidiary who satisfies all of the
requirements of Section 6.
"Fair Market Value" on a given date means (a) the average between the
high and low reported sale prices for the Stock on that date (or, if there were
no such sales on that date, on the next most recent date on which there were
such sales) as reported on the Composite
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Tape if the Stock is listed on the New York Stock Exchange ("NYSE") or on the
National Association of Securities Dealers National Market System ("NMS") or
(b) if the Stock is not then listed on the NYSE or the NMS, the average between
the closing bid and asked price quotations for the Stock on that date (or if
none on that date, on the next most recent date) as reported by the National
Association of Securities Dealers Automatic Quotation System or any successor
thereto.
"Holder" means a Participant who has been granted an Option, a Stock
Appreciation Right, a Restricted Stock Award, Phantom Stock Unit Award, Cash
Incentive Award or a Performance Share Unit Award.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.
"Nonqualified Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.
"Normal Termination" means termination:
(i) At retirement pursuant to the Company retirement plan then in
effect;
(ii) On account of Disability; or
(iii) With the written approval of the Committee.
"Option" means an Award granted under Section 7 of the Plan.
"Participant" means an Eligible Person who has been selected to
participate in the Plan and to receive an Award pursuant to Section 6.
"Performance Goals" means the performance objectives of the Company
during an Award Period established for the purpose of determining whether, and
to what extent, Awards will be earned for an Award Period.
"Performance Share Unit" means a hypothetical investment equivalent equal
to one share of Stock granted in connection with an Award made under Section 9
of the Plan.
"Phantom Stock Unit" means a hypothetical investment equivalent equal to
one share of Stock granted in connection with an Award made under Section 10 of
the Plan.
"Plan" means the 1991 Long-Term Incentive Performance Plan of Employee
Benefit Plans, Inc.
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"Restricted Period" means, with respect to any share of Restricted Stock,
the period of time determined by the Committee during which such share of
Restricted Stock is subject to the restrictions set forth in Section 10.
"Restricted Stock" means shares of Common Stock issued or transferred to
a Participant subject to the restrictions set forth in Section 10 and any new,
additional or different securities a Participant may become entitled to receive
as a result of adjustments made pursuant to Section 12.
"Restricted Stock Award" means an Award granted under Section 10 of the
Plan.
"Stock" means the voting Common Stock of the Company.
"Stock Appreciation Right" or "SAR" means an Award granted under Section
8 of the Plan.
"Subsidiary" means any corporation of which a majority of the outstanding
voting stock or voting power is beneficially owned directly or indirectly by
the Company.
"Valuation Date" means the last day of an Award Period or the date of
death of a Participant, as applicable.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
Subject to the approval of this Plan by the shareholders of the Company
at a duly convened meeting of shareholders, the Nonqualified Stock Option
provisions became effective December 13, 1990 and other Awards may be granted
under the Plan effective August __, 1991 and thereafter, and no further Awards
may be made after December 13, 2000.
The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. Each member of the Committee
shall, at the time he takes any action with respect to the timing, pricing
amount of or form of payment of an Award under the Plan to an officer or
director of the Company, be a Disinterested Person. Two members of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
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(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to
each Participant;
(c) Determine the time or times when Awards will be made;
(d) Determine the duration of each Award Period;
(e) Determine the conditions to which the payment of Awards may
be subject;
(f) Establish the Performance Goals for each Award Period;
(g) Prescribe the form or forms evidencing Awards; and
(h) Cause records to be established in which shall be entered,
from time to time as Awards are made to Participants, the date of each
Award, the number of Incentive Stock Options, Nonqualified Stock Options,
SARs, Phantom Stock Units, Performance Share Units, Cash Incentive Awards
and shares of Restricted Stock awarded by the Committee to each
Participant, the expiration date, the Award Period and the duration of
any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any Awards granted pursuant thereto and all decisions and determinations by
the Committee with respect to the Plan shall be final, binding, and conclusive
on all parties unless otherwise determined by the Board.
5. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK AWARDS,
PHANTOM STOCK AWARDS AND PERFORMANCE SHARE UNITS: SHARES SUBJECT TO THE
PLAN
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units and/or Performance
Share Units to one or more Participants; provided however that:
(a) Subject to Section 13, the aggregate number of shares of
Stock made subject to Awards may be up to, but may not equal or exceed,
at the time of grant of an Award ten percent (10%) of the then issued and
outstanding shares of stock before giving effect to such Award; provided
however the aggregate number of shares of Stock available for issuance
pursuant to Incentive Stock Option Awards under this Plan shall not
exceed 350,000.
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(b) Such shares shall be deemed to have been used in payment of
Awards whether they are actually delivered or the Fair Market Value
equivalent of such shares is paid in cash. In the event any Option, SAR
not attached to an Option, Restricted Stock, Phantom Stock Unit or
Performance Share Unit, shall be surrendered, terminate, expire, or be
forfeited, the number of shares of Stock no longer subject thereto shall
thereupon be released and shall thereafter be available for new Awards
under the Plan; and
(c) Stock delivered by the Company in settlement of Awards under
the Plan may be authorized and unissued Stock or Stock held in the
treasury of the Company or may be purchased on the open market or by
private purchase at prices no higher than the Fair Market Value at the
time of purchase.
6. ELIGIBILITY
Participants shall be limited to Eligible Person who have received
written notification from the Committee or from a person designated by the
Committee, that they have been selected to participate in the Plan. Only
employees of the Company and its subsidiaries are eligible to receive grants of
Incentive Stock Options.
7. STOCK OPTIONS
One or more Options can be granted to any Participant. As determined by
the Committee, they may be Incentive Stock Options or Nonqualified Stock
Options. Each Option so granted shall be subject to the following conditions.
(a) Option Price. For Incentive Stock Options, the Option price
("Option Price") per share of Stock shall be set by the grant but shall not be
less than Fair Market Value at the Date of Grant. For Nonqualified Stock
Options, the Option Price may be less than Fair Market Value at the Date of
Grant.
(b) Manner of exercise and form of payment. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall
be payable 1) by Holder in cash at the time of exercise, 2) by Holder in shares
of Stock valued at the Fair Market Value at the time the Option is exercised,
3) a combination of 1) and 2), or 4) through a registered brokerage firm
promptly after sale of a portion of the shares being purchased ("cashless
exercise").
(c) Other terms and conditions. If the Holder has not died or if a
Normal Termination has not occurred, the Option shall become exercisable in
such manner and within such period or periods ("Option Period"), not to exceed
10 years from its Date of Grant, as set forth in the Stock Option Agreement to
be entered into in connection therewith.
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(i) Each Option shall lapse in the following situations:
-Ten years after it is granted;
-Three months after Normal Termination, except as otherwise
provided by the Committee; or
-Any earlier time set forth in the Stock Option Agreement.
(ii) If the Holder's terminated employment is otherwise than by
Normal Termination or death, the Option shall lapse at the time of
termination.
(iii) If the Holder dies within the Option Period or within 1 year
after Normal Termination (or such other period as may have been
established by the Committee), the Option shall lapse unless it is
exercised within the Option Period and in no event later than 15
months after the date of Holder's death by the Holder's legal
representative or representatives or by the person or persons
entitled to do so under the Holder's last will and testament or, if
the Holder shall fail to make testamentary disposition of such
Option or shall die intestate, by the person entitled to receive
said Option under the applicable laws of descent and distribution.
(d) Stock Option Agreement. Each Option granted under the Plan shall
be evidenced by a "Stock Option Agreement" between the Company and the Holder
of the Option containing such provisions as may be determined by the Committee,
but shall be subject to the following terms and conditions.
(i) Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof, except as
otherwise determined by the terms of the Stock Option Agreement.
(ii) Each share of Stock purchased through the exercise of an
Option shall be paid for in full at the time of the exercise in the
manner set forth in (b) above. Each Option shall cease to be
exercisable, as to any share of Stock, when the Holder purchases the
share or exercises a related SAR or when the Option lapses.
(iii) Options shall not be transferable by the Holder except by
will or the laws of descent and distribution and shall be exercisable
during the Holder's lifetime only by him.
(iv) Each Option shall become exercisable by the Holder in
accordance with the vesting schedule established by the Committee for the
Award.
(v) Each Stock Option Agreement may contain an agreement that,
upon demand by the Committee for such a representation, the Holder shall
deliver to the
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Committee at the time of any exercise of an Option a written
representation that the shares to be acquired upon such exercise are to
be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
prior to the delivery of any shares issued upon exercise of an Option
shall be a condition precedent to the right of the Holder or such other
person to purchase any shares. In the event certificates for Stock are
delivered under the Plan with respect to which such investment
representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference
to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.
(e) Grants to 10% holders of Company voting stock. Notwithstanding
Section 7(a), if an Incentive Stock Option is granted to a Holder who owns
stock representing more than ten percent of the voting power of all classes of
stock of the Company or of the Company and its Subsidiaries, the period
specified in the Stock Option Agreement for which the Option thereunder is
granted and at the end of which such Option shall expire shall not exceed five
years from the Date of Grant of such Option and the Option Price shall be at
least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock
subject to the Option.
(f) Limitation. The aggregate Fair Market Value (as determined as of
the Date of Grant) of Stock for which Incentive Stock Options are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and its Subsidiaries) shall not exceed $100,000. Any options
becoming exercisable for the first time in any calendar year in excess of the
$100,000 limit shall be treated as Nonqualified Stock Options. Options shall
be taken into account toward the $100,000 award limit in the order granted.
(g) Voluntary Surrender. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option and its
corresponding SAR, if any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
shares as the Option surrendered or require such voluntary surrender as a
condition precedent to a grant of a new Option to such Participant. Such new
Option shall be exercisable at the Option Price, during the exercise period,
and in accordance with any other terms or conditions specified by the Committee
at the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, exercise period, or
any other terms and conditions of the Nonqualified Stock Option surrendered.
(h) Order of exercise. Options granted under the Plan may be exercised
in any order, regardless of the Date of Grant or the existence of any other
outstanding Option.
(i) Notice of disposition. Participants shall give prompt notice to
the Company of any disposition of Stock acquired upon exercise of an Incentive
Stock Option if such disposition occurs within either two years after the Date
of Grant of such Option and/or one year after the receipt of such Stock by the
Holder.
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8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include a SAR, either at the time
of grant or by amendment except that in the case of an Incentive Stock Option,
such SAR shall be granted only at the time of grant of the related Option. The
Committee may also award to Participants SARs independent of any Option. A SAR
shall be subject to such terms and conditions not inconsistent with the Plan as
the Committee shall impose, including, but not limited to, the following:
(a) Vesting. A SAR granted in connection with an Option shall become
exercisable, be transferable and shall lapse according to the same vesting
schedule, transferability and lapse rules that are established for the Option.
A SAR granted independent of an Option shall become exercisable, be
transferable and shall lapse in accordance with a vesting schedule,
transferability and lapse rules established by the Committee.
(b) Failure to exercise. If on the last day of the Option Period (or
in the case of a SAR independent of an Option, the SAR period established by
the Committee) the Fair Market Value of the Stock exceeds the Option Price, the
Holder has not exercised the Option or SAR, and neither the Option nor the SAR
has lapsed, such right shall be deemed to have been exercised by the Holder on
such last day and the Company shall make the appropriate payment therefor.
(c) Payment. The amount of additional compensation which may be
received pursuant to the award of one SAR is the excess, if any, of the Fair
Market Value of one share of Stock on the Appreciation Date over the Option
Price, in the case of a SAR granted in connection with an Option, or the Fair
Market Value of one share of Stock on the Date of Grant, in the case of a SAR
granted independent of an Option. Unless a different form of payment is
provided under the Award, the Company shall issue or transfer to the
Participant shares of Stock with a Fair Market Value at such time equal to 100
percent of any such excess. Fractional shares shall be settled in cash. If
the Award allows for an election by the Participant to receive cash in full or
partial settlement for any SAR, for Participants subject to Section 16(b) of
the Exchange Act, such election must be made in compliance with Rule 16b-3
under the Exchange Act.
(d) Designation of Appreciation Date. A Participant may designate an
Appreciation Date at such time or times as may be determined by the Committee
at the time of grant by filing an irrevocable written notice with the Committee
or its designee, specifying the number of SARs to which the Appreciation Date
relates, and the date on which such SARs were awarded.
(e) Expiration. Except as otherwise provided in the case of SARs
granted in connection with Options, the SARs shall expire on a date designated
by the Committee which is not later than ten years after the date on which the
SAR was awarded.
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9. PERFORMANCE SHARE UNITS
(a) Award grants. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods of not less than 1
year nor more than 10 years. At the beginning of each Award Period, the
Committee will establish Performance Goals based upon financial objectives for
the Company for such Award Period and a schedule relating the accomplishment of
the Performance Goals to the Awards to be earned by Participants. Performance
Goals may include absolute or relative growth in earnings per share or rate of
return on stockholders' equity or other measurement of corporate performance
and may be determined on an individual basis or by categories of Participants
by the Committee as its discretion. The Committee may adjust Performance Goals
or performance measurement standards as it deems equitable in recognition of
extraordinary or non-recurring events experienced during an Award Period by the
Company or by any other corporation whose performance is relevant to the
determination of whether Performance Goals have been attained. The Committee
shall determine the number of Performance Share Units to be awarded, if any, to
each Participant who is selected to receive an Award. The Committee may add
new Participants to a Performance Share program after its commencement by
making pro rata grants.
(b) Determination of Award. At the completion of a Performance Share
program, or at other times as specified by the Committee, the Committee shall
calculate the amount earned with respect to each Participant's Award by
multiplying the Fair Market Value on the Valuation Date by the number of
Performance Share Units granted to the Participant and multiplying the amount
so determined by a performance factor representing the degree of attainment of
the Performance Goals.
(c) Partial Awards. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) Payment of Non-deferred Awards. Unless otherwise provided in the
letter or form evidencing the Award or unless deferred pursuant to Section
9(e), the amount earned with respect to an Award shall be payable 100% in
shares of Stock based on the Stock's Fair Market Value on the Valuation Date;
provided, however, that, at its discretion, the Committee may vary such form of
payment as to any Participant upon the specific request of such Participant.
The amount of any payment made in cash shall be based upon the Fair Market
Value of the Performance Share Units. Except as provided in subparagraph 9(e),
payments of Awards shall be made as soon as practicable after the completion of
an Award Period.
(e) Deferral of Payment. A Participant may file a written election
with the Committee to defer the payment of any amount otherwise payable
pursuant to subparagraph 9(d) on account of an Award to a period commencing at
such future date, as specified in the election. Such election must be filed
with the Committee no later than the last day of
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the first month of the Award Period during which the Award is earned, unless
the Committee specifies later filing date.
(f) Separate Accounts. At the conclusion of each Award Period, the
Committee shall cause a separate account to be maintained in the name of each
Participant with respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All deferred amounts
credited to such account shall be fully vested at all times.
(g) Election of Form of Investment. Within 60 days from the end of
each Award Period, and at such time or times, if any, as the Committee may
permit, a Participant may file a written election with the Committee of the
percentage of the deferred portion of any Award of Performance Share Units
which is to be credited with interest and the percentage of such Award which is
to be maintained as with Performance Share Units. In the event a Participant
fails to file an election within the time prescribed, one hundred percent
(100%) of the deferred portion of such Participant's Award shall be maintained
as Units.
(h) Interest Portion. The amount of interest credited with respect to
the portion of an Award credited to the Participant's account which is deferred
and credited with interest (the "Interest Portion") shall be equal to the
amount such portion would have earned had it been credited with interest from
the last day of the Award Period with respect to which the Award was made until
the seventh business day preceding the date as of which payment is made,
compounded annually, at the Company's average borrowing rate for each fiscal
year that payment is deferred, or at such other rate as the Committee may from
time to time determine.
(i) Dividend Equivalents. Within thirty (30) days from the payment of
a dividend by the Company on its Stock, the Performance Share Unit Portion of
each Participant's account shall be credited with additional Performance Share
Units the number of which shall be determined by (i) multiplying the dividend
per share paid on the Company's Stock by the number of Performance Share Units
credited to his account at the time such dividend was declared, then (ii)
dividing such amount by the Fair Market Value on the payment date for such
dividend.
(j) Payment of Deferred Awards. Payment with respect to amounts
credited to the account of a Participant shall be made in a series of
installments over a period not to exceed ten (10) years as provided in the
deferral election or the letter or form evidencing the Award. Except as
otherwise provided by the Committee, each installment shall be withdrawn
proportionately from the Interest Portion and from the Performance Share Unit
Portion of a Participant's account based on the percentage of the Participant's
account which he originally elected to be credited with interest and with
Performance Share Units, or, if a later election has been permitted by the
Committee and is then in effect, based on the percentage specified in such
later election. Payments shall commence on the date specified by the
Participant in his deferral election, unless the Committee in its sole
discretion determines that payment shall be made over a shorter period or in
more frequent
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installments, or commence on an earlier date, or any or all of the above. If a
Participant dies prior to the date on which payment with respect to all amounts
credited to his account shall have been completed, payment with respect to such
amounts shall be made to the participant's beneficiary in a series of annual
installments over a period of five (5) years, unless the Committee in its sole
discretion determines that payment shall be made over a shorter period or in
more frequent installments, or both. To the extent practicable, each
installment payable hereunder shall approximate that part of the amount then
credited to the Participant's or beneficiary's account which, if multiplied by
the number of installments remaining to be paid would be equal to the entire
amount then credited to the Participant's account.
(k) Composition of Payment. Notwithstanding subparagraph (j), the
Committee shall cause all payments with respect to deferred Awards to be made
in a manner described in the letter or form authorizing the Award as the
Committee shall determine in its sole discretion.
(l) Adjustment of Performance Goals. The Committee may, during the
Award Period, make such adjustments to Performance Goals as it may deem
appropriate, to compensate for, or reflect, any significant changes that may
have occurred during such Award Period in (i) applicable accounting rules or
principles or changes in the Company's method of accounting or in that of any
other corporation whose performance is relevant to the determination of whether
an Award has been earned or (ii) tax laws or other laws or regulations that
alter or affect the computation of the measures of Performance Goals used for
the calculation of Awards.
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) Award of Restricted Stock and Phantom Stock Units.
(i) The Committee shall have the authority (1) to directly grant
Restricted Stock and Phantom Stock Units Awards, (2) to issue or transfer
Restricted Stock to Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock and Phantom Stock
Units, including the Restricted Period, which may differ with respect to
each grantee, the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the number of shares or
units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Secretary of the Company an agreement with respect to
Restricted Stock satisfactory to the Committee and the appropriate blank
stock powers with respect to the Restricted Stock covered by such
agreements and shall pay to the Company, as the purchase price of the
shares of Stock subject to such Award, the purchase price, if any,
established by the Committee in its discretion and indicated in the Award
within 60 days following the making of such Award. If a Participant
shall fail to execute the agreement, stock powers or shall fail to pay
such purchase price within
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such period, the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder shall generally have
the rights and privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock. At the discretion of
the Committee, cash and stock dividends with respect to the Restricted
Stock may be either currently paid or withheld by the Company for the
Holder's account, and interest may be paid on the amount of cash
dividends withheld at a rate and subject to such terms as determined by
the Committee. Cash or stock dividends so withheld by the Committee
shall not be subject to forfeiture.
(iii) In the case of a Restricted Stock Award, the Committee shall
then cause stock certificates registered in the name of the Holder to be
issued and held by the Secretary of the Company or an agent.
(iv) In the case of a Phantom Stock Units Award, no shares of
Common Stock shall be issued at the time the award is made, and the
Company will not be required to set aside a fund for the payment of any
such Award. The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units an amount equal to the cash dividends
paid by the Company upon one share of Stock for each Phantom Stock Unit
then credited to such Holder's account ("Dividend Equivalents").
Dividend Equivalents credited to Holder's account shall be subject to
forfeiture and may bear interest at a rate and subject to such terms as
determined by the Committee.
(b) Restrictions.
(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the Restricted Period:
(1) the Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the restrictions on
transferability set forth in the Grant; (3) the shares shall be subject
to forfeiture to the extent provided by the Committee in the Incentive
Plan Agreement and, to the extent such shares are forfeited, the stock
certificates shall be returned to the Company, and all rights of the
Holder to such shares and as a shareholder shall terminate without
further obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant shall be
subject to the following restrictions until the expiration of the
Restricted Period: (1) the units shall be subject to forfeiture to the
extent provided in subparagraph (d), and to the extent such units are
forfeited, all rights of the Holder to such units shall terminate without
further obligation on the part of the Company and (2) any other
restrictions which the Committee may determine in advance are necessary
or appropriate.
(iii) The Committee shall have the authority to remove any or all
of the restrictions on the Restricted Stock and Phantom Stock Units
whenever it may determine that, by reason of changes in applicable laws
or other changes in
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14
circumstances arising after the date of the Restricted Stock Award or
Phantom Stock Award, such action is appropriate.
(c) Restricted Period. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and unless otherwise
established by the Committee in the Incentive Plan Agreement, shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units in
accordance with a schedule included in the letter or form evidencing the Award.
(d) Delivery of Restricted Stock and Settlement of Phantom Stock Units.
Upon the expiration of the Restricted Period with respect to any shares of
Stock covered by a Restricted Stock Award, a stock certificate evidencing the
shares of Restricted Stock which have not then been forfeited and with respect
to which the Restricted Period has expired (to the nearest full share) shall be
delivered without charge to the Holder, or his beneficiary, free of all
restrictions under the Plan.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder or his beneficiary without any charge one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("vested unit") and cash equal to any
Dividend Equivalents credited with respect to each such vested unit and the
interest thereon, if any; provided, however, that the Committee may, in its
sole discretion, elect to pay cash or part cash and part Stock in lieu of
delivering only Stock for vested units. If a cash payment is made in lieu of
delivering Stock, the amount of such cash payment shall be equal to the Fair
Market Value for the date on which the Restricted Period lapsed with respect to
such vested unit.
(e) Payment for Restricted Stock. Except as provided in subparagraph
10(a)(ii), a Holder shall not be required to make any payment for Stock
received pursuant to a Restricted Stock Award.
(f) SEC Restrictions. Unless the Restricted Stock has been otherwise
registered with the SEC, each certificate representing Restricted Stock awarded
under the Plan shall bear the following legend:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE WERE ISSUED
PURSUANT TO THE EMPLOYEE BENEFIT PLANS, INC. 1991 LONG-TERM PERFORMANCE
INCENTIVE PLAN. SUCH SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH."
If the shares of Common Stock to be issued to a Participant have been
registered under the Securities Act of 1933, as amended, but the Participant is
subject to resale restrictions under Rule 144 under the Securities Act of 1933,
as amended, the Company may place the following legend on stock certificates
issued to the Participant:
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15
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO AN
AFFILIATE OF THE ISSUER AND THE RESALE OF SUCH SHARES IS SUBJECT TO
CERTAIN RESTRICTIONS UNDER RULE 144 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR SUCH OTHER PROVISIONS APPLICABLE TO THE RESALE OF SECURITIES
BY AFFILIATES."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities except in compliance with
the Securities Act of 1933, as amended ("Act").
11. CASH INCENTIVE AWARDS
The Committee also may grant Cash Incentive Awards which vest and become
payable only upon the attainment of pre-defined Performance Goals as
determined by the Committee.
12. GENERAL
(a) Additional Provisions of an Award. The award of any benefit under
the Plan may also be subject to such other provisions (whether or not
applicable to the benefit awarded to any other Participant) as the Committee
determines appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Common Stock through the exercise of
Options, provisions for the forfeiture of or restrictions on resale or other
disposition of shares acquired under any form of benefit, provisions giving the
Company the right to repurchase shares acquired under any form of benefit in
the event the Participant elects to dispose of such shares, and provisions to
comply with federal and state securities laws and federal and state income tax
withholding requirements. In order to promote compliance with Section 16(b) of
the Exchange Act, all grants of Awards payable in the form of stock or Awards
considered "derivative securities" or other "equity securities" for purposes of
the Exchange Act granted to Participants that are subject to the restrictions
of Section 16(b) must include restrictions on sale, transfer or other
disposition of such securities (unless otherwise exempted) for a period six (6)
months after Date of Grant (or such other period as may be imposed under
Section 16(b) or rules thereunder).
(b) Privileges of stock ownership. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Options or
Restricted Stock Awards, Performance Share Unit Awards or Phantom Stock Unit
Awards hereunder until such shares have been issued to that person upon
exercise of an Option according to its terms or upon sale or grant of those
shares in accordance with a Restricted Stock Award, Performance Share Unit
Award or Phantom Stock Unit Award.
(c) Government and other regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. The Company shall be under no obligation to register under
the Act any of the shares of Stock
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paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
(d) Tax withholding. Notwithstanding any other provision of the Plan,
the Company or a Subsidiary, as appropriate, shall have the right to deduct
from all Awards, to the extent paid in cash, all federal, state or local taxes
as required by law to be withheld with respect to such Awards and, in the case
of Awards paid in Stock, the Holder or other person receiving such Stock may be
required to pay to the Company or a Subsidiary, as appropriate prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock.
Subject in particular cases to the disapproval of the Committee, the Company
may accept shares of Stock of equivalent Fair Market Value or may agree to
withhold shares of stock payable under an Award of equivalent Fair Market Value
in payment of such withholding tax obligations, provided however if the Holder
is subject to Section 16(b) of the Exchange Act, such Holder must comply with
Rule 16b-3(e).
(e) Claim to Awards and employment rights. No employee or other person
shall have any claim or right to be granted an Award under the Plan nor, having
been selected for the grant of an Award, to be selected for a grant of any
other Award. Neither this Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ of
the Company or a Subsidiary.
(f) Conditions. Each Participant to whom Awards are granted under the
Plan shall be required to enter into an Incentive Plan Agreement in a form
authorized by the Committee, including provisions that the Participant shall
not disclose any trade or secret data or any other confidential information of
the Company or any of its Subsidiaries acquired during the course of such
Participant's employment.
(g) Designation and change of beneficiary. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect
to an Award of Performance Share Units, Phantom Share Units or Restricted
Stock, if any, due under the Plan upon his death. A Participant may, from time
to time, revoke or change his beneficiary designation without the consent of
any prior beneficiary by filing a new designation with the Committee. The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death,
and in no event shall it be effective as of a date prior to such receipt.
(h) Payments to persons other than Participants. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his affairs because of illness or accident, or is a minor,
or has died, then any payment due to such person or his estate (unless a prior
claim therefor has been made by a duly appointed legal representative), may, if
the Committee so directs the Company, be paid to his spouse, child,
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17
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company therefor.
(i) No liability of Committee members. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any
such person. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
(j) Governing law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Minnesota without reference
to the principles of conflicts of law thereof.
(k) Funding. Except as provided under Section 10, no provision of the
Plan shall require the Company for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to segregate any assets,
nor shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no rights under the
Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law.
(l) Nontransferability. A person's rights and interests under the
Plan, including amounts payable, may not be sold, assigned, donated, or
transferred or otherwise disposed of, mortgaged, pledged or encumbered except
(unless limited in the form evidencing the Award), (i) in the event of a
Holder's death, to a designated beneficiary to the extent permitted by the
Plan, or in the absence of-such designation, by will or the laws of descent and
distribution, or (ii) in the case of a transfer pursuant to a "qualified
domestic relations order" as defined in the Code.
(m) Reliance on Reports. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for
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having so relied, acted or failed to act in good faith, upon any report made by
the independent public accountant of the Company and its Subsidiaries and upon
any other information furnished in connection with the Plan by any person or
persons other than himself.
(n) Relationship to other benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided.
(o) Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
(p) Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(q) Titles and headings. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
13. CHANGES IN CAPITAL STRUCTURE
Options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards, and any agreements evidencing such Awards, and
Performance Goals shall be subject to adjustment or substitution, as determined
by the Committee in its sole discretion, as to the number, price or kind of a
share of Stock or other consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company, or of any other
corporation whose performance is relevant to the attainment of Performance
Goals hereunder, by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any
such Award or (ii) in the event of any change in applicable laws or any change
in circumstances which results in or would result in any substantial dilution
or enlargement of the rights granted to, or available for, Participants in the
Plan, or which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan. In addition, in the event of any such
adjustments or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 12 shall be made only to the extent not constituting a
"modification" within the meaning of Section 425(h)(3) of the Code. The
Company shall give each Participant notice of an adjustment hereunder and, upon
notice, such adjustment shall be conclusive and binding for all purposes.
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14. AWARDS MAY INCLUDE CHANGE IN CONTROL PROVISION
(a) Unless otherwise provided in the discretion of the Committee and
evidenced in the Award in the form indicated in b) below, the following shall
apply in the event of a tender offer. In the event of the purchase of in
excess of fifty percent (50%) of the Corporation's outstanding common stock
pursuant to a tender offer approved by the Corporation's Board of Directors and
made in accordance with the provisions of the Securities Exchange Act of 1934
(a "Tender"), all options granted hereunder and not yet exercised on the date
of the close of such Tender shall automatically terminate on such date, and all
options which are exercisable as of sale date must be exercised within thirty
(30) days after such date and shall automatically be converted into the right
to receive in lieu of Common Stock an amount equal to the amount per share of
Common Stock paid pursuant to the Tender. With respect to all other Awards any
elections with respect to receipt of Common Stock, such election must be made
within thirty (30) days after the sale date and shall automatically be
converted into the right to receive in lieu of Common Stock, an amount equal to
the amount per share of Common Stock paid pursuant to the Tender.
(b) If the provisions of subp. (a) are modified by the Committee on an
individual basis, any such Award must include the following provisions:
(i) In the event of a Change in Control, notwithstanding any
vesting schedule provided for hereunder or by the Committee
with respect to an Award of Options, SARs, Phantom Stock
Units or Restricted Stock, such Option or SAR shall become
immediately exercisable with respect to 100 percent of the
shares subject to such Option or SAR, and the Restricted
Period shall expire immediately with respect to 100 percent
of the Phantom Stock Units or shares of Restricted Stock
subject to Restrictions.
(ii) In the event of a Change in Control, all incomplete Award
Periods in effect on the date the Change in Control occurs
shall end on the date of such change, and the Committee
shall, (1) determine the extent to which Performance Goals
with respect to each such Award Period have been met based
upon such audited or unaudited financial information then
available as it deems relevant, (2) cause to be paid to each
Participant partial or full Awards with respect to
Performance Goals for each such Award Period based upon the
Committee's determination of the degree of attainment of
Performance Goals, and (3) cause all previously deferred
Awards to be settled in full as soon as possible.
(iii) The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization
resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all
of
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the assets and business of the Company. The Company agrees
that it will make appropriate provisions for the preservation
of Participants' rights under the Plan in any agreement or
plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization or transfer or assets.
15. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under this Plan, and such
arrangements may be either applicable generally or only in specific cases.
16. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. With the express written
consent of an individual participant, the Board may cancel or reduce or
otherwise alter the outstanding Awards thereunder if, in its judgment, the tax,
accounting, or other effects of the Plan or potential payouts thereunder would
not be in the best interest of the Company. The Board may, at any time, or
from time to time, amend or suspend and, if suspended, reinstate, the Plan in
whole or in part, provided, however, that without further stockholder approval
the Board shall not:
(a) Increase the maximum number of shares of Stock which may be
issued on exercise of Options, SARs, or pursuant to Restricted Stock
Awards, Phantom Stock Unit Awards, or Performance Share Unit Awards,
except as provided in Section 13;
(b) Change the maximum Option Price;
(c) Extend the maximum Option term; or
(d) Extend the termination date of the Plan.
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Amendment No. 1 to Employee Benefit Plans, Inc.
1991 Long-Term Incentive Performance Plan
(effective as of August 12, 1991)
The last sentence of Section 10(a)(ii) of the Employee Benefit Plans,
Inc. 1991 Long-Term Incentive Performance Plan (the "Plan") is hereby amended
so that Section 10(a) of the Plan provides as follows:
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) Award of Restricted Stock and Phantom Stock Units.
(i) The Committee shall have the authority (1) to directly grant
Restricted Stock and Phantom Stock Units Awards, (2) to issue or transfer
Restricted Stock to Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock and Phantom Stock
Units, including the Restricted Period, which may differ with respect to
each grantee, the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the number of shares or
units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Secretary of the Company an agreement with respect to
Restricted Stock satisfactory to the Committee and the appropriate blank
stock powers with respect to the Restricted Stock covered by such
agreements and shall pay to the Company, as the purchase price of the
shares of Stock subject to such Award, the purchase price, if any,
established by the Committee in its discretion and indicated in the Award
within 60 days following the making of such Award. If a Participant
shall fail to execute the agreement, stock powers or shall fail to pay
such purchase price within such period, the Award shall be null and void.
Subject to the restrictions set forth in Section 10(b), the Holder shall
generally have the rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such Restricted Stock. At
the discretion of the Committee, cash and stock dividends with respect to
the Restricted Stock may be either currently paid or withheld by the
Company for the Holder's account, and interest may be paid on the amount
of cash dividends withheld at a rate and subject to such terms as
determined by the Committee. Cash or stock dividends so withheld by the
Committee shall be subject to forfeiture at the discretion of the
Committee.
(iii) In the case of a Restricted Stock Award, the Committee shall
then cause stock certificates registered in the name of the Holder to be
issued and held by the Secretary of the Company or an agent.
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(iv) In the case of a Phantom Stock Units Award, no shares of
Common Stock shall be issued at the time the award is made, and the
Company will not be required to set aside a fund for the payment of any
such Award. The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units an amount equal to the cash dividends
paid by the Company upon one share of Stock for each Phantom Stock Unit
then credited to such Holder's account ("Dividend Equivalents").
Dividend Equivalents credited to Holder's account shall be subject to
forfeiture and may bear interest at a rate and subject to such terms as
determined by the Committee.
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23
EMPLOYEE BENEFIT PLANS, INC.
STOCK OPTION AGREEMENT
PURSUANT TO 1991 LONG-TERM INCENTIVE PERFORMANCE PLAN
This AGREEMENT is made effective as of the _____st day of
____________, 19____ by and between Employee Benefit Plans, Inc., a Delaware
corporation (the "Company"), and the undersigned employee of the Company (or
one of its subsidiaries) (the "Employee").
Recitals
1. The Company desires to afford the Employee an opportunity to
purchase shares of its common stock, par value $.01 per share (the "Shares"),
to carry out the purposes of its 1991 Long-Term Incentive Performance Plan, as
amended (the "Plan"), a copy of which has been provided to Employee and the
terms of which are incorporated by reference herein.
2. Section 7(d) of the Plan provides that each option is to be
evidenced by an Option Agreement, setting forth the terms and conditions of the
Option.
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Employee hereby
agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee a Nonqualified Stock Option (the "Option") to purchase all or any part
of an aggregate of (______) Shares on the terms and conditions hereinafter set
forth.
2. Purchase Price. The purchase price for the Shares covered by
the Option (the "Purchase Price") shall be $_______ per Share.
3. Time and Manner of Exercise of Option.
(a) The Option shall be exercisable in the following
annual installments commencing [one year from effective date]:
Percentage of
Shares Becoming Cumulative
Available for Percentage
One or After Exercise Available
------------ ---------------- -----------
[one year from effective date] 33.34% 33.34%
[two years from effective date] 33.33% 66.67%
[three years from effective date] 33.33% 100%
24
(b) To the extent that the right to exercise the Option
has accrued and is in effect, the Option may be exercised in full at one time
or in part from time to time, by giving written notice, signed by the person or
persons exercising the Option, to the Company, stating the number of Shares
with respect to which the Option is being exercised, accompanied by payment in
full of the Purchase Price for such Shares (or delivery of a notice from a
registered brokerage firm advising that payment will be made by such firm to
the Company under its "cashless exercise" procedures in accordance with the
Plan), which payment may be in whole or in part in shares of the common stock
of the Company already owned by the person or persons exercising the Option
with a fair market value equal to the exercise price; provided, however, that
there shall be no such exercise at any one time as to fewer than ten (10)
Shares or all of the remaining Shares then purchasable by the person or persons
exercising the Option, if fewer than ten (10) Shares. Upon such exercise,
delivery of a Certificate for Paid-up, non-assessable Shares shall be made at
the Principal office of the Company to the Person or Persons exercising the
Option at such time, during ordinary business hours, not more than thirty (30)
days from the date of receipt of the notice by the Company, as shall be
designated in such notice, or at such time, place and manner as may be agreed
upon by the Company and the person or persons exercising the Option.
(c) The Company shall at all times during the term of the
Option reserve and keep available such number of shares of its common stock as
will be sufficient to satisfy the requirements of the Option and shall pay all
original issue and transfer taxes (if any) with respect to the issue and
transfer of Shares pursuant hereto, and all other fees and expenses necessarily
incurred by the Company in connection therewith. The holder of this Option
shall not have any of the rights of a stockholder of the Company with respect
of the Shares until one or more Certificates for such Shares shall be delivered
to the holder upon the due exercise of the Option.
4. Term of Option.
(a) The Option shall terminate ten (10) years from the
date hereof, but shall be subject to earlier termination as hereinafter
provided.
(b) Except as otherwise provided in this Section 4, in
the event that the Employee ceases to be an employee of the Company or one of
its subsidiaries, the Option may be exercised, to the extent then exercisable
under Section 3(a) hereof, within three (3) months after the date the Employee
ceases to be an employee of the Company or one of its subsidiaries, but shall
thereafter terminate.
(c) If such termination of employment is because of
dismissal for cause or because the Employee is in breach of any employment
agreement, the Option will terminate on the date the Employee ceases to be an
employee of the Company or one of its subsidiaries.
(d) If such termination of employment is because the
Employee has died or becomes permanently disabled within the meaning of Section
105(b)(4) of the Internal
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25
Revenue Code of 1986 (the "Code"), the Option may be exercised prior to the
expiration of (i) six (6) months from the date the Employee ceases to be an
employee or (ii) ten (10) years from the date hereof, whichever occurs first.
(e) Subject to Section 4(c) above, in the event of
termination of employment, the Option shall be exercisable only to the extent
that the right to Purchase the Shares under the Option has accrued and is in
effect at the date of such cessation of employment, unless such cessation is
because the Employee has become disabled, in which case the Option may be
exercised to the full number of Shares covered hereby.
(f) In the event of the death of the Employee, the Option
shall be exercisable only to the extent that the right to Purchase the Shares
under the Option has accrued and may be exercised by the estate of the
Employee, or by any person or persons who acquired the right to exercise the
Option by bequest or inheritance or by reason of the death of the Employee.
5. Nontransferability. The right of the Employee to exercise the
Option shall not be assignable or transferable by the Employee other than by
will or the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Employee only by them or by their guardian or legal
representative. The Option shall be null and void and without effect upon the
bankruptcy of the Employee or upon any attempted assignment or transfer, except
as provided herein, including without limitations any purported assignment
(whether voluntary or by operation of law), pledge, hypothecation or other
disposition, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
6. Investment Representation; Delay in Issuance of Shares.
Notwithstanding the provisions of Section 3 hereof, the Company may delay the
issuance of Shares covered by the exercise of the Option and the delivery of a
certificate for such shares until (i) Employee executes a written declaration
that the Shares issued to them pursuant to such exercise of the Option are for
their own account as an investment and not with a view to, or for resale in
connection with, the distribution of any such Shares, and that he or she will
make no transfer of the same except in compliance with the 1933 Act and the
rules and regulations promulgated thereunder and then in effect or (ii) such
time as the Company elects to make a public release of material "inside
information" concerning the Company (as such term is customarily used under
federal securities laws), if the Company reasonably believes, at its
discretion, that the holder of the Option possesses such information or the
exercise of the Option would create an obligation to disclose publicly such
information.
7. Adjustments. In the event that the outstanding shares of the
common stock of the Company are changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividends payable in capital stock (other than for a change in control as
described in Section 8 hereof), appropriate adjustment shall be made in the
number and kind of shares as to which the Option, or portion thereof then
unexercised, shall be exercisable, to the end
-3-
26
that the proportionate interest of the Employee shall be maintained as before
the occurrence of such event; such adjustment in the Option shall be made
without change in the total price applicable to the unexercised portion of the
Option and with a corresponding adjustment in the Purchase Price per Share. No
such adjustment shall be made which shall, within the meaning of any applicable
sections of the Code, constitute a modification, extension or renewal of the
Option or grant of additional benefits to the Employee.
8. Tender Offers. In the event of the purchase of in excess of
fifty percent (50%) of the Company's outstanding common stock pursuant to a
tender offer approved by the Company's Board of Directors and made in
accordance with the provisions of the Securities Exchange Act of 1934, as
amended (a "Tender"), all options granted hereunder and not yet exercised on
the date of the close of such Tender shall automatically terminate on such
date, and all Options which are exercisable as of sale date must be exercised
within thirty (30) days after such date and shall automatically be converted
into the right to receive in lieu of Common Stock an amount equal to the amount
per share of Common Stock paid pursuant to the Tender.
9. Liquidation. Upon dissolution or liquidation of the Company,
the Option shall terminate, but the Employee (if at such time in the employ of
or otherwise associated with the Company or any of its subsidiaries) shall have
the right, immediately prior to such dissolution or liquidation, to exercise
the Option to the extent then exercisable.
10. Fractional Shares. No fraction of a share will be purchasable
or deliverable upon the exercise of the Option, but in the event any adjustment
hereunder of the number of Shares covered by the Option shall cause such number
to include a fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first appearing above.
EMPLOYEE BENEFIT PLANS, INC.
By:_____________________________________
William E. Sagan
President & Chief Executive Officer
EMPLOYEE
________________________________________
[name of employee]
SS# ____________________________________
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