EXHIBIT 10.1
LAIDLAW INTERNATIONAL, INC.
2003 EQUITY AND PERFORMANCE INCENTIVE PLAN
1. PURPOSE. The purpose of the 2003 Equity and Performance
Incentive Plan (this "Plan") is to attract and retain directors,
officers and employees for Laidlaw International, Inc. (the
"Corporation") and its Subsidiaries and to provide to such persons
incentives and rewards for superior performance.
2. DEFINITIONS. As used in this Plan:
"Annual Meeting" means the annual meeting of stockholders of
the Corporation.
"Appreciation Right" means a right granted pursuant to Section
5 of this Plan.
"Board" means the Board of Directors of the Corporation and,
to the extent of any delegation by the Board to a committee (or subcommittee
thereof) pursuant to Section 17 of this Plan, such committee (or subcommittee
thereof).
"Change in Control" shall have the meaning provided in Section
12 of this Plan.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Common Shares" means shares of common stock, par value $.01
per share, of the Corporation or any security into which such shares of common
stock may be changed by reason of any transaction or event of the type referred
to in Section 11 of this Plan.
"Covered Employee" means a Participant who is, or is
determined by the Board to be likely to become, a "covered employee" within the
meaning of Section 162(m) of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which
a grant of Option Rights, Appreciation Rights, Performance Shares or Performance
Units or a grant or sale of Restricted Shares or Deferred Shares shall become
effective (which date shall not be earlier than the date on which the Board
takes action with respect thereto) and shall also include the date on which a
grant of Option Rights to a Non-Employee Director becomes effective pursuant to
Section 9 of this Plan.
"Deferral Period" means the period of time during which
Deferred Shares are subject to deferral limitations under Section 7 of this
Plan.
"Deferred Shares" means an award made pursuant to Section 7 of
this Plan of the right to receive Common Shares at the end of a specified
Deferral Period.
"Designated Subsidiary" means a Subsidiary that is (a) not a
corporation or (b) a corporation in which at the time the Corporation owns or
controls, directly or indirectly, less than 80% of the total combined voting
power represented by all classes of stock issued by such corporation.
"Effective Date" means the effective date of any plan of
reorganization confirmed by the United States bankruptcy court with respect to
the Corporation in the bankruptcy case numbered 01-14099K
"Evidence of Award" means an agreement, certificate,
resolution or other type of writing or other evidence approved by the Board
which sets forth the terms and conditions of the Option Rights, Appreciation
Rights, Performance Units, Performance Shares, Restricted Shares, Deferred
Shares or other awards. An Evidence of Award may be in an electronic medium, may
be limited to a notation on the books and records of the Corporation and, with
the approval of the Board (or committee or subcommittee thereof delegated
pursuant to Section 17 of this Plan), need not be signed by a representative of
the Corporation or a Participant.
"Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Incentive Stock Options" means Option Rights that are
intended to qualify as "incentive stock options" under Section 422 of the Code
or any successor provision.
"Management Objectives" means the measurable performance
objective or objectives established pursuant to this Plan for Participants who
have received grants of Performance Shares or Performance Units or, when so
determined by the Board, Option Rights, Appreciation Rights, Restricted Shares
and dividend credits pursuant to this Plan. Management Objectives may be
described in terms of Corporation-wide objectives or objectives that are related
to the performance of the individual Participant or of the Subsidiary, division,
department, region or function within the Corporation or Subsidiary in which the
Participant is employed. The Management Objectives may be made relative to the
performance of other corporations. The Management Objectives applicable to any
award to a Covered Employee shall be based on specified levels of or growth in
one or more of the following criteria:
1. earnings;
2. earnings per share (earnings per share will be
calculated without regard to any change in accounting
standards that may be required by the Financial
Accounting Standards Board after the goal is
established);
3. share price;
4. total shareholder return;
5. return on invested capital, equity, or assets;
6. operating earnings;
7. sales growth;
8. productivity improvement;
2
If the Board determines that a change in the business,
operations, corporate structure or capital structure of the Corporation, or the
manner in which it conducts its business, or other events or circumstances
render the Management Objectives unsuitable, the Board may in its discretion
modify such Management Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Board deems appropriate and equitable,
except in the case of a Covered Employee where such action would result in the
loss of the otherwise available exemption under Section 162(m) of the Code. In
such case, the Board shall not make any modification of the Management
Objectives or minimum acceptable level of achievement.
"Market Value per Share" means, as of any particular date, the
closing sale price per Common Share on the national securities exchange on which
the Common Shares are then listed, the final reported bid sale price per Common
Share on the principal national automated system which the Common Shares are
then quoted or, if the Common Shares are not then listed or quoted, the fair
market value of the Common Shares as determined by the Board.
"Non-Employee Director" means a Director of the Corporation
who is not an employee of the Corporation or any Subsidiary.
"Optionee" means the person named in an Evidence of Award
evidencing an outstanding Option Right.
"Option Price" means the purchase price payable on exercise of
an Option Right.
"Option Right" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 or Section 9 of this Plan.
"Participant" means a person who is selected by the Board to
receive benefits under this Plan and who is at the time an officer, or other
employee of the Corporation or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the Date
of Grant, and shall also include each Non-Employee Director who receives an
award of Option Rights pursuant to Section 9 of this Plan; provided, however,
that for purposes of Sections 4, 5, 7 and 8 of this Plan, Participant shall not
include such Non-Employee Director.
"Performance Period" means, in respect of a Performance Share
or Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
"Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a
unit equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"Reload Option Rights" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(i) or Section 9(a)(viii) of this Plan.
3
"Restricted Shares" means Common Shares granted or sold
pursuant to Section 6 or Section 9 of this Plan as to which neither the
substantial risk of forfeiture nor the prohibition on transfers referred to in
such Section 6 has expired.
"Retirement" means a termination of employment with the
Corporation and its Subsidiaries at or after the attainment of (a) age 65, (b)
age 55 with at least 10 years of continuous employment or (c) 30 years of
continuous employment.
"Rule l6b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from time to
time.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, as such law, rules and regulations may
be amended from time to time.
"Spread" means the excess of the Market Value per Share of the
Common Shares on the date when an Appreciation Right is exercised, or on the
date when Option Rights are surrendered in payment of the Option Price of other
Option Rights, over the Option Price provided for in the related Option Right.
"Subsidiary" means a corporation, company or other entity (a)
more than 50% of whose outstanding shares or securities (representing the right
to vote for the election of directors or other managing authority) are, or (b)
that does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but more than 50% of
whose ownership interest representing the right generally to make decisions for
such other entity is, now or hereafter, owned or controlled, directly or
indirectly, by the Corporation except that for purposes of determining whether
any person may be a Participant for purposes of any grant of Incentive Stock
Options, "Subsidiary" means any corporation in which at the time the Corporation
owns or controls, directly or indirectly, more than 50% of the total combined
voting power represented by all classes of stock issued by such corporation.
"Termination for Cause" means a termination of a Participant's
employment:
(a) due to the Participant's willful and continuous gross
neglect of his or her duties for which he or she is employed,
or
(b) due to an act of dishonesty on the part of the
Participant constituting a felony resulting or intended to
result, direct or indirectly, in his or her gain for personal
enrichment at the expense of the Corporation or a Subsidiary.
"Voting Shares" means at any time, the then-outstanding
securities entitled to vote generally in the election of directors of the
Corporation.
3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as
provided in Section 11 of this Plan, the number of Common Shares that
may be issued or transferred (i) upon the exercise of Option Rights or
Appreciation Rights, (ii) as Restricted Shares and released from
substantial risks of forfeiture thereof, (iii) as Deferred Shares, (iv)
in payment of Performance Shares or Performance Units that have been
earned, (v) as awards to Non-Employee Directors or (vi) in payment of
dividend equivalents paid with
4
respect to awards made under the Plan shall not exceed in the aggregate
5,000,000 shares, plus any shares described in Section 3(c). Such
shares may be shares of original issuance or treasury shares or a
combination of the foregoing. Upon the payment of any Option Price by
the transfer to the Corporation of Common Shares or upon satisfaction
of any withholding amount by means of transfer or relinquishment of
Common Shares, there shall be deemed to have been issued or transferred
under this Plan only the net number of Common Shares actually issued or
transferred by the Corporation.
(b) Notwithstanding anything in this Section 3, or
elsewhere in this Plan, to the contrary, the aggregate number of Common Shares
actually issued or transferred by the Corporation upon the exercise of Incentive
Stock Options shall not exceed 5,000,000 shares. Further, no Participant shall
be granted Option Rights for more than 500,000 Common Shares during any calendar
year, subject to adjustments as provided in Section 11 of this Plan.
(c) The number of shares available in Section 3(a) above
shall be adjusted to account for shares relating to awards that expire, are
forfeited or are transferred, surrendered or relinquished upon the payment of
any Option Price by the transfer to the Company of Common Shares or upon
satisfaction of any withholding amount. Upon payment in cash of the benefit
provided by any award granted under this Plan, any shares that were covered by
that award shall again be available for issue or transfer hereunder.
(d) Notwithstanding any other provision of this Plan to
the contrary, in no event shall any Participant in any calendar year receive
more than 500,000 Appreciation Rights, subject to adjustments as provided in
Section 11 of this Plan.
(e) Notwithstanding any other provision of this Plan to
the contrary, in no event shall any Participant in any calendar year receive
more than 500,000 Restricted Shares or 500,000 Deferred Shares, subject to
adjustments as provided in Section 11 of this Plan.
(f) Notwithstanding any other provision of this Plan to
the contrary, in no event shall any Participant in any calendar year receive an
award of Performance Shares or Performance Units having an aggregate maximum
value as of their respective Dates of Grant in excess of $1,000,000.
(g) Notwithstanding any other provision of this Plan to
the contrary, in no event shall the total number of Common Shares issuable to
any Participant together with any Common Shares reserved for issuance to such
Participant under any other share compensation arrangement of the Corporation
exceed 5% of the issued and outstanding Common Shares of the Corporation at the
Date of Grant.
4. OPTION RIGHTS. The Board may, from time to time and upon such
terms and conditions as it may determine, authorize the granting to
Participants of options to purchase Common Shares. Each such grant may
utilize any or all of the authorizations, and shall be subject to all
of the requirements, contained in the following provisions:
(a) Each grant shall specify the number of Common Shares
to which it pertains, subject to the limitations set forth in
Section 3 of this Plan.
5
(b) Each grant shall specify an Option Price per share,
which shall be at least equal to the Market Value per Share on
the Date of Grant.
(c) Unless a shorter period is specified in an applicable
Evidence of Award, each such Option Right shall become
exercisable to the extent of one-third of the number of shares
covered thereby one year after the Date of Grant and to the
extent of an additional one-third of such shares after each of
the next two successive years thereafter. Such Option Rights
shall become exercisable in full immediately in the event of a
Change in Control. Each such Option Right granted under this
Plan shall expire ten years from the Date of Grant and shall
be subject to earlier termination as hereinafter provided.
(d) Each such Option Right shall terminate automatically
and without further notice after the employee ceases to be an
employee of the Corporation and its Subsidiaries for any
reason other than as described in Section 4(e) of this Plan;
provided, however, that the employee shall have until the
first to occur of (i) the stated expiration date of such
Option Right or (ii) the 90th calendar day following the
effective date of any such termination of employment to
exercise Option Rights that had vested and become exercisable
as of such effective date of termination of employment.
Notwithstanding the foregoing, each such Option Right shall
terminate immediately upon a Termination for Cause.
(e) In the event of a holder's (i) death, (ii) disability
or (iii) Retirement, each of the then outstanding Option
Rights of such holder may be exercised at any time within
three years after such death, disability or Retirement, but in
no event after the expiration date of the term of such Option
Rights.
(f) Each grant shall specify whether the Option Price
shall be payable (i) in cash or by check acceptable to the
Corporation, (ii) by the actual or constructive transfer to
the Corporation of nonforfeitable, unrestricted Common Shares
owned by the Optionee (or other consideration authorized
pursuant to subsection (g) below) having a value at the time
of exercise equal to the total Option Price or (iii) by a
combination of such methods of payment.
(g) The Board may determine, at or after the Date of
Grant, that payment of the Option Price of any option (other
than an Incentive Stock Option) may also be made in whole or
in part in the form of Restricted Shares or other Common
Shares that are forfeitable or subject to restrictions on
transfer, Deferred Shares, Performance Shares (based, in each
case, on the Market Value per Share on the date of exercise),
other Option Rights (based on the Spread on the date of
exercise) or Performance Units. Unless otherwise determined by
the Board at or after the Date of Grant, whenever any Option
Price is paid in whole or in part by means of any of the forms
of consideration specified in this paragraph, the Common
Shares received upon the exercise of the Option Rights shall
be subject to such risks of forfeiture or restrictions on
transfer as may correspond to any that apply to the
consideration surrendered, but only to the extent of (i) the
number of
6
shares or Performance Shares, (ii) the Spread of any
unexercisable portion of Option Rights or (iii) the stated
value of Performance Units surrendered.
(h) Except to the extent prohibited by law, any grant may
provide for deferred payment of the Option Price from the
proceeds of sale through a bank or broker on a date
satisfactory to the Corporation of some or all of the shares
to which such exercise relates.
(i) Any grant may, at or after the Date of Grant, provide
for the automatic grant of Reload Option Rights to an Optionee
upon the exercise of Option Rights (including Reload Option
Rights) using Common Shares or other consideration specified
in paragraph (g) above. Reload Option Rights shall cover up to
the number of Common Shares, Deferred Shares, Option Rights or
Performance Shares (or the number of Common Shares having a
value equal to the value of any Performance Units) surrendered
to the Corporation upon any such exercise in payment of the
Option Price or to meet any withholding obligations. Reload
Options may have an Option Price that is no less than that
which represents the same percentage of the Market Value per
Share at the time of exercise of the Option Rights that the
per share Option Price represented of the Market Value per
Share at the time the Option Rights being exercised were
granted and shall be on such other terms as may be specified
by the Directors, which may be the same as or different from
those of the original Option Rights.
(j) Successive grants may be made to the same Participant
whether or not any Option Rights previously granted to such
Participant remain unexercised.
(k) Any grant of Option Rights may specify Management
Objectives that must be achieved as a condition to the
exercise of such rights.
(l) Option Rights granted under this Plan may be (i)
options, including, without limitation, Incentive Stock
Options, that are intended to qualify under particular
provisions of the Code, (ii) options that are not intended so
to qualify or (iii) combinations of the foregoing.
(m) The Board may, at or after the Date of Grant of any
Option Rights (other than Incentive Stock Options), provide
for the payment of dividend equivalents to the Optionee on
either a current or deferred or contingent basis or may
provide that such equivalents shall be credited against the
Option Price.
(n) The exercise of an Option Right shall result in the
cancellation on a share-for-share basis of any related
Appreciation Right authorized under Section 5 of this Plan.
(o) Each grant of Option Rights shall be evidenced by an
Evidence of Award, which shall contain such terms and
provisions, consistent with this Plan, as the Board may
approve.
7
5. APPRECIATION RIGHTS. The Board may also authorize the granting
to any Optionee of Appreciation Rights in respect of Option Rights
granted hereunder at any time prior to the exercise or termination of
such related Option Rights; provided, however, that an Appreciation
Right awarded in relation to an Incentive Stock Option must be granted
concurrently with such Incentive Stock Option. An Appreciation Right
shall be a right of the Optionee, exercisable by surrender of the
related Option Right, to receive from the Corporation an amount
determined by the Board, which shall be expressed as a percentage of
the Spread (not exceeding 100%) at the time of exercise. Each such
grant may utilize any or all of the authorizations, and shall be
subject to all of the requirements, contained in the following
provisions:
(a) Any grant may specify that the amount payable on
exercise of an Appreciation Right may be paid by the
Corporation in cash, in Common Shares or in any combination
thereof and may either grant to the Participant or retain in
the Board the right to elect among those alternatives.
(b) Any grant may specify that the amount payable on
exercise of an Appreciation Right may not exceed a maximum
specified by the Board at the Date of Grant.
(c) Any grant may specify waiting periods before exercise
and permissible exercise dates or periods and shall provide
that no Appreciation Right may be exercised except at a time
when the related Option Right is also exercisable and at a
time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right
may be exercised only in the event of a Change in Control or
other similar transaction or event.
(e) Each grant of Appreciation Rights shall be evidenced
by an Evidence of Award that shall describe such Appreciation
Rights, identify the related Option Rights, state that such
Appreciation Rights are subject to all the terms and
conditions of this Plan, and contain such other terms and
provisions, consistent with this Plan, as the Board may
approve.
(f) Any grant of Appreciation Rights may specify
Management Objectives that must be achieved as a condition of
the exercise of such rights.
6. RESTRICTED SHARES. The Board may also authorize the grant or
sale to Participants of Restricted Shares. Each such grant or sale may
utilize any or all of the authorizations, and shall be subject to all
of the requirements, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate
transfer of the ownership of Common Shares to the Participant
in consideration of the performance of services, entitling
such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
8
(b) Each such grant or sale may be made without
additional consideration or in consideration of a payment by
such Participant that is less than Market Value per Share at
the Date of Grant.
(c) Each such grant or sale shall provide that the
Restricted Shares covered by such grant or sale shall be
subject, except (if the Board shall so determine) in the event
of a Change in Control or other similar transaction or event,
for a period of not less than three years to be determined by
the Board at the Date of Grant, to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code.
(d) Each such grant or sale shall provide that during the
period for which such substantial risk of forfeiture is to
continue, the transferability of the Restricted Shares shall
be prohibited or restricted in the manner and to the extent
prescribed by the Board at the Date of Grant (which
restrictions may include, without limitation, rights of
repurchase or first refusal in the Corporation or provisions
subjecting the Restricted Shares to a continuing substantial
risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management
Objectives that, if achieved, will result in termination or
early termination of the restrictions applicable to such
shares and each grant may specify with respect to such
specified Management Objectives, a minimum acceptable level of
achievement and shall set forth a formula for determining the
number of Restricted Shares on which restrictions will
terminate if performance is at or above the minimum level, but
falls short of full achievement of the specified Management
Objectives.
(f) Any such grant or sale of Restricted Shares may
require that any or all dividends or other distributions paid
thereon during the period of such restrictions be
automatically deferred and reinvested in additional Restricted
Shares, which may be subject to the same restrictions as the
underlying award.
(g) Each grant or sale of Restricted Shares shall be
evidenced by an Evidence of Award that shall contain such
terms and provisions, consistent with this Plan, as the Board
may approve. Unless otherwise directed by the Board, all
certificates representing Restricted Shares shall be held in
custody by the Corporation until all restrictions thereon
shall have lapsed, together with a stock power or powers
executed by the Participant in whose name such certificates
are registered, endorsed in blank and covering such Shares.
7. DEFERRED SHARES. The Board may also authorize the granting or
sale of Deferred Shares to Participants. Each such grant or sale may
utilize any or all of the authorizations, and shall be subject to all
of the requirements contained in the following provisions:
(a) Each such grant or sale shall constitute the
agreement by the Corporation to deliver Common Shares to the
Participant in the future in consideration of the
9
performance of services, but subject to the fulfillment of
such conditions during the Deferral Period as the Board may
specify.
(b) Each such grant or sale may be made without
additional consideration or in consideration of a payment by
such Participant that is less than the Market Value per Share
at the Date of Grant.
(c) Each such grant or sale shall be subject, except (if
the Board shall so determine) in the event of a Change in
Control or other similar transaction or event, to a Deferral
Period of not less than one year, as determined by the Board
at the Date of Grant.
(d) During the Deferral Period, the Participant shall
have no right to transfer any rights under his or her award
and shall have no rights of ownership in the Deferred Shares
and shall have no right to vote them, but the Board may, at or
after the Date of Grant, authorize the payment of dividend
equivalents on such Shares on either a current or deferred or
contingent basis, either in cash or in additional Common
Shares.
(e) Each grant or sale of Deferred Shares shall be
evidenced by an Evidence of Award containing such terms and
provisions, consistent with this Plan, as the Board may
approve.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Board may also
authorize the granting of Performance Shares and Performance Units that
will become payable to a Participant upon achievement of specified
Management Objectives. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each grant shall specify the number of Performance
Shares or Performance Units to which it pertains, which number
may be subject to adjustment to reflect changes in
compensation or other factors; provided, however, that no such
adjustment shall be made in the case of a Covered Employee.
(b) The Performance Period with respect to each
Performance Share or Performance Unit shall be such period of
time (not less than one year, except in the event of a Change
in Control or other similar transaction or event, if the Board
shall so determine) commencing with the Date of Grant (as
shall be determined by the Board at the time of grant).
(c) Any grant of Performance Shares or Performance Units
shall specify Management Objectives that, if achieved, will
result in payment or early payment of the award, and each
grant may specify with respect to such specified Management
Objectives a minimum acceptable level of achievement and shall
set forth a formula for determining the number of Performance
Shares or Performance Units that will be earned if performance
is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives.
10
The grant of Performance Shares or Performance Units shall
specify that, before the Performance Shares or Performance
Units shall be earned and paid, the Board must certify that
the Management Objectives have been satisfied.
(d) Each grant shall specify a minimum acceptable level
of achievement in respect of the specified Management
Objectives below which no payment will be made and shall set
forth a formula for determining the amount of payment to be
made if performance is at or above such minimum but short of
full achievement of the Management Objectives.
(e) Each grant shall specify the time and manner of
payment of Performance Shares or Performance Units that have
been earned. Any grant may specify that the amount payable
with respect thereto may be paid by the Corporation in cash,
in Common Shares or in any combination thereof and may either
grant to the Participant or retain in the Board the right to
elect among those alternatives.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum
specified by the Board at the Date of Grant. Any grant of
Performance Units may specify that the amount payable or the
number of Common Shares issued with respect thereto may not
exceed maximums specified by the Board at the Date of Grant.
(g) The Board may, at or after the Date of Grant of
Performance Shares, provide for the payment of dividend
equivalents to the holder thereof on either a current or
deferred or contingent basis, either in cash or in additional
Common Shares.
(h) Each grant of Performance Shares or Performance Units
shall be evidenced by an Evidence of Award containing such
other terms and provisions, consistent with this Plan, as the
Board may approve.
9. AWARDS TO NON-EMPLOYEE DIRECTORS. The Board may, from time to
time and upon such terms and conditions as it may determine, authorize
the granting to Non-Employee Directors of Option Rights and may also
authorize the grant or sale of Restricted Shares to Non-Employee
Directors.
(a) Each grant of Option Rights awarded pursuant to this
Section 9 shall be evidenced by Evidence of Award, and shall
be subject to the following additional terms and conditions:
(i) Each grant shall specify the number of
Common Shares to which it pertains subject to the
limitations set forth in Section 3 of this Plan.
(ii) Each grant shall specify an Option Price per
share, which shall equal the Market Value per Share
on the Date of Grant.
(iii) Each such Option Right shall become
exercisable to the extent of one-third of the number
of shares covered thereby one year after the Date
11
of Grant and to the extent of an additional one-third
of such shares after each of the next two successive
years thereafter. Such Option Rights shall become
exercisable in full immediately in the event of a
Change in Control. Each such Option Right granted
under this Plan shall expire ten years from the Date
of Grant and shall be subject to earlier termination
as hereinafter provided.
(iv) In the event of the termination of service
on the Board by the holder of any such Option Rights,
other than by reason of disability or death as set
forth in Section 9(a)(v) of this Plan, the then
outstanding Option Rights of such holder may be
exercised only to the extent that they were
exercisable on the date of such termination and shall
expire 90 days after such termination, or on their
stated expiration date, whichever occurs first;
provided, however, that any Option Rights may provide
that a Director who has completed a specified period
of service on the Board or attained a specified age
will be entitled to exercise any such Option Rights
immediately in full at any time after any such
termination until their stated expiration date.
(v) In the event of the death or disability of
the holder of any such Option Rights, each of the
then outstanding Option Rights of such holder may be
exercised at any time within three years after such
death or disability, but in no event after the
expiration date of the term of such Option Rights.
(vi) If a Non-Employee Director subsequently
becomes an employee of the Corporation or a
Subsidiary while remaining a member of the Board, any
Option Rights held under the Plan by such individual
at the time of such commencement of employment shall
not be affected thereby.
(vii) Option Rights may be exercised by a
Non-Employee Director only upon payment to the
Corporation in full of the Option Price of the Common
Shares to be delivered. Such payment shall be made in
cash or in Common Shares previously owned by the
optionee for more than six months, or in a
combination of cash and such Common Shares.
(viii) Each grant may provide for the automatic
grant of Reload Option Rights to an Optionee upon the
exercise of Option Rights (including Reload Option
Rights) using Common Shares. Reload Option Rights
shall cover up to the number of Common Shares
surrendered to the Corporation upon any such exercise
in payment of the Option Price. Reload Options may
have an Option Price that is no less than that which
represents the same percentage of the market Value
per Share at the time of exercise of the Option
Rights that the per share Option Price represented of
the Market Value per Share at the time the Option
Rights being exercised were granted and shall be on
such other terms as may be specified by the
12
Directors, which may be the same as or different from
those of the original Option Rights.
(b) Each grant or sale of Restricted Shares pursuant to
this Section 9 shall be upon terms and conditions consistent
with Section 6 of this Plan.
10. TRANSFERABILITY. (a) Except as otherwise determined by the
Board, no Option Right, Appreciation Right or other derivative security
granted under the Plan shall be transferable by an Optionee other than
by will or the laws of descent and distribution, except (in the case of
a Participant who is not a Director or officer of the Corporation) to a
fully revocable trust of which the Optionee is treated as the owner for
federal income tax purposes. Except as otherwise determined by the
Board, Option Rights and Appreciation Rights shall be exercisable
during the Optionee's lifetime only by him or her or by his or her
guardian or legal representative. Notwithstanding the foregoing, the
Board in its sole discretion, may provide for transferability of
particular awards under this Plan so long as such provisions will not
disqualify the exemption for other awards under Rule 16b-3.
(b) The Board may specify at the Date of Grant that part
or all of the Common Shares that are (i) to be issued or transferred by the
Corporation upon the exercise of Option Rights or Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of Performance Shares or Performance Units or (ii) no longer
subject to the substantial risk of forfeiture and restrictions on transfer
referred to in Section 6 of this Plan, shall be subject to further restrictions
on transfer.
11. ADJUSTMENTS. The Board may make or provide for such
adjustments in the numbers of Common Shares covered by outstanding
Option Rights, Appreciation Rights, Deferred Shares and Performance
Shares granted hereunder, in the prices per share applicable to such
Option Rights and Appreciation Rights and in the kind of shares covered
thereby, as the Board, in its sole discretion, exercised in good faith,
may determine is equitably required to prevent dilution or enlargement
of the rights of Participants or Optionees that otherwise would result
from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the
Corporation or (b) any merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization, partial or complete liquidation or
other distribution of assets or issuance of rights or warrants to
purchase securities or (c) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the
event of any such transaction or event, the Board, in its discretion,
may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it, in good faith, may
determine to be equitable in the circumstances and may require in
connection therewith the surrender of all awards so replaced. The Board
may also make or provide for such adjustments in the numbers of shares
specified in Section 3 of this Plan and in the number of Option Rights
to be granted automatically pursuant to Section 9 of this Plan as the
Board in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this
Section 11.
13
12. CHANGE IN CONTROL. For purposes of this Plan, a "Change in
Control" shall mean if at any time any of the following events shall
have occurred:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of the Voting Shares; provided, however, that the
following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Corporation,
(B) any acquisition by the Corporation, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any Subsidiary of the
Corporation or (D) any acquisition by any Person pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of
Section 12(c); or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason (other
than death or disability) to constitute at least a majority of
the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Corporation in
which such person is named as a nominee for director, without
objection to such nomination) 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 (within the meaning of Rule 14a-11
of the Exchange Act) 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 Corporation (a
"Business Combination"), unless, in each case, immediately
following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial
owners of Voting Shares of the Corporation immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors of the entity resulting from such
Business Combination (including, without limitation, an entity
which as a result of such transaction owns the Corporation or
all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially
the same proportions relative to each other as their
ownership, immediately prior to such Business Combination, of
the Voting Shares of the Corporation, (ii) no Person
(excluding any entity resulting from such Business Combination
or any employee benefit plan (or related trust) sponsored or
maintained by the Corporation, any Subsidiary or such entity
resulting from such Business Combination) beneficially owns,
directly or indirectly, 15% or more of the then outstanding
shares of common
14
stock of the entity resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such entity except to the extent such ownership
existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the
entity resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement or of the action of the Board providing for
such Business Combination; or
(d) Approval by the stockholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
13. FRACTIONAL SHARES. The Corporation shall not be required to
issue any fractional Common Shares pursuant to this Plan. The Board may
provide for the elimination of fractions or for the settlement of
fractions in cash.
14. WITHHOLDING TAXES. To the extent that the Corporation is
required to withhold federal, state, local or foreign taxes in
connection with any payment made or benefit realized by a Participant
or other person under this Plan, and the amounts available to the
Corporation for such withholding are insufficient, it shall be a
condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such
taxes required to be withheld, which arrangements (in the discretion of
the Board) may include relinquishment of a portion of such benefit.
Participants shall also make such arrangements as the Corporation may
require for the payment of any withholding tax obligations that may
arise in connection with the disposition of shares acquired upon the
execution of Option Rights. In no event, however, shall the Corporation
accept Common Shares for payment of taxes in excess of required tax
withholding rates, except that, in the discretion of the Committee, a
Participant or such other person may surrender Common Shares owned for
more than six months to satisfy any tax obligations resulting from any
such transaction.
15. PARTICIPATION BY EMPLOYEES OF DESIGNATED SUBSIDIARIES. As a
condition to the effectiveness of any grant or award to be made
hereunder to a Participant who is an employee of a Designated
Subsidiary, whether or not such Participant is also employed by the
Corporation or another Subsidiary, the Board may require such
Designated Subsidiary to agree to transfer to such employee (when, as
and if provided for under this Plan and any applicable agreement
entered into with any such employee pursuant to this Plan) the Common
Shares that would otherwise be delivered by the Corporation, upon
receipt by such Designated Subsidiary of any consideration then
otherwise payable by such Participant to the Corporation. Any such
award shall be evidenced by an agreement between the Participant and
the Designated Subsidiary, in lieu of the Corporation, on terms
consistent with this Plan and approved by the Board and such Designated
Subsidiary. All such Common Shares so delivered by or to a Designated
Subsidiary shall be treated as if they had been delivered by or to the
Corporation for purposes of Section 3 of this Plan, and all references
to the Corporation in this Plan shall be deemed to refer to such
Designated Subsidiary, except for purposes of the definition of "Board"
and except in other cases where the context otherwise requires.
15
16. NON U.S. EMPLOYEES. In order to facilitate the making of any
grant or combination of grants under this Plan, the Board may provide
for such special terms for awards to Participants who are foreign
nationals or who are employed by the Corporation or any Subsidiary
outside of the United States of America as the Board may consider
necessary or appropriate to accommodate differences in local law, tax
policy or custom. Moreover, the Board may approve such supplements to
or amendments, restatements or alternative versions of this Plan as it
may consider necessary or appropriate for such purposes, without
thereby affecting the terms of this Plan as in effect for any other
purpose, and the Secretary or other appropriate officer of the
Corporation may certify any such document as having been approved and
adopted in the same manner as this Plan. No such special terms,
supplements, amendments or restatements, however, shall include any
provisions that are inconsistent with the terms of this Plan as then in
effect unless this Plan could have been amended to eliminate such
inconsistency without further approval by the shareholders of the
Corporation.
17. ADMINISTRATION OF THE PLAN. (a) This Plan shall be
administered by the Board, which may from time to time delegate all or
any part of its authority under this Plan to a committee of the Board
(or subcommittee thereof), consisting of not less than three
Non-Employee Directors appointed by the Board of Directors, each of
whom shall be a "Non-Employee Director" within the meaning of Rule
16b-3 and an "outside director" within the meaning of Section 162(m) of
the Code. A majority of the committee (or subcommittee thereof) shall
constitute a quorum, and the action of the members of the committee (or
subcommittee thereof) present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of
the committee (or subcommittee thereof).
(b) The interpretation and construction by the Board of
any provision of this Plan or of any agreement, notification or document
evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares,
Deferred Shares, Performance Shares or Performance Units and any determination
by the Board pursuant to any provision of this Plan or of any such agreement,
notification or document shall be final and conclusive. No member of the Board
shall be liable for any such action or determination made in good faith.
18. GOVERNING LAW. The Plan and all awards granted and actions
taken thereunder shall be governed by and construed in accordance with
the internal substantive laws of the State of Delaware.
19. AMENDMENTS, ETC. (a) The shareholders of the Corporation may
at any time and from time to time amend the Plan in whole or in part.
Any such amendment shall, if required, be subject to the prior approval
of, or acceptance by, any stock exchange on which the Common Shares are
listed and posted for trading. Presentation of this Plan or any
amendment hereof for shareholder approval shall not be construed to
limit the Corporation's authority to offer similar or dissimilar
benefits in plans that do not require shareholder approval.
(b) The Board may permit Participants to elect to defer
the issuance of Common Shares or the settlement of awards in cash under the Plan
pursuant to such rules,
16
procedures or programs as it may establish for purposes of this Plan. The Board
also may provide that deferred issuances or settlements include the payment or
crediting of dividend equivalents or interest on the deferral amounts.
(c) The Board may condition the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral by
the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Corporation or a Subsidiary to the
Participant.
(d) In case of termination of employment by reason of
death, disability or normal or early retirement, or in the case of hardship or
other special circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any Restricted Shares
as to which the substantial risk of forfeiture or the prohibition or restriction
on transfer has not lapsed, or any Deferred Shares as to which the Deferral
Period has not been completed, or any Performance Shares or Performance Units
that have not been fully earned, or who holds Common Shares subject to any
transfer restriction imposed pursuant to Section 10(b) of this Plan, the Board
may, in its sole discretion, accelerate the time at which such Option Right or
Appreciation Right may be exercised or the time at which such substantial risk
of forfeiture or prohibition or restriction on transfer will lapse or the time
when such Deferral Period will end or the time at which such Performance Shares
or Performance Units will be deemed to have been fully earned or the time when
such transfer restriction will terminate or may waive any other limitation or
requirement under any such award.
(e) This Plan shall not confer upon any Participant any
right with respect to continuance of employment or other service with the
Corporation or any Subsidiary, nor shall it interfere in any way with any right
the Corporation or any Subsidiary would otherwise have to terminate such
Participant's employment or other service at any time.
(f) To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify as an Incentive Stock
Option from qualifying as such, that provision shall be null and void with
respect to such Option Right. Such provision, however, shall remain in effect
for other Option Rights and there shall be no further effect on any provision of
this Plan.
20. TERMINATION. No grant (other than an automatic grant of Reload
Option Rights) shall be made under this Plan more than ten years after
the date that this Plan is adopted by the Board, but all grants made on
or prior to such date shall continue in effect thereafter subject to
the terms thereof and of this Plan.
17