EXHIBIT 10.22
STATE STREET CORPORATION
1997 EQUITY INCENTIVE PLAN
PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to advance the
interests of State Street Corporation (the "Company") and its subsidiaries by
enhancing their ability to attract and retain employees and other persons or
entities who are in a position to make significant contributions to the success
of the Company and its subsidiaries through ownership of shares of the Company's
common stock ("Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant Awards in the form of Options, Stock Appreciation Rights, Restricted Stock
or Unrestricted Stock Awards, Deferred Stock Awards, Performance Awards, or
Supplemental Grants, or combinations thereof, all as more fully described below.
2. ADMINISTRATION
Unless otherwise determined by the Board of Directors of the Company (the
"Board"), the Plan will be administered by a Committee of the Board designated
for such purpose (the "Committee"). The Committee shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. During such times as the Stock is registered under the
Securities Exchange Act of 1934 (the "1934 Act"), except as the Board may
otherwise determine, all members of the Committee shall be "non-employee
directors" within the meaning of Rule 16b-3 promulgated under the 1934 Act and
"outside directors" within the meaning of Section 162(m)(4)(C)(i) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award;(c) determine the type or types of each Award; (d) determine the terms and
conditions of each Award; (e) waive compliance by a holder of an Award with any
obligations to be performed by such holder under an Award and waive any terms or
conditions of an Award; (f) amend or cancel an existing Award in whole or in
part (and if an Award is canceled, grant another Award in its place on such
terms and conditions as the Committee shall specify), except that the Committee
may not, without the consent of the holder of an Award, take any action under
this clause with respect to such Award if such action would adversely affect the
rights of such holder; (g) prescribe the form or forms of instruments that are
required or deemed appropriate under the Plan, including any written notices and
elections required of Participants (as defined below), and change such forms
from time to time; (h) adopt, amend and rescind rules and regulations for the
administration of the Plan; and (i) interpret the Plan and decide any questions
and settle all controversies and disputes that may arise in connection with the
Plan. Such determinations and actions of the Committee, and all other
determinations and actions of the Committee made or taken under authority
granted by any provision of the Plan, will be conclusive and will bind all
parties. Nothing in this paragraph shall be construed as limiting the power of
the Committee to make adjustments under Section 7.3 or Section 8.6.
3. EFFECTIVE DATE AND TERM OF PLAN*
The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Awards may be made prior to such stockholder
approval if made subject thereto. No Award may be granted under the Plan after
December 18, 2006, but Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be
8,000,000. If any Award requiring exercise by the Participant for delivery of
Stock terminates without having been exercised in full, or if any Award payable
in Stock or cash is satisfied in cash rather than Stock, the number of shares of
Stock as to which such Award was not exercised or for which cash was substituted
will be available for future grants.
Subject to Section 8.6(a), the maximum number of shares of Stock as to
which Options or Stock Appreciation Rights may be granted to any Participant in
any one calendar year is 800,000, which limitation shall be construed and
applied consistently with the rules under Section 162(m) of the Internal Revenue
Code. The maximum number of shares of Restricted Stock that may be delivered
under the Plan shall not exceed 40% of the total number of shares authorized for
issuance.
Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.
5. ELIGIBILITY AND PARTICIPATION
Each key employee of the Company or any of its subsidiaries (an "Employee")
and each other person or entity (including without limitation non-Employee
directors of the Company or a subsidiary of the Company) who, in the opinion of
the Committee, is in a position to make a significant contribution to the
success of the Company or its subsidiaries will be eligible to receive Awards
under the Plan (each such Employee, person or entity receiving an Award, "a
Participant"). A "subsidiary" for purposes of the Plan will be a corporation in
which the Company owns, directly or indirectly, stock possessing 50% or more of
the total combined voting power of all classes of stock.
6. TYPES OF AWARDS
6.1. OPTIONS
(a) Nature of Options. An Option is an Award giving the recipient the right
on exercise thereof to purchase Stock.
Both "incentive stock options," as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code") (any Option intended to
qualify as an incentive stock option being hereinafter referred to as an "ISO"),
and Options that are not ISOs, may be granted under the Plan. ISOs shall be
awarded only to Employees. An Option awarded under the Plan shall be a non-ISO
unless it is expressly designated as an ISO at time of grant.
* Common Stock shares have been adjusted for the 2 for 1 stock split effective
April 30, 1997.
(b) Exercise Price. The exercise price of an Option will be determined by the
Committee subject to the following:
(1) The exercise price of an Option shall not be less than 100% of the
fair market value of the Stock subject to the Option, determined as of the
time the Option is granted. In no event shall the exercise price of an
option, once granted, be lowered through a repricing of the option. For
purposes of the preceding sentence, "repricing" shall include an amendment
to the exercise price of an existing option or the cancellation of an
option followed by a regrant at a lower exercise price, but shall not
include an assumption or replacement described in Section 7.3(b) or an
adjustment to the exercise price of an option described in the first
sentence of Section 8.6(b).
(2) In no case may the exercise price paid for Stock which is part of
an original issue of authorized Stock be less than the par value per share
of the Stock.
(c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified by
the Committee at the time the Option was granted.
(d) Exercise of Options. An Option will become exercisable at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time and from time to time accelerate the time at which all or any part
of the Option may be exercised. Any exercise of an Option must be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by (1) any documents required by the Committee and (2) payment in full in
accordance with paragraph (e) below for the number of shares for which the
Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an Option must be
paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
Committee at or after the grant of the Option or by the instrument evidencing
the Option, (i) through the delivery (including by attestation of ownership) of
shares of Stock which have been outstanding for at least six months (unless the
Committee approves a shorter period) and which have a fair market value equal to
the exercise price, (ii) by delivery of an unconditional and irrevocable
undertaking by a broker to deliver promptly to the Company sufficient funds to
pay the exercise price, or (iii) by any combination of the foregoing permissible
forms of payment.
(f) Discretionary Payments. If (i) the market price of shares of Stock
subject to an Option (other than an Option which is in tandem with a Stock
Appreciation Right as described in Section 6.2 below) exceeds the exercise price
of the Option at the time of its exercise, and (ii) the person exercising the
Option so requests the Committee in writing, the Committee may in its sole
discretion cancel the Option and cause the Company to pay in cash or in shares
of Common Stock (at a price per share equal to the fair market value per share)
to the person exercising the Option an amount equal to the difference between
the fair market value of the Stock which would have been purchased pursuant to
the exercise (determined on the date the Option is canceled) and the aggregate
exercise price which would have been paid.
6.2. STOCK APPRECIATION RIGHTS.
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right or SAR
is an Award entitling the holder on exercise to receive an amount in cash or
Stock or a combination thereof (such form to be determined by the Committee)
determined in whole or in part by reference to appreciation, from and after the
date of grant, in the fair market value of a share of Stock. SARs may be based
solely on appreciation in the fair market value of Stock or on a comparison of
such appreciation with some other measure of market growth such as (but not
limited to) appreciation in a recognized market index. The date as of which such
appreciation or other measure is determined shall be the exercise date unless
another date is specified by the Committee.
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted in tandem with, or independently of, Options granted under the Plan.
(1) Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, (a) the Stock Appreciation Right will
be exercisable only at such time or times, and to the extent, that the
related Option is exercisable and will be exercisable in accordance with
the procedure required for exercise of the related Option; (b) the Stock
Appreciation Right will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock
Appreciation Right granted with respect to less than the full number of
shares covered by an Option will not be reduced until the number of shares
as to which the related Option has been exercised or has terminated exceeds
the number of shares not covered by the Stock Appreciation Right; (c) the
Option will terminate and no longer be exercisable upon the exercise of the
related Stock Appreciation Right; and (d) the Stock Appreciation Right will
be transferable only with the related Option.
(2) Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as the Committee
may specify. The Committee may at any time accelerate the time at which all
or any part of the Right may be exercised.
Any exercise of a Stock Appreciation Right must be in writing, signed by
the proper person and delivered or mailed to the Company, accompanied by any
other documents required by the Committee.
6.3. RESTRICTED AND UNRESTRICTED STOCK.
(a) Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock in such amounts and upon such terms and conditions as the
Committee shall determine subject to the restrictions described below.
(b) Restricted Stock Agreement. The Committee may require, as a condition
to an Award, that a recipient of a Restricted Stock Award enter into a
Restricted Stock Award Agreement, setting forth the terms and conditions of the
Award. In lieu of a Restricted Stock Award Agreement, the Committee may provide
the terms and conditions of an Award in a notice to the Participant of the
Award, on the Stock certificate representing the Restricted Stock, in the
resolution approving the Award, or in such other manner as it deems appropriate.
(c) Transferability and Other Restrictions. Except as otherwise provided in
this Section 6.3, the shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable period or periods established by the Committee and the
satisfaction of any other conditions or restrictions established by the
Committee (such period during which a share of Restricted Stock is subject to
such restrictions and conditions is referred to as the "Restricted Period").
Except as the Committee may otherwise determine under Section 7.1 or
Section 7.2 below, if a Participant retires or suffers a Status Change (as
defined at Section 7.2(a) below) for any reason during the Restricted Period,
the Company may purchase the shares of Restricted Stock subject to such
restrictions and conditions for the amount of cash paid by the Participant for
such shares; provided, that if no cash was paid by the Participant such shares
of Restricted Stock shall be automatically forfeited to the Company without
consideration.
During the Restricted Period with respect to any shares of Restricted
Stock, the Company shall have the right to retain in the Company's possession
the certificate or certificates representing such shares.
(d) Removal of Restrictions. Except as otherwise provided in this Section
6.3, a share of Restricted Stock covered by a Restricted Stock grant shall
become freely transferable by the Participant upon completion of the Restricted
Period, including the passage of any applicable period of time and satisfaction
of any conditions to vesting. The Committee, in its sole discretion, shall have
the right at any time to waive all or any part of the restrictions and
conditions with regard to all or any part of the shares held by any Participant.
(e) Voting Rights, Dividends and Other Distributions. During the Restricted
Period, Participants holding shares of Restricted Stock granted hereunder may
exercise full voting rights and shall receive all regular cash dividends paid
with respect to such shares. Except as the Committee shall otherwise determine,
any other cash dividends and other distributions paid to Participants with
respect to shares of Restricted Stock including any dividends and distributions
paid in shares shall be subject to the same restrictions and conditions as the
shares of Restricted Stock with respect to which they were paid.
(f) Unrestricted Stock. The Committee may, in its sole discretion, sell to
any Participant shares of Stock free of restrictions under the Plan for a price
which is not less than the par value of the Stock.
(g) Notice of Section 83(b) Election. Any Participant making an election
under Section 83(b) of the Code with respect to Restricted Stock must provide a
copy thereof to the Company within 10 days of filing such election with the
Internal Revenue Service.
(h) Shares delivered under Senior Executive Annual Incentive Plan. In the
case of an award under the Company's Senior Executive Annual Incentive Plan
which is payable in shares of Stock, the holder of such award shall be deemed a
Participant hereunder and any such Shares shall be treated as having been sold
to the Participant as Unrestricted Stock or Restricted Stock hereunder (or as
Deferred Stock under Section 6.4, if delivery is deferred) for a price equal to
the cash payment under the award in lieu of which the Stock is being delivered
under the Award.
6.4. DEFERRED STOCK.
A Deferred Stock Award entitles the recipient to receive shares of Stock to
be delivered in the future. Delivery of the Stock will take place at such time
or times, and on such conditions, as the Committee may specify. The Committee
may at any time accelerate the time at which delivery of all or any part of the
Stock will take place. At the time any Award described in this Section 6 is
granted, the Committee may provide that, at the time Stock would otherwise be
delivered pursuant to the Award, the Participant will instead receive an
instrument evidencing the Participant's right to future delivery of Deferred
Stock.
6.5. PERFORMANCE AWARDS; PERFORMANCE GOALS.
(a) Nature of Performance Awards. A Performance Award entitles the
recipient to receive, without payment, an amount in cash or Stock or a
combination thereof (such form to be determined by the Committee) subject to the
attainment of performance goals. Performance goals may be related to personal
performance, corporate performance, departmental performance or any other
category of performance established by the Committee. The Committee will
determine the performance goals, the period or periods during which performance
is to be measured and all other terms and conditions applicable to the Award.
(b) Other Awards Subject to Performance Condition. The Committee may, at
the time any Award described in this Section 6 is granted, impose the condition
(in addition to any conditions specified or authorized in this Section 6 or any
other provision of the Plan) that performance goals be met prior to the
Participant's realization of any vesting, payment or benefit under the Award.
Any such Award made subject to the achievement of performance goals (other than
an Option or SAR granted with an exercise price not less than fair market value)
shall be treated as a Performance Award for purposes of Section 6.5(c) below.
However, an Award under the Company's Senior Executive Annual Incentive Plan
shall not be considered a Performance Award for purposes of this Plan.
(c) Limitations and Special Rules. No more than an aggregate of 500,000
shares of Stock (or their equivalent fair market value in cash) may be delivered
to any Participant under Performance Awards made from and after the effective
date of the Plan and prior to December 19, 2006. In the case of any Performance
Award intended to qualify for the performance-based remuneration exception
described at Section 162(m)(4)(C) of the Code and the regulations thereunder (an
"exempt award"), the Committee shall in writing preestablish one or more
specific, objectively determinable performance goal or goals (based solely on
one or more qualified performance criteria) no later than ninety (90) days after
the commencement of the period of service to which the performance relates (the
"performance period") (or at such other time as is required to satisfy the
conditions of Section 162(m)(4)(C) of the Code and the regulations thereunder).
For purposes of the preceding sentence, a qualified performance criterion is any
of the following determined (to the extent relevant) on either a consolidated or
business-unit basis: (i) return on equity, (ii) earnings per share, (iii) the
Company's total shareholder return during the performance period compared to the
total shareholder return of a generally recognized market reference (e.g., the
S & P 500 or the S & P Financial Index); (iv) revenue growth; (v) operating
leverage; or (vi) market share. To the extent consistent with qualification of
an exempt award under Section 162(m)(4)(C) of the Code and the regulations
thereunder, the Committee may provide that performance goals be adjusted in
order to eliminate the effect of extraordinary items (as determined in
accordance with generally accepted accounting principles) or changes in the
Stock by reason of an event described in Section 8.6(a).
6.6. SUPPLEMENTAL GRANTS.
In connection with any Award, the Committee may at the time such Award is
made or at a later date, provide for and grant a cash award to the Participant
("Supplemental Grant") not to exceed an amount equal to (1) the amount of any
Federal, state and local income tax on ordinary income for which the Participant
may be liable with respect to the Award, determined by assuming taxation at the
highest marginal rate, plus (2) an additional amount on a grossed-up basis
intended to make the Participant whole on an after-tax basis after discharging
all the Participant's income tax liabilities arising from all payments under
this Section 6. Any payments under this subsection (b) will be made at the time
the Participant incurs or is expected to incur Federal income tax liability with
respect to the Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. DEATH, RETIREMENT OR DISABILITY.
If the employment of an Employee Participant terminates by reason of death,
retirement at or after the normal or early retirement age under any retirement
plan or supplemental retirement agreement maintained by the Company or any
subsidiary ("retirement"), or disability as determined (subject to such
additional rules as the Committee may prescribe) in accordance with the long
term disability plan of the Company and its subsidiaries covering the
Participant or, if there is no such plan, in accordance with a determination of
disability by the Social Security Administration ("disability"), the following
will apply except as the Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the Participant or a
transferee immediately prior to such termination of employment, whether or not
then exercisable, may be exercised by the Participant or such transferee (or if
the Option or SAR was held by the Participant at death, by the Participant's
executor or administrator or the person or persons to whom the Option or Right
is transferred by will or the applicable laws of descent and distribution), in
accordance with the terms of the Option or SAR or on such accelerated basis as
the Committee may determine, during the period that ends on the later of (1) one
year after death, or (ii) one year after the Option or SAR, or the last
installment of such Option or SAR if there is more than one, first becomes
exercisable. In no event, however, shall an Option or Stock Appreciation Right
remain exercisable beyond the latest date on which it could have been exercised
without regard to this Section 7.
(b) In the case of termination of employment occurring by reason of death
or disability, all Restricted Stock held by the Participant immediately prior to
such termination of employment shall be vested. In the case of termination of
employment occurring by reason of retirement, all Restricted Stock held by the
Participant immediately prior to retirement must be transferred to the Company
(and, in the event the certificates representing such Restricted Stock are held
by the Company, such Restricted Stock will be so transferred without any further
action by the Participant) in accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award, Performance Award,
or Supplemental Grant to which the Participant was not irrevocably entitled
prior to termination of employment will be forfeited and the Award canceled as
of the time of such termination of employment.
7.2. OTHER TERMINATION OF SERVICE.
If a Participant who is an Employee ceases to be an Employee for any reason
other than death, retirement, or disability (as defined at Section 7.1 above),
or if there is a termination of the consulting, service or similar relationship
in respect of which a non-Employee Participant was granted an Award hereunder
(such termination of the employment or other relationship being hereinafter
referred to as a "Status Change"), the following will apply except as the
Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the Participant (or
if the Option or Right was previously transferred, by the transferee) that were
not exercisable immediately prior to the Status Change shall terminate at the
time of the Status Change. Any Options or Rights that were exercisable
immediately prior to the Status Change will continue to be exercisable for a
period of three months, and shall thereupon terminate; provided, that if the
Participant should die within such three-month period, the Option or Right shall
be exercisable (to the extent it was exercisable immediately prior to death) for
a period of one year following the Status Change. In no event, however, shall an
Option or Stock Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section 7.
(b) All Restricted Stock held by the Participant at the time of the Status
Change must be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock will be so transferred without any further action by the Participant) in
accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award, Performance Award,
or Supplemental Grant to which the Participant was not irrevocably entitled
prior to the Status Change will be forfeited and the Award canceled as of the
date of such Status Change.
(d) For purposes of this Section 7.2, in the case of a Participant who is
an Employee, a Status Change shall not be deemed to have resulted by reason of
(i) a sick leave or other bona fide leave of absence approved for purposes of
the Plan by the Committee, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of employment
between the Company and a subsidiary or between subsidiaries, or to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an Option in a transaction to which Section
424(a) of the Code applies.
7.3 CERTAIN CORPORATE TRANSACTIONS.
Except as otherwise provided by the Committee at the time of grant, in the
event of a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the
Company's outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of substantially all the Company's assets or a dissolution or
liquidation of the Company (a "covered transaction"), the following rules shall
apply:
(a) Subject to paragraph (b) below, all outstanding Awards requiring
exercise will cease to be exercisable, and all other Awards to the extent not
fully vested (including Awards subject to conditions not yet satisfied or
determined) will be forfeited except as required under Section 7.4 below, as of
the effective time of the covered transaction, provided that the Committee may
in its sole discretion (but subject to Section 7.4 below in the case of a
covered transaction that constitutes a Change of Control), on or prior to the
effective date of the covered transaction, (1) make any outstanding Option and
Stock Appreciation Right exercisable in full, (2) remove the restrictions from
any Restricted Stock, (3) cause the Company to make any payment and provide any
benefit under any Deferred Stock Award, Performance Award or Supplemental Grant,
and (4) remove any performance or other conditions or restrictions on any Award;
or
(b) With respect to an outstanding Award held by a Participant who,
following the covered transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in the covered
transaction or an affiliate of such an entity, the Committee may at or prior to
the effective time of the covered transaction, in its sole discretion and in
lieu of the action described in paragraph (a) above, arrange to have such
surviving or acquiring entity or affiliate assume any Award held by such
Participant outstanding hereunder or grant a replacement award which, in the
judgment of the Committee, is substantially equivalent to any Award being
replaced.
7.4. CHANGE OF CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control:
(1) Acceleration of Options and SARs; Effect on Other Awards. All
Options and SARs outstanding as of the date such Change of Control is
determined to have occurred and which are not then exercisable shall (prior
to application of the provisions of Section 7.3 above, in the case of a
Change of Control that also constitutes a covered transaction) become
exercisable to the full extent of the original grant, all shares of
Restricted Stock which are not otherwise vested shall vest, and holders of
Performance Awards granted hereunder as to which the relevant performance
period has not ended as of the date such Change of Control is determined to
have occurred shall be entitled at the time of such Change of Control to
receive a cash payment per Performance Award equal to such amount, if any,
as shall be specified in the Award.
(2) Restriction on Application of Plan Provisions Applicable in the
Event of Termination of Employment. After a Change of Control (but subject
to Section 7.3 above), Options and SARs shall remain exercisable following
a termination of employment or other service relationship (other than
termination by reason of death, disability (as determined by the Company)
or retirement) for seven (7) months following such termination or until
expiration of the original terms of the Option or SAR, whichever period is
shorter.
(3) Restriction on Amendment. In connection with or following a Change
of Control, neither the Committee nor the Board may impose additional
conditions upon exercise or otherwise amend or restrict an Option, SAR,
share of Restricted Stock, Deferred Stock Award or Performance Award, or
amend the terms of the Plan in any manner adverse to the holder thereof,
without the written consent of such holder.
Notwithstanding the foregoing, if any right granted pursuant to this
Section 7.4 would make a Change of Control transaction ineligible for pooling of
interests accounting under applicable accounting principles that but for this
Section 7.4 would otherwise be eligible for such accounting treatment, the
Committee shall have the authority to substitute Stock for the cash which would
otherwise be payable pursuant to this Section 7.4 having a fair market value
equal to such cash.
(b) Definition of Change of Control. For purposes of the Plan, a "Change of
Control" shall mean the happening of any of the following events:
(1) An 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 25% or more of either (x) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock") or
(y) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the following
acquisitions of Outstanding Company Common Stock and Outstanding Company
Voting Securities: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any Person
pursuant to a transaction which complies with clauses (i), (ii) and (iii)
of subsection (3) of this Section 7.4; or
(2) Individuals who, as of the effective date of the Plan, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual who
becomes a member of the Board subsequent to such effective date, whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of directors then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board; but, provided further, that any such individual
whose initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board shall not be so considered as a member of the
Incumbent Board; or
(3) Consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company ("Business Combination"); excluding, however,
such a Business Combination pursuant to which (i) all or substantially all
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
own, directly or indirectly, more than 50% of, respectively, the
outstanding shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or such corporation resulting from
such Business Combination) will beneficially own, directly or indirectly,
25% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the outstanding voting securities of such corporation entitled to
vote generally in the election of directors except to the extent that such
ownership existed with respect to the Company prior to the Business
Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(4) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
8. GENERAL PROVISIONS
8.1. DOCUMENTATION OF AWARDS.
Awards will be evidenced by such written instruments, if any, as may be
prescribed by the Committee from time to time. Such instruments may be in the
form of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2. RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.
Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a stockholder; the Participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, only upon the issuance of Stock. However, the Committee
may, on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Stock subject to the Participant's Award had such Stock been outstanding.
Without limitation, the Committee may provide for payment to the Participant of
amounts representing such dividends, either currently or in the future, or for
the investment of such amounts on behalf of the Participant.
8.3. CONDITIONS ON DELIVERY OF STOCK.
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove restriction from shares previously delivered under the
Plan (a) until all conditions of the Award have been satisfied or removed, (b)
until, in the opinion of the Company's counsel, all applicable Federal and state
laws and regulation have been complied with, (c) if the outstanding Stock is at
the time listed on any stock exchange or The Nasdaq National Market, until the
shares to be delivered have been listed or authorized to be listed on such
exchange or market upon official notice of notice of issuance, and (d) until all
other legal matters in connection with the issuance and delivery of such shares
have been approved by the Company's counsel. If the sale of Stock has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid
violation of such Act and may require that the certificates evidencing such
Stock bear an appropriate legend restricting transfer.
If an Award is exercised by the Participant's legal representative or
transferee, the Company will be under no obligation to deliver Stock pursuant to
such exercise until the Company is satisfied as to the authority of such
representative.
8.4. TAX WITHHOLDING.
The Company will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding requirements").
In the case of an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Stock.
If and to the extent that such withholding is required, the Committee may permit
the Participant or such other person to elect at such time and in such manner as
the Committee provides to have the Company hold back from the shares to be
delivered, or to deliver to the Company, Stock having a value calculated to
satisfy the withholding requirement. The Committee may make such share
withholding mandatory with respect to any Award at the time such Award is made
to a Participant.
If in connection with the exercise of an ISO the Committee determines that
the Company could be liable for withholding requirements with respect to the
exercise or with respect to a disposition of the Stock received upon exercise,
the Committee may require as a condition of exercise that the person exercising
the ISO agree (a) to provide for withholding under the preceding paragraph of
this Section 8.4, if the Committee determines that a withholding responsibility
may arise in connection with tax exercise, (b) to inform the Company promptly of
any disposition (within the meaning of Section 424(c) of the Code) of Stock
received upon exercise, and (c) to give such security as the Committee deems
adequate to meet the potential liability of the Company for the withholding
requirements and to augment such security from time to time in any amount
reasonably deemed necessary by the Committee to preserve the adequacy of such
security.
8.5. NONTRANSFERABILITY OF AWARDS.
Unless otherwise permitted by the Committee, no Award (other than an Award
in the form of an outright transfer of cash or Unrestricted Stock) may be
transferred other than by will or by the laws of descent and distribution, and
during a Participant's lifetime an Award requiring exercise may be exercised
only by the Participant (or in the event of the Participant's incapacity, the
person or persons legally appointed to act on the Participant's behalf). The
Committee may in its discretion permit transfers to other persons or entities.
8.6. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution to common stockholders other than normal cash dividends, after the
effective date of the Plan, the Committee will make any appropriate adjustments
to the maximum number of shares that may be delivered under the Plan under the
first paragraph of Section 4 above and to the limits described in the second
paragraph of Section 4 and in Section 6.5(c).
(b) In any event referred to in paragraph (a), the Committee will also make
any appropriate adjustments to the number and kind of shares of stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change. The Committee may also make such adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan; provided, that
adjustments pursuant to this sentence shall not be made to the extent it would
cause any Award intended to be exempt under Section 162(m)(4)(C) to fail to be
so exempt.
(c) In the case of ISOs or Awards intended to satisfy the performance-based
remuneration exception under Section 162(m)(4)(C) of the Code, the adjustments
described in (a) and (b) will be made only to the extent consistent with
continued qualification of the option under Section 422 of the Code (in the case
of an ISO) or Section 162(m) of the Code.
8.7. EMPLOYMENT RIGHTS, ETC.
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued retention by the Company or any subsidiary as
an Employee or otherwise, or affect in any way the right of the Company or
subsidiary to terminate an employment, service or similar relationship at any
time. Except as specifically provided by the Committee in any particular case,
the loss of existing or potential profit in Awards granted under the Plan will
not constitute an element of damages in the event of termination of an
employment, service or similar relationship even if the termination is in
violation of an obligation of the Company to the Participant.
8.8. NONCOMPETITION RESTRICTIONS, ETC.
The Committee may provide in connection with any Award that the
Participant's rights to enjoyment of the Award or to any cash or Stock
deliverable under the Award be conditioned upon the Participant's agreeing not
to compete with the Company and its subsidiaries, not to disclose confidential
information, and not to solicit employees, advisors or business from the Company
and its subsidiaries, the terms of any such agreement or undertaking to be
determined by the Committee.
8.9. DEFERRAL OF PAYMENTS.
The Committee may agree at any time, upon request of the Participant and
subject to such rules as the Committee may determine, to defer the date on which
any future payment under an Award will be made.
8.10. PAST SERVICES AS CONSIDERATION.
Where a Participant purchases Stock under an Award for a price equal to the
par value of the Stock the Committee may determine that such price has been
satisfied by past services rendered by the Participant.
9. EFFECT, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
Employees.
The Committee may at any time or times amend the Plan or any outstanding
Award for any purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of Awards, provided that
(except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify for the award of ISOs under Section 422 of the Code
or for the award of performance-based compensation under Section 162(m) of the
Code, nor shall any such amendment adversely affect the rights of a holder of an
Award without such holder's consent.