EXHIBIT 10.2
STILWELL FINANCIAL INC.
1998 Long Term Incentive Stock Plan
(as amended and restated effective as of May 9, 2001)
Table of Contents
Article Page
1. History, Effective Date, Objectives and Duration......................... 1
2. Definitions.............................................................. 1
3. Administration........................................................... 8
4. Shares Subject to the Plan and Maximum Awards........................... 10
5. Eligibility and General Conditions of Awards............................. 11
6. Stock Options............................................................ 15
7. Stock Appreciation Rights and Limited Stock Appreciation Rights.......... 18
8. Restricted Shares........................................................ 19
9. Performance Units and Performance Shares................................. 20
10. Bonus Shares............................................................ 21
11. Beneficiary Designation................................................. 22
12. Deferrals............................................................... 22
13. Rights of Employees/Directors/Consultants............................... 22
14. Change of Control....................................................... 23
15. Amendment, Modification, and Termination................................ 24
16. Withholding............................................................. 24
17. Successors.............................................................. 26
18. Additional Provisions................................................... 26
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Stilwell Financial Inc.
1998 Long Term Incentive Stock Plan
(AS AMENDED AND RESTATED EFFECTIVE AS OF May 9, 2001)
Article 1. History, Effective Date, Objectives and Duration
1.1 History. Stilwell Financial Inc., a Delaware corporation
the "Company"), has established the Stilwell Financial Inc. 1998 Long Term
Incentive Stock Plan, as set forth herein, and as the same may be amended from
time to time (the "Plan"). The Plan was originally adopted by the Board of
Directors of the Company (the "Board") and approved by the sole stockholder of
the Company, Kansas City Southern Industries, Inc. ("KCSI") and by the
stockholders of KCSI on July 15, 1998, to be effective as of June 1, 1998 (the
"Effective Date"). Effective August 11, 1999, Section 2.14 of the Plan was
amended and the Plan was renamed; effective June 15, 2000, Sections 2.51, 5.7
and 15.1 were amended; effective January 18, 2001, Sections 2.42, 2.51 and
5.6(d) were amended; and effective May 9, 2001, Section 5.6(d) was amended. Each
such time the Plan was amended, the Plan has been restated as so amended, as set
forth herein.
1.2 Objectives of the Plan. The Plan is intended to allow
employees, directors and consultants of the Company and its Subsidiaries to
acquire or increase equity ownership in the Company, thereby strengthening their
commitment to the success of the Company and stimulating their efforts on behalf
of the Company, and to assist the Company and its Subsidiaries in attracting new
employees, directors and consultants and retaining existing employees, directors
and consultants. The Plan also is intended to optimize the profitability and
growth of the Company through incentives which are consistent with the Company's
goals; to provide employees, directors and consultants with an incentive for
excellence in individual performance; and to promote teamwork among employees,
directors and consultants.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date and shall remain in effect, subject to the right of the Board to
amend or terminate the Plan at any time pursuant to Article 15 hereof, until all
Shares subject to it shall have been purchased or acquired according to the
Plan's provisions. However, in no event may an Incentive Stock Option be granted
under the Plan on or after the date 10 years following the earlier of (i) the
date the Plan was adopted and (ii) the date the Plan was approved by the
stockholders of the Company.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings
set forth below:
2.1 "Article" means an Article of the Plan.
2.2 "Award" means Options (including Incentive Stock Options),
Restricted Shares, Bonus Shares, stock appreciation rights (SARs), limited stock
appreciation rights (LSARs), Performance Units or Performance Shares granted
under the Plan.
2.3 "Award Agreement" means the written agreement by which an
Award shall be evidenced.
2.4 "Board" has the meaning set forth in Section 1.1.
2.5 "Bonus Shares" means Shares that are awarded to a Grantee
without cost and without restrictions in recognition of past performance
(whether determined by reference to another employee benefit plan of the Company
or otherwise) or as an incentive to become an employee, director or consultant
of the Company or a Subsidiary.
2.6 "Cause" means, unless otherwise defined in an Award
Agreement,
(i) before the occurrence of a Change of Control, any one or
more of the following, as determined by the Committee:
(A) a Grantee's commission of a crime which, in the
judgment of the Committee, resulted or is likely to result in damage
or injury to the Company or a Subsidiary;
(B) the material violation by the Grantee of written
policies of the Company or a Subsidiary;
(C) the habitual neglect or failure by the Grantee in
the performance of his or her duties to the Company or a Subsidiary
(but only if such neglect or failure is not remedied within a
reasonable remedial period after Grantee's receipt of written notice
from the Company which describes such neglect or failure in reasonable
detail and specifies the remedial period); or
(D) action or inaction by the Grantee in connection
with his or her duties to the Company or a Subsidiary resulting, in
the judgment of the Committee, in material injury to the Company or a
Subsidiary; and
(ii) from and after the occurrence of a Change of Control, the
occurrence of any one or more of the following, as determined in the
good faith and reasonable judgment of the Committee:
(A) Grantee's conviction for committing an act of
fraud, embezzlement, theft, or any other act constituting a felony
involving moral turpitude or causing material damage or injury,
financial or otherwise, to the Company;
(B) a demonstrably willful and deliberate act or
failure to act which is committed in bad faith, without reasonable
belief that such action or inaction is in the best interests of the
Company, which causes material damage or injury, financial or
otherwise, to the Company (but only if such act or inaction is not
remedied within 15 business days of Grantee's receipt of written
notice from the Company which describes the act or inaction in
reasonable detail); or
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(C) the consistent gross neglect of duties or consistent
wanton negligence by the Grantee in the performance of the Grantee's
duties (but only if such neglect or negligence is not remedied within
a reasonable remedial period after Grantee's receipt of written notice
from the Company which describes such neglect or negligence in
reasonable detail and specifies the remedial period).
2.7 "Change of Control" means, unless otherwise defined in an Award
Agreement, any one or more of the following:
(i) the acquisition or holding by any person, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), other than
by the Company or any Subsidiary or any employee benefit plan of the Company or
a Subsidiary (and other than by KCSI prior to the Spin-off Distribution), of
beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of
20% or more of the then-outstanding Common Stock or the then-outstanding Voting
Power of the Company; provided, however, that no Change of Control shall occur
solely by reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 60% of both the then-outstanding common shares
and the then-outstanding Voting Power of such corporation are then beneficially
owned, directly or indirectly, by the persons who were the beneficial owners of
the then-outstanding Common Stock and Voting Power of the Company immediately
before such acquisition, in substantially the same proportions as their
respective ownership, immediately before such acquisition, of the
then-outstanding Common Stock and Voting Power of the Company; or
(ii) individuals who, as of the date of the Spin-off
Distribution, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least 75% of the Board; provided that any individual who
becomes a director after the Effective Date whose election or nomination for
election by the Company's stockholders was approved by at least 75% of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
"election contest" relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 under the 1934 Act) or "tender offer" (as
such term is used in Section 14(d) of the 1934 Act) or a proposed Extraordinary
Transaction (as defined below)) shall be deemed to be a member of the Incumbent
Board; or
(iii) approval by the stockholders of the Company of any one or
more of the following:
(A) a merger, reorganization, consolidation or similar
transaction (any of the foregoing, an "Extraordinary Transaction")
with respect to which persons who were the respective beneficial
owners of the then-outstanding Common Stock and Voting Power of the
Company immediately before such Extraordinary Transaction would not,
if such Extraordinary Transaction were to be consummated immediately
after such stockholder approval (but otherwise in accordance with the
terms presented in writing to the stockholders of the Company for
their approval), beneficially own, directly or indirectly, more than
60% of both the then-outstanding common shares and the
then-outstanding Voting Power of the corporation resulting from such
Extraordinary Transaction, in substantially the same proportions as
their respective ownership, immediately before such Extraordinary
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Transaction, of the then-outstanding Common Stock and Voting Power of
the Company,
(B) a liquidation or dissolution of the Company, or
(C) the sale or other disposition of all or substantially
all of the assets of the Company in one transaction or a series of
related transactions.
2.8 "Change of Control Value" means the Fair Market Value of
a Share on the date of a Change of Control.
2.9 "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and regulations and rulings thereunder. References to a
particular section of the Code include references to successor provisions of the
Code or any successor code
2.10 "Committee," "Plan Committee" and "Management Committee"
have the meanings set forth in Article 3.
2.11 "Common Stock" means the common stock, $.01 par value, of
the Company.
2.12 "Company" has the meaning set forth in Section 1.1.
2.13 "Covered Employee" means a Grantee who, as of the date
that the value of an Award is recognizable as taxable income, is one of the
group of "covered employees," within the meaning of Code Section 162(m).
2.14 "Disability" means, unless otherwise defined in an Award
Agreement, for purposes of the exercise of an Incentive Stock Option after
Termination of Affiliation, a disability within the meaning of Section 22(e)(3)
of the Code, and for all other purposes, means total disability as determined
for purposes of the long term disability plan of Stilwell or any Subsidiary or
other employer of the Grantee and disability shall be deemed to occur for
purposes of the Plan on the date such determination of disability is made.
2.15 "Disqualifying Disposition" has the meaning set forth in
Section 6.4.
2.16 "Effective Date" has the meaning set forth in Section 1.1.
2.17 "Eligible Person" means (i) any employee (including any
officer) of the Company or any Subsidiary, including any such employee who is on
an approved leave of absence, layoff, or has been subject to a disability which
does not qualify as a Disability, (ii) any director of the Company or any
Subsidiary and (iii) any person performing services for the Company or a
Subsidiary in the capacity of a consultant. Solely for purposes of granting KCSI
Substitute Options
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(as defined in Section 6.3), Eligible Person shall also include any person who
holds a KCSI Option (as defined in Section 6.3) as of the date that a KCSI
Substitute Option is granted.
2.18 "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time. References to a particular section of the
Exchange Act include references to successor provisions.
2.19 "Extraordinary Transaction" has the meaning set forth in
Section 2.7.
2.20 "Fair Market Value" means (A) with respect to any property
other than Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee, and (B) with respect to Shares, unless otherwise determined by the
Committee, as of any date, (i) the average of the high and low trading prices on
the date of determination on the New York Stock Exchange (or, if no sale of
Shares was reported for such date, on the next preceding date on which a sale of
Shares was reported); (ii) if the Shares are not listed on the New York Stock
Exchange, the average of the high and low trading prices of the Shares on such
other national exchange on which the Shares are principally traded or as
reported by the National Market System, or similar organization, or if no such
quotations are available, the average of the high bid and low asked quotations
in the over-the-counter market as reported by the National Quotation Bureau
Incorporated or similar organizations; or (iii) in the event that there shall be
no public market for the Shares, the fair market value of the Shares as
determined by the Committee.
2.21 "Freestanding SAR" means an SAR that is granted
independently of any other Award.
2.22 "Good Reason" means, unless otherwise defined in an Award
Agreement, the occurrence after a Change of Control, without a Grantee's prior
written consent, of any one or more of the following:
(i) the assignment to the Grantee of any duties which result
in a material adverse change in the Grantee's position (including status,
offices, titles, and reporting requirements), authority, duties, or other
responsibilities with the Company, or any other action of the Company which
results in a material adverse change in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent action which is
remedied by the Company promptly after receipt of notice thereof given by the
Grantee,
(ii) any relocation of the Grantee of more than 40 miles from
the place where the Grantee was located at the time of the Change of Control, or
(iii) a material reduction or elimination of any component of
the Grantee's rate of compensation, including (x) base salary, (y) any incentive
payment or (z) benefits or perquisites which the Grantee was receiving
immediately prior to a Change of Control.
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2.23 "Grant Date" has the meaning set forth in Section 5.2.
2.24 "Grantee" means an individual who has been granted an
Award.
2.25 "Incentive Stock Option" means an option granted under
Article 6 of the Plan that is intended to meet the requirements of Section 422
of the Code or any successor provisions thereto.
2.26 "including" or "includes" means "including, without
limitation," or "includes, without limitation," respectively.
2.27 "LSAR" means a limited stock appreciation right.
2.28 "Mature Shares" means Shares for which the holder thereof
has good title, free and clear of all liens and encumbrances, and which such
holder either (i) has held for at least six months or (ii) has purchased on the
open market.
2.29 "Minimum Consideration" means $.01 per Share or such other
amount that is from time to time considered to be capital for purposes of
Section 154 of the Delaware General Corporation Law.
2.30 "Option" means an option granted under Article 6 of the
Plan.
2.31 "Option Price" means the price at which a Share may be
purchased by a Grantee pursuant to an Option.
2.32 "Option Term" means the period beginning on the Grant Date
of an Option and ending on the expiration date of such Option, as specified in
the Award Agreement for such Option and as may, consistent with the provisions
of the Plan, be extended from time to time by the Committee prior to the
expiration date of such Option then in effect.
2.33 "Outside Director" means a member of the Board who is
not an employee of the Company or any Subsidiary.
2.34 "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
2.35 "Performance Period" has the meaning set forth in
Section 9.2.
2.36 "Performance Share" or "Performance Unit" has the meaning
set forth in Article 9.
2.37 "Period of Restriction" means the period during which the
transfer of Restricted Shares is limited in some way (the length of the period
being based on the passage of time, the
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achievement of performance goals, or upon the occurrence of other events as
determined by the Committee), and the Shares are subject to a substantial risk
of forfeiture, as provided in Article 8.
2.38 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.39 "Plan" has the meaning set forth in Section 1.1.
2.40 "Required Withholding" has the meaning set forth in
Article 16.
2.41 "Restricted Shares" means Shares that are subject to
forfeiture if the Grantee does not satisfy the conditions specified in the Award
Agreement applicable to such Shares.
2.42 "Retirement" means, for any Grantee who is a director
of the company or an employee, Termination of Affiliation by the Grantee upon
either (i) having both attained age fifty-five (55) and completed at least ten
(10) years of service with the Company or a Subsidiary or a Consolidated
Subsidiary, including any years of service such employee may have had with KCSI
or (ii) meeting such other requirements as may be specified by the Committee.
2.43 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under
the Exchange Act, as amended from time to time, together with any successor
rule, as in effect from time to time.
2.44 "SAR" means a stock appreciation right.
2.45 "SEC" means the United States Securities and Exchange
Commission, or any successor thereto.
2.46 "Section" means, unless the context otherwise requires, a
Section of the Plan.
2.47 "Section 16 Person" means a person who is subject to
potential liability under Section 16(b) of the 1934 Act with respect to
transactions involving equity securities of the Company.
2.48 "Share" means a share of Common Stock.
2.49 "Spin-off Distribution" means the distribution by KCSI
of at least 80% of the outstanding Shares, as a result of which the Company
ceases to be a subsidiary of KCSI.
2.50 "Strike Price" of any SAR shall equal, for any Tandem SAR
(whether such Tandem SAR is granted at the same time as or after the grant of
the related Option), the Option Price of such Option, or for any other SAR, 100%
of the Fair Market Value of a Share on the Grant Date of such SAR; provided that
the Committee may specify a higher Strike Price in the Award Agreement.
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2.51 "Subsidiary" means, for purposes of grants of Incentive
Stock Options, a corporation as defined in Section 424(f) of the Code (with the
Company being treated as the employer corporation for purposes of this
definition) and, for all other purposes, a United States or foreign corporation
or limited liability company, partnership or other similar entity with respect
to which the Company owns, directly or indirectly, 50% (or such lesser
percentage as the Committee may specify, which percentage may be changed from
time to time and may be different for different entities) or more of the Voting
Power of such corporation, limited liability company, partnership or other
similar entity and "Consolidated Subsidiary" means a Subsidiary that is
consolidated with the Company for financial reporting purposes.
2.52 "Tandem SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require cancellation of the
right to purchase a Share under the related Option (and when a Share is
purchased under the related Option, the Tandem SAR shall similarly be canceled).
2.53 "Termination of Affiliation" occurs on the first day on
which an individual is for any reason no longer providing services to the
Company or any Subsidiary in the capacity of an employee, director or
consultant, or with respect to an individual who is an employee or director of,
or consultant to, a corporation which is a Subsidiary, the first day on which
such corporation ceases to be a Subsidiary.
2.54 "10% Owner" means a person who owns capital stock
(including stock treated as owned under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary.
2.55 "Voting Power" means the combined voting power of the
then-outstanding securities of a corporation entitled to vote generally in the
election of directors.
Article 3. Administration
3.1 Committee.
(a) Subject to Article 15, and to Section 3.2, the Plan shall
be administered by the Board, or a committee appointed by the Board to
administer the Plan ("Plan Committee"). To the extent the Board considers it
desirable to comply with or qualify under Rule 16b-3 or meet the
Performance-Based Exception, the Plan Committee shall consist of two or more
directors of the Company, all of whom qualify as "outside directors" as defined
for purposes of the regulations under Code Section 162(m) and "non-employee
directors" within the meaning of Rule 16b-3. The number of members of the Plan
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 and the Performance-Based Exception as then in effect.
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(b) The Board or the Plan Committee may appoint and delegate
to another committee ("Management Committee") any or all of the authority of the
Board or the Plan Committee, as applicable, with respect to Awards to Grantees
other than Grantees who are Section 16 Persons at the time any such delegated
authority is exercised.
(c) Any references herein to "Committee" are references to
the Board, or the Plan Committee or the Management Committee, as applicable.
3.2 Powers of Committee. Subject to the express provisions of
the Plan, the Committee has full and final authority and sole discretion as
follows:
(i) to determine when, to whom and in what types and amounts
Awards should be granted and the terms and conditions applicable to each Award,
including the benefit payable under any SAR, Performance Unit or Performance
Share, and whether or not specific Awards shall be granted in connection with
other specific Awards, and if so whether they shall be exercisable cumulatively
with, or alternatively to, such other specific Awards;
(ii) to determine the amount, if any, that a Grantee shall
pay for Restricted Shares, whether to permit or require the payment of cash
dividends thereon to be deferred and the terms related thereto, when Restricted
Shares (including Restricted Shares acquired upon the exercise of an Option)
shall be forfeited and whether such shares shall be held in escrow;
(iii) to construe and interpret the Plan and to make all
determinations necessary or advisable for the administration of the Plan;
(iv) to make, amend, and rescind rules relating to the Plan,
including rules with respect to the exercisability and nonforfeitability of
Awards upon the Termination of Affiliation of a Grantee;
(v) to determine the terms and conditions of all Award
Agreements (which need not be identical) and, with the consent of the Grantee,
to amend any such Award Agreement at any time, among other things, to permit
transfers of such Awards to the extent permitted by the Plan; provided that the
consent of the Grantee shall not be required for any amendment which (A) does
not adversely affect the rights of the Grantee, or (B) is necessary or advisable
(as determined by the Committee) to carry out the purpose of the Award as a
result of any new or change in existing applicable law:
(vi) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;
(vii) to accelerate the exercisability (including
exercisability within a period of less than six months after the Grant Date) of,
and to accelerate or waive any or all of the terms and conditions applicable to,
any Award or any group of Awards for any reason and at any time, including in
connection with a Termination of Affiliation;
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(viii) subject to Sections 1.3 and 5.3, to extend the time
during which any Award or group of Awards may be exercised;
(ix) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are advisable to fulfill the
purposes of the Plan or to comply with applicable local law;
(x) to impose such additional terms and conditions upon
the grant, exercise or retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate, including limiting the
percentage of Awards which may from time to time be exercised by a Grantee; and
(xi) to take any other action with respect to any matters
relating to the Plan for which it is responsible.
All determinations on all matters relating to the Plan or any Award
Agreement may be made in the sole and absolute discretion of the Committee, and
all such determinations of the Committee shall be final, conclusive and binding
on all Persons. No member of the Committee shall be liable for any action or
determination made with respect to the Plan or any Award.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants. Subject to
adjustment as provided in Section 4.2, the number of Shares hereby reserved for
issuance under the Plan shall be 30,000,000, and the number of Shares for which
Awards (other than KCSI Substitute Options, as defined in Section 6.3) may be
granted to any Grantee on any Grant Date, when aggregated with the number of
Shares for which Awards (other than KCSI Substitute Options) have previously
been granted to such Grantee in the same calendar year, shall not exceed one
percent (1%) of the total Shares outstanding as of such Grant Date; provided,
however, that the total number of Shares for which Awards (other than KCSI
Substitute Options) may be granted to any Grantee in any calendar year shall not
exceed 2,000,000. If any Shares subject to an Award granted hereunder are
forfeited or such Award otherwise terminates without the issuance of such Shares
or of other consideration in lieu of such Shares, the Shares subject to such
Award, to the extent of any such forfeiture or termination shall again be
available for grant under the Plan. If any Shares (whether subject to or
received pursuant to an Award granted hereunder, purchased on the open market,
or otherwise obtained) are withheld, applied as payment, or sold pursuant to
procedures approved by the Committee and the proceeds thereof applied as payment
in connection with the exercise of an Award or the withholding of taxes related
thereto, such Shares, to the extent of any such withholding or payment, shall
again be available or shall increase the number of Shares available, as
applicable, for grant under the Plan. The Committee may from time to time
determine the appropriate methodology for calculating the number of Shares
issued pursuant to the Plan. Shares issued pursuant to the Plan may be treasury
Shares or newly-issued Shares.
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4.2 Adjustments in Authorized Shares. In the event that the
Committee determines that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, subdivision, consolidation or reduction of
capital, reorganization, merger, scheme of arrangement, split-up, spin-off or
combination involving the Company or repurchase or exchange of Shares or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event that occurs at any time after the Spin-off
Distribution affects the Shares such that any adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other securities or property) with
respect to which Awards may be granted, (ii) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award or the
substitution of other property for Shares subject to an outstanding Award;
provided, in each case that with respect to Awards of Incentive Stock Options no
such adjustment shall be authorized to the extent that such adjustment would
cause the Plan to violate Section 422(b)(1) of the Code or any successor
provision thereto; and provided further, that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.
Article 5. Eligibility and General Conditions of Awards
5.1 Eligibility. The Committee may grant Awards to any
Eligible Person, whether or not he or she has previously received an Award.
5.2 Grant Date. The Grant Date of an Award shall be the
date on which the Committee grants the Award or such later date as specified by
the Committee.
5.3 Maximum Term. The Option Term or other period during
which an Award may be outstanding shall under no circumstances extend more than
10 years after the Grant Date, and shall be subject to earlier termination as
herein provided; provided, however, that any deferral of a cash payment or of
the delivery of Shares that is permitted or required by the Committee pursuant
to Article 12 may, if so permitted or required by the Committee, extend more
than 10 years after the Grant Date of the Award to which the deferral relates.
5.4 Award Agreement. To the extent not set forth in the
Plan, the terms and conditions of each Award (which need not be the same for
each grant or for each Grantee) shall be set forth in an Award Agreement.
5.5 Restrictions on Share Transferability. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise or
vesting of an Award as it may deem advisable, including restrictions under
applicable federal securities laws.
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5.6 Termination of Affiliation. Except as otherwise
provided in an Award Agreement, and subject to the provisions of Section 14.1,
the extent to which the Grantee shall have the right to exercise, vest in, or
receive payment in respect of an Award following Termination of Affiliation
shall be determined in accordance with the following provisions of this Section
5.6.
(a) For Cause. If a Grantee has a Termination of
Affiliation for Cause, (i) the Grantee's Restricted Shares that are forfeitable
shall thereupon be forfeited, subject to the provisions of Section 8.4 regarding
repayment of certain amounts to the Grantee; and (ii) any unexercised Option,
LSAR or SAR, and any Performance Share or Performance Unit with respect to which
the Performance Period has not ended as of the date of such Termination of
Affiliation, shall terminate effective immediately upon such Termination of
Affiliation.
(b) On Account of Death or Disability. If a Grantee
has a Termination of Affiliation on account of death or Disability, then:
(i) the Grantee's Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;
(ii) any unexercised Option or SAR, whether or not
exercisable on the date of such Termination of Affiliation, may be exercised, in
whole or in part, within the first 12 months after such Termination of
Affiliation (but only during the Option Term) by the Grantee or, after his or
her death, by (A) his or her personal representative or the person to whom the
Option or SAR, as applicable, is transferred by will or the applicable laws of
descent and distribution, or (B) the Grantee's beneficiary designated in
accordance with Article 11; and
(iii) the benefit payable with respect to any
Performance Share or Performance Unit with respect to which the Performance
Period has not ended as of the date of such Termination of Affiliation on
account of death or Disability shall be equal to the product of the Fair Market
Value of a Share as of the date of such Termination of Affiliation or the value
of the Performance Unit specified in the Award Agreement (determined as of the
date of such Termination of Affiliation), as applicable, multiplied successively
by each of the following:
(1) a fraction, the numerator of which is the
number of months (including as a whole month any partial month) that have
elapsed since the beginning of such Performance Period until the date of such
Termination of Affiliation and the denominator of which is the number of months
(including as a whole month any partial month) in the Performance Period; and
(2) a percentage determined by the Committee that
would be earned under the terms of the applicable Award Agreement assuming that
the rate at which the performance goals have been achieved as of the date of
such Termination of Affiliation would continue until the end of the Performance
Period, or, if the Committee elects to compute the benefit after the end of the
Performance Period, the Performance Percentage, as determined by the Committee,
attained during the Performance Period.
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(c) On Account of Retirement. If a Grantee has a
Termination of Affiliation on account of Retirement, then:
(i) the Grantee's Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;
(ii) any unexercised Option or SAR, whether or not
exercisable on the date of such Termination of Affiliation, may be exercised, in
whole or in part, within the first five years after such Termination of
Affiliation (but only during the Option Term) by the Grantee or, after his or
her death, by (A) his or her personal representative or the person to whom the
Option or SAR, as applicable, is transferred by will or the applicable laws of
descent and distribution, or (B) the Grantee's beneficiary designated in
accordance with Article 11; and
(iii) the benefit payable with respect to any Performance
Share or Performance Unit with respect to which the Performance Period has not
ended as of the date of such Termination of Affiliation on account of Retirement
shall be equal to the product of the Fair Market Value of a Share as of the date
of such Termination of Affiliation or the value of the Performance Unit
specified in the Award Agreement (determined as of the date of such Termination
of Affiliation), as applicable, multiplied successively by each of the
following:
(1) a fraction, the numerator of which is the
number of months (including as a whole month any partial month) that have
elapsed since the beginning of such Performance Period until the date of such
Termination of Affiliation and the denominator of which is the number of months
(including as a whole month any partial month) in the Performance Period; and
(2) a percentage determined by the Committee that
would be earned under the terms of the applicable Award Agreement assuming that
the rate at which the performance goals have been achieved as of the date of
such Termination of Affiliation would continue until the end of the Performance
Period, or, if the Committee elects to compute the benefit after the end of the
Performance Period, the Performance Percentage, as determined by the Committee,
attained during the Performance Period.
(d) Any Other Reason. If a Grantee has a Termination
of Affiliation for any reason other than for Cause, death, Disability or
Retirement, then:
(i) the Grantee's Restricted Shares, to the extent
forfeitable on the date of the Grantee's Termination of Affiliation, shall be
forfeited on such date;
(ii) any unexercised Option or SAR, to the extent
exercisable immediately before the Grantee's Termination of Affiliation, may be
exercised in whole or in part, not later than three months after such
Termination of Affiliation (but only during the Option Term) by the Grantee or,
after his or her death, by (A) his or her personal representative or the person
to whom the Option or SAR, as applicable, is transferred by will or the
applicable laws of descent and distribution, or (B) the Grantee's beneficiary
designated in accordance with Article 11;
13
(iii) if such Termination of Affiliation is the
result of the Grantee's termination of employment by the Corporation or a
Consolidated Subsidiary (other than for Cause), then, in addition to giving
effect to the immediately preceding clause (ii), the portion of any Option that
was not exercisable immediately before the Grantee's Termination of Affiliation,
may be exercised in whole or in part, not later than three months after such
Termination of Affiliation (but only during the Option Term) by the Grantee or,
after his or her death, by (A) his or her personal representative or the person
to whom the Option is transferred by will or the applicable laws of descent and
distribution, or (b) the Grantee's beneficiary designated in accordance with
Article 11: and
(iv) any Performance Shares or Performance Units with
respect to which the Performance Period has not ended as of the date of such
Termination of Affiliation shall terminate immediately upon such Termination of
Affiliation.
5.7 Nontransferability of Awards.
(a) Except as provided in Section 5.7(c) below, each Award,
and each right under any Award, shall be exercisable only by the Grantee during
the Grantee's lifetime, or, if permissible under applicable law, by the
Grantee's guardian or legal representative.
(b) Except as provided in Section 5.7(c) below, no Award
(prior to the time, if applicable, Shares are issued in respect of such Award),
and no right under any Award, may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Grantee otherwise than by will
or by the laws of descent and distribution (or in the case of Restricted Shares,
to the Company), and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Subsidiary; provided, that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.
(c) To the extent and in the manner permitted by the
Committee, and subject to such terms, conditions, restrictions or limitations
that may be prescribed by the Committee, a Grantee may transfer an Award (other
than an Incentive Stock Option) to (i) a spouse, sibling, parent, child
(including an adopted child) or grandchild (any of which, an "Immediate Family
Member") of the Grantee; (ii) a trust, the primary beneficiaries of which
consist exclusively of the Grantee or Immediate Family Members of the Grantee;
or (iii) a corporation, partnership or similar entity, the owners of which
consist exclusively of the Grantee or Immediate Family Members of the Grantee.
5.8 Cancellation and Rescission of Awards. Unless the Award
Agreement specifies otherwise, the Committee may cancel, rescind, suspend,
withhold, or otherwise limit or restrict any unexercised Award at any time if
the Grantee is not in compliance with all applicable provisions of the Award
Agreement and the Plan or if the Grantee has a Termination of Affiliation for
Cause.
5.9 Loans and Guarantees. The Committee may, subject to
applicable law, (i) allow a Grantee to defer payment to the Company of all or
any portion of the Option Price of an Option or
14
the purchase price of Restricted Shares, or (ii) cause the Company to loan to
the Grantee, or guarantee a loan from a third party to the Grantee for, all or
any portion of the Option Price of an Option or the purchase price of Restricted
Shares or all or any portion of any taxes associated with the exercise of,
nonforfeitability of, or payment of benefits in connection with, an Award. Any
such payment deferral, loan or guarantee by the Company shall be on such terms
and conditions as the Committee may determine.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of
the Plan, Options may be granted to any Eligible Person in such number, and upon
such terms, and at any time and from time to time as shall be determined by the
Committee. Without in any manner limiting the generality of the foregoing, the
Committee may grant to any Eligible Person, or permit any Eligible Person to
elect to receive, an Option in lieu of or in substitution for any other
compensation (whether payable currently or on a deferred basis, and whether
payable under this Plan or otherwise) which such Eligible Person may be eligible
to receive from the Company or a Subsidiary.
6.2 Award Agreement. Each Option grant shall be evidenced by
an Award Agreement that shall specify the Option Price, the Option Term, the
number of shares to which the Option pertains, the time or times at which such
Option shall be exercisable and such other provisions as the Committee shall
determine.
6.3 Option Price. The Option Price of an Option under this
Plan shall be determined by the Committee, and shall be equal to or more than
100% of the Fair Market Value of a Share on the Grant Date; provided, however,
that any Option that is (i) granted to a Grantee in connection with the Spin-off
Distribution, (ii) associated with an option to purchase shares of stock of KCSI
("KCSI Option") held by such Grantee immediately prior to such Spin-off
Distribution, and (iii) intended to preserve for the Grantee the economic value
of all or a portion of such KCSI Option ("KCSI Substitute Option") may, to the
extent necessary to achieve such preservation of economic value, be granted with
an Option Price that is less than 100% of the Fair Market Value of a Share on
the Grant Date; and provided, further, that any Option that is (x) granted to a
Grantee in connection with the acquisition ("Acquisition"), however effected, by
the Company of another corporation or entity ("Acquired Entity") or the assets
thereof, (y) associated with an option to purchase shares of stock of the
Acquired Entity or an affiliate thereof ("Acquired Entity Option") held by such
Grantee immediately prior to such Acquisition, and (z) intended to preserve for
the Grantee the economic value of all or a portion of such Acquired Entity
Option ("Substitute Option") may, to the extent necessary to achieve such
preservation of economic value, be granted with an Option Price that is less
than 100% of the Fair Market Value of a Share on the Grant Date.
6.4 Grant of Incentive Stock Options. At the time of the
grant of any Option, the Committee may designate that such Option shall be made
subject to additional restrictions to permit it to qualify as an "incentive
stock option" under the requirements of Section 422 of the Code. Any Option
15
designated as an Incentive Stock Option shall, to the extent required by Section
422 of the Code:
(i) if granted to a 10% Owner, have an Option Price not less
than 110% of the Fair Market Value of a Share on its Grant Date;
(ii) be exercisable for a period of not more than 10 years
(five years in the case of an Incentive Stock Option granted to a 10% Owner)
from its Grant Date, and be subject to earlier termination as provided herein or
in the applicable Award Agreement;
iii) not have an aggregate Fair Market Value (as of the Grant
Date of each Incentive Stock Option) of the Shares with respect to which
Incentive Stock Options (whether granted under the Plan or any other stock
option plan of the Grantee's employer or any parent or Subsidiary thereof
("Other Plans")) are exercisable for the first time by such Grantee during any
calendar year, determined in accordance with the provisions of Section 422 of
the Code, which exceeds $100,000 (the "$100,000 Limit");
(iv) if the aggregate Fair Market Value of the Shares
(determined on the Grant Date) with respect to the portion of such grant which
is exercisable for the first time during any calendar year ("Current Grant") and
all Incentive Stock Options previously granted under the Plan and any Other
Plans which are exercisable for the first time during the same calendar year
("Prior Grants") would exceed the $100,000 Limit be exercisable as follows:
(A) the portion of the Current Grant which would,
when added to any Prior Grants, be exercisable with respect to Shares
which would have an aggregate Fair Market Value (determined as of the
respective Grant Date for such options) in excess of the $100,000
Limit shall, notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Grantee in the first subsequent
calendar year or years in which it could be exercisable for the first
time by the Grantee when added to all Prior Grants without exceeding
the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant,
any portion of a Current Grant could not be exercised under the
preceding provisions of this Section during any calendar year
commencing with the calendar year in which it is first exercisable
through and including the last calendar year in which it may by its
terms be exercised, such portion of the Current Grant shall not be an
Incentive Stock Option, but shall be exercisable as an Option which is
not an Incentive Stock Option at such date or dates as are provided in
the Current Grant;
(v) be granted within 10 years from the earlier of the
date the Plan is adopted or the date the Plan is approved by the stockholders of
the Company; and
(vi) by its terms not be assignable or transferable other
than by will or the laws of descent and distribution and may be exercised,
during the Grantee's lifetime, only by the Grantee;
16
provided, however, that the Grantee may, in any manner permitted by the Plan and
specified by the Committee, designate in writing a beneficiary to exercise his
or her Incentive Stock Option after the Grantee's death.
Any Option designated as an Incentive Stock Option shall also require
the Grantee to notify the Committee of any disposition of any Shares issued
pursuant to the exercise of the Incentive Stock Option under the circumstances
described in Section 421(b) of the Code (relating to certain disqualifying
dispositions) (any such circumstance, a "Disqualifying Disposition"), within 10
days of such Disqualifying Disposition.
Notwithstanding the foregoing and Section 3.2(v), the Committee may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an Incentive Stock Option), take any action necessary to prevent
such Option from being treated as an Incentive Stock Option.
6.5 Payment. Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the Company,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares made by any one or more of
the following means subject to the approval of the Committee:
(a) cash, personal check or wire transfer;
(b) Mature Shares, valued at their Fair Market Value on
the date of exercise;
(c) Restricted Shares held by the Grantee for at least
six months prior to the exercise of the Option, each such Share valued
at the Fair Market Value of a Share on the date of exercise;
(d) subject to applicable law, pursuant to procedures
approved by the Committee, through the sale of the Shares acquired on
exercise of the Option through a broker-dealer to whom the Grantee has
submitted an irrevocable notice of exercise and irrevocable
instructions to deliver promptly to the Company the amount of sale or
loan proceeds sufficient to pay for such Shares, together with, if
requested by the Company, the amount of federal, state, local or
foreign withholding taxes payable by Grantee by reason of such
exercise; or
(e) when permitted by the Committee, payment may also be
made in accordance with Section 5.9.
If any Restricted Shares ("Tendered Restricted Shares") are used to
pay the Option Price, a number of Shares acquired on exercise of the Option
equal to the number of Tendered Restricted Shares shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option.
17
Article 7. Stock Appreciation Rights and Limited Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of
the Plan, SARs may be granted to any Eligible Person at any time and from time
to time as shall be determined by the Committee. The Committee may grant
Freestanding SARs, Tandem SARs, or any combination thereof.
The Committee shall determine the number of SARs granted to each Grantee
(subject to Article 4), the Strike Price thereof, and, consistent with Section
7.2 and the other provisions of the Plan, the other terms and conditions
pertaining to such SARs.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised
for all or part of the Shares subject to the related Award upon the surrender of
the right to exercise the equivalent portion of the related Award. A Tandem SAR
may be exercised only with respect to the Shares for which its related Award is
then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR, (i) the Tandem SAR will expire no later than the
expiration of the underlying Option; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than 100% of the difference between the
Option Price of the underlying Option and the Fair Market Value of the Shares
subject to the underlying Option at the time the Tandem SAR is exercised; and
(iii) the Tandem SAR may be exercised only when the Fair Market Value of the
Shares subject to the Option exceeds the Option Price of the Option.
7.3 Payment of SAR Amount. Upon exercise of an SAR, the
Grantee shall be entitled to receive payment from the Company in an amount
determined by multiplying:
(a) the excess of the Fair Market Value of a Share on the
date of exercise over the Strike Price;
by
(b) the number of Shares with respect to which the SAR is
exercised;
provided that the Committee may provide in the Award Agreement that the benefit
payable on exercise of an SAR shall not exceed such percentage of the Fair
Market Value of a Share on the Grant Date as the Committee shall specify. As
determined by the Committee, the payment upon SAR exercise may be in cash, in
Shares which have an aggregate Fair Market Value (as of the date of exercise of
the SAR) equal to the amount of the payment, or in some combination thereof, as
set forth in the Award Agreement.
7.4 Grant of LSARs. Subject to the terms and conditions
of the Plan, LSARs may be granted to any Eligible Person at any time and from
time to time as shall be determined by the Committee. Each LSAR shall be
identified with a Share subject to an Option or SAR held by the
18
Grantee, which may include an Option or SAR previously granted under the Plan.
Upon the exercise, expiration, termination, forfeiture or cancellation of the
Option or SAR with which an LSAR is identified, such LSAR shall terminate.
7.5 Exercise of LSARs. Each LSAR shall automatically be
exercised upon a Change of Control which has not been approved by the Incumbent
Board. The exercise of an LSAR shall result in the cancellation of the Option or
SAR with which such LSAR is identified, to the extent of such exercise.
7.6 Payment of LSAR Amount. Within 10 business days after the
exercise of an LSAR, the Company shall pay to the Grantee, in cash, an amount
equal to the difference between:
(a) the greatest of (i) the Change of Control Value, (ii)
the Fair Market Value of a Share on the date occurring
during the 180-day period immediately preceding the
date of the Change of Control on which such Fair Market
Value is the greatest or (iii) such other valuation
amount, if any, as may be determined pursuant to the
provisions of the applicable Award Agreement;
minus
(b) either (i) in the case of an LSAR identified with an
Option, the Option Price of such Option or (ii) in the
case of an LSAR identified with an SAR, the Strike Price
of such SAR.
Article 8. Restricted Shares
8.1 Grant of Restricted Shares. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Shares to any Eligible Person in such amounts as the Committee
shall determine.
8.2 Award Agreement. Each grant of Restricted Shares shall
be evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Restricted Shares granted, and such other provisions
as the Committee shall determine. The Committee may impose such conditions
and/or restrictions on any Restricted Shares granted pursuant to the Plan as it
may deem advisable, including restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, Subsidiary and/or
individual), time-based restrictions on vesting, and/or restrictions under
applicable securities laws.
8.3 Consideration. The Committee shall determine the amount,
if any, that a Grantee shall pay for Restricted Shares, which shall be (except
with respect to Restricted Shares that are treasury shares) at least the Minimum
Consideration for each Restricted Share. Such payment shall be made in full by
the Grantee before the delivery of the shares and in any event no later than 10
business days after the Grant Date for such shares.
19
8.4 Effect of Forfeiture. If Restricted Shares are forfeited,
and if the Grantee was required to pay for such shares or acquired such
Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to
have resold such Restricted Shares to the Company at a price equal to the lesser
of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the
Fair Market Value of a Share on the date of such forfeiture. The Company shall
pay to the Grantee the required amount as soon as is administratively practical.
Such Restricted Shares shall cease to be outstanding, and shall no longer confer
on the Grantee thereof any rights as a stockholder of the Company, from and
after the date of the event causing the forfeiture, whether or not the Grantee
accepts the Company's tender of payment for such Restricted Shares.
8.5 Escrow; Legends. The Committee may provide that the
certificates for any Restricted Shares (x) shall be held (together with a stock
power executed in blank by the Grantee) in escrow by the Secretary of the
Company until such Restricted Shares become nonforfeitable or are forfeited
and/or (y) shall bear an appropriate legend restricting the transfer of such
Restricted Shares. If any Restricted Shares become nonforfeitable, the Company
shall cause certificates for such shares to be issued without such legend.
Article 9. Performance Units and Performance Shares
9.1 Grant of Performance Units and Performance Shares. Subject
to the terms of the Plan, Performance Units or Performance Shares may be granted
to any Eligible Person in such amounts and upon such terms, and at any time and
from time to time, as shall be determined by the Committee.
9.2 Value/Performance Goals. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals which,
depending on the extent to which they are met, will determine the number or
value of Performance Units or Performance Shares that will be paid out to the
Grantee. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
9.3 Earning of Performance Units and Performance Shares.
Subject to the terms of this Plan, after the applicable Performance Period has
ended, the holder of Performance Units or Performance Shares shall be entitled
to receive a payout based on the number and value of Performance Units or
Performance Shares earned by the Grantee over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.
If a Grantee is promoted, demoted or transferred to a different
business unit of the Company during a Performance Period, then, to the extent
the Committee determines the performance goals or Performance Period are no
longer appropriate, the Committee may adjust, change or eliminate the
performance goals or the applicable Performance Period as it deems appropriate
in order to make them appropriate and comparable to the initial performance
goals or Performance Period.
20
9.4 Form and Timing of Payment of Performance Units and
Performance Shares. Payment of earned Performance Units or Performance Shares
shall be made in a lump sum following the close of the applicable Performance
Period. The Committee may pay earned Performance Units or Performance Shares in
the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance Units
or Performance Shares at the close of the applicable Performance Period. Such
Shares may be granted subject to any restrictions deemed appropriate by the
Committee. The form of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.
As determined by the Committee, a Grantee may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units or Performance Shares but not yet
distributed to the Grantee. In addition, a Grantee may, as determined by the
Committee, be entitled to exercise his or her voting rights with respect to such
Shares.
Article 10. Bonus Shares
Subject to the terms of the Plan, the Committee may grant Bonus Shares
to any Eligible Person, in such amount and upon such terms and at any time and
from time to time as shall be determined by the Committee. The terms of such
Bonus Shares shall be set forth in the Award Agreement pertaining to the grant
of the Award.
Article 11. Beneficiary Designation
Each Grantee under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Grantee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Grantee in writing with
the Company during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
Article 12. Deferrals The Committee may permit or require a Grantee
to defer receipt of the payment of cash or the delivery of Shares that would
otherwise be due by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Shares, the satisfaction of
any requirements or goals with respect to Performance Units or Performance
Shares, or the grant of Bonus Shares. If any such deferral is required or
permitted, the Committee shall establish rules and procedures for such
deferrals. Except as otherwise provided in an Award Agreement, any payment or
any Shares that are subject to such deferral shall be made or delivered to the
Grantee upon the Grantee's Termination of Affiliation.
21
Article 13. Rights of Employees/Directors/Consultants
13.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Grantee's employment,
directorship or consultancy at any time, nor confer upon any Grantee the right
to continue in the employ or as a director or consultant of the Company.
13.2 Participation. No employee, director or consultant shall
have the right to be selected to receive an Award under the Plan or, having been
so selected, to be selected to receive a future Award.
Article 14. Change of Control
14.1 Change of Control. Except as otherwise provided in an
Award Agreement, if a Change of Control occurs, then:
(i) the Grantee's Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;
(ii) any unexercised Option or SAR, whether or not exercisable
on the date of such Change of Control, shall thereupon be fully exercisable and
may be exercised, in whole or in part; and
(iii) the Company shall immediately pay to the Grantee, with
respect to any Performance Share or Performance Unit with respect to which the
Performance Period has not ended as of the date of such Change of Control, a
cash payment equal to the product of (A) in the case of a Performance Share, the
Change of Control Value or (B) in the case of a Performance Unit, the value of
the Performance Unit specified in the Award Agreement, as applicable, multiplied
successively by each of the following:
(1) a fraction, the numerator of which is the number of
whole and partial months that have elapsed between the beginning of such
Performance Period and the date of such Change of Control and the denominator of
which is the number of whole and partial months in the Performance Period; and
(2) a percentage equal to a greater of (x) the target
percentage, if any, specified in the applicable Award Agreement or (y) the
maximum percentage, if any, that would be earned under the terms of the
applicable Award Agreement assuming that the rate at which the performance goals
have been achieved as of the date of such Change of Control would continue until
the end of the Performance Period.
14.2 Pooling of Interests Accounting. If the Committee
determines, prior to a sale or merger of the Company that the Committee
determines is reasonably likely to occur, that the grant
22
or exercise of Options, SARs or LSARs would preclude the use of pooling of
interests accounting ("pooling") after the consummation of such sale or merger
and that such preclusion of pooling would have a material adverse effect on such
sale or merger, the Committee may (a) make any adjustments in such Options, SARs
or LSARs prior to the sale or merger that will permit pooling after the
consummation of such sale or merger or (b) cause the Company to pay the benefits
attributable to such Options, SARs or LSARs (including for this purpose not only
the spread between the then Fair Market Value of the Shares subject to such
Options, SARs or LSARs and the Option Price or Strike Price applicable thereto,
but also the additional value of such Options, SARs, or LSARs in excess of such
spread, as determined by the Committee) in the form of Shares if such payment
would not cause the transaction to remain or become ineligible for pooling;
provided, however, no such adjustment or payment may be made that would
adversely affect in any material way any such Options, SARs or LSARs without the
consent of the affected Grantee.
Article 15. Amendment, Modification, and Termination
15.1 Amendment, Modification, and Termination. Subject to
the terms of the Plan, the Board may at any time and from time to time, alter,
amend, suspend or terminate the Plan in whole or in part without the approval of
the Company's stockholders. The Board may delegate to the Plan Committee any or
all of the authority of the Board under Section 15.1 to alter, amend, suspend or
terminate the Plan.
15.2 Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee may make adjustments in the terms
and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including the events described in Section 4.2)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of the Performance-Based Exception.
15.3 Awards Previously Granted. Notwithstanding any other
provision of the Plan to the contrary, no termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the Grantee of
such Award.
23
Article 16. Withholding
16.1 Withholding
(a) Mandatory Tax Withholding.
(1) Whenever, under the Plan, Shares are to be delivered
upon exercise or payment of an Award or upon Restricted Shares
becoming nonforfeitable, or any other event with respect to
rights and benefits hereunder, the Company shall be entitled to
require (i) that the Grantee remit an amount in cash, or if
determined by the Committee, Mature Shares, sufficient to satisfy
all federal, state, local and foreign tax withholding
requirements related thereto ("Required Withholding"), (ii) the
withholding of such Required Withholding from compensation
otherwise due to the Grantee or from any Shares or other payment
due to the Grantee under the Plan or (iii) any combination of the
foregoing.
(2) Any Grantee who makes a Disqualifying Disposition or
an election under Section 83(b) of the Code shall remit to the
Company an amount sufficient to satisfy all resulting Required
Withholding; provided that, in lieu of or in addition to the
foregoing, the Company shall have the right to withhold such
Required Withholding from compensation otherwise due to the
Grantee or from any Shares or other payment due to the Grantee
under the Plan.
(b) Elective Share Withholding.
(1) Subject to subsection 16.1(b)(2), a Grantee may elect
the withholding ("Share Withholding") by the Company of a portion
of the Shares subject to an Award upon the exercise of such Award
or upon Restricted Shares becoming non-forfeitable or upon making
an election under Section 83(b) of the Code (each, a "Taxable
Event") having a Fair Market Value equal to (i) the minimum
amount necessary to satisfy Required Withholding liability
attributable to the Taxable Event; or (ii) with the Committee's
prior approval, a greater amount, not to exceed the estimated
total amount of such Grantee's tax liability with respect to the
Taxable Event.
(2) Each Share Withholding election shall be subject to
the following conditions:
(i) any Grantee's election shall be
subject to the Committee's discretion to revoke the Grantee's right to elect
Share Withholding at any time before the Grantee's election if the Committee has
reserved the right to do so in the Award Agreement;
(ii) the Grantee's election must be made
before the date (the "Tax Date") on which the amount of tax to be withheld is
determined; and
(iii) the Grantee's election shall be
irrevocable.
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16.2 Notification under Code Section 83(b). If the Grantee, in
connection with the exercise of any Option, or the grant of Restricted Shares,
makes the election permitted under Section 83(b) of the Code to include in such
Grantee's gross income in the year of transfer the amounts specified in Section
83(b) of the Code, then such Grantee shall notify the Company of such election
within 10 days of filing the notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code. The Committee may, in
connection with the grant of an Award or at any time thereafter prior to such an
election being made, prohibit a Grantee from making the election described
above.
Article 17. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise of all or substantially all of the business
and/or assets of the Company.
Article 18. Additional Provisions
18.1 Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include the feminine, the
plural shall include the singular and the singular shall include the plural.
18.2 Severability. If any part of the Plan is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not invalidate any other part of the Plan. Any Section or
part of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
18.3 Requirements of Law. The granting of Awards and the
issuance of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
stock exchanges as may be required. Notwithstanding any provision of the Plan or
any Award, Grantees shall not be entitled to exercise, or receive benefits
under, any Award, and the Company shall not be obligated to deliver any Shares
or other benefits to a Grantee, if such exercise or delivery would constitute a
violation by the Grantee or the Company of any applicable law or regulation.
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18.4 Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any
applicable securities law, or the requirements of any stock exchange upon which
Shares may be listed, the Committee may impose any restriction on Shares
acquired pursuant to Awards under the Plan as it may deem advisable. All
certificates for Shares delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the SEC, any stock exchange upon which Shares are then
listed, any applicable securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions. If so requested by the Company, the Grantee shall make a written
representation to the Company that he or she will not sell or offer to sell any
Shares unless a registration statement shall be in effect with respect to such
Shares under the Securities Act of 1993, as amended, and any applicable state
securities law or unless he or she shall have furnished to the Company evidence
satisfactory to the Company that such registration is not required.
(b) If the Committee determines that the exercise or
nonforfeitability of, or delivery of benefits pursuant to, any Award would
violate any applicable provision of securities laws or the listing requirements
of any stock exchange upon which any of the Company's equity securities are
listed, then the Committee may postpone any such exercise, nonforfeitability or
delivery, as applicable, but the Company shall use all reasonable efforts to
cause such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date.
18.5 No Rights as a Stockholder. A Grantee shall not have any
rights as a stockholder of the Company with respect to the Shares (other than
Restricted Shares) which may be deliverable upon exercise or payment of such
Award until such shares have been delivered to him or her. Restricted Shares,
whether held by a Grantee or in escrow by the Secretary of the Company, shall
confer on the Grantee all rights of a stockholder of the Company, except as
otherwise provided in the Plan or Award Agreement. At the time of a grant of
Restricted Shares, the Committee may require the payment of cash dividends
thereon to be deferred and, if the Committee so determines, reinvested in
additional Restricted Shares. Stock dividends and deferred cash dividends issued
with respect to Restricted Shares shall be subject to the same restrictions and
other terms as apply to the Restricted Shares with respect to which such
dividends are issued. The Committee may provide for payment of interest on
deferred cash dividends.
18.6 Nature of Payments. Awards shall be special incentive
payments to the Grantee and shall not be taken into account in computing the
amount of salary or compensation of the Grantee for purposes of determining any
pension, retirement, death or other benefit under (a) any pension, retirement,
profit-sharing, bonus, insurance or other employee benefit plan of the Company
or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary
and (ii) the Grantee, except as such plan or agreement shall otherwise expressly
provide.
18.7 Performance Measures. Unless and until the Committee
proposes for stockholder vote and stockholders approve a change in the general
performance measures set forth
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in this Section 18.7, the performance measure(s) to be used for purposes of such
Awards shall be chosen from among the following:
(a) Earnings (either in the aggregate or on a per-share basis);
(b) Net income (before or after taxes);
(c) Operating income;
(d) Cash flow;
(e) Return measures (including return on assets, equity, or sales);
(f) Earnings before or after either, or any combination of, taxes,
interest or depreciation and amortization;
(g) Gross revenues;
(h) Share price (including growth measures and stockholder return or
attainment by the Shares of a specified value for a specified
period of time);
(i) Reductions in expense levels in each case, where applicable,
determined either on a Company-wide basis or in respect of any
one or more business units;
(j) Net economic value; or
(k) Market share.
Any of the foregoing performance measures may be applied, as determined
by the Committee, on the basis of the Company as a whole, or in respect of any
one or more Subsidiaries or divisions of the Company or any part of a Subsidiary
or division of the Company that is specified by the Committee.
The Committee may adjust the determinations of the degree of attainment
of the preestablished performance goals; provided, however, that Awards which
are designed to qualify for the Performance-Based Exception may not be adjusted
upward without the approval of the Company's stockholders (the Committee may
adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, and still qualify for the
Performance-Based Exception, the Committee shall have sole discretion to make
such changes without obtaining stockholder approval.
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18.8 Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware other than its laws respecting choice of law.
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