1981 Executive Incentive Plan - Jacobs Engineering Group Inc.
JACOBS ENGINEERING GROUP INC.
1981 Executive Incentive Plan
(As Amended and Restated)
March 25, 1993
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TABLE OF CONTENTS
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1. Purpose .................................................. 1
2. Definitions .............................................. 1
3. Shares of Capital Stock Subject to the Plan .............. 3
4. Administration of the Plan ............................... 3
5. Eligibility for Incentive Award .......................... 4
6. Issuance of Restricted Stock and Forfeiture Restrictions . 5
7. Options .................................................. 6
8. Stock Appreciation Rights ................................ 9
9. Adjustment Provisions .................................... 11
10. Change in Control ........................................ 12
11. Outside Director Stock Options ........................... 13
(a) Applicable Provisions of the Plan .................... 13
(b) Definitions .......................................... 13
(c) Grant of Options to Outside Directors ................ 14
(i) Eligibility ................................... 14
(ii) Appointment Grants ............................ 14
(iii) Annual Grants ................................. 14
(d) Terms of Outside Director Options .................... 14
(i) Option Agreement .............................. 14
(ii) Option Price .................................. 14
(iii) Exercisability ................................ 15
(e) Exercise of Options .................................. 16
(i) Persons Eligible to Exercise .................. 16
(ii) Manner of Exercise ............................ 16
(iii) Rights as a Shareholder ....................... 18
(iv) Conditions to Issuance of Stock Certificates .. 18
(f) Adjustment Provisions ................................ 18
(g) Other Provisions ..................................... 19
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(i) Outside Director Options not Transferable ..... 19
(ii) Effective Date ................................ 19
12. General Provisions ........................................ 19
13. Amendment, Suspension and Termination of Plan ............. 21
14. Termination of The Plan ................................... 21
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JACOBS ENGINEERING GROUP INC.
1981 EXECUTIVE INCENTIVE PLAN
(As Amended and Restated)
March 25, 1993
1. Purpose. The purpose of the Jacobs Engineering Group Inc. 1981
Executive Incentive Plan is to secure for the Corporation and its stockholders
the benefits which accrue by providing officers, directors and key employees of
the Corporation who will be responsible for the future growth and success of the
Corporation the benefits arising from capital stock ownership, realization of
capital stock appreciation, or both. The Plan evidences a conviction that, by
providing such opportunities for officers, directors and policy making
employees, the Corporation can instill a sense of personal involvement in the
continued development and financial success of the Corporation and can encourage
them to remain with and devote their best efforts to the business of the
Corporation, thereby advancing the interests of the Corporation and its
stockholders.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth in
this Paragraph 2.
"Affiliate" means any corporation controlling, controlled by, or under
common control with the Corporation.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Capital Stock" shall mean the common stock, $1.00 par value, of the
Corporation or such other class of shares or other securities as may be
applicable pursuant to the provisions of Paragraph 9.
"Committee" shall mean the Compensation and Benefits Committee or
other committee appointed by the Board of Directors to administer the Plan
pursuant Paragraph 4. The Board of Directors may, from time to time, remove
members from, or add members to, the Committee. Vacancies on the Committee,
however caused, shall be filled only by the Board of Directors.
"Corporation" shall mean Jacobs Engineering Group Inc.
"Employee" shall mean any employee of the Corporation, or of any of
its present or future parent or subsidiary corporations, or a corporation or a
parent or subsidiary corporation of such corporation issuing or assuming an
Option in
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a transaction to which Section 425(a) of the Internal Revenue Code applies,
whether such employee is so employed at the time this Plan is adopted or becomes
so employed subsequent to the adoption of this Plan.
"Fair Market Value" shall mean the closing price of the Capital Stock
on the composite transactions report of the national securities exchange on
which the Common Stock is then listed for the day on which the value is
determined. If such date is a Saturday, Sunday, legal holiday or other date on
which such exchange is closed, then the fair market value shall be determined as
the closing price on the first immediately preceding trading date.
"Incentive Award" shall mean an Option, Stock Appreciation Right or
Restricted stock granted under the Plan.
"Incentive Stock Option" shall mean an option as defined under Section
422 of the Internal Revenue Code and regulations thereunder.
"Insider" shall mean an Optionee who is required to file reports
pursuant to Section 16(a) of the 1934 Act.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Nonqualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
"Option" shall mean an option granted under the Plan to purchase
shares of Capital Stock.
"Optionee" shall mean any person to whom an Option is granted under
the Plan.
"Parent corporation" and "subsidiary corporation" shall have the
meanings assigned to them in Sections 425(e) and 425(f) of the Internal Revenue
Code.
"Plan" shall mean the Jacobs Engineering Group Inc. 1981 Executive
Incentive Plan as set forth herein and as amended from time to time.
"Restricted Stock" shall mean shares of Capital Stock granted pursuant
to Paragraph 6 of the Plan.
"Stock Appreciation Right" shall mean a right, granted pursuant to
Paragraph 8 of the Plan, to receive a number of shares of Capital Stock or, in
the discretion of the Committee, an amount of cash or a combination of shares
and cash, in either
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event based on an increase in the Fair Market Value of the shares subject to the
right.
"Tax Date" shall mean the date as of which any federal, state, local
or foreign tax is required to be withheld from an Optionee in connection with
the exercise of an Option or the sale or other disposition of Capital Stock
acquired upon the exercise of an Option.
3. Shares of Capital Stock Subject to the Plan.
(a) Subject to the provisions of subparagraph (c) of this
Paragraph 3 and Paragraph 9, the aggregate number of shares of capital Stock
which may be issued or transferred pursuant to Incentive Awards under the Plan
shall not exceed 3,048,900.
(b) The shares to be delivered under the Plan shall be made
available, at the discretion of the Board of Directors, either from authorized
but unissued shares of Capital Stock or previously issued shares reacquired by
the Corporation, including shares purchased in the open market.
(c) If any shares of Capital Stock subject to an Option are not
issued or transferred and cease to be issuable or transferable for any reason,
or if any shares of Restricted Stock granted under the Plan are forfeited to the
Corporation pursuant to the restrictions imposed on such shares in conformity
with the Plan, the shares not so issued or transferred and the shares so
forfeited shall no longer be charged against the limitation provided for in
Paragraph 3(a) and may again be made subject to Incentive Awards. However,
shares as to which an Option has been surrendered in connection with the
exercise of a related Stock Appreciation Right shall not again be available for
the grant of any further Incentive Awards.
4. Administration of the Plan.
(a) All provisions of the Plan except the provisions of Paragraph
11 shall be administered by a committee (the "Committee") appointed by the Board
of Directors of the Corporation (the "Board") from among its members and shall
be comprised of not less than three (3) members of the Board. Unless and until
its members are not qualified to serve on the Committee pursuant to the
provisions of the Plan, the Compensation and Benefits Committee of the Board
shall function as the Committee. Members of the Committee shall be members of
the Board who are not eligible to participate under the Plan or any other plan
of the Corporation or its Affiliates authorizing discretionary grants or awards
of stock, stock options or stock appreciation rights and who have not been
eligible to so participate for at least one (1) year prior to service as a
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member of the Committee. Eligibility requirements for members of the Committee
shall comply with Rule 16b-3 promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act") or any successor rule or regulation. No
person, other than a member of the Committee, shall have any discretion
concerning decisions regarding the Plan except as otherwise set forth in this
Plan or as may be required by applicable law. The Committee shall determine the
key employees of the Corporation and its Affiliates (including officers, whether
or not they are directors) to whom, and the type of Incentive Award, the time or
times at which, Incentive Awards will be granted, the number of shares to be
subject to each Incentive Award, the duration of each Incentive Award, the time
or times within which the Incentive Award may be exercised, the cancellation of
the Incentive Award (with the consent of the holder thereof) and the other
conditions of the grant of the Incentive Award. The provisions and conditions
of the Incentive Awards need not be the same with respect to each Employee or
with respect to each Incentive Award. In making such determinations the
Committee may take into account the nature of the services rendered by the
respective employees, their present and potential contributions to the
Corporation's success and such other factors as the Committee in its discretion
shall deem relevant.
(b) The Committee shall have and may exercise such powers and
authority of the Board of Directors as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan, and any reference
in the Plan to any specific power or authority of the Committee shall not
derogate from the foregoing. Subject to the express provisions of the Plan, the
Committee shall also have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Incentive Award agreements (which need not be
identical) and to make all other determinations necessary or advisable for the
administration of the Plan.
(c) The Committee shall select one of its members as its chairman
and shall hold its meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum and all determinations of the
Committee shall be made by a majority of its members.
5. Eligibility for Incentive Award.
(a) The Committee shall determine and designate from time to time
those Employees of the Corporation and its subsidiary corporations who are to be
granted Incentive Awards. Incentive Awards may be granted only to salaried
officers or other salaried key employees of the Corporation and its subsidiary
corporations, but may be granted the same Employee on more than one occasion.
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(b) Incentive Awards may be granted in the following forms:
(i) Restricted Stock, in accordance with Paragraph 6,
(ii) an Option, in accordance with Paragraph 7,
(iii) a Stock Appreciation Right, in accordance with Paragraph
8, or
(iv) a combination of one or more of the foregoing.
6. Issuance of Restricted Stock and Forfeiture Restrictions. An
Incentive Award in the form of shares of Restricted Stock may be issued to an
Employee under this Paragraph 6 from time to time as determined by the
Committee. The shares of Restricted Stock so issued to an Employee shall not be
sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of,
and in the event of termination of the Employee's employment with the
Corporation for any reason (including death, unless the Committee in its sole
discretion deems to terminate the Forfeiture Restrictions following the death of
such Employee), the Employee shall be obligated, for no consideration, to
forfeit and surrender such shares (to the extent then subject to the Forfeiture
Restrictions) to the Corporation. The restrictions against disposition and the
obligation to forfeit and surrender shares to the Corporation are herein
referred to as "Forfeiture Restrictions", and the shares which are then subject
to the Forfeiture Restrictions are herein sometimes referred to as "Restricted
Stock." Certificates representing Restricted Stock shall be appropriately
legended to reflect the Forfeiture Restrictions.
The Forfeiture Restrictions with respect to Restricted Stock issued to
an employee under this Paragraph 6 shall lapse and be of no further force and
effect upon the expiration of the period of time fixed by the Committee upon the
issuance of such Restricted Stock; provided, however, that restrictions shall
not be removed sooner than as provided in the following schedule:
Time From Date Stock Free of
of Grant Restrictions
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After 1st Year 20%
After 2nd Year 40%
After 3rd Year 60%
After 4th Year 80%
After 5th Year 100%
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In order to enforce the restrictions imposed upon shares of Restricted
Stock, the Committee may require any Employee to enter into an escrow agreement
providing that the certificates representing such shares of Restricted Stock
shall remain in the physical custody of an escrow holder until any or all of the
restrictions imposed pursuant to the Plan expire or shall have been removed.
All of the foregoing restrictions regarding shares of Restricted Stock
shall be evidenced by a written agreement from the purchaser of such shares
containing such terms and conditions, not inconsistent with the Plan, as the
Committee shall approve.
7. Options. An Incentive Award in the form of an Option shall be
subject to the following provisions:
(a) The day on which the Committee approves the granting of an
Option shall be considered as the date on which such Option is granted.
(b) The purchase price of each share of Capital Stock under each
Option shall not be less than 85% of the Fair Market Value of a share of Capital
Stock on the date on which the Option is granted.
(c) The Option shall not be transferable otherwise than by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security Act and may be exercised
solely by the Employee to whom granted or his duly appointed guardian or
personal representative, except as provided in Section 7(e), in the event of
such person's death.
(d) Each Option shall be subject to the condition that it shall
not be exercisable unless and until the Optionee shall have remained in the
employ of the Corporation for at least one year after the date on which the
Option is granted. An Option shall be exercisable after the end of the first
year following such granting date in accordance with such exercise schedule and
within such normal expiration date or dates (subject to earlier termination
dates as provided in the Plan) as the Committee may in its sole discretion
determine and provide in such Option. In no event, however, shall an Option be
exercisable after the expiration of the tenth year following the date on which
the option is granted.
(e) The Option shall terminate if and when the Optionee ceases to
be an Employee of the Corporation, except as follows:
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(i) If an Optionee is permanently and totally disabled within
the meaning of Sections 422(c)(6) and 22(e)(3) of the Internal Revenue Code, or
dies while employed by the Corporation or while the Option theretofore granted
to him was exercisable by him in accordance with subparagraph (ii) below after
his retirement or the termination of his employment other than for cause, such
Option may be exercised (for not more than the number of shares as to which the
Optionee might have exercised his Option at the time of such disability or
death) by the Optionee in the event of disability and by the beneficiary in the
event of death who is designated pursuant to Paragraph 12(f) or, in the absence
of such designation or if no such beneficiary survives the Optionee, by such
person or persons as shall have acquired the Optionee's rights under the Option
by will or by the laws of descent and distribution, at any time (A) prior to the
normal expiration date provided for in such Option, in the event such normal
expiration date is less than one year following the date of disability or death,
or (B) within such one year, in the event that such normal expiration date is
more than one year following such date of disability or death.
(ii) If an Optionee retires or if his employment with the
Corporation is terminated for any reason other than by death, permanent
disability or termination for cause, the Option may be exercised (for not more
than the number of shares as to which the Optionee might have exercised his
Option on the date of his retirement or the date on which his employment was
terminated) at any time prior to the earlier of (A) the normal expiration date
provided for in such Option in the event such normal expiration date is less
than three months following the date of such retirement or termination, or (B)
within three months after such retirement or termination of employment in the
event that such normal expiration date is more than three months following the
date of such retirement or termination of employment. If an Optionee is
dismissed for cause, for which the Committee shall be the sole judge, his Option
shall expire forthwith. The Committee may determine that, for the purpose of the
Plan, an Optionee who is on a leave of absence will be considered as still in
the employ of the Corporation, provided that an Option shall be exercisable
during a leave of absence only as to the number of shares to which it was
exercisable at the commencement of such leave of absence, and provided that the
Optionee would still be considered an employee under Sections 421 and 422A of
the Internal Revenue Code and regulations thereunder.
(f) An Optionee electing to exercise an Option shall give written
notice to the Corporation of such election and of the number of shares he has
elected to purchase and shall at
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the time of exercise tender the full purchase price of the shares he has elected
to purchase. The purchase price shall be payable in full in cash or its
equivalent acceptable to the Corporation. In the discretion of the Corporation,
which discretion may be exercised by the Committee, the purchase price may be
paid by the assignment and delivery to the Corporation of shares of Capital
Stock of the Corporation or a combination of cash and such shares equal in value
to the Option exercise price. Any shares so assigned and delivered to the
Corporation in payment or partial payment of the purchase price shall be valued
at their Fair Market Value on the Option exercise date.
(g) In the discretion of the Corporation, which discretion may be
exercised by the Committee, all or any portion of any federal, state, local or
foreign taxes required to be withheld from an Optionee with respect to the
exercise of an Option or the sale or other disposition of any Capital Stock
acquired upon the exercise of an Option may be satisfied by the Optionee's
electing one of the following:
(i) Optionee's delivery to the Corporation of Capital Stock with
a Fair Market Value on the Tax Date equal to the amount of withholding
taxes so to be satisfied; or
(ii) Corporation's withholding from the shares of Capital Stock
that would otherwise be delivered upon exercise of an Option shares of
Capital Stock with a Fair Market Value on the Tax Date equal to the amount
of withholding taxes so to be satisfied.
The foregoing means of satisfying an Optionee's obligation to pay withholding
taxes are subject to the following additional rules and restrictions:
(y) In no event may the amount of withholding taxes to be
satisfied pursuant to this Section 7(g) exceed the total taxes payable
by the Optionee with respect to the Option exercise or early
disposition of shares acquired under an Option, computed at the
maximum rates applicable to such Optionee at the time of such
election.
(z) Each election to use Capital Stock to satisfy a
withholding tax obligation must (A) be in a written instrument signed
by the Optionee and stating the number of shares to be withheld or
surrendered or a formula pursuant to which such number may be
determined, and (B) be irrevocable.
The Committee shall adopt such rules and policies as may be required to enable
Insiders to use Capital Stock to satisfy
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withholding requirements in compliance with Rule 16b-3 of the Securities
Exchange Commission and any successor rules and the interpretations of such
rules adopted by the Securities Exchange Commission.
(h) The Corporation may grant Nonqualified Stock Options or
Incentive Stock Options. All Incentive Stock Options granted under this Plan
shall comply in all respects with Section 422 of the Internal Revenue Code of
1986, as amended, and with any successor section thereto and all regulations and
rulings thereunder. Each written instrument evidencing an Incentive Stock Option
shall designate it as such; if a written instrument evidencing an Option does
not contain such a designation, then it shall not evidence an Incentive Stock
Option.
(i) To the extent an Option is exercised, any related Stock
Appreciation Right shall be proportionately reduced by a number of shares equal
to the shares with respect to which the Option is exercised.
(j) Each Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with the Plan, as the
Committee shall approve.
8. Stock Appreciation Rights.
(a) The day on which the Committee approves the granting of a
Stock Appreciation Right shall be considered as the date on which such Stock
Appreciation Right is granted.
(b) A Stock Appreciation Right may be granted in connection with
any Option granted under the Plan, either at the time of the grant of such
Option or at any time thereafter during the term of the Option, subject to
Paragraph 13 of the Plan.
(c) A Stock Appreciation Right shall entitle the holder of the
related Option, upon exercise of the Stock Appreciation Right, to surrender such
Option, or any portion thereof, to the extent unexercised in respect of the
number of shares as to which such Stock Appreciation Right is exercised, and to
receive payment of an amount computed pursuant to Paragraph 8(d)(ii). Such
Option shall, to the extent so surrendered, thereupon cease to be exercisable.
(d) A Stock Appreciation Right shall be subject to the following
terms and conditions and to such other terms and conditions, consistent with the
terms of the Plan, as the Committee may deem advisable:
(i) Subject to the second and third sentences of this
subparagraph (i), a Stock Appreciation Right shall be exercisable at such
time or times, and only
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to the extent, that the related Option is exercisable and shall not be
transferable except to the extent that such related Option may be. Such
Stock Appreciation Right shall be exercisable by the holder thereof (or by
such other person entitled to exercise the related option pursuant to
Paragraph 7 of the Plan). The Committee may impose such conditions on
exercise of a Stock Appreciation Right as may be required to satisfy the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 (or
any other comparable provisions in effect at that time).
(ii) Upon exercise of a Stock Appreciation Right, the holder
thereof shall be entitled to receive payment of an amount determined by
multiplying:
(A) the difference obtained by subtracting the purchase
price of a share of Capital Stock specified in such related Option
from the Fair Market Value of a share of Capital Stock on the date of
exercise on such Stock Appreciation Right, by
(B) the number of shares with respect to which such Stock
Appreciation Right shall have been exercised.
(iii) Payment of the amount determined under subparagraph
(d)(ii) above shall be made solely in whole shares of Capital Stock valued
at their Fair Market Value on the date of exercise of the Stock
Appreciation Right (in the event that the division of such amount by such
Fair Market Value per share results in a fractional share, no such
fractional share shall be delivered, and the number of shares to be
delivered shall be founded to the next lower whole number, without any
payment or other adjustment for any fraction in excess of such whole
number), or alternatively, in the sole discretion of the Committee, solely,
in cash, or in such combination of cash and such whole shares as the
Committee, in its sole discretion, may deem advisable.
(e) In the event that a Stock Appreciation Right is exercised, any
shares of Capital Stock delivered as to the whole or part of the payment on such
exercise (i) may be authorized unissued or reacquired shares of Capital Stock,
(ii) shall be deemed allocated from the shares as to which the related Option is
surrendered in connection with such exercise, and (iii) shall not be separately
charged against the maximum limitation set forth in Paragraph 3(a).
(f) Each Stock Appreciation Right shall be evidenced by a written
instrument containing such terms and
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conditions, not inconsistent with the Plan, as the Committee shall approve.
9. Adjustment Provisions.
(a) Subject to the provisions of Paragraph 9(b), if the outstanding
shares of Capital Stock of the Corporation are increased, decreased or exchanged
for a different number or kind of shares or other securities, or if additional
shares or new or different shares or other securities are distributed in respect
of such shares of Capital Stock or other securities, through merger,
consolidation, sale of all or substantially all of the property of the
Corporation, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other distribution in respect of such shares
of Capital Stock or other securities, an appropriate and proportionate
adjustment shall be made in (i) the maximum number and kind of securities
provided in Paragraph 3(a) of the Plan, (ii) the number and kind of shares or
other securities subject to then outstanding Options and Stock Appreciation
Rights, (iii) the price for each share or other unit of any other securities
subject to such Options, but without change in the aggregate purchase price as
to which such Options remain exercisable, and (iv) the number and kind of shares
or other securities then subject to restrictions pursuant to Paragraph 6 of the
Plan.
(b) Upon the dissolution or liquidation of the Corporation or upon a
reorganization, merger or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, or upon the sale of all or substantially all the property of the
Corporation, all Options and Stock Appreciation Rights then outstanding under
the Plan shall be fully vested and exercisable and the Forfeiture Restrictions
imposed by Paragraph 6 on Restricted Stock shall lapse unless provisions are
made in connection with such transaction for the continuance of this Plan and
the assumption or the substitution for such Incentive Awards of new options or
stock appreciation rights or restricted stock, as applicable, covering the stock
of a successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices.
(c) Adjustments under this Paragraph 9 shall be made by the Committee,
subject to the approval of the Board of Directors, whose determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive. No fractional interests shall be issued under the Plan on
account of any such adjustment.
10. Change in Control. If the employment of the holder of an
Incentive Award with the Corporation and/or its Affiliates shall be terminated
for any reason within three years
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following a Change in Control, then all Options and Stock Appreciation Rights
held by such holder shall be fully vested and exercisable and the Forfeiture
Provisions imposed by Paragraph 6 on Restricted Stock shall lapse.
A "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act as in effect on November 21, 1991,
provided that such a Change in Control shall be deemed to have occurred at such
time as (i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of
the 1934 Act), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act) directly or indirectly, of securities representing 25% or
more of the combined voting power for election of directors of the then
outstanding securities of the Corporation or any successor of the Corporation;
(ii) during any period of two (2) consecutive years or less, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation cease, for any reason, to constitute at least a majority of the
Board of Directors, unless the election or nomination for election of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period; (iii) the
shareholders of the Corporation approve any merger or consolidation as a result
of which the Stock shall be changed, converted or exchanged (other than a merger
with a wholly-owned subsidiary of the Corporation) or any liquidation of the
Corporation or any sale or other disposition of 50% or more of the assets or
earning power of the Corporation; or (iv) the shareholders of the Corporation
approve any merger or consolidation to which the Corporation is a party as a
result of which the persons who were shareholders of the Corporation immediately
prior to the effective date of the merger or consolidation shall have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation following the effective date of such
merger or consolidation; provided, however, that no Change in Control shall be
deemed to have occurred if, prior to such time as a Change in Control would
otherwise be deemed to have occurred, the Board of Directors determines
otherwise.
11. Outside Director Stock Options.
(a) Applicable Provisions of the Plan. All provisions of this Plan
shall apply to the Outside Director Options provided for in this Paragraph 11,
except the following provisions, which shall not be applicable thereto:
(i) The definition of "Fair Market Value" in Paragraph 2.
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(ii) Paragraphs 4 (Administration of the Plan), Paragraph 5
(Eligibility for Incentive Award), Paragraph 6 (Issuance of Restrictive
Stock and Forfeiture Restrictions), Paragraph 7 (Options), Paragraph 8
(Stock Appreciation Rights), Subparagraphs (a) and (c) of Paragraph 9
(Adjustment Provisions), Paragraph 10 (Change in Control) and Paragraph 12
(General Conditions).
(b) Definitions. The following terms, when used in this Paragraph 11,
shall have the meanings set forth in this Subparagraph 11(b):
"Disabled" shall mean an Outside Director's inability to perform the
duties of a director of the Corporation by reason of a mental or physical
impairment. The following shall constitute conclusive proof that an
Outside Director is disabled:
(1) The appointment by a court of competent jurisdiction of a
guardian or conservator of the person or estate of an Outside
Director; or
(2) An Outside Director's failure to attend any meetings of the
Board during a period of six months.
"Fair Market Value" shall mean the average closing price of the
Capital Stock on the composite transactions report of the National
Securities Exchange on which the Capital Stock is then listed for the ten
trading days ending on the second trading day prior to the date on which an
Option is granted pursuant to this Paragraph 11.
"Outside Director" shall mean a member of the Board of Directors who
is not also an employee of the Corporation or any of its subsidiaries.
"Outside Director Option" shall mean an Option granted pursuant to
this Paragraph 11.
"Retirement" shall mean resignation from the Board of Directors after
a Director has attained the age of 70 years with a minimum of five years of
service on the Board of Directors.
(c) Grant of Options to Outside Directors.
(i) Eligibility. All Outside Directors shall receive Options
pursuant to this Paragraph 11, but they shall not be eligible to receive
any Incentive Awards pursuant to Paragraphs 6, 7 or 8 of this Plan.
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(ii) Appointment Grants. All persons who are Outside Directors
on the date when this Paragraph 11 is adopted by the Board of Directors
shall receive an initial grant of an Outside Director Option to purchase
2,000 shares of Capital Stock (the "Appointment Grant") on the first day of
the month following the date of adoption of this Paragraph 11. Outside
Directors who first become Directors after such adoption shall receive an
Appointment Grant on the first day of the month following the date upon
which they are elected to the Board of Directors.
(iii) Annual Grants. All Outside Directors shall also receive
annually on each first day of March following their receipt of their
Appointment Grant an Option to purchase 1,000 shares of Capital Stock.
(iv) Outside Director Options may not be granted for more than
100,000 shares of the Capital Stock reserved for the Plan by Paragraph 3(a)
of the Plan, adjusted as provided by Paragraph 9 of the Plan.
(d) Terms of Outside Director Options.
(i) Option Agreement. Each Outside Director Option shall be
evidenced by a written instrument containing such terms and conditions, not
inconsistent with this Paragraph 11 and the other applicable provisions of
the Plan, as the Corporation deems appropriate.
(ii) Option Price. The price of the shares of Capital Stock
subject to each Outside Director Option shall be 100% of the Fair Market
Value of such shares on the date such Option is granted but, if the price
as so determined is less than 85% of the closing price of the Capital Stock
as reported in the composite transactions report of the National Securities
Exchange on which the Capital Stock is then listed for the date of grant,
then such purchase price shall be 85% of such closing price.
(iii) Exercisability.
(A) No Outside Director Option may be exercised in whole or
in part until one year following the date upon which the Option is
granted;
(B) Subject to the provisions of Subparagraphs 11(d)(iii)(A)
and 11(f)(ii), which shall at all times preempt the provisions of this
Subparagraph 11(d)(iii)(B), an installment of 25% of each Outside
Director Option shall become exercisable one year following the date
of grant, with additional installments of 25% becoming exercisable on
each
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anniversary date of the grant, so that all Options are fully
exercisable at the end of four years from the date of grant.
(C) No installment of an Outside Director Stock Option that
has not become exercisable on the date on which the holder thereof
ceases to be a director of the Corporation for any reason shall
thereafter become exercisable by such holder or his successors and
assigns.
(iv) Expiration of Outside Director Options. No Outside
Director Option may be exercised after the first to occur of the
following events:
(A) The expiration of one year from the date of the
Optionee's death; or
(B) Except in the case of an Optionee who is disabled,
or an Optionee's retirement, the expiration of three months from
the earlier of the date of the Optionee's resignation from or
replacement on the Board of Directors unless the Optionee dies
within said three-month period, in which case the limitation in
Subparagraph 11(d)(iv)(A) shall apply; or
(C) In the case of an Optionee who is disabled, the
expiration of one year from the date of the Optionee's
resignation from or replacement on the Board of Directors by
reason of such disability, unless the Optionee dies within said
one-year period, in which case the limitation in Subparagraph
11(d)(iv)(A) shall apply; or
(D) In the case of the retirement of an Optionee, the
expiration of one year from the date of the Optionee's
retirement, unless the Optionee dies within said one-year period,
in which case the limitation in Subparagraph 11(d)(iv)(A) shall
apply.
No Outside Director Option may be exercised to any extent by anyone
after the expiration of ten years from the date the Option was
granted.
(e) Exercise of Options.
(i) Persons Eligible to Exercise. Outside Director Options may
not be transferred by an Optionee other than by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as
defined
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in the Internal Revenue Code of 1986, as amended, Title I of the Employee
Retirement Income Security Act or the rules thereunder. After the death of
the Optionee, any exercisable portion of such Option may, prior to the time
when such portion becomes unexercisable under the provisions of
Subparagraph 11(d)(iv), above, be exercised by the Optionee's personal
representative or by any person empowered to do so under court order, by
will or the laws of descent and distribution.
(ii) Manner of Exercise. An Outside Director Option, or any
exercisable portion thereof, may be exercised solely by delivery to the
Corporation of all of the following prior to the time when such Option or
portion thereof becomes unexercisable under Subparagraph 11(d)(iv):
(A) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that such
Option or portion is exercised; and
(B) Either:
(x) Full payment (in cash or by check) for the shares
with respect to which such Option or portion is thereby
exercised; or
(y) Vested shares of the Capital Stock of the
Corporation owned by the Optionee, duly endorsed for transfer to
the Corporation, with a Fair Market Value on the date of delivery
equal to the aggregate purchase price of the shares with respect
to which such Option or portion is thereby exercised; or
(z) Any combination of the consideration provided in
the foregoing subsections (x) and (y); and
(C) In the event the Outside Director Option or a portion
thereof is being exercised pursuant to subparagraph 11(e)(i) by any
person or persons other than the Optionee to whom it was originally
granted, appropriate proof, reasonably satisfactory to the
Corporation, of the authority of such person or persons to exercise
the Option or such portion thereof.
(D) If income tax withholding on the exercise of an Outside
Director Stock Option is required, then all or any portion of any
federal, state, local or foreign taxes required to be withheld
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from an Optionee with respect to the exercise of such Option may be
satisfied by the Optionee's electing one of the following:
(x) Optionee's delivery to the Corporation of Capital
Stock with a Fair Market Value on the Tax Date equal to the
amount of withholding taxes so to be satisfied; or
(y) Corporation's withholding from the shares of
Capital Stock that would otherwise be delivered upon exercise of
such Option shares of Capital Stock with a Fair Market Value on
the Tax Date equal to the amount of withholding taxes so to be
satisfied.
The foregoing means of satisfying an Optionee's obligation to pay
withholding taxes are subject to the following additional rules and
restrictions:
(I) In no event may the amount of withholding
taxes to be satisfied pursuant to this Clause (D) exceed the
total taxes payable by the Optionee with respect to the
Option exercise, computed at the maximum rates applicable to
such Optionee at the time of such election.
(II) Each election to use Capital Stock to satisfy
a withholding tax obligation must either (A) be in a written
instrument signed by the Optionee and stating the number of
shares to be withheld or surrendered or a formula pursuant
to which such number may be determined and be irrevocable;
or (B) otherwise be made in compliance with the Rules and
Regulations of the Securities and Exchange Commission under
the '34 Act relating to such elections, as from time to time
in effect.
In no event shall the Corporation be required to issue fractional shares,
and an Option may not be exercised for fewer than 100 shares.
(iii) Rights as a Shareholder. A holder of an Outside Director
Option shall not be, and shall not have any of the rights or privileges of,
a shareholder of the Corporation with respect to any shares of Capital
Stock purchasable upon the exercise of such Option unless and until such
Option shall have been exercised and a
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certificate or certificates evidencing such shares shall have been issued
by the Corporation to such holder.
(iv) Conditions to Issuance of Stock Certificates. The
Corporation shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option
or portion thereof unless and until all legal requirements applicable to
such issuance or delivery have, in the opinion of counsel to the
Corporation, been complied with. In connection with any such issuance or
transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances satisfactory to such counsel in respect of
such matters as such counsel may deem desirable to assure compliance with
all applicable legal requirements.
(f) Adjustment Provisions.
(i) If the outstanding shares of Capital Stock of the Corporation
are increased, decreased or exchanged for a different number or kind of
shares or other securities, of if additional shares or new or different
shares or other securities are distributed in respect of such shares of
Capital Stock or other securities, through merger, consolidation, sale of
all or substantially all of the property of the Corporation,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other distribution in respect of such shares
of Capital Stock or other securities, there shall be an appropriate and
proportionate adjustment in
(x) the maximum number and kind of securities provided
in Subparagraph (c)(iv) of this Paragraph 11;
(y) the number and kind of securities and the option
price per share as provided in the unexercised portion of all
outstanding Outside Director Options, but without change in the
aggregate purchase price as to which such Options remain
exercisable; but
(z) there shall be no adjustment to the number of
shares to be granted to Outside Directors pursuant to
Subparagraphs (c)(ii) or (c)(iii) of this Paragraph 11.
(ii) Upon the dissolution or liquidation of the Corporation or
upon a reorganization, merger or consolidation of the Corporation with one
or more corporations as a result of which the Corporation is not the
surviving corporation, or upon the sale of all or
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substantially all the property of the Corporation, all Outside Director
Options then outstanding shall be fully vested and exercisable.
(g) Other Provisions.
(i) Outside Director Options not Transferable. No Outside
Director Option or interest or right therein or part thereof shall be
subject to or liable for the debts, contracts or engagements of the
Optionee or the Optionee's successors in interest, as the case may be, or
shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition
be voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect; provided, however, that nothing in this
Subparagraph 11(g) shall prevent transfers by will or by the applicable
laws of descent and distribution. All Outside Director Stock Options are
intended to be non-qualified (non-statutory) stock options.
(ii) Effective Date. This Paragraph 11 shall become effective
immediately upon its adoption by the Board of Directors, but no Outside
Director Option may be exercised until six months and one day following
approval of this Paragraph 11 by the shareholders of the Corporation within
12 months after the date upon which the Board of Directors shall have
adopted the same.
12. General Provisions.
(a) With respect to any shares of Capital Stock issued or transferred
under any provisions of the Plan, such shares may be issued or transferred
subject to such conditions, in addition to those specifically provided in the
Plan, as the Committee may direct.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Employee any right to continue in the employ of the
Corporation or shall affect the right of the Corporation to terminate the
employment of any Employee with or without cause.
(c) No shares of Capital Stock shall be issued or transferred pursuant
to an Incentive Award unless and until all legal requirements applicable to such
issuance or transfer have, in the opinion of counsel to the Corporation, been
complied with. In connection with any such issuance or transfer, the person
acquiring the shares shall, if requested by the Corporation, give
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assurances satisfactory to counsel to the Corporation in respect of such matters
as the Corporation may deem desirable to assure compliance with all applicable
legal requirements.
(d) No Employee (individually or as a member of a group), and no
beneficiary or other person claiming under or through such Employee, shall have
any right, title or interest in or to any shares of Capital Stock allocated or
reserved for the purpose of the Plan or subject to any Incentive Award except as
to such shares of Capital Stock, if any, as shall have been issued or
transferred to such Employee.
(e) The Corporation may make such provisions as it may deem
appropriate for the withholding of any taxes which the Corporation or a
subsidiary corporation determines it is required to withhold in connection with
any Incentive Awards.
(f) No Incentive Award and no right under the Plan, contingent or
otherwise, shall be assignable or subject to any encumbrance, pledge or charge
of any nature except that, under such rules and regulations as the Committee may
establish pursuant to the terms of the Plan, a beneficiary may be designated in
respect of an Incentive Award in the event of the death of the holder of such
Incentive Award and except, also, that if such beneficiary is the executor or
administrator of the estate of the holder of such Incentive Award, any rights in
respect of such Incentive Award may be transferred to the person or persons or
entity (including a trust) entitled thereto under the will of the holder of such
Incentive Award or, in the case of intestacy, under the laws relating to
intestacy.
(g) Nothing in the Plan is intended to be a substitute for, or to
preclude or limit the establishment or a continuance of, any other plan,
practice or arrangement for the payment of compensation or benefits to employees
generally, or to any class or group of employees, which the Corporation now has
or may hereafter lawfully put into effect, including, without limitation, any
retirement, pension, insurance, stock purchase, incentive compensation or bonus
plan.
13. Amendment, Suspension and Termination of Plan. The Board may
terminate the Plan, in whole or in part, may suspend the Plan, in whole or in
part, from time to time and may amend the Plan from time to time, including the
adoption of amendments deemed necessary or desirable to qualify the Incentive
Awards under the laws of various countries (including tax laws) and under rules
and regulations promulgated by the Securities and Exchange Commission (the
"SEC") with respect to employees who are subject to the provisions of Section 16
of the 1934 Act, or to correct any defect or supply an omission or reconcile any
inconsistency in the Plan or in any Incentive Award granted thereunder, without
the approval of the stockholders of the
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Corporation; provided, however, that no action shall be taken without the
approval of the stockholders of the Corporation to increase the number of shares
of Stock on which Incentive Awards may be granted, or materially increase the
benefits accruing to participants under the Plan, materially modify the
requirements as to eligibility for participation in the Plan, withdraw
administration from the Committee, or permit any person while a member of the
Committee to be eligible to receive, other than pursuant to a non-discretionary
formula plan, a grant or award of a stock option, a stock appreciation right or
other equity security of the Corporation or to amend Paragraph 11 of the Plan in
any respect; and, provided, further, that Paragraph 11 may not be amended more
often than once every six months other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act or the rules
thereunder. Without limiting the foregoing, the Board of Directors or the
Committee may make amendments applicable or inapplicable only to Insiders.
No amendment or termination or modification of the Plan shall in any
manner affect any Incentive Award theretofore granted without the consent of the
holder thereof, except that the Committee may amend or modify the Plan in a
manner that does affect Incentive Awards theretofore granted upon a finding by
the Committee that such amendment or modifications is in the best interest of
holders of outstanding Incentive Awards affected thereby.
This Plan is intended to comply with all applicable requirements of
Rule 16b-3 or its successors under the 1934 Act, insofar as Insiders are covered
thereby. To the extent any provision of the Plan does not so comply and cannot
for any reason be amended by the Board so as to comply, the provision shall, to
the extent permitted by law and deemed advisable by the Committee, be deemed
null and void with respect to such Insiders.
14. Termination of The Plan. Unless previously terminated by the
Board of Directors, the Plan shall terminate on January 1, 1999, and no
Restricted Stock may be issued, and no Option or Stock Appreciation Right may be
granted, under the Plan thereafter, but such termination shall not affect any
Incentive Award theretofore issued or granted.
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