STILWELL FINANCIAL INC.
1998 Long Term Incentive Stock Plan
(as amended and restated effective as of June 15, 2000)
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Table Of Contents
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Article Page
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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 . . . . . . . . . . . . . . . . . . . . . . . . . 22
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 JUNE 15, 2000)
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 as of August 11, 1999, the Board
amended Section 2.14 of the Plan, renamed the Plan and restated the Plan, as
so amended as set forth herein. Then effective as of June 15, 2000, the
Board amended Sections 2.51, 5.7 and 15.1 of the Plan and restated the Plan,
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
(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; , 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; 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 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 (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.
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 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 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 (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; that the
Committee may specify a higher Strike Price in the Award Agreement.
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.
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.
(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; 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;
(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 consider-
ation 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.
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; , 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 , 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; 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.
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.
(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; and
(iii) 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; , 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 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 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; , 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.
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 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.
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.
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.
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 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.
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;
that, in lieu of or in addition to the foregoing, the Company shall
have the right to withhold such Required Withholding from compensa-
tion 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.
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.
II.
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.
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 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.
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.
