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EXHIBIT 10.19
KPMG CONSULTING, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the KPMG Consulting, Inc. Employee Stock
Purchase Plan (the "Plan") is to provide employees of KPMG Consulting, Inc., a
Delaware corporation (the "Company"), and its Subsidiary Companies (as defined
below) added incentive to remain employed by such companies and to encourage
increased efforts to promote the best interests of such companies by permitting
eligible employees to purchase shares of common stock, par value $0.01 per
share, of the Company ("Common Stock") at below-market prices. The Company
intends to use reasonable efforts to have the Plan qualify as an "employee stock
purchase plan" under section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). However, the Company does not undertake or represent that
the Plan complies or will continue to comply with Section 423 of the Code. In
addition, this Plan authorizes the grant of options and issuances of Common
Stock which do not qualify under section 423 of the Code pursuant to sub-plans
adopted by the Committee designed to achieve desired tax or other objectives in
particular locations outside the United States. For purposes of the Plan, the
term "Subsidiary Companies" shall mean all corporations that are subsidiary
corporations (within the meaning of section 424(f) of the Code) and of which the
Company is the common parent. The Company and its Subsidiary Companies that,
from time to time, adopt the Plan are sometimes hereinafter called collectively
the "Participating Companies."
2. Eligibility.
(a) Eligible Employee. For any Purchase Period (as defined in
Section 4) participation in the Plan shall be open to each employee of the
Participating Companies whose customary employment is for at least 20 hours per
week as of the first day of any such Purchase Period (hereinafter, an "Eligible
Employee"). No right to purchase Common Stock hereunder shall accrue under the
Plan in favor of any person who is not an Eligible Employee as of the first day
of the relevant Purchase Period. For purposes of the Plan, the term "employee"
shall not include any individual who performs services for any of the
Participating Companies pursuant to an agreement (written or oral) that
classifies such individual's relationship with the Participating Company as
other than a common law employee of the Participating Company, regardless of
whether such individual is at any time determined to be a common law employee of
the Participating Company.
(b) Limitations. Notwithstanding anything contained in the Plan to
the contrary, no Eligible Employee shall acquire a right to purchase Common
Stock hereunder to the extent that (i) immediately after receiving such right,
such employee would own 5% or more of the total combined voting power or value
of all classes of stock of the Company or any Subsidiary Company (including any
stock attributable to such employee under section 424(d) of the Code), or (ii)
such right would permit such employee rights to purchase Common Stock under all
employee stock purchase plans, which qualify under section 423 of the Code, of
the Company and its Subsidiary Companies to accrue at a rate which exceeds
$25,000 or such other amount as may be specified under section 423 of the Code
of fair market value of such stock (as determined on the first day of the
Purchase Period (as hereinafter defined)) for any calendar year during which
such right is outstanding at any time. The determination of the accrual of the
right
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to purchase Common Stock shall be made in accordance with section 423(b)(8) of
the Code and the regulations thereunder. Further notwithstanding anything
contained in the Plan to the contrary, the maximum number of shares that may be
bought by any Eligible Employee during any Purchase Period shall not exceed
5,000, subject to adjustment in the same manner described in Section 13, in the
case of the occurrence of any of the events described in Section 13.
(c) Rights and Privileges. All Eligible Employees who participate
in the Plan shall have the same rights and privileges under the Plan except for
differences which may be mandated by local law and which are consistent with
section 423(b)(5) of the Code; provided, however, that Eligible Employees
participating in a sub-plan adopted pursuant to Section 16 hereof which is not
designed to qualify under section 423 of the Code need not have the same rights
and privileges as Eligible Employees participating in the section 423 Plan. The
Committee may impose restrictions on eligibility and participation of Eligible
Employees who are officers and directors to facilitate compliance with federal
or state securities laws or foreign laws.
3. Effective Date of Plan. The Plan shall become effective on the date
of the commencement of the initial public offering of the Company's Common Stock
(the "Effective Date"). The Plan shall cease to be effective unless, within 12
months before or after the date of its adoption by the Board of Directors (the
"Board") of the Company, it has been adopted by the shareholders of the Company
at a duly-called meeting of such shareholders.
4. Purchase Periods and Offering Periods. The first "Purchase Period"
under the Plan shall be the twenty-four month period beginning on the Effective
Date. Succeeding twenty-four month "Purchase Periods" shall commence at
six-month intervals over the term of the Plan. Within each Purchase Period,
there shall be four consecutive six-month offering periods (the "Offering
Periods"). The first "Offering Period" of each Purchase Period shall commence on
the first day of each such Purchase Period. Notwithstanding the foregoing, the
initial Offering Period shall begin on the Effective Date, or as soon thereafter
as is administratively feasible. The Committee, in its discretion, may shorten
the initial Offering Period.
Each participant shall be granted a separate right to purchase Common
Stock for each Purchase Period in which such participant participates. The right
shall be granted on the first day of the Purchase Period and shall be exercised
automatically in successive installments on the last day of each Offering Period
(the "Exercise Date") within such Purchase Period. An Eligible Employee may
participate in only one Purchase Period at a time.
5. Basis of Participation.
(a) Payroll Deduction. Subject to compliance with applicable rules
prescribed by the Committee (as defined in Section 12), each Eligible Employee
shall be entitled to enroll in the Plan as of the first day of any Purchase
Period which begins on or after such employee has become an Eligible Employee,
provided, however, that for the first Purchase Period under the Plan, each
Eligible Employee with respect to such Purchase Period shall be entitled to
enroll as of the date prescribed by the Committee.
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To enroll in the Plan, an Eligible Employee shall make a
request to the Company or its designated agent, at the time and in the manner
prescribed by the Committee, specifying the amount of payroll deduction to be
applied to the compensation paid to the employee by the employee's employer
while the employee is a participant in the Plan. The amount of each payroll
deduction specified in such request for each such payroll period shall be a
whole percentage of a participant's compensation, unless otherwise determined by
the Committee to be a whole dollar amount, in either case not to exceed 15%, or
such lesser percentage as may be determined by the Committee, of the
participant's compensation (before withholding or other deductions) paid to him
or her during the Purchase Period by any of the Participating Companies. Subject
to compliance with applicable rules prescribed by the Committee, the request
shall become effective on the first day of the Purchase Period following the day
the Company or its designated agent receives such request, provided, however,
that for the first Purchase Period under the Plan, the request shall be
effective as of the payroll period prescribed by the Committee.
Payroll deductions (and any other amount paid under the Plan)
shall be made for each participant in accordance with such participant's request
until such participant's participation in the Plan terminates, such participant
makes a new request that changes the amount of payroll deductions, the
Participant elects to suspend his or her participation in the Plan or the Plan
terminates, all as hereinafter provided.
A participant may change the amount of his or her payroll
deduction effective as of the first day of any Purchase Period by so directing
the Company or its designated agent at the time and in the manner specified by
the Committee. The Committee may establish rules limiting the frequency with
which participants may discontinue and resume payroll deductions under the Plan
and may impose a waiting period on participants wishing to resume payroll
deductions following discontinuance. The Committee also may change the rules
regarding discontinuance of participation or changes in participation in the
Plan. Except to the extent otherwise determined by the Committee, a participant
may not change the amount of his or her payroll deduction effective as of any
date other than the first day of a Purchase Period, except that a participant
may elect to suspend his or her participation in the Plan as provided in Section
8.
Payroll deductions for each participant shall be credited to
a purchase account established and maintained on behalf of the participant on
the books of the participant's employer or such employer's designated agent (a
"Purchase Account"). On each Exercise Date, the amount in each participant's
Purchase Account will be applied to the purchase of the number of shares of
Common Stock determined by dividing such amount by the Purchase Price (as
defined in Section 6) for the Offering Period ending on such Exercise Date. No
interest shall accrue at any time for any amount credited to a Purchase Account
of a participant except where otherwise required by local law as determined by
the Committee. . Unless otherwise specified by the Committee, payroll deductions
made with respect to employees paid in currencies other than U.S. dollars shall
be accumulated in local (non-U.S.) currency and converted to U.S. dollars as of
the Exercise Date.
(b) Other Methods of Participation. The Committee may, in its
discretion, establish additional procedures whereby Eligible Employees may
participate in the
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Plan by means other than payroll deduction, including, but not limited to,
delivery of funds by participants in a lump sum or automatic charges to
participants' bank accounts. Such other methods of participating shall be
subject to such rules and conditions as the Committee may establish. The
Committee may at any time amend, suspend or terminate any participation
procedures established pursuant to this paragraph without prior notice to any
participant or Eligible Employee.
6. Purchase Price. The purchase price (the "Purchase Price") per share
of Common Stock hereunder for an Offering Period included in a Purchase Period
shall be (a) in the case of the first Purchase Period, the lesser of 85% of the
initial public offering price of a share of Common Stock and 85% of the fair
market value of a share of Common Stock on the Exercise Date within such
Offering Period and (b) in the case of any Purchase Period subsequent to the
first Purchase Period, the lesser of 85% of the fair market value of a share of
Common Stock on the first day of such Purchase Period and 85% of the fair market
value of a share of Common Stock on the Exercise Date within such Offering
Period. If such sum results in a fraction of one tenth of one cent, the Purchase
Price shall be increased to the next higher tenth of one cent. For purposes of
the Plan, the fair market value of a share of Common Stock on a given day shall
be the last sale price of a share of Common Stock as reported on the Nasdaq
National Market on the date as of which such value is being determined, or, if
the Common Stock is listed on a national securities exchange, the last sale
price of a share of Common Stock on the principal national stock exchange on
which the Common Stock is traded on the date as of which such value is being
determined, or if there shall be no reported transactions for such date, on the
next preceding date for which transactions are reported, provided, however, that
the fair market value of a share of Common Stock on the first day of the first
Purchase Period under the Plan shall be the price at which shares of Common
Stock are first offered to the public. In no event, however, shall the Purchase
Price be less than the par value of a share of Common Stock.
7. Purchase Accounts and Certificates. The Common Stock purchased on an
Exercise Date by each participant shall be posted to such participant's Purchase
Account as soon as practicable after, and credited to such participant's
Purchase Account as of, such Exercise Date. Except as provided in Section 8 and
Section 9, a participant will be issued his or her shares when his or her
participation in the Plan is terminated, the Plan is terminated or upon request,
but, in the last case, only in denominations of at least 25 shares.
After the close of each Offering Period, information will be made
available to each participant regarding the entries made to such participant's
Purchase Account, the number of shares of Common Stock purchased and the
applicable Purchase Price. In the event that the maximum number of shares of
Common Stock are purchased by the participant for the Purchase Period and cash
remains credited to the participant's Purchase Account, such cash shall be
delivered as soon as practicable to such participant. For purposes of the
preceding sentence, the maximum number of shares of Common Stock that may be
purchased by a participant for a Purchase Period shall be determined under
Section 2.
The Committee may permit or require that shares be deposited directly
with a broker designated by the Committee (or a broker selected by the
Committee) or to a designated agent of the Company, and the Committee may
utilize electronic or automated methods of share transfer. The Committee may
require that shares be retained with such broker or agent for a
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designated period of time (and may restrict dispositions during that period)
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares or to restrict transfer of such shares. The
Committee may require that shares purchased under the Plan shall automatically
participate in a dividend reinvestment plan or program maintained by the
Company. The Company shall retain the amount of payroll deductions used to
purchase Common Stock as full payment for the Common Stock and the Common Stock
shall then be fully paid and non-assessable.
8. Suspension or Termination of Participation. A participant may elect
at any time, in the manner prescribed by the Committee, to suspend his or her
participation in the Plan, provided such election is received by the Company or
its designated agent prior to the date specified by the Committee for suspension
of participation during the Purchase Period for which such suspension is to be
effective.
Upon any suspension of participation, the participant's payroll
deductions shall cease and the cash credited to such participant's Purchase
Account on the date of such suspension shall be delivered as soon as practicable
to such participant. A participant who elects to suspend participation in the
Plan shall be permitted to resume participation in the Plan by making a new
request at the time and in the manner described in Section 5 hereof.
If the participant dies, terminates employment with the Participating
Companies for any reason, or otherwise ceases to be an Eligible Employee, such
participant's participation in the Plan shall immediately terminate. Upon such
terminating event, the cash credited to such participant's Purchase Account on
the date of such termination shall be delivered as soon as practicable to such
participant or his or her legal representative, as the case may be without
interest (except where required by local law) and certificates for the number of
full shares of Common Stock and the cash equivalent for any fractional share
held for such participant's benefit shall be issued to him or her. The cash
equivalent for any fractional share held for the benefit of a participant shall
be determined by multiplying the fractional share by the fair market value of a
share of Common Stock on the day immediately preceding such election to receive
such shares determined as provided in Section 6. Whether a termination of
employment has occurred shall be determined by the Committee. The Committee also
may establish rules regarding when leaves of absence or change of employment
status will be considered to be a termination of employment, and the Committee
may establish termination of employment procedures for this Plan which are
independent of similar rules established under other benefit plans of the
Company and its Subsidiary Companies.
9. Termination or Amendment of the Plan. The Company, by action of the
Board or the Committee, may terminate the Plan at any time, in which case notice
of such termination shall be given to all participants, but any failure to give
such notice shall not impair the effectiveness of the termination.
Without any action being required, the Plan shall terminate in any
event when the maximum number of shares of Common Stock to be sold under the
Plan (as provided in Section 13) has been purchased. Such termination shall not
impair any rights that under the Plan shall have vested on or prior to the date
of such termination. If at any time the number of shares of Common Stock
remaining available for purchase under the Plan are not sufficient to satisfy
all
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then-outstanding purchase rights, the Board or Committee may determine an
equitable basis of apportioning available Common Stock among all participants.
The Board or the Committee may amend the Plan from time to time in any
respect for any reason; provided, however, no such amendment shall (a)
materially adversely affect any purchase rights outstanding under the Plan
during the Purchase Periods in which such amendment is to be effected, (b)
increase the maximum number of shares of Common Stock which may be purchased
under the Plan, (c) decrease the Purchase Price of the Common Stock for any
Offering Period below the lesser of 85% of the fair market value thereof on the
first day of the Purchase Period containing such Offering Period and 85% of such
fair market value on the last day of such Offering Period or (d) adversely
affect the qualification of the Plan under section 423 of the Code.
Upon termination of the Plan, the number of full shares of Common Stock
held for each participant's benefit shall be issued as soon as practicable to
such participant and the cash equivalent of any fractional share so held
determined as provided in Section 8, and, except as otherwise provided in
Section 15, the cash, if any, credited to such participant's Purchase Account,
shall be distributed as soon as practicable to such participant.
10. Non-Transferability. Rights acquired under the Plan are not
transferable and may be exercised only by a participant and any attempted
transfer shall be null and void and without effect. If a participant in any
manner attempts to transfer, assign or otherwise encumber his or her rights or
interest under the Plan, such act shall be treated as an election by the
participant to discontinue participation in the Plan pursuant to Section 8.
11. Shareholder's Rights. No Eligible Employee or participant shall by
reason of the Plan have any rights of a shareholder of the Company until he or
she shall acquire Common Stock as herein provided.
12. Administration of the Plan. The Plan shall be administered by a
committee appointed by the Board consisting of two or more members of the Board
(the "Committee"). In addition to the power to amend or terminate the Plan
pursuant to Section 9, the Committee shall have full power and authority to: (i)
interpret and administer the Plan and any instrument or agreement entered into
under the Plan; (ii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (iii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan, including
by way of illustration the adoption of sub-plans applicable to specified
Subsidiary Companies or locations. Decisions of the Committee shall be final,
conclusive and binding upon all persons, including the Company, any participant
and any other employee of the Company. A majority of the members of the
Committee may determine its actions and fix the time and place of its meetings.
The Committee may delegate to one or more individuals the day-to-day
administration of the Plan. The Company shall pay all expenses incurred in the
administration of the Plan. No Board or Committee member shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
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Except as otherwise provided in Section 2 above, the Plan shall be
administered so as to ensure that all participants have the same rights and
privileges as are provided by section 423(b)(5) of the Code.
13. Maximum Number of Shares. The maximum number of shares of Common
Stock that may be purchased under the Plan is 14,000,000, subject to adjustment
as hereinafter set forth. Common Stock sold hereunder may be purchased for
participants in the open market (on an exchange or in negotiated transactions)
or may be previously acquired treasury shares, authorized and unissued shares,
or any combination of shares purchased in the open market, previously acquired
treasury shares or authorized and unissued shares. If the Company shall, at any
time after the Effective Date of the Plan, change its issued Common Stock into
an increased number of shares, with or without par value, through a stock
dividend or a stock split, or into a decreased number of shares, with or without
par value, through a combination of shares, then, effective with the record date
for such change, the maximum number of shares of Common Stock which thereafter
may be purchased under the Plan and the maximum number of shares which
thereafter may be purchased during any Purchase Period shall be the maximum
number of shares which, immediately prior to such record date, remained
available for purchase under the Plan and under any Purchase Period
proportionately increased, in case of such stock dividend or stock split, or
proportionately decreased in case of such combination of shares.
14. Miscellaneous. Except as otherwise expressly provided herein, (i)
any request, election or notice under the Plan from an Eligible Employee or
participant shall be transmitted or delivered to the Company or its designated
agent and, subject to any limitations specified in the Plan, shall be effective
when received by the Company or its designated agent and (ii) any request,
notice or other communication from the Company or its designated agent that is
transmitted or delivered to Eligible Employees or participants shall be
effective when so transmitted or delivered. The Plan, and the Company's
obligation to sell and deliver Common Stock hereunder, shall be subject to all
applicable federal, state and foreign laws, rules and regulations, and to such
approval by any regulatory or governmental agency as may, in the opinion of
counsel for the Company, be required.
15. Change in Control. In order to maintain the participants' rights in
the event of any Change in Control of the Company, as hereinafter defined, upon
such Change in Control the then current Purchase Periods shall thereupon end,
and the cash credited to all participants' Purchase Accounts shall be applied to
purchase shares pursuant to Sections 6 and 7, and the Plan shall immediately
thereafter terminate. For purposes of this Section 15, "Change in Control" shall
mean:
(1) a sale or transfer of all or substantially all of the assets
of the Company on a consolidated basis in any transaction or series of related
transactions;
(2) any merger, consolidation or reorganization to which the
Company is a party, except for a merger, consolidation or reorganization in
which the Company is the surviving corporation and, after giving effect to such
merger, consolidation or reorganization, the holders of the Company's
outstanding equity (on a fully diluted basis) immediately prior to the merger,
consolidation or reorganization will own in the aggregate immediately following
the
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merger, consolidation or reorganization the Company's outstanding equity (on a
fully diluted basis) either (i) having the ordinary voting power to elect a
majority of the members of the Company's board of directors to be elected by the
holders of Common Stock and any other class which votes together with the Common
Stock as a single class or (ii) representing at least 50% of the equity value of
the Company as reasonably determined by the Board;
(3) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of such Board; provided, however, that any individual who becomes a director of
the Company subsequent to the date hereof whose election, or nomination for
election by the holders of the Company's equity, was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board shall be
deemed to have been a member of the Incumbent Board; and provided further, that
no individual who was initially elected as a director of the Company as a result
of an actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual
or threatened solicitation of proxies or consents by or on behalf of any
individual, entity or group (a "Person"), including any "person" within the
meaning of Section 13(d) of the Exchange Act, other than the Board shall be
deemed to have been a member of the Incumbent Board; or
(4) any Person other than KPMG LLP or its affiliates, acquires
beneficial ownership of 30% or more of the outstanding equity of the Company
generally entitled to vote on the election of directors.
16. Committee Rules for Foreign Jurisdictions. The Committee may adopt
rules or procedures relating to the operation and administration of the Plan to
accommodate the specific requirements of local laws and procedures. Without
limiting the generality of the foregoing, the Committee is specifically
authorized to adopt rules and procedures regarding handling of payroll
deductions, payment of interest, conversion of local currency, payroll tax,
withholding procedures and handling of stock certificates which vary with local
requirements.
The Committee may also adopt sub-plans applicable to particular
Subsidiary Companies or locations, which sub-plans may be designed to be outside
the scope of section 423 of the Code. The rules of such sub-plans may take
precedence over other provisions of this Plan, with the exception of Section
5(a), but unless otherwise superseded by the terms of such sub-plan, the
provisions of this Plan shall govern the operation of such sub-plan.
17. No Enlargement of Employee Rights. Nothing contained in this Plan
shall be deemed to give any Eligible Employee the right to be retained in the
employ of the Company or any Subsidiary Company or to interfere with the right
of the Company or the Subsidiary Companies to discharge any Eligible Employee at
any time.
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