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PAINE WEBBER GROUP INC.
EQUITY PLUS PROGRAM
1. PURPOSE. The purpose of the Program is to assist PaineWebber in
increasing the share ownership of Eligible Employees of PaineWebber and to
enable such Eligible Employees to acquire or increase a proprietary interest in
PaineWebber. Subject to the terms of the Program, Participants will be given the
opportunity under the Program to purchase shares of Common Stock and be granted
a Related Option based on the number of Program Shares they purchase.
2. DEFINITIONS AND RULES OF CONSTRUCTION.
(a) For purposes of the Program, the following capitalized words
shall have the meanings set forth below:
"Account" means an account established by PaineWebber in accordance
with Section 9 to record a Participant's Cash Contributions, Program Shares and
Related Options.
"Account Balance" means, collectively, a Participant's Cash Account
Balance, Program Shares and outstanding Related Options.
"Board" means the Board of Directors of PWG.
"Cash Account Balance" means, as of a given date, the sum of the
Cash Contributions credited to a Participant's Account and not applied to the
purchase of Program Shares.
"Cash Contributions" means the portion of a Participant's
Compensation that the Participant has elected to contribute to the Program in
accordance with Section 6.
"Change in Eligibility Status" has the meaning set forth in Section
8(c)(i).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rulings and regulations promulgated thereunder.
"Committee" means the Compensation Committee of the Board, or such
other committee of the Board as may be designated by the Board to administer the
Program.
"Common Stock" means the common stock, par value $1.00 per share, of
PWG.
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"Compensation" has the same meaning as the definition of
"compensation" under the PaineWebber 401(k) Plus Plan, as amended from time to
time.
"Contribution Percentage" means the percentage of Compensation that
a Participant has elected to contribute to the Program.
"Effective Date" means October 16, 1998.
"Eligible Employee" means any individual who is eligible to
participate in the PaineWebber 401(k) Plus Plan, as amended from time to time,
or such other individuals as may be determined by the Committee who are employed
outside the United States. Eligible Employee shall not include any individual
who is characterized by PaineWebber as an "independent contractor" regardless of
whether or not such classification is substantially upheld by a court or
governmental authority. Eligible Employee shall not include any individual who
is covered by a collective bargaining agreement. Eligible Employee shall also
exclude any individual whose employment contract, offer letter or similar
agreement with PaineWebber provides that such individual shall not be eligible
to participate in the Program.
"Enrollment Form" means a written form prescribed by the Committee
and meeting the requirements of Section 6(b) which is signed by an Eligible
Employee and pursuant to which an Eligible Employee elects to participate in the
Program, specifies his applicable Contribution Percentage(s) and authorizes
PaineWebber to withhold Cash Contributions from his Compensation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rulings and regulations promulgated thereunder.
"Fair Market Value" means, with respect to a share of Common Stock,
the average of the high and low sales prices of Common Stock on the New York
Stock Exchange on the date as of which such value is being determined.
"Long-Term Disability Status" has the meaning set forth in Section
8(c)(iii).
"Multiplier" means two, or such other number as may be approved by
the Chairman of PaineWebber (or, in the case of officers of PWG who are subject
to the reporting requirements of Section 16(a) of the Exchange Act, the
Committee) for all Participants or for a specified class or classes of
Participants. More than one Multiplier may be in effect for different
Participants or different classes of Participants for each Program Year.
"PaineWebber" means PWG and each direct or indirect subsidiary
thereof.
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"Participant" means an Eligible Employee of PaineWebber who has
elected to participate in the Program in accordance with Section 6. A
Participant includes any individual who has an Account Balance under the
Program.
"Program" means this Paine Webber Group Inc. Equity Plus Program.
"Program Administrator" means any agent appointed by the Committee
(i) to maintain Program records and Participant Accounts, (ii) to hold the
shares that remain subject to the Transfer restriction described in Section
6(d), (iii) to purchase shares on behalf of the Program in the open market or
(iv) to whom authority under the Program is delegated, including a third-party
administrator. Notwithstanding anything to the contrary, the person appointed
pursuant to clause (iii) shall not be an affiliate of PaineWebber.
"Program Limitations" means the minimum limitation set forth in
Section 6(c)(iii) and the maximum limitation set forth in Section 6(c)(iv).
"Program Shares" means the shares of Common Stock purchased by a
Participant that are subject to the transfer restrictions set forth in Section
6(e).
"Program Year" means, unless the Committee determines otherwise,
January 1, 1999 through November 30, 1999 and each twelve-month period
commencing on each December 1st thereafter prior to termination of the Program
in accordance with Section 11.
"Purchase Date" means the date as of which the Cash Account Balances
of Participants are applied to the purchase of Program Shares. Unless the
Committee determines otherwise, the Purchase Dates shall be the last business
day in each February, May, August, and November. A Quarterly Participation
Period will end on the occurrence of a Purchase Date.
"PWG" means Paine Webber Group Inc., a Delaware corporation, and any
successor thereto.
"Quarterly Participation Period" means a period of approximately
three months ending on a Purchase Date during any part of which Cash
Contributions are collected by PaineWebber for the purpose of purchasing Program
Shares; provided, however, that the first Quarterly Participation Period shall
commence on January 1, 1999 and end on the next following Purchase Date.
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"Related Option" means the stock options granted to a Participant
under the Stock Option Plans in connection with the Participant's purchase of
Program Shares and which are subject to the vesting, forfeiture and other
provisions of Section 7.
"Share Holding Period" means, with respect to a Program Share, the
period beginning on the Purchase Date related to such share and ending on the
earliest to occur of (i) the second anniversary of such Purchase Date, (ii) the
date of a Change in Control, (iii) the date that a Participant's employment with
PaineWebber ends for any reason and (iv) such earlier date specified by the
Committee.
"Stock Option Plans" means, collectively, the Paine Webber Group
Inc. 1994 Executive Stock Award Plan, the Paine Webber Group Inc. 1994 Stock
Award Plan and the Paine Webber Group Inc. Investment Executive Stock Option
Plan, as amended and in effect immediately prior to the Effective Date, and any
other plan designated by the Committee for the grant of Related Options.
"Transfer" means to sell, assign, transfer, distribute, pledge,
mortgage, encumber, otherwise dispose of or create an interest in any property.
(b) Rules of Construction. Unless the context requires otherwise,
the masculine form of a word shall be deemed to include the feminine and the
singular form of a word shall be deemed to include the plural. Section
references are, unless otherwise noted, to sections of the Program.
(c) Stock Option Plans. Certain provisions of the Program are to be
read in conjunction with the provisions of the Stock Option Plans. In the event
of any discrepancy between the provisions of the Program concerning the Related
Options and the provisions of the Stock Option Plans, the provisions of the
applicable Stock Option Plan will prevail.
3. ADMINISTRATION.
(a) Authority of the Committee. The Program shall be administered by
the Committee, no member of which shall be eligible to participate in the
Program. The Committee shall have full and final authority, in each case subject
to and consistent with the provisions of the Program, (i) to establish rules and
regulations for the administration of the Program, (ii) to construe and
interpret the Program and the forms of award documents and to correct defects,
supply omissions or reconcile inconsistencies therein, (iii) to make factual
determinations in connection with the administration or interpretation of the
Program, and (iv) to make all other decisions or interpretations as the
Committee may deem necessary or advisable for the administration of the Program.
Any decision of the Committee in the administration of the Program shall be
final and
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conclusive on all interested persons. Notwithstanding the above, the grant of
Related Options under the Program shall be made in accordance with the terms and
provisions of the applicable Stock Option Plan.
(b) Delegation. The Committee may delegate its responsibility with
respect to the administration of the Program to the Chief Administrative
Officer, to the Director of Human Resources, to one or more members of the
Committee or to one or more members of the Board or to one or more Program
Administrators; provided, however, that the Committee may not delegate its
responsibility (i) with respect to Participants who are subject to Section 16 of
the Exchange Act or Section 162(m) of the Code or (ii) to amend or terminate the
Program in accordance with Section 11. The Committee may also appoint agents to
assist in the day-to-day administration of the Program and may delegate the
authority to execute documents under the Program to one or more members of the
Committee or to one or more officers of PaineWebber.
(c) Reliance and Indemnification. The Committee shall be entitled to
rely in good faith upon any report or other information furnished to it by
PaineWebber or from the financial, accounting, legal or other advisers of
PaineWebber. Each member of the Committee, each individual to whom the Committee
delegates authority hereunder, each individual designated by the Committee to
administer the Program and each other person acting at the direction of or on
behalf of the Committee shall not be liable for any determination or anything
done or omitted to be done by him or by any other member of the Committee or any
other such individual in connection with the Program, except for his own willful
misconduct or as expressly provided by statute, and, to the extent permitted by
law and the by laws of PWG, shall be fully indemnified and protected by
PaineWebber with respect to such determination, act or omission. The provisions
of this Section 3(c) shall not apply to any third-party who is not affiliated
with PaineWebber.
4. ELIGIBILITY. Each Eligible Employee of PaineWebber may
participate in the Program by completing and filing with PaineWebber an
Enrollment Form in accordance with Section 6(b). PaineWebber will begin
deducting Cash Contributions beginning with the first payment of Compensation in
the Program Year. A newly hired Eligible Employee may elect to participate in
the Program at any time prior to October lst of the Program Year in which occurs
their date of hire by completing an Enrollment Form and filing it with
PaineWebber's payroll office. PaineWebber will begin deducting Cash
Contributions beginning as soon as practicable following the date of enrollment.
A newly hired employee who is hired on or after October 1st may participate in
the Program Year following the Program Year in which occurs their date of hire
by completing an Enrollment Form in accordance with Section 6(b).
5. COMMON STOCK SUBJECT TO THE PROGRAM. PaineWebber is authorized to
issue up to three million shares of Common Stock annually as Program
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Shares under the Program. Such shares of Common Stock may be newly issued shares
of Common Stock, reacquired shares of Common Stock held in the treasury of PWG,
or shares purchased by the Program Administrator in the open market on behalf of
the Program. Shares of Common Stock issued in connection with the Related
Options shall not be subject to the limit set forth above but shall be subject
to any applicable limit in the Stock Option Plan pursuant to which the Related
Option is granted.
6. PURCHASES OF PROGRAM SHARES.
(a) Program Years. The Program shall be implemented by consecutive
(but not concurrent) Program Years. The Committee shall have the authority to
delay the start of a Program Year, to curtail, suspend or terminate a Program
Year or to cancel the start of one or more Program Years during the Term of the
Program with respect to some or all of the Participants. In addition, the
Committee may curtail, suspend or terminate one or more Quarterly Participation
Periods or cancel the start of one or more Quarterly Participation Periods
related to a Program Year with respect to some or all of the Participants. If
the Committee suspends or terminates a Program Year or a Quarterly Participation
Period, the Committee may (i) apply the Cash Contributions credited to each
Participant's Account to the purchase of Program Shares as of the next
applicable Purchase Date, (ii) as promptly as practicable, remit to the
Participant the Participant's Cash Account Balance or (iii) undertake a
combination of clauses (i) and (ii) in accordance with procedures established by
the Committee for this purpose.
(b) Elections. An Eligible Employee shall become a Participant by
completing an Enrollment Form which (i) specifies the Eligible Employee's
Contribution Percentage(s) and authorizes PaineWebber to deduct Cash
Contributions from the Eligible Employee's Compensation based on such
Contribution Percentage and to apply these Cash Contributions to the purchase of
Program Shares, (ii) contains an agreement by the Eligible Employee not to
Transfer any Program Shares during the Share Holding Period applicable to such
Program Shares and (iii) sets forth such other terms and conditions as the
Committee deems necessary or advisable. Unless the Committee determines
otherwise, an Enrollment Form will be effective only if filed with PaineWebber
at least thirty days prior to the start of the applicable Program Year or as
otherwise provided in Section 4.
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(c) Cash Contributions.
(i) Participants shall specify on their Enrollment Form applicable
to a Program Year the Contribution Percentage(s) that shall be withheld on
an after-tax basis as Cash Contributions. The Contribution Percentage(s)
elected by a Participant shall be in whole percentages from one to ten
percent and, subject to the Program Limitations set forth below, such
Contribution Percentage(s) shall be applied to the pre-tax amount of each
payroll, bonus or other installment of Compensation paid to the
Participant during the Program Year. In accordance with procedures
established by the Committee, if the Committee so elects, a Participant
may be permitted to make different elections of Contribution Percentage(s)
for different components of Compensation; provided, however, that any
Contribution Percentage election regarding bonus compensation is
irrevocable once made; and provided, further, that, after the Purchase
Date in a Program Year during which the Compensation attributable to a
bonus is applied to purchase Program Shares, a Participant may elect to
withdraw and sell such Program Shares due to a Financial Hardship, if the
Participant so qualifies, under the provisions of Section 8(b). The
special procedures established by the Committee under this Section 6(c)(i)
may vary each Program Year.
(ii) Unless the Committee determines otherwise, a Participant must
complete an Enrollment Form no less than thirty days prior to the start of
each Program Year or as otherwise provided in Section 4. The complete
Enrollment Form shall be deemed to be an election to participate in the
Program for the entire Program Year to which it relates, unless the
Participant elects to withdraw from participation in accordance with
Section 8(a) or 8(b).
(iii) Notwithstanding Section 6(c)(i) and any Enrollment Form filed
by the Participant, the minimum amount of Cash Contribution to be withheld
from any payment of Compensation shall not be less than $50 for those
Participants who receive a paycheck on a bi-weekly or semi-monthly basis
and $100 for those Participants who receive a paycheck on a monthly basis,
unless such minimum amount would cause the Participant to exceed the
maximum Program Limitation set forth in Section 6(c)(iv).
(iv) Notwithstanding Section 6(c)(i) and any Enrollment Form filed
by the Participant; in no event may a Participant acquire more than 1,000
Program Shares during any Program Year. In the event a Participant's Cash
Contributions exceed the 1,000 Program Share maximum, any excess Cash
Contributions will be refunded to the Participant as soon as practicable
following the purchase of the 1,000th Program Share and no remaining Cash
Contributions will be withheld from the Participant's Compensation for the
balance of the Program Year.
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(d) Purchase of Program Shares.
(i) Cash Contributions shall be credited to a Participant's Account
under the Program and shall be applied on the next Purchase Date to the
purchase of whole Program Shares; provided, however, that if a
Participant's Cash Account Balance as of a Purchase Date is less than
$300, then, unless the Committee determines otherwise, no portion of the
Participant's Cash Account Balance shall be applied to the purchase of
Program Shares on such Purchase Date but shall continue to be credited to
the Participant's Account until the next Purchase Date on which such Cash
Account Balance equals or exceeds $300; and provided further, that the
previous proviso shall not apply to the first Purchase Date following the
Effective Date. If a Participant elects to participate in successive
Program Years, his Cash Account Balance (regardless of the amount) will be
carried forward at the end of each Program Year and applied to successive
Purchase Dates. If a Participant chooses not to participate in the next
Program Year, then the remainder of the Participant's Cash Account
Balance, if any, shall be refunded to the Participant as soon as
practicable following the purchase of Program Shares on the last Purchase
Date in the Program Year in which he is participating and no further Cash
Contributions will be withheld from the Participant's Compensation
following the last day of the Program Year in which he was participating.
No partial shares of Common Stock shall be purchased or delivered under
the Program, and any portion of the Cash Account Balance that is not
sufficient to purchase a whole share shall remain credited to the Account
and shall be applied to the purchase of Program Shares at a subsequent
Purchase Date in accordance with the provisions of this Section 6.
(ii) The per share purchase price for Program Shares shall be the
Fair Market Value of a share of Common Stock on the Purchase Date.
Anything in the Program to the contrary notwithstanding, unless the
Committee determines otherwise, Program Shares allocated to Participants
who are subject to Section 16(a) of the Exchange Act by virtue of their
status as a director or officer of PWG shall only be purchased from
PaineWebber and not through open-market purchases of Common Stock by the
Program Administrator.
(e) Restrictions and Rights with Respect to Program Shares.
(i) During the Share Holding Period applicable to a Participant's
Program Shares, the Participant shall not be permitted to Transfer the
Program Shares, unless such Transfer is permitted in accordance with the
hardship provisions of Section 8(b). Program Shares held in certificate or
book entry form shall, to the extent the Committee deems advisable,
contain an appropriate legend or notation indicating this Transfer
restriction.
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(ii) During the Share Holding Period, Program Shares shall be held
by the Program Administrator for the benefit of the Participant and the
Participant shall have the right to vote such Program Shares and to
receive all dividends and other distributions in respect thereof. In the
event of a stock split, stock dividend or distribution of property other
than cash affecting the Program Shares, the shares of Common Stock
received in connection with such stock dividend or stock split and the
property received in such distribution shall, unless the Committee
determines otherwise, be subject to the Transfer restrictions set forth in
this Section 6(e)(i).
(iii) Following the expiration of the Share Holding Period, all
restrictions on the transfer of Program Shares (other than those
restrictions imposed by applicable securities laws or the policies on
trading of PaineWebber) shall cease and the Program Shares shall be made
available to the Participant.
(iv) Program Shares shall at all times be fully vested and
nonforfeitable.
7. RELATED OPTION GRANTS.
(a) Grant of Related Options. On a Purchase Date, each Participant
who acquires Program Shares on such date shall be granted a Related Option under
the Stock Option Plan applicable to the Participant to purchase Common Stock.
The Related Option shall have a per share exercise price equal to the Fair
Market Value of a share of Common Stock as of the Purchase Date. The number of
shares subject to the Related Option shall equal the number of Program Shares
acquired by the Participant on the Purchase Date multiplied by the approved
Multiplier.
(b) Terms and Vesting of Related Options. Unless the Committee
determines otherwise, Related Options shall have a seven-year term and shall
vest and become exercisable on the third anniversary of the date of grant
thereof, provided that the Participant is in the employ of PaineWebber on such
anniversary date. Related Options shall be nonqualified stock options and not
incentive stock options within the meaning of Section 422 of the Code. The
Related Options shall contain such other terms and conditions as may be required
by the Stock Option Plan pursuant to which the Related Options are granted or
that the Committee determines to be necessary or advisable.
(c) Forfeiture of Related Options. Unless the Committee determines
otherwise, a Related Option shall be immediately forfeited without further
action by PaineWebber if the Participant Transfers the corresponding Program
Shares prior to the expiration of the Share Holding Period, if the Program
Shares are delivered to the
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Participant prior to the end of the Share Holding Period, or pursuant to any
forfeiture provision of the Stock Option Plans or related stock option
agreements.
8. WITHDRAWALS; REPAYMENTS OF CASH CONTRIBUTIONS; EFFECT OF
TERMINATION OF EMPLOYMENT.
(a) Withdrawal of Cash Contributions. Participants shall have the
right to elect once in writing during any Program Year, by the fifteenth day of
the last month of any Quarterly Participation Period, to cease participating in
the Program beginning with the first paycheck of the Quarterly Participation
Period following the Quarterly Participation Period in which the withdrawal
request occurs; provided, however, this Section 8(a) will not apply to Cash
Contributions attributable to bonus compensation. If a Participant chooses to
withdraw from participation and, the Participant's Cash Account Balance as of
the last Quarterly Participation Period in which the Participant is
participating, equals or exceeds $300, then the Participant's Cash Account
Balance shall be used to purchase Program Shares for that Quarterly
Participation Period. If the Participant's Cash Account Balance is less than
$300, then no portion of the Participant's Cash Account Balance shall be applied
to the purchase of Program Shares, but shall be refunded to the Participant as
soon as practicable following the end of the Quarterly Participation Period in
which he was participating, but in no event later than thirty days following the
end of such Quarterly Participation Period. Anything in the Program to the
contrary notwithstanding, in the event a Participant makes an election to
withdraw due to Financial Hardship in accordance with Section 8(b), Cash
Contributions will be suspended as soon as administratively practicable
following the date of the approval of the Financial Hardship request and no
portion of the Participant's Cash Account Balance shall be applied to purchase
Program Shares on the next Purchase Date, regardless of the amount of the
Participant's Cash Account Balance, but shall be refunded to Participant as soon
as practicable following the date of withdrawal. Any withdrawal election by a
Participant shall be irrevocable once made. A Participant who makes such a
withdrawal election shall be precluded from participating in the Program again
until the start of the next Program Year, provided the Participant files a new
Enrollment Form for such Program Year in accordance with Section 6(b). No
withdrawal by a Participant under this Section 8(a) shall affect any Program
Shares purchased on behalf of the Participant prior to the date the withdrawal
election is received by PaineWebber.
(b) Sale of Program Shares. A Participant may file a written
election with the Committee, in accordance with procedures established by the
Committee for this purpose, to request PaineWebber to sell on his behalf all or
a portion of the Program Shares credited to his Account as a result of a
Financial Hardship (as defined below). If Program Shares are sold as a result of
a Financial Hardship, all Related Options shall be immediately forfeited as of
the date of such sale without further action by PaineWebber.
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In addition, the Participant will not be eligible to participate in the Program
again until the next Program Year following the Program Year during which such
sale occurs, provided the Participant files a new Enrollment Form for such
Program Year in accordance with Section 6(b).
If a Participant elects a Financial Hardship sale from his Account,
PaineWebber will stop deducting Cash Contributions and refund the balance of the
Participant's Cash Account Balance to the Participant as soon as
administratively practicable following the date of the approval of the Financial
Hardship request. The additional amounts needed with respect to the Financial
Hardship may be satisfied from the Program Shares purchased in any Quarterly
Participation Period prior to the date of the request. The Participant must
identify, by Purchase Date, the Program Shares to be sold on his behalf and,
anything in the Program to the contrary notwithstanding, in no event may a
Participant have PaineWebber sell less than 100% of the Program Shares credited
to his Account related to a specific Purchase Date. The identified Program
Shares will be sold by PaineWebber on behalf of the Participant and a check
equal to the amount of the proceeds of the sale, minus any costs, will be
remitted to the Participant as soon as practicable following the date of the
approval of the Financial Hardship request. The timing of all sales of Program
Shares sold due to a Financial Hardship will be determined in the sole
discretion of the Program Administrator.
For purposes of this Section 8(b), a "Financial Hardship" means any
of the following: (i) tuition payments for post-secondary education of the
Participant or his spouse or dependents incurred within four months of such
Financial Hardship request; (ii) costs directly related to the purchase or
construction of a Participant's principal residence; (iii) expenses for medical
care previously incurred by a Participant or his spouse or dependents, or
necessary for these persons to obtain such medical care, that are not reimbursed
by the Participant's medical carrier; (iv) amounts necessary to prevent the
eviction of a Participant from his principal residence or the need to prevent
foreclosure on the mortgage of his principal residence; or (v) any other type of
expenses that are deemed by the Committee and the Commissioner of the Internal
Revenue Service through revenue rulings, notices and other administrative
pronouncements of general applicability to constitute immediate and heavy
financial burden for purposes of Section 401(k) of the Code. The Participant
must provide to the Director of Human Resources credible evidence in writing of
the Financial Hardship and the amount necessary to be withdrawn under the
Program to alleviate the Financial Hardship. The Director of Human Resources
shall have sole discretion to determine whether the evidence presented (i)
constitutes a Financial Hardship under the Program and (ii) demonstrates a need
for the dollar amount requested by the Participant.
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(c) Termination of Employment.
(i) Anything in the Program to the contrary notwithstanding, unless
the Committee determines otherwise, no Program Shares shall be purchased
on behalf of a Participant, and no Related Option shall be granted to a
Participant, who is not an employee of PaineWebber on the applicable
Purchase Date. Unless the Committee determines otherwise, in the event a
Participant ceases to be an Eligible Employee but is still an employee of
PaineWebber (a "Change in Eligibility Status"), all Cash Contributions
will cease to be collected on the date the Change in Eligibility Status
occurs. In addition, for the purposes of the Participant's Cash Account
Balance, the date of such Change in Eligibility Status shall be treated as
a withdrawal request under Section 8(a). No Change in Eligibility Status
under this Section 8(c)(i) shall affect any Program Shares purchased on
behalf of the Participant prior to the date the Change in Eligibility
Status occurs, unless otherwise determined by the Committee.
(ii) In the event of a Participant's termination of employment for
any reason, PaineWebber shall pay to the Participant, in a lump sum as
soon as practicable following the date of such termination of employment
but in no event later than thirty days following the last day of the
Quarterly Participation Period in which the termination of employment
occurs, the full amount of the Participant's Cash Account Balance. The
Program Shares credited to the Participant's Account shall continue to be
subject to the restrictions on Transfer until the expiration of the
applicable Share Holding Period. Following the expiration of the Share
Holding Period applicable to the Program Shares, such Program Shares shall
be made available to the Participant.
(iii) All Cash Contributions will cease to be deducted from a
Participant's Compensation on the date that the Participant begins
receiving disability benefit payments as a result of the Participant's
long-term disability status under the PaineWebber long-term disability
plan applicable to such Participant ("Long-Term Disability Status"). If
the Participant's Cash Account Balance as of the Quarterly Participation
Period in which the Long-Term Disability Status commences equals or
exceeds $300, then the Participant's Cash Account Balance shall be used to
purchase Program Shares for that Quarterly Participation Period. If such
Participant's Cash Account Balance is less than $300 on such date, then no
portion of the Participant's Cash Account Balance shall be applied to the
purchase of Program Shares, but shall be refunded to the Participant as
soon as practicable following the end of the Quarterly Participation
Period in which the Long-Term Disability Status commences, but in no event
later than thirty days following the end of such Quarterly Participation
Period. Unless otherwise determined by the Committee, Program Shares
purchased on behalf of a
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Participant on Long-Term Disability Status will be released to the
Participant at the end of the Share Holding Period.
(iv) The Committee shall have discretion to determine how approved
leaves of absence will be treated under the Program.
(v) The effect of a Participant's termination of employment for any
reason on the Related Options shall be governed by the terms of the
applicable Stock Option Plan and corresponding option agreement.
9. ACCOUNTS.
(a) Establishment of Accounts. PaineWebber shall establish and
maintain (or cause to be established and maintained) an Account for each
Participant to record increases and decreases in the Participant's Cash Account
Balance, Program Shares and Related Options.
(b) Account Statements. PaineWebber shall provide Participants with
a statement of their Account no less frequently than annually.
(c) Cash Contributions. PaineWebber shall not be obligated to
segregate the Cash Contributions from its other assets or to establish any trust
or separate fund to hold such Cash Contributions. No interest shall accrue with
respect to the Cash Contributions held in the Participant's Account regardless
of the period of time for which such Cash Contributions are held and regardless
of whether Program Shares are actually purchased with such Cash Contributions.
10. CHANGE IN CONTROL.
(a) Effect of a Change in Control. In the event of a Change in
Control of PWG, (i) all Transfer restrictions will immediately lapse on all
Program Shares, (ii) all Cash Contributions will cease to be withheld from
Participant Compensation and all purchases of Program Shares on behalf of a
Participant will terminate and (iii) each Participant's Cash Account Balance
will be paid to the Participant as soon as practicable following the date of the
Change in Control. The effect of a Change in Control on the Related Options will
be governed by the terms and conditions of the Stock Option Plans and the
corresponding stock option agreements under which each Related Option is
granted.
(b) Change in Control Defined. For the purposes of this Program,
"Change in Control" shall mean the occurrence of any of the following events:
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(i) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than PWG, a subsidiary, any trustee or other
fiduciary holding securities under an employee benefit plan of PaineWebber
or a subsidiary, or any corporation owned, directly or indirectly, by the
stockholders of PWG in substantially the same proportions as their
contemporaneous ownership of voting securities of PWG, is or becomes a
"20% Beneficial Owner." For purposes of this provision, a "20% Beneficial
Owner" shall mean a person who is or becomes the "beneficial owner" (as
defined in Rule 13 d-3 under the Exchange Act), directly or indirectly, of
securities of PWG representing 20% or more of the combined voting power of
PWG's then-outstanding voting securities; provided that (A) the term "20%
Beneficial Owner" shall not include any Beneficial Owner who has crossed
such 20% percent threshold solely as a result of an acquisition of
securities directly from PWG, or solely as a result of an acquisition by
PWG of PWG securities, until such time thereafter as such person acquires
additional voting securities other than directly from PWG and, after
giving effect to such acquisition, such person would constitute a 20%
Beneficial Owner; and (B) with respect to any person who is and remains
eligible to file a Schedule 13G pursuant to Rule 13d-l(b)(l) under the
Exchange Act with respect to PWG securities, there shall be excluded from
the number of securities deemed to be beneficially owned by such person
for purposes of determining whether such person is a 20% Beneficial Owner
a number of securities representing 10% of the combined voting power of
PWG's then-outstanding voting securities;
(ii) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of PWG,
together with any new director (other than a director designated by a
person who has entered into an agreement with PWG to effect a transaction
described in paragraph (i), (iii), or (iv) hereof) whose election by the
Board or nomination for election by PWG's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved (the "Continuing
Directors"), cease for any reason to constitute at least a majority
thereof
(iii) The stockholders of PWG approve a merger, consolidation,
recapitalization or reorganization of PWG, or a reverse stock split of any
class of voting securities of PWG, or the consummation of any such
transaction of stockholder approval is not obtained, other than any such
transaction which would result in at least 80% of the total voting power
represented by the voting securities of PWG or the surviving entity
outstanding immediately after such transaction, with the relative voting
power of each such continuing holder compared to the voting power of each
other continuing holder not substantially altered as a result
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<PAGE> 15
of the transaction; provided that, for purposes of this paragraph (iii),
such continuity of ownership (and preservation of relative voting power)
shall be deemed to be satisfied if the failure to meet such 80% threshold
(or to substantially preserve such relative voting power) is due solely to
the acquisition of voting securities by an employee benefit plan of PWG or
its subsidiaries, such surviving entity, or of any subsidiary of PWG or
such surviving entity;
(iv) The stockholders of PWG approve a plan of complete liquidation
of PWG or an agreement for the sale or disposition by PWG of all or
substantially all of PWG's assets (or any transaction having a similar
effect); or
(v) Any other event which the Board of Directors (or the Committee,
if and to the extent that the Committee must exercise sole discretion over
the matter in order to comply with applicable requirements of Rule 16b-3
under the Exchange Act), determines shall constitute a Change in Control
for purposes of this Program.
11. AMENDMENT AND TERMINATION. The Board or Committee may at any
time and for any reason suspend, amend or terminate the Program at any time,
except that no such termination will adversely affect Program Shares previously
purchased or Related Options previously granted.
12. MISCELLANEOUS PROVISIONS.
(a) Rights Not Transferable. A Participant's right to participate in
the Program may not be subject to any assignment, transfer, pledge or other
disposition.
(b) No Right to Continued Employment. Neither the creation of the
Program nor the purchase of Program Shares nor the granting of Related Options
hereunder shall be deemed to create a condition of employment or right to
continued employment with PaineWebber or affect an employee's status as an
"employee at will," and each Participant shall be and shall remain subject to
discharge by PaineWebber as though the Program had never come into existence.
(c) Consent to Program. By filing an Enrollment Form with
PaineWebber and accepting any Program Share or Related Option or other benefit
under the Program, each Participant and each person claiming under or through
him shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Program by
PaineWebber, the Board or the Committee.
(d) Wage and Tax Withholding. Nothing in the Program shall preclude
PaineWebber from withholding from a Participant's Compensation or from any
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<PAGE> 16
other remuneration payable to the Participant any amounts that are required to
be withheld under federal, state and local income and payroll tax withholding
laws.
(e) Compliance with Securities Laws. No Program Shares may be
purchased under the Program or delivered to a Participant unless and until
PaineWebber determines that such purchase and delivery complies with all
applicable securities laws. A Related Option may not be exercised, and no shares
of Common Stock may be issued in connection with such options, unless
PaineWebber determines that the issuance of such shares has been registered
under the Securities Act of 1933, as amended, and qualified under applicable
state "blue sky" laws, or an exemption from registration and from qualification
under such state "blue sky" laws is available.
(f) Capital Changes. In the event of changes in the Common Stock of
PWG due to a stock split, reverse stock split, stock dividend, combination,
reclassification, or like change in PWG's capitalization, or in the event of any
merger, sale or other reorganization, appropriate adjustments shall be made by
the Committee to preserve the original intent of the Program.
(g) Beneficiary Designation. In the event of the death of a
Participant, PaineWebber shall pay or deliver the Account Balance to the
executor or administrator of the estate of the Participant.
(h) Awards to Individuals Subject to Non-U.S. Jurisdictions. To the
extent that Program Shares or Related Options are purchased or granted to
Participants who are domiciled or resident outside of the United States or to
persons who are domiciled or resident in the United States but who are subject
to the tax laws of a jurisdiction outside of the United States, the Committee
may adjust the terms of the purchases of the Program Shares and the Related
Options to the extent reasonably necessary (i) to comply with the laws of such
jurisdiction and (ii) to permit the grant of the Related Options and the
purchase of the Program Shares not to be a taxable event to the applicable
Participant. The authority granted under the previous sentence shall include the
discretion for the Committee to adopt, on behalf of PaineWebber, one or more
sub-plans applicable to separate classes of Eligible Employees who are subject
to the laws of jurisdictions outside of the United States.
(i) Expenses. Except as otherwise determined by the Committee, the
costs and expenses of administering and implementing the Program shall be borne
by PaineWebber.
(j) Effective Date. The Program shall become effective on the
Effective Date and shall remain in effect until terminated in accordance with
Section 11.
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(k) Governing Law. The validity, construction and effect of the
Program, any rules and regulations relating to the Program, and any option or
share documentation shall be determined in accordance with the laws of the State
of New York applicable to contracts executed and performed within such state and
without giving effect to principles of conflicts of laws.
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