SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
:
In the Matter :
:
CENTRAL AND SOUTH WEST CORPORATION : CERTIFICATE
:
File No. 70-7940 : OF
:
(Public Utility Holding Company Act of 1935) : NOTIFICATION
:
:
Central and South West Corporation ("CSW"), a Delaware
corporation and a registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), hereby certifies the matters
set forth below. Capitalized terms used herein without definition have the
meanings ascribed to them in the Application-Declaration in File No. 70-7940.
1. Pursuant to an order (the "Order") of the Securities and
Exchange Commission (the "Commission") dated April 7, 1992 (HCAR No. 25511), CSW
was authorized to adopt, subject to shareholder approval at CSW's 1992 Annual
Meeting, the Central and South West Corporation 1992 Long-Term Incentive Plan
(the "Incentive Plan"). CSW's shareholders approved the Incentive Plan and it
was adopted pursuant to the Order.
2. At the annual meeting of CSW shareholders held on April 17,
1997, a majority of the shareholders of CSW affirmatively voted to approve the
adoption of the Central and South West Corporation Amended and Restated 1992
Long-Term Incentive Plan ("Amended Incentive Plan"), and the Amended
Incentive Plan was duly adopted by CSW.
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The Amended Incentive Plan reflects amendments to the
Incentive Plan to (i) impose maximum grant and award payment amounts in respect
of stock option, stock appreciation right, restricted stock and performance unit
awards; (ii) enable the Executive Compensation Committee of CSW's Board of
Directors (the "Committee") to determine, in its own discretion, how share
availability under the Incentive Plan is computed; (iii) preclude the use of
shares owned less than six months in payment for the exercise price of stock
options; (iv) permit the Committee to determine, on an individual award basis,
the shareholder rights, if any, available to a restricted stock grantee; (v) add
"cash value added" and "economic value added" concepts as possible performance
unit performance goals; (vi) provide that upon death, disability or retirement a
grantee's awards under the Incentive Plan will become 100% vested and any stock
options held by any such terminee will be exercisable for three years after
retirement and one year after death or disability; (vii) eliminate the
requirement that an award under the Incentive Plan be forfeited if the grantee
terminates employment for any reason within one year after the date of grant of
such award; (viii) permit the transfer of non-qualified stock options by
grantees (if so provided by the Committee); (ix) conform the definition of
"change in control" in the Incentive Plan to the definition of that term
contained in the several change-in- control agreements recently entered into
with members of CSW's senior management; and (x) delete the provision limiting
payments under the Incentive Plan to amounts not treated as non-deductible
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"excess parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code").
The reason for the changes listed in (i), (ii) and (viii)
above is to take advantage of, or to bring the Incentive Plan into compliance
with, recent changes to Rule 16b-3, as promulgated under ss.16(b) of the
Securities Exchange Act of 1934, as amended, or Section 162(m) of the Code. The
amendments set forth in (iv) and (v) above are intended to provide more
flexibility to the Committee in fashioning the terms and provisions of grants
under the Incentive Plan. The changes described in (vi) and (ix) above are
intended to conform the Incentive Plan to the historical practice of the
Committee and to other aspects of the CSW's overall compensation program. The
provisions referred to in (vii) and (x) above were eliminated because the
Committee views them as unduly restrictive. Finally, the change described in
(iii) above is intended to eliminate any inadvertent accounting charges relating
to "stock swap" option exercises using so-called "immature" shares.
2. The following exhibit is filed herewith:
Exhibit 7 - Central and South West Corporation Amended
and Restated 1992 Long-Term Incentive Plan.
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S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: April 25, 1997
CENTRAL AND SOUTH WEST CORPORATION
By:/s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
7 Central and South West Corporation Electronic
Amended and Restated 1992 Long-Term
Incentive Plan.
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EXHIBIT 7
Amended and Restated
1992 Long-Term Incentive Plan
Central and South West Corporation
January 22, 1997
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Contents
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Page
Article 1. Purpose 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Term of Plan/Common Stock Subject to Plan 4
Article 5. Eligibility 5
Article 6. Stock Options 5
Article 7. Stock Appreciation Rights 7
Article 8. Restricted Awards 8
Article 9. Performance Units 10
Article 10. Deferral Elections 12
Article 11. Dividend Equivalents 12
Article 12. Termination of Employment 12
Article 13. Nontransferability of Awards 14
Article 14. Changes in Capitalization and Other Matters 14
Article 15. Change in Control 15
Article 16. Amendments, Suspension, and Termination 18
Article 17. Miscellaneous 19
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Central and South West Corporation
Amended and Restated 1992 Long-Term Incentive
Plan
Article 1. Purpose
The purpose of the Amended and Restated 1992 Long-Term Incentive Plan (the
"Plan") is to further and promote the interests of Central and South West
Corporation (the "Company"), its Subsidiaries, and its shareholders by enabling
the Company to attract, retain, and motivate key employees and to align the
interests of such key employees and the Company's shareholders. To do this, the
Plan offers performance-based stock and cash incentives and other equity-based
incentive awards and opportunities to provide such key employees with a
proprietary interest in maximizing the growth, profitability, and overall
success of the Company.
Article 2. Definitions
For purposes of the Plan, the following terms shall have the meanings set
forth below:
2.1. "Award" means an award or grant made to a Participant under Sections
6, 7, 8, and/or 9 of the Plan. "Award Agreement" means the agreement executed by
a Participant pursuant to Sections 3.2 and 17.7 of the Plan in connection with
the granting of an Award.
2.2 "Board" means the Board of Directors of the Company, as constituted
from time to time.
2.3 "Code" means the Internal Revenue Code of 1986, as in effect and as
amended from time to time, or any successor statute thereto, together with any
rules, regulations, and interpretations promulgated thereunder or with respect
thereto.
2.4 "Committee" means the Executive Compensation Committee of
the Board.
2.5 "Common Stock" means the Common Stock, $3.50 par value, of the
Company or any security of the Company issued by the Company in substitution or
exchange therefor.
2.6 "Company" means Central and South West Corporation, a Delaware
corporation, or any successor corporation to Central and South West Corporation.
2.7 "Disability" means disability as determined by the Committee in
accordance with standards and procedures similar to those under the Company's
long-term disability plan, if any. At any time that the Company does not
maintain a long-term disability plan, Disability shall mean the inability of a
Participant, as determined by the Committee, substantially to perform such
Participant's regular duties and responsibilities due to a medically
determinable physical or mental illness which has lasted (or can reasonably be
expected to last) for a period of six (6) consecutive months.
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2.8 "Exchange Act" means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations, and interpretations promulgated thereunder
or with respect thereto.
2.9 "Fair Market Value" means on, or with respect to, any given date, the
average of the highest and lowest market prices of the Common Stock, as reported
on the consolidated transaction reporting system for the New York Stock Exchange
for such date or, if the Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was traded.
2.10 "Incentive Stock Option" means any stock option granted pursuant to
the provisions of Section 6 of the Plan (and the relevant Award Agreement) that
is intended to be (and is specifically designated as) an "incentive stock
option" within the meaning of Section 422 of the Code.
2.11 "Nonqualified Stock Option" means any stock option granted pursuant
to the provisions of Section 6 of the Plan that is not an Incentive Stock Option
and the relevant Award Agreement.
2.12 "Participant" means a key employee of the Company or any Subsidiary
who is selected under Section 5 to receive an Award by the Committee under the
Plan.
2.13 "Performance Units" means the monetary units granted under Section 9
of the Plan and the relevant Award Agreement.
2.14 "Phantom Stock" means the phantom stock units granted pursuant to the
provisions of Section 8 of the Plan and the relevant Award Agreement.
2.15 "Plan" means the Central and South West Corporation 1992 Long-Term
Incentive Plan, as set forth herein and as in effect and as amended from time to
time (together with any rules and regulations promulgated by the Committee with
respect thereto).
2.16 "Reload Stock Option" means any Nonqualified Stock Option
automatically granted pursuant to the provisions of Section 6.7 of the Plan and
the relevant Award Agreement.
2.17 "Restricted Award" means an Award of Restricted Stock and/or Phantom
Stock pursuant to the provisions of Section 8 of the Plan and the relevant Award
Agreement.
2.18 "Restricted Stock" means the restricted shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan and the relevant
Award Agreement.
2.19 "Retirement" means retirement from active employment with the Company
and its Subsidiaries on or after the normal retirement date specified in the
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Company's qualified retirement plans or such earlier date as approved in writing
by the Committee for the purposes of this Plan.
2.20 "Stock Appreciation Right" means an Award described in Section 7.2 of
the Plan and granted pursuant to the provisions of Section 7 of the Plan.
2.21 "Subsidiary(ies)" means any corporation (other than the Company) in
an unbroken chain of corporation, beginning with the Company, if each of such
corporation, other than the last corporation in the unbroken chain, owns,
directly or indirectly, fifty percent (50%) or more of the voting stock in one
of the other corporations in such chain.
Article 3. Administration
3.1. The Committee. The Plan shall be administered by the Committee.
Consistent with the By-Laws of the Company, the Committee shall be appointed
from time to time by the Board. Consistent with the By-Laws of the Company,
members of the Committee shall serve at the pleasure of the Board, and the Board
may at any time and from time to time remove members from the Committee, or,
subject to the immediately preceding sentence, add members to the Committee.
Consistent with the By-Laws of the Corporation, a majority of the members of the
Committee shall constitute a quorum for the transaction of business, and any act
or acts approved in writing by all of the members of the Committee then serving
shall be the act or acts of the Committee (as if taken by unanimous vote at a
meeting of the Committee duly called and held).
3.2 Plan Administration and Plan Rules. The Committee is authorized to
construe and interpret the Plan and to promulgate, amend, and rescind rules and
regulations relating to the implementation, administration, and maintenance of
the Plan. Subject to the terms and conditions of the Plan, the Committee shall
make all determinations necessary or advisable for the implementation,
administration, and maintenance of the Plan including, without limitation, (a)
selecting the Plan's Participants; (b) making Awards in such amounts and form as
the Committee shall determine; and (c) imposing any technical defect or
technical omission, or reconciling any technical inconsistency, in the Plan
and/or any Award Agreement. The Committee may designate persons other than
members of the Committee to carry out the day-to-day administration of the Plan
under such conditions and limitations as it may prescribe, except that the
Committee shall not delegate its authority with regard to selection for
participation in the Plan and/or the granting of any Awards to Participants. The
Committee's determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated. Any determination, decision, or action of the Committee in connection
with the construction, interpretation, administration, implementation, or
maintenance of the Plan shall be final, conclusive, and binding upon all
Participants and any person(s) claiming under or through any Participants. The
Company shall effect the granting of Awards under the Plan, in accordance with
the determinations made by the Committee, by execution of written agreements
and/or other instruments in such form as is approved by the Committee.
3.3 Liability Limitation. Neither the Board nor the Committee, nor any
member of either, shall be liable for any act, omission, interpretation,
construction,
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or determination made in good faith in connection with the Plan (or any Award
Agreement), and the members of the Board and the Committee shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage, or expense (including, without limitation, attorneys' fees) arising or
resulting therefrom to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage which may be in effect from
time to time.
Article 4. Term of Plan/Common Stock Subject to Plan
4.1. Term. The Plan shall terminate on April 17, 2007, except with
respect to Awards then outstanding. After such date no further Awards shall be
granted under the Plan.
4.2 Common Stock. The maximum number of shares of Common Stock in respect
for which Awards may be granted under the Plan, subject to adjustment as
provided in Section 14 of the Plan, shall be four million (4,000,000) shares.
Notwithstanding the foregoing, the maximum number of shares of Common Stock
which may be issued as Restricted Awards granted pursuant to Article 8 herein
shall be an amount equal to thirty percent (30%) of the total number of shares
of Common Stock in respect for which Awards may be granted under the Plan.
In the event of a change in the Common Stock of the Company that is limited
to a change in the designation thereof to "Capital Stock" or other similar
designation, or to a change in the par value thereof, or from par value to no
par value, without increase or decrease in the number of issued shares, the
shares resulting from any such change shall be deemed to the Common Stock for
purposes of the Plan. Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have been
reacquired by the Company and which are being held as treasury shares. No
fractional shares of Common Stock shall be issued under the Plan, unless the
Committee determines otherwise.
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4.3 Computation of Available Shares. The Committee shall determine the
appropriate methodology for calculating the number of shares of Common Stock
available for Awards under the Plan. If any Awards expire unexercised or are
forfeited, surrendered, canceled, terminated, or settled in cash in lieu of
Common Stock, the shares of Common Stock which were theretofore subject (or
potentially subject) to such Awards shall again be available for Awards under
the Plan to the extent of such expiration, forfeiture, surrender, cancellation,
termination, or settlement of such Awards.
Article 5. Eligibility
Employees eligible for Awards under the Plan shall consist of key employees
of the Company and/or its Subsidiaries who are responsible for the management,
growth, and protection of the business of the Company and/or its Subsidiaries
and whose performance or contribution, in the sole discretion of the Committee,
benefits or will benefit the Company in a significant manner.
Article 6. Stock Options
6.1 Terms and Conditions. Stock options granted under the Plan may be in
the form of Incentive Stock Options, Nonqualified Stock Options, or Reload Stock
Options (sometimes referred to collectively herein as the "Stock Option(s)").
Such Stock Options shall be subject to the terms and conditions set forth in
this Section 6 and any additional terms and conditions, not inconsistent with
the express terms and provisions of the Plan, as the Committee shall set forth
in the relevant Award Agreement. The maximum aggregate number of shares of
Common Stock that may be granted in the form of Stock Options, pursuant to any
Award granted in any one fiscal year to any one Participant shall be two hundred
fifty thousand (250,000), including any Reload Stock Options granted in
connection with such an Award.
6.2 Grant. Stock Options may be granted under the Plan in such form as
the Committee may from time to time approve. Subject to Section 5 of the Plan,
Stock Options may be granted alone or in addition to other Awards under the Plan
or in tandem with Stock Appreciation Rights. Notwithstanding the above, no
Incentive Stock Options shall be granted to any employee who owns more than ten
percent (10%) of the combined total voting power of all classes of stock of the
Company or any Subsidiary.
6.3 Exercise Period. The exercise price per share of Common Stock subject
to a Stock Option shall be determined by the Committee at the time of grant;
provided, however, that the exercise price of an Incentive Stock Option or a
Reload Stock Option shall not be less than one hundred percent (100%) of the
Fair Market Value of the Common Stock on the date of the grant of such Incentive
Stock Option or Reload Stock Option.
6.4 Term. The term of each Stock Option shall be such period of time as
is fixed by the Committee at the time of grant; provided, however, that the term
of any Incentive Stock Option shall not exceed ten (10) years after the date the
Incentive Stock Option is granted.
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6.5 Method of Exercise. A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Secretary of the Company
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the exercise price in cash, by certified
check, bank draft, or money order payable to the order of the Company or, if
permitted by the terms of the relevant Award Agreement and applicable law, by
delivery of, alone or in conjunction with a partial cash or instrument payment,
(a) a fully secured, recourse promissory note; or (b) shares of Common Stock
already owned by the Participant for a minimum of six (6) months. The Committee
may, in the relevant Award Agreement, also permit Participants (either on a
selective or group basis) to simultaneously exercise Stock Options and sell the
shares of Common Stock thereby acquired, pursuant to a brokerage "cashless
exercise" arrangement, selected by and approved of in all respects in advance by
the Committee, and use the proceeds from such sale as payment of the exercise
price of such Stock Options. Payment instruments shall be received by the
Company subject to collection. The proceeds received by the Company upon
exercise of any Stock Option may be used by the Company for general corporate
purposes.
6.6 Date of Exercise. Unless otherwise provided in the Award Agreement,
in respect of any Stock Option, such Stock Option may be exercised in whole or
in part at any time and from time to time during its specified term.
Notwithstanding the preceding sentence, in no event shall any Stock Option
granted under the Plan be exercisable prior to the date which is one (1) year
after the date on which the Stock Option is granted.
6.7 Reload Stock Options. The Committee may, in its sole discretion,
provide in any Award Agreement in respect of any Nonqualified Stock Option that
if the Participant delivers shares of the Company's Common Stock already owned
by such Participant in full or partial payment of the exercise price of such
Nonqualified Stock Option, the Participant shall automatically and immediately
thereupon be granted a Reload Stock Option to purchase that number of shares of
Common Stock delivered by the Participant to the Company (on such terms as the
Committee may prescribe under and in accordance with the Plan).
6.8 Tandem Grants. If Nonqualified Stock Options and Stock Appreciation
Rights are granted in tandem, as designated in the relevant Award Agreements,
the right of a Participant to exercise any tandem Stock Option shall terminate
to the extent that the shares of Common Stock subject to such Stock Option are
used to calculate amounts or shares receivable upon the exercise of the related
tandem Stock Appreciation Right.
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Article 7. Stock Appreciation Rights
7.1 Terms and Conditions. The grant of Stock Appreciation Rights under
the Plan shall be subject to the terms and conditions set forth in this Section
7, and any additional terms and conditions not consistent with the express terms
and provisions of the Plan, as the Committee shall set forth in the relevant
Award Agreement. The maximum aggregate number of shares of Common Stock that may
be granted in the form of Stock Appreciation Rights, pursuant to any Award
granted in any one fiscal year to any one Participant shall be two hundred fifty
thousand (250,000).
7.2 Stock Appreciation Rights. A Stock Appreciation Right is an Award
granted with respect to a specified number of shares of Common Stock entitling a
Participant to receive an amount equal to the excess of the Fair Market Value of
a share of Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the date of grant of the Stock Appreciation Right, or
such other value as set forth in the relevant Award Agreement by the Committee,
multiplied by the number of shares of Common Stock with respect to which the
Stock Appreciation Right shall have been exercised.
7.3 Grant. Subject to Section 5 of the Plan, a Stock Appreciation Right
may be granted in addition to any other Award under the Plan or in tandem with
or completely independent of a Nonqualified Stock Option.
7.4 Date of Exercise. Unless otherwise provided in the Award Agreement in
respect of any Stock Appreciation Right, a Stock Appreciation Right may be
exercised by a Participant, in accordance with and subject to all of the
procedures established by the Committee, in whole or in part at any time and
from time to time during its specified term. Notwithstanding the preceding
sentence, in no event shall any Stock Appreciation Right be exercisable prior to
the date which is one (1) year after the date on which the Stock Appreciation
Right was granted. The Committee may also provide, as set forth in the relevant
Award Agreement and without limitation, that some Stock Appreciation Rights
shall be automatically exercised on one or more dates specified therein by the
Committee.
7.5 Form of Payment. Upon exercise of a Stock Appreciation Right, payment
may be made in cash, in Restricted Stock, or in shares of unrestricted Common
Stock, as the Committee, in its sole discretion, shall determine and provide in
the relevant Award Agreement.
7.6 Tandem Grant. The right of a Participant to exercise a tandem Stock
Appreciation Right shall terminate to the extent such Participant exercises the
Nonqualified Stock Option to which such Stock Appreciation Right is related.
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Article 8. Restricted Awards
8.1 Terms and Conditions. Restricted Awards under the Plan may be in the
form of grants of Restricted Stock or Phantom Stock. Restricted Awards shall be
subject to the terms and conditions set forth in this Section 8 and any
additional terms and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the relevant Award
Agreement. The maximum aggregate grant with respect to Awards of Restricted
Stock or Phantom Stock granted in any one fiscal year to any one Participant
shall be one hundred thousand (100,000) shares.
8.2 Restricted Stock Grants. A grant of Restricted Stock is an Award of
shares of Common Stock issued to and registered in the name of a Participant,
subject to such restrictions, terms, and conditions as the Committee deems
appropriate, including, without limitation, restrictions on the sale,
assignment, transfer, hypothecation, or other disposition of such shares and the
requirement that the Participant deposit such shares with the Company while such
shares are subject to such restrictions and that such shares be forfeited upon
termination of employment for specified reasons within a specified period of
time.
8.3 Phantom Stock Grants. A grant of Phantom Stock is an Award of units
(with each unit having a value equivalent to the Fair Market Value from time to
time of one (1) share of Common Stock) granted to a Participant, subject to such
restrictions, terms, and conditions as the Committee deems appropriate,
including, without limitation, the requirement that the Participant forfeit such
units upon termination of employment for specified reasons within a specified
period of time.
8.4 Grants of Awards
8.4.1 Subject to Section 5 of the Plan, Restricted Awards may be
granted alone or in addition to any other Awards under the Plan. Subject to
the terms of the Plan, the Committee shall determine the number of
Restricted Awards to be granted to a Participant, and the Committee may
impose different terms and conditions of any particular Restricted Award
made to any Participant.
8.4.2 With respect to each Participant receiving an Award of
Restricted Stock, there shall be issued a stock certificate (or
certificates) in respect of such shares of Restricted Stock. Such stock
certificate(s) shall be registered in the name of such Participant, shall
be accompanied by a stock power duly executed by such Participant, and
shall bear, among other required legends, the following legend referring to
certain terms, conditions, and restrictions applicable to such Award:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including,
without limitation, forfeiture events) contained in the Central and
South West Corporation Amended and Restated 1992 Long-Term Incentive
Plan and an Award Agreement entered into between the registered owner
hereof and Central and South West Corporation. Copies of such Plan and
Award Agreement are on file in the office of the Secretary of Central
and South West
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Corporation, Dallas, Texas, and the Corporation will furnish to the
record holder of the certificate, without charge, upon written request
to the Corporation at its principal place of business, a copy of such
Plan and Award Agreement."
Such stock certificate evidencing such shares shall be deposited with and
held in custody by the Company until the restrictions thereon shall have
lapsed and all of the terms and conditions applicable to such grant shall
have been satisfied.
8.5 Restriction Period. In accordance with Sections 8.1, 8.2, and/or 8.3
of the Plan, Restricted Awards shall only become unrestricted and vest in the
Participant in accordance with the vesting schedule relating to the service
performance restriction applicable to such Restricted Award, as the Committee
may establish at the time of the Award in the relevant Award Agreement (the
"Restriction Period"). Notwithstanding the immediately preceding sentence, in no
event shall the Restriction Period be less than one (1) year after the date on
which such Restricted Award is granted. During the Restriction Period applicable
to a Restricted Award, such Award shall be unvested, and a Participant may not
sell, assign, transfer, pledge, encumber, otherwise dispose of or hypothecate
such Award. Upon satisfaction of the vesting schedule and any other applicable
restrictions, terms, and conditions, the Participant shall be entitled to
receive payment of the Restricted Award or a portion thereof, as the case may
be, as provided in Section 8.6 of the Plan.
8.6 Payment of Awards
8.6.1 Restricted Stock Grants. After the satisfaction and/or lapse
of the restrictions, terms and conditions set by the Committee in respect
of a grant of Restricted Stock, a new certificate, without the legend set
forth in Section 8.4 of the Plan, for the number of shares of Common Stock
which are no longer subject to such restrictions, terms and conditions
shall, as soon as practicable thereafter, be delivered to the Participant.
The remaining shares, if any, issued in respect of such Restricted Stock,
shall either be forfeited and canceled, or shall continue to be subject to
the restrictions, terms, and conditions set by the Committee, as the case
may be.
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8.6.2 Phantom Stock Grants. After the satisfaction and/or lapse of
the restrictions, terms and conditions set by the Committee in respect of a
grant of Phantom Stock, a Participant shall be entitled to receive payment
in respect of such Phantom Stock (or a portion thereof) in an amount equal
to the aggregate Fair Market Value of the vested portion of the shares of
Common Stock covered by such Award. Payment in settlement of vested Phantom
Stock shall be made as soon as practicable thereafter in cash, in
unrestricted Common Stock, in Restricted Stock, or Stock Option grants, as
the Committee, in its sole discretion, shall determine and provide in the
relevant Award Agreement.
8.7 Shareholder Rights. A Participant shall have, with respect to the
shares of Common Stock received under a grant of Restricted Stock, after
expiration of the relevant Restriction Period, all of the rights of a
shareholder of the Company, including, without limitation, the right to vote the
shares, to receive any cash dividends, and to participate, in respect of such
Restricted Stock, the Corporation's Dividend Reinvestment Plan. During the
Restriction Period, a Participant shall have such shareholder rights, including
the right to vote shares and receive dividends, as may be determined by the
Committee and set forth in the relevant Award Agreement. Stock dividends issued
with respect to such Restricted Stock shall be treated as additional Restricted
Stock grants and shall be subject to the same restrictions and other terms and
conditions that apply to the shares of Restricted Stock with respect to which
such stock dividends are issued.
Article 9. Performance Units
9.1 Terms and Conditions. Performance Units shall be subject to the terms
and conditions set forth in this Section 9, and any additional terms and
conditions not inconsistent with the express provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement. The maximum aggregate
payout with respect to Awards of Performance Units granted in any one fiscal
year to any one Participant shall be the value of one hundred thousand (100,000)
shares of Common Stock at the end of the Performance Period.
9.2 Performance Unit Grants. A Performance Unit is an Award expressed in
terms of units (with each unit representing such monetary amount as is
designated by the Committee in the Award Agreement) or shares (with each share
having a value equal to the Fair Market Value of a share of Common Stock)
granted to a Participant, subject to such terms and conditions as the Committee
deems appropriate, including, without limitation, the requirement that the
Participant forfeit such units (or a portion thereof) in the event certain
performance criteria are not met within a designated period of time.
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9.3 Grants. Subject to Section 5 of the Plan, Performance Units may be
granted alone or in addition to any other Awards under the Plan. Subject to the
terms of the Plan, the Committee shall determine the number of Performance Units
to be granted to a Participant, and the Committee may impose different terms and
conditions on any particular Performance Units granted to any Participant.
9.4 Performance Goals and Performance Periods. Participants receiving a
grant of Performance Units shall only earn into and be entitled to payment in
respect of such Awards if the Company and/or the Participant achieves certain
performance goals (the "Performance Goals") during and in respect of a
designated performance period equal in length to at least three (3) years (the
"Performance Period"). The Performance Goals and the Performance Period shall be
established by the Committee, in its sole discretion. The Committee shall
establish Performance Goals for each Performance Period prior to, or as soon as
practicable after, the commencement of such Performance Period. The Committee
shall also establish a schedule or schedules for Performance Units setting forth
the portion of the Award which will be earned or forfeited based on the degree
of achievement, or lack thereof, of the Performance Goals at the end of the
relevant Performance Period. In setting Performance Goals, the Committee may
use, but shall not be limited to, such performance measures as cash value added,
earnings per share, economic value added, net earnings growth, net income,
operating income, return on assets, return on equity, sales or revenue growth,
total shareholder return, comparisons to peer companies, individual or aggregate
Participant performance, corporate or subsidiary performance, or such other
measure or measures of performance as the Committee, in its sole discretion, may
deem appropriate. Such performance measures shall be defined as to their
respective components and meaning by the Committee (in its sole discretion).
During any Performance Period, the Committee shall have the authority to adjust
the Performance Goals in such manner as the Committee, in its sole discretion,
deems appropriate with respect to such Performance Period; provided, however,
that Awards which are designed to qualify for the performance-based exception of
162(m), and which are held by "covered employees" (as such term is defined in
the regulations promulgated under Code Section 162(m)), may not be adjusted
upward (the Committee shall retain the discretion to adjust the Awards
downward).
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9.5 Payment of Units. With respect to each Performance Unit, the
Participant shall, if the applicable Performance Goals have been achieved by the
Company during the relevant Performance Period, be entitled to receive payment
in an amount equal to the designated value of each Performance Unit times the
number of such units so earned. Payment in settlement of earned Performance
Units shall be made as soon as practicable following the conclusion of the
respective Performance Period in cash, in unrestricted Common Stock, in
Restricted Stock or Phantom Stock, or in Stock Option grants as the Committee,
in its sole discretion, shall determine and provide in the relevant Award
Agreement.
Article 10. Deferral Elections
The Committee may permit a Participant to elect to defer receipt of any
payment of cash or any delivery of shares of Common Stock that would otherwise
be due to such Participant by virtue of the exercise, earn out, or settlement of
any Award made under the Plan. If any such election is permitted, the Committee
shall establish rules and procedures for such deferrals, including, without
limitation, the payment or crediting of reasonable interest on such deferred
amounts credited in cash, and the payment or crediting of dividend equivalents
in respect of deferrals credited in units of Common Stock.
Article 11. Dividend Equivalents
In addition to the provisions of Section 8.7 of the Plan, Awards of Stock
Options, Stock Appreciation Rights, and/or Phantom Stock may, in the sole
discretion of the Committee and if provided for in the relevant Award Agreement,
earn dividend equivalents. In respect of any such Award which is outstanding on
a dividend record date for Common Stock, the Participant shall be credited with
an amount equal to the amount of cash or stock dividends that would have been
paid on the shares of Common Stock covered by such Award had such covered shares
been issued and outstanding on such dividend record date. The Committee shall
establish such rules and procedures governing the crediting of such dividend
equivalents, including, without limitation, the amount, the timing, form of
payment, and payment contingencies and/or restrictions of such dividend
equivalents, as it deems appropriate or necessary.
Article 12. Termination of Employment
12.1 General. Subject to the terms and conditions of Section 15 of the
Plan, if, and to the extent the terms and conditions under which an Award may be
exercised, earned out, or settled after a Participant's termination of
employment for any particular reason shall not have been set forth in the
relevant Award Agreement, by and as determined by the Committee, in its sole
discretion, the following terms and conditions shall apply as appropriate and as
not inconsistent with the terms and conditions, if any, of such Award Agreement:
12.1.1 If a Participant's employment by the Company or any of its
Subsidiaries is terminated for any reason other than death, Disability, or
Retirement, such Participant's rights, if any, to exercise any Stock
Options or Stock Appreciation Rights shall immediately terminate, and the
Participant (and such Participant's estate, designated beneficiary, or
other legal representative) shall forfeit any rights or interests in or
with respect to any such
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Stock Options or Stock Appreciation Rights. If a Participant's employment
by the Company or any of its Subsidiaries is terminated due to death,
Disability, or Retirement, such Participant's Stock Options or Stock
Appreciation Rights shall immediately vest upon such termination, shall
remain exercisable until the earlier of: (i) the termination of the Stock
Options or Stock Appreciation Rights as set forth in the Relevant Award
Agreement; or (ii) one (1) year after a termination due to death or
Disability or three (3) years after a termination due to Retirement.
12.1.2 If a Participant's employment with the Company or any of its
Subsidiaries is terminated for any reason other than death, Disability, or
Retirement prior to the satisfaction and/or lapse of the Restrictions,
terms and conditions applicable to a grant of Restricted Stock or Phantom
Stock, such Restricted Award or Awards shall immediately be canceled, and
the Participant (and such Participant's estate, designated beneficiary, or
other legal representative) shall forfeit any rights or interests in and
with respect to any such Restricted Award. If a Participant's employment
with the Company or any of its Subsidiaries is terminated as a result of
death, Disability, or Retirement prior to the satisfaction and/or lapse of
the restrictions, terms, and conditions applicable to a grant of Restricted
Stock or Phantom Stock, the Participant shall be entitled to payment of the
Awards pursuant to Section 8.6 of the Plan.
12.1.3 If a Participant's employment with the Company or any of its
Subsidiaries is terminated for any reason other than death, Disability, or
Retirement prior to the completion of any Performance Period, any
Performance Units granted in respect of such Performance Period shall,
regardless of whether the relevant Performance Goals for such Performance
Period have been (or are expected to be) achieved (partially or otherwise),
immediately be canceled, and the Participant (and such Participant's
estate, designated beneficiary, and/or legal representative) shall forfeit
any rights or interests in and with respect to any such Performance Units.
If a Participant's employment with the Company or any of its Subsidiaries
is terminated as a result of death, Disability, or Retirement prior to the
completion of any Performance Period, such Awards shall not be affected by
the termination and shall continue in effect under the terms of the Plan
and the relevant Award Agreement.
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Article 13. Nontransferability of Awards
Unless otherwise provided for in an Award Agreement, no Award under the
Plan, and no rights or interests herein or therein, shall or may be assigned,
transferred, sold, exchanged, pledged, disposed of, or otherwise hypothecated or
encumbered by a Participant or any beneficiary thereof, except by testamentary
disposition or the laws of descent and distribution. No such interest shall be
subject to seizure for the payment of the Participant's (or any beneficiary's)
debts, judgments, alimony, or separate maintenance or be transferable by
operation of law in the event of the Participant's (or any beneficiary's)
bankruptcy or insolvency. During the lifetime of a Participant, Stock Options
and Stock Appreciation Rights are exercisable only by the Participant.
Article 14. Changes in Capitalization and Other Matters
14.1 No Corporate Action Restriction. The existence of the Plan, any Award
Agreement, and/or the Award granted hereunder shall not limit, affect, or
restrict in any way the right or power of the Board or the shareholders of the
Company to make or authorize (a) any adjustment, recapitalization,
reorganization, or other change in the Company's or Subsidiary's capital
structure or its business; (b) any merger, consolidation, or change in the
ownership of the Company or any Subsidiary; (c) any issue of bonds, debentures,
capital, preferred or prior preference stocks ahead of or affecting the
Company's or any Subsidiary's capital stock or the rights thereof; (d) any
dissolution or liquidation of the Company or any Subsidiary; (e) any sale or
transfer of all or any part of the Company's or any Subsidiary's assets or
business; or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary, or any other person shall have any
claim against any member of the Board or the Committee, the Company, or any
Subsidiary as a result of any such action.
14.2 Recapitalization Adjustments. In the event of any change in
capitalization affecting the Common Stock of the Company, including, without
limitation, a stock dividend or other distribution, stock split, reverse stock
split, recapitalization, merger, consolidation, subdivision, split-up, spin-off,
split-off, combination or exchange of shares, or other form of reorganization,
or any other change affecting the Common Stock, the Board, in its sole
discretion, may authorize and make such proportionate adjustments, if any, as
the Board may deem appropriate to reflect such change, including, without
limitation, with respect to the aggregate number of shares of the Common Stock
for which Awards in respect thereof may be granted under the Plan, the maximum
number of shares of the Common Stock which may be sold or awarded to any
Participant, the number of shares of the Common Stock covered by each
outstanding Award, and the exercise price or other price per share of Common
Stock in respect of any outstanding Awards.
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Article 15. Change in Control
15.1 Acceleration of Awards Vesting. Except as otherwise provided in
Section 15.2 of the Plan, if a Change in Control of the Company occurs, (a) all
Stock Options and/or Stock Appreciation Rights then unexercised and outstanding
shall become fully exercisable as of the date of the Change in Control; (b) all
restrictions, terms, and conditions applicable to all Restricted Stock and/or
Phantom Stock then outstanding shall be deemed lapsed and satisfied as of the
date of the Change in Control; and (c) all Performance Units shall be deemed to
have been fully earned as of the date of the Change in Control.
15.2 Payment After Change in Control. Within thirty (30) days after a
Change in Control occurs, (a) the holder of an Award of Restricted Stock shall
receive a new certificate for such shares without the legend set forth in
Section 8.4.2. of the Plan; and (b) the holder of an Award of Phantom Stock
and/or Performance Units shall receive payment of the value of such grants in
cash.
15.3 Termination as a Result of a Potential Change in Control. In
determining the applicability of Section 15.2 of the Plan, if (a) a
Participant's employment is terminated by the Company or any Subsidiary prior to
a Change in Control without Cause at the request of a Person who has entered
into an agreement with the Company, the consummation of which will constitute a
Change in Control; or (b) the Participant terminates his employment with the
Company or any Subsidiary for Good Reason prior to a Change in Control, and the
circumstance or event which constitutes Good Reason at the request of the Person
described in Section 15.4(a) of the Plan, then for purposes of this Section 15,
a Change in Control shall be deemed to have occurred immediately prior to such
Participant's termination of employment.
15.4 Definitions. For purposes of this Section 15, the following words and
phrases shall have the meaning specified:
15.4.1 "Beneficial Owner" shall have the meaning defined in Rule
13d-3 of the Exchange Act.
15.4.2 "Cause" shall mean, unless otherwise defined in the
Participant's individual employment agreement with the Company or any
Subsidiary (in which case such employment agreement definition shall
govern), (a) the indictment of the Participant for any serious crime; (b)
the willful and continued failure by the Participant to substantially
perform the Participant's duties, as they may be defined from time to time,
with the Participant's primary employer or to abide by the written policies
of the Company or the Participant's primary employer (other than any such
failure resulting from the Participant's incapacity due to physical or
mental illness); or (c) the willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the Company or any
Subsidiary, monetarily or otherwise. For purposes of the preceding
sentence, no act shall be considered "willful" unless done, or omitted to
be done, by the Participant not in good faith and without reasonable belief
that such act, or failure to act, was in the best interests of the Company
and its Subsidiaries.
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15.4.3 A "Change in Control" shall mean the occurrence of one of the
following events:
(a) Any Person or entity, including a "group" as contemplated by
Section 13(d)3) of the Exchange Act acquires or gains
ownership or control (including, without limitation, power to
vote) of twenty-five percent (25%) or more of the outstanding
shares of the Company's voting stock (based upon voting
power); or
(b) A period of twenty-four (24) consecutive months during which
two-thirds (2/3) of the individuals who are directors of the
Company at the beginning of such period cease to be directors
of the Company for any reason; or
(c) The Closing of any merger, acquisition, or consolidation
following which the shareholders of the Company own less than
seventy-five percent (75%) of the surviving entity; or
(d) The Closing of a sale or disposition (other than to a
subsidiary) of more than eighty-five percent (85%) of the
Company's assets.
"Closing" shall mean a meeting at which all documents
necessary to consummate a transaction are executed and
delivered; provided that a transaction shall not be considered
closed for purposes of this Plan until all conditions
precedent to the consummation of the transaction, including
but not limited to, all required regulatory approvals have
been fulfilled.
Notwithstanding the foregoing, with respect to a particular Participant, a
Change in Control shall not include any event, circumstance, or transaction
which results from the action of any entity or group which includes, is
affiliated with, or is wholly or partly controlled by one or more executive
officers of the Company or any Subsidiary and in which entity or group the
Participant participates.
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15.4.4 "Good Reason" for termination by a Participant of the
Participant's employment shall mean, for purposes of this Section 15,
unless otherwise defined in the Participant's individual employment
agreement with the Company or any Subsidiary (in which case such employment
agreement definition shall govern), the occurrence (without the
Participant's consent) of any one of the following:
(a) The assignment to the Participant of any duties and/or
responsibilities and significantly inconsistent with the
nature and status of the Participant's duties and/or
responsibilities immediately prior to any Potential Change in
Control, or a substantial and significant adverse alteration
in the nature or status of the employee's duties and/or
responsibilities from those in effect immediately prior to
any such Potential Change in Control; provided, however, that
a redesignation of the Participant's title shall not under
any circumstances constitute Good Reason if the Participant's
overall status among the Company and its Subsidiaries is not
substantially and significantly adversely affected; or
(b) A reduction in the Participant's rate of annual base salary
as in effect on January 1, 1992, as the same may be increased
from time to time, where "annual base salary" is the
Participant's regular basic annual compensation prior to any
reduction therein under a salary reduction agreement pursuant
to Section 401(k) or Section 125 of the Code, and, without
limitation, shall not include cost-of-living allowances and
post allowances for foreign service, fees, retainers,
reimbursements, bonuses, incentive awards, prizes, or similar
payments.
15.4.5 "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
provided, however, a Person shall not include (a) the Company or any
Subsidiary; (b) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a Subsidiary qualified under
Section 401(a) of the Code; (c) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (d) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
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15.4.6 "Potential Change in Control" shall be deemed to have
occurred if any one of the following conditions shall have been satisfied:
(a) The Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
or
(b) Any Person files a Schedule 13D under the Exchange Act
announcing an intention to take action which, if consummated,
would constitute a Change in Control.
15.4.7 "Surviving Entity" shall mean only an entity in which
substantially all of the Company's stockholders immediately before any
merger, consolidation, or liquidation become stockholders by the terms of
such merger, consolidation, or liquidation.
Article 16. Amendments, Suspension, and Termination
16.1 In General. The Board may suspend or terminate the Plan (or any
portion thereof) at any time and may amend the Plan at any time and from time to
time in such respects as the Board may deem advisable to insure that any and all
Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to benefit from any
change in applicable laws or regulations, or in any other respect the Board may
deem to be in the best interests of the Company or any subsidiary; provided,
however, that no such amendment shall, without majority (or such greater
percentage if required by law, charter, by-law, or other regulation or rule)
stockholder approval to the extent required by law or the rules of any exchange
upon which the Common stock is listed, (a) except as provided in Section 14 of
the Plan, materially increase the number of shares of Common Stock which may be
issued under the Plan; (b) materially modify the requirements as to eligibility
for participation in the plan; (c) materially increase the benefits accruing to
Participants under the Plan; or (d) extend the termination date of the Plan. No
such amendment, suspension, or termination shall (i) materially adversely affect
the rights of any Participant under any outstanding Stock Option, Stock
Appreciation Rights, Performance Units, or Restricted Stock or Phantom Stock
grants, without the consent of such Participant; or (ii) make any change that
would disqualify the Plan, or any other plan of the Company or any Subsidiary
intended to be so qualified, from (A) the exemption provided by Rule 16b-3,
promulgated under the Exchange Act, or any successor rule or regulation to such
rule 16b-3, as such rule is applicable from time to time; or (B) the benefits
provided under section 422 of the Code, or any successor thereto.
16.2 Award Agreements. The Committee may amend or modify at any time and
from time to time any outstanding Stock Options, Stock Appreciation Rights,
Performance Units, or Restricted Stock or Phantom stock grants, in any manner to
the extent that the Committee would have had the authority under the Plan to
initially determine the restrictions, terms, and provisions of such Stock
Options, Stock Appreciation Rights, Performance Units, and/or Restricted Stock
or Phantom Stock grants, including, without limitation, to change the date or
dates as of which such Options or Stock Appreciation Rights may be exercised. No
such amendment
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or modification shall, however, materially adversely affect the rights of any
Participant under any such Award without the consent of such Participant.
Article 17. Miscellaneous
17.1 Tax Withholding. The Company shall have the right to deduct from any
payment or settlement under the Plan, including, without limitation, the
exercise of any Stock Option or Stock Appreciation Right, or the delivery or
vesting of any shares of Common Stock, Restricted Stock, or Phantom Stock, any
federal, state, local, or other taxes of any kind which the Committee, in its
sole discretion, deems necessary to be withheld to comply with the Code and/or
any other applicable law, rule, or regulation. If the Committee, in its sole
discretion, permits shares of Common Stock to be used to satisfy any such tax
withholding, such Common Stock shall be valued based on the Fair Market Value of
such stock as of the date the tax withholding is required to be made, such date
to be determined by the Committee. The Committee may establish rules limiting
the use of Common Stock to meet withholding requirements by Participants who are
subject to Section 16 of the Exchange Act.
17.2 No Right to Employment. Neither the adoption of the Plan, the
granting of any Award, nor the execution of any Award Agreement, shall confer
upon any employee of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right, if any, of the Company or any Subsidiary to
terminate the employment of any employee at any time for any reason.
17.3 Unfunded Plan. The Plan shall be unfunded, and the Company shall not
be required to segregate any assets in connection with any Awards under the
Plan. Any liability of the Company to any person with respect to any Award under
the Plan or any Award Agreement shall be based solely upon the contractual
obligations that may be created as a result of the Plan or any such award or
agreement. No such obligation of the Company shall be deemed to be secured by
any pledge of, encumbrance on, or other interest in, any property or asset of
the Company or any Subsidiary. Nothing contained in the Plan or any Award
Agreement shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between the Company, any
Subsidiary,and/or any such Participant, any beneficiary, or any other person.
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17.4 Payments to a Trust. The Committee is authorized to cause to be
established a trust agreement or several trust agreements or similar
arrangements from which the Committee may make payments of amounts due or to
become due to any Participants under the Plan.
17.5 Other Company Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's compensation for purposes of the
determination of benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Company or any Subsidiary unless expressly
provided in such other plans or arrangements, or except where the Board
expressly determined in writing that including of an Award or portion of an
Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards, or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain, and motivate
employees.
17.6 Listing, Registration, and Other Legal Compliance. No shares of the
Common Stock shall be issued under the Plan unless legal counsel of the Company
shall be satisfied that such issuance will be in compliance with all applicable
federal and state securities laws and regulations and any other applicable laws
or regulations. The Committee may require, as a condition of any payment or
share issuance, that certain agreements, undertakings, representations,
certificates, and/or information, as the Committee may deem necessary or
advisable, be executed or provided to the Company to assure compliance with all
such applicable laws or regulations. Certificates for shares of the Restricted
Stock and/or Common Stock delivered under the Plan may be subject to such
stock-transfer orders and such other restrictions as the Committee may deem
advisable under the rules, regulations, or other requirements of the Securities
and Exchange Commission, any stock exchange upon which the common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such share certificates to make
appropriate reference to such restrictions. In addition, if, at any time
specified herein (or in any Award Agreement) for (a) the making of
determination; (b) the issuance or other distribution of Restricted Stock and/or
Common Stock; or (c) the payment of amounts to or through a Participant with
respect to any Award, any law, rule, regulation, or other requirement of any
governmental authority or agency shall require either the Company, any
Subsidiary, or any Participant (or any designated beneficiary or other legal
representative) to take any action in connection with any such determination,
any such shares to be issued or distributed, any such payment, or the making of
any such determination, as the case may be, shall be deferred until such
required action is taken. If at any time and from time to time the Committee
determines, in its sole discretion, that the listing, registration, or
qualification of any Award, or any Common Stock or property covered by or
subject to such Award, upon any securities exchange or under any foreign,
federal, state, or local securities or other law, rule, or regulation is
necessary or desirable as a condition to or in connection with the granting of
such
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Award or the issuance or delivery of Restricted Stock and/or Common Stock or
other property under such Award or otherwise, no such Award may be exercised or
settled or paid in Restricted Stock, Common Stock, or other property unless such
listing, registration, or qualification shall have been effected free of any
conditions that are not acceptable to the Committee.
17.7 Award Agreements. Each Participant receiving an Award under the Plan
shall enter into an Award Agreement with the Company in a form specified by the
Committee. Each such Participant shall agree to the restrictions, terms, and
conditions of the Award set forth therein.
17.8 Designation of Beneficiary. Each Participant to whom an Award has
been made under the Plan may designate a beneficiary or beneficiaries to receive
any payment which under the terms of the Plan and the relevant Award Agreement
may become payable on or after the Participant's death. At any time, and from
time to time, any such designation may be changed or canceled by the Participant
without the consent of any such beneficiary. Any such designation, change, or
cancellation must be on a form provided for that purpose by the Committee and
shall not be effective until received by the Committee. If no beneficiary has
been designated by a deceased Participant, or if the designated beneficiaries
have predeceased the Participant, the beneficiary shall be the Participant's
estate. If the Participant designates more than one beneficiary, any payments
under the Plan to such beneficiaries shall be made in equal shares unless the
Participant has expressly designated otherwise, in which case the payments shall
be made in the shares designated by the Participant.
17.9 Leaves of Absence/Transfers. The Committee shall have the power to
promulgate rules and regulations and to make determinations, as it deems
appropriate, under the Plan in respect of any leave of absence from the Company
or any Subsidiary granted to a Participant. Without limiting the generality of
the foregoing, the Committee may determine whether any such leave of absence
shall be treated as if the Participant has terminated employment with the
Company or any such Subsidiary. If a Participant transfers within the Company,
or to or from any Subsidiary, such Participant shall not be deemed to have
terminated employment as a result of such transfers.
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17.10 Loans. Subject to applicable law, the Committee may provide, pursuant
to Plan rules, for the Company or any Subsidiary to make loans to Participants
to finance the exercise price of any Stock Options, as well as the withholding
obligation under Section 17.1 of the Plan and/or the estimated or actual taxes
payable by the Participant as a result of the exercise of such Stock Option, and
the Committee may prescribe the terms and conditions of any such loan.
17.11 Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Texas,
without regard to principles of conflict of laws. Any titles and headings herein
are for reference purposes only and shall in no way limit, define, or otherwise
affect the meaning, construction, or interpretation of any provisions of the
Plan.
17.12 Effective Date. The Plan shall be effective as of April 17, 1997,
subject to approval by the Securities and Exchange Commission and by a majority
of the Company's shareholders at the 1992 annual meeting of shareholders or any
proper adjournment thereof.
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