As filed with the Securities and Exchange Commission on April 1, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------------------
R.H. DONNELLEY CORPORATION
(Exact name of issuer as specified in its charter)
(Formerly named The Dun & Bradstreet Corporation)
Delaware 2741 13-2740040
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Identification No.)
incorporation or Number)
or organization)
One Manhattanville Road
Purchase, New York 10577
(914) 933-6400
(Address of principal executive offices)
-----------------------
R.H. DONNELLEY CORPORATION
1998 DIRECTORS' STOCK PLAN
(Full title of the plan)
-----------------------
Stephen B. Wiznitzer
R.H. Donnelley Corporation
Purchase, New York 10577
(914) 933-6400
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (914) 933-6400
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed
Maximum Proposed
Amount Offering Maximum Amount of
Title Of Securities to be Price Aggregate Offering Registration
to be Registered Registered(1) Per Share(2) Price(2) Fee(2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value $1.00 per
share)............................... 150,000 shares(3) $14.71875 $2,212,265.625 $615.01
=======================================================================================================================
</TABLE>
(1) Plus an indeterminate number of additional shares which may be offered and
issued to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
(2) As the date hereof, options to purchase 7,500 shares of common stock under
the 1998 Directors' Stock Plan were outstanding at an aggregate exercise
price of $15.3125 per share. In accordance with Rule 457(h) under the
Securities Act of 1933, the registration fee for the foregoing shares is
based upon this exercise price. In accordance with Rule 457(c) under the
Securities Act of 1933, solely for the purpose of calculating the
registration fee for the remaining 142,500 shares available under the 1998
Directors' Stock Plan, the maximum offering price per unit is based on the
average of the high and low prices of the common stock on the New York
Stock Exchange Composite Transaction Tape on March 29, 1999.
(3) Reflects a one-for-five reverse split of the Registrant's common stock,
effective August 24, 1998.
The Registrationn Statement Includes a Total of 31 Pages.
Exhibit Index on Page 8.
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1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
R.H. Donnelley Corporation, formerly The Dun & Bradstreet Corporation,
(the "Registrant") hereby files this Registration Statement with the Securities
and Exchange Commission (the "Commission") on Form S-8 to register 150,000
shares of the Registrant's Common Stock, par value $1.00 per share ("Common
Stock"), for issuance pursuant to the Registrant's 1998 Directors' Stock Plan
(the "Plan") and such indeterminate number of additional shares which may be
offered and issued pursuant to the Plan to prevent dilution resulting from stock
splits, stock dividends or similar transactions.
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), (Commission
1934 Act File Number 001-07155) are incorporated by reference herein:
(1) Registrant's Annual Report and amendments thereto on Form 10-K for
the fiscal year ended December 31 1998.
(2) All other reports filed with the Commission by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the 1934 Act subsequent to the
date hereof (and prior to the filing of a post-effective amendment which
indicates that all securities offered herein have been sold or which deregisters
all securities then remaining unsold).
(3) The description of the Registrant's Common Stock contained in the
following documents: Registrant's Registration Statement on Form S-3
(Registration No. 33-10462) dated November 28, 1986, including any amendment
thereto or report filed for the purpose of updating such description; and the
Registrant's Form 8-A filed with the Securities and Exchange Commission on
November 5, 1998 with respect to a rights plan adopted by the Registrant on
October 27, 1998.
Any statement contained herein or made in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which is
also incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which enables a corporation in its certificate of
incorporation to eliminate or limit the personal liability of a director for
violations of the director's fiduciary duty, except (i) for breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to section 174 of the DGCL (providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) for any transaction from which a director
derived an improper personal benefit. The Registrant's certificate of
incorporation eliminates the liability of directors to the fullest extent
permitted by Delaware Law.
Reference is made to section 145 of the DGCL which provides that a
corporation may indemnify directors and officers as well as other employees and
agents against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation (a "derivative action") if
they act in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
2
<PAGE>
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorney's fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise. The
Registrant's certificate of incorporation provides for indemnification of its
directors, officers. Employees and agents to the fullest extent permitted by
Delaware Law.
In addition, the Registrant has purchased and maintains directors' and
officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- --------
4.01................ Certificate of Incorporation of the Registrant
(Incorporated herein by reference to Exhibit 3.1 to
Amendment No. 1 to the Registrant's Registration
Statement on Form S-4, File No. 333-59287).*
4.02................ Amended and Restated Bylaws of the Registrant
(Incorporated herein by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-4, File No.
333- 59287).*
5.01................ Opinion of Davis Polk & Wardwell.
23.01............... Consent of Independent Public Accountants -
PricewaterhouseCoopers LLP.
23.02............... Consent of Davis Polk & Wardwell (included in their
opinion filed as Exhibit 5.01).
24.01............... Powers of Attorney (included on the signature page of
this registration statement).
99.01............... Form of the R.H. Donnelley 1998 Directors' Stock Plan.
- -------------------
* Incorporated by reference.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission
3
<PAGE>
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
into this Registration Statement;
(2) That for the purpose of determining any liability under the
1933 Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of the Plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
EXPERTS
The consolidated balance sheets as of December 31, 1998 and 1997 and
the related consolidated statements of operations, shareholders' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 1998, incorporated by reference in this S-8, have been incorporated
herein in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The validity of the Common Stock offered hereunder has been passed
upon by Davis Polk & Wardwell, New York, New York.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Purchase, State of New York, on this 1st day of April
1999.
R.H. DONNELLEY CORPORATION
By /s/ Frank R. Noonan
-------------------------------
Frank R. Noonan
Chairman of the Board, President and Chief
Executive Officer
5
<PAGE>
POWER OF ATTORNEY
Know all men by these present, that each person whose signature appears
below, constitutes and appoints Frank R. Noonan, Philip C. Danford and Stephen
B. Wiznitzer and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, to do any and all acts and
things and execute, in the name of the undersigned, any and all instruments
which said attorneys-in-fact and agents may deem necessary or advisable in order
to enable R. H. Donnelley Corporation to comply with the Securities Act of 1933
and any requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing with the Securities and Exchange
Commission of the Registration Statement on Form S-8 under the Securities Act of
1933, including specifically but without limitation, power and authority to sign
the name of the undersigned to such Registration Statement, and any amendments
to such Registration Statement (including post-effective amendments), and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, to sign any and all
applications, registration statements, notices or other documents necessary or
advisable to comply with applicable state securities laws, and to file the same,
together with other documents in connection therewith with the appropriate state
securities authorities, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and to perform each and every act
and thing requisite or necessary to be done in and about the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, and
any of them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
6
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Frank R. Noonan Chairman-of-the Board of Directors, April 1, 1999
- ------------------------- President and Chief Executive Officer
Frank R. Noonan
/s/ Philip C. Danford Senior-Vice-President and Chief April 1, 1999
- ------------------------- Financial Officer
Philip C. Danford
/s/ Diane P. Baker Director April 1, 1999
- -------------------------
Diane P. Baker
/s/ William G. Jacobi Director April 1, 1999
- -------------------------
William G. Jacobi
/s/ Robert J. Kamerschen Director April 1, 1999
- -------------------------
Robert J. Kamerschen
/s/ Carol J. Parry Director April 1, 1999
- -------------------------
Carol J. Parry
/s/ Barry L. Williams Director April 1, 1999
- -------------------------
Barry L. Williams
/s/ Anna Patruno Vice-President-and Controller April 1, 1999
- -------------------------
Anna Patruno
7
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
------ -------
4.01 Certificate of Incorporation of the Registrant (Incorporated
herein by reference to Exhibit 3.1 to Amendment No. 1 to the
Registrant's 1933 Act Registration Statement on Form S-4, File
No. 333-59287).*
4.02 Amended and Restated Bylaws of the Registrant (Incorporated
herein by reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-4, File No. 333-59287).*
5.01 Opinion of Davis Polk & Wardwell.
23.01 Consent of Independent Public Accountants -
PricewaterhouseCoopers LLP.
23.02 Consent of Davis Polk & Wardwell (included in their opinion
filed as Exhibit 5.01).
24.01 Powers of Attorney (included on the signature page of this
registration statement).
99.01 Form of the R.H. Donnelley Corporation 1998 Directors' Stock
Plan.
- -------------------
* Incorporated by reference.
8
<PAGE>
Exhibit 5.01
[Davis Polk & Wardwell Letterhead]
April 1, 1999
R. H. Donnelley Corporation
One Manhattanville Road
Purchase, New York 10577
Dear Sirs:
We are acting as counsel for R. H. Donnelley Corporation (the
"Registrant") in connection with its Registration Statement on Form S-8 (the
"Registration Statement") to register under the Securities Act of 1933, as
amended, 150,000 shares (the "Shares") of Common Stock ($1.00 par value) of the
Registrant issuable pursuant to the 1998 Directors' Stock Plan (the "Plan") of
the Registrant. In connection therewith, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other instruments as we
have deemed necessary for the purpose of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Shares
deliverable pursuant to the Plan have been duly authorized and, when and to the
extent issued pursuant to the Plan upon receipt by the Registrant of adequate
consideration therefor, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.01 to the
Registration Statement.
Very truly yours,
/s/DAVIS POLK & WARDWELL
------------------------
DAVIS POLK & WARDWELL
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
R.H. Donnelley Corporation on Form S-8 of our report dated February 19, 1999, on
our audits of the consolidated financial statements of R. H. Donnelley
Corporation as of December 31, 1998 and 1997, and for each of the three years in
the period ended December 31, 1998, which report is incorporated by reference in
the Annual Report on Form 10-K. We also consent to the reference to our firm
under the caption "Experts."
By /s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
New York, New York
March 31, 1999
- ------------------------------------------------------------------------------
Exhibit 99.01
- -------------------------------------------------------------------------------
R. H. DONNELLEY CORPORATION
1998 Directors' Stock Plan
<PAGE>
R. H. DONNELLEY CORPORATION
- -------------------------------------------------------------------------------
1998 Directors' Stock Plan
- -------------------------------------------------------------------------------
Page
----
1. Purpose.................................................................3
2. Definitions.............................................................3
3. Administration..........................................................7
4. Shares Available Under the Plan.........................................7
5. Eligibility.............................................................8
6. Initial and Annual Grants of Options....................................8
7. Grants of Deferred Shares and Restricted Stock..........................9
9. Other Deferrals and Terms of Deferral Accounts.........................15
10. Settlement of Deferral Accounts........................................17
11. Amendment and Termination..............................................18
12. General Provisions.....................................................18
<PAGE>
R. H. DONNELLEY CORPORATION
- -------------------------------------------------------------------------------
1998 Directors' Stock Plan
- -------------------------------------------------------------------------------
1. Purpose. The purpose of this 1998 Directors' Stock Plan (the "Plan")
is to aid R.H. Donnelley Corporation (the "Company") in attracting, retaining
and compensating non-employee directors and to enable such persons to increase
their proprietary interest in the Company. In furtherance of this purpose, the
Plan provides to each such director (i) an automatic annual grant of Deferred
Shares (as defined below), (ii) an automatic initial grant of an Option (as
defined below) to each newly elected or appointed non-employee director, (iii)
an automatic annual grant of an Option, (iv) an opportunity to elect deferred
and alternative forms of compensation in lieu of cash fees for service as a
director, including Options, Deferred Shares, and deferred cash, and (v) an
opportunity to defer delivery of shares otherwise deliverable upon exercise of
Options or settlement of Deferred Shares.
2. Definitions. In addition to the terms defined in Section 1 above,
the following capitalized terms used in the Plan have the respective meanings
set forth in this Section:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act or rule thereunder shall include
any successor provisions or rules.
(b) "Administrator" means the administrative committee specified
in Section 3(b) to whom the Board has delegated the authority to take action
under the Plan.
(c) "Beneficial Owner" has the meaning defined in Rule 13d-3
under the Act.
(d) "Beneficiary" means any person (which may include trusts and
is not limited to one person) who has been designated by the Participant in his
or her most recent written beneficiary designation filed with the Company to
receive the benefits specified under the Plan in the event of the Participant's
death. If no Beneficiary has been designated who survives the Participant's
death, then Beneficiary means any person(s) entitled by will or, in the absence
thereof, the laws of descent and distribution to receive such benefits.
<PAGE>
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means the occurrence of any of the
following events after the effective date of the Plan:
(i) Any "person," as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities;
(ii) During any period of two consecutive years commencing on
July 14, 1998, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person (as defined above) who has entered into an
agreement with the Company to effect a transaction described in
subsections (i), (iii) or (iv) of this definition) whose election by
the Board or nomination for election by the Company's shareholders 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 cease for any reason to constitute at least a majority
thereof;
(iii) The shareholders of the Company have approved a merger or
consolidation of the Company with any other company and all other
required governmental approvals of such merger or consolidation have
been obtained, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity)
more than 60% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no person (as defined above) becomes the beneficial owner (as
defined above) of more than 20% of the combined voting power of the
Company's then outstanding securities; or
<PAGE>
(iv) The shareholders of the Company have approved a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, and all other required governmental approvals of such
transaction have been obtained.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code or regulation (including a proposed
regulation) thereunder shall include any successor provisions or regulations.
(h) "Deferral Account" means the account established and
maintained by the Company for Deferred Shares credited under Sections 7 and 8
and deferred cash credited under Section 8. A Deferral Account shall include one
or more subaccounts, including a Deferred Share Account for forfeitable Deferred
Shares under Section 7, a Deferred Share Account for Deferred Shares that have
become nonforfeitable under Section 7 or that are at all times nonforfeitable
under Section 8(c), a Deferred Share Account for Deferred Shares resulting from
Option exercises under Section 9(a), and a Deferred Cash Account described in
Section 8(d). The Deferral Account and subaccounts, and Deferred Shares and
deferred cash credited thereto, will be maintained solely as bookkeeping entries
by the Company to evidence unfunded obligations of the Company.
(i) "Deferred Share" means a credit to a Participant's Deferred
Share Account under Sections 7 or 8 which represents the right to receive one
share of Stock upon settlement of such Account.
(j) "Disability" means a Participant's termination of service as
a director of the Company due to a physical or mental incapacity of long
duration which renders the Participant unable to perform the duties of a
director of the Company.
(k) "Effective Date" means July 14, 1998, the date the Plan
becomes effective.
(l) "Fair Market Value" means, with respect to Stock as of a
given date, the average of the high and low sales prices per share of Stock
reported on a consolidated basis for securities listed on the principal stock
exchange or market on which Stock is traded on the date immediately preceding
the date as of which such value is being determined or, if there is no sale on
that date, then on the last previous day on which a sale was reported, unless
otherwise determined by the Committee.
<PAGE>
(m) "Option" means the right, granted to a Participant under
Section 6 or 8, to purchase a specified number of shares of Stock at the
specified exercise price for a specified period of time under the Plan. All
Options will be non-qualified stock options.
(n) "Option Valuation Methodology" means the method for
determining the number of shares to be subject to Options, and the exercise
price thereof, granted in payment of Retainer Fees under Section 8(b).
(o) "Other Director Compensation" means fees payable to a
director in his or her capacity as such, other than Retainer Fees, for attending
meetings and other service on the Board and Board committees or otherwise.
(p) "Participant" means any person who, while a director, has
been granted an Option which remains outstanding, has Deferred Shares or cash
credited to his or her Deferral Account, or has elected to be granted Options in
payment of Retainer Fees or to defer payment of Retainer Fees and Other Director
Compensation in the form of Deferred Shares or cash under the Plan.
(q) "Plan Year" means, with respect to a Participant, the period
commencing at the time of election of the director at an annual meeting of
shareholders (or the election of a class of directors if the Company then has a
classified Board of Directors), or the director's initial appointment to the
Board if not at an annual meeting of shareholders, and continuing until the
close of business of the day preceding the next annual meeting of shareholders;
provided, however, that the initial Plan Year for directors serving on the
Effective Date shall begin at the opening of business on August 14, 1998.
(r) "Restricted Stock" means shares of Stock granted under
Section 7, subject to a risk of forfeiture and restrictions on transfer for a
specified period.
(s) "Retainer Fees" means annual Board and chair retainer fees
payable to a director in his or her capacity as such for service on the Board
and Board committees.
(t) "Retirement" means a Participant's termination of service as
a director of the Company at or after age 65.
(u) "Stock" means Common Stock, par value $1.00 per share, or
any other equity securities of the Company substituted or resubstituted for
Stock under Section 12(b).
<PAGE>
(v) "Valuation Date" shall mean the close of business on the
last business day of each calendar quarter and, in the case of any final
distribution from a Participant's Deferred Cash Account, the day preceding such
distribution.
3. Administration.
(a) Authority. Both the Board and the Administrator (subject to
the ability of the Board to restrict the Administrator) shall administer the
Plan in accordance with its terms, and shall have all powers necessary to
accomplish such purpose, including the power and authority to construe and
interpret the Plan, to define the terms used herein, to prescribe, amend and
rescind rules and regulations, agreements, forms, and notices relating to the
administration of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The Administrator may perform any
function of the Board under the Plan, except for grants of Awards under Sections
6 and 7, adoption of material amendments to the Plan under Section 11, or other
functions from time to time specifically reserved by the Board to itself. Any
actions of the Board or the Administrator with respect to the Plan shall be
conclusive and binding upon all persons interested in the Plan, except that any
action of the Administrator will not be binding on the Board. The Board and
Administrator may each appoint agents and delegate thereto powers and duties
under the Plan, except as otherwise limited by the Plan.
(b) Administrator. The Administrator shall be the Compensation
and Benefits Committee of the Board of Directors or such other committee as may
designated by the Board. No member of the Administrator shall be entitled to act
on or decide any matter relating solely to himself or herself or any of his or
her rights or benefits under the Plan. No bond or other security need be
required of the Administrator or any member thereof in any jurisdiction.
(c) Limitation of Liability. Each member of the Board and the
Administrator shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or other employee of
the Company or any subsidiary, the Company's independent certified public
accountants, or any legal counsel, executive compensation consultant, or other
professional retained by the Company to assist in the administration of the
Plan. To the maximum extent permitted by law, no member of the Board or the
Administrator, nor any person to whom ministerial duties under the Plan have
been delegated, shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of the Plan.
4. Shares Available Under the Plan. The total number of shares of Stock
reserved and available for delivery under the Plan is 750,000, subject to
<PAGE>
adjustment as provided in Section 12(b). Shares that may be delivered under the
Plan shall be treasury shares or shares acquired in the market for the account
of the Participant. For purposes of the Plan, shares that may be purchased upon
exercise of an Option or distributed in settlement of Deferred Shares will not
be considered to be available after such Option has been granted or Deferred
Share credited, except for purposes of delivery in connection with such Option
or Deferred Share; provided, however, that, if an Option expires for any reason
without having been exercised in full or Deferred Shares or shares of Restricted
Stock are forfeited or cancelled, the shares subject to the unexercised portion
of such Option or to the forfeited or cancelled Deferred Shares or Restricted
Stock will again be available for delivery under the Plan. The Company will use
its best efforts to ensure that, at any time shares are deliverable by the
Company under the Plan, the Company has a sufficient number of treasury shares
available for such delivery.
5. Eligibility. Each non-employee director of the Company who is paid
fees for service on the Board or a Board committee may participate in the Plan,
subject to the terms hereof. No person other than those specified in this
Section 5 will be eligible to participate in the Plan. The Administrator will
notify each person of his or her eligibility to participate in the Plan on an
elective basis not later than 15 days (or such other period as may be determined
by the Administrator) prior to any deadline for filing an election form.
6. Initial and Annual Grants of Options. Options shall be granted to
non-employee directors in accordance with policies established from time to time
by the Board specifying the classes of directors to be granted Options, the
number of shares to be subject to each Option, and the time or times at which
such Options shall be granted.
(a) Initial Policy -- Option Grants. The initial policy with
respect to Options granted under this Section 6, effective as of the Effective
Date and continuing until modified or revoked by the Board, shall be as follows:
(i) Initial Grants. At the date of a person's initial election or
appointment as a member of the Board after the Effective Date, such
person, if he or she is a non-employee director eligible to participate
upon such election or appointment, shall be granted an Option to
purchase during the Option term 7,500 shares of Stock, subject to
adjustment as provided in Section 12(b). At the Effective Date, each
person who is a non-employee member of the Board eligible to
participate at that date shall be granted an Option to purchase during
the Option term 7,500 shares of Stock.
<PAGE>
(ii) Annual Grants. At the date of each annual meeting of
shareholders at which a director is elected or reelected as a member of
the Board (or at which members of another class of directors are
elected or reelected, if the Company then has a classified Board), such
director, if he or she is a non-employee director eligible to
participate at that date and if he or she has not been granted an
Option under this Section 6(a) previously during the same calendar
year, shall be granted an Option to purchase during the Option term
7,500 shares of Stock, subject to adjustment as provided in Section
12(b).
(b) Terms of Options Granted Under Section 6. Each Option
granted under this Section 6 shall be subject to the following terms and
conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option will be equal to 100% of the Fair Market
Value of Stock on the date of grant of the Option.
(ii) Option Term. Each Option shall expire ten years after the
date of grant, or such earlier date as the Option may no longer be
exercised and cannot, by its terms, thereafter become exercisable.
(iii) Vesting and Exercisability. The Board may establish terms
regarding the times at which Options shall become vested and
exercisable. Unless otherwise determined by the Board, an Option
granted under this Section 6 and not previously forfeited shall vest
and become exercisable by a Participant as to one-third of the number
of shares subject to the Option at the close of business on the day
preceding each of the three annual meetings of shareholders following
the date of grant of the Option, rounded to the nearest number of whole
shares. The foregoing notwithstanding, an Option not previously
forfeited shall vest and become exercisable on an accelerated basis
upon a Change in Control or upon the termination of the Participant's
service as a director due to death, Disability or Retirement. Unless
otherwise determined by the Board, an Option will cease to vest and
become exercisable upon the termination of the Participant's service
prior to a Change in Control for any reason other than death,
Disability or Retirement, and the portion of that has not vested and
become exercisable at the time of such termination shall be forfeited.
(iv) Payment. The exercise price of an Option shall be paid to
the Company either in cash or by the surrender of Stock, or any
combination thereof, or in such other form or manner as may be
established by the Administrator, unless otherwise determined by the
Board.
<PAGE>
7. Grants of Deferred Shares and Restricted Stock. Deferred Shares
and/or Restricted Stock shall be granted to non-employee directors in accordance
with policies established from time to time by the Board specifying the classes
of directors to be granted such Awards, the number of Deferred Shares or shares
of Restricted Stock to be granted, and the time or times at which such Awards
shall be granted.
(a) Initial Policy -- Grant of Deferred Shares. The initial
policy with respect to Awards under this Section 7, effective as of the
Effective Date and continuing until modified or revoked by the Board, shall be
as follows:
(i) Initial Grant. At the Effective Date, each person who is a
non-employee member of the Board eligible to participate at that date
shall be granted 7,500 Deferred Shares.
(ii) Annual Grants. At the date of each annual meeting of
shareholders at which a director is elected or reelected as a member of
the Board (or at which members of another class of directors are
elected or reelected, if the Company then has a classified Board), such
director, if he or she is a non-employee director eligible to
participate at that date and if he or she has not been granted Deferred
Shares or Restricted Stock under this Section 7(a) previously during
the same calendar year, shall be granted 7,500 Deferred Shares, unless
the director has elected, prior to such annual meeting of shareholders,
to receive such grant in the form of an equal number of shares of
Restricted Stock. The number of shares subject to such annual grants
shall be subject to adjustment as provided in Section 12(b).
(b) Terms of Deferred Shares and Restricted Stock Granted Under
Section 7. Deferred Shares granted under this Section 7 shall be subject to the
terms and conditions of Deferred Shares specified in Sections 9(b), (c), and
(d), unless otherwise determined by the Board. Deferred Shares and Restricted
Stock granted under this Section 7 shall also be subject to the following
additional terms and conditions:
(i) Vesting and Forfeiture. The Board may establish terms
regarding the times at which Deferred Shares and Restricted Stock shall
become vested and non-forfeitable. Unless otherwise determined by the
Board, an Award granted under this Section 7 and not previously
forfeited shall become vested and non-forfeitable as to one-third of
the number of Deferred Shares or shares of Restricted Stock at the
close of business on the day preceding each of the three annual
meetings of shareholders
<PAGE>
following the date of grant of such Award, rounded to the nearest
number of whole shares. The foregoing notwithstanding, an Award of
Deferred Shares or Restricted Stock not previously vested or forfeited
shall vest and become non-forfeitable on an accelerated basis upon a
Change in Control or upon the termination of the Participant's service
as a director due to death, Disability or Retirement. Unless otherwise
determined by the Board, an Award of Deferred Shares or Restricted
Stock not previously vested or forfeited will cease to vest and will be
forfeited upon the termination of the Participant's service prior to a
Change in Control for any reason other than death, Disability or
Retirement.
(ii) Deferred Shares Credited As a Result of Dividend Equivalents.
Unless otherwise determined by the Board, Deferred Shares credited as a
result of dividend equivalents under Section 9(b) shall be subject to
the same terms, including risk of forfeiture, as the Deferred Shares
with respect to which the dividend equivalents were credited.
(iii) Dividends on Restricted Stock. Unless otherwise determined
by the Board, dividends on Restricted Stock declared and paid prior to
the lapse of the risk of forfeiture on such Restricted Stock shall be
automatically reinvested in additional shares of Restricted Stock,
which shall be subject to the same terms, including risk of forfeiture,
as the Restricted Stock on which the dividend was paid.
(iv) Awards Nontransferable. Deferred Shares and Restricted Stock
shall be nontransferable by the Participant at any time that the Award
remains subject to a risk of forfeiture.
8. Options Granted in Payment of Fees and Deferral of Fees In Deferred
Shares and Deferred Cash. Each director of the Company who is eligible under
Section 5 may elect, in accordance with Section 8(a), to be paid Retainer Fees
in the form of Options under Section 8(b) or to defer receipt of Retainer Fees
and Other Director Compensation in the form of Deferred Shares under Section
8(c) or deferred cash under Section 8(d).
(a) Elections. A director shall elect to participate and the
terms of such participation by filing an election with the Company prior to the
beginning of a Plan Year (the initial Plan Year will begin August 14, 1998 and
Plan Years thereafter generally will begin at each annual meeting of
shareholders or, in the case of a new director, upon initial appointment) or at
such other date as may be specified by the Administrator, provided that any date
so specified shall ensure effective deferral of taxation and otherwise comply
with applicable laws.
<PAGE>
(i) Effect and Irrevocability of Elections. Elections shall be
deemed continuing, and therefore applicable to Plan Years after the
initial Plan Year covered by the election, until the election is
modified or superseded by the Participant. Elections other than those
subject to Section 9(d) shall become irrevocable at the commencement of
the Plan Year to which an election relates, unless the Administrator
specifies a different time. Elections relating to the time of
settlement of a Deferral Account shall become irrevocable at the time
specified in Section 9(d). Elections may be modified or revoked by
filing a new election prior to the time the election to be modified or
revoked has become irrevocable. The latest election filed with the
Administrator shall be deemed to revoke all prior inconsistent
elections that remain revocable at the time of filing of the latest
election.
(ii) Matters To Be Elected. The Administrator will provide a form
of election which will permit a director to make appropriate elections
with respect to all relevant matters under this Section 8.
(iii) Time of Filing Elections. An election must be received by
the Administrator prior to the date specified by the Administrator.
Under no circumstances may a Participant defer compensation to which
the Participant has attained, at the time of deferral, a legally
enforceable right to current receipt of such compensation.
(b) Options Granted in Payment of Retainer Fees. A Participant
who has elected to be paid a specified amount of Retainer Fees in the form of
Options shall be granted, at the close of business on the day the Participant's
Plan Year commences an Option to purchase the number of whole shares of Stock
determined in accordance with the Option Valuation Methodology specified by the
Board. Each Option granted under this Section 8(b) shall be subject to the
following terms and conditions:
( i) Option Valuation Methodology. The Board shall determine the
Option Valuation Methodology which will be used to determine the number
of Options granted and the Option exercise price. The Option Valuation
Methodology may be based upon a valuation of the Option, a discounting
of the aggregate exercise price of the Options by the amount of
Retainer Fees to be paid in the form of Options, or such other
methodology as may be deemed reasonable for purposes of this Section
8(b).
(ii) Option Term. Each Option will expire ten years after the
date of grant; provided, however, that, unless otherwise determined by
the
<PAGE>
Board, any portion of an Option that is not yet exercisable at the date
a Participant ceases to serve as a director for any reason will expire
at the date such service ceases; and, provided further, that, unless
otherwise determined by the Board, any portion of an Option that is not
yet exercisable at the date a Participant ceases to serve as chair or a
member of a Board committee will, to the extent specified in Section
8(b)(v), expire at the date such service ceases.
(iii) Vesting and Exercisability. Each Option will vest and
become exercisable as to 25% of the underlying shares on the June 30,
September 30, December 31, and March 31 following the date of grant;
provided, however, that, in the case of a Plan Year which begins on or
after June 30 and before September 30, the vesting percentage shall be
33%, and in the case of a Plan Year which begins on or after September
30 and before December 31, the vesting percentage shall be 50%; and
provided further, that an Option will become fully vested and
exercisable at the close of business on the last day of the Plan Year
in which it was granted. The number of shares as to which the Option
becomes vested and exercisable will be rounded to the nearest whole
number. The foregoing notwithstanding, upon a Change in Control a
Participant's Option not previously forfeited shall vest and become
exercisable in full, and (ii), upon termination of the Participant's
service as a director due to death, Disability, or Retirement, that
portion of the Option which would become vested and exercisable on the
last day of the calendar quarter in which such death, Disability, or
Retirement occurred will become immediately vested and exercisable.
Unless otherwise determined by the Board, an Option will cease to
further vest and become exercisable upon the termination of the
Participant's service as a director prior to a Change in Control for
any reason, and the portion that has not vested and become exercisable
at the time of such termination shall be forfeited.
(iv) Exercise Price. The exercise price per share of Stock
purchasable under an Option will be determined in accordance with the
Option Valuation Methodology. The exercise price of an Option shall be
paid to the Company either in cash or by the surrender of Stock, or any
combination thereof, or in such other form or manner as may be
established by the Administrator; provided, however, that, unless
otherwise determined by the Administrator, shares shall not be
surrendered in payment of the exercise price if such surrender would
result in additional accounting expense to the Company.
<PAGE>
(v) Changes in Fees; Changes in Service as a Committee
Chair. If the amount of Retainer Fees is increased during a Plan Year,
or if a Director is appointed chair of a Board committee such that an
additional Retainer Fee is payable during a Plan Year, such increased
or additional fees will not be paid in the form of Options. If a
Director has been granted an Option in respect of a Plan Year in
payment of Retainer Fees which included committee-related fees for
service as chair or a member of any Board committee, and during such
Plan Year he or she ceases such service but remains on the Board, the
Option will expire in part at the time such service ceases, to the
extent of that portion of the Option which is not yet exercisable
multiplied by a fraction the numerator of which is the amount of
committee-related fees included in such Retainer Fees and the
denominator of which is the total amount of such Retainer Fees.
(vi) Service During Part of a Quarter. If a Participant ceases to
serve as a director or on committee at a date other than a vesting date
for the Option and if the Board does not exercise its discretion to
permit vesting of the Participant's Option in consideration for the
Participant's service in that final quarterly period, the Participant
shall be entitled to payment in cash for his or her service in that
final quarterly period if and to the extent then provided in the
Company's regular non-employee director compensation policies.
(c) Deferral of Retainer Fees and Other Director Compensation in
the Form of Deferred Shares. If a Participant has elected to defer receipt of a
specified amount of Retainer Fees or Other Director Compensation in the form of
Deferred Shares, a number of Deferred Shares shall be credited to the
Participant's Deferred Share Account, as of the date such Retainer Fees or Other
Director Compensation otherwise would have been payable to the Participant but
for such election to defer, equal to (i) such amount otherwise payable divided
by (ii) the Fair Market Value of a share of Stock at that date. Deferred Shares
credited under this Section 8(c) shall be subject to the terms and conditions of
Deferred Shares specified in Sections 9(b), (c), and (d). The right and interest
of each Participant in Deferred Shares credited to the Participant's Deferred
Share Account under this Section 8(c) at all times will be nonforfeitable.
(d) Deferral of Retainer Fees and Other Director Compensation in
the Form of Deferred Cash. If a Participant has elected to defer receipt of a
specified amount of Retainer Fees or Other Director Compensation in the form of
deferred cash, an amount equal to such specified amount shall be credited to the
Participant's Deferred Cash Account as of the date such Retainer Fees or Other
Director Compensation otherwise would have been payable to the
<PAGE>
Participant but for such election to defer. As of the close of business on each
Valuation Date, interest shall be credited to such Deferred Cash Account in an
amount equal to the average daily balance in such Deferred Cash Account since
the last Valuation Date multiplied by the interest rate as specified by the
Board and applicable to the period since the last Valuation Date. The right and
interest of each Participant relating to his or her Deferred Cash Account at all
times will be nonforfeitable.
(e) Cessation of Service as a Director. If any Retainer Fee or
Other Director Compensation otherwise subject to an election would be paid to a
Participant after he or she has ceased to serve as a director, such payment
shall not be subject to deferral under this Section 8, but shall instead be paid
in accordance with the Company's regular non-employee director compensation
policies.
9. Other Deferrals and Terms of Deferral Accounts.
(a) Deferral of Certain Option Shares. Upon any exercise of an
Option or an option granted under any other plan or program of the Company by a
non-employee director, if the exercise price of such option is paid by surrender
of shares of Stock to the Company, the director may elect to defer receipt of
all or a portion of the shares deliverable upon exercise of the option in excess
of the number surrendered in payment of the exercise price. In such case, the
number of shares deferred shall be credited to the Participant's Deferred Share
Account.
(b) Dividend Equivalents on Deferred Shares. Dividend
equivalents will be credited on Deferred Shares credited to a Participant's
Deferred Share Account(s) as follows:
(i) Cash and Non-Share Dividends. If the Company declares and
pays a dividend on Stock in the form of cash or property other than
shares of Stock, then a number of additional Deferred Shares shall be
credited to a Participant's Deferred Share Account(s) as of the payment
date for such dividend equal to (i) the number of Deferred Shares
credited to the respective Account as of the record date for such
dividend, multiplied by (ii) the amount of cash plus the Fair Market
Value of any property other than shares actually paid as a dividend on
each share at such payment date, divided by (iii) the Fair Market Value
of a share of Stock at such payment date.
(ii) Share Dividends and Splits. If the Company declares and pays
a dividend on Stock in the form of additional shares of Stock, or there
occurs a forward split of Stock, then a number of additional Deferred
<PAGE>
Shares shall be credited to the Participant's Deferred Share Account(s)
as of the payment date for such dividend or forward Stock split equal
to (i) the number of Deferred Shares credited the respective Account as
of the record date for such dividend or split multiplied by (ii) the
number of additional Shares actually paid as a dividend or issued in
such split in respect of each Share.
(c) Reallocation of Accounts. A Participant shall have no right
to have amounts credited as cash to the Participant's Deferred Cash Account
reallocated or switched to his or her Deferred Share Account or amounts credited
to the Participant's Deferred Share Account reallocated or switched to his or
her Deferred Cash Account, except as may be permitted by the Administrator.
(d) Elections as to Settlement. Each Participant, while still a
director of the Company, shall file an election with the Administrator
specifying the time or times at which the Participant's Deferral Account will be
settled, following the Participant's termination of service as a director of the
Company, and whether distribution will be in a single lump sum or in a number of
annual installments not exceeding ten; provided, however, that, if no valid
election has been filed as to the time of settlement of a Participant's Deferral
Account or any portion thereof, such Deferral Account or portion thereof shall
be distributed in a single lump sum on the first business day of the year
following the year in which the Participant ceases to serve as a director. If
installments are elected, such installments must be annual installments
commencing not later than the first year following the year in which the
Participant ceases to serve as a director (on such annual installment date as
may be specified by the Administrator) and extending over a period not to exceed
ten years.
(i) Matters Covered by Election. Subject to the terms of the
Plan, the Administrator shall determine whether all deferrals under the
Plan must be subject to a single election as to the time or times of
settlement, or whether settlement elections may relate to a specified
sub-account (i.e., the Deferred Share Account or the Deferred Cash
Account) and/or a specified Plan Year. If the Administrator permits
elections to relate to a specified Plan Year, such election shall apply
to the amounts originally credited to the specified subaccount in
respect of such Plan Year and to any additional amounts credited as
dividend equivalents or interest in respect of such originally credited
amounts and previously credited additional amounts.
(ii) Modifying Elections. A Participant may modify a prior
election as to the time at which a Participant's Deferral Account
(including a specified subaccount) will be settled at any time prior to
the time the
<PAGE>
Participant ceases to serve as a director of the Company, subject to
such requirements as may be specified by the Administrator. Such
modification shall be made by filing a new election with the
Administrator. The foregoing notwithstanding, the Administrator may
disapprove or limit elections under this Section 9(d) in order to
ensure that the Participant will not be deemed to have constructively
received compensation in respect of the Participant's Deferral Account
prior to settlement.
(e) Election Forms. Elections under the Plan shall be made in
writing on such form or forms as may be specified from time to time by the
Administrator.
(f) Statements. The Administrator will furnish statements to
each Participant reflecting the amount credited to a Participant's Deferral
Account, transactions therein, and other related information no less frequently
than once each calendar year.
(g) Fractional Shares. The amount of Deferred Shares credited to
a Deferred Share Account shall include fractional shares calculated to at least
three decimal places.
10. Settlement of Deferral Accounts. The Company will settle a
Participant's Deferral Account by making one or more distributions to the
Participant (or his or her Beneficiary, following Participant's death) at the
time or times, in a lump sum or installments, as specified in the Participant's
election filed in accordance with Section 9(d); provided, however, that a
Deferral Account will be settled at times earlier than those specified in such
election in accordance with Sections 10(b), (c), and (d).
(a) Form of Distribution. Distributions in respect of a
Participant's Deferred Share Account shall be made only in shares of Stock,
together with cash in lieu of any fractional share remaining at a time that less
than one whole Deferred Share is credited to such Deferred Share Account. Shares
may be delivered in certificate form to a Participant (or his or her
Beneficiary) or to a nominee for the account of the Participant (or his or her
Beneficiary), or in such other manner as the Administrator may determine.
Distributions in respect of a Participant's Deferred Cash Account shall be made
only in cash.
(b) Death. If a Participant ceases to serve as a director due to
death or dies prior to distribution of all amounts from his or her Deferral
Account, the Company shall make a single lump-sum distribution to the
Participant's Beneficiary. Any such distribution shall be made as soon as
practicable following notification to the Company of the Participant's death.
<PAGE>
(c) Financial Emergency and Other Payments. Other provisions of
the Plan notwithstanding, if, upon the written application of a Participant, the
Board determines that the Participant has a financial emergency of such a
substantial nature and beyond the Participant's control that payment of amounts
previously deferred under the Plan is warranted, the Board may direct the
payment to the Participant of all or a portion of the balance of a Deferral
Account and the time and manner of such payment.
(d) Change in Control. In the event of a Change in Control,
payments in settlement of any Deferral Account (including a Deferral Account
with respect to which one or more installment payments have previously been
made) shall be made within fifteen (15) business days following such Change in
Control.
11. Amendment and Termination. The Board may, with prospective or
retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan at
any time without the consent of Participants, shareholders, or any other person;
provided, however, that, without the consent of a Participant, no such action
shall materially and adversely affect the rights of such Participant with
respect to any rights to payment of amounts credited to such Participant's
Deferral Account. The foregoing notwithstanding, the Board may, in its sole
discretion, terminate the Plan (in whole or in part) and, and may distribute to
any Participant (in whole or in part, and whether or not in connection with a
termination of the Plan) the amounts credited to the Participant's Deferral
Account.
12. General Provisions.
(a) Limits on Transferability. Options, Deferred Shares,
Restricted Stock and all other rights under the Plan will not be transferable by
a Participant except by will or the laws of descent and distribution, or to a
Beneficiary in the event of a Participant's death, and will not otherwise be
subject to alienation, anticipation, encumbrance, garnishment, attachment, levy,
execution or other legal or equitable process, nor subject to the debts,
contracts, liabilities or engagements, or torts of any Participant or his or her
Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish,
attach or take any other action subject to legal or equitable process or
encumber or dispose of any interest in the Plan shall be void. The foregoing
notwithstanding, the Administrator may permit a Participant to transfer Options,
Deferred Shares, and related rights to one or more trusts, partnerships, or
family members during the lifetime of the Participant solely for estate planning
purposes, but only if and to the extent then consistent with the registration of
any offer and sale of shares related thereto on Form S-8, Form S-3, or such
other registration form of the Securities and Exchange
<PAGE>
Commission as may then be filed and effective with respect to the Plan. The
Company may rely upon the beneficiary designation last filed in accordance with
this Section 12(a).
(b) Adjustments. In the event that any large, special and
non-recurring dividend or other distribution (whether in the form of cash,
Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the Board to be
appropriate in order to prevent dilution or enlargement of a Participant's
rights under the Plan, then the Board shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of shares of Stock
reserved and available for delivery under the Plan and to be subject to Options,
Deferred Shares, and Restricted Stock thereafter granted or credited, (ii) the
number of shares subject to Options automatically granted under Section 6(a) and
the number of Deferred Shares and/or shares of Restricted Stock automatically
granted under Section 7(a), (iii) the number and kind of shares of Stock
deliverable upon exercise of outstanding Options, and the exercise price per
share thereof (provided that no fractional shares will be delivered upon
exercise of any Option), (iv) the number and kind of shares of Stock to be
delivered upon settlement of outstanding Deferred Shares (taking into account
any Deferred Shares credited as dividend equivalents under Section 9(b)), and
(v) the number and kind of shares outstanding as Restricted Stock.
(c) Receipt and Release. Payments (in any form) to any
Participant or Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims for the
compensation deferred and relating to the Deferral Account to which the payments
relate against the Company, the Board, or the Administrator, and the
Administrator may require such Participant or Beneficiary, as a condition to
such payments, to execute a receipt and release to such effect. In the case of
any payment under the Plan of less than all amounts then credited to a Deferral
Account in the form of Deferred Shares, the amounts paid shall be deemed to
relate to the Deferred Shares credited to the Account at the earliest time.
(d) Unfunded Status of Plan; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for deferred compensation and
Participants shall rely solely on the unsecured promise of the Company for
payment hereunder. With respect to any payment not yet made to a Participant
under the Plan, nothing contained in the Plan shall give a Participant any
rights that are greater than those of a general unsecured creditor of the
Company; provided, however, that the Board may authorize the creation of trusts
or make other arrangements to meet the Company's obligations under the Plan,
which
<PAGE>
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Board otherwise determines with the consent of each affected
Participant.
(e) Compliance. The Company shall have no obligation to settle
any Deferral Account of a Participant (in any form) until all legal and
contractual obligations of the Company relating to establishment of the Plan and
such settlement shall have been complied with in full. In addition, the Company
shall impose such restrictions on Stock delivered to a Participant hereunder and
any other interest constituting a security as it may deem advisable in order to
comply with the Securities Act of 1933, as amended, the requirements of the New
York Stock Exchange or any other stock exchange or automated quotation system
upon which the Stock is then listed or quoted, any state securities laws
applicable to such a transfer, any provision of the Company's Certificate of
Incorporation or Bylaws, or any other law, regulation, or binding contract to
which the Company is a party.
(f) Other Participant Rights. No Participant shall have any of
the rights or privileges of a shareholder of the Company under the Plan,
including as a result of the grant of an Option or crediting of Deferred Shares
or other amounts to a Deferral Account, or the creation of any Trust and deposit
of Stock therein, except at such time as such Option may have been duly
exercised or Stock may be actually delivered in settlement of a Deferral
Account, except that a Participant granted Restricted Stock shall have rights of
a shareholder except to the extent that those rights are limited by the terms of
the Plan and the agreement relating to the Restricted Stock. No provision of the
Plan, document relating to the Plan, or transaction hereunder shall confer upon
any Participant any right to continue to serve as a director of the Company or
in any other capacity with the Company or a subsidiary or to be nominated for
reelection as a director, or interfere in any way with the right of the Company
to increase or decrease the amount of any compensation payable to such
Participant. Subject to the limitations set forth in Section 12(a) hereof, the
Plan shall inure to the benefit of, and be binding upon, the parties hereto and
their successors and assigns.
(g) Continued Service as an Employee. If a Participant ceases to
serve as a director and, immediately thereafter, is employed by the Company or
any subsidiary, then such Participant will not be deemed to have ceased to serve
as a director or as chair or as a member of a Board committee at that time, and
his or her continued employment by the Company or any subsidiary will be deemed
to be continued service as a director or chair or a member of a Board committee;
provided, however, that, for purposes of Section 5, such former director will
not be deemed to be a non-employee director eligible for further grants of
Awards.
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(h) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws, and applicable provisions of federal law.
(i) Limitation. A Participant and his or her Beneficiary shall
assume all risk in connection with any decrease in value of Options or a
Deferral Account and neither the Company, the Board nor the Administrator shall
be liable or responsible therefor.
(j) Construction. The captions and numbers preceding the
sections of the Plan are included solely as a matter of convenience of reference
and are not to be taken as limiting or extending the meaning of any of the terms
and provisions of the Plan. Whenever appropriate, words used in the singular
shall include the plural or the plural may be read as the singular.
(k) Severability. In the event that any provision of the Plan
shall be declared illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining provisions of the Plan but shall be
fully severable, and the Plan shall be construed and enforced as if said illegal
or invalid provision had never been inserted herein.
(l) Status. The establishment and maintenance of, or allocations
and credits to, the Deferral Account of any Participant shall not vest in any
Participant any right, title or interest in and to any Plan assets or benefits
except at the time or times and upon the terms and conditions and to the extent
expressly set forth in the Plan and in accordance with the terms of any Trust.
(m) Nonexclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as creating any limitation on the power of the
Board to adopt such other compensatory arrangements for directors as it may deem
desirable.
