<PAGE> 1
Registration No. 33 --
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------------
KMART CORPORATION
(Exact number of issuer as specified in its charter)
Michigan
(State or other jurisdiction 38-0729500
of incorporation or organization) (I.R.S. Employer Identification No.)
3100 West Big Beaver Road, Troy, Michigan 48084
(Address of Principal Executive Offices) (Zip Code)
1997 Long-Term Equity Compensation Plan
(Full title of the plans)
A. N. Palizzi
Executive Vice President and General Counsel
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
(Name and Address of agent for service)
Telephone number, including area code, of agent of service:
248-643-1000
Copies of Communications to:
Verne C. Hampton II
Dickinson, Wright, Moon, Van Dusen & Freeman
500 Woodward, Suite 4000
Detroit, Michigan 48226
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed
Title of Securities Amount to be Offering Price Per Maximum Aggregate Amount of
to be Registered Registered Share* Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock ($1 24,000,000 $13 1/4 $318,000,000 $ 96,364
par value)...... shs.
</TABLE>
*Based upon the market price on June 4, 1997
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
ITEM 3.
Kmart Corporation (the "Company) hereby incorporates by reference in this
Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"):
1. The Company's Annual Report on Form 10-K for the year ended January
29, 1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1997.
3. The description of the Common Stock, $1.00 par value, of the
Company set forth in the Prospectus of the Company dated June 6, 1996
which was part of Amendment No. 1 to Registration Statement No.
33-64905.
All documents subsequently filed with the Commission by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated herein by reference and
to be a part hereof from the dates of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and the Michigan Business Corporation Act permit the
Company's officers and directors to be indemnified under certain
circumstances for expenses and in some instances, for judgments, fines or
amounts paid in settlement of civil, criminal, administrative and
investigative suits or proceedings, including those involving alleged
violations of the Securities Act of 1933, as amended (the "Act"). In
addition, the Company maintains directors' and officers' liability insurance
which, under certain circumstances, would cover alleged violations of the
Act. Insofar as indemnification for liabilities arising under the Act may
be permitted to officers and directors pursuant to the foregoing provisions,
the Company has been informed that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. Therefore in the
event that a claim for such indemnification is asserted by any officer or
director, the Company (except insofar as such claim seeks reimbursement by
the Company of the expenses paid or incurred by an officer or director in
the successful defense of any action, suit or proceeding) will, unless the
matter has heretofore been adjudicated by precedent deemed by the Company to
be controlling, submit to a court of appropriate jurisdiction the question
of whether or not the indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable
<PAGE> 3
ITEM 8. EXHIBITS
The following exhibits are filed herewith:
Exhibit
Number Exhibit
------- -------
5 Opinion and consent of Dickinson, Wright,
Moon, Van Dusen & Freeman
24 Consent of Price Waterhouse LLP
28(a) Kmart Corporation 1997 Long-Term Equity
Compensation Plan
ITEM 9. UNDERTAKINGS
The undersigned Company 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 the 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 the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement. (2) That, for purposes of
determining any liability under the Securities Act of 1933, 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. (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.
The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company, 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 Company 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 of
whether or not such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 4
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 or amendment thereto to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Troy and State of
Michigan on May 31, 1997.
KMART CORPORATION
By /s/ FLOYD HALL
-------------------
(Floyd Hall)
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities indicated on May 31, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE SIGNATURE TITLE
<S> <C> <C> <C>
/s/ FLOYD HALL Chairman of the Board,
- ----------------------------- President and Chief Executive
(Floyd Hall) Officer (Principal Executive
Officer) and Director
/s/ MARTIN E. WELCH III Senior Vice President and Chief
- ----------------------------- Financial Officer (Principal
(Martin E. Welch III) Financial Officer)
/s/ WILLIAM C. NAJDECKI Vice President, Controller /s/ ENRIQUE C. FALLA Director
- ----------------------------- (Principal Accounting Officer) ------------------------
(William C. Najdecki) (Enrique C. Falla)
/s/ JAMES B. ADAMSON Director /s/ JOSEPH P. FLANNERY Director
- ----------------------------- ------------------------
(James B. Adamson) (Joseph P. Flannery)
/s/ LILYAN H. AFFINITO Director /s/ WARREN FLICK Director
- ----------------------------- ------------------------
(Lilyan H. Affinito) (Warren Flick)
/s/ STEPHEN F. BOLLENBACH Director /s/ ROBERT KENNEDY Director
- ----------------------------- ------------------------
(Stephen F. Bollenbach) (Robert Kennedy)
/s/ JOSEPH A. CALIFANO, JR. Director /s/ J. RICHARD MUNRO Director
- ----------------------------- ------------------------
(Joseph A. Califano, Jr.) (J. Richard Munro)
/s/ RICHARD G. CLINE Director /s/ ROBIN B. SMITH Director
- ------------------------ ------------------------------
(Richard G. Cline) (Robin B. Smith)
/s/ WILLIAM P. WEBER Director
/s/ WILLIE D. DAVIS Director ------------------------------
- ------------------------ (William P. Weber)
(Willie D. Davis)
/s/ JAMES O. WELCH, JR. Director
------------------------------
(James O. Welch, Jr.)
</TABLE>
<PAGE> 5
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
5 Opinion and consent of Dickinson, Wright, Moon,
Van Dusen & Freeman
24 Consent of Price Waterhouse LLP
28(a) Kmart Corporation 1997 Long-Term Equity
Compensation Plan
<PAGE> 1
[DICKINSON, WRIGHT, MOON, VAN DUSEN, & FREEMAN LETTERHEAD]
June 5, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kmart Corporation
1997 Long-Term Equity Compensation Plan
Registration Statement on Form S-8
Gentlemen:
As counsel for Kmart Corporation, a Michigan corporation (the
"Corporation"), we are familiar with the corporate affairs of the Corporation
and particularly with the corporate proceedings relating to the establishment
of the Corporation's 1997 Long-Term Equity Compensation Plan (herein called the
"Plan").
The Plan was duly and legally adopted by the Board of Directors and the
stockholders of the Corporation.
Based on the above, we are of the opinion that:
1. The Corporation duly and validly has
adopted and established the Plan taking all
necessary corporate action for that purpose.
2. The shares of Common Stock of the
Corporation covered by the Plan have been duly
authorized and when issued pursuant to the Plan
will be validly issued, fully paid and
non-assessable and no personal liability will
attach to the holders thereof.
3. The Plan is not subject to the
Employee Retirement Income Security Act of 1974,
as amended.
Very truly yours,
DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN
Exhibit 5
<PAGE> 1
EXHIBIT 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated March 4, 1997, which
appears on page 21 of the 1996 Annual Report to Shareholders of Kmart
Corporation and its subsidiary companies, which is incorporated by reference in
Kmart Corporation's Annual Report on Form 10-K for the year ended January 29,
1997.
PRICE WATERHOUSE LLP
200 Renaissance Center
Detroit, Michigan
June 5, 1997
<PAGE> 1
EXHIBIT 28(a)
KMART CORPORATION 1997 LONG-TERM EQUITY COMPENSATION PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1. Establishment of the Plan. Kmart Corporation, a Michigan corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "Kmart Corporation 1997 Long-Term Equity
Compensation Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares and Performance Units.
The Plan shall become effective as of March 18, 1997 (the "Effective
Date") and shall remain in effect as provided in Section 1.3 herein. All
grants to officers and directors and any grants of incentive stock options
under the Plan shall be subject to stockholder approval of the Plan.
1.2 Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link the personal interests of Participants
to those of the Company's stockholders; to provide Participants with an
incentive for excellence in individual performance; and to promote teamwork
among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3. Duration of the Plan. The Plan shall commence on the Effective Date
set forth in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 herein, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan after March 17, 2007. Awards granted
prior thereto, however, may extend beyond such date and the provisions of the
Plan shall continue to apply thereto.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and, when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "Affiliate" has the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
2.2. "Award" means, individually or collectively, a grant under the Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units.
2.3. "Award Agreement" means an agreement evidencing and setting forth
the terms of an Award granted under the Plan, in such form as the Committee
may, from time to time, approve.
2.4. "Beneficial Owner" or "Beneficial Ownership" has the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.5. "Board" or "Board of Directors" means the Board of Directors
of the Company.
<PAGE> 2
2.6. "Change in Control" of the Company is deemed to have occurred as of
the first day that any one or more of the following conditions shall have been
satisfied:
(a) The "Beneficial Ownership" of securities representing more than
thirty-three percent (33%) of the combined voting power of the Company is
acquired by any ''person'' as defined in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company); or
(b) The stockholders of the Company approve a definitive agreement to
merge or consolidate the Company with or into another corporation or to sell
or otherwise dispose of all or substantially all of its assets, or adopt a
plan of liquidation; or
(c) During any period of three consecutive years, individuals who at
the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election, or the
nomination for election by the Company's stockholders, of each new director
was approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of such period or whose election
or nomination was previously so approved).
2.7. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.8. "Committee" means the Compensation and Incentives Committee of the
Board, unless and until another committee is appointed by the Board in its
discretion to administer Awards to Employees, as described in Article 3 herein.
2.9. "Director" means any individual who is a member of the Board of
Directors of the Company; provided, however, that any Director who is employed
by the Company shall be considered an Employee under the Plan.
2.10. "Employee" means any employee of the Company or its Subsidiaries
or Affiliates. Directors who are employed by the Company shall be considered
Employees under this Plan.
2.11. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.12. "Fair Market Value" is deemed to be the mean of the highest price
and lowest price at which the Shares shall have been sold, regular way, on the
date in question or on the next preceding day on which there were such sales of
Shares if no such sales shall have been made on the date in question, as
reported on the Composite Transactions reporting system.
2.13. "Freestanding SAR" means an SAR that is granted to a Participant
independently of any Option pursuant to Article 7 herein.
2.14. "Incentive Stock Option" or "ISO" means an option to purchase
Shares granted to a Participant pursuant to Article 6 herein and which is
designated as an Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.
2.15. "Nonemployee Director" means a Director who is not also an
Employee.
2.16. "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares granted to a Participant pursuant to Article 6 herein and which
is not intended to meet the requirements of Code Section 422.
<PAGE> 3
2.17. "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted to a Participant pursuant to Article 6 herein.
2.18. "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.19. "Participant" means an Employee or Director who has been selected
to receive an Award or one who has an outstanding Award granted under the Plan.
2.20. "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
2.21. "Performance Share" means an Award granted to a Participant
pursuant to Article 9 herein.
2.22. "Performance Unit" means an Award granted to a Participant
pursuant to Article 9 herein.
2.23. "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, in its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
2.24. "Restricted Stock" means an Award granted to a Participant
pursuant to Article 8 herein.
2.25. "Shares" means the shares of common stock of the Company.
2.26. "Stock Appreciation Right" or "SAR" means an Award, granted to a
Participant alone or in connection with a related Option, designated as an SAR,
pursuant to Article 7 herein.
2.27. "Subsidiary" means any corporation, partnership, joint venture, or
other entity in which the Company directly or indirectly has a majority
interest.
2.28. "Tandem SAR" means an SAR that is granted to a Participant in
connection with a related Option pursuant to Article 7 herein, the exercise of
which shall require forfeiture of the right to purchase a Share under the
related Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).
ARTICLE 3. ADMINISTRATION
3.1. General. The Plan shall be administered by the Committee, or by any
committee appointed by the Board; provided, however, that the Board shall
administer the Plan with respect to Awards granted to Directors. Any such
Committee shall be comprised entirely of Nonemployee Directors who meet the
applicable requirements of a "nonemployee director" under Rule 16b-3 of the
General Rules and Regulations under the Exchange Act and of an "outside
director" under Section 162(m) of the Code. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors. To the extent that the administration of the Plan remains
with the Board or any other committee designated by the Board, all applicable
references to the Committee in the Plan shall be to the Board or other
committee, as applicable. The Committee shall have the authority to delegate
administrative duties to officers or Directors of the Company.
3.2. Authority of the Committee. Except as limited by law or by the
Articles of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee, or the Board where applicable, shall have
full power to: select Employees and Directors who shall participate in the
Plan;
<PAGE> 4
determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; construe and interpret the Plan
and any agreement or instrument entered into under the Plan; establish, amend,
or waive rules and regulations for the Plan's administration; and amend the
terms and conditions of any outstanding Award as provided in the Plan. Further,
the Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by law (and subject
to Section 3.1 herein), the Committee may delegate its authority as specified
herein.
3.3. Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Committee shall be final, conclusive, and binding on all
persons, including the Company, its stockholders, Employees, Directors,
Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2 herein, the number of Shares which may be issued to
Participants under the Plan shall be twenty-four million (24,000,000), of which
no more than five million (5,000,000) may be granted in the form of Restricted
Stock. Shares issued or subject to an Award under the Plan may be either
authorized and unissued Shares or issued Shares which have been reacquired by
the Company. No Award may be granted under the Plan to an Employee or Director
who owns more than five percent (5%) of the outstanding Shares. In the event
that any Award or portion thereof expires or is canceled, surrendered,
forfeited, or terminated for any reason, such Shares shall again become
available for issue under the Plan.
The following rules shall apply to grants of such Awards under the Plan:
(a) Stock Options: The maximum aggregate number of Shares that may be
granted in the form of Stock Options, pursuant to Awards granted in any one
fiscal year to any one Participant, shall be one million (1,000,000).
(b) SARs: The maximum aggregate number of Shares that may be granted in
the form of Stock Appreciation Rights, pursuant to Awards granted in any one
fiscal year to any one Participant, shall be one million (1,000,000).
(c) Restricted Stock: The maximum aggregate number of Shares that may
be granted in the form of Restricted Stock, pursuant to Awards granted in
any one fiscal year to any one Participant, shall be five hundred thousand
(500,000).
(d) Performance Shares: The maximum aggregate number of Shares that may
be granted in the form of Performance Shares, pursuant to Awards granted in
any one fiscal year to any one Participant, shall be five hundred thousand
(500,000).
(e) Performance Units: The maximum aggregate payout (determined as of
the end of the applicable Performance Period), with respect to Awards of
Performance Units granted in any one fiscal year to any one Participant,
shall be equal to the value of five hundred thousand (500,000) Shares.
4.2. Adjustments in Authorized Shares. In the event of: any change in
corporate capitalization, such as a stock split; a corporate transaction, such
as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company; any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368); or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares which may be
delivered under Section 4.1 herein, in the number and class of and/or price of
Shares subject to
<PAGE> 5
outstanding Awards granted under the Plan, and in the Award limits set forth in
subsections 4.1(a) through (e) herein, as may be determined to be appropriate
and equitable by the Committee, in its discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
The Committee may, from time to time, grant Awards under the Plan to
Participants. The Committee shall determine in its discretion, in accordance
with the provisions of the Plan, to whom an Award is granted and the terms and
conditions of the Award. In making such determinations, the Committee may
consider the position and responsibilities of the Participant, the nature and
value to the Company of his or her services and accomplishments, his or her
present and potential contribution to the Company, and such other factors as
the Committee may deem relevant.
ARTICLE 6. STOCK OPTIONS
6.1. Grant of Options. Subject to the terms and conditions of the Plan,
the Committee, at any time, and from time to time, may grant Options to
Participants in such amounts and upon such terms as the Committee shall
determine in its discretion. Options granted under the Plan shall be subject to
and governed by the provisions of the Plan and by such other terms and
conditions, not inconsistent with the Plan, as shall be determined by the
Committee.
6.2 Option Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is an ISO or an NQSO.
6.3. Option Price. The Option Price for each grant of an Option under the
Plan shall be not less than the Fair Market Value of a Share on the date the
Option is granted.
6.4. Duration of Options. An Option granted under the Plan may not be
exercised after the earlier of (a) the date specified by the Committee, which
shall be a maximum of ten years from the date of grant as to an ISO and a
maximum of ten years and two days from the date of grant as to an NQSO or (b)
the applicable time limit specified in the second paragraph of Section 6.5
herein. Any Option not exercised within these time periods shall automatically
terminate at the expiration of such period.
6.5 Exercise and Payment. Options granted pursuant to this Article 6 shall
be exercised by the delivery of a written notice of exercise to the Company (in
the form prescribed by the Company), setting forth the number of Shares with
respect to which the Option is to be exercised and by full payment for the
Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent (in U.S. dollars), or (b)
by tendering previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the Option Price (provided that the Shares
which are tendered must have been held by the Participant for at least six (6)
months prior to exercise of the Option), or (c) by a combination of cash and
Shares equal to the Option Price. Shares used in payment shall be valued as of
the date notice of exercise is received by the Company. Any Shares delivered in
payment shall be in such form as is acceptable to the Company.
6.6 Exercisability of Options. Options granted pursuant to this Article 6
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need not be
the same for each grant or for each Participant.
<PAGE> 6
An Option may be exercised by an optionee only while such optionee is an
Employee or Director or within three months thereafter (or such longer period
thereafter as determined by the Committee in its discretion or as provided in
Section 14.1 herein), and only if the Option is otherwise exercisable prior to
termination of employment or service; provided, however, if at the date of
termination of employment or service, the optionee has ten or more years of
full-time service as an Employee or Director or if such termination results
from death or total and permanent disability as defined in the Company's
Employee Pension Plan, such three-month period shall be extended to three
years. Except as otherwise provided by the Committee, any Option that is not
exercisable at the date of termination shall be forfeited and reacquired by the
Company and all rights of the optionee shall terminate to the extent of the
forfeiture without further obligation on the part of the Company.
An Option granted with a maximum exercise period of more than three years
may not be exercised earlier than in three equal annual installments commencing
on the first anniversary of the date of grant (or such other period as
determined by the Committee in its discretion); provided, however, this
limitation shall be removed if termination of employment or service of the
optionee results from death or total and permanent disability as defined in the
Company's Employee Pension Plan, or if termination of employment or
directorship of the optionee occurs at or after age 65 and the optionee has ten
or more years of full-time service as an Employee or Director, or if and to the
extent the Committee may so determine in its discretion, or as provided in
Section 14.1 herein. An Option granted with a maximum exercise period of three
years or less is not subject to the limitation contained in the preceding
sentence.
6.7 Other Restrictions. The Committee may impose such conditions and/or
restrictions on any Shares acquired pursuant to the exercise of an Option
granted pursuant to this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8. Nontransferability of Options. Except as otherwise determined by the
Committee in its discretion, with respect to NQSOs, no Option or any rights
with respect thereto shall be subject to any debts or liabilities of an
optionee, nor be assignable or transferable except by will or the laws of
descent and distribution, nor be exercisable during the optionee's lifetime
other than by him or her, nor shall Shares be issued to or in the name of one
other than the optionee; provided, however, that an Option may, after the death
or total and permanent disability of an optionee, be exercised pursuant to
Article 11 herein; and provided further that any Shares issued to an optionee
hereunder may, at the request of the optionee, be issued in the name of the
optionee and one other person, as joint tenants with right of survivorship and
not as tenants in common, or in the name of a trust for the benefit of the
optionee or for the benefit of the optionee and others.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. Grant of SARs. Subject to the terms and conditions of the Plan, the
Committee, at any time, and from time to time, may grant SARs to Participants
in such amounts and upon such terms as the Committee shall determine in its
discretion. The Committee may grant Freestanding SARs, Tandem SARs, or any
combination of these forms of SARs. SARs granted under the Plan shall be
subject to and governed by the provisions of the Plan and by such other terms
and conditions, not inconsistent with the Plan, as shall be determined by the
Committee.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2. SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, the number
of SARs, and such other provisions as the Committee shall determine.
<PAGE> 7
7.3. Payment of SAR Amount. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon exercise of an SAR
may be in cash, in Shares of equivalent value, or in some combination thereof.
7.4. Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its discretion; provided, however, that such
term shall not exceed ten (10) years and two (2) days.
7.5. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to any Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payment with respect to the Tandem SAR may be no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised
only when the Fair Market Value of the Shares subject to the ISO exceeds the
Option Price of the ISO.
7.6. Exercise of Freestanding SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its discretion, imposes
upon them.
7.7. Termination of Employment/Directorship. Each SAR Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the SAR following termination of the Participant as an Employee or
Director. Such provisions shall be determined in the discretion of the
Committee, shall be included in the Award Agreement entered into with the
Participant, need not be uniform among all SARs issued pursuant to this Article
7, and may reflect distinctions based on the reasons for termination.
7.8. Other Restrictions. The Committee may impose such conditions and/or
restrictions on any Shares issued pursuant to the exercise of any SAR granted
pursuant to this Article 7 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
7.9. Nontransferability of SARs. Except as otherwise determined by the
Committee in its discretion, no SAR or any rights with respect thereto shall be
subject to any debts or liabilities of a Participant, nor be assignable or
transferable except by will or the laws of descent and distribution, nor be
exercisable during the Participant's lifetime other than by him or her, nor
shall Shares be issued to or in the name of one other than the Participant;
provided, however, that any Shares issued to a Participant pursuant to an SAR
hereunder may at the request of the Participant be issued in the name of the
Participant and one other person as joint tenants with right of survivorship
and not as tenants in common, or in the name of a trust for the benefit of the
Participant or for the benefit of the Participant and others.
<PAGE> 8
ARTICLE 8. RESTRICTED STOCK
8.1. Grant of Restricted Stock. Subject to the terms and conditions of the
Plan, the Committee, at any time, and from time to time, may grant Restricted
Stock to Participants in such amounts and upon such terms as the Committee
shall determine in its discretion. Restricted Stock granted under the Plan
shall be subject to and governed by the provisions of the Plan and by such
other terms and conditions, not inconsistent with the Plan, as shall be
determined by the Committee.
8.2. Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
8.3. Termination of Employment/Directorship. Except as otherwise provided
in the Plan or in the Award Agreement, unless and until the restrictions and
other terms and conditions applicable to a Restricted Stock Award expire or are
terminated or otherwise satisfied, such Award and the Shares and any dividends
or other rights applicable thereto shall be forfeited and reacquired by the
Company if the Participant ceases to be an Employee or Director, and all rights
of the Employee or Director shall terminate to the extent of the forfeiture
without further obligation on the part of the Company.
8.4. Other Restrictions. Subject to Article 10 herein, the Committee may
impose such conditions and/or restrictions on any Shares of Restricted Stock
granted pursuant to this Article 8 as it may deem advisable, including, without
limitation, restrictions requiring the Participant's payment of a stipulated
purchase price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting,
and/or restrictions under federal or state securities laws applicable to such
Shares.
As soon as practicable following the grant of Shares of Restricted Stock,
either (i) a stock certificate or certificates representing such Shares shall
be registered in the Participant's name and shall bear an appropriate legend
referring to the restrictions applicable thereto, which certificates may be
held in the custody of the Company or its designee for the account of the
Participant; or (ii) the Company's stock transfer agent or its designee shall
credit such Shares to the Participant's Restricted Stock Account, which Shares
shall be subject to the restrictions applicable thereto.
If and to the extent that the restrictions and other terms and conditions
applicable to a Restricted Stock Award are not satisfied, such Award and the
Shares and any dividends or other rights applicable thereto shall be
forfeited and reacquired by the Company, and all rights of the Participant
shall terminate to the extent of the forfeiture without further obligation on
the part of the Company.
The Committee may in its discretion terminate, shorten, or accelerate any
period of restriction or waive any terms or conditions applicable to all or any
portion of a Restricted Stock Award.
Upon the expiration or termination of the restrictions and the
satisfaction of any other terms and conditions applicable to a Restricted Stock
Award, a stock certificate or certificates representing Shares free from the
restrictions and any legend, except as may be imposed by law, shall be issued
to the Participant or to the Participant's beneficiary, estate or legal
representative, as the case may be, along with any dividends applicable thereto
which have been withheld by the Company.
8.5. Nontransferability of Restricted Stock. Except as otherwise provided
in this Article 8 or determined by the Committee in its discretion, no Shares
of Restricted Stock or any rights with respect thereto shall be subject to any
debts or liabilities of a Participant, nor be assignable or transferable until
the expiration or termination of the restrictions and the satisfaction of any
other terms and conditions applicable to the Award, nor shall any rights with
respect to Restricted Stock be available during a Participant's lifetime other
than to him or her.
<PAGE> 9
8.6. Shareholder Rights. Except as provided in the Plan or in the Award
Agreement, a Participant to whom Restricted Stock is issued, shall generally
have the rights and privileges of a stockholder as to the Restricted Stock,
including the right to vote such Shares.
At the discretion of the Committee, dividends declared with respect to
Shares of Restricted Stock may either be paid to the Participant or withheld by
the Company for the Participant's account, and interest may be paid on any
dividends withheld at a rate determined by the Committee. The Committee may
apply any restrictions to the dividends that the Committee deems appropriate.
Without limiting the generality of the preceding sentence, if the grant or
vesting of Restricted Shares is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such
Restricted Shares, such that the dividends and/or the Restricted Shares
maintain eligibility for the Performance-Based Exception.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1. Grant of Performance Units/Shares. Subject to the terms and
conditions of the Plan, the Committee, at any time, and from time to time, may
grant Performance Units and/or Performance Shares to Participants in such
amounts and upon such terms as the Committee shall determine in its discretion.
Performance Units and Performance Shares granted under the Plan shall be
subject to and governed by the provisions of the Plan and by such other terms
and conditions, not inconsistent with the Plan, as shall be determined by the
Committee.
9.2. Value of Performance Units/Shares. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant.
Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. Subject to Article 10 herein, the
Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, shall determine the number and/or value of
Performance Units/Shares that shall be paid out to the Participant. For
purposes of this Article 9, the time period during which the performance goals
must be met shall be called a "Performance Period."
9.3. Earning of Performance Units/Shares. Subject to the terms of the Plan
and the Award Agreement, after the applicable Performance Period has ended, the
holder of Performance Units/Shares shall be entitled to receive a payout on the
number and value of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved.
9.4. Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares shall be made in a single lump sum following
the close of the applicable Performance Period. Subject to the terms of the
Plan, the Committee, in its discretion, may pay earned Performance Units/Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee.
At the discretion of the Committee, Participants may be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and /or Performance Shares, but not
yet distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.6 herein). In
addition, Participants may, in the discretion of the Committee, have the rights
and privileges of a stockholder as to the Shares, including the right to vote
such Shares.
<PAGE> 10
9.5. Termination of Employment/Directorship. Except as otherwise provided
in the Plan or in the Award Agreement, unless and until the terms and
conditions applicable to an Award of Performance Units/Shares are met, such
Award and the Performance Units/Shares and any dividends or other rights
applicable thereto shall be forfeited to the Company if the Participant ceases
to be an Employee or Director, and all rights of the Employee or Director shall
terminate to the extent of the forfeiture without further obligation on the
part of the Company; provided, however, that the Committee may in its
discretion waive any terms or conditions or permit a payout with respect to all
or any portion of an Award of Performance Units/Shares.
9.6. Other Restrictions. The Committee may impose such conditions and/or
restrictions on any Shares issued pursuant to this Article 9 as it may deem
advisable, including, without limitation, restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and under any blue sky law or
state securities laws applicable to such Shares.
If and to the extent that no payout is earned with respect to an Award of
Performance Units/Shares in accordance with the terms and conditions of the
Award, such Award and the Performance Units/Shares and any dividends or other
rights applicable thereto shall be forfeited to the Company, and all rights of
the Participant shall terminate to the extent of the forfeiture without further
obligation on the part of the Company.
9.7. Nontransferability of Performance Units/Shares. Except as otherwise
determined by the Committee in its discretion, no Performance Units/Shares or
any rights with respect thereto shall be subject to any debts or liabilities of
a Participant, nor be assignable or transferable except by will or the laws of
descent and distribution, nor be exercisable during the Participant's lifetime
other than by him or her, nor shall Shares be issued to or in the name of one
other than the Participant; provided, however, that any Shares issued to a
Participant hereunder may at the request of the Participant be issued in the
name of the Participant and one other person, as joint tenants with right of
survivorship and not as tenants in common, or in the name of a trust for the
benefit of the Participant or for the benefit of the Participant and others.
ARTICLE 10. PERFORMANCE MEASURES
The performance measure(s) to be used for purposes of granting
performance-based Awards shall be chosen from among the following, with respect
to the Company, its Subsidiaries, its Affiliates, subdivisions thereof, or any
combination thereof:
(a) Return on equity, assets, capital, sales, or investment;
(b) Pretax or after-tax profit levels;
(c) Expense reduction levels;
(d) Implementation of processes or projects;
(e) Changes in the market price of Shares;
(f) Total shareholder return; and
(g) Cash flow.
This measure may be expressed as a concrete goal, in terms of an increase
or decrease or in comparison to the Company's competitors, the industry, or
some other comparator group.
<PAGE> 11
The Committee shall have the authority to set a threshold level of
performance below which no payment shall be made, levels of performance at
which specified percentages of payment shall be made, and a maximum level of
performance above which no additional payment shall be made.
Following the determination of the level of performance, the Committee may
in its discretion adjust (upward or downward) the payment which would otherwise
have been made; provided, however, no upward adjustment shall be authorized to
the extent that it would disqualify the payment under the Performance-Based
Exception.
To the extent applicable, any such performance goal shall be determined in
accordance with generally accepted accounting principles and reported upon by
the Company's independent accountants.
The Committee may make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4.2 herein)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Awards; provided, however, that no such adjustment
shall be authorized to the extent that it would disqualify the Awards under the
Performance-Based Exception.
ARTICLE 11. BENEFICIARY DESIGNATION/LEGAL REPRESENTATIVE
In the event one who holds an outstanding Award dies, either before or
after termination of his or her status as Employee or Director, any Award which
is otherwise exercisable or payable may be exercised by or paid to the person
or persons whom the Participant shall have designated as beneficiary in writing
on forms prescribed by and filed with the Company, or if no designation has
been made, by the person or persons entitled thereto through the Participant's
estate. In the event of the disability of a Participant, an Award which is
otherwise exercisable or payable may be exercised by or paid to the
Participant's legal representative or guardian. The Company may require an
indemnity and/or such evidence or other assurances as it may deem necessary in
connection with an exercise of an Award by or payment of an Award to a
beneficiary, estate, heir, legal representative, or guardian.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 13. EMPLOYMENT/MISCONDUCT
13.1. Employment. No provision of the Plan, nor any term or condition of
any Award, nor any action taken by the Committee, the Company, a Subsidiary, or
an Affiliate pursuant to the Plan, shall give or be construed as giving a
Participant any right to be retained in the employ of or remain a director of
the Company, a Subsidiary, or an Affiliate, or affect or limit in any way the
right of the Company, a Subsidiary, or an Affiliate to terminate his or her
employment or directorship. Employment with or
<PAGE> 12
directorship of a Subsidiary or an Affiliate shall be deemed terminated on the
date such Subsidiary or Affiliate ceases to be a Subsidiary or an Affiliate of
the Company.
13.2. Participation. No Employee or Director shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.
13.3. Misconduct. Notwithstanding anything contained in the Plan or in an
Award Agreement to the contrary, all rights with respect to all Awards of a
Participant are subject to the conditions that the Participant not engage or
have engaged (i) in fraud, dishonesty, conduct in violation of Company policy,
or any similar act at any time while an Employee or Director; or (ii) in
activity directly or indirectly in competition with any business of the
Company, a Subsidiary, or an Affiliate, or in other conduct inimical to the
best interests of the Company, a Subsidiary, or an Affiliate, during or
following the Participant's employment with the Company, a Subsidiary, or an
Affiliate or directorship with the Company. If it is determined by the
Committee or the Committee's designee, either before or after termination of
employment or directorship of a Participant, that there has been a failure of
any such condition, all Awards and all rights with respect to all Awards
granted to such Participant shall immediately terminate and be null and void.
ARTICLE 14. CHANGE IN CONTROL
14.1. Treatment of Outstanding Awards. Subject to Section 14.3 herein,
upon the occurrence of a Change in Control:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable and shall remain exercisable throughout their entire
term;
(b) Any restriction periods and restrictions imposed on Restricted
Shares which are not performance-based shall lapse;
(c) The target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units, and
Performance Shares shall be deemed to have been fully earned for the entire
Performance Period(s) as of the effective date of the Change in Control. The
vesting of all Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid out to
Participants within thirty (30) days following the effective date of the
Change in Control a pro rata number of Shares (or their cash equivalents)
based upon an assumed achievement of all relevant targeted performance goals
and upon the length of time within the Performance Period which has elapsed
prior to the Change in Control. Awards denominated in cash shall be paid pro
rata to participants in cash within thirty (30) days following the effective
date of the Change in Control, with the proration determined as a function
of the length of time within the Performance Period which has elapsed prior
to the Change in Control, and based on an assumed achievement of all
relevant targeted performance goals.
14.2. Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of an event which is likely to give
rise to a Change in Control to affect adversely any Award theretofore granted
under the Plan without the prior written consent of the Participant with
respect to said Participant's outstanding Awards.
14.3. Pooling of Interests Accounting. Notwithstanding anything contained
in the Plan to the contrary, in the event that the consummation of a Change in
Control is contingent on using pooling of interests accounting methodology, the
Board may, in its discretion, take any action necessary to preserve the use of
pooling of interests accounting.
<PAGE> 13
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1. Amendment, Modification, and Termination. Except as provided in
Section 14.2 herein, the Committee may from time to time alter, amend, suspend,
or terminate the Plan in whole or in part. Any such amendment may be effective
in respect of all past and future Awards granted hereunder in the discretion of
the Committee.
ARTICLE 16. WITHHOLDING
16.1. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
16.2. Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, the Committee may in its discretion permit a Participant to elect,
in such form and at such time as the Committee may prescribe, to satisfy the
withholding requirement, in whole or in part, by electing to (i) have the
Company withhold whole Shares or (ii) deliver other whole Shares owned by the
Participant having a Fair Market Value equal to the amount to be withheld.
ARTICLE 17. SUCCESSORS
All obligations to the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise of all or substantially all of the business
and/or assets of the Company.
ARTICLE 18. LEGAL CONSTRUCTION
18.1. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein shall include the feminine; the plural shall
include the singular; and the singular shall include the plural.
18.2. Severability. If any provision of the Plan, or any term or condition
of any Award or Award Agreement or form executed or to be executed thereunder,
or any application thereof to any person or circumstance is invalid or would
result in an ISO failing to meet the requirements of Code Section 422, such
provision, term, condition, or application shall to that extent be void, or, in
the discretion of the Committee, such provision, term, or condition may be
amended so as to avoid such invalidity or failure, and shall not affect other
provisions, terms, conditions, or applications thereof, and to this extent such
provision, term, or condition is severable.
18.3. Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4. Securities Law Compliance. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act
and shall be construed to so comply.
<PAGE> 14
18.5. Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Michigan
without reference to principles of conflict of laws.
