EXHIBIT 4
1992 DIRECTORS STOCK OWNERSHIP PROGRAM
SECTION 1 PURPOSE
The purpose of this Program is to attract and retain well-qualified
persons for service as nonemployee directors of the Company and to promote
identity of interest between directors and stockholders of the Company.
It is intended that the 1992 Directors Stock Ownership Program will
provide for the granting to participants of restricted stock grants and
other stock awards. It is also intended that the Program will allow
participants to elect voluntarily to defer and convert a portion or all of
their retainer fees for services as a director into Common Stock for payment
upon retirement, death, or disability.
SECTION 2 DEFINITIONS
(a) "Agreement" shall mean the agreement entered into between the
Company and a Participant at the time of the grant or award of any rights
under the Program by the Committee, or other written evidence issued by the
Company to the Participant.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Committee" shall mean the Executive Committee established by the
Board of Directors who shall administer the Program as provided in Section
7, or such other committee of disinterested administrators established by
the Board of Directors to comply with Rule 16b-3 promulgated by the
Securities and Exchange Commission, as amended from time to time.
(d) "Common Stock" shall mean the common stock, without par value, of
the Company.
(e) "Common Stock Equivalents" shall mean the number of unissued
shares of Common Stock determined by the formulae provided in Section 4.
(f) "Company" shall mean Minnesota Mining and Manufacturing Company.
(g) "Conditions" shall mean the condition that the Restricted Period
stipulated by the Committee at the time of grants of Restricted Stock shall
have expired or terminated and that any other conditions prescribed by the
Committee regarding a Participant's continued membership on the Board of
Directors of the Company or the Company's performance during the Restricted
Period shall have been satisfied, or any other conditions stipulated by the
Committee with respect to Stock Awards.
(h) "Deferral Election" shall mean the voluntary election by any
Participant to have all or any portion of the Participant's Retainer Fee
deferred in payment and converted to a number of Common Stock Equivalents.
(i) "Deferred Stock" shall mean the Participant's right to have issued
a certificate for Common Stock upon the occurrence of any of those events
set forth in Section 4, equal in number of shares to the Common Stock
Equivalents determined by the Participant's Deferral Election, and Dividend
Equivalents until the date of such occurrence.
(j) "Dividend Equivalents" shall mean that sum of cash or Common
Stock of equivalent value equal to the amount of cash or stock dividends
paid upon Common Stock subject to any grants or awards under the Program,
prior to such time as the Participant otherwise becomes entitled thereto
as a holder of record.
(k) "Fair Market Value" shall mean the average of the high and low
prices for Common Stock as reported on the New York Stock Exchange Composite
Transactions, rounded upwards to the nearest $0.05.
(l) "Participant" shall mean each and every nonemployee member of the
Board of Directors to the extent a grant of Restricted Stock or Stock Award
is determined appropriate by the Committee, or to the extent that the
nonemployee director shall make a Deferral Election with respect to any or
all of the directors Retainer Fee.
(m) "Program" shall mean the Company's 1992 Directors Stock
Ownership Program.
(n) "Program Effective Date" shall mean the date fixed by the Board of
Directors upon which the Program becomes effective after approval by
stockholders.
(o) "Restricted Period" shall mean that period of time determined by
the Committee and provided in the applicable Conditions stated in the
Restricted Stock Agreement of a Participant regarding the incremental or
complete lapse of the restrictions.
(p) "Restricted Stock" shall mean that Common Stock granted to a
Participant in a Restricted Stock Agreement and subject to the Conditions,
as so determined by the Committee, during the Restricted Period of the
grant.
(q) "Retainer Fee" shall mean those fees paid by the Company to
nonemployee directors for services rendered and shall include attendance
fees, fees for acting as committee chair or member, as well as annual
retainer fees.
(r) "Retirement Date" shall be the date a Participant retires as a
member of the Board of Directors of the Company.
(s) "Stock Award" shall mean any award of Common Stock under the
Program and may include Restricted Stock awards or other awards of Common
Stock as determined appropriate by the Committee.
SECTION 3 PARTICIPATION
A nonemployee director may participate in the Program in one or both of
two ways: (i) by making a Deferral Election to have all or a portion of the
Participant's Retainer Fee converted into Deferred Stock, or (ii) by
receiving a grant of Restricted Stock or Stock Award by act of the
Committee. A Participant may make the Deferral Election by authorizing the
Company to convert all or a portion of the Retainer Fee otherwise payable in
cash into a number of Common Stock Equivalents, which will then create an
obligation of the Company to accrue a liability to the Participant and to
deliver the Deterred Stock to the Participant at a future date as determined
by Section 4 of the Program. The Deferral Election, once made by the
Participant, shall be irrevocable for a period of six months from the date
of the last preceding Deferral Election and with regard to all Retainer Fee
converted to Deferred Stock while the Deferral Election is in effect.
A nonemployee director shall also become a Participant to the extent
that the Committee shall make a grant to a nonemployee director of
Restricted Stock or a Stock Award. The Committee shall determine the number
of shares of Common Stock to be the subject of a grant to each Participant.
However, no more than 3,500 shares would be granted to any one Participant
under the Program by way of Restricted Stock or Stock Awards.
SECTION 4 DEFERRED STOCK
(a) Common Stock Equivalents. In the event that the Participant shall
have made a Deferral Election in a form satisfactory to the Committee and
such Deferral Election shall continue effective, the appropriate amount of
Retainer Fee shall be converted to Common Stock Equivalents by dividing that
amount of Retainer Fee payable to the Participant by the Fair Market Value
at the date the Retainer Fee is earned and becomes payable, which generally
will be the date of a meeting of the Board of Directors or a committee of
the Board. To the extent that the date upon which the Retainer Fee is
earned and becomes payable is a day upon which the New York Stock Exchange
is closed to trading, then the Fair Market Value on the next succeeding
trading day shall be used to determine Common Stock Equivalents.
(b) Payment of Deferred Stock. Common Stock Equivalents shall become
Deferred Stock and shall be reflected on the books and records of the
Company as an obligation to issue and deliver a number of shares of Common
Stock at a future date upon the retirement, resignation, or other
termination of Participant's membership on the Board of Directors for any
cause whatsoever. No stock certificate shall be created or registered until
the date for delivery specified above, and the Participant shall generally
not have any of the rights and privileges of a stockholder as to such
Deferred Stock, except that the Deferred Stock will earn Dividend
Equivalents rights as provided in Section 15.
(c) No Forfeiture. Deferred Stock shall not be subject to forfeiture
for any reason and shall be issued and delivered to Participant as provided
above or as provided in Section 9.
SECTION 5 RESTRICTED STOCK
(a) Restricted Stock granted by the Committee shall be designated as
such and shall be evidenced by Agreements in such forms as the Committee
shall approve, which Agreements shall comply with and be subject to the
terms and conditions of this Program.
(b) Restricted Stock, in addition to the Conditions stated and
determined by the Committee in the Agreement, may or may not have a stated
purchase price. The purchase price determined by the Committee, in its sole
discretion, if any, shall be clearly set forth in the Agreement presented to
a Participant, along with any and all other applicable Conditions.
(c) If the Committee shall fix a purchase price for Restricted Stock
in addition to other Conditions therefor, no shares of Common Stock shall be
issued upon the satisfaction of Conditions until full payment has been made
to the Company and the Participant has remitted to the Company the required
federal and state withholding taxes, if any. Payment of the purchase price
may be made in whole, or in part, in shares of Common Stock, pursuant to
such terms and conditions as may be established from time to time by the
Committee. If payment is made in shares of Common Stock, such stock shall
be valued at one hundred percent (100%) of Fair Market Value on the day the
restrictions lapse, and the number of shares required to effect payment of
the purchase price shall be withheld from the shares of Common Stock
otherwise deliverable. Similarly, any applicable withholding taxes may be
paid upon the lapse of restrictions upon Restricted Stock by the withholding
of shares of Common Stock otherwise deliverable.
(d) At the time a grant of Restricted Stock is made, the Committee, in
its Sole discretion, shall establish a Restricted Period and such additional
Conditions as may be deemed appropriate for the incremental lapse or
complete lapse of restrictions with respect to all or any portion of the
shares of Common Stock represented by the Restricted Stock. The Committee
may also, in its sole discretion, shorten or terminate the Restricted Period
or waive any Conditions with respect to all or any portion of the shares of
Common Stock represented by the Restricted Stock. Notwithstanding the
foregoing, all restrictions set forth in the Conditions shall lapse or
terminate with respect to all Common Stock represented in the grant of
Restricted Stock in the event of the death or total disability of a
Participant (as defined in Section 9 below) or the occurrence of a Change in
Control(as defined in Section 14 below).
(e) A stock certificate for the number of shares of Common Stock
represented in the grant of Restricted Stock to a Participant shall be
registered in the Participant's name but shall be held in custody by the
Company for the Participant's account. The Participant shall generally have
the rights and privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock, except that, subject to
the provisions of Section 9 below, the following restrictions shall apply:
(i) the Participant shall not be entitled to delivery of the certificate
until the expiration or termination of the Restricted Period. The
satisfaction of any other Conditions prescribed by the Committee, if any,
and the payment in full of the purchase price, if any;
(ii) none of the Restricted Stock may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restricted Period
and until the satisfaction of other Conditions prescribed by the Committee,
if any; and
(iii) all of the Restricted Stock shall be forfeited and all rights of the
Participant shall terminate without further obligation on the part of the
Company unless the Participant shall have remained a nonemployee member of
the Board of Directors until the expiration or termination of the Restricted
Period and the satisfaction of other Conditions prescribed by the Committee,
if any.
(f) At the sole discretion of the Committee, Dividend Equivalents may
be either currently paid or withheld by the Company for the Participant's
account, and interest may be paid on the amount of cash dividends withheld at
a rate and under such terms as determined by the Committee. Cash or stock
dividends so withheld by the Committee shall not be subject to forfeiture.
Upon the forfeiture of the Restricted Stock, such shares of Common Stock
represented in the grant of Restricted Stock shall be transferred to the
Company without further action by the Participant.
(g) Upon the expiration or termination of the Restricted Period and
the satisfaction of other Conditions prescribed by the Committee, if any, or
at such earlier time as provided for in Section 9 below, the restrictions
applicable to the Restricted Stock shall lapse and a stock certificate for
the number of shares of Common Stock represented in the grant of Restricted
Stock shall be delivered to the Participant or the Participant's
beneficiary, representative, or estate, as the case may be, free of all
restrictions, except any that may be imposed by law, subject as well to the
obligation of the Participant to pay the purchase price, and applicable
withholding taxes, if any, as provided in this Section. The Company shall
not be required to deliver any fractional share of Common Stock but will
pay, in lieu thereof, the Fair Market Value (as of the date the last
Conditions lapse) of such fractional share.
SECTION 6 OTHER STOCK AWARDS
(a) The Committee may, in its sole discretion, grant Stock Awards
other than Restricted Stock grants, and such Stock Awards may be granted
singly, in combination or in tandem with, in replacement of, or as
alternatives to grants or rights under this Program or any compensation plan
of the Company, including the plan of any acquired entity.
(b) If the Committee shall stipulate Conditions with respect to such
Stock Awards, the Conditions will be set forth in Agreements evidencing the
grant, and such Agreements shall comply with and be subject to the terms and
conditions of this Program.
(c) If Conditions with respect to such Stock Awards shall require the
surrender or forfeiture of other grants or rights under this Program or any
other compensation plan of the Company, then the Participant shall not have
any rights under such Stock Awards until the grants or rights exchanged have
been fully and effectively surrendered or forfeited.
SECTION 7 ADMINISTRATION
The Program shall be administered under the direction of the Committee
acting without any members who participate in the Program. In administering
the Program, it will be necessary to follow various laws and regulations.
It may be necessary from time to time to change or waive requirements of the
Program to conform with the law, to meet special circumstances not
anticipated or covered in the Program, or to carry on successful operation
of the Program, and in connection therewith, the Committee shall have the
full power and authority to:
(a) Prescribe, amend, and rescind rules and regulations relating to
the Program, establish procedures deemed appropriate for its administration,
and make any and all other determinations not herein specifically authorized
which may be necessary or advisable for its effective administration;
(b) Make any amendments to or modifications of the Program which may
be required or necessary to make the Program set forth herein comply with
the provisions of any laws, federal or state, or any regulations issued
thereunder, and to cause the Company at its expense to take any action
related to the Program which may be required under such laws or regulations.
(c) Contest on behalf of the Participants or the Company. at the sole
discretion of the Committee and at the expense of the Company, any ruling or
decision on any issue related to the Program, and conduct any such contest
and any resulting litigation to a final determination, ruling or decision.
SECTION 8 SHARES SUBJECT TO THE PROGRAM
(a) For each calendar year, including the calendar year within which
the Program Effective Date falls, no more than 25,000 shares of the issued
Common Stock, including treasury shares, shall be available for issuance
under the Program.
(b) In no event, however, except as subject to adjustment as provided
in the foregoing subparagraph, shall more than 200,000 shares of Common
Stock be cumulatively available for issuance under the Program.
(c) The payment of dividends and Dividend Equivalents in conjunction
with outstanding awards shall not be counted against the shares available
for issuance.
(d) Shares of Common Stock issued under the Program may consist in
whole or in part of authorized and unissued shares or of treasury shares,
and no fractional shares shall be issued under the Program. Cash may be
paid in lieu of any fractional shares issuable under the Program.
(e) In the event of a reclassification or stock split after the
Program Effective Date, the foregoing absolute numbers of shares shall be
appropriately adjusted.
SECTION 9 TERMINATION OF RIGHTS UNDER THE PROGRAM
(a) Participation hereunder shall cease and all rights under the
Program as regards Restricted Stock or other Stock Awards are automatically
forfeited by the Participant upon the date of termination of membership as a
nonemployee member of the Board of Directors for any cause other than:
(i) retirement, (ii) because of physical or mental disability as determined
by the Committee, or (iii) death. Deferred Stock shall not be subject to
forfeiture for any reason.
(b) If the Participant dies, either prior to or following retirement,
or becomes totally disabled because of a physical or mental disability and
has not yet received the stock certificate for the shares of Common Stock
represented by the grant of Deferred Stock, Restricted Stock, or other Stock
Award, then all restrictions imposed by the Restricted Period or other
Conditions prescribed by the Committee, if any, shall automatically lapse
and a stock certificate shall be delivered to the Participant or the
Participant's beneficiary, representative, or estate, as the case may be, as
provided in Section 5(g) herein.
SECTION 10 DELIVERY OF STOCK CERTIFICATES
Within sixty (60) days after the complete satisfaction of Conditions
applicable to Restricted Stock or any other Stock Award, the Company will
have delivered to Participants certificates representing all stock purchased
or received thereunder.
The Company shall not, however, be required to issue or deliver any
certificates for its Common Stock prior to the admission of such stock to
listing on any stock exchange on which stock may at that time be listed or
required to be listed, or prior to registration under the Securities Act of
1933. The Participant shall have no interest in Common Stock until
certificates for such stock are issued or transferred to the
Participant and the Participant becomes the holder of record.
SECTION 11 TRANSFERABILITY
Rights and grants under the Program may not be assigned, transferred
(other than a transfer by will or the laws of descent and distribution as
provided in Section 9), pledged, or hypothecated (whether by operation of
law or otherwise), and shall not be subject to execution, attachment, or
similar process. Any attempted assignment, transfer (other than a transfer
by will or laws of descent and distribution), pledge, hypothecation, other
disposition of Restricted Stock or other Stock Awards under the Program, or
levy of attachment or similar process upon Restricted Stock or other Stock
Awards shall constitute an immediate cancellation of the rights and grants
under the Program.
SECTION 12 STOCK DIVIDEND, STOCK SPLIT, REDUCTION IN SHARES,
MERGER, OR CONSOLIDATION
If a record date for a stock dividend, split, or reduction in the
number of shares of stock should occur after the Program Effective Date
during the period of continued exercisability of any rights under the
Program, appropriate adjustment shall be made to give effect thereto on an
equitable basis.
It the Company is merged into or consolidated with one or more
corporations during the period of continued exercisability of any rights
under the Program, appropriate adjustments shall be made to give effect
thereto on an equitable basis in terms of issuance of shares of the
corporation surviving the merger or the consolidated corporation, as the
case may be.
In the event that within such period there shall be any change in the
number or kind of the issued shares of stock (of the class optioned or
granted hereunder), or of any issued capital stock or other securities into
which such shares shall have been converted, or for which they shall have
been exchanged, and such change shall occur otherwise than through a stock
dividend or split-up or combination of shares of stock of the Company, then
if (and only if) the Committee shall, in its sole discretion, determine that
such change equitably requires an adjustment in the number or kind or
purchase price of shares of stock then subject to rights under this Program,
such adjustment as the Committee shall, in its sole discretion, determine is
equitable, shall be made and shall be effective and binding for all purposes
of such outstanding rights.
SECTION 13 WITHDRAWAL, AMENDMENT, OR TERMINATION OF THE PLAN
The Program shall terminate when and as determined by the Board of
Directors, and no rights under the Program shall be granted after the date
of termination. Such termination shall not adversely affect rights under
the Program theretofore granted.
The Board of Directors may at any time withdraw or amend the Plan,
except that there shall be no withdrawal or amendment which shall adversely
affect rights under the Program theretofore granted, and no amendment shall
be made without prior approval of the stockholders which would (i) permit
the issuance of Restricted Stock before payment of the purchase price as
determined herein or by the Committee, if any be so determined, (ii)
increase the number of shares to be offered, (iii) reduce the price per
share at which Restricted Stock may be sold if a purchase price is
determined by the Committee, or (iv) increase the amount of Deferred Stock
above 100% of the Participant's Retainer Fee.
SECTION 14 CHANGE IN CONTROL
(a) For purposes of this Section 14, the following words and phrases
shall have the meanings indicated below, unless the context clearly
indicates otherwise:
(i) "Person" shall have the meaning associated with that term as it
is used in Sections 13(d) and 14(d) of the Act.
(ii) "Affiliates and Associates" shall have the meanings assigned to
such terms in Rule 12b-2 promulgated under Section 12 of the Act.
(iii) "Act" means the Securities Exchange Act of 1934.
(iv) "Continuing Directors" shall have the meaning assigned to such
term in Article Thirteenth of the Company's Restated Certificate of
Incorporation.
(v) "Code" means the Internal Revenue Code of 1986, as amended.
(b) Notwithstanding any other provision of this Program to the
contrary, all restrictions regarding the Restricted Period or the
satisfaction of other Conditions prescribed by the Committee, if any, with
respect to grants of Stock Awards, shall automatically lapse, expire, and
terminate and the Participant shall be immediately entitled to receive a
stock certificate for the number of shares of Common Stock represented in
the grant of Stock Awards as provided in Section 6 herein upon the
occurrence of a Change in Control. Similarly, Deferred Stock shall
immediately be issued and delivered to the Participant by the Company upon
the occurrence of a Change in Control.
(c) For purposes of this Section 14, a Change in Control of the
Company shall be deemed to have occurred if:
(i) any Person (together with its Affiliates and Associates), other
than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the "beneficial owner"
(as that term is defined in Rule 13d-3 promulgated under the
Act), directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities, unless a majority of the
Continuing Directors of the Company's Board of Directors prior to
that time have determined in their sole discretion that, for
purposes of this Program, a Change in Control of the Company has not
occurred; or
(ii) the Continuing Directors of the Company's Board of Directors
shall at any time fail to constitute a majority of the members of such
Board of Directors.
(d) In the event that the provisions of this Section 14 result in
"payments" that are finally determined to be subject to the excise tax
imposed by Section 4999 of the Code, the Company shall pay to each
Participant an additional amount such that the net amount retained by such
Participant following the lapse of restrictions, if any, and delivery of
Common Stock under this Section that resulted in such "payments," after
allowing for the amount of such excise tax and any additional federal,
state, and local income taxes paid on the additional amount, shall be equal
to the net amount that would otherwise have been retained by the Participant
following the lapse of restrictions, if any, and delivery of Common Stock
under this Section if there were no excise tax imposed by Section 4999 of
the Code.
(e) The Company shall pay to each Participant the amount of all
reasonable legal and accounting fees and expenses incurred by such
Participant in seeking to obtain or enforce his rights under this Section
14, or in connection with any income tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to the payments
made pursuant to this Section 14, unless a lawsuit commenced by the
Participant for such purposes is dismissed by the court as being spurious or
frivolous. The Company shall also pay to each Participant the amount of all
reasonable tax and financial planning fees and expenses incurred by such
Participant in connection with such Participant's receipt of payments
pursuant to this Section 14.
SECTION 15 DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that awards under the Program earn dividends
or Dividend Equivalents. Such Dividend Equivalents may be paid currently or
may be credited to a Participant's account. In addition, dividends paid on
outstanding awards or issued shares may be credited to a Participant's
account rather than paid currently. Any crediting of dividends or Dividend
Equivalents may be subject to such restrictions and conditions as the
Committee may establish, including reinvestment in additional shares or
share equivalents.
SECTION 16 DEFERRALS AND SETTLEMENTS
Payment of awards may be in the form of cash, Common Stock, other
awards or combinations thereof as the Committee shall determine, and with
such other restrictions as it may impose. The Committee may also require or
permit Participants to elect to defer the issuance of shares or the
settlement of awards in cash under such rules and procedures as it may
establish under the Program. It may also provide that deferred settlements
include the payment or crediting of interest on the deferral amounts
denominated in cash or the payment or crediting of Dividend Equivalents on
deferred settlements denominated in shares.
SECTION 17 UNFUNDED PLAN
Unless otherwise determined by the Committee, the Program shall be
unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Program shall not establish any fiduciary
relationship between the Company and any Participant or other person. To
the extent any person holds any rights by virtue of a grant under the
Program, such right (unless otherwise determined by the Committee) shall be
no greater than the right of an unsecured general creditor of the Company.
SECTION 18 FUTURE RIGHTS
No person shall have any claim or rights to be granted an award under
the Program.
