SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended May 31, 1995 Commission file number 1-8527
A.G. EDWARDS, INC.
DELAWARE 43-1288229
State of Incorporation: I.R.S. Employer Identification No.
ONE NORTH JEFFERSON AVENUE
ST. LOUIS, MISSOURI 63103
Registrant's telephone number, including area code: (314) 289-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or of such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
At July 1, 1995, there were 62,372,668 shares of A.G. Edwards, Inc. common
stock, par value $1, issued and outstanding.
A.G. EDWARDS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Consolidated balance sheets 1
Consolidated statements of earnings 2
Consolidated statements of
stockholders' equity 3
Consolidated statements of cash flows 4
Notes to consolidated financial statements 5
Management's financial discussion 6 - 7
PART II. OTHER INFORMATION 7 - 8
SIGNATURES 9
<TABLE>
<CAPTION>
A.G. EDWARDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
May 31, February 28,
ASSETS 1995 1995
<S> <C> <C>
Cash and cash equivalents $ 49,397 $ 41,464
Cash and government securities,
at market, segregated under
federal and other regulations 52,554 43,808
Securities purchased under
agreements to resell 24,761 42,819
Receivable from brokers and dealers 412,522 309,417
Receivable from customers, less
allowance for doubtful accounts
of $3,450 1,318,677 1,359,172
Securities inventory, at market
State and municipal 105,943 77,834
Government and agencies 37,211 30,239
Corporate 38,875 44,489
Property and equipment, at cost, net
of accumulated depreciation and
amortization of $152,301 and $145,072 169,399 167,570
Other assets 116,245 107,470
$ 2,325,584 $ 2,224,282
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans $ 54,900 $ --
Checks payable 132,060 106,973
Payable to brokers and dealers 512,801 462,693
Payable to customers 413,881 415,741
Securities sold but not yet
purchased, at market 27,130 39,478
Employee compensation and related taxes 183,093 246,120
Income taxes 22,429 2,370
Other liabilities 30,673 31,626
Total Liabilities 1,376,967 1,305,001
Stockholders' Equity:
Preferred stock, $25 par value:
Authorized 4,000,000 shares,
none issued
Common stock, $1 par value:
Authorized 250,000,000 shares
Issued 62,363,738 and
62,294,211 shares 62,364 62,294
Additional paid-in capital 196,473 194,863
Retained earnings 692,634 665,992
951,471 923,149
Less: Unamortized expense
of restricted stock awards 2,854 3,868
Total Stockholders' Equity 948,617 919,281
$ 2,325,584 $ 2,224,282
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
A.G. EDWARDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended May 31,
1995 1994
<S> <C> <C>
REVENUES:
Commissions $ 181,309 $ 175,138
Principal transactions 56,875 56,906
Investment banking 25,326 21,259
Interest 32,566 21,739
Other 29,226 26,534
325,302 301,576
EXPENSES:
Compensation and benefits 207,395 198,217
Communications 19,841 18,712
Occupancy and equipment 18,521 17,223
Floor brokerage and clearance 3,770 3,841
Interest 1,409 976
Other operating expenses 17,153 13,173
268,089 252,142
EARNINGS BEFORE INCOME TAXES 57,213 49,434
INCOME TAXES 21,840 18,880
NET EARNINGS $ 35,373 $ 30,554
Earnings per share $.56 $.50
Dividends per share $.14 $.14
Average common and common
equivalent shares outstanding 63,644 61,459
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
A.G. EDWARDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MAY 31, 1994 AND 1995
(In thousands, except per share amounts)
(Unaudited)
Unamortized
Additional Expense of
Common Paid-in Retained Restricted Treasury
Stock Capital Earnings Stock Awards Stock
<S> <C> <C> <C> <C> <C>
BALANCES, March 1, 1994 $ 60,446 $ 165,124 $ 576,073 $ (11,276) $ 0
Net earnings 30,554
Cash dividends -
$.14 per share (8,455)
Treasury stock acquired (2,765)
Stock issued:
Employee stock
purchase/option plans 101 1,382 244
Restricted stock (3) 769 65 (44)
Amortization of restricted
stock awards 1,823
BALANCES, May 31, 1994 $ 60,544 $ 167,275 $ 598,172 $ (9,388) $(2,565)
BALANCES, March 1, 1995 $ 62,294 $ 194,863 $ 665,992 $ (3,868) $ 0
Net earnings 35,373
Cash dividends -
$.14 per share (8,731)
Stock issued:
Employee stock
purchase/option plans 70 1,372 73
Restricted stock 238 18 (73)
Amortization of restricted
stock awards 996
BALANCES, May 31, 1995 $ 62,364 $ 196,473 $ 692,634 $ (2,854) $ 0
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
A.G. EDWARDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended May 31,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 35,373 $ 30,554
Noncash items included in earnings 10,163 12,231
(Increase) decrease in segregated cash and government securities (8,746) 147,791
Increase in net receivable from brokers and dealers (52,997) (36,293)
Decrease (increase) in net receivable from customers 38,635 (138,236)
(Increase) decrease in net securities inventory (41,815) 27,230
Net change in other assets and liabilities (32,158) (130,620)
Net cash used in operating activities (51,545) (87,343)
Cash Flows from (payments for) Investing Activities:
Securities purchased under agreements to resell 18,058 114,553
Capital expenditures and other investments (6,447) (21,642)
Net cash provided by investing activities 11,611 92,911
Cash Flows from (payments for) Financing Activities:
Bank loans 54,900
Employee stock transactions 1,698 2,514
Cash dividends (8,731) (8,455)
Treasury stock (2,765)
Net cash provided by (used in) financing activities 47,867 (8,706)
Net Increase (Decrease) in Cash and Cash Equivalents 7,933 (3,138)
Cash and Cash Equivalents at March 1 41,464 40,341
Cash and Cash Equivalents at May 31 $ 49,397 $ 37,203
<FN>
Income tax payments totaled $2,673 and $9,290 during the three month periods
ended May 31, 1995, and 1994, respectively.
Interest payments totaled $1,104 and $401 during the three month periods ended
May 31, 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
A.G. EDWARDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 31, 1995
(Unaudited)
FINANCIAL STATEMENTS:
The consolidated financial statements include the accounts of A.G. Edwards, Inc.
and its wholly owned subsidiaries (collectively referred to as the "Company"),
including its principal subsidiary, A.G. Edwards & Sons, Inc. ("Edwards"), and
have been prepared in conformity with generally accepted accounting principles.
These financial statements should be read in conjunction with the Company's
annual report for the year ended February 28, 1995. All adjustments that, in
the opinion of management, are necessary for a fair presentation of the results
of operations for the interim periods have been reflected. All such adjustments
consist of normal recurring accruals unless otherwise disclosed in these interim
financial statements. The results of operations for the three months ended May
31, 1995, are not necessarily indicative of the results for the year ending
February 29, 1996.
NET CAPITAL REQUIREMENTS:
Edwards is subject to the uniform net capital rule administered by the
Securities and Exchange Commission ("SEC"). This rule requires Edwards to
maintain a minimum net capital, as defined, and to notify, and sometimes obtain
approval of, the SEC and other regulatory organizations for substantial
withdrawals of capital and loans to affiliates. At May 31, 1995, Edwards' net
capital of $621,819,000 was $594,324,000 in excess of the minimum required.
A.G. EDWARDS, INC. AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION
THREE MONTHS ENDED MAY 31, 1995 COMPARED TO
THREE MONTHS ENDED MAY 31, 1994
Results of Operations
The three months ended May 31, 1995 saw an upturn of retail investor activity
from the level experienced during the first quarter of our last fiscal year.
The NYSE and Nasdaq overall trading volumes increased 16% and 18%, respectively,
over the prior year which resulted in an 8% increase in total customer trades.
The number and size of customer trades and the product mix generally affect the
level of revenues. The number of branches and brokers increased to 522 and
5,560, respectively; both represent an increase of 6% compared to the same
period last year.
Total revenues increased $24 million (8%) from last year, from $301 million to
$325 million. Expenses were $268 million, an increase of $16 million (6%),
resulting in a rise in net profit margins from 10.1% last year to 10.9% this
year.
Total commission revenue increased $6 million (4%) primarily due to increases in
listed and OTC revenue, partially offset by decreases in mutual fund and
insurance and annuity sales. The combination of listed and OTC revenue
increased $19 million reflecting the recent rise in volume in the equity
markets, contrasted with the uncertainty last year caused by rising interest
rates. Mutual fund revenue declined $9 million due mainly to a 42% drop in
sales of income funds coupled with an 18% decline in sales of growth funds.
Insurance revenue dropped $3 million primarily due to decreased customer demand
for variable annuities.
Revenues from principal transactions were flat. An increase in corporate equity
revenue of $3 million (33%) was offset by a decline in revenue generated from
the sale of municipal bonds, which is down $4 million (18%). Market conditions
for equity securities improved this year compared to the first quarter last year
when rising interest rates caused uncertainties in the market. Customer demand
for municipal bonds has declined after increasing last year in a rising interest
rate environment. As a result, revenues from municipal bond sales have fallen
$6 million. As a partial offset, municipal bond inventory gains increased $2
million, due to lower gains last year also caused by rising interest rates.
Investment banking revenue increased $4 million (19%) principally due to
increases in nearly every category. Revenues from corporate debt issues rose $3
million due to higher interest rates resulting in an increase in sales of
certificates of deposits. Management fees also increased $2 million due to
participation as manager or co-manager in a larger number of offerings, in both
corporate equity and debt issues, this year. These were partially offset by the
decrease in municipal bond revenue of $1 million caused by a decreased supply of
new issues due to higher interest rates.
Interest revenues increased $11 million (50%) primarily due to higher customer
margin account balances, which are up 6%, coupled with higher interest rates.
Other revenues increased $3 million (10%) due to an increase in fees resulting
from a rise in customer investments under professional management. Service fees
have also increased due to a rise in administrative transaction fees.
Compensation and benefits increased $9 million (5%) due to increases in most
categories. Commission expense increased due to the rise in commissionable
revenue. General and administrative salaries and related benefits increased due
primarily to general increases and expansion. Incentive related compensation
rose as a result of higher earnings.
Liquidity and Capital Resources
No material changes have taken place since February 28, 1995 regarding the
Company's liquidity, capital resources and overall financial condition.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
There have been no material changes in the legal proceedings previously
reported in the Company's Annual Report on Form 10-K for the year ended February
28, 1995.
Item 2: Changes in Securities
On June 22, 1995, the Company amended its Stockholders' Rights Plan to
change the Purchase Price and expiration date in the Rights Agreement dated
December 30, 1988.
The Purchase Price has been amended to $90.00. The Purchase Price was
originally $75.00 and had been adjusted, principally due to stock splits and
stock dividends, to $29.09.
The expiration date has been restated to June 22, 2005 from January 18,
1999.
Item 4: Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders on June 22, 1995,
stockholders approved a number of nominations and proposals. Results of these
nominations and proposals were:
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Withheld*
<S> <C> <C> <C>
Nominations for director:
Robert G. Avis 51,528,726 470,016
Dr. E. Eugene Carter 51,606,608 392,134
Robert L. Bagby 51,529,784 468,958
Approval to amend the
Company's 1988 Incentive
Stock Plan 33,326,065 12,273,976 6,398,701
Ratification of auditors 51,563,459 271,075 164,208
<FN>
A total of 51,998,742 shares were present in person or by proxy at the
Annual Meeting.
*Includes abstentions and broker non-votes.
</TABLE>
Item 6: Exhibits and Reports on 8-K
Exhibit 4 Amendment No. 2 to the Rights Agreement dated December 30,
1988, between A.G. Edwards, Inc. and Boatmen's Trust Company as Rights
Agent, dated June 22, 1995, filed as Exhibit 4(iii) to the Registrant's
amended Form 8-A on July 12, 1995, and is incorporated herein by
reference.
Exhibit 10 1995 restatement of A.G. Edwards, Inc. 1988 Incentive Stock Plan.
Exhibit 27 Financial Data Schedule. (This financial data schedule is only
required to be submitted with the registrant's Quarterly Report in Form
10-Q as filed electronically to the SEC's Edgar database.)
Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended May 31,
1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
A.G. EDWARDS, INC.
(Registrant)
Date: July 13, 1995 /s/ Benjamin F. Edwards III
BENJAMIN F. EDWARDS, III
Principal Executive Officer
Date: July 13, 1995 /s/ David W. Mesker
DAVID W. MESKER
Principal Financial Officer
A.G. EDWARDS, INC.
1988 INCENTIVE STOCK PLAN
1995 RESTATEMENT
RECITALS
This Plan originally became effective in April 1988. It was amended in
(1) June 1990 by the stockholders of the Company to increase the number of
shares of Common Stock available under the Plan to 4,060,000 shares (which
number has since been adjusted to 7,612,500 shares to reflect a 50% and a 25%
stock dividend, treated as a stock split), (2) April 1992 by the Board of
Directors to comply with changes under Section 16(b) of the Exchange Act and
(3) June 1992 by the stockholders of the Company to increase the number of
shares of Common Stock available under the Plan to 13,862,500 shares (which
number has since been adjusted to 17,328,125 to reflect a 25% stock dividend,
treated as a stock split).
The Company now wishes to amend the Plan to increase the number of shares
available under the Plan to 26,328,125, subject to approval of the stockholders
of the Company, and to make certain other changes.
NOW, THEREFORE, effective June 22, 1995, the Plan is hereby amended and
restated in its entirety as follows:
1. PURPOSE.
The purpose of the A.G. Edwards, Inc. 1988 Incentive Stock Plan (the
"Plan") is to motivate employees of A.G. Edwards, Inc. (the "Company") and its
subsidiaries through added incentives to make a maximum contribution to Company
objectives.
2. DEFINITIONS.
As used in the Plan, the following words shall have the following meanings:
"Administrator" has the meaning ascribed to it in Section 3(a) of the Plan.
"Award Amount" has the meaning ascribed to it in Section 5(b) of the Plan.
"Benefits" means the benefits awarded to Participants as described in
Sections 5 through 9 of the Plan. Benefits may be awarded separately or in any
combination.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day on which the New York Stock Exchange is open
for business.
"Change in Control" means the occurrence of any of the following events
without the prior approval of the Board of Directors: (a) a merger,
consolidation or reorganization of the Company in which the Company does not
survive as an independent entity; (b) a sale of all or substantially all of the
assets of the Company; (c) the first purchase of shares of Common Stock of the
Company pursuant to a tender or exchange offer for more than 20% of the
Company's outstanding shares of Common Stock; or (d) any change in control of a
nature that, in the opinion of the Board of Directors, would be required to be
reported under the federal securities laws; provided that such a change in
control shall be deemed to have occurred if (i) any person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's then
outstanding securities; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute a majority thereof
unless the election of any director, who was not a director at the beginning of
the period, was approved by a vote of at least 70% of the directors then still
in office who were directors at the beginning of the period.
"Code" means the Internal Revenue Code of 1986, as amended. Reference to a
section of the Code shall include: (i) that section and any comparable section
or sections of any future legislation that amends, supplements or supersedes
that section, and (ii) any rules or regulations promulgated under such section.
"Common Stock" means the $1.00 par value common stock of the Company,
together with the Common Stock Purchase Rights (as described in the Rights
Agreement dated December 30, 1988 by and between the Company and Boatmen's Trust
Company, as Rights Agent) associated with such common stock.
"Company" has the meaning ascribed to it in Section 1 of the Plan.
"Competition with the Company" means, with respect to any individual,
owning, managing, controlling, participating in or becoming connected with, as
an officer, employee, partner, stockholder, consultant or otherwise, any
business, individual, partnership or corporation that is engaged significantly,
or is planning to become engaged significantly, in a business which, directly or
indirectly, competes with a business of the Company or a Subsidiary; provided,
merely acquiring or holding shares of any business entity that has its
securities listed on a national securities exchange or quoted in the daily
listing of over-the-counter market securities shall not constitute such
competition so long as such individual and members of such individual's family
do not own more than 1% of the voting securities of such an entity.
"Corporate Executive Bonus" has the meaning ascribed to it in Section 4 of
the Plan.
"Corporate Executive Bonus Plan" has the meaning ascribed to it in
Section 4 of the Plan.
"Date of Grant" has the meaning ascribed to it in Section 7(b) of the Plan.
"Deferred Award Date" has the meaning ascribed to it in Section 6(e) of the
Plan.
"Disability" means a total and permanent disability that renders a
Participant unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than three years.
"Disinterested Administrator" means an Administrator composed of the Board
of Directors, if each member is a disinterested person, or a committee of two or
more directors of the Company, each of whom is a disinterested person.
"Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) promulgated under Section 16 of the Exchange Act, or any
successor rule thereto.
"Eligible Employee" has the meaning ascribed to it in Section 4 of the
Plan.
"Employee" means any individual who is employed by the Company or a
Subsidiary.
"Employee Stock Purchase Plan" has the meaning ascribed to it in Section 7
of the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
Reference to a section of the Exchange Act shall include: (i) that section and
any comparable section or sections of any future legislation that amends,
supplements or supercedes that section, and (ii) any rules or regulations
promulgated under such section.
"Exercise Price" has the meaning ascribed to it in Section 5(d) of the
Plan.
"Incentive Stock Options" has the meaning ascribed to it in Section 8 of
the Plan.
"Market Value" means, with respect to a share of Common Stock on a
particular date, the average of the highest and lowest quoted selling prices on
the particular date. If there are no sales on that date, the Market Value shall
be the weighted average of the mean between the highest and lowest quoted
selling prices on the nearest date before and the nearest date after that date.
Such average shall be weighted inversely by the respective number of trading
days between the selling dates and the valuation date.
"Offered Shares" has the meaning ascribed to it in Section 7(b) of the
Plan.
"Offering" has the meaning ascribed to it in Section 7 of the Plan.
"Offering Period" has the meaning ascribed to it in Section 7(e) of the
Plan.
"Option Award Date" has the meaning ascribed to it in Section 5(a) of the
Plan.
"Option Award Amount" has the meaning ascribed to it in Section 5(c) of the
Plan.
"Option Awards" has the meaning ascribed to it in Section 5(a) of the Plan.
"Option Determination Date" has the meaning ascribed to it in Section 5(a)
of the Plan.
"Options" has the meaning ascribed to it in Section 5(a) of the Plan.
"Over 60 Participant" has the meaning ascribed to it in Section 6(e) of the
Plan.
"Participant" means each eligible Employee who receives a Benefit or an
award of Benefits under the Plan.
"Phantom Stock Credits" has the meaning ascribed to it in Section 6(e) of
the Plan.
"Plan" has the meaning ascribed to it in Section 1 of the Plan.
"Purchase Price" has the meaning ascribed to it in Section 7(d) of the
Plan.
"Reporting Person" means any person who is an officer or director, within
the meaning of the Exchange Act, and the rules and regulations promulgated
thereunder, of the Company.
"Restricted Period" has the meaning ascribed to it in Section 6(c)(1) of
the Plan.
"Restricted Share Award Amount" has the meaning ascribed to it in
Section 6(b) of the Plan.
"Restricted Share Award Date" has the meaning ascribed to it in Section
6(a) of the Plan.
"Restricted Share Awards" has the meaning ascribed to it in Section 6(a) of
the Plan.
"Restricted Share Determination Date" has the meaning ascribed to it in
Section 6(a) of the Plan.
"Restricted Shares" has the meaning ascribed to it in Section 6(a) of the
Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under Section 16 of the Exchange
Act, or any successor rule thereto.
"Section 423 Options" has the meaning ascribed to it in Section 7(a) of the
Plan.
"Senior Participant" has the meaning ascribed to it in Section 5(f) of the
Plan.
"Stock Purchase Plan Eligible Employee" has the meaning ascribed to it in
Section 7(a) of the Plan.
"Subsidiary" means any corporation, partnership, joint venture or business
trust, control of which is owned, directly or indirectly, by the Company;
provided, for the purpose of any Incentive Stock Options and options granted
pursuant to the Employee Stock Purchase Plan, "Subsidiary" shall have the same
meaning as the term "subsidiary corporation" as defined in Section 424 of the
Code.
"Termination of Employment," whether or not capitalized when used herein,
or any other similar phrase used herein to refer to the employment of an
Employee with the Company being terminated means the Employee ceases to be
employed by the Company whether the cessation of employment is voluntary or
involuntary and regardless of whether the employment of the Employee with the
Company ceases because the Employee quits, is discharged, retires, is disabled
or dies.
"Termination for Aggravated Cause" means a Termination of Employment
(whether voluntary or involuntary) because any of the following acts or events
have occurred: any action or failure to act by a Participant that results in or
is likely to result in detriment to the Company or any of its Subsidiaries,
employees or customers; violation of any securities law; dishonesty whether or
not resulting in a direct or indirect monetary loss; insubordination;
drunkenness; use of harmful drugs; willful destruction of property; provocation
or continuous agitation of the Company's or any Subsidiary's customers or
employees; or conviction of a felony or a misdemeanor.
"Vesting Period" has the meaning ascribed to it in Section 5(d) of the
Plan.
3. ADMINISTRATION.
(a) Appointment. The Plan shall be administered by the Board of Directors
of the Company or by one or more committees the members of which need not be
members of the Board of Directors (collectively, the "Administrator") appointed
by the Board of Directors. Such a committee may be appointed by designating
another committee, such as the Compensation Committee of A.G. Edwards & Sons,
Inc., to serve as Administrator. All of the duties of the Administrator may be
assigned to one committee or, if the Board of Directors appoints more than one
committee to serve as Administrator, the Board of Directors may allocate the
specific duties of the Administrator among such committees. A particular
committee to whom a specific duty is so allocated shall have the sole
responsibility and authority for carrying out such duty. A committee shall
continue to serve in its appointed role until its role is terminated or changed
by the Board of Directors.
(b) Duties. Subject to the provisions of the Plan, the Administrator
shall have exclusive authority to interpret and administer the Plan (including,
without limitation, developing or approving forms to implement all or any part
of the Plan), to delegate its authority and duties under the Plan, and to take
all such steps and make all such rules or determinations in connection with the
Plan and any of the Benefits provided by the Plan as it may deem necessary or
advisable (including, without limitation, rules relating to any tax withholding
requirements, designation of beneficiaries, ownership of shares in joint names
and restoration of awards for rehired Participants); provided, however, the
Administrator shall not have the authority to change the amount, price or timing
of any Benefits awarded by the terms of any formula contained in the Plan;
provided, further, with respect to the forfeiture of any Benefits, only a
Disinterested Administrator may make a determination that a Reporting Person has
incurred a Termination for Aggravated Cause.
4. ELIGIBILITY.
"Eligible Employee" shall include any individual who is an Employee of the
Company or a Subsidiary at the time Benefits under the Plan are awarded and who
(i) is a non-Reporting Person who satisfies the eligibility requirements
established by the Administrator, from time to time, taking into account such
factors as the Administrator may consider relevant (which may include, but need
not include, the nature of services rendered by the Employee or the capacity of
the Employee to contribute to the success of the Company), or (ii) is a
Reporting Person who is a participant in the "Corporate Executive Bonus Plan" as
of October 1, and as of the last day, of the fiscal year of the Company for
which the Benefits are awarded.
For the purposes of this Section 4 and Section 5: (i) "Corporate Executive
Bonus Plan" means the compensation plan by such name together with the
Performance Plan for Executives each as adopted by the Company or a subsidiary
of the Company, and shall continue to refer to such plans even if the name or
terms of such plans are changed in the future, whereby officers of the Company
and Subsidiaries who are not otherwise eligible for or who do not otherwise
receive variable compensation or bonuses participate in a defined bonus pool,
and (ii) "Corporate Executive Bonus" means a bonus received by an Eligible
Employee from the Corporate Executive Bonus Plan. The terms and conditions
relating to the Corporate Executive Bonus Plan with respect to Reporting
Persons, including, without limitation, the requisite qualifications for
Employees who are Reporting Persons, shall not be changed more frequently than
is permitted for a change in the amount, price or timing of any Benefits awarded
by the terms of any formula contained in the Plan, and any such change shall be
deemed to be a change and amendment to the Plan.
5. STOCK OPTIONS.
(a) Grant and Time of Award. Subject to each Eligible Employee's election
under Section 5(c), options ("Options") shall be granted to Eligible Employees
to purchase shares of Common Stock from the Company on the terms specified
herein. Options shall be in the form of "Nonqualified Stock Options," which are
not intended to qualify as incentive stock options within the meaning of
Section 422A of the Code. Awards of Options ("Option Awards") shall be made for
each fiscal year of the Company during the term of the Plan as of the last day
of each such fiscal year (an "Option Award Date"). The amount of the Option
Awards on a specific Option Award Date shall be determined in accordance with
Sections 5(b) and (c) as soon as administratively practical after the end of
each such fiscal year (an "Option Determination Date").
(b) Amount of Award. The total amount of the award (the "Award Amount")
for both Options and Restricted Shares (as hereinafter defined) to which an
Eligible Employee is entitled for any specific fiscal year of the Company shall
be equal to: (i) 25% of such Eligible Employee's Corporate Executive Bonus for
such fiscal year if such Eligible Employee is a Reporting Person or (ii) such
amount as may be determined by the Administrator if such Eligible Employee is a
non-Reporting Person. The Award Amount hereunder to an Eligible Employee is for
services rendered by the Eligible Employee during the fiscal year of the Company
on which such Award Amount is based. In no event shall the Award Amount for any
specific Eligible Employee in any given fiscal year of the Company beginning on
or after March 1, 1995 exceed $100,000. If an Eligible Employee (who is a
Reporting Person) does not receive a Corporate Executive Bonus for any specific
fiscal year of the Company for which awards of Benefits are to be made, he will
not be entitled to an award of Options or Restricted Shares for that fiscal
year.
(c) Election of Awards. An Eligible Employee may elect to receive his
Award Amount in any specific fiscal year of the Company as (i) 100% Restricted
Shares; (ii) 50% Restricted Shares and 50% Options, or (iii) 100% Options. An
Eligible Employee's Award Amount in any specific fiscal year of the Company will
automatically be divided 50% Restricted Shares and 50% Options if his election
form is not received within the time period specified by the Administrator. The
portion of any Award Amount elected, or deemed elected, by an Eligible Employee
to be received as Options is hereafter referred to as an "Option Award Amount."
The number of shares of Common Stock subject to Options awarded to a
Participant for a specific fiscal year of the Company shall be determined by
dividing such Participant's Option Award Amount for such fiscal year by the
greater of (a) the Market Value of a share of Common Stock on the applicable
Option Determination Date, or (b) $16 (subject to adjustment as referred to in
Section 10), and multiplying such number by 2.5. All calculations shall be
rounded down to the nearest whole share.
(d) Exercise. Options shall entitle a Participant to purchase shares of
Common Stock at a price (an "Exercise Price") per share equal to the Market
Value of the Common Stock on the applicable Option Determination Date. Options
shall become exercisable three (3) years after the applicable Option Award Date
(a "Vesting Period"), and must be exercised no later than eight (8) years,
unless extended, after the applicable Option Award Date. Any Vesting Period
shall be extended by the length of any leave of absence, except a leave of
absence for medical reasons approved in writing by the Administrator. Options
that are not exercised within eight (8) years (unless extended) after the
applicable Option Award Date will lapse. A Participant may exercise all of his
vested Options in any order and at one time or at different times for less than
the total amount until all of his vested Options have been exercised. A
Participant may exercise his Options only by giving the Administrator written
notice of his intent to exercise his Options. The written notice must be in a
form acceptable by the Administrator. When a Participant exercises an Option,
the applicable Exercise Price is payable to the Company in full in cash;
provided, the Administrator may permit a Participant to pay for all or any part
of the Common Stock purchased on exercise of an Option with shares of Common
Stock (valued at their Market Value on the date of the exercise) already owned
by the Participant or acquired pursuant to the exercise of his Options.
(e) Restrictions.
(1) Assignment. During a Participant's lifetime, Options shall be
exercisable only by the Participant. A Participant cannot transfer or
assign his Options awarded under the Plan other than by will or by the laws
of descent and distribution.
(2) Forfeiture. A Participant will forfeit his unvested Options if
his employment with the Company is terminated for any reason other than
death or Disability on or before the end of any applicable Vesting Period.
A Termination of Employment shall not be deemed to occur if a Participant
merely transfers from the Company to a Subsidiary, from one Subsidiary to
another Subsidiary or from a Subsidiary to the Company.
(3) Termination of Restrictions.
(A) If a Participant's employment is terminated before the end
of any applicable Vesting Period because of death or Disability, his
unvested Options may be exercised by him (or his beneficiary, personal
representative or distributee, as applicable) during a five-year
exercise period beginning as of the date of such Termination of
Employment, but in no event later than the expiration of the
applicable original exercise period.
(B) Any Vesting Period shall end and all unvested Options shall
become exercisable immediately upon a Change in Control.
(4) No Rights as a Stockholder. No person entitled to exercise any
Option granted under the Plan shall have any of the rights or privileges of
a stockholder of the Company with respect to shares issuable upon exercise
of such Option until certificates representing such shares shall have been
issued and delivered to such person.
(f) Awards for Senior Participants. The terms of this Section 5(f) shall
apply to any unvested Options held by a Participant age 57 or older (a "Senior
Participant"). The following percentage of shares subject to any unvested
Option held by a Senior Participant shall not be forfeited (but shall remain
subject to any applicable Vesting Period) merely because such Senior
Participant's employment with the Company is terminated (other than a
Termination for Aggravated Cause):
ATTAINED AGE AT PERCENT
TERMINATION OF EMPLOYMENT NOT FORFEITED
57 but less than 58 25%
58 but less than 59 50%
59 but less than 60 75%
60 and over 100%
Upon a Termination for Aggravated Cause, a Senior Participant shall forfeit
all unvested Options. A Senior Participant who engages in Competition with the
Company within any Vesting Period shall forfeit his unvested Options at the time
such Competition with the Company commences. All of the Options of a Senior
Participant shall become fully vested immediately upon a Change in Control. Any
restrictions, terms or conditions in this Section 5 applicable to Options
generally shall apply to a Senior Participant's Options to the extent they are
not inconsistent with the provisions of this Section 5(f).
6. RESTRICTED SHARES.
(a) Time of Award. "Restricted Shares" are shares of Common Stock that
are subject to certain restrictions on their disposition and to the rights of
the Company to reacquire such shares upon the occurrence of certain events, all
on the terms specified in the Plan. Subject to an Eligible Employee's election
under Section 5(c), Restricted Shares shall be awarded to Eligible Employees on
the terms specified herein. Awards of Restricted Shares ("Restricted Share
Awards") shall be made for each fiscal year of the Company during the term of
the Plan as of the last day of each such fiscal year (a "Restricted Share Award
Date"). The amounts of the Restricted Share Awards shall be determined in
accordance with Section 6(b) as soon as administratively practical after the end
of each such fiscal year (a "Restricted Share Determination Date").
(b) Amount of Award. The portion of an Award Amount in any specific
fiscal year that is available for Restricted Shares (a "Restricted Share Award
Amount") shall be equal to such Award Amount less any Option Award Amount
elected, or deemed elected, pursuant to Section 5(c) with respect to such Award
Amount. The number of Restricted Shares awarded to a Participant for any
specific fiscal year of the Company is determined by dividing the Participant's
Restricted Share Award Amount for such fiscal year by the greater of (a) the
Market Value of the Common Stock on the applicable Restricted Share
Determination Date and (b) $16 (subject to adjustment as referred to in
Section 10). All calculations shall be rounded down to the nearest whole share.
(c) Restrictions.
(1) Restricted Period. Restricted Shares shall be subject to the
restrictions described herein for three (3) years from their applicable
Restricted Share Award Date (a "Restricted Period"). Any Restricted Period
shall be extended by the length of any leave of absence, except a leave of
absence for medical reasons approved in writing by the Administrator.
During any Restricted Period, a Participant will have the entire
beneficial ownership and the right to vote his Restricted Shares and
receive any dividends thereon; provided, however, a Participant may not
sell, transfer, pledge or otherwise dispose of or encumber his Restricted
Shares (other than by will or by the laws of descent and distribution)
during any applicable Restricted Period. A Participant shall not be
entitled to delivery of a certificate representing shares of Common Stock
until the expiration of the Restricted Period applicable to such shares as
Restricted Shares.
(2) Forfeiture. A Participant will forfeit his Restricted Shares if
his employment with the Company is terminated for any reason other than
death or Disability within any Restricted Period. A termination of
employment shall not be deemed to occur if a Participant merely transfers
from the Company to a Subsidiary, from one Subsidiary to another Subsidiary
or from a Subsidiary to the Company.
(3) Termination of Restrictions.
(A) If a Participant's employment with the Company is terminated
during any Restricted Period because of death or Disability, the
restrictions on his Restricted Shares will end and he (or his
beneficiary, personal representative or distributee, as applicable)
will be entitled to receive and retain his Restricted Shares.
(B) A Restricted Period shall end, and Participants shall have a
nonforfeitable right to their Restricted Shares, immediately upon a
Change in Control.
(d) Awards for Senior Participants. The terms of this Section 6(d) shall
apply to any Restricted Shares held by a Senior Participant, except as may be
provided in Section 6(e). A percentage of any Restricted Shares held by a
Senior Participant shall not be forfeited (but shall remain subject to their
restrictions during any applicable Restricted Period) merely because such Senior
Participant's employment with the Company is terminated (other than a
Termination for Aggravated Cause). Such percentage shall be determined in the
same manner as for Options pursuant to Section 5(f). Upon a Termination for
Aggravated Cause, a Senior Participant shall forfeit all of his Restricted
Shares still subject to a Restricted Period at the time of termination. A
Senior Participant who engages in Competition with the Company during any
Restricted Period shall forfeit all of his Restricted Shares subject to a
Restricted Period at the time such Competition with the Company commences. A
Restricted Period applicable to a Senior Participant's Restricted Shares shall
end upon a Change in Control. Any restrictions, terms or conditions in this
Section 6 applicable to Restricted Shares generally shall apply to a Senior
Participant's Restricted Shares to the extent they are not inconsistent with the
provisions of this Section 6(d).
(e) Phantom Stock Credits. An Eligible Employee who is 60 years of age or
older (an "Over 60 Participant") on any Restricted Share Award Date, and who
elects to receive Restricted Shares as all or part of his award, shall not be
awarded Restricted Shares on that date. Instead, such an Over 60 Participant
shall be awarded "Phantom Stock Credits" which will serve as the basis for an
award of Restricted Shares two years after such a Restricted Share Award Date (a
"Deferred Award Date"), with each Phantom Stock Credit representing the right to
receive one share of Restricted Stock. An account shall be established for each
Over 60 Participant to show the number of Phantom Stock Credits allocated to
him. The award of Phantom Stock Credits allocated to such an account for any
specific fiscal year of the Company shall be in an amount that will entitle such
Over 60 Participant to the number of Restricted Shares to which such Over 60
Participant would have been entitled to receive under the applicable award
formula if such Over 60 Participant had been younger than 60 years of age on the
applicable Restricted Share Award Date.
The number of Phantom Stock Credits in an Over 60 Participant's account
shall be adjusted to reflect dividends on the Common Stock on each dividend
record date after the applicable Restricted Share Determination Date. The
number of additional Phantom Stock Credits allocated to an Over 60 Participant's
account for a cash dividend shall equal the total amount of each such dividend
imputed to such Over 60 Participant (the per share dividend multiplied by the
number of Phantom Stock Credits in such Over 60 Participant's account before
such increase) divided by the Market Value of the Common Stock on the record
date of the dividend. The number of additional Phantom Stock Credits allocated
to an Over 60 Participant's account for a stock dividend shall equal the number
of additional shares of Common Stock to which such Over 60 Participant would
have been entitled if he had been the holder of a number of shares of Common
Stock equal in number to the number of Phantom Stock Credits allocated to his
account as of that dividend record date before such increase. The number of
Phantom Stock Credits allocated to an Over 60 Participant's account instead of
dividends will be added to the total number of such Over 60 Participant's
Phantom Stock Credits for calculating future amounts to be allocated in lieu of
dividends.
Over 60 Participants cannot transfer or assign their Phantom Stock Credits
awarded under the Plan other than by will or by the laws of descent and
distribution. If an Over 60 Participant's employment is terminated (other than
a Termination for Aggravated Cause), he shall not forfeit the right to an award
of Restricted Shares on any Deferred Award Date, nor shall he forfeit Restricted
Shares awarded on any Deferred Award Date, merely because of such a termination.
If an Over 60 Participant's employment is terminated before any Deferred Award
Date because of death or Disability, such Over 60 Participant (or his
beneficiary, personal representative or distributee, as applicable) shall be
entitled to receive at the time of such termination a stock certificate for the
whole number of shares of Common Stock equal to the number of Phantom Stock
Credits then credited to his account (rounded down to the nearest whole number
of shares). Any Deferred Award Date shall occur and any applicable Restricted
Period for Restricted Shares awarded shall end immediately upon a Change in
Control.
If an Over 60 Participant's termination is a Termination for Aggravated
Cause, he shall forfeit the right to an award of Restricted Shares based on any
Phantom Stock Credits attributable to his account and shall forfeit all shares
of Restricted Shares still subject to a Restricted Period at the time of his
Termination for Aggravated Cause. An Over 60 Participant who engages in
Competition with the Company before any Deferred Award Date or the end of any
Restricted Period shall forfeit his Phantom Stock Credits and Restricted Shares.
As of any specific Deferred Award Date, each Over 60 Participant shall be
awarded that number of shares of Restricted Shares equal to the number of
Phantom Stock Credits (rounded down to the nearest whole share) then credited to
his account for the applicable award year. Restricted Shares awarded as of any
Deferred Award Date shall be subject to all of the previously described terms
and restrictions applicable to Restricted Shares, to the extent they are not
inconsistent with the provisions of this Section 6(e), except that any
applicable Restricted Period shall be for only nine months unless extended
during a leave of absence. Over 60 Participants have no rights as stockholders
with respect to their Phantom Stock Credits until their Restricted Shares are
awarded.
7. EMPLOYEE STOCK PURCHASE PLAN.
Solely for purposes of the Code, this Section 7 shall be treated as a
separate plan and referred to as the A.G. Edwards, Inc. Employee Stock Purchase
Plan ("Employee Stock Purchase Plan"). Notwithstanding anything to the contrary
in the Plan, the following provisions shall apply to any options ("Section 423
Options") to purchase Common Stock awarded Participants ("Offering") in
accordance with this Section 7:
(a) Eligibility. Section 423 Options awarded in accordance with the
Employee Stock Purchase Plan shall be granted only to Employees. To be eligible
for an award of Section 423 Options in any specific Offering, an Employee (a
"Stock Purchase Plan Eligible Employee") must: (i) be a full-time Employee or
part-time salaried Employee on October 1 and on the Date of Grant (as
hereinafter defined) for such Offering and (ii) have one year of employment with
the Company or a Subsidiary or one year of experience in the securities industry
during the 10 years preceding the Date of Grant for such Offering. Securities
industry experience shall include such experience as may be determined by the
Administrator.
Irrespective of any other provision of the Plan or the Employee Stock
Purchase Plan, no Section 423 Option may be granted to an Employee who owns
stock possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or a Subsidiary as determined in accordance with
Section 423(b)(3) of the Code; and no Section 423 Option may be granted to any
Employee if such option permits the Employee's rights to purchase stock under
all employee stock purchase plans (as defined in Section 423 of the Code) of the
Company or any Subsidiary to accrue at a rate that exceeds Twenty-Five Thousand
Dollars ($25,000.00) of Market Value of such stock (determined at the time the
Section 423 Option is granted) for each calendar year in which such option is
outstanding at any time.
(b) Timing of Offerings. An Offering shall be made for each fiscal year
of the Company during the term of the Plan as of the first Business Day in
October of each such fiscal year. The total number of shares offered ("Offered
Shares") to all Stock Purchase Plan Eligible Employees in any specific Offering
shall be determined by the Administrator. Subject to a Stock Purchase Plan
Eligible Employee's election to participate in an Offering pursuant to
Section 7(e), Section 423 Options shall be granted to each individual who is a
Stock Purchase Plan Eligible Employee on the Date of Grant of any Offering. For
purposes of this Section 7, "Date of Grant" shall have the same meaning as set
forth in Treasury Regulation 1.421-7(c).
(c) Amount of Shares Purchasable. Section 423 Options granted to a
Participant in connection with any specific Offering shall entitle such
Participant to purchase individually at the end of the applicable Offering
Period (as hereinafter defined) his proportionate share of the Offered Shares
for such Offering, based on the percentage that his individual contributions
represent of the total contributions of all Stock Purchase Plan Eligible
Employees with respect to such Offering; provided, however, a Stock Purchase
Plan Eligible Employee may not purchase more than $25,000 worth of Common Stock
as provided in Section 7(a).
Only full shares of Common Stock may be purchased, and no fractional shares
will be issued; provided, any amounts not used to purchase Common Stock shall be
refunded on terms established by the Administrator. If any Offering is
oversubscribed, any amount received from any Participant that is not used to
purchase Common Stock shall be refunded on terms established by the
Administrator. No Section 423 Option awarded in accordance with the terms of
the Employee Stock Purchase Plan shall be transferable otherwise than by will or
by the laws of descent and distribution, and shall be exercisable only by the
Participant to whom it is granted or by a transferee as permitted herein.
(d) Purchase Price. The price ("Purchase Price") per share at which
Participants can purchase Common Stock pursuant to their Section 423 Options
granted with respect to any specific Offering shall be the lesser of the
following two amounts: (1) the greater of (A) 85% of the Market Value of the
Common Stock on the applicable Date of Grant, or (B) 85% of the average of the
Market Values of the Common Stock on the first Business Day of each month for
thirteen (13) consecutive months from and including the month of the applicable
Date of Grant; and (2) 85% of the Market Value on the first Business Day in
October of the next year after the applicable Date of Grant.
(e) Participation and Contributions. To participate in any specific
Offering, a Stock Purchase Plan Eligible Employee must elect to contribute
between 1% and 10% of his total cash compensation (based on salary, commission,
bonus and overtime) paid during the period from the applicable Date of Grant
until the first Business Day in October of the next year after such date (an
"Offering Period").
During any Offering Period, a Participant may not increase or decease his
contributions; provided, he may stop future contributions for the remainder of
such Offering Period and either use amounts contributed up to that date to
purchase Common Stock at the end of the Offering Period, or request a refund of
the total amount contributed during such Offering Period. A Participant may
request a refund of all, but not less than all, of his contributions prior to
the end of any specific Offering Period, in which case he would cease to be a
Participant in that Offering. If a Participant's employment is terminated prior
to the end of a specific Offering Period, he will not be able to continue
participation in that Offering, and contributions with respect to that Offering
will be automatically refunded.
The Administrator may establish and adopt uniform rules and forms relating
to how and when elections, contributions, withdrawals and refunds may be made by
or paid to Participants. All employees granted Section 423 Options under the
Employee Stock Purchase Plan shall have the same rights and privileges as
required by Section 423(b)(5) of the Code.
(f) Purchase of Stock. Common Stock shall be purchased automatically for
Participants using their accumulated contributions to the maximum possible
extent at the end of any specific Offering Period. Participants must be
Employees at the end of a specific Offering Period to purchase Common Stock in
the Offering.
(g) Reporting Person Restrictions and Limitations. Notwithstanding any
provision contained in this Section 7 to the contrary, the terms of this Section
7(g) shall apply to any Section 423 Options granted to any Reporting Person.
(1) Refunds. If a Reporting Person who is a Participant in the
Employee Stock Purchase Plan requests a refund pursuant to Section 7(e),
such Participant must cease further purchases in the Employee Stock
Purchase Plan for six (6) months, or the Common Stock so distributed must
be held by such Participant six (6) months prior to disposition, unless
otherwise permitted under Rule 16b-3(d)(2)(i)(B).
(2) Termination of Participation. If a Reporting Person who is a
Participant in the Employee Stock Purchase Plan ceases participation in the
Employee Stock Purchase Plan, such Participant may not participate again
for at least six (6) months.
8. OTHER BENEFITS.
A Disinterested Administrator may award Common Stock or the right to
acquire Common Stock to any Employee upon such terms and conditions as such
Disinterested Administrator in its discretion shall determine. Such awards may
consist of any single Benefit, or a combination of the Benefits, described in
the preceding sections (in addition to the award of any such Benefits pursuant
to the terms, conditions and formulae contained in such preceding sections), or
any other right to acquire Common Stock (including, without limitation, options
granted in the form of "Incentive Stock Options" which are intended to qualify
as incentive stock options within the meaning of Section 422A of the Code or
stock appreciation rights), and may be subject to any conditions such
Disinterested Administrator may prescribe, such as a right of first refusal by
the Company to repurchase the shares; provided, however, that any Benefit
awarded in accordance with the provisions of the Plan which grants the right to
purchase shares of Common Stock, except any Benefit which is subject to
restrictions that in the aggregate would amount to a substantial risk of forfei
ture for purposes of Section 83 of the Code, shall require that the price at
which the Participant may purchase such shares shall be at least 85% of the
Market Value of such shares as determined by such Disinterested Administrator at
the time such benefit is awarded.
The Administrator may make any type of awards that can be made by a
Disinterested Administrator; provided, unless the Plan is amended as provided
below, such awards are made only to Employees who are not Reporting Persons.
The Board of Directors may amend the Plan, from time to time as provided or
limited herein, (i) to change any terms, conditions or formulae pursuant to
which an award of Benefits as described in the preceding sections may be awarded
(either increasing or decreasing the amount of such awards); provided, such
changes comply with Rule 16b-3 and/or (ii) to provide terms, conditions and a
formula (complying with Rule 16b-3) pursuant to which any right to acquire
Common Stock (including, without limitation, Incentive Stock Options and stock
appreciation rights) may be awarded, in addition to the Benefits described in
the preceding sections. If any such amendments are made, the awards of Benefits
authorized by such amendments may be administered by the Administrator.
9. SHARES SUBJECT TO PLAN.
Subject to the provisions of Section 10 (relating to adjustment for changes
in capital stock), the maximum number of shares that may be issued under the
Plan (including shares to be issued under the Employee Stock Purchase Plan)
shall not exceed in the aggregate twenty-six million three hundred twenty-eight
thousand one hundred and twenty-five (26,328,125) shares of Common Stock of the
Company. Such shares may be unissued shares or treasury shares.
If there is a lapse, expiration, termination or cancellation of any Benefit
without the issuance of shares, or if shares are issued in connection with any
Benefit and later are reacquired by the Company pursuant to rights reserved on
issuance, the shares subject to or reserved for such Benefit may again be used
in connection with the grant of any of the Benefits described in this Plan;
provided, that in no event may the number of shares of Common Stock issued under
this Plan exceed twenty-six million three hundred twenty-eight thousand one
hundred and twenty-five (26,328,125), subject to adjustment as described in
Section 10.
10. ADJUSTMENT UPON CHANGES IN STOCK.
If any change is made in the shares of Common Stock of the Company by
reason of any merger, consolidation, reorganization, recapitalization, stock
dividend, split up, combination of shares, exchange of shares, change in
corporate structure, or otherwise, appropriate adjustments shall be made by the
Administrator to: (i) the kind and maximum number of shares subject to the
Plan, (ii) the kind and number of shares and price per share of stock subject to
each outstanding Benefit, (iii) the number of Offered Shares referred to in
Section 7(b) and (iv) any other amount herein which is so indicated. Any
increase in the shares, or the right to acquire shares, as the result of such an
adjustment shall be subject to the same terms and conditions that apply to the
Benefit for which such increase was received. No fractional shares of Common
Stock shall be issued under the Plan on account of any such adjustment, and
rights to shares always shall be limited after such an adjustment to the lower
full share.
11. AMENDMENT OF THE PLAN.
Except as provided below, the Board of Directors of the Company may at any
time amend the Plan (including the provisions of the Employee Stock Purchase
Plan); provided, the Board may not, without approval (within twelve months
before or after the date of such change) of such number of the stockholders as
may be required by either federal income tax or securities law for any
particular amendment: (a) increase the maximum number of shares of Common Stock
in the aggregate which may be issued under the Plan, except as may be permitted
under the adjustment provisions of Section 10, or (b) adopt any other amendment
for which shareholder approval is required by federal income tax or securities
laws. The Board of Directors may not alter or impair any Benefit previously
granted under the Plan without the consent of the person to whom the Benefit was
granted.
If required to qualify the Plan under Rule 16b-3, no amendment to the Plan
shall be made more than once every six months that would change the amount,
price or timing of any Benefits awarded by the terms of any formula contained in
the Plan, other than to comport with changes in the Code, the Employment
Retirement Income Security Act of 1974 (as amended), or the rules thereunder.
12. TERMINATION OF THE PLAN.
The Plan shall continue in force until it is terminated by the Board of
Directors. The Board of Directors may terminate or suspend the Plan (including
the Employee Stock Purchase Plan) at any time. No Benefit shall be awarded
after termination of the Plan. Rights and obligations under a Benefit awarded
while the Plan is in effect shall not be altered or impaired by termination or
suspension of the Plan except by consent of the person to whom the Benefit was
awarded.
13. WITHHOLDING TAX.
The Company shall have the right to withhold with respect to any payments
made to Participants under the Plan any taxes required by law to be withheld
because of such payments.
14. RULES OF CONSTRUCTION.
The terms of the Plan shall be construed in accordance with the laws of the
State of Missouri; provided, that the terms of the Plan as they relate to
Incentive Stock Options shall be construed first in accordance with the meaning
under and in a manner that will result in the Plan satisfying the requirements
of the provisions of the Code governing incentive stock options; provided,
further, that the terms of Section 7 of the Plan shall be construed first in
accordance with the meaning under, and in a manner that will result in the
Employee Stock Purchase Plan satisfying the requirements of, the Code governing
such plans. The Plan is intended to qualify under Rule 16b-3 and shall be
interpreted and administered in a manner consistent with such intention. Unless
otherwise expressly provided, any calculation required by any provision of the
Plan shall be rounded down to the nearest whole number. Any word contained in
the text of the Plan shall be read in the singular or plural or as masculine,
feminine or neuter as may be applicable or permissible in the particular
context.
15. NONTRANSFERABILITY.
Each Option or similar right (including a Stock Appreciation Right) granted
under this Plan shall not be transferable other than by will or by the laws of
descent and distribution, and shall be exercisable during the holder's lifetime
only by the holder or the holder's guardian or legal representative.
16. EFFECTIVE DATE.
The Plan originally became effective as of April 21, 1988. The Plan as
currently revised and restated shall become effective on the date stated on the
first page hereof.
CERTIFICATION
The undersigned hereby certifies that the foregoing A.G. Edwards, Inc. 1988
Incentive Stock Plan (as amended and restated) is restated in a form that
reflects separate amendments thereto duly adopted by the Board of Directors of
A.G. Edwards, Inc. on February 24, 1995, and by the stockholders of A.G.
Edwards, Inc. on June 22, 1995.
IN WITNESS WHEREOF, the undersigned has executed this Certification this
5th day of July, 1995.
/s/ Douglas L. Kelly
Douglas L. Kelly, Secretary
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRATED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE
THREE MONTH PERIOD ENDED MAY 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-31-1995
<CASH> 49,397
<RECEIVABLES> 1,340,254
<SECURITIES-RESALE> 24,761
<SECURITIES-BORROWED> 390,945
<INSTRUMENTS-OWNED> 182,029
<PP&E> 169,399
<TOTAL-ASSETS> 2,325,584
<SHORT-TERM> 0
<PAYABLES> 776,704
<REPOS-SOLD> 0
<SECURITIES-LOANED> 465,131
<INSTRUMENTS-SOLD> 27,130
<LONG-TERM> 0
<COMMON> 62,364
0
0
<OTHER-SE> 886,253
<TOTAL-LIABILITY-AND-EQUITY> 2,325,584
<TRADING-REVENUE> 56,875
<INTEREST-DIVIDENDS> 32,566
<COMMISSIONS> 166,337
<INVESTMENT-BANKING-REVENUES> 25,326
<FEE-REVENUE> 32,180
<INTEREST-EXPENSE> 1,409
<COMPENSATION> 207,395
<INCOME-PRETAX> 57,213
<INCOME-PRE-EXTRAORDINARY> 57,213
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,373
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
