<PAGE> 1
Exhibit 10.1
UNITED ASSET MANAGEMENT CORPORATION
SECOND AMENDED AND RESTATED 1994 STOCK OPTION PLAN
PREAMBLE
The plan (the "Plan") comprises three subplans: Subplan A covers options to
be granted to any key employees, including officers, and any non-employees
(other than directors) who provide important services to United Asset Management
Corporation, a Delaware corporation ("UAM") or any of its subsidiaries or
parents. Subplan B covers options to be granted to employees of UAM or of its
subsidiaries who are subject to the income tax laws of the United Kingdom, to
the extent that such options can be granted with favorable income tax treatment
under such United Kingdom laws. Subplan C covers options to be granted to
non-employee directors of UAM.
Subject to the adjustments provided in the Plan, the aggregate number of
shares of Common Stock of UAM which may be issued and sold pursuant to incentive
stock options (as defined below) granted under Subplan A or Options (as defined
below) granted under Subplan B of the Plan shall not exceed 16,900,000 shares of
Common Stock (as defined below), which may be either authorized but unissued
shares or treasury shares.(1) Except as provided below, the aggregate number of
shares of Common Stock which may be issued and sold pursuant to non-incentive
stock options (as defined below) granted under Subplan A or Subplan C of the
Plan shall not exceed the number of shares specified in the preceding sentence
(subject to the adjustments provided in the Plan), less (1) the number of shares
issued pursuant to Subplan A incentive stock options and Subplan B Options and
(2) the number of shares underlying outstanding Subplan A incentive stock
options and Subplan B Options. Notwithstanding the foregoing, additional shares
of Common Stock may be issued and sold pursuant to non-incentive stock options
granted under Subplan A or Subplan C in amounts up to the number of additional
shares reserved for such purpose from time to time under one or more written
resolutions adopted by the Committee (as defined below). The additional shares
of Common Stock that the Committee may reserve for non-incentive stock options
pursuant to the preceding sentence shall meet the following requirements: (1)
all such additional shares must have been reacquired by UAM for not more than
their fair market value at the time of reacquisition and (2) as of the date of
the Committee's resolution to reserve the additional shares, the cumulative
amount received in cash by UAM upon the exercise of options granted under the
Plan since its adoption in 1994 shall not be less than the aggregate amount paid
for the reacquired shares that are included in such resolution or in any prior
resolution to reserve additional shares. If any option granted under the Plan
shall terminate or expire without being fully exercised, the shares which have
not been purchased will again become available for purposes of the Plan. Any
shares surrendered to UAM or withheld by UAM as payment upon the exercise of an
option granted under the Plan or
--------
(1) Of these 16,900,000 total shares, 6,400,000 were originally reserved under
the Plan by action of the shareholders in 1994, 5,500,000 were reserved under
the amended and restated Plan by action of the shareholders in 1997 and
5,000,000 have been reserved under the Second Amended and Restated Plan by
action of the shareholders in 2000.
<PAGE> 2
to cover any required tax withholding with respect to any such option will
become or remain available for purposes of the Plan.
SUBPLAN A--U.S. SUBPLAN PORTION OF THE
SECOND AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE OF SUBPLAN A
The purpose of this Subplan A is to encourage key employees, including
officers, of UAM and any present or future subsidiary and parent of UAM
(hereinafter collectively referred to as the "Company") as well as non-employees
(other than directors of UAM) who provide important services to the Company to
acquire shares of common stock of UAM, $.01 par value per share (the "Common
Stock"), and thereby increase their proprietary interest in the Company's
success and provide an added incentive to remain in the employ of the Company.
For purposes of this Subplan A, the words parent and subsidiary shall be
interpreted in accordance with Section 422 and Section 424 of the Internal
Revenue Code of 1986, as from time to time amended (the "Code"). It is intended
that options granted under this Subplan A shall constitute either "incentive
stock options" within the meaning of Section 422 of the Code, or "non-incentive
stock options," as determined by the Committee named in Section 3 of this
Subplan in its sole discretion and indicated on each form of option grant (the
"Option Grant"), and the terms of this Subplan and the Option Grants shall be
construed accordingly.
2. SHARES RESERVED UNDER SUBPLAN A
Subject to the adjustment provided in Section 9, the aggregate number of
shares of Common Stock which may be issued and sold pursuant to options granted
under this Subplan A of the Plan shall be determined in accordance with the
Preamble above.
3. ADMINISTRATION
Except to the extent otherwise provided in Subplan B, the Plan shall be
administered by a committee (the "Committee") consisting of not less than three
(3) members of the Board of Directors of UAM (the "Board"). Each of the members
of the Committee shall be a person who in the opinion of counsel to the Company
is (i) a "non-employee" as such term is used in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"), and (ii) an "outside
director" as such term is used in Treasury regulation Section 1.162-27(e) (3)
under Section 162(m) of the Code. The Committee shall be appointed by, and shall
serve at the pleasure of, the Board of Directors. A majority of the members
present at any meeting at which a quorum is present, and any acts approved in
writing by all the members of the Committee without a meeting, shall constitute
the acts of the Committee. The Committee shall have the powers granted to it in
Sections 3, 4, 5, 7 and 8 of this Subplan A. The Committee is authorized to
interpret this Subplan A and, subject to the provisions of the Subplan, to
prescribe, amend, and rescind rules and regulations relating thereto. The
Committee is further authorized, subject to the express provisions of this
Subplan A, to alter or amend the form of Option Grant attached hereto as Exhibit
A and to make all other determinations necessary or advisable in the
administration of
2
<PAGE> 3
the Subplan. The interpretation and administration by the Committee of any
provisions of this Subplan A and the Option Grant shall be final and conclusive
on all persons having any interest therein.
Notwithstanding any other provision of this Plan, if the Committee
determines that a person to whom an option may be granted under this Subplan A
will neither be a "covered employee" within the meaning of Section 162(m) of the
Code nor an employee subject to the short-swing profits rules of Section 16(b)
of the Act at any time from the date of grant until the end of the term of any
option which could be granted under this Subplan A at the time of such
determination, such options may be granted to such person by a committee
consisting of any number of members of the Board, any or all of whom would not
then be eligible to serve on the Committee. With respect to all options referred
to in this paragraph, the committee referred to in this paragraph shall have all
powers otherwise granted to the Committee in Sections 3, 4, 5, 7 and 8 of this
Subplan A, but the committee referred to in this paragraph shall not otherwise
administer this Subplan A.
No members of the Committee or of any committee referred to in the
preceding paragraph or of the Board shall be held liable for any action or
determination made in good faith with respect to the Plan, this Subplan A, or
any option granted hereunder.
4. OPTION GRANTS
Options to purchase shares of Common Stock under this Subplan A may be
granted to key employees (including officers and directors who are employees) of
the Company and to non-employees who provide important services to the Company.
The term "Employee" will include, for purposes of this Subplan A key employees
as well as such non-employees who provide important services to the Company. In
selecting the Employees to whom options will be granted and in deciding how many
shares of Common Stock will be subject to each option, the Committee shall give
consideration to the importance of an Employee's duties, to his experience with
the Company, to his future value to the Company, to his present and potential
contribution to the success of the Company, and to such other factors as the
Committee may deem relevant. Subject to the express provisions of the Plan and
the form of Option Grant incorporated herein by reference as from time to time
altered or amended, the Committee shall have authority to determine with respect
to each Option Grant the number of installments, the number of shares of Common
Stock in each installment, and the exercise dates, and, to the extent not
inconsistent with the applicable provisions of the Code, if any, may specify
additional restrictions and conditions for any Option Grant. Each incentive
stock option shall expire not later than ten years from the date of the grant of
such option.
Except as provided in Section 7 of this Subplan A, no incentive stock
option may be granted to any Employee who, at the time such option is granted
owns stock possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company within the meaning of Section 422 of the
Code. Non-employees who provide services to the Company shall not be eligible to
receive incentive stock options under the Plan.
The date of grant of an option under this Subplan A shall be the date the
Committee votes to grant the option, but no optionee shall have the right to
exercise his option until the Company
3
<PAGE> 4
has executed and delivered the Option Grant to such optionee. Each option
granted under this Subplan A shall be evidenced by and subject to the terms and
conditions of the Option Grant which is incorporated into the Plan by reference
as from time to time altered or amended.
No incentive stock option may be transferred by the optionee, other than by
will or the laws of descent and distribution. An incentive stock option can be
exercised during such individual's life only by him. Notwithstanding the
foregoing, the Committee may grant non-incentive stock options under this
Subplan A or under Subplan C that are transferable (subject to any terms and
conditions imposed by the Committee) by the optionee, either directly or in
trust, to one or more members of the optionee's family. Following any transfer
permitted pursuant to this paragraph, of which the optionee has notified the
Committee in writing, such option may be exercised by the transferee(s), subject
to all terms and conditions of the Option Grant. For these purposes, the members
of the optionee's family are only the optionee's: (i) spouse; (ii) lineal
descendants; (iii) lineal ancestors; and (iv) siblings and spouses and children
of such siblings.
5. OPTION PRICE
The price per share at which each option granted under this Subplan A may
be exercised shall be determined by the Committee subject to the provisions of
this Section 5. In the case of an incentive stock option, the exercise price
shall not be less than the fair market value per share on the date of the grant,
as determined by the Committee in accordance with applicable provisions of the
Code then in effect. In the case of a non-incentive stock option, the exercise
price shall not be less than 50% of the fair market value per share on the date
of grant, as so determined. In no event shall the option price per share for any
option under the Plan be less than the par value per share.
6. LIMITATION ON AMOUNT
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by an individual during any calendar year under
all plans of the Company shall not exceed $100,000. To the extent that the
aggregate value of such options (determined in the order in which they were
granted) exceeds such amount, such options shall be treated as non-incentive
stock options.
Subject to all other applicable restrictions in the Plan, the maximum
number of shares with respect to which any options may be granted under the Plan
(including this Subplan A) to any individual during any single calendar year
shall be 6,983,439, which is the number of shares that were available for future
grants of all types of options under the Plan as of February 29, 2000
(1,983,439) plus the total number of additional shares that became available for
future grants of all types of options (5,000,000) upon stockholder approval of
this Second Amended and Restated Plan.
4
<PAGE> 5
7. SPECIAL RULE FOR 10 PERCENT SHAREHOLDERS
The Committee may grant incentive stock options under this Subplan A to
Employees who own more than 10 percent of the combined voting stock of the
Company if (i) at the time of the Option Grant the price per share at which the
option may be exercised is at least 110 percent of the fair market value of the
stock subject to the option and (ii) such option is not exercisable after the
expiration of five years from the date such option is granted.
8. NON-INCENTIVE STOCK OPTIONS
Notwithstanding the provisions of Sections 4, 5, 6 and 7 of this Subplan A,
the Committee may grant options which in one or more respects do not meet the
requirements for incentive stock options established by Section 422 of the Code.
The Committee shall indicate on each Option Grant whether an incentive stock
option within the meaning of Section 422 of the Code or a non-incentive stock
option is thereby granted.
Except as otherwise provided in this Subplan A, the Committee, in its sole
discretion, shall establish the terms and conditions for each non-incentive
stock option which it grants. Such terms and conditions may, but need not,
include some or all of the provisions of Sections 4, 5, 6 and 7 of this Subplan
A with respect to incentive stock options. If the Committee grants an option
which in all respects meets the requirements for incentive stock options it may
nonetheless designate such option a non-incentive stock option on the Option
Grant.
9. ADJUSTMENT OF SHARES RESERVED UNDER THE PLAN
The aggregate number and kind of shares reserved under the Plan, the
maximum number of shares as to which options may be granted to any individual
and the option price per share shall be appropriately adjusted by the Board in
the event of any recapitalization, stock split, stock dividend, combination of
shares, or other similar change in the capitalization of the Company, but no
adjustment in the option price shall be made which would reduce the option price
per share to less than the par value per share, and any adjustment in the option
price for options granted under Subplan B of the Plan shall be subject to the
requirements of Rule 5 of Subplan B.
10. DISSOLUTION OR REORGANIZATION
(A) VESTING PROVISIONS
(1) Notwithstanding anything to the contrary in this Subplan A, or in the
Option Grant, an optionee may purchase the full amount of shares of Common Stock
for which options have been granted to such optionee (the "optioned shares") and
for which the options have not been exercised, upon the occurrence of any of the
following events (individually and collectively a "Change of Control" over the
Company):
(a) STOCK TRANSFER OF 20% OR MORE. The acquisition by any individual,
entity or group (within the meaning of Sections 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Act) of 20 percent or more of either (i) the then
outstanding shares of the Common Stock or
5
<PAGE> 6
(ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election
of the directors (the "Outstanding Company Voting Securities");
provided, however, that no change in such beneficial ownership
percentage that results solely from a change in the aggregate number
of outstanding shares of Common Stock or Outstanding Company Voting
Securities shall constitute a Change of Control; provided further,
however, that the following acquisitions shall not constitute a Change
of Control: (A) any acquisition directly from the Company (excluding
an acquisition by virtue of the exercise of a conversion privilege);
(B) any acquisition by the Company or by any corporation controlled by
the Company; (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or (D) any acquisition by any
corporation pursuant to a consolidation or merger, if, following such
consolidation or merger, the conditions described in clauses (i),
(ii), and (iii) of paragraph (c) below are satisfied; or
(b) CHANGE IN INCUMBENT BOARD OF 50% OR MORE. Individuals who, as of
November 19, 1998 (the "Effective Date"), constitute the Board (the
"Incumbent Board") ceasing for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was approved by
a vote or resolution of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(c) MERGER WITHOUT CONTINUITY OF OWNERSHIP IN EXCESS OF 60%. Adoption
by the Board of a resolution approving an agreement of consolidation
of the Company with or merger of the Company into another corporation
or business entity in each case, unless, following such consolidation
or merger, (i) more than 60 percent of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such consolidation or merger and/or the combined voting power of the
then outstanding voting securities of such corporation or business
entity entitled to vote generally in the election of directors (or
other persons having the general power to direct the affairs of such
entity) is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Common Stock and Outstanding
Company Voting Securities immediately prior to such consolidation or
merger in substantially the same proportions as their ownership,
immediately prior to such consolidation or merger, of the Common Stock
and/or Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of
6
<PAGE> 7
the Company or such corporation or other business entity resulting
from such consolidation or merger and any Person beneficially owning,
immediately prior to such consolidation or merger, directly or
indirectly, 35 percent or more of the Common Stock and/or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 35 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such consolidation or merger or the combined voting power of the then
outstanding voting securities of such corporation or business entity
entitled to vote generally in the election of its directors (or other
persons having the general power to direct the affairs of such entity)
and (iii) at least a majority of the members of the board of directors
(or other group of persons having the general power to direct the
affairs of the corporation or other business entity) resulting from
such consolidation or merger were members of the Incumbent Board at
the time of the execution of the initial agreement providing for such
consolidation or merger; provided that any right which shall vest by
reason of the action of the Board pursuant to this paragraph (c) shall
be divested, with respect to any such right not already exercised,
upon (A) the rejection of such agreement of consolidation or merger by
the stockholders of the Company or (B) its abandonment by either party
thereto in accordance with its terms; or
(d) SALE OF ASSETS OR DISSOLUTION. Adoption by the requisite majority
of the whole Board, or by the holders of such majority of stock of the
Company as is required by law or by the Certificate of Incorporation
or By-Laws of the Company as then in effect, of a resolution or
consent authorizing (i) the dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the assets of
the Company, other than to a corporation or other business entity with
respect to which, following such sale or other disposition, (A) more
than 60 percent of, respectively, the then outstanding shares of
common stock of such corporation and/or the combined voting power of
the outstanding voting securities of such corporation or other
business entity entitled to vote generally in the election of
directors (or other persons having the general power to direct the
affairs of such entity) is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportions
as their ownership, immediately prior to such sale or other
disposition, of the Common Stock and/or Outstanding Company Voting
securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or
such corporation or other business entity and any Person beneficially
owning, immediately prior to such sale or other disposition, directly
or indirectly, 35 percent or more of the Common Stock and/or
Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 35 percent or more of,
respectively, the then outstanding shares of common stock of such
corporation and/or the combined voting power of the then outstanding
voting securities of such corporation or other business entity
entitled to vote generally in the election of directors (or other
persons having the general
7
<PAGE> 8
power to direct the affairs of such entity) and (C) at least a
majority of the members of the board of directors (or other group of
persons having the general power to direct the affairs of such
corporation or other entity) were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the
Board providing for such sale or other disposition of assets of the
Company; provided that any right which shall vest by reason of the
action of the Board or the stockholders pursuant to this paragraph (d)
shall be divested, with respect to any such right not already
exercised, upon the abandonment by the Company of such dissolution, or
such sale or other disposition of assets, as the case may be.
(2) Notwithstanding subsection (1) hereof, holder(s) of any unexercised
option(s) that meet the requirements for incentive stock options under Section
422 of the Code (the rights being "ISO Rights," and such holder being an "ISO
Optionee"), may elect at any time to waive the applicability of subsections (1)
hereof to such ISO Optionee's ISO Rights.
(3) Notwithstanding subsections (1) or (2) hereof, after a Change of
Control, and upon adoption of a plan of dissolution, liquidation, merger,
consolidation, or reorganization of the Company (the "Event"), the Board may
decide to terminate each outstanding option granted under this Subplan A. If the
Board so decides, such option(s) shall terminate as of the effective date of the
Event, but the Board shall suspend the exercise of all outstanding options a
reasonable time prior to the Event, giving each optionee not less than fourteen
days' prior written notice of the date of suspension, prior to which an optionee
may purchase in whole or in part the shares available to him as of the date of
receipt of the notice. If the Event is not consummated, the suspension shall be
removed and all options shall continue in full force and effect, subject to the
terms of their respective option grants.
(B) EXPIRED OPTIONS
Nothing herein shall allow the optionee to purchase optioned shares, the
options for which have expired.
11. MANNER OF EXERCISE OF OPTIONS
Provisions describing the terms and conditions of an optionee's exercise of
his options granted under this Plan are included in the form of Option Grant
incorporated herein by reference.
8
<PAGE> 9
12. AMENDMENT AND TERMINATION OF PLAN AND SUBPLAN A
The Board may amend, suspend, or terminate the Plan and/or this Subplan A,
including the form of Option Grant incorporated herein by reference. No such
action, however, may, without approval or ratification by the shareholders,
increase the maximum number of shares reserved under the Plan except as provided
in Section 9 of this Subplan A, Rule 5 of Subplan B, or Section 8 of Subplan C,
alter the class or classes of individuals eligible for options, or make any
other change which, pursuant to the Code or regulations thereunder or Section
16(b) of the Act and the rules and regulations promulgated thereunder, requires
action by the shareholders. No such action may, without the consent of the
holder of the option, alter or impair any option previously granted.
In any event, the Plan shall terminate 10 years from the date of adoption
of the second amended and restated Plan by the Board of Directors, or if
earlier, from the date of its approval by the shareholders. Any shares remaining
under the Plan at the time of termination which are not subject to outstanding
options and any shares which thereafter become available because of the
expiration or termination of an option shall cease to be reserved for purposes
of the Plan.
13. RIGHT TO TERMINATE EMPLOYMENT
Nothing contained herein or in any Option Grant executed pursuant hereto
shall restrict the right of the Company to terminate the employment of any
optionee at any time.
14. DATE OF ADOPTION
The date of adoption of this second amended and restated Plan by the Board
is March 8, 2000.
15. DATE OF APPROVAL
The date of approval of this amended and restated Plan by the shareholders
and the Plan's effective date is May 18, 2000.
9
<PAGE> 10
SUBPLAN B--UK SUBPLAN PORTION OF THE
SECOND AMENDED AND RESTATED 1994 STOCK OPTION PLAN
RULES OF THE UNITED ASSET MANAGEMENT CORPORATION
EMPLOYEE SHARE OPTION SCHEME
1. DEFINITIONS
In this Scheme (hereinafter sometimes referred to as the "UK Subplan"),
unless the context otherwise requires, the following words and expressions
shall have the following meanings:
"Act" the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations
promulgated thereunder
"Adoption Date" the date on which the Scheme is adopted by
the Company
"Associated Company" the meaning given to that term in Section 416
of the U.K. Income and Corporation Taxes Act
1988
"Auditors" the auditors for the time being of the
Company (acting as experts and not as
arbitrators)
"Board" the board of directors of the Company
"Change of Control" the meaning given to that term in Rule 6.1 of
this Scheme
"Code" the U.S. Internal Revenue Code of 1986, as
amended, and regulations promulgated
thereunder
"Committee" the committee established by the Board
pursuant to Rule 10.4
"Company" United Asset Management Corporation
"Control" the meaning given to that word by Section 840
of the U.K. Income and Corporation Taxes Act
1988
"Date of Grant" the date on which an Option is, was or is to
be granted under the Scheme
"Effective Date" 19 November 1998
10
<PAGE> 11
"Eligible Employee" any employee of any Participating Company who
is subject to the income tax laws of the
United Kingdom and who is normally required
to devote to his duties not less than 20
hours per week (excluding meal breaks) (in
the case of an employee who is also a
director of any Participating Company, 25
hours per week (excluding meal breaks)) and
is not precluded by paragraph 8 of Schedule 9
from participating in the Scheme
"Event" the dissolution, liquidation, merger,
consolidation, or reorganization of the
Company
"Group" that group comprising all of the
Participating Companies
"Incumbent Board" the individuals who, as of the Effective
Date, constitute the Board
"Issued Company the then issued voting securities of the
Voting Securities" Company entitled to vote generally in the
election of the Board
"Market Value" on any day the closing sales price in U.S.
Dollars of a Share as derived from the
consolidated tape of The New York Stock
Exchange for such day or, if such day, as not
a trading day or if no Shares sold on such
day, such closing sales price on the next
previous trading day on which a sale occurred
"Option" a right to purchase Shares under the Scheme
"Option Certificate" the certificate embodying an Option granted
in accordance with these Rules
"Option Holder" an individual to whom an Option has been
granted pursuant to the Scheme
"Participating Company" the Company and any other corporation which
it Controls
"Person" any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of
the Act
"Plan" the United Asset Management Corporation
Second Amended and Restated 1994 Stock Option
Plan, of which this Scheme is an integral
part
11
<PAGE> 12
"Price" the price determined by the Committee in U.S.
Dollars at which each Share subject to an
Option may be acquired on the exercise of
that Option, which price shall be, subject to
Rule 5, not less than the higher of:
(i) the par value (if any) of a Share and
(ii) the Market Value of a Share on the Date
of Grant of that Option
"Relevant Emoluments" the meaning given to that term in
sub-paragraph (2) of paragraph 28 of Schedule
9 by virtue of subparagraph (4) of that
paragraph
"Rules" the terms of the Scheme, as expressed herein
and as amended from time to time
"Schedule 9" Schedule 9 to the U.K. Income and Corporation
Taxes Act 1988
"Scheme" this U.K. Subplan, as set forth in these
Rules as amended from time to time
"Share" a share of common stock, U.S. $.01 par value,
in the capital of the Company which satisfies
the conditions specified in paragraphs 10 to
14 inclusive of Schedule 9 and which may
either be an authorized but unissued share or
a treasury share
"Sterling Value" in respect of an Option, the sterling
equivalent of the appropriate Price,
calculated by reference to the U.S.
Dollar/Sterling exchange rate prevailing on
the Date of Grant of that Option
"Subplan A" the portion of the Plan applicable to key
employees of, and non-employees (other than
directors of the Company) who provide
important services to, a Participating
Company
"Subplan C" the portion of the Plan applicable to
non-employee directors of the Company
"Subsisting Option" an Option which has neither lapsed nor been
exercised or released, given up, or
surrendered by its holder
"UK Subplan" the portion of the Plan comprising the Scheme
as set forth in these Rules
12
<PAGE> 13
"Year of Assessment" year beginning on any 6th April and ending on
the following 5th April
Where the context permits the singular shall include the plural and vice versa
and the masculine shall include the feminine. References to any Act or statute
shall include any statutory modification, amendment or re-enactment thereof.
Headings are for ease of reference only and shall not affect the construction or
interpretation of these Rules.
2. GRANT OF OPTION
2.1 Subject to the terms of these Rules, the Committee may at its absolute
discretion, from time to time, grant Options to any Eligible Employees
under the Scheme by issuing Option Certificates to them, complying with
Rule 2.2 below.
2.2 Each Option Certificate shall be under seal and shall specify:
i. the Date of Grant of the relevant Option;
ii. the number of Shares for which the Option is granted (which shall not
be so large that the grant of an Option for that number of Shares
would cause the applicable limits specified in Rule 3 to be exceeded);
iii. the Price at which the relevant Shares can be acquired; and
iv. any conditions on the Option imposed by the Committee, including
(without limitation) any vesting schedule.
In addition each Option Certificate shall indicate that Options cannot be
transferred, assigned or charged and that any purported transfer,
assignment or charge shall cause the relevant Option to lapse forthwith.
Each Option Certificate shall be accompanied by a "form of acceptance" (as
described in Rule 4.3) which shall indicate that the Option to which it
relates will automatically lapse if the Option holder does not sign and
return such form to the Company within 3 months of the Date of Grant.
3. LIMITATIONS
3.1 Subject to adjustment as provided in Rule 5, the aggregate number of Shares
in respect of which Options may be granted under the Scheme on any Date of
Grant or which may be issued and sold pursuant to such Options shall not
exceed 16,900,000 Shares, less (i) any Shares then subject to any
outstanding incentive stock option granted under Subplan A of the Plan or
previously issued pursuant to any such incentive stock option and (ii) any
shares that are then subject to any outstanding non-incentive stock option
granted under Subplan A or Subplan C or previously issued pursuant to any
such non-incentive stock option and are not reacquired shares (as described
in the Preamble to the Plan). If any
13
<PAGE> 14
Option granted under the Plan shall lapse or shall be released, given up or
surrendered without being fully exercised, the Shares which have not been
purchased under the Option shall again become available for purposes of the
Plan.
3.2 No Option shall be granted to an Eligible Employee if immediately following
such grant he would hold Subsisting Options with an aggregate Sterling
Value exceeding (pound)30,000.
For the purposes of this Rule 3.2. Options shall include all Options
granted under this Scheme and all options granted under any other scheme
approved under Schedule 9 and established by the Company or any Associated
Company.
3.3 The maximum number of Shares with respect to which any options may be
granted under the Plan (including this UK Subplan) to any individual during
any single calendar year shall be 100,000 Shares.
4. EXERCISE OF OPTIONS
4.1 Any Option which has not lapsed may be exercised only after the earliest of
the following events:
i. the first anniversary of the Date of Grant;
ii. the death of the Option holder;
iii. the Option holder ceasing to be an employee of any Participating
Company by reason of injury, disability, redundancy or retirement or,
at the discretion of the Committee, for any other reason;
iv. a Change of Control of the Company, but only in respect of an Option
granted after April 1, 1999.
Provided always that when granting an Option the Committee may provide that
the Option or any part of it shall not become exercisable under sub Rules
4.1 (i), (ii) or (iii) above until after such time(s) as the Committee
determine and any such restriction on the Option's exercisability shall be
set forth in the Option Certificate for that Option. For the avoidance of
doubt, once an Option has become exercisable under Rule 4.1 (iv), it shall
be exercisable in full.
4.2 Once an Option has become exercisable under Rule 4.1 above, it may be
exercised either in whole or in part at any time unless or until it shall
lapse under Rule 4.3 below, but subject in all cases to Rule 7 below.
4.3 An Option shall lapse on the earliest of the following events:
i. the expiry of three months from the Date of Grant, unless the Option
holder has previously given notice to the Company of his acceptance of
the Scheme's Rules
14
<PAGE> 15
using the form of acceptance supplied to him with the relevant Option
Certificate;
ii. subject to a shorter period specified in the Option Certificate, the
tenth anniversary of the Date of Grant;
iii. subject to a shorter period specified in the Option Certificate, the
first anniversary of the Option holder's death;
iv. the Option holder ceasing to be an employee of any Participating
Company by reason of gross misconduct;
v. subject to a shorter period specified in the Option Certificate, the
expiry of three months after the date on which the Option holder
ceases to be an employee of any Participating Company otherwise than
by reason of death or gross misconduct in circumstances in which
sub-clause (iv) applies;
vi. the Option holder being adjudicated bankrupt; and
vii. the first date upon which the Option holder purports to transfer,
assign or charge the Option.
5. VARIATION OF SHARE CAPITAL
In the event of any capitalization or rights issue or any stock split or
stock dividend or any consolidation, sub-division or reduction of capital
by the Company, the number of Shares subject to any Option and the Price
payable for each of those Shares shall be adjusted in such manner as the
Auditors confirm to be fair and reasonable provided that:
i. the aggregate amount payable on the exercise of any Option in full is
not increased;
ii. the Price of a Share is not reduced below its par value if any;
iii. no adjustments shall be made without the prior approval of the Board
of Inland Revenue; and
iv. following the adjustment the Shares continue to satisfy the conditions
specified in paragraphs 10 to 14 inclusive of Schedule 9.
15
<PAGE> 16
6. CHANGE OF CONTROL
6.1 A Change of Control shall be the occurrence of any of the following events:
i. STOCK TRANSFER OF 20% OR MORE
the acquisition by a Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 20 percent or more
of either (a) the then issued Shares of the Company or (b) the
combined voting power of the Issued Company Voting Securities;
provided, however, that no change in such beneficial ownership
percentage that results solely from a change in the aggregate number
of outstanding Shares or Issued Company Voting Securities shall
constitute a Change of Control; provided further, however, that the
following acquisitions shall not constitute a Change of Control: (A)
any acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege); (B) any acquisition
by the Company or any Associated Company; (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any Associated Company; or (D) any acquisition by any
corporation pursuant to a consolidation or merger, if, following such
consolidation or merger, the conditions described in clauses (a), (b),
and (c) of Rule 6.1(iii) below are satisfied; or
ii. CHANGE IN INCUMBENT BOARD OF 50% OR MORE
the Incumbent Board ceasing for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was approved by
a vote or resolution of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
iii. MERGER WITHOUT CONTINUITY OF OWNERSHIP IN EXCESS OF 60%
the adoption by the Board of a resolution approving an agreement of
consolidation of the Company with or merger of the Company into
another corporation or business entity in each case, unless, following
such consolidation or merger, (a) more than 60 percent of,
respectively, the then issued shares of common stock of the
corporation resulting from such consolidation or merger and/or the
combined voting power of the then issued voting securities of such
corporation or business entity entitled to vote generally in the
election of directors (or other persons having the general power to
direct the affairs of such
16
<PAGE> 17
entity) is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Shares and Issued Company
Voting Securities immediately prior to such consolidation or merger in
substantially the same proportions as their ownership, immediately
prior to such consolidation or merger, (b) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company
or such corporation or other business entity resulting from such
consolidation or merger and any Person beneficially owning,
immediately prior to such consolidation or merger, directly or
indirectly, 35 percent or more of the Shares and/or Issued Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 35 percent or more of, respectively, the then issued
shares of common stock of the corporation resulting from such
consolidation or merger or the combined voting power of the then
outstanding voting securities of such corporation or business entity
entitled to vote generally in the election of its directors (or other
persons having the general power to direct the affairs of such entity)
and (c) at least a majority of the members of the board of directors
(or other group of persons having the general power to direct the
affairs of the corporation or other business entity) resulting from
such consolidation or merger were members of the Incumbent Board at
the time of the execution of the initial agreement providing for such
consolidation or merger; provided that any right which shall vest by
reason of the action of the Board pursuant to this paragraph (iii)
shall be divested, with respect to any such right not already
exercised upon (A) the rejection of such agreement of consolidation or
merger by the shareholders of the Company or (B) its abandonment by
either party thereto in accordance with its terms; or
iv. SALE OF ASSETS OR DISSOLUTION
the adoption by the requisite majority of the whole Board, or by the
holders of such majority of stock of the Company as is required by law
or by the certificate of incorporation or by-laws of the Company as
then in effect, of a resolution or consent authorizing (a) the
dissolution of the Company or (b) the sale or other disposition of all
or substantially all of the assets of the Company, other than to a
corporation or other business entity with respect to which, following
such sale or other disposition, (A) more than 60 percent of,
respectively, the then issued shares of common stock of such
corporation and/or the combined voting power of the issued voting
securities of such corporation or other business entity entitled to
vote generally in the election of directors (or other persons having
the general power to direct the affairs of such entity) is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Shares and/or Issued Company Voting Securities
immediately prior to such sale or other disposition in substantially
the same proportions as their ownership, immediately prior to such
sale or other disposition, of the Shares and/or Issued Company Voting
Securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or
such corporation or
17
<PAGE> 18
other business entity and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 35
per cent or more of the Shares and/or Issued Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 35 percent or more of, respectively, the then issued
shares of common stock of such corporation and/or the combined power
of the then outstanding voting securities of such corporation or other
business entity entitled to vote generally in the election of
directors (or other persons having the general power to direct the
affairs of such entity) and (C) at least a majority of the members of
the board of directors (or other group of persons having the general
power to direct the affairs of such corporation or other entity) were
members of the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such sale or
other disposition of assets of the Company; provided that any right
which shall vest by reason of the action of the Board or the
stockholders pursuant to this paragraph (iv) shall be divested, with
respect to any such right not already exercised, upon the abandonment
by the Company of such dissolution, or such sale or other disposition
of assets, as the case may be.
6.2 In the event of a Change of Control of the Company, notwithstanding any
decision of the Board restricting the Option's excisability under Rule 4.1,
all Options shall be exercisable in full or in part at the Option holder's
discretion provided that one of the events referred to in Rule 4.1(i) to
(iv) has occurred.
6.3 Notwithstanding Rule 4.1, after a Change of Control, and upon the adoption
of a plan for an Event, the Board may elect to terminate each Subsisting
Option. If the Board so elects, such Option shall terminate as of the
effective date of the Event, but the Board shall suspend the exercise of
all Subsisting Options a reasonable time prior to the Event, giving each
Option holder not less than fourteen days written notice of the date of
suspension, prior to which an Option holder may purchase in whole or in
part the Shares available to him as of the date of receipt of the notice.
If the Event is not consummated, the suspension shall be removed and all
Options shall continue in full force and effect, subject to the terms of
their respective Option Certificates.
6.4 For the avoidance of doubt, nothing in this Rule 6 shall entitle an Option
holder to exercise an Option which has previously lapsed.
7. MANNER OF EXERCISE OF OPTIONS
7.1 No Option may be exercised by an individual at any time when he is
precluded by paragraph 8 of Schedule 9 from participating in the Scheme.
7.2 An Option shall be exercised by the Option holder, or as the case may be
his personal representative, giving notice to the Company in writing of the
number of Shares in respect of which he wishes to exercise the Option and
making arrangements reasonably acceptable to the Committee for payment of
the appropriate amount, and submitting the
18
<PAGE> 19
relevant Option Certificate. Any such notice shall be effective on the date
of its receipt by the Company.
7.3 Shares shall be allocated and issued pursuant to a notice of exercise
within 30 days of the date of exercise.
8. RIGHTS ATTACHING TO SHARES
All Shares allocated pursuant to the exercise of an Option shall rank pari
passu in all respects with all other Shares in issue at the date of such
allocation.
9. AVAILABILITY OF SHARES
The Company shall at all times procure that it can secure the issue or the
transfer of sufficient Shares to permit the exercise of all Subsisting
Options.
10. LOSS OF OFFICE
If any Option holder shall cease to be an employee of a Participating
Company within the Group for any reason, he shall not be entitled by way of
compensation for loss of office or otherwise howsoever to any sum or other
benefit to compensate him for any loss of any right under the Scheme, and
in returning the form of acceptance referred to in Rule 4.3 he shall be
deemed to have agreed to this.
11. ADMINISTRATION AND AMENDMENT
11.1 No member of the Committee or the Board shall be held liable for any action
or determination made in good faith with respect to the Plan, the UK
Subplan, these Rules or any Option granted hereunder.
11.2 The cost of establishing and operating the Scheme shall be borne by the
Participating Companies in such proportions as the Board shall determine.
11.3 The Board may from time to time suspend or terminate the Plan and/or the UK
Subplan or amend these Rules or the form of Option Certificate, provided
that:
i. no such action may, without approval or ratification by the Company's
shareholders, increase the maximum number of Shares reserved under the
UK Subplan (except as provided in Rule 5) or under the Plan (except as
otherwise expressly provided in the Plan), alter the class or classes
of employees eligible for Options, or make any other such change
which, pursuant to Section 16(b) of the Act and the rules and
regulations promulgated thereunder, requires action by the Company's
shareholders;
19
<PAGE> 20
ii. except as provided in Rule 11.5, no such action may detrimentally
affect an Option holder as regards an Option granted prior to the
taking of such action; and
iii. no amendment to these Rules shall have effect until approved by the
Board of the Inland Revenue.
11.4 The Scheme shall be administered by the Committee, the members of which
shall be appointed by and shall serve at the pleasure of the Board (subject
to the restrictions of this Rule 11.4). Notwithstanding the foregoing,
until and unless the Board shall have constituted the Committee pursuant to
this Rule 10.4, the committee serving from time to time as administrator of
the Plan generally shall also serve as the Committee for purposes of the UK
Subplan. Actions taken by a majority of the members present at any meeting
of the Committee at which a quorum is present, and any acts approved in
writing by all members of the Committee without a meeting, shall constitute
the acts of the Committee. The Committee shall have all powers of
administration granted under these Rules, except such powers as are
expressly reserved to the Board. The Committee is authorized to interpret
these Rules and, subject to the provisions of Rule 11.3, to prescribe,
amend, and rescind rules and regulations relating thereto. The Committee is
further authorized. subject to the express provisions of the Plan and these
Rules, to alter or amend the form of Option Certificate pursuant to which
Options may be granted under the Scheme from time to time and to make all
determinations necessary or advisable in the administration of the Scheme.
The interpretation and administration by the Committee of any provisions of
the Plan and the UK Subplan, including these Rules, and any Option
Certificate issued pursuant to the Scheme shall be final, binding and
conclusive on all persons having any interest therein.
11.5 Any notice or communication to be given by or on behalf of the Company to
any Eligible Employee may be given by personal delivery or by sending the
same by ordinary post to his last known address in which case it shall be
deemed to have been received on the day after it was posted. Any notice,
document, option, share certificate or other communication sent by post
shall be sent at the risk of the Eligible Employee involved.
11.6 Unless otherwise provided any notice or other communication to be given by
an Eligible Employee to the Company shall be regarded as having been
properly given if sent or delivered to the company secretary of the
Participating Company by whom he is employed at that company's registered
office, any such communication being effective only upon receipt.
11.7 The Scheme shall at all times be read in accordance with the provisions of
the U.K. Income and Corporation Taxes Act 1988 and insofar as any of its
Rules shall be inconsistent with any of the said provisions and/or with any
requirements of the Board of Inland Revenue necessary for its approval or
continued approval under the said Act they shall be deemed automatically
varied or deleted in such a way as to ensure compliance with the same.
20
<PAGE> 21
SUBPLAN C--NON-EMPLOYEE ("ELIGIBLE") DIRECTOR PORTION OF THE
SECOND AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE OF SUBPLAN C
The purpose of this Subplan C is to grant options to purchase shares of the
common stock, $.01 par value (the "Common Stock"), of United Asset Management
Corporation (the "Company") to Eligible Directors (as defined in Section 4 of
this Subplan) of the Company at market value on the date of grant, and to permit
the granting of stock options to Eligible Directors at an exercise price less
than market value at the date of grant as an alternative to the payment of
Directors' fees in cash. The Company believes that the granting of such options
will serve to enhance the Company's ability to attract and retain the services
of such persons, to provide additional incentives to them and to encourage the
highest level of performance by them by offering them a proprietary interest in
the Company's success. The Company also believes that the Plan will encourage
directors to make greater equity investment in the Company, more closely
aligning the interests of the directors and the stockholders.
2. SHARES RESERVED UNDER SUBPLAN C
Subject to the adjustment provided in Section 8, the aggregate number of
shares of Common Stock which may be issued and sold pursuant to options granted
under this Subplan C of the Plan shall not exceed 800,000 shares (or, if less,
the then remaining aggregate number of shares determined in accordance with the
Preamble to the Plan), which may be either authorized but unissued shares or
treasury shares. If any option granted under the Plan shall terminate or expire
without being fully exercised, the shares which have not been purchased will
again become available for purposes of the Plan.
3. ADMINISTRATION
This Subplan C shall be interpreted and administered by a committee (the
"Committee") consisting of not less than three (3) members of the Board of
Directors of the Company (the "Board") appointed pursuant to Section 3 of
Subplan A of the Plan. The interpretation and administration by the Committee of
any provisions of the Plan and any option granted thereunder shall be final and
conclusive on all persons having any interest therein.
No members of the Committee or the Board shall be held liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
4. OPTION GRANTS
"Eligible Directors" shall mean directors of the Company who are directors
on the date of grant and who are not officers or employees of the Company. All
options granted under this Subplan C shall be non-incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
21
<PAGE> 22
(A) REGULAR OPTIONS
Each Eligible Director who is such on the 30th day following the date on
which each Annual Meeting of the Stockholders of the Company (the "Annual
Meeting") is held during the term of the Plan shall on such 30th day be granted
a stock option to purchase 14,000 shares of Common Stock. Each such option is
defined herein as a "Regular Option."
The date of grant of an option to an Eligible Director under this Subplan C
shall be the applicable day referred to immediately above.
(B) DISCOUNTED OPTIONS
(1) Subject to such other rules as the Committee may adopt from time to
time, during the term of the Plan, options to purchase Common Stock at a
discount from fair market value on the date of grant ("Discounted Options")
shall be granted to any Eligible Director who, no later than June 30, with
respect to the six-month period following such date, and no later than December
31, with respect to the six-month period following such date (each six month
period, a "Semi-Annual Period"), has filed with the Company an irrevocable
election to receive a stock option in lieu of all or a specified portion
(expressed in terms of a percentage of the Semi-Annual Fee) of the Semi-Annual
Fee (as defined in Subsection 4(b) (iii)) earned or expected to be earned by
such Director for the Semi-Annual Period specified in the election.
(2) Discounted Options shall be granted to an electing Eligible Director
on the first day (July 1 or January 1) of each applicable Semi-Annual Period.
A separate election must be made for each Semi-Annual Period, although a
Director may specify that a particular election shall apply to future
Semi-Annual Periods unless amended or revoked; provided, however, that no
amendment or revocation may be made with respect to a Semi-Annual Period after
the applicable election date for such Semi-Annual Period. The Director shall not
be entitled to receive in cash any portion of the Semi-Annual Fee for which an
election has been made to receive an option.
(3i) Option Formula. The number of shares of Common Stock subject to each
Discounted Option granted to any Eligible Director for a Semi-Annual Period
shall be equal to the nearest number of whole shares of Common Stock, with cash
payment for fractional shares, determined in accordance with the following
formula:
SEMI-ANNUAL FEE = Number of Shares
------------------------
(Fair Market Value minus
Discounted Option Price)
"Discounted Option Price" and "Fair Market Value" shall be defined as set
forth in Section 5 below. "Semi-Annual Fee" shall mean the quarterly retainer
fees which the Director will be entitled to receive during a Semi-Annual Period
for serving as a Director pursuant to the policy in effect for each year during
the term of the Plan, but expressly excluding fees paid for attendance at or
participation in meetings of the Board or any committee thereof; provided,
however, that if a Director elects to receive a stock option in lieu of only a
portion of the Semi-
22
<PAGE> 23
Annual Fee, the Semi-Annual Fee for purposes of the foregoing formula shall
equal the portion of the Semi-Annual Fee so elected. For purposes of this
Subplan C, "Semi-Annual Fee" shall also not include expenses reimbursed by the
Company for attendance at or participation in meetings of the Board or any
committee of the Board or fees for any other services to be provided to the
Company.
5. OPTION PRICE
(A) REGULAR OPTION
The price per share at which each Regular Option granted under this Subplan
C to an Eligible Director may be exercised ("Regular Option Price") shall be the
fair market value of the Common Stock as determined by the closing sales price
of such Common Stock on the consolidated tape of the principal exchange on which
such Common Stock is traded on the date of grant, or if there are no sales on
such date, on the trading day next preceding the date of grant on which a sale
took place, or, if the Common Stock is not so traded, then as determined by a
principal market maker for such Common Stock selected by the Committee ("Fair
Market Value").
(B) DISCOUNTED STOCK OPTIONS
The price per share at which each Discounted Option granted under this
Subplan C to an Eligible Director may be exercised (the "Discounted Option
Price," the Regular Option Price and the Discounted Option Price being sometimes
hereinafter referred to as the "Option Price") shall be seventy-five percent
(75%) of the Fair Market Value of the Common Stock on the date the Discounted
Option is granted.
(C) In no event shall the Option Price per share for any option under this
Subplan C be less than the par value per share.
6. TERMS OF GRANT
Each option granted under this Subplan C shall be evidenced by and subject
to the terms and conditions of an Option Grant attached hereto as Exhibit A.
Each Option Grant executed and delivered to an Eligible Director shall contain
the following terms and conditions. Each option shall expire five years from the
date of grant of such option, and shall be exercisable in full beginning on or
after the date which is six months after the date of grant thereof; provided,
however, that any option granted between March 31, 1999 and August 31, 1999,
inclusive, shall be exercisable in full beginning on or after the date on which
the Option Grant representing such option is delivered to the optionee. Each
Eligible Director to whom an option is granted may exercise such option from
time to time, in whole or in part, during the period that it is exercisable, by
payment of the Option Price of each share purchased. The Option Price of each
share purchased shall be paid in cash, or by delivery or deemed delivery of
other shares of the Company's Common Stock owned by the Eligible Director with
an aggregate Fair Market Value equal to the product of the Option Price
multiplied by the number of the shares to be purchased, or by withholding by the
Company of the number of shares of its Common Stock otherwise issuable upon
exercise of the installment with an aggregate Fair Market Value equal to the
product of the Option Price multiplied by the number of the shares (including
such withheld
23
<PAGE> 24
shares) to be purchased, or by delivery of irrevocable instructions to a broker
promptly to pay to the Company the exercise price of the shares to be purchased,
or in any combination of the forms of payment. A deemed delivery of shares shall
mean the offset by the Company of a number of shares to be purchased against an
equal number of shares of the Company's Common Stock owned by the Eligible
Director. If, however, the applicable Committee established pursuant to Section
3 of this Subplan C determines in good faith that an exercise of an option
through the delivery or deemed delivery or withholding of shares of the
Company's Common Stock or through delivery of irrevocable instructions to a
broker is not in the best interest of the Company, the Committee may withhold
the right to so exercise the option and require payment of the purchase price in
cash.
The shares of Common Stock issued upon exercise of an option granted under
this Subplan C will be acquired for investment and not with a view to
distribution thereof unless there shall be an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), with respect
thereto. In the event that the Company, upon the advice of counsel, deems it
necessary to list upon official notice of issuance shares to be issued pursuant
to the Plan on a national securities exchange or to register under the 1933 Act
or other applicable federal or state statute any shares to be issued pursuant to
the Plan, or to qualify any such shares for exemption from the registration
requirements of the 1933 Act under the Rules and Regulations of the Securities
and Exchange Commission or for similar exemption under state law, then the
Company shall notify each Eligible Director to that effect and no shares of
Common Stock subject to an option shall be issued until such registration,
listing or exemption has been obtained. The Company shall make prompt
application for any such registration, listing or exemption pursuant to federal
or state law or rules of such securities exchange which it deems necessary and
shall make reasonable efforts to cause such registration, listing or exemption
to become and remain effective. Nothing in this Subplan C or in the Option Grant
will confer upon any Eligible Director the right to continue as a director of
the Company. The shares of Common Stock issued on exercise of the option shall
be subject to any restrictions on transfer then in effect pursuant to the
Certificate of Incorporation or Bylaws of the Company.
Options granted under this Subplan C shall be transferable (subject to any
terms and conditions imposed by the Committee) by the optionee, either directly
or in trust, to one or more members of the optionee's family. Following any
transfer permitted pursuant to this paragraph, of which the optionee has
notified the Committee in writing, such option may be exercised by the
transferee(s), subject to all terms and conditions of the Option Grant. For
these purposes, the members of the optionee's family are only the optionee's:
(i) spouse; (ii) lineal descendants; (iii) lineal ancestors; and (iv) siblings
and spouses and children of such siblings.
7. TERMINATION OF DIRECTORSHIP
An Eligible Director's right to participate in this Subplan C shall
automatically terminate if and when such Director becomes an employee of the
Company. Options granted to an Eligible Director shall cease to be exercisable 6
months after the date such Director ceases to be a director for any reason other
than death. If an Eligible Director ceases to be a director on account of his
death, any option previously granted to him, whether or not exercisable at the
date of death, may be exercised by his executor, administrator or the person or
persons to whom his rights under the
24
<PAGE> 25
option shall pass by will or the applicable laws of descent and distribution, at
any time within 12 months after the date of death, but in no event after the
expiration of the option.
8. ADJUSTMENT OF SHARES RESERVED UNDER THE PLAN
The aggregate number and kind of shares that may be issued under this
Subplan C, the maximum number of shares as to which options may be granted to
any individual and the Option Price per share shall be appropriately adjusted by
the Board in the event of any recapitalization, stock split, stock dividend,
combination of shares, or other similar change in the capitalization of the
Company, but no adjustment in the Option Price shall be made which would reduce
the Option Price per share to less than the par value per share.
9. DISSOLUTION OR REORGANIZATION
Prior to a dissolution, liquidation, merger, consolidation, or
reorganization of the Company (the "Event"), the Board may decide to terminate
each outstanding option. If the Board so decides, such option shall terminate as
of the effective date of the Event, but the Board shall suspend the exercise of
all outstanding options a reasonable time prior to the Event, giving each
optionee not less than fourteen days written notice of the date of suspension,
prior to which an optionee may purchase in whole or in part the shares available
to him as of the date of receipt of the notice. If the Event is not consummated,
the suspension shall be removed and all options shall continue in full force and
effect subject to the terms of their respective Option Grants.
10. AMENDMENT AND TERMINATION OF SUBPLAN C
The Board may amend, suspend, or terminate this Subplan C, including the
form of Option Grant incorporated herein by reference. No such action, however,
may, without approval or ratification by the shareholders, increase the maximum
number of shares reserved under this Subplan C except as provided in Section 8,
alter the class or classes of individuals eligible for options, or make any
other change which, pursuant to the Code or regulations thereunder or Section
16(b) of the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, requires action by the shareholders. No such action may,
without the consent of the holder of the option, alter or impair any option
previously granted.
25
