<PAGE>
REG. NO. 333-_____
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
KAISER ALUMINUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-3030279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5847 San Felipe, Suite 2600
Houston, Texas 77057
(Address of Principal Executive Offices)
KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN
(Full title of the plan)
J. Kent Friedman
Senior Vice President and General Counsel
Kaiser Aluminum Corporation
5847 San Felipe, Suite 2600
Houston, Texas 77057
713-267-3777
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum Maximum
Title of Securities to Amount to be Offering Price Per Aggregate Amount of
be Registered Registered Share Offering Price Registration Fee
- ------------------------- -------------------- ------------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock (par
value $.01 per share) 5,500,000 shares $4.34375(a) $23,890,625 $6,307.13
========================= ==================== ========================= ===================== ======================
<FN>
(a) Estimated, in accordance with Rule 457(c), solely for the purpose of
calculating the registration fee. The Proposed Maximum Offering Price Per
Share represents the average of the high and low prices of the Common Stock
as reported by the New York Stock Exchange as of April 27, 2000, which is
within five (5) business days prior to the date of this Registration
Statement.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1999.
(b) The Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000.
(c) Definitive Schedule 14A (Proxy Statement) filed on April 21,
2000.
(d) The description of the Registrant's Common Stock, par value
$.01 per share, contained in the Registration Statement on
Form 8-A filed pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "1934 Act") on June 20, 1991,
including any amendments or reports filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act, after the date of this Registration
Statement and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all such securities remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or replaced for
purposes of this Registration Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or replaces such statement. Any
such statement so modified or replaced shall not be deemed, except as so
modified or replaced, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the securities being registered hereunder will be
passed upon by J. Kent Friedman, Esq., Senior Vice President and General Counsel
of the Registrant, who is also an officer of the parent corporations of the
Registrant and an officer and/or director of certain subsidiaries of the
Registrant. Mr. Friedman, in his capacity as Senior Vice President and General
Counsel of the Registrant, is an executive officer of the Registrant and is a
participant in various employee benefit plans offered to officers and employees
of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of the director's fiduciary duty, except (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
DGCL (providing for liability of directors for unlawful payment of dividends or
unlawful stock purchase or redemptions), or (iv) for any transaction from which
the director derived an improper personal benefit. The Registrant's Restated
Certificate of Incorporation contains provisions permitted by Section 102(b)(7)
of the DGCL.
Reference also is made to Section 145 of the DGCL, which provides that
a corporation may indemnify any person, including officers and directors, who
was or is, or is threatened to be made, a party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe that the conduct was unlawful. A Delaware
corporation may indemnify its officers, directors, employees and agents in an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or otherwise
in the defense of any action referred to above, the corporation must indemnify
him against the expenses which such officer, director, employee or agent
actually and reasonably incurred in connection therewith.
2
<PAGE>
The Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Registrant provide for indemnification of directors, officers and
employees of the Registrant to the fullest extent authorized by law.
In addition, the Registrant has entered into indemnification agreements
with each of its directors and officers which provide that the Registrant will
indemnify such individuals if and whenever they were or are a party or are
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that they are or were a director, officer or employee of the
Registrant, or are or were serving at the request of the Registrant or any of
its subsidiaries as a director, officer, employee, agent or other official of
another corporation, partnership, joint venture, trust, or other enterprise,
against judgments, fines and amounts paid in settlement and reasonable expenses
(including attorney's fees) actually incurred by them in connection with such
action, suit or proceeding except to the extent that (a) any judgments, fines,
amounts paid in settlement and expenses are finally determined by a court of
competent jurisdiction to have resulted from their gross negligence or bad faith
in the performance of their duties (or, alternatively in the case of certain of
the indemnification agreements, result from conduct which is finally determined
by a court of competent jurisdiction to be knowingly fraudulent or deliberately
dishonest, or to constitute willful misconduct), (b) any amount is paid without
the prior approval of the Registrant in settlement of a proceeding brought in
the name and on behalf of the Registrant or another corporation, partnership,
joint venture, trust or other enterprise for which they are or were serving at
the request of the Registrant as a director, officer, employee, agent or other
official, (c) such indemnification is otherwise prohibited by law, whether by
statute, court decision or otherwise, or (d) reimbursement of such expenses has
actually been made pursuant to insurance policies maintained by the Registrant
for their benefit. For these purposes, service at the request of the Registrant
with respect to an "other enterprise" includes service with respect to any
employee benefit plan. The agreements further provide for the advancement of
expenses incurred in defending any such action, suit or proceeding upon receipt
of a repayment undertaking if it is ultimately determined that such individuals
are not entitled to be indemnified or to the extent they recover such expenses
from others pursuant to insurance or otherwise.
The Registrant may terminate the agreements on 90 days' prior written
notice to such individuals, but the indemnification provided by the agreements
continues to apply to all actions taken or failed to be taken by such
individuals prior to the expiration of the 90-day notice period notwithstanding
such termination.
The Registrant provides liability insurance for each of its directors
and officers for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Registrant.
Subject to certain limitations and exceptions, the Registrant has
insurance coverage for losses by any person who is or hereafter may be a
director or officer of the Registrant arising from claims against that person
for any wrongful act in his capacity as a director or officer of the Registrant
or
3
<PAGE>
any of its subsidiaries. The policy also provides for reimbursement to the
Registrant for indemnification given by the Registrant pursuant to common or
statutory law or its Restated Certificate of Incorporation or Amended and
Restated By-Laws to any such person arising from any such claims.
The foregoing discussion is qualified in its entirety by reference to
the DGCL, the Registrant's Restated Certificate of Incorporation and Amended and
Restated By-Laws, and the referenced indemnification agreements.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "1933
Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by
reference in the Registration Statement.
4
<PAGE>
(2) That, for the purpose of determining any liability under the
1933 Act, each such post- effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnifica tion is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Houston, Texas, on May 3, 2000.
KAISER ALUMINUM CORPORATION
By: /s/ Raymond J. Milchovich
----------------------------------
Raymond J. Milchovich
President, Chief Executive Officer
and Chief Operating Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Raymond J. Milchovich President, Chief Executive Officer, Chief May 3, 2000
Raymond J. Milchovich Operating Officer and Director
(Principal Executive Officer)
/s/ John T. La Duc Executive Vice President and Chief Financial May 3, 2000
John T. La Duc Officer
(Principal Financial Officer)
/s/ Daniel D. Maddox Vice President and Controller May 3, 2000
Daniel D. Maddox (Principal Accounting Officer)
/s/ Robert J. Cruikshank Director May 3, 2000
Robert J. Cruikshank
/s/ George T. Haymaker, Jr. Chairman of the Board and Director May 3, 2000
George T. Haymaker, Jr.
6
<PAGE>
/s/ Charles E. Hurwitz Director May 3, 2000
Charles E. Hurwitz
/s/ Ezra G. Levin Director May 3, 2000
Ezra G. Levin
/s/ James D. Woods Director May 3, 2000
James D. Woods
7
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------ -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Registrant,
dated February 18, 2000 (incorporated by reference to
Exhibit 3.1 to the Report on Form 10-K for the period
ended December 31, 1999, filed by Registrant, File
No. 1-9447).
4.2 Amended and Restated By-Laws of the Registrant, dated
October 1, 1997 (incorporated by reference to Exhibit 3.3
to the Report on Form 10-Q for the period ended September
30, 1997, filed by the Registrant, File No. 1-9447).
4.3 Certificate of Retirement of the Registrant, dated
October 24, 1995 (incorporated by reference to Exhibit
3.2 to the Report on Form 10-K for the period ended
December 31, 1995, filed by the Registrant, File No
1-9447).
4.4 Certificate of Retirement of the Registrant, dated
February 12, 1998 (incorporated by reference to Exhibit
3.3 to the Report on Form 10-K for the period ended
December 31, 1997, filed by the Registrant, File No
1-9447).
4.5 Certificate of Elimination of the Registrant, dated July
1, 1998 (incorporated by reference to Exhibit No. 3.4 to
the Report on Form 10-Q for the period ended June 30,
1999, filed by the Registrant, File No. 1-9447).
4.6 Certificate of Amendment of the Restated Certificate of
Incorporation of the Registrant, dated January 10, 2000
(incorporated by reference to Exhibit 3.5 to the Report
on Form 10-K for the period ended December 31, 1999, filed
by the Registrant, File No. 1-9447).
*5 Opinion of Counsel re Legality.
*23.1 Consent of Independent Accountants.
*23.2 Consent of Counsel (included in Exhibit 5).
*24 Power of Attorney.
* 99 Kaiser 1997 Omnibus Stock Incentive Plan.
<FN>
* Included in this filing.
</FN>
</TABLE>
8
<PAGE>
Exhibit 5
[COMPANY LETTERHEAD]
May 3, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-8 (the "Registration
Statement") filed by Kaiser Aluminum Corporation, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission relating to the issuance
of 5,500,000 shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), pursuant to the Kaiser 1997 Omnibus Stock Incentive Plan (the
"Plan").
In connection therewith, I have reviewed copies of the Restated Certificate of
Incorporation and Amended and Restated By-Laws of the Company and the
Registration Statement and I have reviewed such documents and records of the
Company as I have deemed necessary to enable me to express an opinion on the
matters covered hereby, and I have also examined and relied upon
representations, statements or certificates of public officials and officers and
representatives of the Company. Based on the foregoing, I am of the opinion that
the shares of Common Stock of the Company to be issued pursuant to the Plan,
when issued in compliance with such plan, will be validly issued, fully-paid and
non-assessable.
I hereby consent to the use of this opinion as an Exhibit to the Registration
Statement. In giving this consent, I do not thereby admit that I am within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
I am delivering this opinion to the Company, and no person other than the
Company may rely upon it.
Very truly yours,
/s/ J. Kent Friedman
J. Kent Friedman
Senior Vice President and General Counsel
Kaiser Aluminum Corporation
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-8 of Kaiser Aluminum
Corporation (the "Company") registering 5,500,000 shares of the common stock of
the Company pursuant to the Kaiser 1997 Omnibus Stock Incentive Plan of our
report dated March 7, 2000, included in the Company's Form 10-K for the fiscal
year ending December 31, 1999.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
May 2, 2000
<PAGE>
Exhibit 24
POWER OF ATTORNEY
Know all men by these presents, that each of the undersigned
constitutes and appoints J. Kent Friedman and John Wm. Niemand II, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to the Registration
Statement on Form S-8 (including post-effective amendments) of Kaiser Aluminum
Corporation (the "Company") relating to the issuance by the Company of up to
5,500,000 additional shares of the Company's Common Stock, par value $.01 per
share, under the Kaiser 1997 Omnibus Stock Incentive Plan, and to file same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that such attorneys-in-fact and agents or
any of them, or their or this substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Raymond J. Milchovich President, Chief Executive Officer, Chief May 3, 2000
Raymond J. Milchovich Operating Officer and Director
(Principal Executive Officer)
/s/ John T. La Duc Executive Vice President and Chief Financial May 3, 2000
John T. La Duc Officer
(Principal Financial Officer)
/s/ Daniel D. Maddox Vice President and Controller May 3, 2000
Daniel D. Maddox (Principal Accounting Officer)
/s/ Robert J. Cruikshank Director May 3, 2000
Robert J. Cruikshank
/s/ George T. Haymaker, Jr. Chairman of the Board and Director May 3, 2000
George T. Haymaker, Jr.
/s/ Charles E. Hurwitz Director May 3, 2000
Charles E. Hurwitz
/s/ Ezra G. Levin Director May 3, 2000
Ezra G. Levin
/s/ James D. Woods Director May 3, 2000
James D. Woods
</TABLE>
<PAGE>
Exhibit 99
Kaiser Aluminum Corporation
and
Kaiser Aluminum & Chemical Corporation
Kaiser 1997 Omnibus Stock Incentive Plan
Article 1. Establishment, Objectives, and Duration
- -----------------------------------------------------
1.1. Establishment of the Plan. Kaiser Aluminum
----------------------------------
Corporation ("KAC") and Kaiser Aluminum & Chemical Corporation ("KACC"), both
Delaware corporations (hereinafter collectively referred to as the "Company"),
hereby establish an incentive compensation plan to be known as the "Kaiser 1997
Omnibus Stock Incentive Plan" (hereinafter referred to as the "Plan"), as set
forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares, Performance Units, and Cash-Based Awards.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 1, 1997 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 herein.
1.2. Objectives of the Plan. The purpose of the Plan
-------------------------------
is to advance the interests of the Company and optimize the profitability and
growth of the Company through annual and long-term incentives which are
consistent with the Company's goals by encouraging and providing for the
acquisition of equity interests (or rights measured by the market value of the
equity) in the success of the Company by key employees and non-employee
directors, by providing additional incentives and motivation toward enhancing
the long-term performance of the Company. The Plan is further intended to
provide increased flexibility to the Company within a single plan in its ability
to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3. Duration of the Plan. The Plan shall commence
-----------------------------
on the Effective Date, as described in Section 1.1 herein, and shall remain in
effect, subject to the right of the Board of Directors to amend or terminate the
Plan at any time pursuant to Article 15 herein, until all Shares subject to the
Plan shall have been purchased or acquired according to the Plan's provisions.
However, in no event may an Award be granted under the Plan after March 31,
2007.
Article 2. Definitions
- -------------------------
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "Affiliate" shall have the meaning ascribed to
--------------------
such term in Rule 12b-2 of the General Rules and Regulations of the Exchange
Act.
<PAGE>
2.2. "Award" means, individually or collectively, a
----------------
grant under this Plan of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares, Performance
Units, or Cash-Based Awards.
2.3. "Award Agreement" means an agreement entered
--------------------------
into by the Company and each Participant setting forth the terms and provisions
applicable to Awards granted under this Plan.
2.4. "Board" or "Board of Directors" unless otherwise
----------------
specified, means collectively, the Boards of Directors of KAC and KACC,
collectively.
2.5. "Cash-Based Award" means an Award granted to a
---------------------------
Participant, as described in Article 9 herein.
2.6. Intentionally Left Blank.
---
2.7. "Code" means the Internal Revenue Code of 1986,
---------------
as amended from time to time, and any successor act thereto, and, to the extent
applicable, any federal income tax regulations, including any temporary or
proposed regulations, promulgated under the Code, as such may be amended from
time to time.
2.8. "Committee" means any committee appointed by the
--------------------
Board to administer Awards to Employees, as specified in Article 3 herein,
including, but not limited to the Compensation Policy and Section 162(m)
Compensation Committees of KAC and KACC. Any such committee shall be comprised
entirely of Directors.
2.9. "Company" shall have the meaning given to it in
------------------
Section 1.1 herein.
2.10. "Covered Employee" means a Participant who, as
---------------------------
of the date of vesting and/or payout of an Award, as applicable, is one of the
group of "covered employees," as defined in the regulations promulgated under
Code Section 162(m), or any successor statute.
2.11. "Director" means any individual who is a member
-------------------
of the Board of Directors of KAC, KACC, or any Subsidiary or Affiliate thereof;
provided, however, that any Director who is employed by the Company or any
Subsidiary or Affiliate shall be considered an Employee under the Plan.
2.12. "Disability" shall have the meaning ascribed to
---------------------
such term in the KACC pension plan for salaried employees, or if no such plan
exists, at the discretion of the Board.
2.13. "Effective Date" shall have the meaning ascribed
-------------------------
to such term in Section 1.1 herein.
-2-
<PAGE>
2.14. "Employee" means a regular full-time salaried
-------------------
employee (including officers and directors who are also employees other than
directors who serve on the Committee) of the Company or its Subsidiaries or
Affiliates, or any branch, unit, or division thereof.
2.15. "Exchange Act" means the Securities Exchange Act
-----------------------
of 1934, as amended from time to time, or any successor act thereto.
2.16. "Fair Market Value" means the average of the
----------------------------
highest and lowest prices of the Shares as reported by the consolidated tape of
the New York Stock Exchange on a particular date. In the event that there are no
Share transactions on such date, the Fair Market Value shall be determined as of
the immediately preceding date on which there were Share transactions, provided
that such date is not more than ten (10) business days preceding the applicable
date. If there were no such transaction within the period stated above, the Fair
Market Value of such Shares shall be determined by the Committee.
2.17. "Freestanding SAR" means an SAR that is granted
---------------------------
independently of any Options, as described in Article 7 herein.
2.18. "Incentive Stock Option" or "ISO" means an
--------------------------------- ------
option to purchase Shares granted under Article 6 herein and which is designated
as an Incentive Stock Option and which is intended to meet the requirements of
Code Section 422.
2.19. "Insider" shall mean an individual who is, on
------------------
the relevant date, an officer, director or ten percent (10%) beneficial owner of
any class of the Company's equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange
Act.
2.20. "Nonqualified Stock Option" or "NQSO" means an
------------------------------------ ------
option to purchase Shares granted under Article 6 herein and which is not
intended to meet the requirements of Code Section 422.
2.21. "Option" means an Incentive Stock Option or a
-----------------
Nonqualified Stock Option, as described in Article 6 herein.
2.22. "Option Price" means the price at which a Share
-----------------------
may be purchased by a Participant pursuant to an Option.
2.23. "Participant" means an Employee or Director who
----------------------
has been selected to receive an Award or who has outstanding an Award granted
under the Plan.
2.24. "Performance-Based Exception" means the
--------------------------------------
performance-based exception from the tax deductibility limitations of Code
Section 162(m).
-3-
<PAGE>
2.25. "Performance Share" means an Award granted to a
----------------------------
Participant, as described in Article 9 herein.
2.26. "Performance Unit" means an Award granted to a
---------------------------
Participant, as described in Article 9 herein.
2.27. "Period of Restriction" means the period during
--------------------------------
which the transfer of Shares of Restricted Stock is limited in some way (based
on the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Board, at its discretion), and
the Shares are subject to a substantial risk of forfeiture, as provided in
Article 8 herein.
2.28. "Restricted Stock" means an Award granted to a
---------------------------
Participant pursuant to Article 8 herein.
2.29. "Retirement" shall have the meaning ascribed to
---------------------
such term in the KACC pension plan for salaried employees.
2.30. "Shares" means the Common Stock of KAC, par
-----------------
value $.01.
2.31. "Stock Appreciation Right" or "SAR" means an
----------------------------------- -----
Award, granted alone or in connection with a related Option, designated as an
SAR, pursuant to the terms of Article 7 herein.
2.32. "Subsidiary" means any corporation, partnership,
---------------------
joint venture, or other entity in which the Company has a majority voting
interest.
2.33. "Tandem SAR" means an SAR that is granted in
---------------------
connection with a related Option pursuant to Article 7 herein, the exercise of
which shall require forfeiture of the right to purchase a Share under the
related Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).
Article 3. Administration
- ----------------------------
3.1. General. The Plan shall be administered by the
----------------
Board, or (subject to the following) by one or more Committees appointed by the
Board. The members of the Committee shall be appointed from time to time by, and
shall serve at the discretion of, the Board of Directors. The Board may delegate
to the Committee any or all of the administration of the Plan; provided,
however, that the administration of the Plan with respect to Awards granted to
Directors may not be so delegated. To the extent that the Board has delegated to
the Committee any authority and responsibility under the Plan, all applicable
references to the Board in the Plan shall be to the Committee. The Committee
shall have the authority to delegate administrative duties to officers or
Directors of the Company.
-4-
<PAGE>
3.2. Authority of the Board. Except as limited by
-------------------------------
law or by the Certificate of Incorporation or Bylaws of the Company, and subject
to the provisions herein, the Board shall have full power to select Employees
and Directors who shall participate in the Plan; determine the sizes and types
of Awards; determine the terms and conditions of Awards in a manner consistent
with the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and amend the terms and conditions of any
outstanding Award as provided in the Plan. Further, the Board shall make all
other determinations which may be necessary or advisable for the administration
of the Plan. As permitted by law (and subject to Section 3.1 herein), the Board
may delegate its authority as identified herein.
3.3. Decisions Binding. All determinations and
--------------------------
decisions made by the Board pursuant to the provisions of the Plan and all
related orders and resolutions of the Board shall be final, conclusive and
binding on all persons, including the Company, its stockholders, Directors,
Employees, Participants, and their estates and beneficiaries.
Article 4. Shares Subject to the Plan and Maximum Awards
- -----------------------------------------------------------
4.1. Number of Shares Available for Grants. Subject
----------------------------------------------
to adjustment as provided in Section 4.2 herein, the number of Shares hereby
reserved for issuance to Participants under the Plan shall be Five Million Five
Hundred Thousand (5,500,000), including any Shares remaining available under the
Kaiser 1993 Omnibus Stock Incentive Plan which Shares shall be rolled into the
Shares available for issuance under the Plan. In addition, no more than One
Million Eight Hundred Thousand (1,800,000) of which may be granted in the form
of Restricted Stock. The Board shall determine the appropriate methodology for
calculating the number of shares issued pursuant to the Plan. Unless and until
the Board determines that an Award to a Covered Employee shall not be designed
to comply with the Performance-Based Exception, the following rules shall apply
to grants of such Awards under the Plan:
(a) Stock Options: The maximum aggregate number of
-------------
Shares that may be granted in the form of Stock
Options, pursuant to any Award granted in any
one fiscal year to any one Participant shall be
Five Hundred Thousand (500,000).
(b) SARs: The maximum aggregate number of Shares
----
that may be granted in the form of Stock
Appreciation Rights, pursuant to any Award
granted in any one fiscal year to any one
Participant shall be Five Hundred Thousand
(500,000).
(c) Restricted Stock: The maximum aggregate grant
----------------
with respect to Awards of Restricted Stock
granted in any one fiscal year to any one
Participant shall be Two Hundred Thousand
(200,000) Shares.
-5-
<PAGE>
(d) Performance Shares/Performance Units and
----------------------------------------
Cash-Based Awards: The maximum aggregate payout
-----------------
(determined as of the end of the applicable
performance period) with respect to Cash-Based
Awards or Awards of Performance Shares or
Performance Units granted in any one fiscal year
to any one Participant shall be equal to the
value of Three Hundred Thousand (300,000)
Shares.
4.2. Lapsed Awards. If any Award granted under this
----------------------
Plan is canceled, terminates, expires, or lapses for any reason (with the
exception of the termination of a Tandem SAR upon exercise of the related
Option, or the termination of a related Option upon exercise of the
corresponding Tandem SAR), any Shares subject to such Award again shall be
available for the grant of an Award under the Plan.
4.3. Adjustments in Authorized Shares. In the event
-----------------------------------------
that the Board or any Committee, as appropriate, shall determine that any
dividend or other distribution (whether in the form of cash, securities, or
other property), recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of Shares
or securities which may thereafter be issued in connection with Awards, (ii) the
number and kind of Shares or securities issued or issuable in respect of
outstanding Awards, and (iii) the exercise price, grant price, or purchase price
relating to any Award or, if deemed appropriate, make provision for payment of
cash or other property with respect to any outstanding Award; provided in each
case, that with respect to ISOs, no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422 of the
Code. In addition, the Board or Committee, as appropriate, is authorized to make
adjustments in the terms and conditions of, and the criteria included in Awards
in recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence) affecting the Company or any
subsidiary or the financial statements of the Company or any subsidiary, or in
response to changes in applicable laws, regulations, accounting principles, tax
rates and regulations of business conditions.
Article 5. Eligibility and Participation
- -------------------------------------------
5.1. Eligibility. Persons eligible to participate in
--------------------
this Plan include all Employees and Directors.
5.2. Actual Participation. Subject to the provisions
-----------------------------
of the Plan, the Board may, from time to time, select from all eligible
Employees and Directors, those to whom Awards shall be granted and shall
determine the nature and amount of each Award.
-6-
<PAGE>
Article 6. Stock Options
- ---------------------------
6.1. Grant of Options. Subject to the terms and
-------------------------
provisions of the Plan, Options may be granted to Participants in such number,
and upon such terms, and at any time and from time to time as shall be
determined by the Board.
6.2. Award Agreement. Each Option grant shall be
------------------------
evidenced by an Award Agreement that shall specify the Option Price, the
duration of the Option, the number of Shares to which the Option pertains, and
such other provisions as the Board shall determine. The Award Agreement also
shall specify whether the Option is intended to be an ISO within the meaning of
Code Section 422, or an NQSO whose grant is intended not to fall under the
provisions of Code Section 422.
6.3. Option Price. The Option Price for each grant
---------------------
of an Option under this Plan shall be at least equal to one hundred percent
(100%) of the Fair Market Value of a Share on the date the Option is granted.
6.4. Duration of Options. Each Option granted to a
----------------------------
Participant shall expire at such time as the Board shall determine at the time
of grant; provided, however, that no Option shall be exercisable later than the
tenth (10th) anniversary of the date of its grant.
6.5. Exercise of Options. Options granted under this
----------------------------
Article 6 shall be exercisable at such times and be subject to such restrictions
and conditions as the Board shall in each instance approve, which need not be
the same for each grant or for each Participant.
6.6. Payment. Options granted under this Article 6
----------------
shall be exercised by the delivery of a written notice of exercise to the
Company, setting forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a)
and (b).
The Board also may allow cashless exercise as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law restrictions, or by
any other means which the Board determines to be consistent with the Plan's
purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).
-7-
<PAGE>
6.7. Restrictions on Share Transferability. The
----------------------------------------------
Board may impose such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Article 6 as it may deem advisable,
including, without limitation, restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state securities
laws applicable to such Shares.
6.8. Termination of Employment/Directorship. Each
-----------------------------------------------
Participant's Option Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise the Option following termination of
the Participant's employment or directorship with the Company. Such provisions
shall be determined in the sole discretion of the Board, shall be included in
the Award Agreement entered into with each Participant, need not be uniform
among all Options issued pursuant to this Article 6, and may reflect
distinctions based on the reasons for termination.
6.9. Nontransferability of Options.
--------------------------------------
(a) Incentive Stock Options. No ISO granted under
-----------------------
the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothe-
cated, other than by will or by the laws of
descent and distribution. Further, all ISOs
granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by
such Participant.
(b) Nonqualified Stock Options. Except as otherwise
--------------------------
provided in a Participant's Award Agreement, no
NQSO granted under this Article 6 may be sold,
transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or
by the laws of descent and distribution.
Further, except as otherwise provided in a
Participant's Award Agreement, all NQSOs granted
to a Participant under this Article 6 shall be
exercisable during his or her lifetime only by
such Participant.
Article 7. Stock Appreciation Rights
- ---------------------------------------
7.1. Grant of SARs. Subject to the terms and
----------------------
conditions of the Plan, SARs may be granted to Participants at any time and from
time to time as shall be determined by the Board. The Board may grant
Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.
The Board shall have complete discretion in determining the number of SARs
granted to each Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs. The grant price of a Freestanding SAR shall equal the Fair Market
Value of a Share on the date of grant of the SAR. The grant price of Tandem
SARs shall equal the Option Price of the related Option.
7.2. Exercise of Tandem SARs. Tandem SARs may be
--------------------------------
exercised for all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the related Option.
A Tandem SAR may be exercised only with respect to the Shares for which its
related Option is then exercisable.
-8-
<PAGE>
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3. Exercise of Freestanding SARs. Freestanding
--------------------------------------
SARs may be exercised upon whatever terms and conditions the Board, in its sole
discretion, imposes upon them.
7.4. SAR Agreement. Each SAR grant shall be
----------------------
evidenced by an Award Agreement that shall specify the grant price, the term of
the SAR, and such other provisions as the Board shall determine.
7.5. Term of SARs. The term of an SAR granted under
---------------------
the Plan shall be determined by the Board, in its sole discretion; provided,
however, that such term shall not exceed ten (10) years.
7.6. Payment of SAR Amount. Upon exercise of an SAR,
------------------------------
a Participant shall be entitled to receive payment from the Company in an amount
determined by multiplying:
(a) The difference between the Fair Market Value of
a Share on the date of exercise over the grant
price; by
(b) The number of Shares with respect to which the
SAR is exercised.
At the discretion of the Board, the payment upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof. The Board's
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.
7.7. Termination of Employment/Directorship. Each
-----------------------------------------------
SAR Award Agreement shall set forth the extent to which the Participant shall
have the right to exercise the SAR following termination of the Participant's
employment or directorship with the Company and/or its subsidiaries. Such
provisions shall be determined in the sole discretion of the Board, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination.
7.8. Nontransferability of SARs. Except as otherwise
-----------------------------------
provided in a Participant's Award Agreement, no SAR granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution and except as
otherwise required by law. Further, except as otherwise provided in a
Participant's
-9-
<PAGE>
Award Agreement, all SARs granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.
Article 8. Restricted Stock
- ------------------------------
8.1. Grant of Restricted Stock. Subject to the terms
----------------------------------
and provisions of the Plan, the Board, at any time and from time to time, may
grant Shares of Restricted Stock to Participants in such amounts as the Board
shall determine.
8.2. Restricted Stock Agreement. Each Restricted
-----------------------------------
Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall
specify the Period(s) of Restriction, the number of Shares of Restricted Stock
granted, and such other provisions as the Board shall determine.
8.3. Transferability. Except as provided in this
------------------------
Article 8, the Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction established by the Board and
specified in the Restricted Stock Award Agreement, or upon earlier satisfaction
of any other conditions, as specified by the Board in its sole discretion and
set forth in the Restricted Stock Award Agreement. All rights with respect to
the Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
8.4. Other Restrictions. Subject to Article 11
---------------------------
herein, the Board shall impose such other conditions and/or restrictions on any
Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or
individual), time-based restrictions on vesting following the attainment of the
performance goals, and/or restrictions under applicable federal or state
securities laws.
The Company may retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5. Voting Rights. Participants holding Shares of
----------------------
Restricted Stock granted hereunder may be granted the right to exercise full
voting rights with respect to those Shares during the Period of Restriction.
8.6. Dividends and Other Distributions. During the
------------------------------------------
Period of Restriction, Participants holding Shares of Restricted Stock granted
hereunder may be credited with regular cash dividends
-10-
<PAGE>
paid with respect to the underlying Shares while they are so held. The Board may
apply any restrictions to the dividends that the Board deems appropriate.
Without limiting the generality of the preceding sentence, if the grant or
vesting of Restricted Shares granted to a Covered Employee is designed to comply
with the requirements of the Performance-Based Exception, the Board may apply
any restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Shares, such that the dividends and/or the Restricted
Shares maintain eligibility for the Performance-Based Exception.
8.7. Termination of Employment/Directorship. Each
-----------------------------------------------
Restricted Stock Award Agreement shall set forth the extent to which the
Participant shall have the right to receive unvested Restricted Shares following
termination of the Participant's employment or directorship with the Company.
Such provisions shall be determined in the sole discretion of the Board, shall
be included in the Award Agreement entered into with each Participant, need not
be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination; provided, however
that, except in the cases of terminations by reason of death or Disability, the
vesting of Shares of Restricted Stock which qualify for the Performance-Based
Exception and which are held by Covered Employees shall occur at the time they
otherwise would have, but for the termination.
Article 9. Performance Units, Performance Shares, and
- --------------------------------------------------------
Cash-Based Awards
- -------------------
9.1. Grant of Performance Units/Shares and Cash-Based
---------------------------------------------------------
Awards. Subject to the terms of the Plan, Performance Units,
- --------
Performance Shares, and/or Cash-Based Awards may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Board.
9.2. Value of Performance Units/Shares and Cash-Based
---------------------------------------------------------
Awards. Each Performance Unit shall have an initial value
- --------
that is established by the Board at the time of grant. Each Performance Share
shall have an initial value equal to the Fair Market Value of a Share on the
date of grant. Each Cash-Based Award shall have a value as may be determined by
the Board. The Board shall set performance goals in its discretion which,
depending on the extent to which they are met, will determine the number and/or
value of Performance Units/Shares and Cash-Based Award that will be paid out to
the Participant. For purposes of this Article 9, the time period during which
the performance goals must be met shall be called a "Performance Period."
9.3. Earning of Performance Units/Shares and
------------------------------------------------
Cash-Based Awards. Subject to the terms of this Plan, after
- -------------------
the applicable Performance Period has ended, the holder of Performance
Units/Shares and Cash-Based Awards shall be entitled to receive payout on the
number and value of Performance Units/Shares and of Cash-Based Awards earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance goals have been achieved.
-11-
<PAGE>
9.4. Form and Timing of Payment of Performance
--------------------------------------------------
Units/Shares and Cash-Based Awards. Except as provided in
- ------------------------------------
the Participant's Award Agreement, payment of earned Performance Units/Shares
and Cash-Based Awards shall be made in a single lump sum following the close of
the applicable Performance Period. Subject to the terms of this Plan, the Board,
in its sole discretion, may pay earned Performance Units/Shares and Cash-Based
Awards in the form of cash or in Shares (or in a combination thereof) which have
an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Board. The
determination of the Board with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
At the discretion of the Board, Participants may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units and/or Performance Shares which have been
earned, but not yet distributed to Participants (such dividends shall be subject
to the same accrual, forfeiture, and payout restrictions as apply to dividends
earned with respect to Shares of Restricted Stock, as set forth in Section 8.6
herein). In addition, Participants may, at the discretion of the Board, be
entitled to exercise their voting rights with respect to such Shares.
9.5. Termination of Employment/Directorship Due to
- -----------------------------------------------------------
Death, Disability, or Retirement. Unless determined
- ----------------------------------
otherwise by the Board and set forth in the Participant's Award Agreement, in
the event the employment or directorship of a Participant is terminated by
reason of death, Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance Units/Shares or Cash-Based
Awards which is prorated, as specified by the Board in its discretion.
Payment of earned Performance Units/Shares or Cash-Based Awards shall be
made at a time specified by the Board in its sole discretion and set forth in
the Participant's Award Agreement. Notwithstanding the foregoing, with respect
to Covered Employees who retire during a Performance Period, payments shall be
made at the same time as payments are made to Participants who did not
terminate employment during the applicable Performance Period.
9.6. Termination of Employment/Directorship for Other
---------------------------------------------------------
Reasons. In the event that a Participant's employment or
- ---------
directorship terminates for any reason other than those
reasons set forth in Section 9.5 herein, all Performance
Units/Shares shall be forfeited by the Participant to the
Company unless determined otherwise by the Board, as set
forth in the Participant's Award Agreement.
9.7. Nontransferability. Except as otherwise
---------------------------
provided in a Participant's Award Agreement, Performance Units/Shares and
Cash-Based Awards may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's Award
Agreement, a Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
-12-
<PAGE>
Article 10. Stock Bonuses
- ---------------------------
Subject to the terms and provisions of the Plan, the Committee may grant
Shares of stock of the Company to any Participant as a bonus, upon such terms
and at any time and from time to time as determined by the Board.
Article 11. Performance Measures
- ----------------------------------
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 11, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed
to qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among the following:
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return measures (including, but not limited to,
return on assets, revenue, equity, or sales);
(d) Cash flow return on investments which equals net
cash flows divided by owners equity;
(e) Earnings before or after taxes;
(f) Measures of gross sales, gross revenues, or
growth in sales or revenues;
(g) Share price (including, but no limited to,
growth measures and total shareholder return);
and
(h) Operating measures (including, but not limited
to, operating margin and operating costs).
The Board shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by a Covered Employee, may not be adjusted upward (the Board
shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Board discretion to alter the governing performance measures without obtaining
shareholder approval of such changes, the Board shall have sole discretion to
make such changes without obtaining shareholder
-13-
<PAGE>
approval. In addition, in the event that the Board determines that it is
advisable to grant Awards which shall not qualify for the Performance-Based
Exception, the Board may make such grants without satisfying the requirements of
Code Section 162(m).
Article 12. Beneficiary Designation
- -------------------------------------
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
Article 13. Deferrals
- ------------------------
The Board may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock, or the satisfaction
of any requirements or goals with respect to Performance Units/Shares. If any
such deferral election is required or permitted, the Board shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
Article 14. Rights of Employees/Directors
- --------------------------------------------
14.1. Employment. Nothing in the Plan shall interfere
-------------------
with or limit in any way the right of the Company to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue in
the employ of the Company.
14.2. Participation. No Employee or Director shall
----------------------
have the right to be selected to receive an Award under this Plan, or, having
been so selected, to be selected to receive a future Award.
Article 15. Intentionally Left Blank
- ---------------------------------------
Article 16. Amendment, Modification, and Termination
- -------------------------------------------------------
16.1. Amendment, Modification, and Termination.
-------------------------------------------------
Subject to the terms of the Plan, the Board may at any time
and from time to time, alter, amend, suspend or terminate the
Plan in whole or in part.
-14-
<PAGE>
16.2. Adjustment of Awards Upon the Occurrence of
----------------------------------------------------
Certain Unusual or Nonrecurring Events. The Board may make
- ----------------------------------------
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4.3 herein) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations, or accounting principles, whenever the Board determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan;
provided that, unless the Board determines otherwise at the time such adjustment
is considered, no such adjustment shall be authorized to the extent that such
authority would be inconsistent with the Plan's meeting the requirements of
Section 162(m) of the Code, as from time to time amended.
16.3. Awards Previously Granted. Notwithstanding any
----------------------------------
other provision of the Plan to the contrary, no termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
16.4. Compliance with Code Section 162(m). At all
--------------------------------------------
times when Code Section 162(m) is applicable, all Awards granted under this Plan
shall comply with the requirements of Code Section 162(m); provided, however,
that in the event the Board determines that such compliance is not desired with
respect to any Award or Awards available for grant under the Plan, then
compliance with Code Section 162(m) will not be required. In addition, in the
event that changes are made to Code Section 162(m) to permit greater flexibility
with respect to any Award or Awards available under the Plan, the Board may,
subject to this Article 16, make any adjustments it deems appropriate.
Article 17. Withholding
- --------------------------
17.1. Tax Withholding. The Company shall have the
------------------------
power and the right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy Federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Plan.
17.2. Share Withholding. With respect to withholding
--------------------------
required upon the exercise of Options or SARs, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event arising as a result of Awards
granted hereunder, Participants may elect, subject to the approval of the Board,
to satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Board, in its sole discretion, deems appropriate.
-15-
<PAGE>
Article 18. Indemnification
- ------------------------------
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgement in any such action, suit, or proceeding against him or her, provided
he or she shall give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it on his
or her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Certificate of Incorporation of Bylaws, as a matter of law,
or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
Article 19. Successors
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All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 20. Legal Construction
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20.1. Gender and Number. Except where otherwise
--------------------------
indicated by the context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular shall include
the plural.
20.2. Severability. In the event any provision of the
---------------------
Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included.
20.3. Requirements of Law. The granting of Awards and
----------------------------
the issuance of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
20.4. Securities Law Compliance. With respect to
----------------------------------
Insiders, transactions under this Plan are intended to comply with all
applicable conditions or Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the plan or action by the Board fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Board.
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<PAGE>
20.5. Governing Law. To the extent not preempted by
----------------------
federal law, the Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Texas.
