EXHIBIT 4(a)
1993 COMPREHENSIVE
STOCK INCENTIVE PLAN
(as amended April 1999)
Sodexho Marriott Services, Inc.
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CONTENTS
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PAGE
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Article 1. Amendment and Restatement, Establishment, Purpose, And Duration 1
Article 2. Definitions and Construction 1
Article 3. Administration 4
Article 4. Shares Subject to the Plan 5
Article 5. Participation 6
Article 6. Stock Options 6
Article 7. Restricted Stock 10
Article 8. Deferred Stock 11
Article 9. Amendment, Modification, and Termination 12
Article 10. Tax Withholding 13
Article 11. Indemnification 13
Article 12. Successors 13
Article 13. Legal Construction 13
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SODEXHO MARRIOTT SERVICES, INC.
1993 COMPREHENSIVE STOCK INCENTIVE PLAN
ARTICLE 1. AMENDMENT AND RESTATEMENT, PURPOSE, AND DURATION
1.1 AMENDMENT AND RESTATEMENT OF THE PLAN. Marriott International,
Inc., a Delaware corporation to be renamed Sodexho Marriott Services, Inc. after
the Distribution (as defined below) and the Merger (as defined below) (the
"Company"), hereby amends and restates the Marriott International, Inc. 1993
Comprehensive Stock Incentive Plan (the "Predecessor Plan") as set forth herein,
such amended and restated plan to be known as the "Sodexho Marriott Services,
Inc. 1993 Comprehensive Stock Incentive Plan" (hereinafter referred to as the
"Plan").
The Plan as amended and restated herein shall become effective as of
the effective time of the Merger (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote and
enhance the long-term growth of the Company by aligning the personal interests
of Employees to those of Company shareholders and allowing such Employees to
participate in the growth, development and financial success of the Company,
through the issuance and administration of 1998 Conversion Awards.
1.3 DURATION OF THE PLAN. The Plan as amended and restated shall
commence on the Effective Date, as described in Section 1.1 hereof, and shall
remain in effect, subject to the right of the Board of Directors of the Company
to amend or terminate the Plan at any time pursuant to Article 9 hereof, until
all 1998 Conversion Awards have been exercised, vested, paid, forfeited or
otherwise terminated.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
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 is capitalized:
2.1 "ALLOCATION AGREEMENT" means the Employee Benefits and Other
Employment Matters Allocation Agreement by and between Marriott International,
Inc. (To Be Renamed Sodexho Marriott Services, Inc.) and New Marriott MI, Inc.
(To Be Renamed Marriott International, Inc.) dated as of September 30, 1997.
2.2 "AMENDMENT AGREEMENT" means the Amendment Agreement dated as of
January 28, 1998 by and among the Company, Marriott-ICC Merger-Corp., New
Marriott MI, Inc., Sodexho Alliance S.A. and International Catering Corporation.
2.3 "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
or Deferred Stock.
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2.4 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 under the Exchange Act.
2.5 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
2.7 "COMMITTEE" has the meaning set forth in Section 3.1.
2.8 "COMPANY" means Marriott International, Inc. which, after the
Distribution and the Merger, will be renamed Sodexho Marriott Services, Inc.,
together with any and all Subsidiaries, and any successor thereto as provided in
Article 12 herein.
2.9 "COMPETE" means to engage, individually or as an employee,
consultant or owner (more than 5%) of any entity, in any business engaged in
significant competition with any business operated by the Company.
2.10 "DEFERRED STOCK" means Shares subject to an Award of a Deferred
Stock Agreement granted under the terms and conditions described in Section 8.2.
2.11 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.12 "DISABILITY" means a permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the Committee in good faith,
upon receipt of sufficient competent medical advice from one or more
individuals, selected by or satisfactory to the Committee, who are qualified to
give professional medical advice.
2.13 "DISTRIBUTION" means the distribution to the holders of
outstanding shares of common stock of the Company of all the outstanding shares
of capital stock of New Marriott MI, Inc. as provided in the Distribution
Agreement.
2.14 "DISTRIBUTION AGREEMENT" means the Distribution Agreement between
Marriott International, Inc. (To Be Renamed "Sodexho Marriott Services, Inc.")
and New Marriott MI, Inc. (To Be Renamed "Marriott International, Inc.") dated
as of September 30, 1997, as amended by the Amendment Agreement.
2.15 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.16 "EMPLOYEE" means a nonunion, salaried employee of the Company who
during the thirteen four-week accounting periods prior to any date of
determination worked at least 2,080 hours for the Company.
2.17 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor thereto.
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2.18 "FAIR MARKET VALUE" means, unless otherwise determined in the
discretion of the Committee, the average of the highest and lowest quoted
selling prices for the Shares on the relevant date, or (if there were no sales
on such date) the average so computed on the nearest day before and the nearest
day after the relevant date, as prescribed by Treasury Regulation
20.2031-2(b)(2), as reported in the WALL STREET JOURNAL or a similar publication
selected by the Committee.
2.19 "INCENTIVE STOCK OPTION" or "ISO" means an Award of an option to
purchase Shares, granted under Article 6 hereof, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.20 "INSIDER" shall mean an individual who is, on the relevant date,
an officer, Director or more than 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, as defined under Section 16 of the Exchange Act.
2.21 "MERGER" means the merger contemplated by the Agreement and Plan
of Merger dated as of September 30, 1997, by and among Marriott International,
Inc. (To Be Renamed "Sodexho Marriott Services, Inc."), Marriott-ICC Merger
Corp., New Marriott MI, Inc. (To Be Renamed "Marriott International, Inc."),
Sodexho Alliance, S.A. and International Catering Corporation, as amended by the
Amendment Agreement.
2.22 "1998 CONVERSION AWARD" means an Award made to a Retained Employee
pursuant to the Allocation Agreement solely to reflect the effect of the
Distribution and Reverse Stock Split on outstanding awards made under the
Predecessor Plan and held by the Retained Employee immediately before the
Distribution.
2.23 "NONQUALIFIED STOCK OPTION" or "NQSO" means an Award of an option
to purchase Shares, granted under Article 6 hereof, which is not intended to be
an Incentive Stock Option.
2.24 "NON-UNION EMPLOYEE" means employees of the Company who are not
represented by a labor union with which the Company has entered into a
collective bargaining agreement.
2.25 "OFFICERS" shall have the meaning as that term is defined in Rule
16a-1(f), as the same may be amended from time-to-time, under the Exchange Act.
2.26 "OPTION" means an Award of an Incentive Stock Option or of a
Nonqualified Stock Option.
2.27 "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.28 "PARTICIPANT" means an Employee of the Company with regard to
whom an Award granted under the Plan is outstanding.
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2.29 "PERIOD OF RESTRICTION" means the period during which the transfer
of Shares of Restricted Stock is restricted in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and is subject to a
substantial risk of forfeiture, as provided in Article 7 hereof.
2.30 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and shall include a "group", as defined in Section
13(d)(3) thereof.
2.31 "PREDECESSOR PLAN" means the Marriott International, Inc. 1993
Comprehensive Stock Incentive Plan (prior to its amendment and restatement as
provided herein).
2.32 "PRESIDENT" means the chief executive officer of the Company
however such person may be titled.
2.33 "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 7 hereof.
2.34 "RETAINED EMPLOYEE" has the meaning set forth in Section 2.01 of
the Distribution Agreement.
2.35 "REVERSE STOCK SPLIT" means the conversion of four Shares into one
Share effected on or about the Effective Date, subject to shareholder approval.
2.36 "SHARES" means shares of the Common Stock of the Company, or of
any successor corporation adopting this Plan.
2.37 "SUBSIDIARY" means any corporation more than fifty percent of the
number of share of common stock of which is beneficially owned by the Company,
or by any of its subsidiaries.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Policy Committee of the Board, or by any other committee appointed by the Board
(the "Committee"). The members of the Committee shall be appointed from time to
time by, and shall serve at the discretion of, the Board of Directors.
3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full power to
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; to establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 9 herein) to
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall have the full power to make all other
determinations which may be necessary or advisable for the administration of the
Plan. The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the terms of any
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Award or in the terms of the Plan, in the manner and to the extent it shall deem
expedient. The Committee shall be the sole and final judge of such expediency,
and its determinations shall be conclusive. As permitted by law, the Committee
may delegate its authority under the Plan to a Director or Employee.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding on
all persons, including the Company, its stockholders, Employees, Participants,
and their estates, beneficiaries or other representatives.
3.4 UNANIMOUS CONSENT IN LIEU OF MEETING. A memorandum signed by all
Committee Members shall constitute the act of the Committee without the
necessity, in such event, to hold a meeting.
3.5 NO AWARDS OTHER THAN 1998 CONVERSION AWARDS. Notwithstanding
anything in this Plan to the contrary, on and after the Effective Date, no
Awards other than 1998 Conversion Awards shall be granted or outstanding under
this Plan; provided, however, that nothing in this Plan shall prohibit any
adjustment of any 1998 Conversion Award to the extent allowed by Section 4.3
hereof.
3.6 ADMINISTRATION OF CONVERSION AWARDS. To the extent required by the
Allocation Agreement, the Committee shall give service credit to each
Participant with respect to any continuing employment provisions under the terms
of any 1998 Conversion Award for purposes of determining eligibility, vesting,
or similar requirements.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the number of Shares hereby reserved for issuance under the Plan shall
be equal to the number of Shares subject to 1998 Conversion Awards after giving
effect to the Distribution and Reverse Stock Split.
4.2 LAPSED AWARDS. If any Award granted under this Plan terminates,
expires, or lapses for any reason other than pursuant to an adjustment as
provided in Section 4.3 hereof, any Shares subject to such Award shall not be
available for the grant of an Award by the Committee under this Plan, but such
Shares shall be available for the grant of awards under the Sodexho Marriott
Services, Inc. 1998 Comprehensive Stock Incentive Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES AND AWARDS. In the event of any
change in corporate capitalization, such as a stock split, or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company, (a) such adjustment shall be made in the number and class of Shares
which may be delivered under Section 4.1 as may be determined to be appropriate
and equitable by the Committee, in its sole
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discretion, to prevent dilution or enlargement of rights; and/or (b) the
Committee or the board of directors, compensation committee or similar body of
any other legal entity assuming the obligations of the Company hereunder, shall
either (i) make appropriate provision for the protection of outstanding Awards
by the substitution on an equitable basis of appropriate equity interests or
awards similar to the Awards, provided that the substitution neither enlarges
nor diminishes the value and rights under the Awards; or (ii) upon written
notice to the Participants, provide that Awards will be exercised, distributed,
canceled or exchanged for value pursuant to such terms and conditions (including
the waiver of any existing terms or conditions) as shall be specified in the
notice. Any adjustment of an ISO under this paragraph shall be made in such a
manner so as not to constitute a "modification" within the meaning of Section
424(h)(3) of the Code.
ARTICLE 5. PARTICIPATION
5.1 PARTICIPATION. Only those Employees of the Company entitled to
receive 1998 Conversion Awards shall participate in the Plan.
5.2 EMPLOYMENT. Nothing in the Plan or in any Award or Award agreement
shall interfere with or limit in any way the right of the Company to terminate
any Participant's employment at any time with or without cause, or to increase
or decrease the Employee's compensation from the rate in existence at the time
an Award is granted, and nothing in the Plan shall confer upon any Participant
any right to continue in the employ of the Company.
ARTICLE 6. STOCK OPTIONS
6.1 AWARD OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be awarded to Employees at any time and from time to time as shall
be determined by the Committee. The Committee shall have complete discretion in
determining the number of Shares subject to Options awarded to each Participant.
The Committee may award ISOs, NQSOs, or a combination thereof. No person shall
be eligible to receive Incentive Stock Option Awards who owns, directly or
indirectly (as ownership is defined in Section 424(d) of the Code), more than
ten percent (10%) of the voting stock of the Company or any of its subsidiaries.
Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in
excess of the maximum established by Section 422 of the Code.
6.2 OPTIONS. Options awarded under the Plan shall be evidenced by
stock option agreements in form consistent with the Plan as the Committee shall
approve from time to time, which agreements shall contain in substance the
following terms and conditions:
(a) PRICE. The purchase price for each Share deliverable upon
the exercise of an Option shall be not less than the Fair Market Value of the
stock as determined by the Committee on the day the award of the Option is
approved by the Committee, which shall be deemed to be the date the Option is
awarded. In the case of 1998 Conversion Awards of
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Options, the purchase price for each Share deliverable upon the exercise of an
Option shall be the amount determined in accordance with the Allocation
Agreement.
(b) NUMBER OF SHARES. The Option agreement shall specify the
number of shares to which it pertains. In the case of 1998 Conversion Awards,
the number of shares to which the Option pertains may be adjusted in accordance
with the Allocation Agreement.
(c) WAITING PERIOD AND EXERCISE DATES. The shares subject to
an Option may be purchased commencing one year after the date of the initial
grant, said one-year period being referred to herein as the "waiting period."
Following the waiting period, the shares subject to the Option may be purchased
in accordance with the schedule set forth in the Option agreement, which
schedule shall allow their purchase by the optionee no sooner than as follows:
25% of such shares commencing at the end of the waiting period, and an
additional 25% of such shares commencing at the first day of each of
the second, third, and fourth annual anniversaries of the date of the
Award; provided, however, that the purchase schedule set forth in any
Option agreement may specify any shorter or longer period for share
purchases as the Committee may determine in its sole and absolute
discretion.
To the extent that an Option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable at any time thereafter, provided,
however, that no such Option is exercisable after the expiration of fifteen (15)
years from the date such option is granted (ten (10) years from the grant date
in the case of an Incentive Stock Option), or such shorter period of time as
determined by the Committee upon the award of such Option. Partial exercise will
be permitted from time to time.
(d) MEDIUM AND TIME OF PAYMENT. Shares purchased pursuant to
an Option agreement shall be paid for in full at the time of purchase, payment
to be made either in cash or, if requested by the optionee and approved by the
Committee, by delivery of Shares having an aggregate fair market value equal to
the purchase price. Upon receipt of payment the Company shall, without transfer
or issue tax to the optionee or other Person entitled to exercise the option,
deliver to the optionee or such other Person either a certificate or
certificates for such Shares or confirmation from the transfer agent for the
Shares that said transfer agent is holding Shares for the account of the
optionee or such other Person in a certificateless account.
(e) RIGHTS AS A SHAREHOLDER. The optionee shall have no rights
as a shareholder with respect to any Shares covered by the Option until the date
of issuance of a stock certificate or confirmation for such Shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of
exercise.
(f) NON-ASSIGNABILITY OF OPTION RIGHTS. Except as may
otherwise be provided by the Committee, no Option shall be assignable or
transferable by the optionee except
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by will or by the laws of descent and distribution. During the life of an
optionee, the Option shall be exercisable only by the optionee.
(g) EFFECT OF LEAVE OF ABSENCE, TERMINATION OF EMPLOYMENT OR
DEATH. Except as otherwise provided by the Committee or in any employment
agreement or Award agreement, in the event that an optionee during the
optionee's lifetime goes on leave of absence for a period of greater than twelve
months, or ceases to be an employee of the Company or of any subsidiary for any
reason, including retirement (except a leave of absence approved by the Board or
the Committee, as the case may be), any Option or unexercised portion thereof
which was otherwise exercisable on the date of termination of employment shall
expire unless exercised within a period of three months (one year in the case of
an employee who is disabled, within the meaning of Section 22(e)(3) of the Code)
from the date on which the optionee ceased to be an Employee, or has been on
leave for over 12 months, but in no event after the expiration of the term for
which the Option was granted; provided, however, that in the case of an optionee
of an NQSO who is an "approved retiree" (as hereafter defined), said optionee
may exercise such Option until the sooner to occur of (i) the expiration of such
Option in accordance with its original term or (ii) one year from the date on
which the Option latest in time awarded to the optionee under the Plan has
become fully exercisable under Section 6.2(c) above. For purposes of the proviso
to the preceding sentence: (i) an "approved retiree" is any optionee who (A)
retires from employment with the Company with the specific approval of the
Committee, the Board or its designee on or after such date on which the total of
the number of years of service with the Company (each such year to be a period
of twelve consecutive calendar months during which the optionee was paid for
1200 or more hours of work) when added to the age of the optionee equals or
exceeds 75, and (B) has entered into an agreement not to compete in form and
substance satisfactory to the Company; (ii) any time period during which an
optionee may continue to exercise an Option within clause (ii) of said proviso
shall count in determining compliance with any schedule pursuant to Section
6.2(c) above; and (iii) if an approved retiree is subsequently found by the
Company to have violated the provisions of the non-competition agreement
referred to in clause (i)(B) of this sentence, said optionee shall have ninety
(90) days from the date of such finding within which to exercise any then
exercisable options. Except as otherwise provided by the Committee or in any
employment agreement or Award agreement, in the event of the death of an
optionee during the three month period described above for exercise of an Option
by a terminated optionee or one on leave for over 12 months then the Option
shall be exercisable by the optionee's personal representatives, heirs or
legatees to the same extent and during the same period that the optionee could
have exercised the Option if the optionee had not died. Except as otherwise
provided by the Committee or in any employment agreement or Award agreement, in
the event of the death of an optionee while an employee or an approved retiree
of the Company or any Subsidiary, the total Option granted to the deceased
employee (but only if the waiting period has elapsed), shall be exercisable by
the decedent's personal representatives, heirs or legatees at any time prior to
the expiration of one year from the date of the death of the optionee, but in no
event after the expiration of the term for which the Option was granted. Except
as otherwise provided by the Committee or in any employment agreement or Award
agreement, in the event that an optionee ceases to be an employee of the Company
or any Subsidiary for any reason, including death or retirement prior to the
lapse of the waiting period, the Option shall terminate and be null and void.
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(h) LEAVE OF ABSENCE. In the case of an employee who is on
approved leave of absence in excess of twelve months, the Committee may, as it
deems equitable, make provision for the continuance of the Option during the
period of the leave of absence, except that in no event shall an Option be
exercised after the expiration of the term for which such Option was granted.
(i) GENERAL RESTRICTION. Each Option shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the Shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as, for example, a condition of, or in connection with,
the issue or purchase of Shares thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
(j) DESIGNATION OF OPTION. Each option issued under the Plan
shall be clearly identified as an Incentive Stock Option or as a Non-Qualified
Stock Option.
6.3 INCENTIVE STOCK OPTIONS. The Committee may designate that any
Options granted pursuant to the Plan shall be Incentive Stock Options, any such
designation to be subject to the following terms and conditions:
(a) Exercised Options. No Option which has been exercised may
retroactively be designated as an Incentive Stock Option.
(b) No Incentive Stock Option shall be granted later than ten
years from the earlier of the date the Predecessor Plan was adopted or the date
the Predecessor Plan was approved by shareholders.
(c) Limitation on Annual Exercise. In the case of all
Incentive Stock Options granted hereunder, the aggregate fair market value
(determined at the time the options are granted) of the stock for which
Incentive Stock Options are exercisable for the first time by any Employee
during any calendar year (under plans of the Company and any of its
subsidiaries) shall not exceed $100,000.
(d) Compliance with Code. Any designation of an option as an
Incentive Stock Option and any related Option agreement shall be subject to and
contain such further terms and conditions as shall be necessary to comply with
all provisions of the Code (including any regulations thereunder or
interpretations thereof) which apply to Incentive Stock Options (as defined in
Section 422(b) of the Code). In addition, the Committee may, with respect to any
Option (and any related Option agreement) granted hereunder which is designated
as an Incentive Stock Option, adopt any amendment thereto which it may deem
necessary or advisable to comply with the provisions of Section 422 of the Code.
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ARTICLE 7. RESTRICTED STOCK
7.1 AWARD OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may award Shares of
Restricted Stock to Employees in such amounts, and bearing such restrictions, as
the Committee shall determine.
7.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock award shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Shares of Restricted Stock awarded, and
such other provisions as the Committee shall determine.
7.3 NATURE OF RESTRICTIONS. The restrictions to be imposed on the
Shares of Restricted Stock to be awarded to eligible key employees shall be
removed in phases over a period of years depending upon the fulfillment of
conditions to be determined by the Committee such as: (1) continued employment
with the Company over a prescribed period of time, and (2) the Employee's
refraining from Competing with the Company or otherwise engaging in activities
which are inimical to the Company's best interests.
It is intended that the restrictions imposed by the Committee will,
until released, constitute a "substantial risk of forfeiture" of the Shares of
Restricted Stock within the meaning of Section 83(c)(1) of the Code and Section
1.83-3 of the Federal Income Tax Regulations and are to be construed
accordingly. If the conditions are not met, then any Shares that otherwise would
be freed from the restrictions will be returned to the Company for cancellation.
7.4 NONTRANSFERABILITY OF RESTRICTED STOCK. Except as provided in this
Article 7, 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 Committee and
specified in the Restricted Stock agreement, or upon earlier satisfaction of any
other conditions, as specified by the Committee in its sole discretion and set
forth in the Restricted Stock agreement. All rights with respect to the Shares
of Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
7.5 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article 7, Shares of Restricted Stock covered by each Restricted Stock award
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction.
7.6 VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
7.7 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those Shares while they are so held. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
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7.8 TERMINATION OF EMPLOYMENT. In the event an Employee's employment
with the Company is terminated because of (i) his or her death, or (ii) mental
or physical disability of such a nature as to render him or her incapable of
performing his or her normally assigned duties, the releases of the Shares
pursuant to this Article 7 shall nevertheless continue in the same manner as
though his or her active employment with the Company were continuing on a
satisfactory performance basis; and Employee's rights thereunder in case of
death or mental incapacity shall inure to the benefit of his or her executors,
administrators, personal representatives, and assigns.
ARTICLE 8. DEFERRED STOCK
8.1 AWARD OF DEFERRED STOCK. Subject to the terms and conditions of
the Plan, the Board or Committee, in response to a recommendation from the
President, may award a Deferred Stock Agreement.
8.2 DEFERRED STOCK AGREEMENTS. Deferred Stock Agreements reserve
Shares of Common Stock for the benefit of the Employee subject to the following
conditions:
(a) VESTING. Shares contingently vest in pro rata annual
installments until age 65 or over a specified number of years. If the Employee's
employment with the Company is terminated for any reason, including death,
permanent disability or retirement, all reserved shares not vested before such
termination will be forfeited and the Deferred Stock Agreement terminated.
(b) DISTRIBUTION OF SHARES. Vested Shares will be distributed
to the Employee in ten consecutive annual installments, or over such shorter
period as the President may direct, commencing on January 2 following the date
the Employee retires, becomes permanently disabled, or attains at least age 65
and is no longer employed by the Company. Upon the Employee's death all
undistributed vested shares will be distributed in one distribution to the
deceased Employee's designated beneficiaries or, in absence of such
beneficiaries, to the Employee's estate.
(c) CONDITIONS. Distribution of shares subject to Deferred
Stock Agreements is conditioned upon:
(i) The Employee not competing with the Company,
without obtaining the Company's written
consent, at any time before all Shares
reserved for the Employee's benefit under
the Deferred Stock Agreement have been
distributed or forfeited,
(ii) The Employee not committing any criminal
offense or malicious tort relating to or
against the Company, and
(iii) The Employee having provided the Company
with a current address where Shares may be
distributed. If said conditions are not
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met all undistributed Shares will be
forfeited and the Deferred Stock Agreement
terminated.
8.3 ASSIGNMENT. An Employee's rights under a Deferred Stock Agreement
may not, without the Company's written consent, be assigned or otherwise
transferred, nor shall they be subject to any right or claim of an Employee's
creditors, provided that the Company may offset any amounts owing to or
guaranteed by the Company, or owing to any credit union related to the Company
against the value of Shares to be distributed under Deferred Stock Agreements.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend, or
modify the Plan. The termination, amendment, or modification of the Plan may be
in response to changes in the Code, Exchange Act, national securities exchange
regulations, or for other reasons deemed appropriate by the Committee. However,
without the approval of the stockholders of the Company, no such termination,
amendment, or modification may:
(a) Increase the number of Shares specified in Section 4.1 of
the Plan, or the total number of shares for which Options may be granted under
this Plan, except as provided in Section 4.3 herein; or
(b) Materially modify the requirements as to eligibility for
participation in the Plan; or
(c) Materially increase the benefits accruing to
Participants under the Plan; or
(d) Extend the maximum period after the date of grant during
which Options may be exercised; or
(e) Change the provisions of the Plan regarding Option Price
or the waiting period for exercise of Options, except as provided in Sections
4.3 or 6.2 hereof. The termination or any modification or amendment of the Plan
shall not, without the consent of an Employee, affect the Employee's rights
under an Award previously granted to the Employee. With the consent of the
Employee affected, the Committee may amend an outstanding Award agreement in a
manner consistent with the Plan.
9.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall in any manner adversely affect any Award
previously granted under the Plan, without the written consent of the
Participant.
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ARTICLE 10. WITHHOLDING
The Company shall have the power and the right to deduct from any
amount otherwise due to the Participant, 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.
With respect to withholding required in connection with any Award, the
Company may require, or the Committee may permit a Participant to elect, that
the withholding requirement be satisfied, 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 withheld on
the transaction. Any election by a Participant shall be irrevocable, made in
writing, signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
ARTICLE 11. 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 judgment 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 Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
ARTICLE 12. SUCCESSORS
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, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation, or otherwise.
ARTICLE 13. LEGAL CONSTRUCTION
13.1 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.
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13.2 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.
13.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under this 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.
13.4 GOVERNING LAW. To the extent not preempted or otherwise governed
by Federal law, the Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Maryland.
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