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EXHIBIT 4
TV GUIDE, INC.
EQUITY INCENTIVE PLAN
(Composite Plan Document)
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TV GUIDE, INC.
EQUITY INCENTIVE PLAN
Note: This document is a composite plan document reflecting (1) the terms of
the TV Guide, Inc. Equity Incentive Plan after giving effect to the merger of TV
Guide, Inc. and Gemstar International Group Limited pursuant to the Agreement
and Plan of Merger dated as of October 4, 1999 among Gemstar International Group
Limited, G Acquisition Subsidiary Corp. and TV Guide, Inc., as amended on
February 7, 2000 (the "Transaction"), and (2) all amendments to the plan adopted
prior to the closing of the Transaction.
ARTICLE I
INTRODUCTION
1.1 Establishment. TV Guide, Inc., a Delaware corporation (formerly
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United Video Satellite Group, Inc.) established the TV Guide Inc. Equity
Incentive Plan (formerly the United Video Satellite Group, Inc. Equity Incentive
Plan) (the "Plan") for certain key employees of the Company. The Plan was
assumed by Gemstar-TV Guide International, Inc. in connection with the
Transaction. (Gemstar-TV Guide International, Inc. is hereinafter referred to,
together with its Affiliated Corporations (as defined in subsection 2.1(a)), as
the "Company" except where the context otherwise requires.) The Plan permits
the grant of stock options, restricted stock awards, stock appreciation rights,
stock units and other stock grants to certain key employees of the Company.
1.2 Purposes. The purposes of the Plan are to provide the key employees
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selected for participation in the Plan with added incentives to continue in the
service of the Company and to create in such employees a more direct interest in
the future success of the operations of the Company by relating incentive
compensation to the achievement of long-term corporate economic objectives, so
that the income of the key employees is more closely aligned with the income of
the Company's shareholders. The Plan is also designed to attract key employees
and to retain and motivate participating employees by providing an opportunity
for investment in the Company.
1.3 Effective Date. The effective date of the Plan shall be as set
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forth in subsection 2.1(g) (the "Effective Date"), subject to approval by the
stockholders of the Company, within twelve (12) months before or after the
Effective Date, in a manner authorized by Code Section 422 and the regulations
promulgated thereunder. If the stockholders of the Company do not approve the
Plan as specified above, Awards (as defined in subsection 2.1(b)) made under the
Plan shall be deemed to be rescinded without any further action by the Board or
the Company, and the Plan shall automatically terminate.
ARTICLE II
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
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below:
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(a) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) that is affiliated with Gemstar-TV
Guide International, Inc. through stock ownership or otherwise and is treated as
a common employer under the provisions of sections 414(b) and (c) of the Code,
together with any parent or subsidiary of the Company as defined in section 424
of the Code.
(b) "Award" means an Option, a Restricted Stock Award, a Stock
Appreciation Right, grants of Stock pursuant to Article X or other issuances of
Stock hereunder.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(e) "Compensation Committee" means a committee consisting of members
of the Board who are empowered hereunder to take actions in the administration
of the Plan. Members of the Compensation Committee shall be appointed from time
to time by the Board, shall serve at the pleasure of the Board and may resign at
any time upon written notice to the Board. The Board may appoint more than one
committee to perform specific responsibilities under the Plan, including the
grant of Awards to specific groups of employees, and the reference herein to
the Compensation Committee shall mean any such committee.
(f) "Disabled" or "Disability" shall have the meaning given to such
terms in Section 22(e)(3) of the Code.
(g) "Effective Date" means the effective date of the Plan, November
16, 1993.
(h) "Eligible Employees" means those key employees (including,
without limitation, officers and directors who are also employees) of the
Company or any division thereof, upon whose judgment, initiative and efforts the
Company is, or will become, largely dependent for the successful conduct of its
business.
(i) "Fair Market Value" means the average of the highest and lowest
price of the Stock as reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on the applicable date. If there are no
Stock transactions on such date, the Fair Market Value shall be determined as of
the immediately preceding date on which there were Stock transactions. If the
price of the Stock is not reported on NASDAQ, the Fair Market Value of the Stock
on the applicable date shall be as determined by the Compensation Committee
using a reference comparable to the NASDAQ system. If, upon exercise of an
Option, the exercise price is paid by a broker's transaction as provided in
subsection 7.2(g)(ii)(D), Fair Market Value, for purposes of the exercise, shall
be the price at which the Stock is sold by the broker. Notwithstanding the
foregoing, for purposes of determining the "Fair Market Value" of a share of
Stock with respect to Options granted immediately prior to the time of the
initial public offering (the "IPO") of the Stock, the "Fair Market Value" shall
be equal to the price per share at which shares of the Stock are first sold to
the public pursuant to the IPO.
(j) "Incentive Option" means an Option designated as such and granted
in accordance with Section 422 of the Code.
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(k) "Non-Qualified Option" means any Option other than an Incentive
Option.
(l) "Option" means a right to purchase Stock at a stated or formula
price for a specified period of time. Options granted under the Plan shall be
either Incentive Options or Non-Qualified Options.
(m) "Option Agreement" shall have the meaning given to such term in
Section 7.2 hereof.
(n) "Option Holder" means a Participant who has been granted one or
more Options under the Plan.
(o) "Option Price" means the price at which shares of Stock subject
to an Option may be purchased, determined in accordance with subsection 7.2(b).
(p) "Participant" means an Eligible Employee designated by the
Compensation Committee from time to time during the term of the Plan to receive
one or more of the Awards provided under the Plan.
(q) "Restricted Stock Award" means an award of Stock granted to a
Participant pursuant to Article VII that is subject to certain restrictions
imposed in accordance with the provisions of such Section.
(r) "Share" means a share of Stock.
(s) "Stock" means the Common Stock, par value $0.01per share, of
Gemstar-TV Guide International, Inc..
(t) "Stock Appreciation Right" means the right, granted by the
Compensation Committee pursuant to the Plan, to receive a payment determined by
the increase in value that occurs subsequent to the grant of the Stock
Appreciation Right based upon such factors as may be established by the
Compensation Committee in its sole discretion at the time of the grant of the
Stock Appreciation Right.
2.2 Gender and Number. Except when otherwise indicated by the context,
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the masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural.
ARTICLE III
PLAN ADMINISTRATION
The Plan shall be administered by the Compensation Committee. In
accordance with the provisions of the Plan, the Compensation Committee shall, in
its sole discretion, select the Participants from among the Eligible Employees,
determine the Awards to be made pursuant to the Plan, the number of Stock
Appreciation Rights or shares of Stock to be issued thereunder and the time at
which such Awards are to be made, fix the Option Price, period and manner in
which
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an Option becomes exercisable, establish the duration and nature of Restricted
Stock Award restrictions, establish the terms and conditions applicable to Stock
Appreciation Rights, and establish such other terms and requirements of the
various compensation incentives under the Plan as the Compensation Committee may
deem necessary or desirable and consistent with the terms of the Plan. The
Compensation Committee shall determine the form or forms of the agreements with
Participants that shall evidence the particular provisions, terms, conditions,
rights and duties of the Company and the Participants with respect to Awards
granted pursuant to the Plan, which provisions need not be identical except as
may be provided herein. The Compensation Committee may from time to time adopt
such rules and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The Compensation Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or in any agreement entered into hereunder in the manner and to the
extent it shall deem expedient and it shall be the sole and final judge of such
expediency. No member of the Compensation Committee shall be liable for any
action or determination made in good faith. The determinations, interpretations
and other actions of the Compensation Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all persons.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The number of shares of Stock that are authorized
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for issuance under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the Compensation Committee
may from time to time deem necessary shall not exceed 7,887,600 (after giving
effect to the Transaction). This authorization may be increased from time to
time by approval of the Board and by the stockholders of the Company if, in the
opinion of counsel for the Company, stockholder approval is required. Shares of
Stock that may be issued upon exercise of Options, that are issued as Restricted
Stock Awards, and that are issued as incentive compensation or other stock
grants under the Plan shall be applied to reduce the maximum number of shares of
Stock remaining available for use under the Plan. Shares of Stock that may be
issued upon the exercise of stock options assumed by the Company in connection
with a corporate reorganization or merger shall not be counted against the
number of shares of Stock authorized for issuance under this Plan. The Company
shall at all times during the term of the Plan and while any Options are
outstanding retain as authorized and unissued Stock at least the number of
shares from time to time required under the provisions of the Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to an
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option that expires or for any reason is terminated unexercised, any shares of
Stock that are subject to an Award (other than an Option) and that are
forfeited, and any shares of Stock withheld for the payment of taxes or received
by the Company as payment of the exercise price of
an Option shall automatically become available for use under the Plan, provided,
however, that no more than 7,887,600 shares of Stock (after giving effect to the
Transaction) may be awarded pursuant to Incentive Options.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
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shall at any time increase or decrease the number of its outstanding shares of
Stock or change in any way the rights and privileges of such shares by means of
the payment of a stock dividend or any other
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distribution upon such shares payable in Stock, or through a stock split,
subdivision, consolidation, combination, reclassification or recapitalization
involving the Stock, then in relation to the Stock that is affected by one or
more of the above events, the numbers, rights and privileges of the following
shall be increased, decreased or changed in like manner as if they had been
issued and outstanding, fully paid and nonassessable at the time of such
occurrence: (i) the shares of Stock as to which Awards may be granted under the
Plan and (ii) the shares of the Stock then included in each outstanding Award
granted hereunder.
4.4 Other Distributions and Changes in the Stock. If
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(a) the Company shall at any time distribute with respect to the Stock
assets or securities of persons other than the Company (excluding cash or
distributions referred to in Section 4.3), or
(b) the Company shall at any time grant to the holders of its Stock
rights to subscribe pro rata for additional shares thereof or for any other
securities of the Company, or
(c) there shall be any other change (except as described in Section
4.3) in the number or kind of outstanding shares of Stock or of any stock or
other securities into which the Stock shall be changed or for which it shall
have been exchanged, and if the Compensation Committee shall in its discretion
determine that the event described in subsection (a), (b), or (c) above
equitably requires an adjustment in the number or kind of shares subject to an
Option or other Award, an adjustment in the Option Price or the taking of any
other action by the Compensation Committee, including without limitation, the
setting aside of any property for delivery to the Participant upon the exercise
of an Option or the full vesting of an Award, then such adjustments shall be
made, or other action shall be taken, by the Compensation Committee and shall be
effective for all purposes of the Plan and on each outstanding Option or Award
that involves the particular type of stock for which a change was effected.
Notwithstanding the foregoing provisions of this Section 4.4, pursuant to
Section 8.3 below, a Participant holding Stock received as a Restricted Stock
Award shall have the right to receive all amounts, including cash and property
of any kind, distributed with respect to the Stock upon the Participant's
becoming a holder of record of the Stock. Notwithstanding the foregoing
provisions of this Section 4.4, an Option Holder shall not be entitled to
receive cash dividends with respect to shares of Stock until such time as the
Option Holder has exercised the Option in accordance with the provisions of
subsection 7.2(g) and has become the owner of record of such Stock and nothing
contained herein shall be deemed to create any preemptive rights with respect to
an Option Holder.
4.5 General Adjustment Rules. No adjustment or substitution provided for
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in this Article IV shall require the Company to sell a fractional share of Stock
under any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option and other Award shall be
limited by deleting any fractional share. In the case of any such substitution
or adjustment, the total Option Price for the shares of Stock then subject to an
Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Compensation Committee to reflect the
greater or lesser number of shares of Stock or other securities into which the
Stock subject to the Option may have been changed, and appropriate adjustments
shall be made to other Awards to reflect any such substitution or adjustment.
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4.6 Determination by the Compensation Committee, Etc. Adjustments under
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this Article IV shall be made by the Compensation Committee, whose
determinations with regard thereto shall be final and binding upon all parties
thereto.
ARTICLE V
CORPORATE REORGANIZATION
5.1 Reorganization. Upon the occurrence of any of the following events,
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the Compensation Committee shall notify the Participants under the Plan in
accordance with Section 5.2 and all of the Awards then outstanding shall be
treated as described in Section 5.2, without the necessity for any additional
notice or other action by the Board or the Company: (a) the merger or
consolidation of the Company with or into another corporation or other
reorganization (other than a reorganization under the United States Bankruptcy
Code) of the Company (other than a consolidation, merger, or reorganization in
which the Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Stock); or (b) the sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety (other than a sale or conveyance in which the Company continues as
holding company of an entity or entities that conduct the business or business
formerly conducted by the Company).
5.2 Required Notice.
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(a) Options. If the Company is a party to a transaction described in
clause (a) or (b) of Section 5.1, the Compensation Committee may either: (i)
declare that all Options granted under the Plan shall become exercisable
immediately, notwithstanding the provisions of the respective Option Agreements
regarding exercisability, and all Options shall terminate thirty (30) days after
the Compensation Committee gives written notice to all Option Holders of their
immediate right to exercise all Options then outstanding and of the Compensation
Committee's decision to terminate all Options not exercised within such thirty
(30) day period; or (ii) declare that all Options previously vested under the
Plan must be exercised within thirty (30) days after the Compensation Committee
gives written notice to such vested Option Holders of such termination and of
the Compensation Committee's decision to terminate all Options (including
Options not vested) at the end of such thirty (30) day period; or (iii) notify
all Option Holders that all Options granted under the Plan shall apply (as
determined by the Compensation Committee) to the securities of the resulting
corporation with appropriate adjustments to such Options.
(b) Other Awards. Upon the occurrence of any of the events described
under clauses (a) or (b) of Section 5.1, the Compensation Committee shall give
at least thirty (30) days prior written notice to each Participant with respect
to Awards other than Options and the Company, or the successor or purchaser, as
the case may be, shall either (i) make adequate provision for the adjustment of
outstanding Awards (other than Options) so that such Awards shall entitle the
Participant to receive the kind and amount of securities or property or cash
receivable upon such merger, consolidation, other reorganization, sale or
conveyance by a holder of the number of shares of Stock that would have been
receivable with respect to such Award immediately prior to such merger,
consolidation, other reorganization, sale or conveyance (assuming such holder of
Stock failed to exercise any rights of election and received per share
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the kind and amount received per share by a majority of the non-electing
shares), or (ii) terminate such Awards and arrange for the payment by the
Company or the successor to the Company to each affected Participant of an
amount equal to the value of each such Award at the time of termination.
5.3 Liquidation or Dissolution. The adoption of a plan of dissolution or
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liquidation by the Board and the stockholders of the Company (a "Liquidation")
shall cause every Award outstanding under the Plan to terminate to the extent
not exercised within thirty (30) days after notice is delivered to the
Participant of the adoption of a plan of Liquidation by the stockholders of the
Company; provided, however, that the Compensation Committee, in its discretion,
may declare that all Awards granted under the Plan shall be exercisable
immediately, notwithstanding the provisions of the respective Awards regarding
exercisability.
5.4 Limitation on Payments. If the provisions of this Article V would
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result in the receipt by any Participant of a payment within the meaning of
Section 280G of the Code and the regulations promulgated thereunder and if the
receipt of such payment by any Participant would, in the opinion of independent
tax counsel of recognized standing selected by the Company, result in the
payment by such Participant of any excise tax provided for in Sections 280G and
4999 of the Code, then the amount of such payment shall be reduced to the extent
required, in the opinion of independent tax counsel, to prevent the imposition
of such excise tax; provided, however, that the Compensation Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.
ARTICLE VI
PARTICIPATION
Participants in the Plan shall be those Eligible Employees who, in the
judgment of the Compensation Committee, are performing, or during the term of
their incentive arrangement will perform, vital services in the management,
operation and development of the Company or an Affiliated Corporation, and
significantly contribute, or are expected to significantly contribute, to the
achievement of long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however, that the grant
of each such Award shall be separately approved by the Compensation Committee,
and receipt of one such Award shall not result in automatic receipt of any other
Award. Upon determination by the Compensation Committee that an Award is to be
granted to a Participant, written notice shall be given to such person,
specifying the terms, conditions, rights and duties related thereto. Each
Participant shall, if required by the Compensation Committee, enter into an
agreement with the Company, in such form as the Compensation Committee shall
determine and which is consistent with the provisions of the Plan, specifying
such terms, conditions, rights and duties. Awards shall be deemed to be granted
as of the date specified in the grant resolution of the Compensation Committee,
which date shall be the date of any related agreement with the Participant. In
the event of any inconsistency between the provisions of the Plan and any such
agreement entered into hereunder, the provisions of the Plan shall govern.
Notwithstanding any other provision of this Plan, the maximum number of shares
of Stock that may be issued to any one Participant during the term of this Plan
pursuant to all Awards shall be 1,971,900 shares of Stock (after giving effect
to the Transaction), provided, however, that Options issued under this Plan as
substitution or replacement options pursuant to a reorganization shall not be
counted against such
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limit, and provided further, that the 1,971,900 share limit (after giving effect
to the Transaction) shall be adjusted as provided in Articles IV and V to
reflect any transaction described therein.
ARTICLE VII
OPTIONS
7.1 Grant of Options. Coincident with or following designation for
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participation in the Plan, a Participant may be granted one or more Options.
The Compensation Committee in its sole discretion shall designate whether an
Option is an Incentive Option or a Non-Qualified Option. The Compensation
Committee may grant both an Incentive Option and a Non-Qualified Option to an
Eligible Employee at the same time or at different times. Incentive Options and
Non-Qualified Options, whether granted at the same time or at different times,
shall be deemed to have been awarded in separate grants and shall be clearly
identified, and in no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of shares for which any other
Option may be exercised, except as provided in subsection 7.2(j). An Option
shall be considered as having been granted on the date specified in the grant
resolution of the Compensation Committee.
7.2 Stock Option Agreements. Each Option granted under the Plan shall be
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be evidenced by a written stock option agreement (an "Option Agreement"). An
Option Agreement shall be entered into between the Company and the Participant
to whom the Option is granted (the "Option Holder") and shall be in such form as
may be approved by the Compensation Committee. The Option Agreement shall
incorporate and conform to the conditions set forth in this Section 7.2 as well
as such other terms and conditions that are not inconsistent as the Compensation
Committee may consider appropriate in each case.
(a) Number of Shares. Each Option Agreement shall state that it
covers a specified number of shares of Stock, as determined by the Compensation
Committee.
(b) Price. The price at which each share of Stock covered by an
Option may be purchased shall be determined in each case by the Compensation
Committee and set forth in the Option Agreement, but in no event shall the price
be less than 100 percent of the Fair Market Value of the Stock on the date the
Option (both Incentive and Non-Qualified) is granted, provided, however, that
Options may be issued under this Plan in substitution for outstanding options
issued by another corporation that is a party to a reorganization, consolidation
or merger to which the Company is also a party with an exercise price less than
the Fair Market Value of the Stock on the date the replacement Option is granted
if such replacement Option is granted in accordance with the provisions of
section 424 of the Code that govern the issuance of substitute options in such
corporate transactions.
(c) Duration of Options; Restrictions on Exercise. Each Option
Agreement shall state the period of time, determined by the Compensation
Committee, within which the Option may be exercised by the Option Holder (the
"Option Period"). The Option Period must end, in all cases, not more than ten
years from the date the Option is granted. The Option Agreement shall also set
forth any installment or other restrictions on Option exercise during such
period, if any, as may be determined by the Compensation Committee. Each Option
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shall become exercisable (vest) over such period of time, if any, or upon such
events, as determined by the Compensation Committee.
(d) Termination of Employment, Death, Disability, Etc. The
Compensation Committee may specify the period, if any, after which an Option may
be exercised following termination of the Option Holder's employment. The
effect of this subsection 7.2(d) shall be limited to determining the
consequences of a termination and nothing in this subsection 7.2(d) shall
restrict or otherwise interfere with the Company's discretion with respect to
the termination of any individual's employment. If the Compensation Committee
does not otherwise specify, the following shall apply:
(i) If the employment of the Option Holder terminates for any
reason other than death or Disability, the Option shall thereafter be void for
all purposes, provided, however, that if such termination of employment shall be
due to the Option Holder's voluntary resignation with the consent of the
Compensation Committee, such Option may be exercised for a period of three
months after such termination of employment, so long as such Option is exercised
within the Option Period. If the Compensation Committee permits the exercise of
an Option after termination of employment pursuant to the foregoing sentence,
the Option may only be exercised with respect to the shares of Stock as to which
the Option was exercisable on the date of the Option Holder's termination of
employment.
(ii) If the Option Holder becomes Disabled, the Option may be
exercised by the Option Holder, or in the case of death by the persons specified
in subsection (iii) of this subsection 7.2(d), within one year following his or
her Disability (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be exercised only
as to the shares as to which the Option had become exercisable on or before the
date of the Option Holder's termination of employment because of Disability.
(iii) If the Option Holder dies during the Option Period while
still employed or within the one year period referred to in (ii) above or the
three month period referred to in (i) above (if applicable), the Option may be
exercised by those entitled to do so under the Option Holder's will or by the
laws of descent and distribution within one year following the Option Holder's
death, (provided that such exercise must occur within the Option Period), but
not thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date of
the Option Holder's death.
(e) Transferability. Each Option shall not be transferable by the
Option Holder except by will or pursuant to the laws of descent and
distribution. Each Option is exercisable during the Option Holder's lifetime
only by him or her, or in the event of disability or incapacity, by his or her
guardian or legal representative. The Committee may, however, provide at the
time of grant or thereafter that the Option Holder may transfer a Non-Qualified
Option to a member of the Option Holder's immediate family, a trust of which the
members of the Option Holder's immediate family are the only beneficiaries, or a
partnership of which members of the Option Holder's immediate family or a trust
for the sole benefit of the Option Holder's immediate family are the only
partners. Immediate family means the Option Holder's spouse, issue (by birth or
adoption), parents, grandparents and siblings (including half brothers and
sisters and adopted siblings). The Committee may require the Option Holder and
the transferee to enter into an appropriate agreement with the Company providing
for, among other things, the satisfaction
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of required tax withholding with respect to the exercise of the transferred
Option and the satisfaction of any Stock retention requirements applicable to
the Option Holder, together with such other terms and conditions as may be
specified by the Committee. During the Option Holder's lifetime the Option
Holder may not transfer an Incentive Option under any circumstances.
(f) Consideration for Grant of Option. Each Option Holder agrees to
remain in the employment of the Company, at the pleasure of the Company, for a
continuous period of at least one year after the date the Option is granted, at
the salary rate in effect on the date of such agreement or at such changed rate
as may be fixed, from time to time, by the Company. Nothing in this paragraph
shall limit or impair the Company's right to terminate the employment of any
employee.
(g) Exercise, Payments, Etc.
(i) Manner of Exercise. The method for exercising each Option
granted hereunder shall be by delivery to the Company of written notice
specifying the number of Shares with respect to which such Option is exercised.
The purchase of such Shares shall take place at the principal offices of the
Company within thirty days following delivery of such notice, at which time the
Option Price of the Shares shall be paid in full by any of the methods set forth
below or a combination thereof. Except as set forth in the next sentence, the
Option shall be exercised when the Option Price for the number of shares as to
which the Option is exercised is paid to the Company in full. If the Option
Price is paid by means of a broker's loan transaction described in subsection
7.2(g)(ii)(D), in whole or in part, the closing of the purchase of the Stock
under the Option shall take place (and the Option shall be treated as exercised)
on the date on which, and only if, the sale of Stock upon which the broker's
loan was based has been closed and settled, unless the Option Holder makes an
irrevocable written election, at the time of exercise of the Option, to have the
exercise treated as fully effective for all purposes upon receipt of the Option
Price by the Company regardless of whether or not the sale of the Stock by the
broker is closed and settled. A properly executed certificate or certificates
representing the Shares shall be delivered to or at the direction of the Option
Holder upon payment therefor.
(ii) Unless otherwise specified by the Compensation Committee at
the time an Option is granted to an Option Holder, the exercise price shall be
paid by any of the following methods or any combination of the following methods
at the election of the Option Holder, or by any other method approved by the
Compensation Committee upon the request of the Option Holder:
(A) by certified, cashier's check or other check acceptable
to the Company, payable to the order of the Company;
(B) by delivery to the Company of certificates representing
the number of shares then owned by the Option Holder, the Fair Market Value of
which equals the purchase price of the Stock purchased pursuant to the Option,
properly endorsed for transfer to the Company; provided however, that no Option
may be exercised by delivery to the Company of certificates representing Stock,
unless such Stock has been held by the Option Holder for more than six months;
for purposes of this Plan, the Fair Market Value of any shares of Stock
delivered in payment of the purchase price upon exercise of the Option shall be
the Fair Market
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Value as of the exercise date; the exercise date shall be the day of delivery of
the certificates for the Stock used as payment of the Option Price; or
(C) by delivery to the Company of a properly executed notice
of exercise together with irrevocable instructions to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a portion of
the Stock or of a loan from the broker to the Option Holder required to pay the
Option Price.
(h) Date of Grant. An Option shall be considered as having been
granted on the date specified in the grant resolution of the Compensation
Committee.
(i) Withholding.
(i) Non-Qualified Options. Upon exercise of an Option, the
Option Holder shall make appropriate arrangements with the Company to provide
for the amount of additional withholding required by Sections 3102 and 3402 of
the Code and applicable state income tax laws, including payment of such taxes
through delivery of shares of Stock or by withholding Stock to be issued under
the Option, as provided in Article XV.
(ii) Incentive Options. If an Option Holder makes a disposition
(as defined in Section 424(c) of the Code) of any Stock acquired pursuant to the
exercise of an Incentive Option prior to the expiration of two years from the
date on which the Incentive Option was granted or prior to the expiration of one
year from the date on which the Option was exercised, the Option Holder shall
send written notice to the Company at its principal office in Tulsa, Oklahoma
(Attention: Corporate Secretary), of the date of such disposition, the number of
shares disposed of, the amount of proceeds received from such disposition and
any other information relating to such disposition as the Company may reasonably
request. The Option Holder shall, in the event of such a disposition, make
appropriate arrangements with the Company to provide for the amount of
additional withholding, if any, required by Sections 3102 and 3402 of the Code
and applicable state income tax laws.
7.3 Restrictions on Incentive Options.
---------------------------------
(a) Initial Exercise. The aggregate Fair Market Value of the
Shares with respect to which Incentive Options are exercisable for the first
time by an Option Holder in any calendar year, under the Plan or otherwise,
shall not exceed $100,000. For this purpose, the Fair Market Value of the Shares
shall be determined as of the date of grant of the Option.
(b) Ten Percent Stockholders. Incentive Options granted to an
Option Holder who is the holder of record of 10% or more of the outstanding
Stock of the Company shall have an Option Price equal to 110% of the Fair Market
Value of the Shares on the date of grant of the Option and the Option Period for
any such Option shall not exceed five years.
7.4 Stockholder Privileges. No Option Holder shall have any rights as
----------------------
a stockholder with respect to any shares of Stock covered by an Option until the
Option Holder becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other rights as to which
there is a record date preceding the date such Option Holder becomes the holder
of record of such Stock, except as provided in Article IV.
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ARTICLE VIII
RESTRICTED STOCK AWARDS
8.1 Grant of Restricted Stock Awards. Coincident with or following
--------------------------------
designation for participation in the Plan, the Compensation Committee may grant
a Participant one or more Restricted Stock Awards consisting of Shares of Stock.
The number of Shares granted as a Restricted Stock Award shall be determined by
the Compensation Committee.
8.2 Restrictions. A Participant's right to retain a Restricted Stock
------------
Award granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company or an
Affiliated Corporation for a restriction period specified by the Compensation
Committee or the attainment of specified performance goals and objectives, as
may be established by the Compensation Committee with respect to such Award.
The Compensation Committee may in its sole discretion require different periods
of employment or different performance goals and objectives with respect to
different Participants, to different Restricted Stock Awards or to separate,
designated portions of the Stock shares constituting a Restricted Stock Award.
In the event of a Participant's termination of employment for any reason, any
Restricted Stock Awards as to which the employment period or other restrictions
have not been satisfied shall be forfeited, and all shares of Stock related
thereto shall be immediately returned to the Company.
8.3 Privileges of a Stockholder, Transferability. A Participant shall
--------------------------------------------
have all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under this
Article VIII upon his becoming the holder of record of such Stock; provided,
however, that the Participant's right to sell, encumber, or otherwise transfer
such Stock shall be subject to the limitations of Section 11.2.
8.4 Environment of Restrictions. The Compensation Committee shall
---------------------------
cause a legend to be placed on the Stock certificates issued pursuant to each
Restricted Stock Award referring to the restrictions provided by Sections 8.2
and 8.3 and, in addition, may in its sole discretion require one or more of the
following methods of enforcing the restrictions referred to in Sections 8.2 and
8.3:
(a) Requiring the Participant to keep the Stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in effect;
or
(b) Requiring that the Stock certificates, duly endorsed, be held in
the custody of a third party while the restrictions remain in effect.
ARTICLE IX
STOCK APPRECIATION RIGHTS
9.1 Persons Eligible. The Compensation Committee, in its sole
----------------
discretion, may grant Stock Appreciation Rights to Eligible Employees.
9.2 Grant. The Compensation Committee shall determine at the time of
-----
the grant of a Stock Appreciation Right the method of determining the increase
in value of the Stock
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Appreciation Right and the time period during which the Stock Appreciation Right
may be exercised, which period may not commence until six months after the date
of grant.
9.3 Termination of Employment; Exercise. A Stock Appreciation Right
-----------------------------------
shall entitle a Participant to receive a payment in accordance with Section 9.4
below. Upon termination of the Participant's employment with the Company and
all Affiliated Corporations, the Stock Appreciation Right shall be deemed to be
exercised and the Company shall deliver to the person entitled thereto a payment
in accordance with Section 9.4 below. The date the Participant terminates
employment with the Company and all Affiliated Corporations is referred to in
this Article IX as the "exercise date". The delivery of payment pursuant to
such exercise shall take place at the principal offices of the Company within
thirty (30) days following the exercise date.
9.4 Amount of Payment. The amount which shall be paid pursuant to the
-----------------
exercise of a Stock Appreciation Right shall be determined by multiplying the
total number of shares of Stock as to which the Stock Appreciation Right is
exercised by the amount of appreciation that has occurred, based upon the
valuation method established in the Stock Appreciation Right, from the date of
grant of the Stock Appreciation Right to the date of exercise of such Right.
The amount payable to a Participant upon exercise of a Stock Appreciation Right
shall be paid either by company check, by issuing shares of Stock to the
Participant with a Fair Market Value (determined as of the date of exercise of
the Stock Appreciation Right) equal to the amount payable to the Participant, or
a combination thereof, as determined by the Committee in its sole discretion,
within the time period specified in Section 9.3.
9.5 Termination of Stock Appreciation Rights by the Compensation
------------------------------------------------------------
Committee. In its sole discretion, the Compensation Committee may at any time
---------
cause any or all of the then outstanding Stock Appreciation Rights held by any
or all of the Participants to be terminated effective upon the date specified by
the Compensation Committee in written notice delivered to each such Participant.
Upon such termination of a Stock Appreciation Right, the Participant shall be
entitled to a payment computed in accordance with the terms of such Stock
Appreciation Right.
ARTICLE X
OTHER COMMON STOCK GRANTS
From time to time during the duration of this Plan, the Compensation
Committee may, in its sole discretion, adopt one or more incentive compensation
arrangements for Participants pursuant to which the Participants may acquire
shares of Stock, whether by purchase, outright grant, or otherwise, pursuant to
the provisions of this Plan. The Compensation Committee may also, in its sole
discretion, grant shares of Stock under this Plan as payment for all or any
portion of other incentive compensation arrangements for employees of the
Company. Any such arrangements shall be subject to such provisions of this Plan
as the Compensation Committee may determine in its sole discretion and all
shares of Stock issued pursuant to such arrangements shall be issued under this
Plan. At the sole discretion of the Company, the Company may adopt other plans
or arrangements pursuant to which shares of Stock may be issued to employees of
the Company.
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ARTICLE XI
RIGHTS OF EMPLOYEES; PARTICIPANTS
11.1 Employment. Nothing contained in the Plan or in any Award, or other
----------
Award granted under the Plan shall confer upon any Participant any right with
respect to the continuation of his employment by the Company or any Affiliated
Corporation, or interfere in any way with the right of the Company or any
Affiliated Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Award. Whether an authorized leave of
absence, or absence in military or government service, shall constitute a
termination of employment shall be determined by the Compensation Committee at
the time.
11.2 Covenant Not to Compete. In consideration of the grant of each
-----------------------
Award under the Plan, the Participant shall agree that for the three year period
immediately following the period he is employed by the Company he will not (a)
"Participate In" (as hereinafter defined) any business or organization (a
"Competitor") in a capacity that directly assists such Competitor in competing
with the Company in any business enterprise or business operation that is then
being conducted by the Company or as to which the Company has developed business
plans to enter such business in the respective specific geographic areas where
the Company conducted such businesses at the time the Participant ceased to be
an employee of the Company, (b) own a controlling interest in a business or
organization that competes in a material respect in the above described business
in the respective geographic areas where the Company conducted such businesses
at the time the Participant ceased to be employed by the Company, or (c) solicit
or interfere with, or endeavor to entice away from the Company, any of its
suppliers, customers or employees. For purposes of this Section, the term
"Participate In" shall mean: directly or indirectly, for his own benefit or
for, with or through any other person, firm or corporation, own, manage,
operate, control, lend money to, or participate in the ownership, management,
operation or control of, or be connected as a director, officer, employee,
partner, consultant, agent, independent contractor or otherwise with, or
acquiesce in the use of his name in connection with any other firm, corporation
or business enterprise in a manner that advances the business interests of such
other entity." Notwithstanding the foregoing, the Participant shall not be
deemed to "Participate In" a business merely because he owns not more than 25%
of the outstanding common stock of a corporation, if, at the time of its
acquisition by the Participant, such stock is listed on a national securities
exchange, is reported on NASDAQ, or is regularly traded in the over-the-counter
market by a member of a national securities exchange. The Participant shall
agree that the provisions of this Section are necessary and reasonable to
protect the Company in the conduct of its business. If any restriction
contained in this Section shall be deemed to be invalid, illegal or
unenforceable by reason of the extent, duration or geographical scope hereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration or geographical scope or other provision hereof,
and in its reduced form such restriction shall then be enforceable in the manner
contemplated hereby. Notwithstanding the foregoing, the Committee may alter the
terms and conditions of any covenant not to compete imposed in connection with
the grant of an Award under the Plan or may determine, in its sole discretion,
not to impose any such restriction.
11.3 Nontransferability. Except as otherwise provided in Section 7.2(e),
------------------
no right or interest of any Participant in an Option, a Stock Appreciation
Right, a Restricted Stock Award (prior to the completion of the restriction
period applicable thereto), or other Award granted
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pursuant to the Plan, shall be assignable or transferable during the lifetime of
the Participant, either voluntarily or involuntarily, or subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interests in Options, Stock
Appreciation Rights, Restricted Stock Awards and other Awards, shall, to the
extent provided in Articles VII, VIII, IX and X, be transferable by will or the
laws of descent and distribution, and payment of any amounts due under the Plan
shall be made to, and exercise of any Options may be made by, the Participant's
legal representatives, heirs or legatees. If in the opinion of the Compensation
Committee a person entitled to payments or to exercise rights with respect to
the Plan is disabled from caring for his affairs because of mental condition,
physical condition or age, payment due such person may be made to, and such
rights shall be exercised by, such person's guardian, conservator or other legal
personal representative upon furnishing the Compensation Committee with evidence
satisfactory to the Compensation Committee of such status.
11.4 No Plan Funding. Obligations to Participants under the Plan will not
---------------
be funded, trusteed, insured or secured in any manner. The Participants
under the Plan shall have no security interest in any assets of the Company or
any Affiliated Corporation, and shall be only general creditors of the Company.
ARTICLE XII
GENERAL RESTRICTIONS
12.1 Investment Representations. The Company may require any person to
--------------------------
whom an Option, Stock Appreciation Right, Restricted Stock Award, or Stock is
granted, as a condition of exercising such Option or Stock Appreciation Right,
or receiving such Restricted Stock Award, or Stock, to give written assurances
in substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Stock for his own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with Federal and applicable state securities laws.
12.2 Compliance with Securities Laws. Each Option, Stock Appreciation
-------------------------------
Right, Restricted Stock Award, and Stock grant shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of the shares subject to such Option,
Stock Appreciation Right, Restricted Stock Award, or Stock grant upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance or purchase of shares thereunder, such
Option, Stock Appreciation Right, Restricted Stock Award, or Stock grant may not
be accepted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Compensation Committee. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification.
12.3 Changes in Accounting Rules. Notwithstanding any other provision of
---------------------------
the Plan to the contrary, if, during the term of the Plan, any changes in the
financial or tax accounting rules applicable to Options, Stock Appreciation
Rights, Restricted Stock Awards, or other Awards shall occur which, in the sole
judgment of the Compensation Committee, may have a material adverse effect on
the reported earnings, assets or liabilities of the Company, the
15
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Compensation Committee shall have the right and power to modify as necessary,
any then outstanding and unexercised Options, Stock Appreciation Rights,
outstanding Restricted Stock Awards, and other outstanding Awards as to which
the applicable employment or other restrictions have not been satisfied.
ARTICLE XIII
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option or Stock Appreciation Right, the sale of
shares received upon such exercise, the vesting of any Restricted Stock Award,
or the grant of Stock shall not constitute "earnings" or "compensation" with
respect to which any other employee benefits of such employee are determined,
including without limitation benefits under any pension, profit sharing, life
insurance or salary continuation plan.
ARTICLE XIV
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the stockholders
if stockholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, or if the Company, on the advice of
counsel, determines that stockholder approval is otherwise necessary or
desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights, Restricted Stock
Awards, Stock or other Award theretofore granted under the Plan, without the
consent of the Participant holding such Options, Stock Appreciation Rights,
Restricted Stock Awards, Stock or other Awards.
ARTICLE XV
WITHHOLDING
15.1 Withholding Requirement. The Company's obligations to deliver
-----------------------
shares of Stock upon the exercise of any Option, or Stock Appreciation Right,
the vesting of any Restricted Stock Award, or the grant of Stock shall be
subject to the Participant's satisfaction of all applicable federal, state and
local income and other tax withholding requirements.
15.2 Withholding With Stock. At the time the Compensation Committee
----------------------
grants an Option, Stock Appreciation Right, Restricted Stock Award, other Award,
or Stock, it may, in its sole discretion, grant the Participant an election to
pay all such amounts of tax withholding, or any part thereof, by electing to
transfer to the Company, or to have the Company withhold from shares otherwise
issuable to the Participant, shares of Stock having a value equal to the amount
required to be withheld or such lesser amount as may be elected by the
Participant. All elections shall be subject to the approval or disapproval of
the Compensation Committee. The value of shares of Stock to be withheld shall
be based on the Fair Market Value of the Stock on the date
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that the amount of tax to be withheld is to be determined (the "Tax Date"). Any
such elections by Participants to have shares of Stock withheld for this purpose
will be subject to the following restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
(c) If the Participant is an officer or director of the Company
within the meaning of Section 16 ("Section 16") of the Securities Exchange Act
of 1934 (the "34 Act"), the Participant must satisfy the requirements of such
Section 16 and any applicable Rules thereunder with respect to the use of Stock
to satisfy such tax withholding obligation.
ARTICLE XVI
REQUIREMENTS OF LAW
16.1 Requirements of Law. The issuance of Stock and the payment of cash
-------------------
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
16.2 Federal Securities Law Requirements. If a Participant is an officer
-----------------------------------
or director of the Company within the meaning of Section 16, Awards granted
hereunder shall be subject, to the extent practical, to all conditions required
under Rule 16b-3, or any successor rule promulgated under the 1934 Act, to
qualify the Award for any exception from the provisions of Section 16(b) of the
1934 Act available under that Rule. Such conditions shall be set forth in the
agreement with the Participant which describes the Award or other document
evidencing or accompanying the Award.
16.3 Governing Law. The Plan and all agreements hereunder shall be
-------------
construed in accordance with and governed by the laws of the State of Delaware.
ARTICLE XVII
DURATION OF THE PLAN
Unless sooner terminated by the Board of Directors, the Plan shall
terminate on November 15, 2003, and no Option, Stock Appreciation Right,
Restricted Stock Award, other Award or Stock shall be granted, or offer to
purchase Stock made, after such termination. Options, Stock Appreciation
Rights, Restricted Stock Awards and other Awards outstanding at the time of the
Plan termination may continue to be exercised, or become free of restrictions,
or paid, in accordance with their terms.
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