As filed with the Securities and Exchange Commission on September 25, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
______________________
STATE STREET CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 04-2456637
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of Principal Executive Offices) (Zip Code)
STATE STREET CORPORATION
1997 EQUITY INCENTIVE PLAN
(Full Title of the Plan)
JOHN R. TOWERS, ESQ.
Executive Vice President and General Counsel
State Street Corporation
225 Franklin Street, Boston, Massachusetts 02110
(Name and Address of Agent For Service)
(617)786-3000
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
CHAMPE A. FISHER, ESQ.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
(617)951-7000
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered(1) Registered(1) Share(2) Price(2) Fee
------------- ------------- --------- --------- ------------
Common Stock 8,000,000 $55.24 $441,911,271 $133,913
$1 Par Value shares
(1) Includes Preferred Share Purchase Rights. Prior to the occurrence of
certain events the Preferred Share Purchase Rights will not be evidenced
separately from the Common Stock. Also includes such additional shares
of Common Stock as may be required in the event of a stock dividend,
recapitalization or other change in the Registrant's capital stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933. The maximum
aggregate offering price is estimated to be $441,911,271 which is the sum
of (i) the aggregate exercise price of options outstanding on the date
hereof and (ii) for shares not subject to options on the date hereof, the
average of the high and low price for the Registrant's Common Stock as
reported on the New York Stock Exchange on September 23, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates the following documents herein by
reference:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed with the Securities and Exchange
Commission (the "Commission") on March 26, 1997.
(2) The Registrant's Quarterly Report on Form 10-Q for the period ended
March 31, 1997, as filed with the Commission on May 14, 1997, and
for the period ended June 30, 1997, as filed with the Commission on
August 14, 1997.
(3) The description of the Registrant's Common Stock included in the
Registrant's effective registration statement report on Form 8A, as
filed with the Commission on January 18, 1995.
(4) The Registrant's Current Report on Form 8-K dated December 20, 1996.
(5) The Registrant's Current Report on Form 8-K dated March 11, 1997.
(6) All other reports filed by the Registrant with the Commission
pursuant to Section 13(a) or Section 15 (d) of the Securities
Exchange Act of 1934 (the "Exchange Act") since the end of the
fiscal year covered by the Registrant's Annual Report referred to
above.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in the registration statement and to be
part thereof from the date of filing of such documents.
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Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares to be offered hereby will be passed upon for
the Registrant by Ropes & Gray. Truman S. Casner, a partner of Ropes & Gray,
is a director of the Registrant and owns beneficially a total of 13,330 shares
of Common Stock of the Registrant. In addition a total of 1,200 shares of
Common Stock of the Registrant were owned beneficially by Ropes & Gray
attorneys participating in this matter. Ropes & Gray performs services for
the Registrant from time to time.
Item 6. Indemnification of Directors and Officers.
Section 67 of Chapter 156B of the General Laws of Massachusetts provides
that to the extent specified in or authorized by the articles of organization,
a by-law adopted by stockholders or a vote adopted by the holders of the
majority of shares of stock entitled to vote on the election of directors, a
corporation may indemnify directors, officers, employees and other agents of
the corporation, (and persons who serve at its request as directors, officers,
employees or other agents of another organization or in any capacity with
respect to any employee benefit plan) except as to any matter as to which such
person shall have been adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that the action was in the best interest of the
corporation or the participants or beneficiaries of such employee benefit
plan.
The Restated Articles of Organization of the Registrant (Article 6)
provide the following:
The Corporation shall to the fullest extent legally permissible indemnify
each person who is or was a director, officer, employee or other agent of
the corporation and each person who is or was serving at the request of
the corporation as a director, trustee, officer, employee or other agent
of another corporation or of any partnership, joint venture, trust,
employee benefit plan or other enterprise or organization against all
liabilities, costs and expenses, including but not limited to amounts
paid in satisfaction of judgments, in settlement or as fines and
penalties, and counsel fees and disbursements, reasonably incurred by him
in connection with the defense or disposition of or
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otherwise in connection with or resulting from any action, suit or other
proceeding, whether civil, criminal, administrative or investigative,
before any court or administrative or legislative or investigative body,
in which he may be or may have been involved as a party or otherwise or
with which he may be or may have been threatened, while in office or
thereafter, by reason of his being or having been such a director,
officer, employee, agent or trustee, or by reason of any action taken or
not taken in any such capacity, except with respect to any matter as to
which he shall have been finally adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that his action was in the best interests of the corporation (any person
serving another organization in one or more of the indicated capacities
at the request of the corporation who shall not have been adjudicated in
any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interest of such other organization shall
be deemed so to have acted in good faith with respect to the corporation)
or to the extent that such matter relates to service with respect to an
employee benefit plan, in the best interest of the participants or
beneficiaries of such employee benefit plan. Expenses, including but not
limited to counsel fees and disbursements, so incurred by any such person
in defending any such action, suit or proceeding, shall be paid from time
to time by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf
of the person indemnified to repay the amounts so paid if it shall
ultimately be determined that indemnification of such expenses is not
authorized hereunder.
If, in an action, suit or proceeding brought by or in the name of the
corporation, a director of the corporation is held not liable for
monetary damages, whether because that director is relieved of personal
liability under the provisions of this Article Six of the Articles of
Organization, or otherwise, that director shall be deemed to have met the
standard of conduct set forth above and to be entitled to indemnification
for expenses reasonably incurred in the defense of such action, suit or
proceeding.
As to any matter disposed of by settlement by any such person, pursuant
to a consent decree or otherwise, no such indemnification either for the
amount of such settlement or for any other expenses shall be provided
unless such settlement shall be approved as in the best interests of the
corporation, after notice that it involves such indemnification, (a) by
vote of a majority of the
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disinterested directors then in office (even though the disinterested
directors be less than a quorum), or (b) by any disinterested person or
persons to whom the question may be referred by vote of a majority of
such disinterested directors, or (c) by vote of the holders of a majority
of the outstanding stock at the time entitled to vote for directors,
voting as a single class, exclusive of any stock owned by any interested
person, or (d) by any disinterested person or persons to whom the
question may be referred by vote of the holders of a majority of such
stock. No such approval shall prevent the recovery from any such
director, officer, employee, agent or trustee of any amounts paid to him
or on his behalf as indemnification in accordance with the preceding
sentence if such person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation.
The right of indemnification hereby provided shall not be exclusive of or
affect any other rights to which any director, officer, employee, agent
or trustee may be entitled or which may lawfully be granted to him. As
used herein, the terms "director," "officer," "employee," "agent" and
"trustee" include their respective executors, administrators and other
legal representatives, an "interested" person is one against whom the
action, suit or other proceeding in question or another action, suit or
other proceeding on the same or similar grounds is then or had been
pending or threatened, and a "disinterested" person is a person against
whom no such action, suit or other proceeding is then or had been pending
or threatened.
By action of the board of directors, notwithstanding any interest of the
directors in such action, the corporation may purchase and maintain
insurance, in such amounts as the board of directors may from time to
time deem appropriate, on behalf of any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer,
employee or other agent of another corporation or of any partnership,
joint venture, trust, employee benefit plan or other enterprise or
organization against any liability incurred by him in any such capacity,
or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability.
In addition, the Registrant maintains a directors' and officers'
liability insurance policy.
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Article 6 of the Registrant's Restated Articles of Organization provides
that a director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director notwithstanding any provision of law imposing such
liability, provided, however, that this paragraph ofArticle Six shall not
eliminate the liability of a director to the extent suchliability is imposed
by applicable law (i) for any breach of the director'sduty of loyalty to this
corporation or its stockholders, (ii) for acts oromissions not in good faith
or which involve intentional misconduct or aknowing violation or law, (iii)
for any transaction from which the directorderived an improper personal
benefit, or (iv) for paying a dividend, approvinga stock repurchase or making
loans which are illegal under certain provisionsof Massachusetts law, as the
same exists or hereafter may be amended.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit No. Description
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4.1 Restated Articles of Organization as amended (filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and amendment thereto filed with
the Securities and Exchange Commission as Exhibit 3.4 to
Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1997, and incorporated by reference).
4.2 By-laws as amended (filed with the Securities and Exchange
Commission as Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and
incorporated by reference).
5.1 Opinion of Counsel.
15.1 Letter re unaudited interim financial information.
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23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ropes & Gray (included in Exhibit 5.1)
24.1 Power of Attorney (contained in Part II hereof under
Signature and Power of Attorney)
99.1 State Street Corporation 1997 Equity Incentive Plan
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (a)(i) and (a)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold
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at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to
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Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, the Commonwealth of
Massachusetts on September 24, 1997.
STATE STREET CORPORATION
By: /s/Rex S. Schuette
----------------------------
Rex S. Schuette
Senior Vice President and
Comptroller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on September 18, 1997.
We, the undersigned officers and directors of State Street Corporation
(the "Corporation") hereby severally constitute and appoint Ronald L.
O'Kelley, John R. Towers and Rex S. Schuette, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly,
to sign for us and in our names in the capacities as indicated, any and all
amendments or supplements to the Registration Statement on Form S-8 of the
Corporation, and generally to do all such things in our name and on our behalf
in our capacities as indicated to enable the Corporation to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be required by our said attorneys or any of them, to
any and all amendments.
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<PAGE>
Signature Title
--------- -----
_____/s/Marshall N. Carter____ Chairman and Chief Executive Officer
Marshall N. Carter and Director (Principal Executive Officer)
_____/s/Ronald L. O'Kelley____ Executive Vice President and Chief
Ronald L. O'Kelley Financial Officer (Principal Financial
Officer)
____/s/Rex S. Schuette________ Senior Vice President and Comptroller
Rex S. Schuette (Principal Accounting Officer)
____/s/Tenley E. Albright_____ Director
Tenley E. Albright
____/s/Joseph A. Baute________ Director
Joseph A. Baute
____/s/I. MacAllister Booth___ Director
I. MacAllister Booth
____/s/James I. Cash, Jr._____ Director
James I. Cash, Jr.
___/s/Truman S. Casner________ Director
Truman S. Casner
___/s/Nader F. Darehshori_____ Director
Nader F. Darehshori
___/s/Arthur L. Goldstein_____ Director
Arthur L. Goldstein
___/s/Charles F. Kaye_________ Director
Charles F. Kaye
___/s/John M. Kucharski_______ Director
John M. Kucharski
___/s/Charles R. LaMantia_____ Director
Charles R. LaMantia
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___/s/David B. Perini_________ Director
David B. Perini
___/s/Dennis J. Picard________ Director
Dennis J. Picard
______________________________ Director
Alfred Poe
___/s/Bernard Reznicek________ Director
Bernard Reznicek
___/s/David A. Spina__________ Director
David A. Spina
___/s/Robert E. Weissman_____ Director
Robert E. Weissman
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<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Number Exhibit
- -------------- -------
4.1 Restated Articles of Organization as amended (filed with the
Securities and Exchange Commission as Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and amendment thereto filed with
the Securities and Exchange Commission as Exhibit 3.4 to
Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1997, and incorporated by reference).
4.2 By-laws as amended (filed with the Securities and Exchange
Commission as Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and
incorporated by reference).
5.1 Opinion of Counsel.
15.1 Letter re unaudited interim financial
information.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ropes & Gray (included in Exhibit 5.1)
24.1 Power of Attorney (contained in Part II hereof under
Signature and Power of Attorney)
99.1 State Street Corporation 1997 Equity Incentive Plan
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EXHIBIT 5.1
[Letterhead of ROPES & GRAY]
September 24, 1997
State Street Corporation
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
This opinion is furnished to you in connection with a
registration statement on Form S-8 (the "Registration Statement")
to be filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, for
the registration of 8,000,000 shares of common stock, $1.00 par
value per share (the "Common Stock"), of State Street
Corporation, a Massachusetts corporation (the "Company"), to be
issued pursuant to the Company's 1997 Equity Incentive Plan (the
"Plan").
We have acted as counsel for the Company in the past and are
familiar with the actions taken by the Company in connection with
the Plan. For purposes of this opinion we have examined the
Registration Statement, the Plan and such other documents as we
have deemed appropriate.
We have made such examination of Massachusetts law as we
have deemed relevant for purposes of this opinion but have not
made any review of the laws of any other state or jurisdiction.
Accordingly, this opinion is limited to Massachusetts law.
Based upon the foregoing, we are of the opinion that (i) the
Common Stock has been duly authorized, and (ii) the Common Stock,
when issued and sold in accordance with the terms of the Plan,
will have been validly issued and will be fully paid and
non-assessable.
We hereby consent to your filing this opinion as an exhibit
to the Registration Statement.
Very truly yours,
Ropes & Gray
EXHIBIT 15.1
[Letterhead of ERNST & YOUNG LLP]
The Stockholders and Board of Directors
State Street Corporation
We are aware of the incorporation by reference in the
Registration Statement on Form S-8 of State Street Corporation
pertaining to the State Street Corporation 1997 Equity Incentive
Plan of our reports dated April 11, 1997 and July 14, 1997
relating to the unaudited consolidated interim financial
statements of State Street Corporation that are included in its
Form 10-Q for the quarters ended March 31, 1997 and June 30,
1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our
reports are not a part of the registration statement prepared or
certified by accountants within the meaning of Section 7 or 11 of
the Securities Act of 1933.
ERNST & YOUNG LLP
Boston, Massachusetts
September 24, 1997
EXHIBIT 23.1
[Letterhead of ERNST & YOUNG LLP]
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Interest of Named Experts and Counsel" in the Registration
Statement on Form S-8, to be filed on September 25, 1997,
pertaining to the State Street Corporation 1997 Equity Incentive
Plan and to the incorporation by reference therein of our report
dated January 14, 1997, with respect to the consolidated
financial statements of State Street Corporation incorporated by
reference in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
September 24, 1997
Exhibit 99.1
STATE STREET CORPORATION
1997 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to
advance the interests of State Street Corporation (the "Company")
and its subsidiaries by enhancing their ability to attract and
retain employees and other persons or entities who are in a
position to make significant contributions to the success of the
Company and its subsidiaries through ownership of shares of the
Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling
the Company to grant Awards in the form of Options, Stock
Appreciation Rights, Restricted Stock or Unrestricted Stock
Awards, Deferred Stock Awards, Performance Awards, or
Supplemental Grants, or combinations thereof, all as more fully
described below.
2. ADMINISTRATION
Unless otherwise determined by the Board of Directors of the
Company (the "Board"), the Plan will be administered by a
Committee of the Board designated for such purpose (the
"Committee"). The Committee shall consist of at least two
directors. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or
meeting of the Committee by a writing signed by a majority of the
Committee members. During such times as the Stock is registered
under the Securities Exchange Act of 1934 (the "1934 Act"),
except as the Board may otherwise determine, all members of the
Committee shall be "non-employee directors" within the meaning of
Rule 16b-3 promulgated under the 1934 Act and "outside directors"
within the meaning of Section 162(m)(4)(C)(i) of the Internal
Revenue Code of 1986, as amended (the "Code").
The Committee will have authority, not inconsistent with the
express provisions of the Plan and in addition to other authority
granted under the Plan, to (a) grant Awards at such time or times
as it may choose; (b) determine the size of each Award, including
the number of shares of Stock subject to the Award;(c) determine
the type or types of each Award; (d) determine the terms and
conditions of each Award; (e) waive compliance by a holder of an
Award with any obligations to be performed by such holder under
an Award and waive any terms or conditions of an Award; (f) amend
or cancel an existing Award in whole or in part (and if an Award
is canceled, grant another Award in its place on such terms and
conditions as the Committee shall specify), except that the
Committee may not, without the consent of the holder of an Award,
take any action under this clause with respect to such Award if
such action would adversely affect the rights of such
<PAGE>
holder; (g) prescribe the form or forms of instruments that are
required or deemed appropriate under the Plan, including any
written notices and elections required of Participants (as
defined below), and change such forms from time to time; (h)
adopt, amend and rescind rules and regulations for the
administration of the Plan; and (i) interpret the Plan and decide
any questions and settle all controversies and disputes that may
arise in connection with the Plan. Such determinations and
actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by
any provision of the Plan, will be conclusive and will bind all
parties. Nothing in this paragraph shall be construed as
limiting the power of the Committee to make adjustments under
Section 7.3 or Section 8.6.
3. EFFECTIVE DATE AND TERM OF PLAN*
The Plan will become effective on the date on which it is
approved by the stockholders of the Company. Awards may be made
prior to such stockholder approval if made subject thereto. No
Award may be granted under the Plan after December 18, 2006, but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 8.6 below, the
aggregate number of shares of Stock that may be delivered under
the Plan will be 8,000,000. If any Award requiring exercise by
the Participant for delivery of Stock terminates without having
been exercised in full, or if any Award payable in Stock or cash
is satisfied in cash rather than Stock, the number of shares of
Stock as to which such Award was not exercised or for which cash
was substituted will be available for future grants.
Subject to Section 8.6(a), the maximum number of shares of
Stock as to which Options or Stock Appreciation Rights may be
granted to any Participant in any one calendar year is 800,000,
which limitation shall be construed and applied consistently with
the rules under Section 162(m) of the Internal Revenue Code. The
maximum number of shares of Restricted Stock that may be
delivered under the Plan shall not exceed 40% of the total number
of shares authorized for issuance.
Stock delivered under the Plan may be either authorized but
unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional shares of Stock will be
delivered under the Plan.
* Common Stock shares have been adjusted for the 2-for-1 stock
split effective April 30, 1997.
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5.ELIGIBILITY AND PARTICIPATION
Each key employee of the Company or any of its subsidiaries
(an "Employee") and each other person or entity (including
without limitation non-Employee directors of the Company or a
subsidiary of the Company) who, in the opinion of the Committee,
is in a position to make a significant contribution to the
success of the Company or its subsidiaries will be eligible to
receive Awards under the Plan (each such Employee, person or
entity receiving an Award, "a Participant"). A "subsidiary" for
purposes of the Plan will be a corporation in which the Company
owns, directly or indirectly, stock possessing 50% or more of the
total combined voting power of all classes of stock.
6. TYPES OF AWARDS
6.1. OPTIONS
(a) NATURE OF OPTIONS. An Option is an Award giving the
recipient the right on exercise thereof to purchase Stock.
Both "incentive stock options," as defined in Section 422(b)
of the Internal Revenue Code of 1986, as amended (the "Code")
(any Option intended to qualify as an incentive stock option
being hereinafter referred to as an "ISO"), and Options that are
not ISOs, may be granted under the Plan. ISOs shall be awarded
only to Employees. An Option awarded under the Plan shall be a
non-ISO unless it is expressly designated as an ISO at time of
grant.
(b) EXERCISE PRICE. The exercise price of an Option will
be determined by the Committee subject to the following:
(1) The exercise price of an Option shall not be less
than 100% of the fair market value of the Stock subject to
the Option, determined as of the time the Option is
granted. In no event shall the exercise price of an option,
once granted, be lowered through a repricing of the option.
For purposes of the preceding sentence, "repricing" shall
include an amendment to the exercise price of an existing
option or the cancellation of an option followed by a
regrant at a lower exercise price, but shall not include an
assumption or replacement described in Section 7.3(b) or an
adjustment to the exercise price of an option described in
the first sentence of Section 8.6(b).
(2) In no case may the exercise price paid for Stock
which is part of an original issue of authorized Stock be
less than the par value per share of the Stock.
(c) DURATION OF OPTIONS. The latest date on which an
Option may be exercised will be the tenth anniversary of the day
immediately preceding the date the Option was granted, or such
earlier date as may have been specified by the Committee at the
time the Option was granted.
(d) EXERCISE OF OPTIONS. An Option will become exercisable
at such time or times, and on such conditions, as the Committee
may specify. The Committee may at any time and from
3
time to time accelerate the time at which all or any part of the
Option may be exercised. Any exercise of an Option must be in
writing, signed by the proper person and delivered or mailed to
the Company, accompanied by (1) any documents required by the
Committee and (2) payment in full in accordance with paragraph
(e) below for the number of shares for which the Option is
exercised.
(e) PAYMENT FOR STOCK. Stock purchased on exercise of an
Option must be paid for as follows: (1) in cash or by check
(acceptable to the Company in accordance with guidelines
established for this purpose), bank draft or money order payable
to the order of the Company or (2) if so permitted by the
Committee at or after the grant of the Option or by the
instrument evidencing the Option, (i) through the delivery
(including by attestation of ownership) of shares of Stock which
have been outstanding for at least six months (unless the
Committee approves a shorter period) and which have a fair market
value equal to the exercise price, (ii) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise
price, or (iii) by any combination of the foregoing permissible
forms of payment.
(f) DISCRETIONARY PAYMENTS. If (i) the market price of
shares of Stock subject to an Option (other than an Option which
is in tandem with a Stock Appreciation Right as described in
Section 6.2 below) exceeds the exercise price of the Option at
the time of its exercise, and (ii) the person exercising the
Option so requests the Committee in writing, the Committee may in
its sole discretion cancel the Option and cause the Company to
pay in cash or in shares of Common Stock (at a price per share
equal to the fair market value per share) to the person
exercising the Option an amount equal to the difference between
the fair market value of the Stock which would have been
purchased pursuant to the exercise (determined on the date the
Option is canceled) and the aggregate exercise price which would
have been paid.
6.2. STOCK APPRECIATION RIGHTS.
(a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right or SAR is an Award entitling the holder on
exercise to receive an amount in cash or Stock or a combination
thereof (such form to be determined by the Committee) determined
in whole or in part by reference to appreciation, from and after
the date of grant, in the fair market value of a share of Stock.
SARs may be based solely on appreciation in the fair market value
of Stock or on a comparison of such appreciation with some other
measure of market growth such as (but not limited to)
appreciation in a recognized market index. The date as of which
such appreciation or other measure is determined shall be the
exercise date unless another date is specified by the Committee.
(b) GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted in tandem with, or independently of,
Options granted under the Plan.
(1) RULES APPLICABLE TO TANDEM AWARDS. When Stock
Appreciation Rights are granted in tandem with Options, (a)
the Stock Appreciation Right will be exercisable only at
such time or times, and to the extent, that the related
Option is exercisable and will be exercisable in accordance
with the procedure required for exercise of the related
Option; (b) the Stock Appreciation Right will terminate and
no longer be exercisable upon the termination or exercise of
the related Option, except that a Stock Appreciation Right
granted with respect to less than the full number of shares
covered by an Option will not be reduced until the number of
shares as to which the related Option has been exercised or
has terminated exceeds the number of shares not covered by
the Stock Appreciation Right; (c) the Option will terminate
and no longer be exercisable upon the exercise of the
related Stock Appreciation Right; and (d) the Stock
Appreciation Right will be transferable only with the
related Option.
(2) EXERCISE OF INDEPENDENT STOCK APPRECIATION RIGHTS.
A Stock Appreciation Right not granted in tandem with an
Option will become exercisable at such time or times, and on
such conditions, as the Committee may specify. The
Committee may at any time accelerate the time at which all
or any part of the Right may be exercised.
Any exercise of a Stock Appreciation Right must be in
writing, signed by the proper person and delivered or mailed to
the Company, accompanied by any other documents required by the
Committee.
6.3. RESTRICTED AND UNRESTRICTED STOCK.
(a) GRANT OF RESTRICTED STOCK. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time
to time, may grant shares of Restricted Stock in such amounts and
upon such terms and conditions as the Committee shall determine
subject to the restrictions described below.
(b) RESTRICTED STOCK AGREEMENT. The Committee may require,
as a condition to an Award, that a recipient of a Restricted
Stock Award enter into a Restricted Stock Award Agreement,
setting forth the terms and conditions of the Award. In lieu of
a Restricted Stock Award Agreement, the Committee may provide the
terms and conditions of an Award in a notice to the Participant
of the Award, on the Stock certificate representing the
Restricted Stock, in the resolution approving the Award, or in
such other manner as it deems appropriate.
(c) TRANSFERABILITY AND OTHER RESTRICTIONS. Except as
otherwise provided in this Section 6.3, 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 or periods established by the Committee and
the satisfaction of any other conditions or restrictions
established by the Committee (such period during which a share of
Restricted Stock is subject to such restrictions and conditions
is referred to as the "Restricted Period").
Except as the Committee may otherwise determine under
Section 7.1 or Section 7.2 below, if a Participant retires or
suffers a Status Change (as defined at Section 7.2(a) below) for
any reason during the Restricted Period, the Company may purchase
the shares of Restricted Stock subject to such restrictions and
conditions for the amount of cash paid by the Participant for
such shares; provided, that if no cash was paid by the
Participant such shares of Restricted Stock shall be
automatically forfeited to the Company without consideration.
5
During the Restricted Period with respect to any shares of
Restricted Stock, the Company shall have the right to retain in
the Company's possession the certificate or certificates
representing such shares.
(d) REMOVAL OF RESTRICTIONS. Except as otherwise provided
in this Section 6.3, a share of Restricted Stock covered by a
Restricted Stock grant shall become freely transferable by the
Participant upon completion of the Restricted Period, including
the passage of any applicable period of time and satisfaction of
any conditions to vesting. The Committee, in its sole
discretion, shall have the right at any time to waive all or any
part of the restrictions and conditions with regard to all or any
part of the shares held by any Participant.
(e) VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS.
During the Restricted Period, Participants holding shares of
Restricted Stock granted hereunder may exercise full voting
rights and shall receive all regular cash dividends paid with
respect to such shares. Except as the Committee shall otherwise
determine, any other cash dividends and other distributions paid
to Participants with respect to shares of Restricted Stock
including any dividends and distributions paid in shares shall be
subject to the same restrictions and conditions as the shares of
Restricted Stock with respect to which they were paid.
(f) UNRESTRICTED STOCK. The Committee may, in its sole
discretion, sell to any Participant shares of Stock free of
restrictions under the Plan for a price which is not less than
the par value of the Stock.
(g) NOTICE OF SECTION 83(B) ELECTION. Any Participant
making an election under Section 83(b) of the Code with respect
to Restricted Stock must provide a copy thereof to the Company
within 10 days of filing such election with the Internal Revenue
Service.
(h) SHARES DELIVERED UNDER SENIOR EXECUTIVE ANNUAL
INCENTIVE PLAN. In the case of an award under the Company's
Senior Executive Annual Incentive Plan which is payable in shares
of Stock, the holder of such award shall be deemed a Participant
hereunder and any such Shares shall be treated as having been
sold to the Participant as Unrestricted Stock or Restricted Stock
hereunder (or as Deferred Stock under Section 6.4, if delivery is
deferred) for a price equal to the cash payment under the award
in lieu of which the Stock is being delivered under the Award.
6.4. DEFERRED STOCK.
A Deferred Stock Award entitles the recipient to receive
shares of Stock to be delivered in the future. Delivery of the
Stock will take place at such time or times, and on such
conditions, as the Committee may specify. The Committee may at
any time accelerate the time at which delivery of all or any part
of the Stock will take place. At the time any Award described in
this Section 6 is granted, the Committee may provide that, at the
time Stock would otherwise be delivered pursuant to the Award,
the Participant will instead receive an instrument evidencing the
Participant's right to future delivery of Deferred Stock.
6.5. PERFORMANCE AWARDS; PERFORMANCE GOALS.
(a) NATURE OF PERFORMANCE AWARDS. A Performance Award
entitles the recipient to receive, without payment, an amount in
cash or Stock or a combination thereof (such form to be
determined by the Committee) subject to the attainment of
performance goals. Performance goals may be related to personal
performance, corporate performance, departmental performance or
any other category of performance established by the Committee.
The Committee will determine the performance goals, the period or
periods during which performance is to be measured and all other
terms and conditions applicable to the Award.
(b) OTHER AWARDS SUBJECT TO PERFORMANCE CONDITION. The
Committee may, at the time any Award described in this Section 6
is granted, impose the condition (in addition to any conditions
specified or authorized in this Section 6 or any other provision
of the Plan) that performance goals be met prior to the
Participant's realization of any vesting, payment or benefit
under the Award. Any such Award made subject to the achievement
of performance goals (other than an Option or SAR granted with an
exercise price not less than fair market value) shall be treated
as a Performance Award for purposes of Section 6.5(c) below.
However, an Award under the Company's Senior Executive Annual
Incentive Plan shall not be considered a Performance Award for
purposes of this Plan.
(c) LIMITATIONS AND SPECIAL RULES. No more than an
aggregate of 500,000 shares of Stock (or their equivalent fair
market value in cash) may be delivered to any Participant under
Performance Awards made from and after the effective date of the
Plan and prior to December 19, 2006. In the case of any
Performance Award intended to qualify for the performance-based
remuneration exception described at Section 162(m)(4)(C) of the
Code and the regulations thereunder (an "exempt award"), the
Committee shall in writing preestablish one or more specific,
objectively determinable performance goal or goals (based solely
on one or more qualified performance criteria) no later than
ninety (90) days after the commencement of the period of service
to which the performance relates (the "performance period") (or
at such other time as is required to satisfy the conditions of
Section 162(m)(4)(C) of the Code and the regulations thereunder).
For purposes of the preceding sentence, a qualified performance
criterion is any of the following determined (to the extent
relevant) on either a consolidated or business-unit basis: (i)
return on equity, (ii) earnings per share, (iii) the Company's
total shareholder return during the performance period compared
to the total shareholder return of a generally recognized market
reference (e.g., the S & P 500 or the S & P Financial Index);
(iv) revenue growth; (v) operating leverage; or (vi) market
share. To the extent consistent with qualification of an exempt
award under Section 162(m)(4)(C) of the Code and the regulations
thereunder, the Committee may provide that performance goals be
adjusted in order to eliminate the effect of extraordinary items
(as determined in accordance with generally accepted accounting
principles) or changes in the Stock by reason of an event
described in Section 8.6(a).
6.6. SUPPLEMENTAL GRANTS.
In connection with any Award, the Committee may at the time
such Award is made or at a later date, provide for and grant a
cash award to the Participant ("Supplemental Grant") not to
7
exceed an amount equal to (1) the amount of any Federal, state
and local income tax on ordinary income for which the Participant
may be liable with respect to the Award, determined by assuming
taxation at the highest marginal rate, plus (2) an additional
amount on a grossed-up basis intended to make the Participant
whole on an after-tax basis after discharging all the
Participant's income tax liabilities arising from all payments
under this Section 6. Any payments under this subsection (b)
will be made at the time the Participant incurs or is expected to
incur Federal income tax liability with respect to the Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. DEATH, RETIREMENT OR DISABILITY.
If the employment of an Employee Participant terminates by
reason of death, retirement at or after the normal or early
retirement age under any retirement plan or supplemental
retirement agreement maintained by the Company or any subsidiary
("retirement"), or disability as determined (subject to such
additional rules as the Committee may prescribe) in accordance
with the long term disability plan of the Company and its
subsidiaries covering the Participant or, if there is no such
plan, in accordance with a determination of disability by the
Social Security Administration ("disability"), the following will
apply except as the Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the
Participant or a transferee immediately prior to such termination
of employment, whether or not then exercisable, may be exercised
by the Participant or such transferee (or if the Option or SAR
was held by the Participant at death, by the Participant's
executor or administrator or the person or persons to whom the
Option or Right is transferred by will or the applicable laws of
descent and distribution), in accordance with the terms of the
Option or SAR or on such accelerated basis as the Committee may
determine, during the period that ends on the later of (1) one
year after death, or (ii) one year after the Option or SAR, or
the last installment of such Option or SAR if there is more than
one, first becomes exercisable. In no event, however, shall an
Option or Stock Appreciation Right remain exercisable beyond the
latest date on which it could have been exercised without regard
to this Section 7.
(b) In the case of termination of employment occurring by
reason of death or disability, all Restricted Stock held by the
Participant immediately prior to such termination of employment
shall be vested. In the case of termination of employment
occurring by reason of retirement, all Restricted Stock held by
the Participant immediately prior to retirement must be
transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such
Restricted Stock will be so transferred without any further
action by the Participant) in accordance with Section 6.3(c)
above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant
was not irrevocably entitled prior to termination of employment
will be forfeited and the Award canceled as of the time of such
termination of employment.
8
7.2. OTHER TERMINATION OF SERVICE.
If a Participant who is an Employee ceases to be an Employee
for any reason other than death, retirement, or disability (as
defined at Section 7.1 above), or if there is a termination of
the consulting, service or similar relationship in respect of
which a non-Employee Participant was granted an Award hereunder
(such termination of the employment or other relationship being
hereinafter referred to as a "Status Change"), the following will
apply except as the Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the
Participant (or if the Option or Right was previously
transferred, by the transferee) that were not exercisable
immediately prior to the Status Change shall terminate at the
time of the Status Change. Any Options or Rights that were
exercisable immediately prior to the Status Change will continue
to be exercisable for a period of three months, and shall
thereupon terminate; provided, that if the Participant should die
within such three-month period, the Option or Right shall be
exercisable (to the extent it was exercisable immediately prior
to death) for a period of one year following the Status Change.
In no event, however, shall an Option or Stock Appreciation Right
remain exercisable beyond the latest date on which it could have
been exercised without regard to this Section 7.
(b) All Restricted Stock held by the Participant at the
time of the Status Change must be transferred to the Company
(and, in the event the certificates representing such Restricted
Stock are held by the Company, such Restricted Stock will be so
transferred without any further action by the Participant) in
accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant
was not irrevocably entitled prior to the Status Change will be
forfeited and the Award canceled as of the date of such Status
Change.
(d) For purposes of this Section 7.2, in the case of a
Participant who is an Employee, a Status Change shall not be
deemed to have resulted by reason of (i) a sick leave or other
bona fide leave of absence approved for purposes of the Plan by
the Committee, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer
of employment between the Company and a subsidiary or between
subsidiaries, or to the employment of a corporation (or a parent
or subsidiary corporation of such corporation) issuing or
assuming an Option in a transaction to which Section 424(a) of
the Code applies.
7.3 CERTAIN CORPORATE TRANSACTIONS.
Except as otherwise provided by the Committee at the time of
grant, in the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the
acquisition of substantially all the Company's outstanding Stock
by a single person or entity or by a group of persons and/or
entities acting in concert, or in the event of the sale or
transfer of substantially all the Company's assets or a
dissolution or liquidation of the Company (a "covered
transaction"), the following rules shall apply:
9
(a) Subject to paragraph (b) below, all outstanding Awards
requiring exercise will cease to be exercisable, and all other
Awards to the extent not fully vested (including Awards subject
to conditions not yet satisfied or determined) will be forfeited
except as required under Section 7.4 below, as of the effective
time of the covered transaction, provided that the Committee may
in its sole discretion (but subject to Section 7.4 below in the
case of a covered transaction that constitutes a Change of
Control), on or prior to the effective date of the covered
transaction, (1) make any outstanding Option and Stock
Appreciation Right exercisable in full, (2) remove the
restrictions from any Restricted Stock, (3) cause the Company to
make any payment and provide any benefit under any Deferred Stock
Award, Performance Award or Supplemental Grant, and (4) remove
any performance or other conditions or restrictions on any Award;
or
(b) With respect to an outstanding Award held by a
Participant who, following the covered transaction, will be
employed by or otherwise providing services to an entity which is
a surviving or acquiring entity in the covered transaction or an
affiliate of such an entity, the Committee may at or prior to the
effective time of the covered transaction, in its sole discretion
and in lieu of the action described in paragraph (a) above,
arrange to have such surviving or acquiring entity or affiliate
assume any Award held by such Participant outstanding hereunder
or grant a replacement award which, in the judgment of the
Committee, is substantially equivalent to any Award being
replaced.
7.4. CHANGE OF CONTROL PROVISIONS.
(a) IMPACT OF EVENT. Notwithstanding any other provision
of the Plan to the contrary, in the event of a Change of Control:
(1) ACCELERATION OF OPTIONS AND SARS; EFFECT ON
OTHER AWARDS. All Options and SARs outstanding as of the
date such Change of Control is determined to have occurred
and which are not then exercisable shall (prior to
application of the provisions of Section 7.3 above, in the
case of a Change of Control that also constitutes a covered
transaction) become exercisable to the full extent of the
original grant, all shares of Restricted Stock which are not
otherwise vested shall vest, and holders of Performance
Awards granted hereunder as to which the relevant
performance period has not ended as of the date such Change
of Control is determined to have occurred shall been titled
at the time of such Change of Control to receive a cash
payment per Performance Award equal to such amount, if any,
as shall be specified in the Award.
(2) RESTRICTION ON APPLICATION OF PLAN PROVISIONS
APPLICABLE IN THE EVENT OF TERMINATION OF EMPLOYMENT. After
a Change of Control (but subject to Section 7.3 above),
Options and SARs shall remain exercisable following a
termination of employment or other service relationship
(other than termination by reason of death, disability (as
determined by the Company) or retirement) for seven (7)
months following such termination or until expiration of the
original terms of the Option or SAR, whichever period is
shorter.
(3) RESTRICTION ON AMENDMENT. In connection with or
following a Change of
10
Control, neither the Committee nor the Board may impose
additional conditions upon exercise or otherwise amend or
restrict an Option, SAR, share of Restricted Stock, Deferred
Stock Award or Performance Award, or amend the terms of the
Plan in any manner adverse to the holder thereof, without
the written consent of such holder.
Notwithstanding the foregoing, if any right granted
pursuant to this Section 7.4 would make a Change of Control
transaction ineligible for pooling of interests accounting under
applicable accounting principles that but for this Section 7.4
would otherwise be eligible for such accounting treatment, the
Committee shall have the authority to substitute Stock for the
cash which would otherwise be payable pursuant to this Section
7.4 having a fair market value equal to such cash.
(b) DEFINITION OF CHANGE OF CONTROL. For purposes of the
Plan, a "Change of Control" shall mean the happening of any of
the following events:
(1) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of either (x) the then outstanding
shares of common stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined voting power of
the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding,
however, the following acquisitions of Outstanding Company
Common Stock and Outstanding Company Voting Securities: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any Person pursuant
to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this Section 7.4; or (2)
Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual who becomes a member
of the Board subsequent to such effective date, whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority
of directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(3) Consummation by the Company of a reorganization,
merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company ("Business
Combination"); excluding, however, such a Business
Combination pursuant to which (i) all or substantially all
of the individuals and entities who are the beneficial
11
owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination own, directly or
indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company or such
corporation resulting from such Business Combination) will
beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the outstanding voting securities
of such corporation entitled to vote generally in the
election of directors except to the extent that such
ownership existed with respect to the Company prior to the
Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(4) The approval by the stockholders of the Company of
a complete liquidation or dissolution of the Company.
8. GENERAL PROVISIONS
8.1. DOCUMENTATION OF AWARDS.
Awards will be evidenced by such written instruments, if
any, as may be prescribed by the Committee from time to time.
Such instruments may be in the form of agreements to be executed
by both the Participant and the Company, or certificates, letters
or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to
the terms thereof.
8.2. RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.
Except as specifically provided by the Plan, the receipt of
an Award will not give a Participant rights as a stockholder; the
Participant will obtain such rights, subject to any limitations
imposed by the Plan or the instrument evidencing the Award, only
upon the issuance of Stock. However, the Committee may, on such
conditions as it deems appropriate, provide that a Participant
will receive a benefit in lieu of cash dividends that would have
been payable on any or all Stock subject to the Participant's
Award had such Stock been outstanding. Without limitation, the
Committee may provide for payment to the Participant of amounts
representing such dividends, either currently or in the future,
or for the investment of such amounts on behalf
13
of the Participant.
8.3. CONDITIONS ON DELIVERY OF STOCK.
The Company will not be obligated to deliver any shares of
Stock pursuant to the Plan or to remove restriction from shares
previously delivered under the Plan (a) until all conditions of
the Award have been satisfied or removed, (b) until, in the
opinion of the Company's counsel, all applicable Federal and
state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange or
The Nasdaq National Market, until the shares to be delivered have
been listed or authorized to be listed on such exchange or market
upon official notice of notice of issuance, and (d) until all
other legal matters in connection with the issuance and delivery
of such shares have been approved by the Company's counsel. If
the sale of Stock has not been registered under the Securities
Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as
counsel for the Company may consider appropriate to avoid
violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting
transfer.
If an Award is exercised by the Participant's legal
representative or transferee, the Company will be under no
obligation to deliver Stock pursuant to such exercise until the
Company is satisfied as to the authority of such representative.
8.4. TAX WITHHOLDING.
The Company will withhold from any cash payment made
pursuant to an Award an amount sufficient to satisfy all federal,
state and local withholding tax requirements (the "withholding
requirements").
In the case of an Award pursuant to which Stock may be
delivered, the Committee will have the right to require that the
Participant or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or
make other arrangements satisfactory to the Committee with regard
to such requirements, prior to the delivery of any Stock. If and
to the extent that such withholding is required, the Committee
may permit the Participant or such other person to elect at such
time and in such manner as the Committee provides to have the
Company hold back from the shares to be delivered, or to deliver
to the Company, Stock having a value calculated to satisfy the
withholding requirement. The Committee may make such share
withholding mandatory with respect to any Award at the time such
Award is made to a Participant.
If in connection with the exercise of an ISO the Committee
determines that the Company could be liable for withholding
requirements with respect to the exercise or with respect to a
disposition of the Stock received upon exercise, the Committee
may require as a condition of exercise that the person exercising
the ISO agree (a) to provide for withholding under the preceding
paragraph of this Section 8.4, if the Committee determines that a
withholding responsibility may arise in connection with tax
exercise, (b) to inform the Company promptly of any disposition
(within the meaning of Section 424(c) of the Code) of Stock
received upon
13
exercise, and (c) to give such security as the Committee deems
adequate to meet the potential liability of the Company for the
withholding requirements and to augment such security from time
to time in any amount reasonably deemed necessary by the
Committee to preserve the adequacy of such security.
8.5. NONTRANSFERABILITY OF AWARDS.
Unless otherwise permitted by the Committee, no Award (other
than an Award in the form of an outright transfer of cash or
Unrestricted Stock) may be transferred other than by will or by
the laws of descent and distribution, and during a Participant's
lifetime an Award requiring exercise may be exercised only by the
Participant (or in the event of the Participant's incapacity, the
person or persons legally appointed to act on the Participant's
behalf). The Committee may in its discretion permit transfers to
other persons or entities.
8.6. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the
Company's capitalization, or other distribution to common
stockholders other than normal cash dividends, after the
effective date of the Plan, the Committee will make any
appropriate adjustments to the maximum number of shares that may
be delivered under the Plan under the first paragraph of Section
4 above and to the limits described in the second paragraph of
Section 4 and in Section 6.5(c).
(b) In any event referred to in paragraph (a), the
Committee will also make any appropriate adjustments to the
number and kind of shares of stock or securities subject to
Awards then outstanding or subsequently granted, any exercise
prices relating to Awards and any other provision of Awards
affected by such change. The Committee may also make such
adjustments to take into account material changes in law or in
accounting practices or principles, mergers, consolidations,
acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that
adjustments are appropriate to avoid distortion in the operation
of the Plan; provided, that adjustments pursuant to this sentence
shall not be made to the extent it would cause any Award intended
to be exempt under Section 162(m)(4)(C) to fail to be so exempt.
(c) In the case of ISOs or Awards intended to satisfy the
performance-based remuneration exception under Section
162(m)(4)(C) of the Code, the adjustments described in (a) and
(b) will be made only to the extent consistent with continued
qualification of the option under Section 422 of the Code (in the
case of an ISO) or Section 162(m) of the Code.
8.7. EMPLOYMENT RIGHTS, ETC.
Neither the adoption of the Plan nor the grant of Awards
will confer upon any person any right to continued retention by
the Company or any subsidiary as an Employee or otherwise, or
affect in any way the right of the Company or subsidiary to
terminate an employment, service or similar relationship at any
time. Except as specifically provided by the Committee in any
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particular case, the loss of existing or potential profit in
Awards granted under the Plan will not constitute an element of
damages in the event of termination of an employment, service or
similar relationship even if the termination is in violation of
an obligation of the Company to the Participant.
8.8. NONCOMPETITION RESTRICTIONS, ETC.
The Committee may provide in connection with any Award that
the Participant's rights to enjoyment of the Award or to any cash
or Stock deliverable under the Award be conditioned upon the
Participant's agreeing not to compete with the Company and its
subsidiaries, not to disclose confidential information, and not
to solicit employees, advisors or business from the Company and
its subsidiaries, the terms of any such agreement or undertaking
to be determined by the Committee.
8.9. DEFERRAL OF PAYMENTS.
The Committee may agree at any time, upon request of the
Participant and subject to such rules as the Committee may
determine, to defer the date on which any future payment under an
Award will be made.
8.10. PAST SERVICES AS CONSIDERATION.
Where a Participant purchases Stock under an Award for a
price equal to the par value of the Stock the Committee may
determine that such price has been satisfied by past services
rendered by the Participant.
9. EFFECT, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a
Participant will affect the Company's right to grant to such
Participant awards that are not subject to the Plan, to issue to
such Participant Stock as a bonus or otherwise, or to adopt other
plans or arrangements under which Stock may be issued to
Employees.
The Committee may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be
permitted by law, or may at any time terminate the Plan as to any
further grants of Awards, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment
will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in
order for the Plan to continue to qualify for the award of ISOs
under Section 422 of the Code or for the award of
performance-based compensation under Section 162(m) of the Code,
nor shall any such amendment adversely affect the rights of a
holder of an Award without such holder's consent.
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