AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------------------
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
(Exact Name of Registrant as Specified in Its Charter)
NETHERLANDS ANTILLES 277 PARK AVENUE 52-0684746
(State or Other Jurisdiction of NEW YORK, NEW YORK (I.R.S. Employer
Incorporation or Organization) (Address of Principal Identification No.)
Executive Offices)
10172-2066
(Zip Code)
- --------------------------------------------------------------------------------
1997 LONG-TERM INCENTIVE PLAN OF CAMCO INTERNATIONAL INC.
LONG-TERM INCENTIVE PLAN OF CAMCO INTERNATIONAL INC.
PRODUCTION OPERATORS CORP. 1992 LONG-TERM INCENTIVE PLAN
CAMCO 1996 SAVINGS RELATED SHARE OPTION SCHEME
CAMCO INTERNATIONAL INC. AMENDED AND RESTATED
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(Full title of the plans)
- --------------------------------------------------------------------------------
DAVID S. BROWNING, ESQ.
GENERAL COUNSEL AND SECRETARY
SCHLUMBERGER LIMITED
277 PARK AVENUE
NEW YORK, NEW YORK 10172-2066
(Name and Address of Agent for Service)
Telephone Number, Including Area Code,
of Agent for Service:
(212) 350-9400
CALCULATION OF REGISTRATION FEE
===================================================================================================
Proposed
Title of Amount Proposed Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered(1) Per Share(2) Offering Price(2) Fee
- ---------------------------------------------------------------------------------------------------
Common Stock (par value
$.01 per share) 2,100,000 $48.34375 $101,521,875 $29,949
===================================================================================================
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan(s)
described herein.
(2) Estimated in accordance with Rule 457(c) and (h) solely for the purpose of
calculating the registration fee and based upon the average of the high
and low sales price of the shares of Common Stock of Schlumberger Limited
quoted on the New York Stock Exchange on August 28, 1998.
================================================================================
INTRODUCTORY STATEMENT
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
June 18, 1998 among Schlumberger Technology Corporation, a Texas corporation and
a wholly owned subsidiary of Schlumberger Limited ("STC"), Schlumberger OFS,
Inc., a wholly owned subsidiary of STC ("Sub"), and Camco International Inc.
("Camco"), Sub will be merged into Camco and Camco will become a wholly owned
subsidiary of STC. Pursuant to the Merger Agreement, each share of common
stock, par value $.01 per share, of Camco ("Camco Common Stock") is to be
converted into 1.18 shares of common stock, par value $.01 per share, of
Schlumberger Limited ("Schlumberger Common Stock") and each outstanding option
to acquire Camco Common Stock pursuant to the plans listed on the first page
hereof (the "Camco Plans") is to be converted into the right to acquire 1.18
shares of Schlumberger Common Stock for each share of Camco Common Stock into
which such options are otherwise convertible and the exercise price per share of
those original options will be divided by 1.18. The shares being registered
pursuant to this Registration Statement are the shares of Schlumberger Common
Stock issuable on exercise of options granted under the Camco Plans.
1
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
This Registration Statement incorporates herein by reference the following
documents, which have been filed with the Commission by Schlumberger Limited, a
corporation organized under the laws of the Netherlands Antilles (the "Company")
(File No. 1-4601):
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998;
3. The Company's Current Report on Form 8-K dated June 18, 1998; and
4. The description of the Schlumberger Common Stock contained in the
Company's Registration Statement on Form 20 dated January 8, 1962, filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such description.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Registration Statement
and 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 this
Registration Statement and to be a part hereof from the date of filing such
documents.
Any statement incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES
AUTHORIZED, ISSUED AND TREASURY SHARES
The Company is authorized to issue 1,000,000,000 shares of common stock, par
value $0.01 per share ("Schlumberger Common Stock"), of which 619,147,059 shares
were issued; 499,170,039 shares were outstanding; and 119,977,020 shares were
held by the Company as treasury stock on July 31, 1998. In addition, the Company
is authorized to issue, subject to certain limitations with respect to voting
rights, liquidation and dividend preferences, 200,000,000 shares of cumulative
preferred stock, par value $0.01 per share ("Schlumberger Preferred Stock"),
which may be issued in one or more separate series. If issued, the Schlumberger
Preferred Stock may contain provisions allowing it to be converted into
Schlumberger Common Stock under terms and conditions specified by the Board of
Directors of the Company. No shares of Schlumberger Preferred Stock have been
issued as of the date hereof.
DIVIDEND RIGHTS
All outstanding shares of Schlumberger Common Stock (i.e., shares not held by
the Company and its subsidiaries), are entitled to participate equally and
receive dividends which may be paid out of available profits of the preceding
fiscal year or years. All accumulated and unpaid dividends payable on
Schlumberger Preferred Stock (if issued and outstanding) must be paid prior to
the payment of any dividends on Schlumberger Common Stock. The amount of
II-1
dividends payable with respect to any fiscal year is determined by the
stockholders at the annual general meeting held within nine months of such
fiscal year following such fiscal year, except that the Board of Directors may
declare interim dividends.
VOTING RIGHTS
Each holder of shares of Schlumberger Common Stock is entitled to one vote for
each share registered in such holder's name. Voting rights may be exercised in
person or by proxy. No action to amend the Deed of Incorporation or to sell all
or substantially all of the Company's assets or to dissolve the Company can be
taken except upon the authorization of the holders of at least a majority of the
outstanding shares eligible to vote. In addition, holders of Schlumberger
Preferred Stock (if issued and outstanding) would have additional rights to vote
as a class on certain amendments to the Company's Deed of Incorporation that
would adversely affect Schlumberger Preferred Stock. Any other action requiring
the approval of the stockholders may be authorized by a majority of the votes
cast at any meeting at which a quorum is present, except that, if a quorum is
not present at any meeting, a second meeting may be called, to be held within
two months, at which second meeting, despite the absence of a quorum, valid
resolutions may be adopted with respect to any matter stated in the notice of
the original meeting and of the second meeting. A quorum consists of not less
than 50% of the shares outstanding and eligible to vote.
The Board of Directors of the Company is authorized to effect reorganizations
or rearrangements of the corporate structure of the Company or its subsidiaries
without the vote of stockholders if such reorganization or rearrangement does
not result in any diminution of the beneficial interest of the stockholders in
the assets of the Company. The Board of Directors may change the Company's
corporate domicile from the Netherlands Antilles to another jurisdiction without
the necessity of any stockholder action or approval.
PREEMPTIVE AND OTHER RIGHTS
The shares of Schlumberger Common Stock do not carry any preemptive or
conversion rights, and there are no redemption provisions with respect to
Schlumberger Common Stock. The shares of Schlumberger Preferred Stock (if
issued and outstanding) would not carry any preemptive rights, but the Board of
Directors could specify conversion rights, redemption provisions and (within
limits) liquidation preferences with respect to one or more series of Preferred
Stock. The Company may for its own account purchase shares of Schlumberger
Common Stock so long as at least one-fifth of the authorized capital stock of
the Company remains outstanding with holders other than the Company. In the
event of liquidation, each share of Schlumberger Common Stock is entitled to
equal rights after satisfaction of any Schlumberger Preferred Stock liquidation
preference.
LISTING; TRANSFER AGENTS AND REGISTRARS
Schlumberger Common Stock is listed for trading on the New York, London,
Paris, Amsterdam and Swiss stock exchanges. The Transfer Agent and Registrar
for Schlumberger Common Stock is Boston EquiServe LP, Boston, Massachusetts.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Schlumberger Common Stock is being passed upon by Ellen S.
Summer Esq., Deputy General Counsel of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX, Section 7 of the Company's Deed of Incorporation and Article V of
the Company's By-Laws provide that:
The Company has the power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that he or she is or was a
II-2
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise or entity,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
The Company has the power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or entity against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company and except that no indemnification may be made in respect of any claim,
issue or matter as to which that person has been finally adjudged to be liable
to the Company for improper conduct unless and only to the extent that the court
in which that action or suit was brought or any other court having appropriate
jurisdiction determines upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for those expenses, judgments, fines
and amounts paid in settlement which the court in which the action or suit was
brought or such other court having appropriate jurisdiction deems proper.
To the extent that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the two preceding paragraphs, or in defense of any
claim, issue or matter therein, the Company will indemnify that person against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
Any indemnification under the first two paragraphs in this item (unless
ordered by a court) may be made by the Company only as authorized by contract
approved, or by by-laws, resolution or other action adopted or taken, by the
Board of Directors or by the stockholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding will be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it is
ultimately determined that he or she is not entitled to be indemnified by the
Company as authorized by Article V of the By-Laws or Article IX, Section 7 of
the Deed of Incorporation.
The indemnification and advancement of expenses provided by or granted
pursuant to the other Sections of Article V of the By-Laws and Article IX,
Section 7 of the Deed of Incorporation are not exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, and continues as to
a person who has ceased to be a director, officer, employee or agent and inures
to the benefit of the heirs, executors and administrators of that person.
The Company has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Company,
or is or was serving at the request of the Company in such a capacity for
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against that person and incurred by that person
in any of those capacities or arising out of his status as such, whether or not
the Company may indemnify him or her against such liability under the provisions
of Article V of the By-Laws or Article IX, Section 7 of the Deed of
Incorporation.
II-3
For purposes of Article V of the By-Laws and Article IX, Section 7 of the
Deed of Incorporation, reference to the Company includes, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or Merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, stands in the same position under the provisions of
Article V of the By-Laws and Article IX, Section 7 of the Deed of Incorporation
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
In addition, the Company maintains directors' and officers' liability
insurance which insures against certain liabilities that the officers and
directors of the Company may incur in such capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
The following documents are filed as a part of this registration statement
or incorporated by reference herein:
Exhibit
No. Description
- ------- -------------------------------------------------------------
4.1* -- Deed of Incorporation of the Company, as amended (incorporated
by reference to Exhibit 3(i) to the Company's Form 10-Q for
the quarter ended March 31, 1997, File 001-04601).
4.2* -- By-laws of the Company, as amended (incorporated by reference
to Exhibit 3 to the Company's Form 10-K for the year ended
December 31, 1993, File 001-04601).
4.3* -- Agreement and Plan of Merger dated as of June 18, 1998 among
the Schlumberger Technology Corporation and Camco
International Inc. (incorporated by reference to Exhibit 2.1
to the Company's Form 8-K dated June 18, 1998, File 001-
04601).
5 -- Opinion of Ellen S. Summer, Esq.
10.1 -- 1997 Long-Term Incentive Plan of Camco International Inc.
10.2 -- Long-Term Incentive Plan of Camco International Inc.
10.3 -- Production Operators Corp. 1992 Long-Term Incentive Plan.
10.4 -- Camco 1996 Savings Related Share Option Scheme.
10.5 -- Camco International Inc. Amended and Restated Stock Option
Plan for Nonemployee Directors.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Ellen S. Summer, Esq. (included in Exhibit 5).
24 -- Powers of Attorney.
- ---------------
* Incorporated herein by reference as indicated.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
II-4
(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. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) of the Securities Act if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act 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 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 Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this 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 provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 28, 1998.
SCHLUMBERGER N.V.
(Schlumberger Limited)
By: /s/ Arthur Lindenauer
-------------------------------------
Arthur Lindenauer
Executive Vice President - Finance;
Chief Financial Officer and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons on August 28, 1998 in
the capacities indicated.
* *
- ------------------------------- -----------------------------------
D. Euan Baird William T. McCormick, Jr.
Director, Chairman, President Director
and Chief Executive Officer
/s/ Arthur Lindenauer *
- ------------------------------- -----------------------------------
Arthur Lindenauer Didier Primat
Executive Vice President - Finance; Director
Chief Financial Officer and
Chief Accounting Officer
* *
- ------------------------------- -----------------------------------
Don E. Ackerman Nicolas Seydoux
Director Director
* *
- ------------------------------- -----------------------------------
John Deutch Linda Gillespie Stuntz
Director Director
* *
- ------------------------------- -----------------------------------
Victor E. Grijalva Sven Ullring
Director Director
* *
- ------------------------------- -----------------------------------
Denys Henderson Yoshihiko Wakumoto
Director Director
*
- -------------------------------
Andre Levy-Lang
Director
By: /s/ Ellen S. Summer
-------------------
Ellen S. Summer,
Attorney-in-Fact
EXHIBIT INDEX
Exhibit
No. Description
- ------- -------------------------------------------------------------
4.1* -- Deed of Incorporation of the Company as amended (incorporated
by reference to Exhibit 3(i) to the Company's Form 10-Q for
the quarter ended March 31, 1997, File 001-04601).
4.2* -- By-laws of the Company as amended (incorporated by reference
to Exhibit 3 to the Company's Form 10-K for the year ended
December 31, 1993, File 001-04601).
4.3* -- Agreement and Plan of Merger dated as of June 18, 1998 among
the Schlumberger Technology Corporation and Camco
International Inc. (incorporated by reference to Exhibit 2.1
to the Company's Form 8-K dated June 18, 1998, File 001-
04601).
5 -- Opinion of Ellen S. Summer, Esq.
10.1 -- 1997 Long-Term Incentive Plan of Camco International Inc.
10.2 -- Long-Term Incentive Plan of Camco International Inc.
10.3 -- Production Operators Corp. 1992 Long-Term Incentive Plan.
10.4 -- Camco 1996 Savings Related Share Option Scheme.
10.5 -- Camco International Inc. Amended and Restated Stock Option
Plan for Nonemployee Directors.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Ellen S. Summer, Esq. (included in Exhibit 5).
24 -- Powers of Attorney.
- --------------------
* Incorporated herein by reference as indicated.
EXHIBIT 5
August 31, 1998
Schlumberger Limited
277 Park Avenue
New York, New York 10172-2065
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 (the
"Registration Statement") being filed by Schlumberger Limited, a corporation
organized under the laws of the Netherlands Antilles (the "Company"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to 2,300,000 shares of common stock of the Company, par value $.01 per
share ("Common Stock"), that may be issued pursuant to the following plans: (i)
1997 Long-Term Incentive Plan of Camco International Inc., (ii) Long-Term
Incentive Plan of Camco International Inc., (iii) Production Operators Corp.
1992 Long-Term Incentive Plan, (iv) Camco 1996 Savings Related Share Option
Scheme and (v) Camco International Inc. Amended and Restated Stock Option Plan
for Nonemployee Directors (collectively, the "Plans"), certain legal matters in
connection with those shares of Common Stock are being passed on for the Company
by me. At your request, this opinion is being furnished for filing as Exhibit 5
to the Registration Statement.
In my capacity as Deputy General Counsel of the Company, I have
examined the Registration Statement, the Plans, the Company's Deed of
Incorporation and Bylaws, each as amended to date, and the originals, or copies
certified or otherwise identified, certain resolutions of the Board of Directors
and stockholders of the Company and other corporate records of the Company,
certificates, statements or other representations of public officials and of
representatives of the Company, statutes and other instruments and documents as
a basis for the opinions hereinafter expressed. In connection with this
opinion, I have relied on certificates, statements or other representations of
officers of the Company with respect to the accuracy of material factual matters
contained in or covered thereby.
Based on and subject to the foregoing, I am of the opinion that on the
issuance of shares of Common Stock pursuant to the provisions of the respective
Plans for consideration at least equal to the par value of those shares, those
shares of Common Stock will be duly authorized by all necessary corporate action
on the part of the Company, validly issued, fully paid and nonassessable.
Schlumberger Limited -2- August 31, 1998
I am a member of the State Bar of New York and the District of
Columbia, and I am not admitted to practice in, nor do I hold myself out as an
expert on the laws of, the Netherlands Antilles. I have, however, consulted
with the law firm of Smeets Thesseling Van Bokhorst Spigt, which is qualified to
practice in the Netherlands Antilles and which I consider an expert on the laws
of such jurisdiction. Insofar as the opinion expressed above involves
conclusions as to matters governed by the laws of the Netherlands Antilles, I am
relying on the opinion of such counsel.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Experts" in
the Registration Statement.
Very truly yours,
/s/ Ellen S. Summer
-----------------------------
Ellen S. Summer
EXHIBIT 10.1
1997 LONG-TERM INCENTIVE PLAN
OF
CAMCO INTERNATIONAL INC.
ARTICLE I
General
SECTION 1.1. Purpose of the Plan. The 1997 Long-Term Incentive Plan
(the "Plan") of Camco International Inc. (the "Company") is intended to advance
the best interests of the Company, its subsidiaries and its stockholders in
order to attract, retain and motivate key employees by providing them with
additional incentives through (i) the grant of options ("Options") to purchase
shares of Common Stock, par value $.0l per share, of the Company ("Common
Stock"), (ii) the grant of stock appreciation rights ("Stock Appreciation
Rights"), (iii) the award of shares of restricted Common Stock ("Restricted
Stock") and (iv) the award of units payable in cash or shares of Common Stock
based on performance ("Performance Awards"), thereby increasing the personal
stake of such key employees in the continued success and growth of the Company.
SECTION 1.2. Administration of the Plan. (a) The Plan shall be
administered by the Board of Directors of the Company (the "Board of Directors")
or committee thereof designated by the Board of Directors or such committee
referred to as (the "Committee"). The Committee shall have authority to
interpret conclusively the provisions of the Plan, to adopt such rules and
regulations for carrying out the Plan as it may deem advisable, to decide
conclusively all questions of fact arising in the application of the Plan, to
establish performance criteria in respect of Awards (as defined herein) under
the Plan, to certify that Plan requirements have been met for any participant in
the Plan, to submit such matters as it may deem advisable to the Company's
stockholders for their approval, and to make all other determinations and take
all other actions necessary or desirable for the administration of the Plan.
The Committee is expressly authorized to adopt rules and regulations limiting or
eliminating its discretion in respect of certain matters as it may deem
advisable to comply with or obtain preferential treatment under any applicable
tax or other law rule, or regulation. All decisions and acts of the Committee
shall be final and binding upon all affected Plan participants.
(b) The Committee shall designate the eligible employees, if any, to
be granted Awards and the type and amount of such Awards and the time when
Awards will be granted. All Awards granted under the Plan shall be on the terms
and subject to the conditions determined by the Committee consistent with the
Plan.
SECTION 1.3. Eligible Participants. Key employees, including
officers, of the Company and its subsidiaries, partnerships or other affiliated
entities (all such subsidiaries, partnerships or other affiliated entities being
referred to as "Subsidiaries") shall be eligible for Awards under the Plan.
1
SECTION 1.4. Awards Under the Plan. Awards to key employees may
be in the form of (i) Options, (ii) Stock Appreciation Rights, which may be
issued independent of or in tandem with Options, (iii) shares of Restricted
Stock, (iv) Performance Awards, or (v) any combination of the foregoing
(collectively, "Awards").
SECTION 1.5. Shares Subject to the Plan. Initially, the
aggregate number of shares of Common Stock that may be issued under the Plan
shall be 1,500,000. This number of shares, together with the number of shares
subject to outstanding awards under the Company's 1993 Long-Term Incentive Plan
(the "1993 Plan"), represents approximately 10% of the issued and outstanding
shares of Common Stock as of March 24, 1997. In addition, as of January 1 of
each year the Plan is in effect, if the total number of shares of Common Stock
issued and outstanding, not including any shares issued under the Plan or the
Company's 1993 Incentive Plan, exceeds the total number of shares of Common
Stock issued and outstanding as of January 1 of the previous year (or, for 1997,
as of the commencement of the Plan), the number of shares that may be issued
under the Plan shall be increased by an amount such that the total number of
shares of Common Stock available for issuance under the Plan together with the
number of shares of Common Stock available for issuance for outstanding awards
under the 1993 Incentive Plan, equals 10% of the total number of shares of
Common Stock issued and outstanding, not including any shares issued under the
Plan or the 1993 Incentive Plan. Shares distributed pursuant to the Plan may
consist of authorized but unissued shares of treasury shares of the Company, as
shall be determined from time to time by the Board of Directors. The aggregate
number of shares of Common Stock that may be granted pursuant to an Award of
Options, Stock Appreciation Rights, Restricted Stock or Performance Awards to
any one participating during any one year may not exceed 250,000. The aggregate
amount of cash that may be credited to any one participant pursuant to any
Performance Award during any one year may not exceed $1,000,000.
If any Award under the Plan shall expire, terminate or be canceled
(including cancellation upon an Option holder's exercise of a related Stock
Appreciation Right) for any reason without having been exercised in full, or if
any Award shall be forfeited to the Company, the unexercised or forfeited Award
shall not count against the above limits and shall again become available for
grants under the Plan (unless the holder of such Award received dividends or
other economic benefits with respect to such Award, which dividends or other
economic benefits are not forfeited, in which case the award shall count against
the above limits). Shares of Common Stock equal in number to the shares
surrendered in payment of the option price, and shares of Common Stock which are
withheld in order to satisfy Federal, state or local tax liability, shall count
against the above limits. Only the number of shares of Common Stock actually
issued upon exercise of a Stock Appreciation Right shall count against the above
limits, and any shares which were estimated to be used for such purposes and
were not in fact so used shall again become available for grants under the Plan.
Cash exercises of Stock Appreciation Rights and cash settlement of other Awards
will not count against the above limits.
The total number of Awards (or portions thereof) that may be settled
in cash under the Plan, based on the number of shares covered by such Awards
(e.g., 100 shares for a Stock Appreciation Right with respect to 100 shares),
shall not exceed a number equal to (i) the number
2
of shares initially available for issuance under the Plan plus (ii) the number
of shares that have become available for issuance under the Plan pursuant to the
first paragraph of this Section 1.5.
The number of shares of Common Stock that will be available under the
Plan for Options granted in accordance with Section 2.4(i) ("ISOs") is
1,500,000.
SECTION 1.6. Other Compensation Programs. Nothing contained in
the Plan shall be construed to preempt or limit the authority of the Board of
Directors to exercise its corporate rights and powers, including, but not by way
of limitation, the right of the Board of Directors (i) to grant incentive Awards
for proper corporate purposes otherwise than under the Plan to any employee,
officer, director or other person or entity or (ii) to grant incentive Awards
to, or assume incentive Awards of, any person or entity in connection with the
acquisition (whether by purchase, lease, merger, consolidation or otherwise) of
the business or assets (in whole or in part) of any person or entity.
ARTICLE II
Stock Options and Stock Appreciation Rights
SECTION 2.1. Terms and Conditions of Options. Subject to the
following provisions, all Options granted under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such terms and
conditions as the Committee, in its discretion, may from time to time determine
consistent with the Plan.
(a) Option Price. The option price per share shall be determined
by the Committee, except that in the case of an Option granted in accordance
with Section 2.4(i) (an "ISO") the option price per share shall not be less than
the fair market value of a share of Common Stock (as determined by the
Committee) on the date the Option is granted (other than in the case of
substitute or assumed Options to the extent required to qualify such Options for
preferential tax treatment under the Internal Revenue Code of 1986, as amended,
or successor code or statute, in each case as in effect at the time of such
grant (the "Code")).
(b) Term of Option. The term of an Option shall be determined by
the Committee, except that in the case of an ISO the term of the Option shall
not exceed ten years from the date of grant, and, notwithstanding any other
provision of this Plan, no Option shall be exercised after the expiration of its
term.
(c) Exercise of Options. Options shall be exercisable at such time
or times and subject to such terms and conditions as the Committee shall specify
in the Option grant. Unless the Option grant specifies otherwise, the Committee
shall have discretion at any time to accelerate such time or times and otherwise
waive or amend any conditions in respect of all or any portion of the Options
held by any optionee. An Option may be exercised in accordance with its terms
as to any or all shares purchasable thereunder.
3
(d) Payment for Shares. The Committee may authorize payment for
shares as to which an Option is exercised to be made in cash, shares of Common
Stock, a combination thereof, by "cashless exercise" or in such other manner as
the Committee in its discretion may provide.
(e) Stockholder Rights. The holder of an Option shall, as such,
have none of the rights of a stockholder.
(f) Termination of Employment. The Committee shall have discretion
to specify in the Option grant, or, with the consent of the optionee, an
amendment thereof, provisions with respect to the period, not extending beyond
the term of the Option, during which the Option may be exercised following the
optionee's termination of employment.
SECTION 2.2. Stock Appreciation Rights in Tandem with Options.
(a) The Committee may, either at the time of grant of an Option or at any time
during the term of the Option, grant Stock Appreciation Rights ("Tandem SARs")
with respect to all or any portion of the shares of Common Stock covered by such
Option. A Tandem SAR may be exercised at any time the Option to which it
relates is then exercisable, but only to the extent the Option to which it
relates is exercisable, and shall be subject to the conditions applicable to
such Option. When a Tandem SAR is exercised, the Option to which it relates
shall cease to be exercisable to the extent of the number of shares with respect
to which the Tandem SAR is exercised. Similarly, when an Option is exercised,
the Tandem SARs relating to the shares covered by such Option exercise shall
terminate. Any Tandem SAR which is outstanding on the last day of the term of
the related Option (as determined pursuant to Section 2.1(b)) shall be
automatically exercised on such date for cash without any action by the
optionee.
(b) Upon exercise of a Tandem SAR, the holder shall receive, for each
share with respect to which the Tandem SAR is exercised, an amount (the
"Appreciation") equal to the difference between the option price per share of
the Option to which the Tandem SAR relates and the fair market value (as
determined by the Committee) of a share of Common Stock on the date of exercise
of the Tandem SAR. The Appreciation shall be payable in cash, Common Stock, or
a combination of both, at the option of the Committee, and shall be paid within
30 days of the exercise of the Tandem SAR.
SECTION 2.3. Stock Appreciation Rights Independent of Options.
Subject to the following provisions, all Stock Appreciation Rights granted
independent of Options ("Independent SARs") under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such terms and
conditions as the Committee, in its discretion, may from time to time determine
consistent with the Plan.
(a) Exercise Price. The exercise price per share shall be
determined by the Committee on the date the Independent SAR is granted.
4
(b) Term of Independent SAR. The term of an Independent SAR shall
be determined by the Committee, and, notwithstanding any other provision of this
Plan, no Independent SAR shall be exercised after the expiration of its term.
(c) Exercise of Independent SARs. Independent SARs shall be
exercisable at such time or times and subject to such terms and conditions as
the Committee shall specify in the Independent SAR grant. Unless the
Independent SAR grant specifies otherwise, the Committee shall have discretion
at any time to accelerate such time or times and otherwise waive or amend any
conditions in respect of all or any portion of the Independent SARs held by any
participant. Upon exercise of an Independent SAR, the holder shall receive, for
each share specified in the Independent SAR grant, an amount (the
"Appreciation") equal to the difference between the exercise price per share
specified in the Independent SAR grant and the fair market value (as determined
by the Committee) of a share of Common Stock on the date of exercise of the
Independent SAR. The Appreciation shall be payable in cash, Common Stock, or a
combination of both, at the option of the Committee, and shall be paid within 30
days of the exercise of the Independent SAR.
(d) Stockholder Rights. The holder of an Independent SAR shall, as
such, have none of the rights of a stockholder.
(e) Termination of Employment. The Committee shall have discretion
to specify in the Independent SAR grant, or, with the consent of the holder, an
amendment thereof, provisions with respect to the period, not extending beyond
the term of the Independent SAR, during which the Independent SAR may be
exercised following the holder's termination of employment.
SECTION 2.4. Statutory Options. Subject to the limitations on
Option terms set forth in Section 2.1, the Committee shall have the authority to
grant (i) incentive stock options within the meaning of Section 422 of the Code
and (ii) Options containing such terms and conditions as shall be required to
qualify such Options for preferential tax treatment under the Code as in effect
at the time of such grant. Options granted pursuant to this Section 2.4 may
contain such other terms and conditions permitted by Article II of this Plan as
the Committee, in its discretion, may from time to time determine (including,
without limitation, provision for Stock Appreciation Rights), to the extent that
such terms and conditions do not cause the Options to lose their preferential
tax treatment.
SECTION 2.5. Change of Control. Notwithstanding the
exercisability schedule governing any Option or Stock Appreciation Right, unless
otherwise provided in the agreement relating to a specific Award of an Option or
Stock Appreciation Right or other agreement with the holder of the Option or
Stock Appreciation Right, upon the occurrence of a Change of Control (as defined
in Section 5.10) all Options and Stock Appreciation Rights outstanding at the
time of such Change of Control and held by participants who are employees of the
Company or its subsidiaries at the time of such Change of Control shall become
immediately exercisable and, unless the participant agrees otherwise in writing,
remain exercisable for three years (but not beyond the term of the Option or
Stock Appreciation Right) after the employee's termination of employment for any
reason other than termination by the Company or a subsidiary of the Company for
5
dishonesty, conviction of a felony, willful unauthorized disclosure of
confidential information or wilful refusal to perform the duties of such
employee's position or positions with the Company or such subsidiary
(termination for "cause").
ARTICLE III
Restricted Stock
SECTION 3.1. Terms and Conditions of Restricted Stock Awards.
Subject to the following provisions, all Awards of Restricted Stock under the
Plan to employees of the Company and its Subsidiaries shall be in such form and
shall have such terms and conditions as the Committee, in its discretion, may
from time to time determine consistent with the Plan.
(a) Restricted Stock Award. The Restricted Stock Award shall
specify the number of shares of Restricted Stock to be awarded, the price, if
any, to be paid by the recipient of the Restricted Stock, and the date or dates
on which the Restricted Stock will vest. The vesting and number of shares of
Restricted Stock may be conditioned upon the completion of a specified period of
service with the Company or its Subsidiaries or upon the attainment of any of
the following specified performance goals as fixed by the Committee (i) net
income before or after extraordinary items, operating income, income before
taxes, earnings before depreciation, interest and taxes, cash flow or revenues
of (x) the Company on a consolidated basis, (y) one or more Subsidiaries or (z)
one or more operating divisions, departments, units or segments of the Company
or one or more of its Subsidiaries., (ii) return on equity, (iii) return on
capital employed, (iv) return on net assets, (v) increases in the market price
of the Common Stock or other securities of the Company before or after
dividends, (vi) the performance of the Company's Common Stock in comparison to
other stocks, stock indexes or groups of stocks or other investments, (vii)
increases in sales, margins or profit on a Company, Subsidiary, division,
department, unit, segment, product or product line basis or (viii) any
combination of the above.
(b) Restrictions on Transfer. Unless otherwise provided in the
agreement relating to the Award relating thereto, stock certificates
representing the Restricted Stock granted to an employee shall be registered in
the employee's name or at the option of the Committee not issued until such time
as the Restricted Stock shall become vested or otherwise determined by the
Committee. If certificates are issued prior to the shares of Restricted Stock
becoming vested, such certificates shall either be held by the Company on behalf
of the employee, or delivered to the employee bearing a legend to restrict
transfer of the certificate until the Restricted Stock has vested, as determined
by the Committee. The Committee shall determine whether the employee shall have
the right to vote and/or receive dividends on the Restricted Stock before it has
vested. Except as may otherwise be expressly permitted by the Committee, no
share of Restricted Stock may be sold, transferred, assigned, or pledged by the
employee until such share has vested in accordance with the terms of the
Restricted Stock Award. Unless the grant of a Restricted Stock Award specifies
otherwise, in the event of an employee's termination of employment before all
the employee's Restricted Stock has vested, or in the event other conditions to
the vesting of Restricted Stock have not been satisfied prior to any deadline
for the satisfaction of such conditions set forth in the Award,
6
the shares of Restricted Stock that have not vested shall be forfeited and any
purchase price paid by the employee shall be returned to the employee. At the
time Restricted Stock vests (and, if the employee has been issued legended
certificates of Restricted Stock, upon the return of such certificates to the
Company), a certificate for such vested shares shall be delivered to the
employee (or the beneficiary designated by the employee in the event of death),
free of all restrictions.
(c) Accelerated Vesting. Notwithstanding the vesting conditions
set forth in the Restricted Stock Award unless the Restricted Stock grant or
other agreement with the holder thereof specifies otherwise, (i) the Committee
may in its discretion at any time accelerate the vesting of Restricted Stock or
otherwise waive or amend any conditions of a grant of Restricted Stock, and (ii)
all shares of Restricted Stock shall vest upon a Change of Control of the
Company.
ARTICLE IV
Performance Awards
SECTION 4.1. Terms and Conditions of Performance Awards. The
Committee shall be authorized to grant Performance Awards, which are payable in
stock, cash or a combination thereof, at the discretion of the Committee.
(a) Performance Period. The Committee shall establish with respect
to each Performance Award a performance period over which the performance of the
holder of such Performance Award shall be measured. The performance period for
a Performance Award shall be established at the time such Performance Award is
granted and may overlap with performance periods relating to other Performance
Awards granted hereunder to the same employee.
(b) Performance Objectives. The Committee shall establish a
minimum level of acceptable achievement for the holder at the time of each
Award. Each Performance Award shall be contingent upon future performances and
achievement of objectives fixed by the Committee. Such objectives shall be based
on (i) net income before or after extraordinary items, operating income, income
before taxes, earnings before depreciation, interest and taxes, cash flow or
revenues of (x) the Company on a consolidated basis, (y) one or more
Subsidiaries or (z) one or more operating divisions, departments, units or
segments of the Company or one or more of its Subsidiaries, (ii) return on
equity, (iii) return on capital employed, (iv) return on net assets, (v)
increases in the market price of the Common Stock or other securities of the
Company before or after dividends, (vi) the performance of the Company's Common
Stock in comparison to other stocks, stock indexes or groups of stocks or other
investments, (vii) increases in sales, margins or profit on a Company,
Subsidiary, division, department, unit, segment, product or product line basis
or (viii) any combination of the above.
(c) Size, Frequency and Vesting. The Committee shall have the
authority to determine at the time of the Award the maximum value of a
Performance Award, the frequency of Awards and the date or dates when Awards
vest.
7
(d) Payment. Following the end of each performance period, the
holder of each Performance Award will be entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Award, based on the
achievement of the performance measures for such performance period, as
determined by the Committee. If at the end of the performance period the
specified objectives have been attained, the employee shall be deemed to have
fully earned the Performance Award. Unless otherwise provided in the Award, if
the employee exceeds the specified minimum level of acceptable achievement but
does not attain such objectives, the employee shall be deemed to have partly
earned the Performance Award, and shall become entitled to receive a portion of
the total award, as determined by the Committee. Unless otherwise provided in
the Award, if a Performance Award is granted after the start of a performance
period, the award shall be reduced to reflect the portion of the performance
period during which the Award was in effect. Unless the Award specifies
otherwise, the Committee may adjust the payment of Awards or the performance
objectives if events occur or circumstances arise which would cause a particular
payment or set of performance objectives to be inappropriate, as determined by
the Committee.
(e) Termination of Employment. Unless otherwise provided in the
agreement relating to the Award or other agreement with the recipient, a
recipient of a Performance Award who, by reason of death, disability or
retirement, terminates employment before the end of the applicable performance
period shall be entitled to receive, to the extent earned, a portion of the
Award which is proportional to the portion of the performance period during
which the employee was employed. Unless otherwise provided in the agreement
relating to the Award or other agreement with the recipient, a recipient of a
Performance Award who terminates employment for any other reason shall not be
entitled to any part of the Award unless the Committee determines otherwise.
(f) Accelerated Vesting. Notwithstanding the vesting conditions
set forth in a Performance Award, unless the Award specifies otherwise, (i) the
Committee may in its discretion at any time accelerate vesting of the Award or
otherwise waive or amend any conditions (including but not limited to
performance objectives) in respect of a Performance Award, and (ii) all
Performance Awards shall vest upon a Change of Control of the Company. In
addition, unless an Award specifies otherwise, each participant in the Plan
shall receive the maximum Performance Award he or she could have earned for the
proportionate part of the performance period prior to the Change of Control, and
shall retain the right to earn any additional portion of his or her Award if he
or she remains in the Company's employ.
(g) Stockholder Rights. The holder of a Performance Award shall,
as such, have none of the rights of a stockholder.
ARTICLE V
Additional Provisions
SECTION 5.1. General Restrictions. Each Award under the Plan
shall be subject to the requirement that, if at any time the Committee shall
determine that (i) the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any
8
securities exchange or under any state or Federal law, or (ii) the consent or
approval of any government regulatory body, or (iii) an agreement by the
recipient of an Award with respect to the disposition of shares of Common Stock,
is necessary or desirable (in connection with any requirement or interpretation
of any Federal or state securities law, rule or regulation) as a condition of,
or in connection with, the granting of such Award or the issuance, purchase or
delivery of shares of Common Stock thereunder, such Award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
SECTION 5.2. Adjustments for Changes in Capitalization. In the
event of any stock dividends, stock splits, recapitalizations, combinations,
exchanges of shares, mergers, consolidation, liquidations, split-ups, split-
offs, spin-offs or other similar changes in capitalization, or any distribution
to stockholders, including a rights offering, other than regular cash dividends,
changes in the outstanding stock of the Company by reason of any increase or
decrease in the number of issued shares of Common Stock resulting from a split-
up or consolidation of shares or any similar capital adjustment or the payment
of any stock dividend, any share repurchase at a price in excess of the market
price of the Common Stock at the time such repurchase is announced or other
increase or decrease in the number of such shares, the Committee shall make
appropriate adjustment in the number and kind of shares authorized by the Plan
(including shares available for ISOs), in the number, price or kind of shares
covered by the Awards and in any outstanding Awards under the Plan; provided,
however, that no such adjustment shall increase the aggregate value of any
outstanding Award.
In the event of any adjustment in the number of shares covered by any
Award, any fractional shares resulting from such adjustment shall be disregarded
and each such Award shall cover only the number of full shares resulting from
such adjustment.
SECTION 5.3. Amendments. (a) The Board of Directors may at any
time and from time to time and in any respect amend or modify the Plan.
(b) The Committee shall have the authority to amend any Award to
include any provision which, at the time of such amendment, is authorized under
the terms of the Plan; however, no outstanding Award may be revoked or altered
in a manner unfavorable to the holder without the written consent of the holder.
SECTION 5.4. Cancellation of Awards. Any Award granted under the
Plan may be canceled at any time with the consent of the holder and a new Award
may be granted to such holder in lieu thereof, which award may, in the
discretion of the Committee, be on more favorable terms and conditions than the
canceled Award.
SECTION 5.5. Beneficiary. A participant may file with the
Company a written designation of beneficiary, on such form as may be prescribed
by the Committee, to receive any Options, Stock Appreciation Rights, shares of
Restricted Stock, Common Stock and Performance Awards that become deliverable to
the participant pursuant to the Plan after the
9
participant's death. A participant may, from time to time, amend or revoke a
designation of beneficiary. If no designated beneficiary survives the
participant, the executor or administrator of the participant's estate shall be
deemed to be the participant's beneficiary.
SECTION 5.6. Withholding. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the holder to pay an amount in cash or to retain
or sell without notice, or demand surrender of, shares of Common Stock in value
sufficient to satisfy any Federal, state or local withholding tax liability
("Withholding Tax") prior to the delivery of any certificate for such shares (or
remainder of shares if Common Stock is retained to satisfy such tax liability).
Whenever under the Plan payments are to be made in cash, such payments shall be
net of an amount sufficient to satisfy any Federal, state or local withholding
tax liability.
Whenever Common Stock is so retained or surrendered to satisfy
Withholding Tax, the value of shares of Common Stock so retained or surrendered
shall be determined by the Committee, and the value of shares of Common Stock so
sold shall be the net proceeds (after deduction of commissions) received by the
Company from such sale, as determined by the Committee.
SECTION 5.7. Non-assignability. Except as expressly provided in
the Plan or as may be permitted by the Committee, no Award under the Plan shall
be assignable or transferable by the holder thereof except by will or by the
laws of descent and distribution. Except as expressly provided in the Plan or
as may be permitted by the Committee, during the life of the holder, Awards
under the Plan shall be exercisable only by such holder or by the guardian or
legal representative of such holder.
SECTION 5.8. Non-uniform Determinations. Determinations by the
Committee under the Plan (including, without limitation, determinations of the
persons to receive Awards; the form, amount and timing of such Awards; the terms
and provisions of such Awards and the agreements evidencing same; and provisions
with respect to termination of employment) need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, Awards
under the Plan, whether or not such persons are similarly situated.
SECTION 5.9. No Guarantee of Employment. The grant of an Award
under the Plan shall not constitute an assurance of continued employment for any
period or any obligation of the Board of Directors to nominate any director for
reelection by the Company's stockholders.
SECTION 5.10. Change of Control. A "Change of Control" shall be
deemed to have occurred if:
(1) any Person (as defined below), other than a Designated
Person, is or becomes the Beneficial Owner (as defined below) of
securities of the Company representing 30% or more of the Voting Power
(as defined below);
10
(2) there shall occur a change in the composition of a majority
of the Board of Directors within any period of four consecutive years
which change shall not have been approved by a majority of the Board
of Directors as constituted immediately prior to the commencement of
such period;
(3) at any meeting of the stockholders of the Company called for
the purpose of electing directors, more than one of the persons
nominated by the Board of Directors for election as directors shall
fail to be elected; or
(4) the stockholders of the Company approve a merger,
consolidation, sale of substantially all assets or other
reorganization of the Company, other than a reincorporation, in which
the Company does not survive.
For purposes of this Section 5.10, (i) "Person" shall have the meaning
set forth in Sections 3 (a) (9) and 13 (d) (3) of the Securities Exchange Act of
1934, as in effect on May 20, 1997, (ii) "Beneficial Owner" shall have the
meaning set forth in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934 on May 20, 1997; and (iii) "Voting Power" shall mean the voting power of
the outstanding securities of the Company having the right under ordinary
circumstances to vote at an election of the Board of Directors.
SECTION 5.11. Deferred Compensation and Trust Agreements. The
Committee may authorize and establish deferred compensation agreements and
arrangements in connection with Awards under the Plan and may establish trusts
and other arrangements, including "rabbi trusts", with respect to such
agreements and appoint one or more trustees for such trusts. Shares of Common
Stock under the Plan may also be acquired by one or more trustees from the
Company, in the open market or otherwise.
SECTION 5.12. Duration and Termination. (a) The Plan shall be of
unlimited duration. Notwithstanding the foregoing, no incentive stock option
(within the meaning of Section 422 of the Code) shall be granted under the Plan
ten (10) years after the approval of the Corporation's stockholder, but Awards
granted prior to such date may extend beyond such date, and the terms of this
Plan shall continue to apply to all Awards granted hereunder.
(b) The Board of Directors may suspend, discontinue or terminate the
Plan at any time. Such action shall not impair any of the rights of any holder
of any Award outstanding on the date of the Plan's suspension, discontinuance or
termination without the holder's written consent.
SECTION 5.13. Effective Date. The Plan shall be effective as of
May 20, 1997, subject to approval of a majority of the Corporation's
stockholders present and eligible to vote at a meeting of the stockholders of
the Corporation at which a quorum is present.
11
EXHIBIT 10.2
LONG-TERM INCENTIVE PLAN
OF
CAMCO INTERNATIONAL INC.
ARTICLE I
General
SECTION 1.1. Purpose of the Plan. The Long-Term Incentive Plan (the
"Plan") of Camco International Inc. (the "Company") is intended to advance the
best interests of the Company, its subsidiaries and its stockholders in order to
attract, retain and motivate key employees by providing them with additional
incentives through (i) the grant of options ("Options") to purchase shares of
Common Stock, par value $.01 per share, of the Company ("Common Stock"), (ii)
the grant of stock appreciation rights ("Stock Appreciation Rights"), (iii) the
award of shares of restricted Common Stock ("Restricted Stock") and (iv) the
award of units payable in cash or shares of Common Stock based on performance
("Performance Awards"), thereby increasing the personal stake of such key
employees in the continued success and growth of the Company.
SECTION 1.2. Administration of the Plan. (a) The Plan shall be
administered by the Executive Compensation Committee or other designated
committee (the "Committee") of the Board of Directors of the Company (the "Board
of Directors") which shall consist of at least two Outside Directors. The
Committee shall have authority to interpret conclusively the provisions of the
Plan, to adopt such rules and regulations for carrying out the Plan as it may
deem advisable, to decide conclusively all questions of fact arising in the
application of the Plan, to establish performance criteria in respect of Awards
(as defined herein) under the Plan, to certify that Plan requirements have been
met for any participant in the Plan, to submit such matters as it may deem
advisable to the Company's stockholders for their approval, and to make all
other determinations and take all other actions necessary or desirable for the
administration of the Plan. The Committee is expressly authorized to adopt
rules and regulations limiting or eliminating its discretion in respect of
certain matters as it may deem advisable to comply with or obtain preferential
treatment under any applicable tax or other law rule, or regulation. All
decisions and acts of the Committee shall be final and binding upon all affected
Plan participants.
For purposes of this Plan, "Outside Director" shall mean a nonemployee
director of the Company who is "disinterested" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Committee shall designate the eligible employees, if any, to be
granted Awards and the type and amount of such Awards and the time when Awards
will be granted. All Awards granted under the Plan shall be on the terms and
subject to the conditions determined by the Committee consistent with the Plan.
1
SECTION 1.3. Eligible Participants. Key employees, including
officers, of the Company and its subsidiaries (all such subsidiaries being
referred to as "Subsidiaries") shall be eligible for Awards under the Plan.
SECTION 1.4. Awards Under the Plan. Awards to key employees may be
in the form of (i) Options, (ii) Stock Appreciation Rights, which may be issued
independent of or in tandem with Options, (iii) shares of Restricted Stock, (iv)
Performance Awards, or (v) any combination of the foregoing (collectively,
"Awards").
SECTION 1.5. Shares Subject to the Plan. Initially, the aggregate
number of shares of Common Stock that may be issued under the Plan shall be
1,750,000. In addition, as of January 1 of each year the Plan is in effect, if
the total number of shares of Common Stock issued and outstanding, not including
any shares issued under the Plan, exceeds the total number of shares of Common
Stock issued and outstanding as of January 1 of the preceding year (or, for
1994, as of the commencement of the Plan), the number of shares that may be
issued under the Plan shall be increased by an amount such that the total number
of shares of Common Stock available for issuance under the Plan equals 7% of the
total number of shares of Common Stock outstanding, not including any shares
issued under the Plan. Shares distributed pursuant to the Plan may consist of
authorized but unissued shares or treasury shares of the Company, as shall be
determined from time to time by the Board of Directors. The aggregate number of
shares of Common Stock that may be issued to any one participant under the Plan
shall be 500,000.
If any Award under the Plan shall expire, terminate or be canceled
(including cancellation upon an Option holder's exercise of a related Stock
Appreciation Right) for any reason without having been exercised in full, or if
any Award shall be forfeited to the Company, the unexercised or forfeited award
shall not count against the above limits and shall again become available for
grants under the Plan (unless the holder of such Award received dividends or
other economic benefits with respect to such award, which dividends or other
economic benefits are not forfeited, in which case the award shall count against
the above limits). Shares of Common Stock equal in number to the shares
surrendered in payment of the option price, and shares of Common Stock which are
withheld in order to satisfy Federal, state or local tax liability, shall count
against the above limits. Only the number of shares of Common Stock actually
issued upon exercise of a Stock Appreciation Right shall count against the above
limits, and any shares which were estimated to be used for such purposes and
were not in fact so used shall again become available for grants under the Plan.
Cash exercises of Stock Appreciation Rights and cash settlement of other awards
will not count against the above limits.
The total number of Awards (or portions thereof) settled in cash under
the Plan, based on the number of shares covered by such Awards (e.g., 100 shares
for a Stock Appreciation Right with respect to 100 shares), shall not exceed a
number equal to (i) the number of shares initially available for issuance under
the Plan plus (ii) the number of shares that have become available for issuance
under the Plan pursuant to the first paragraph of this Section 1.5
2
The number of shares of Common Stock that will be available under the
Plan for options granted in accordance with Section 2.4(i) ("ISOs") is
1,750,000.
SECTION 1.6. Other Compensation Programs. Nothing contained in the
Plan shall be construed to preempt or limit the authority of the Board of
Directors to exercise its corporate rights and powers, including, but not by way
of limitation, the right of the Board of Directors (i) to grant incentive awards
for proper corporate purposes otherwise than under the Plan to any employee,
officer, director or other person or entity or (ii) to grant incentive awards
to, or assume incentive awards of, any person or entity in connection with the
acquisition (whether by purchase, lease, merger, consolidation or otherwise) of
the business or assets (in whole or in part) of any person or entity).
ARTICLE II
Stock Options and Stock Appreciation Rights
SECTION 2.1. Terms and Conditions of Options. Subject to the
following provisions, all Options granted under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such terms and
conditions as the Committee, in its discretion, may from time to time determine
consistent with the Plan.
(a) Option Price. The option price per share shall be determined by
the Committee, except that in the case of an Option granted in accordance with
Section 2.4(i) (an "ISO") the option price per share shall not be less than the
fair market value of a share of Common Stock (as determined by the Committee) on
the date the Option is granted (other than in the case of substitute or assumed
Options to the extent required to qualify such Options for preferential tax
treatment under the Code as in effect at the time of such grant).
(b) Term of Option. The term of an Option shall be determined by the
Committee, except that in the case of an ISO the term of the Option shall not
exceed ten years from the date of grant, and, notwithstanding any other
provision of this Plan, no Option shall be exercised after the expiration of its
term.
(c) Exercise of Options. Options shall be exercisable at such time
or times and subject to such terms and conditions as the Committee shall
specify in the Option grant. Unless the Option grant specifies otherwise, the
Committee shall have discretion at any time to accelerate such time or times and
otherwise waive or amend any conditions in respect of all or any portion of the
Options held by any optionee. An Option may be exercised in accordance with its
terms as to any or all shares purchasable thereunder.
(d) Payment for Shares. The Committee may authorize payment for
shares as to which an Option is exercised to be made in cash, shares of Common
Stock, a combination thereof, by "cashless exercise" or in such other manner as
the Committee in its discretion may provide.
3
(e) Stockholder Rights. The holder of an Option shall, as such, have
none of the rights of a stockholder.
(f) Termination of Employment. The Committee shall have discretion to
specify in the Option grant, or, with the consent of the optionee, an amendment
thereof, provisions with respect to the period, not extending beyond the term of
the Option, during which the Option may be exercised following the optionee's
termination of employment.
SECTION 2.2. Stock Appreciation Rights in Tandem with Options. (a)
The Committee may, either at the time of grant of an Option or at any time
during the term of the Option, grant Stock Appreciation Rights ("Tandem SARs")
with respect to all or any portion of the shares of Common Stock covered by such
Option. A Tandem SAR may be exercised at any time the Option to which it
relates is then exercisable, but only to the extent the Option to which it
relates is exercisable, and shall be subject to the conditions applicable to
such Option. When a Tandem SAR is exercised, the Option to which it relates
shall cease to be exercisable to the extent of the number of shares with respect
to which the Tandem SAR is exercised. Similarly, when an Option is exercised,
the Tandem SARs relating to the shares covered by such Option exercise shall
terminate. Any Tandem SAR which is outstanding on the last day of the term of
the related Option (as determined pursuant to Section 2.1(b)) shall be
automatically exercised on such date for cash without any action by the
optionee.
(b) Upon exercise of a Tandem SAR, the holder shall receive, for each
share with respect to which the Tandem SAR is exercised, an amount (the
"Appreciation") equal to the difference between the option price per share of
the Option to which the Tandem SAR relates and the fair market value (as
determined by the Committee) of a share of Common Stock on the date of exercise
of the Tandem SAR. The Appreciation shall be payable in cash, Common Stock, or
a combination of both, at the option of the Committee, and shall be paid within
30 days of the exercise of the Tandem SAR.
SECTION 2.3. Stock Appreciation Rights Independent of Options.
Subject to the following provisions, all Stock Appreciation Rights granted
independent of Options ("Independent SARs") under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such term and
conditions as the Committee, in its discretion, may from time to time determine
consistent with the Plan.
(a) Exercise Price. The exercise price per share shall be determined
by the Committee on the date the Independent SAR is granted.
(b) Term of Independent SAR. The term of an Independent SAR shall be
determined by the Committee, and, notwithstanding any other provision of this
Plan, no Independent SAR shall be exercised after the expiration of its term.
4
(c) Exercise of Independent SARs. Independent SARs shall be
exercisable at such time or times and subject to such term and condition as the
Committee shall specify in the Independent SAR grant. Unless the Independent
SAR grant specifies otherwise, the Committee shall have discretion at any time
to accelerate such time or times and otherwise waive or amend any conditions in
respect of all or any portion of the Independent SARs held by any participant.
Upon exercise of an Independent SAR, the holder shall receive, for each share
specified in the Independent SAR grant, an amount (the "Appreciation") equal to
the difference between the exercise price per share specified in the Independent
SAR grant and the fair market value (as determined by the Committee) of a share
of Common Stock on the date of exercise of the Independent SAR. The
Appreciation shall be payable in cash, Common Stock, or a combination of both,
at the option of the Committee, and shall be paid within 30 days of the exercise
of the Independent SAR.
(d) Stockholder Rights. The holder of an Independent SAR shall, as
such, have none of the rights of a stockholder.
(e) Termination of Employment. The Committee shall have discretion to
specify in the Independent SAR grant, or, with the consent of the holder, an
amendment thereof, provisions with respect to the period, not extending beyond
the term of the Independent SAR, during which the Independent SAR may be
exercised following the holder's termination of employment.
SECTION 2.4. Statutory Options. Subject to the limitations on
Option terms set forth in Section 2.1, the Committee shall have the authority to
grant (i) incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) Options
containing such terms and conditions as shall be required to qualify such
Options for preferential tax treatment under the Code as in effect at the time
of such grant. Options granted pursuant to this Section 2.4 may contain such
other terms and conditions permitted by Article II of this Plan as the
Committee, in its discretion, may from time to time determine (including,
without limitation, provision for Stock Appreciation Rights), to the extent that
such terms and condition do not cause the Options to lose their preferential tax
treatment.
SECTION 2.5. Change of Control. Notwithstanding the exercisability
schedule governing any Option or Stock Appreciation Right, upon the occurrence
of a Change of Control (as defined in Section 5.10) all Options and Stock
Appreciation Rights outstanding at the time of such Change of Control and held
by participants who are employees of the Company or its subsidiaries at the time
of such Change of Control shall (unless specifically provided otherwise in the
grant thereof) become immediately exercisable and, unless the participant agrees
otherwise in writing, remain exercisable for three years (but not beyond the
term of the option or Stock Appreciation Right) after the employee's termination
of employment for any reason other than termination by the Company or a
subsidiary of the Company for dishonesty, conviction of a felony, wilful
unauthorized disclosure of confidential information or wilful refusal to perform
the duties of such employee's position or positions with the Company or such
subsidiary (termination for "cause"); provided that (i) in no event will any
participant be entitled to receive any payment in excess of the amount permitted
to be paid without penalty under Section 4999 of the Code, (ii) this
5
Section 2.5 shall not apply to Awards granted to a participant if, in connection
with a Change of Control pursuant to clause (1) of Section 5.10, such
participant is the Person or forms part of the Person specified in such clause
(1) and (iii) to the extent an Option granted hereunder is intended to replace a
cancelled option to purchase Pearson plc ordinary shares, such Option may not be
exercised after the date the cancelled option could have been exercised under
the Pearson plc 1992 United States Executive Share Option Scheme had such
original option remained in effect and the participant's employment within the
group (as defined thereunder) had continued until termination of employment with
the Company.
ARTICLE III
Restricted Stock
SECTION 3.1. Terms and Conditions of Restricted Stock Awards.
Subject to the following provisions, all awards of Restricted Stock under the
Plan to employees of the Company and its Subsidiaries shall be in such form and
shall have such terms and conditions as the Committee, in its discretion, may
from time to time determine consistent with the Plan.
(a) Restricted Stock Award. The Restricted Stock award shall specify
the number of shares of Restricted Stock to be awarded, the price, if any, to be
paid by the recipient of the Restricted Stock, and the date or dates on which
the Restricted Stock will vest. The vesting and number of shares of Restricted
Stock may be conditioned upon the completion of a specified period of service
with the Company or its Subsidiaries, upon the attainment of specified
performance goals, or upon such other criteria as the Committee may determine in
its sole discretion.
(b) Restrictions on Transfer. Stock certificates representing the
Restricted Stock granted to an employee shall be registered in the employee's
name. Such certificates shall either be held by the Company on behalf of the
employee, or delivered to the employee bearing a legend to restrict transfer of
the certificate until the Restricted Stock has vested, as determined by the
Committee. The Committee shall determine whether the employee shall have the
right to vote and/or receive dividends on the Restricted Stock before it has
vested. No share of Restricted Stock may be sold, transferred, assigned, or
pledged by the employee until such share has vested in accordance with the terms
of the Restricted Stock award. Unless the grant of a Restricted Stock award
specifies otherwise, in the event of an employee's termination of employment
before all the employee's Restricted Stock has vested, or in the event other
conditions to the vesting of Restricted Stock have not been satisfied prior to
any deadline for the satisfaction of such conditions set forth in the award, the
shares of Restricted Stock that have not vested shall be forfeited and any
purchase price paid by the employee shall be returned to the employee. At the
time Restricted Stock vests (and, if the employee has been issued legended
certificates of Restricted Stock, upon the return of such certificates to the
Company), a certificate for such vested shares shall be delivered to the
employee (or the beneficiary designated by the employee in the event of death),
free of all restrictions.
6
(c) Accelerated Vesting. Notwithstanding the vesting conditions set
forth in the Restricted Stock award, (i) unless the Restricted Stock grant
specifies otherwise, the Committee may in its discretion at any time accelerate
the vesting of Restricted Stock or otherwise waive or amend any conditions of a
grant of Restricted Stock, and (ii) all shares of Restricted Stock shall vest
upon a Change of Control of the Company; provided that in no event will any
participant be entitled to receive any payment in excess of the amount permitted
to be paid without penalty under Section 4999 of the Code and clause (ii) above
shall not apply to Awards granted to a participant if, in connection with a
Change of Control pursuant to clause (1) of Section 5.10, such participant is
the Person or forms part of the Person specified in such clause (1).
ARTICLE IV
Performance Awards
SECTION 4.1. Terms and Conditions of Performance Awards. The
Committee shall be authorized to grant Performance Awards, which are payable in
stock, cash or a combination thereof, at the discretion of the Committee.
(a) Performance Period. The Committee shall establish with respect to
each Performance Award a performance period over which the performance of the
holder of such Performance Award shall be measured. The performance period for
a Performance Award shall be established at the time such Performance Aware is
granted and may overlap with performance periods relating to other Performance
Awards granted hereunder to the same employee.
(b) The Committee shall establish a minimum level of acceptable
achievement for the holder at the time of each award. Each Performance Award
shall be contingent upon future performances and achievement of objectives
described either in terms of Company-wide performance or in terms that are
related to performance of the employee or of the division, subsidiary,
department or function within the Company in which the employee is employed.
The Committee shall have the authority to establish the performance objectives
and measures applicable to such objectives.
(c) Size, Frequency and Vesting. The Committee shall have the
authority to determine at the time of the award the maximum value of a
Performance Award, the frequency of awards and the date or dates when awards
vest.
(d) Payment. Following the end of each performance period, the holder
of each Performance Award will be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Award, based on the achievement
of the performance measures for such performance period, as determined by the
Committee. If at the end of the performance period the specified objectives
have been attained, the employee shall be deemed to have fully earned the
Performance Award. If the employee exceeds the specified minimum level of
acceptable achievement but does not attain such objectives, the employee shall
be deemed to have partly earned
7
the Performance Award, and shall become entitled to receive a portion of the
total award, as determined by the Committee. If a Performance Award is granted
after the start of a performance period, the award shall be reduced to reflect
the portion of the performance period during which the award was in effect.
Unless the award specifies otherwise, the Committee may adjust the payment of
awards or the performance objectives if events occur or circumstances arise
which would cause a particular payment or set of performance objectives to be
inappropriate, an determined by the Committee.
(e) Termination of Employment. A recipient of a Performance Award
who, by reason of death, disability or retirement, terminates employment before
the end of the applicable performance period shall be entitled to receive, to
the extent earned, a portion of the award which is proportional to the portion
of the performance period during which the employee was employed. A recipient of
a Performance Award who terminates employment for any other reason shall not be
entitled to any part of the award unless the Committee determines otherwise;
however, the Committee may in no event pay the employee more than that portion
of the award which is proportional to his or her period of actual service.
(f) Accelerated Vesting. Notwithstanding the venting conditions set
forth in a Performance Award, (i) unless the Award specifies otherwise, the
Committee may in its discretion at any time accelerate vesting of the award or
otherwise waive or amend any conditions (including but not limited to
performance objectives) in respect of a Performance Award, and (ii) all
Performance Awards shall vest upon a Change of Control of the Company. In
addition, each participant in the Plan shall receive the maximum Performance
Award he or she could have earned for the proportionate part of the performance
period prior to the Change of Control, and shall retain the right to earn any
additional portion of his or her award if he or she remains in the Company's
employ. In no event, however, will any participant be entitled to receive any
payment in excess of the amount permitted to be paid without penalty under
Section 4999 of the Code and clause (ii) above shall not apply to Awards granted
to a participant if, in connection with a Change of Control pursuant to clause
(1) of Section 5.10, such participant is the Person or forms part of the Person
specified in such clause (1).
(g) Stockholder Rights. The holder of a Performance Award shall, as
such, have none of the rights of a stockholder.
ARTICLE V
Additional Provisions
SECTION 5.1. General Restrictions. Each Award under the Plan shall
be subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or Federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the recipient of an Award with respect to the
8
disposition of shares of Common Stock, is necessary or desirable (in connection
with any requirement or interpretation of any Federal or state securities law,
rule or regulation) as a condition of, or in connection with, the granting of
such Award or the issuance, purchase or delivery of shares of Common Stock
thereunder, such Award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
SECTION 5.2. Adjustments for Changes in Capitalization. In the
event of any stock dividends, stock splits, recapitalizations, combinations,
exchanges of shares, mergers, consolidation, liquidations, split-ups, split-
offs, spin-offs, or other similar changes in capitalization, or any distribution
to stockholders, including a rights offering, other than regular cash dividends,
changes in the outstanding stock of the Company by reason of any increase or
decrease in the number of issued shares of Common Stock resulting from a split-
up or consolidation of shares or any similar capital adjustment or the payment
of any stock dividend, any share repurchase at a price in excess of the market
price of the Common Stock at the time such repurchase is announced or other
increase or decrease in the number of such shares, the Committee shall make
appropriate adjustment in the number and kind of shares authorized by the Plan
(including shares available for ISOs), in the number, price or kind of shares
covered by the Awards and in any outstanding Awards under the Plan; provided,
however, that no such adjustment shall increase the aggregate value of any
outstanding Award.
In the event of any adjustment in the number of shares covered by any
Award, any fractional shares resulting from such adjustment shall be disregarded
and each such Award shall cover only the number of full shares resulting from
such adjustment.
SECTION 5.3. Amendments. (a) The Board of Directors may at any
time and from time to time and in any respect amend or modify the Plan;
provided, however, that no such action of the Board of Directors without
approval of stockholders of the Company may increase the total number of shares
of Common Stock available under Section 1.5 for the implementation of Awards
under the Plan except as contemplated in Section 5.2.
(b) The Committee shall have the authority to amend any Award to
include any provision which, at the time of such amendment, is authorized under
the terms of the Plan; however, no outstanding Award may be revoked or altered
in a manner unfavorable to the holder without the written consent of the holder.
SECTION 5.4. Cancellation of Awards. Any award granted under the
Plan may be canceled at any time with the consent of the holder and a new award
may be granted to such holder in lieu thereof, which award may, in the
discretion of the Committee, be on more favorable terms and conditions than the
canceled award.
SECTION 5.5. Beneficiary. A participant may file with the Company a
written designation of beneficiary, on such form as may be prescribed by the
Committee, to receive
9
any Options, Stock Appreciation Rights, shares of Restricted Stock, Common Stock
and Performance Awards that become deliverable to the participant pursuant to
the Plan after the participant's death. A participant may, from time to time,
amend or revoke a designation of beneficiary. If no designated beneficiary
survives the participant, the executor or administrator of the participant's
estate shall be deemed to be the participant's beneficiary.
SECTION 5.6. Withholding. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the holder to pay an amount in cash or to retain
or sell without notice, or demand surrender of, shares of Common Stock in value
sufficient to satisfy any Federal, state or local withholding tax liability
("Withholding Tax") prior to the delivery of any certificate for such shares (or
remainder of shares if Common Stock is retained to satisfy such tax liability).
Whenever under the Plan payments are to be made in cash, such payments shall be
net of an amount sufficient to satisfy any Federal, state or local withholding
tax liability.
Whenever Common Stock is so retained or surrendered to satisfy
Withholding Tax, the value of shares of Common Stock to retained or surrendered
shall be determined by the Committee, and the value of shares of Common Stock so
sold shall be the net proceeds (after deduction of commissions) received by the
Company from such sale, as determined by the Committee.
SECTION 5.7. Non-assignability. Except as expressly provided in the
Plan, no Award under the Plan shall be assignable or transferable by the holder
thereof except by will or by the laws of descent and distribution. During the
life of the holder, Awards under the Plan shall be exercisable only by such
holder or by the guardian or legal representative of such holder.
SECTION 5.8. Non-uniform Determinations. Determinations by the
Committee under the Plan (including, without limitation, determinations of the
persons to receive Awards; the form, amount and timing of such awards; the terms
and provisions of such Awards and the agreements evidencing same; and provisions
with respect to termination of employment) need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, Awards
under the Plan, whether or not such persons are similarly situated.
SECTION 5.9. No Guarantee of Employment. The grant of an Award
under the Plan shall not constitute an assurance of continued employment for any
period or any obligation of the Board of Directors to nominate any director for
reelection by the Company's stockholders.
SECTION 5.10. Change of Control. A "Change of Control" shall be
deemed to have occurred if:
(1) any Person (as defined below), other than Designated Person, is or
becomes the Beneficial Owner (as defined below) of securities of the
Company representing 30% or more of the Voting Power (as defined below);
10
(2) there shall occur a change in the composition of a majority of the
Board of Directors within any period of four consecutive years which change
shall not have been approved by a majority of the Board of Directors as
constituted immediately prior to the commencement of such period;
(3) at any meeting of the stockholders of the Company called for the
purpose of electing directors, more than one of the persons nominated by
the Board of Directors for election as directors shall fail to be elected;
or
(4) the stockholders of the Company approve a merger, consolidation,
sale of substantially all assets or other reorganization of the Company,
other than a reincorporation, in which the Company does not survive.
For purposes of this Section 5.10, (i) "Person" shall have the meaning
set forth in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as in effect on September 1, 1993, (ii) "Beneficial Owner" shall have the
meaning set forth in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934 on September 1, 1993; (iii) "Voting Power" shall mean the voting power of
the outstanding securities of the Company having the right under ordinary
circumstances to vote at an election of the Board of Directors; and (iv)
"Designated Person" shall mean any one or more of (A) Pearson plc. ("Pearson")
or any of its affiliates, (B) any Person that includes Pearson or any of its
affiliates, (C) any Person whose Beneficial Ownership of securities representing
30% or more of the Voting Power is a result of such Person acquiring securities
as an underwriter in an underwritten public offering of such securities.
SECTION 5.11. Duration and Termination. (a) The Plan shall be of
unlimited duration. Notwithstanding the foregoing, no incentive stock option
(within the meaning of Section 422 of the Code) shall be granted under the Plan
ten (10) years after the approval of the Corporation's stockholder, but Awards
granted prior to such date may extend beyond such date, and the terms of this
Plan shall continue to apply to all Awards granted hereunder.
(b) The Board of Directors may suspend, discontinue or terminate the
Plan at any time. Such action shall not impair any of the rights of any holder
of any Award outstanding on the date of the Plan's suspension, discontinuance or
termination without the holder's written consent.
SECTION 5.12. Effective Date. The Plan shall be effective as of
November 1, 1993, subject to approval of the Corporation's stockholder.
11
EXHIBIT 10.3
PRODUCTION OPERATORS CORP
1992 LONG-TERM INCENTIVE PLAN
Approved by the Stockholders February 24, 1993,
amended June 2, 1993 and October 24, 1995
1. Purpose. The purpose of the Production Operators Corp 1992 Long-Term
Incentive Plan is to promote the interests of the Company and its shareholders
by enabling selected key employees of the Company and its subsidiaries to
participate in the long-term growth of the Company by receiving the opportunity
to acquire shares of the Company's Stock and to provide for additional
compensation based on appreciation in the Company's Stock. The Plan will
thereby facilitate securing, retaining and motivating key employees, thus
contributing to the long-term growth and profitability of the Company.
2. Defined Terms. The following defined terms have the meanings set forth
below:
(a) "Act" means the Securities Exchange Act of 1934, as amended from
time to time.
(b) "Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock options, Stock Appreciation Rights,
Restricted Stock Awards, Unrestricted Stock Awards, Deferred Stock
Awards, Performance Unit Awards and Other Stock-Based Awards.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the internal Revenue Code of 1986, as amended, and
any successor code and related rules, regulations and interpretations.
(e) "Committee" means the Stock Option and Executive Compensation
Committee of the Board (or such other committee as described in
Section 5 below); such Committee shall consist of at Least three
members of the Board, each of whom shall be a Disinterested Person.
(f) "Company" means Production Operators Corp
(g) "Deferred Stock Award" is defined in Section 11(a) below.
(h) "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the
Plan.
(i) "Disinterested Person" shall have the meaning set forth in Rule
16b-3, or any successor definition promulgated by the Securities and
Exchange Commission under the Act.
(j) "Fair Market Value" on a specified date shall be the closing price
of the Stock on the NASDAQ National Market System on that date or, if
no prices are reported on that date, on the last preceding date on
which such price of the Stock was so reported.
(k) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(l) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(m) "Other Stock-Based Award" is defined in Section 13(a) below.
(n) "Performance Unit Award" is defined in Section 12(a) below.
(o) "Plan" means the Production Operators Corp 1992 Long-Term
incentive Plan, as amended from time to time.
(p) "Restricted Stock Award" is defined in Section 9(a) below.
(q) "Retirement" means a severance from the active employment of the
Company or its Subsidiaries by reason of retirement pursuant to the
provisions of the Company's Policy Manual, or any contract between the
Company or any of its Subsidiaries and the Plan participant. The
Committee reserves the final authority to determine the definition of
retirement.
(r) "Rule 16b-3" means Rule 16b-3, as promulgated by the Securities
and Exchange commission under Section 16(b) of the Act, as amended
from time to time.
(s) "Stock" means the Common Stock, $1.00 par value, of the Company.
(t) "Stock Appreciation Right" means a right described in Section 8(a)
below.
(u) "Stock Option" means any option to purchase shares of Stock
granted Pursuant to Section 7 below.
(v) "Stock Surrender Withholding Election" shall have the meaning set
forth in Section 15 below.
2
(w) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 424 of the Code of the Company.
(x) "Unrestricted Stock Award" is defined in Section 10 below.
(y) "Tax Date" shall have the meaning set forth in Section 15 below.
3. Stock Subject to the Plan.
(a) Shares Issuable. The maximum number of shares of Stock reserved
and available for distribution pursuant to Awards under the Plan shall
be 700,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If an Award
expires or terminates for any reason without being exercised in full
or is satisfied without the distribution of Stock, the Stock subject
to such expired or terminated Award or an Award satisfied without the
distribution of Stock shall again be available for distribution for
purposes of the Plan.
(b) Changes in Capitalization. In the event of a stock dividend,
stock split or any increase or decrease in the number of issued shares
of Stock resulting from a subdivision or combination of shares
effected without receipt of consideration by the Company, the
Committee shall make appropriate adjustments in (i) the number and
kind of shares of Stock or other securities with respect to which
Awards may thereafter be granted, (ii) the number and kind of shares
remaining subject to outstanding Awards and (iii) the option or
purchase price in respect of such shares. In the event of any such
change in capitalization of the Company, the Committee may make such
additional adjustments in the number and kind of shares of Stock or
other securities with respect to which outstanding Awards are
exercisable and with respect to which future Awards may be granted as
the Committee in its sole discretion shall deem equitable or
appropriate, subject to the provisions of Section 18 below. In the
event the Stock is changed into the same number of shares with a
different par value or without par value, the shares resulting from
any such change shall be deemed to be the Stock within the meaning of
the Plan. Except (i) as expressly provided in the preceding sentences
or (ii) for any distribution or adjustment made with respect to
outstanding shares of Restricted Stock in connection with a
distribution or adjustment made with respect to all other outstanding
shares of Stock, any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Stock subject to any
Award. The existence of the Plan and the Awards granted pursuant to
the Plan shall not affect in any way the right or power of the Company
to make or authorize any adjustment, reclassification, reorganization
or other change in its capital or business structure, any merger or
consolidation of the Company, any issue of debt or equity securities
having preferences or priorities as to the Stock or the
3
rights thereof, the dissolution or liquidation of the Company, any
sale or transfer of all or any part of its business or assets, or any
other corporate act or proceeding.
(c) Substitute Awards. The Company may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees. Also
the Company may grant Awards under the Plan in substitution for stock
and stock-based awards held by employees of another corporation who
concurrently become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with
the Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation. The
Committee may direct that the substitute Awards be granted on such
terms and conditions as the Committee considers appropriate in the
circumstances. The shares which may be delivered under such
substitute Awards shall be subject to and applied against the maximum
number of shares provided for in paragraph (a) above.
4. Eligibility. Participants in the Plan will be such officers and other
senior key employees of the Company and its Subsidiaries (but excluding any
person who serves only as a director) who are responsible for or contribute to
the management, growth, or profitability of the Company and its Subsidiaries and
who are selected from time to time by the Committee, in its sole discretion.
5. Administration of the Plan. The Plan shall be administered by the
Committee or such other committee of the Board, composed of not less than three
Disinterested Persons, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers and other key employees of the Company and
its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the amount, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Deferred Stock Awards, Performance Units Awards, and any Other
Stock-Based Awards, or any combination of the foregoing, granted to
any one or more Plan participants;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine the terms and conditions of any Award (including,
but not limited to, the share price, any restriction or limitation,
and any waiver of vesting, acceleration or forfeiture provisions
regarding any Stock Option or other Award and the Stock relating
thereto, based on such factors as the Committee shall determine); and
4
(v) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the Participant,
and whether and to what extent the Company shall pay or credit amounts
equal to interest (at rates determined by the Committee), dividends or
deemed dividends on such deferrals.
Subject to the provisions of the Plan, the Committee shall have
full and conclusive authority to interpret the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective Award agreements
and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Committee's determinations
under the Plan need not be uniform and may be made by it selectively
among persons who receive, or are eligible to receive, Awards under
the Plan (whether or not such persons are similarly situated). Any
determination made by the Committee pursuant to the provisions of the
Plan with respect to any Award shall be made in its sole discretion at
the time of the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions by
the Committee made pursuant to the provisions of the Plan shall be
final and binding on all persons, including the Company and Plan
participants.
6. Limitations on Term and Date Of Awards.
(a) Duration of Awards. Subject to Section 19(c) below, no
restrictions or limitations on any Award shall extend beyond ten years
from the grant date, except that deferrals of the receipt of Stock or
other benefits under the Plan elected by participants may extend
beyond such date.
(b) Term. No Award shall be granted more than ten years after the
effective date of the Plan as specified in Section 20 below, but then
outstanding Awards may extend beyond such date.
7. Stock Options. Stock Options may be granted alone or in addition to
other Awards and may be of two types: Incentive Stock Options and Non-Qualified
Stock Options. Each Stock Option shall be clearly identified as to its status as
an Incentive Stock Option or a Non-Qualified Stock Option at the date of grant.
To the extent that any Stock Option denominated as an Incentive Stock Option
does not qualify as an "incentive stock option" within the meaning of Section
422 of the Code, it shall constitute a separate Non-Qualified Stock Option.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall be evidenced by option agreements, which shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time
of grant and set forth in the
5
option agreement but shall be (i) in the case of Incentive Stock
Options, not less than 100% of the Fair Market Value on the date of
grant and (ii) in the case of Non-Qualified Stock Options, unless
expressly authorized otherwise by the Committee, not less than 100% of
the Fair Market Value on the date of grant; provided, however, that
the option price per share of Stock purchasable under a Non-Qualified
Stock Option may not be less than 50% of the Fair Market Value on the
date of grant nor less than the par value of such stock. If an officer
or key employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or
any Subsidiary or parent corporation, and an Incentive Stock Option is
granted to such officer or key employee, the option price shall be no
less than 110% of the Fair Market Value on the date of grant. The
grant of a Stock Option shall occur on the date the Committee by
resolution selects an officer or employee as a Plan participant in any
grant of Stock Options, determines the number of shares of Stock
covered by the Stock Option and specifies the terms and provisions of
the option agreement.
(b) Option Term. Unless an option agreement provides for a shorter
exercise period, any Stock Option shall be exercisable not later than
ten years after the Stock Option is granted; provided, however, that
if an Incentive Stock Option is granted to an employee who owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation, the term
of such Incentive Stock Option shall be no more than five years from
the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions, and in such
amounts, as the Committee shall specify in the option agreement,
except that no Stock Option when initially granted shall provide that
it may be exercisable to any extent during the first six months
following the date of grant. Notwithstanding the foregoing,
subsequent to the grant of a Stock Option, the Committee, at any time
before the complete expiration of such Stock Option, may accelerate
the time or times at which such Stock Option may be exercised in whole
or in part; provided, however, that if any Stock Option is exercised
within the first six months following the date of grant, the shares of
Stock received upon such exercise may not be sold within the first six
months following the date of grant. Except as provided in subsections
(f), (g), (h) and (i) below, a Stock Option may not be exercised by
the holder unless the holder is then, and continually after the grant
of the Stock Option has been, an employee of the Company or one of its
Subsidiaries.
(d) Method of Exercise. Stock Options may be exercised at any time
during the option period by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Except as
provided in subsection (1) below, such
6
notice shall be accompanied by payment in full of the purchase price,
either by certified or bank check or other instrument acceptable to
the Committee, or by delivery of shares of Stock as provided in this
subsection. As determined by the Committee, in its discretion at (or,
in the case of Non-Qualified Stock Options, at or after) the time of
grant, payment in full or part may also be made in the form of shares
of Stock not then subject to restrictions under any Company plan (but
which may include shares the disposition of which constitutes a
disqualifying disposition for purposes of obtaining incentive stock
option treatment under the Code). Shares of Stock so surrendered shall
be valued at Fair Market Value on the exercise date. Except as
provided in subsection (1) below, no shares of Stock shall be issued
until full payment therefor has been made. An optionee shall have all
of the rights of a shareholder of the Company, including the right to
vote the shares and the right to receive dividends, with respect to
shares subject to a Stock Option when the optionee has given written
notice of exercise, has paid in full for such shares and, if
requested, has given the representation described in Section 19(c)
below.
(e) Nontransferability. No Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee or the guardian or legal
representative of the optionee.
(f) Termination by Death. If an optionee's employment with the
Company or any Subsidiary terminates by reason of death, any Stock
Option held by such optionee may thereafter be exercised, to the
extent exercisable at the time of death by the legal representative or
legatee of the optionee, for a period of one year from the date of
death or until the expiration of the stated term of the Stock Option,
whichever period is the shorter
(g) Termination by Disability. If an optionee's employment with the
Company or any Subsidiary terminates by reason of Disability, any
Stock Option held by such optionee way thereafter be exercised by the
optionee, to the extent it was exercisable at the time of termination,
for a period of one year from the date of such termination or until
the expiration of the stated term of the Stock Option, whichever
period is the shorter. Except as otherwise provided by the Committee
at the time of grant, the death of an optionee during such exercise
period shall extend such period for one year following death, or until
the expiration of the stated term of the Stock Option, whichever
period is the shorter.
(h) Termination by Retirement. If an optionee's employment with the
Company or any Subsidiary terminates by reason of Retirement, any
Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of Retirement,
for a period of (i) in the case of Incentive Stock Options, three
months, and (ii) in the case of Non-Qualified Stock Options, one year
from the
7
date of Retirement or until the expiration of the stated term of the
Stock Option, whichever period is the shorter. Except as otherwise
provided by the Committee at the time of grant, the death of an
optionee during such exercise period shall extend such period for one
year following death, or until the expiration of the stated term of
the Stock Option, whichever period is the shorter.
(i) Other Termination. Unless otherwise determined by the Committee,
if an employee's employment with the Company or any Subsidiary
terminates for any reason other than death, Disability or Retirement,
the Stock Option shall thereupon terminate.
(j) Form of Settlement. The Committee may provide in the option
agreement that upon receipt of written notice of exercise, the
Committee may elect to settle all or a part of the portion of any
Stock Option so exercised by paying the optionee an amount, in cash or
Stock, equal to the excess of the Fair Market Value of the Stock over
the exercise price (the "Spread Value") (determined on the date the
Stock Option is exercised). Any such settlement relating to Stock
Options held by optionees who are actually or potentially subject to
Section 16(b) of the Act shall comply with the "window period"
provisions of Rule 16b-3(e), to the extent applicable, and, in the
case of settlements of Non-Qualified Stock Options held by such
optionees, the Committee may determine Fair Market Value under the
pricing rule set forth in Section 8(e) below.
(k) Accelerated Right of Exercise in Certain Circumstances.
Notwithstanding the vesting provisions established pursuant to
subparagraph (c) above, but subject to the provisions of subparagraph
(b) above and the last sentence of this subparagraph (k), a Stock
Option may be exercised as to the full number of shares covered by the
Stock Option without regard to the date of grant of the Stock Option
if: (i) a tender offer or exchange offer has been made for at least
25% of the outstanding shares of Stock, other than one made by the
Corporation or any entity as to which Carl W. Knobloch, Jr. is an
"affiliate" as defined in Rule 12b-2 promulgated under the Act
provided that the corporation, person or other entity making such
offer purchases or otherwise acquires shares of Stock pursuant to such
offer; or (ii) any person, entity or "group," within the meaning of
Section 13(d)(3), or 14(d)(2) of the Act (excluding, for this purpose,
any employee benefit plan of the Corporation or its Subsidiaries and
any group including Carl W. Knobloch, Jr. or any affiliate of Carl W.
Knobloch, Jr.) acquires (other than from the Corporation or in a
transaction approved by the "Incumbent Board" as defined below)
(beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Act) of 25% or more of either the then outstanding shares of
Stock or the combined voting power of the Corporation's then
outstanding voting securities entitled to vote generally in the
election of directors; or (iii) the individuals who constitute the
Incumbent Board fail for any reason to continue to constitute at least
a majority of the Board of Directors. The
8
"Incumbent Board" shall mean the members of the Board of Directors as
of April 8, 1992 and any person becoming a member of the Board of
Directors thereafter whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Act). If any of the events specified in this
subparagraph (k) have occurred, the Stock Option shall be fully
exercisable: (x) in the event of (i) above, on or after the date on
which shares are purchased or otherwise acquired pursuant to such
tender offer or exchange offer; or (y) in the event of (ii) above, at
any time after the date upon which the Corporation is provided a copy
of a Schedule 13D (filed pursuant to section 13(d) of the Act and the
rules and regulations promulgated thereunder) or other notice
indicating that any person, entity or group has become the holder of
25% or more of the outstanding shares of Stock, or, if the Corporation
is not subject to Section 13(d) of the Act, at any time after the date
upon which the Corporation receives written notice that any person,
entity or group has become the holder of 25% or more of the
outstanding shares of Stock; or (z) in the event of (iii) above, on or
after the occurrence of such failure.
(l) Certain Procedure for Certain Credit Assisted Transactions. To
the extent not inconsistent with the provisions of Section 422 of the
Code or Rule 16b-3, any optionee desiring to obtain credit from a
broker, dealer or other "creditor" as defined in Regulation T issued
by the Board of Governors of the Federal Reserve System (provided such
broker, dealer or creditor has been approved by the Committee) to
assist in exercising a Stock Option may deliver to such creditor an
exercise notice properly executed by such optionee with respect to
such Stock Option, together with instructions to the Company to
deliver the resulting Stock to the creditor for deposit into a
designated account. Upon receipt of such exercise notice and related
instructions in a form acceptable to the Company, the Company shall
confirm to the creditor that it will deliver to the creditor the Stock
covered by such exercise notice and instructions promptly following
receipt of the exercise price from the creditor. To the extent not
inconsistent with the provisions of Section 422 of the Code or Rule
16b-3, upon request the Company may in its discretion, but shall not
be obligated to, deliver to the creditor shares of Stock resulting
from an assisted exercise prior to receipt of the option exercise
price for such shares if the creditor has delivered to the Company, in
addition to the other documents contemplated hereby, the creditor's
agreement to pay the Company such exercise price in cash within five
days after delivery of such shares. The credit assistance
contemplated hereby may include a margin loan by the creditor secured
by the Stock purchased upon exercise of a Stock Option or an immediate
sale of some or all of such Stock by the creditor to obtain or recover
the option exercise price which the creditor has committed to Pay to
the Company.
9
(m) Special Provisions Relating to Incentive Stock Options. At the
time any Incentive Stock Option granted under the Plan is exercised,
the Company shall be entitled to legend the certificates representing
the shares of Stock purchased pursuant to such Incentive Stock Option
to clearly identify them as representing shares purchased upon
exercise of an Incentive Stock Option that may be subject to income
tax withholding requirements as set forth in Section 15 below.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the
Plan be exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the affected optionee, to
disqualify any Incentive Stock Option under Section 422 of the Code
(except to the extent provided in Section 16 below).
8. Stock Appreciation Rights.
(a) General. A Stock Appreciation Right is an Award entitling the
recipient to receive an amount in cash or shares of Stock (or forms of
payment permitted under subsection (d) below) or a combination thereof
having a value equal to (or, if the Committee shall so determine at
time of grant, less than) the excess of the Fair Market Value of a
share of Stock on the date of exercise over the Fair Market Value of a
share of Stock on the date of grant (or over the option exercise
price, if the Stock Appreciation Right was granted in tandem with a
Stock Option) multiplied by the number of shares with respect to which
the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
(b) Grant and Exercise. Stock Appreciation Rights may be granted in
tandem with, or independently of, any Stock Option granted under the
Plan. In the case of a Stock Appreciation Right granted in tandem
with a Non-Qualified Stock Option, such Stock Appreciation Right may
be granted either at or after the time of grant of such option. In
the case of a Stock Appreciation Right granted in tandem with an
Incentive Stock Option, such Stock Appreciation Right may be granted
only at the time of the grant of such option. A Stock Appreciation
Right or applicable portion thereof granted in tandem with a Stock
Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that a
Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Stock Option shall not be
reduced until the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock Appreciation
Right.
(c) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions as shall be determined from time to time
by the Committee, including the following:
10
(i) No Stock Appreciation Right shall be exercisable in whole or
in part during the first six months of its term.
(ii) Stock Appreciation Rights granted in tandem with Stock
Options shall be exercisable only at such time or times and to
the extent that the related Stock Option shall be exercisable.
Upon the exercise of a Stock Appreciation Right, the applicable
portion of any related Stock Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with a Stock
Option shall be transferable only with such Stock Option. Stock
Appreciation Rights shall not be transferable otherwise than by
will or the laws of descent and distribution. All Stock
Appreciation Rights shall be exercisable during the participant's
lifetime only by the participant or by the participant's legal
representative or guardian.
(iv) A Stock Appreciation Right granted in tandem with an
Incentive Stock Option may be exercised only when the market
price of the Stock subject to the Incentive Stock Option exceeds
the exercise price of such option.
(d) Form of Settlement. Subject to Section 19(c) below, shares of
Stock issued upon exercise of a Stock Appreciation Right shall be free
of all restrictions under the Plan, except as otherwise provided in
this subsection (d). The Committee may provide at time of grant of a
Stock Appreciation Right that such shares shall be in the form of
Restricted Stock or rights to acquire Deferred Stock, or may reserve
the right to provide so at any time after the date of grant. Any such
shares and any shares subject to rights to acquire Deferred Stock
issued upon exercise of a Stock Appreciation Right shall be valued at
Fair Market Value on the date of exercise of the Stock Appreciation
Right without regard to any restrictions or deferral limitations.
(e) Rules Relating to Exercise. In the case of a participant subject
to the restrictions of Section 16(b) of the Act, no Stock Appreciation
Right shall be exercised except in compliance with any applicable
requirements of Rule 16b-3(e) or any successor rule. Notwithstanding
paragraph (a) above, in the event of such exercise during an exercise
period currently prescribed by such rule, the Committee may prescribe,
by rule of general application, such other measure of value as it may
determine but not in excess of the highest per share closing sale
price of the Stock reported on the Nasdaq National Market System or
such other exchange as the stock trades on during such period and,
where a Stock Appreciation Right relates to an Incentive Stock Option,
not in excess of an amount consistent with the qualification of such
Stock Option as an "incentive stock option" under Section 422 of the
Code.
11
9. Restricted Stock.
(a) General. A Restricted Stock Award is an Award entitling the
recipient to acquire shares of Stock, subject to such conditions,
including the right of the Company during a specified period or
periods to repurchase such shares at the purchase price paid by the
Award recipient or to require forfeiture of such shares (if no cash
consideration was paid) upon the participant's termination of
employment, as the Committee may determine at the time of grant. The
Committee may award shares of Restricted Stock (i) at no cost to the
recipient (or for a purchase price not in excess of the par value of
the shares) or (ii) for a purchase price equal to at least 50% of the
Fair Market Value of the Stock without regard to any restrictions) on
the date of grant. Shares of Restricted Stock may be granted or sold
in respect of past services or other valid consideration.
(b) Award Agreement and Certificates. A participant who is granted a
Restricted Stock Award shall have no rights with respect to such Award
unless the participant shall have accepted the Award within sixty days
(or such shorter period as the Committee may specify) following the
Award date by executing and delivering to the Company a Restricted
Stock Award agreement in such form as the Committee shall determine
and by making payment to the Company, by certified or bank check or
other instrument acceptable to the Committee, of any cash
consideration required to be paid in connection with such Restricted
Stock Award. For each participant receiving a Restricted Stock Award,
the Restricted Stock will be registered in the name of the participant
in an uncertificated account with the Company's transfer agent and
evidence of such registration will be furnished by the said transfer
agent to the participant. Such account shall include an appropriate
legend referring to the terms, conditions and restrictions applicable
to such Award, substantially in the following form:
"This uncertificated account and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture
and restrictions against transfer) contained in the Production
operators Corp 1992 Long-Term Incentive Plan and an agreement entered
into between the registered owner and Production Operators Corp.
Release from such terms and conditions shall be obtained only in
accordance with the provisions of the Plan and the agreement, copies
of which are on file in the office of the Secretary of Production
Operators Corp 11302 Tanner Road, Houston, Texas 77041."
The Committee may require that, as a condition of any Restricted
Stock Award, the participant shall have delivered to the Company a
stock power, endorsed in blank, relating to the Stock covered by such
Award.
12
(c) Rights as a Shareholder. Upon complying with subsection (b)
above, a participant shall have all the rights of a shareholder with
respect to the Restricted Stock including voting and dividend rights,
subject to nontransferability restrictions, Company repurchase or
forfeiture rights and any other condition described in this Section 9
or contained in the Restricted Stock Award, agreement. The Restricted
Stock Award agreement may require or permit the immediate payment,
waiver, deferral, or investment of dividends Paid on the Restricted
Stock.
(d) Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or disposed of
except as specifically provided herein and in the Restricted Stock
Award agreement. Unless the Committee in its discretion provides
otherwise, all shares of Restricted Stock shall be subject to the
restrictions against transfer and the Company's right to repurchase or
require forfeiture set forth in this subsection (d) for a minimum
period of six months from the date of grant. The Committee shall
specify the date or dates which may depend upon or be related to the
attainment of performance goals or such other factors or criteria as
the Committee shall determine) on which the restrictions against
transfer and the Company's right to repurchase or require forfeiture
of such shares shall lapse. The Committee may provide for the lapse of
such restrictions in installments and at any time may accelerate such
date or dates and otherwise waive or, subject to Section 18 below,
amend any terms and conditions of the Award. Except as otherwise may
be provided in the Award agreement or determined by the Committee at
any time after the date of grant, in the event of termination of
employment of a participant with the Company and its Subsidiaries for
any reason (including death), the participant or the participant's
legal representative shall resell to the Company, at the cash
consideration paid therefor, all Restricted Stock, and the Company
shall purchase such shares at that price or, if no cash consideration
was paid, all shares of Restricted Stock awarded to the participant
shall automatically be forfeited to the Company. Any shares of Stock
or other securities of the Company or any other entity which are
issued as a distribution on, or in exchange for, Restricted Stock or
into which Restricted Stock is converted as a result of a
recapitalization, stock dividend, distribution of securities, stock
split or combination of shares or a merger, consolidation or sale of
substantially all of the assets of the Company shall be subject to the
restrictions set forth in the Restricted Stock Award agreement, which
shall inure to the benefit of any surviving or successor corporation
which is the issuer of such securities. Upon the lapse of the
forfeiture restrictions applicable to a participant's Restricted
Stock, the participant may request, by providing written notice to the
Company at its principal executive office addressed to the attention
of its Secretary, a certificate evidencing the stock whose Forfeiture
Restrictions have lapsed be issued by the Company in the participant's
name to the participant or such participant's legal representative or
guardian.
13
(e) Section 83(b) Election. Any Restricted Stock Award agreement may
provide that the participant may not elect to be taxed with respect to such
Award in accordance with Section 83(b) of the Code.
10. Unrestricted Stock. The Committee may, in its sole discretion, grant
(or sell at a purchase price not to exceed the par value of the shares of Stock
at the time of sale) to any participant shares of Stock free of restrictions
under the Plan ("Unrestricted Stock"). Shares of Unrestricted Stock may be
granted or sold as described in the preceding sentence in respect of past
services or other valid consideration. Any purchase of Unrestricted Stock by a
recipient must take Place within sixty days after the time of grant of the right
to purchase such shares. Notwithstanding the foregoing, any shares of
Unrestricted Stock granted to a participant who is subject to Section 16(b) of
the Act may not be sold or otherwise disposed of for value for a period of six
months from the date of grant.
11. Deferred Stock Awards.
(a) General. A Deferred Stock Award is an Award entitling the
recipient to acquire shares of Stock without payment in one or more
installments at a future date or dates, all as determined by the
Committee. The Committee may condition such acquisition on the
attainment of specified performance goals or such other factors or
criteria as the Committee shall determine. Unless the Committee in
its discretion provides otherwise, the deferral period with respect to
any Deferred Stock Award shall be no less than six months from the
date of grant.
(b) Award Agreement. A participant who is granted a Deferred Stock
Award shall have no rights with respect to such Award unless within
sixty days of the grant of such Award (or such shorter period as the
Committee may specify) the participant shall have accepted the Award
by executing and delivering to the Company a Deferred Stock Award
agreement.
(c) Restriction on Transfer. Deferred Stock Awards and rights with
respect to such Awards may not be sold, assigned, transferred, pledged
or otherwise encumbered. Rights with respect to such Awards shall be
exercisable during the participant's lifetime only by the participant
or by the participant's legal representative or guardian.
(d) Rights as a Shareholder. A participant receiving a Deferred Stock
Award will have rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to
shares subject to the Award but not actually received by the
participant. A participant shall be entitled to receive a certificate
for shares of Stock only upon satisfaction of all conditions specified
in the Deferred Stock Award agreement.
14
(e) Elective Deferral. A participant may elect to further defer
receipt of the Stock payable under a Deferred Stock Award (or an
installment of the Award) for a specified period or until a specified
event, subject in each case to the Committee's approval and under such
terms as determined by the Committee. Subject to any exceptions
adopted by the Committee, such election must generally be made at
least 12 months prior to completion of the deferral period for the
Award (or for such installment of the Award).
(f) Termination. Except as may otherwise be Provided in the Deferred
Stock Award agreement, a participant's rights in all Deferred Stock
Awards shall automatically terminate upon the participant's
termination of employment with the Company and its Subsidiaries for
any reason (including death). At any time prior to the Participant's
termination of employment, the Committee may in its discretion
accelerate, waive, or, subject to Section 18 below, amend any or all
of the restrictions or conditions imposed under any Deferred Stock
Award.
(g) Payments in Respect of Deferred Stock. Without limiting the right
of the Committee to specify different terms, the Deferred Stock Award
agreement may require or permit the immediate payment, deferral, or
investment of amounts equal to, or less than, any cash dividends which
would have been payable on the Deferred Stock had such Stock been
outstanding, all as determined by the Committee in its sole
discretion.
12. Performance Unit Awards.
(a) General. A Performance Unit Award is an Award entitling the
recipient to acquire cash or shares of Stock, or a combination of cash
and Stock, upon the attainment of specified performance goals. The
Committee in its sole discretion shall determine whether and to whom
Performance Unit Awards shall be made, the performance goals
applicable under each such Award, the periods during which performance
is to be measured, and all other limitations and conditions applicable
to a Performance Unit Award. Notwithstanding the foregoing, no
Performance Unit Award shall be exercisable in whole or in part during
the first six months following the date of grant. Performance goals
may vary from participant to participant and between groups of
participants and shall be based upon such Company, business unit or
individual performance factors or criteria as the Committee may deem
appropriate. Performance periods applicable to Performance Unit Award
recipients may overlap and participants may participate simultaneously
with respect to Performance Unit Awards that are subject to different
performance periods and different performance goals. The Committee may
adjust the performance goals and periods applicable to a Performance
Unit Award to take into account changes in law and accounting and tax
rules, and to make such adjustments as the Committee deems necessary
or appropriate to reflect the inclusion or exclusion of the impact of
extraordinary or
15
unusual items, events or circumstances in order to avoid windfalls or
hardships. Performance Units may be awarded independent of or in
connection with the grant of any other Award under the Plan.
(b) Award Agreement. A participant shall have no rights with respect
to a Performance Unit Award unless within sixty days of the grant of
such Award (or such shorter period as the Committee may specify) the
participant shall have accepted the Award by executing and delivering
to the Company a Performance Unit Award agreement.
(c) Restrictions on Transfer. Performance Unit Awards and all rights
with respect to such Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered, and if exercisable over a specified
period, shall be exercisable during the participant's lifetime only by
the participant or the participant's legal representative or guardian.
(d) Rights as a Shareholder. A participant receiving a Performance
Unit Award will have rights of a shareholder only as to shares of
Stock actually received by the participant under the Plan and not with
respect to shares subject to the Award but not actually received by
the participant. A participant shall be entitled to receive a
certificate evidencing the acquisition of shares of Stock under a
Performance Unit Award only upon satisfaction of all conditions
specified in the Performance Unit Award agreement.
(e) Termination. Except as may otherwise be provided by the Committee
at any time prior to the termination of employment, a participant's
rights and all Performance Unit Awards shall automatically terminate
upon the participant's termination of employment by the Company and
its Subsidiaries for any reason (including death).
(f) Acceleration; waiver. At any time prior to the participant's
termination of employment with the Company and its Subsidiaries, the
Committee may in its sole discretion accelerate, waive, or, subject to
Section 18 below, amend any or all of the goals, restrictions or
conditions imposed under any Performance Unit Award.
(g) Exercise. The Committee in its sole discretion shall establish
procedures to be followed in exercising any Performance Unit Award,
which procedure shall be set forth in the Performance Unit Award
agreement. The Committee may at any time provide that payment under a
Performance Unit Award shall be made, upon satisfaction of the
applicable performance goals, without any exercise by the participant.
Except as otherwise specified by the Committee, (i) a Performance Unit
granted in tandem with a Stock Option may be exercised only while the
Stock Option is exercisable, and (ii) the exercise of a Performance
Unit granted in tandem with any
16
Award shall reduce the number of shares of Stock subject to the
related Award on such basis as is specified in the Performance Unit
Award agreement.
13. Other Stock-Based Awards.
(a) General. The Committee may grant other Awards under which Stock
is or may in the future be acquired ("Other Stock-Based Awards").
Such Awards may include, without limitation, debt securities
convertible into or exchangeable for shares of Stock upon such
conditions, including attainment of performance goals, as the
Committee shall determine. No Other Stock-Based Award shall be
exercisable in whole or in part during the first six months following
the date of grant or, if shares of Stock are awarded to a participant
on the date of grant such Stock shall be subject to restrictions
against transfer for a period of no less than six months from the date
of grant. Subject to the purchase price limitations in subsection (b)
below, such convertible or exchangeable securities may have such terms
and conditions as the Committee may determine at the time of grant.
However, no convertible or exchangeable debt shall be issued unless
the Committee shall have provided (by the Company's right of
repurchase, right to require conversion or exchange, or other means
deemed appropriate by the Committee) a means of avoiding any right of
the holders of such debt to prevent a Company transaction by reason of
covenants in such debt.
(b) Purchase Price; Form of Payment. The Committee may determine the
consideration, if any, payable upon the issuance or exercise of an
Other Stock-Based Award. However, no shares of Stock (whether acquired
by purchase, conversion, or exchange or otherwise) shall be issued
unless (i) issued at no cost to the recipient (or for a purchase price
not in excess of the par value of the shares), or (ii) sold,
exchanged, or converted by the Company, and the Company shall have
received payment for such Stock or securities so sold, exchanged, or
converted equal to at least 50% of Fair Market Value of the Stock on
the grant or effective date, or the exchange or conversion date, under
the Award, as specified by the Committee. The Committee may permit
payment by certified check or bank check or other instrument
acceptable to the Committee or by surrender of other shares of Stock
(excluding shares then subject to restrictions under the Plan).
(c) Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver
of Restrictions. The Committee may determine the conditions under
which an Other Stock-Based Award shall be forfeited or, in the case of
an Award involving a payment by the recipient, the conditions under
which the Company may or must repurchase such Award or related Stock.
At any time the Committee may in its sole discretion accelerate,
waive, or, subject to Section 18 below, amend any or all of the
limitations or conditions imposed under any Other Stock-Based Award.
17
(d) Award Agreements. A participant shall have no rights with respect
to any Other Stock-Based Award unless within sixty days after the
grant of such Award (or such shorter period as the Committee may
specify) the participant shall have accepted the Award by executing
and delivering to the company an Other Stock-Based Award agreement.
(e) Restrictions on Transfer. Other Stock-Based Awards may not be
sold, assigned, transferred, pledged, or encumbered except as may be
provided in the Other Stock-Based Award agreement. However, in no
event shall any Other Stock-Based Award be transferred other than by
will or by the laws of descent and distribution or be exercisable
during the participant's lifetime by other than the participant or the
participant's legal representative or guardian.
(f) Rights as a Shareholder. A recipient of any Other Stock-Based
Award will have rights of a shareholder only at the time and to the
extent, if any, specified by the Committee in the Other Stock-Based
Award agreement.
(g) Deemed Dividend Payments; Deferrals. Without limiting the right of
the Committee to specify different terms, an Other Stock-Based Award
agreement may require or permit the immediate payment, waiver,
deferral, or investment of dividends or deemed dividend's payable or
deemed payable on Stock subject to the Award.
14. Supplemental Grants.
(a) Loans. The Company may in its sole discretion make a loan to the
recipient of an Award hereunder, either on or after the date of grant
of such Award. Such loans may be either in connection with exercise of
a Stock Option, a Stock Appreciation Right or an Other Stock-Based
Award, in connection with the purchase of shares under any Award, or
in connection with the payment of any federal, state and local income
taxes in respect of income recognized under an Award. The Committee
shall have full authority to decide whether to make a loan hereunder
and to determine the amount, term, and provisions of any such loan,
including the interest rate (which may be zero) charged in respect of
any such loan, whether the loan is to be secured or unsecured, the
terms on which the loan is to be repaid and the conditions, if any,
under which it may be forgiven. However, no loan hereunder shall
provide or reimburse to the borrower the amount used by him for the
Payment of the par value of any shares of Stock issued, have a term
(including extensions) exceeding ten years in duration, or be in an
amount exceeding (i) the total exercise or purchase price paid by the
borrower under an Award or for related Stock under the Plan plus (ii)
an amount equal to any cash payment made as permitted in subsection
(b) below.
18
(b) Cash Payments. The Committee may, at any time and in its
discretion, authorize a cash payment, in respect of the grant or
exercise of an Award under the Plan or the lapse or waiver of
restrictions under an Award, which shall not exceed the amount which
would be required in order to pay in full the federal, state and local
income taxes due as a result of income recognized by the recipient as
a consequence of (i) the receipt of an Award or the exercise of rights
thereunder and (ii) the receipt of such cash payment. The Committee
shall have complete authority to decide whether to make such cash
payments in any case, to make provisions for such payments either
simultaneously with or after the grant of the associated Award, and to
determine the amount of any such payment.
15. Withholding. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. If a participant surrenders
shares of Stock acquired pursuant to the exercise of an Incentive Stock Option
in payment of the option exercise price of a Stock Option or the purchase price
under another Award, and such surrender constitutes a disqualifying disposition
for purposes of obtaining incentive stock option treatment under the Code, the
Company shall have the right to require the participant to remit to the Company
an amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Whenever under the Plan payments are to be made in cash, such Payments
shall be net of an amount sufficient to satisfy any federal, state and local
withholding tax requirements. A recipient may elect with respect to any Non-
Qualified Stock Option, Stock Appreciation Right, Restricted Stock Award,
Unrestricted Stock Award, Deferred Stock Award, Performance Unit Award or Other
Stock-Based Award to surrender or authorize the Corporation to withhold shares
of Stock (valued at Fair Market Value on the date of surrender or withholding of
the shares) in satisfaction of all such withholding requirements (the "Stock
Surrender Withholding Election") in accordance with the following:
(i) Any Stock Surrender Withholding Election shall be made by written
notice to the Company and thereafter shall be irrevocable by the
recipient.
(ii) Any Stock Surrender Withholding Election shall be subject to the
consent or disapproval of the Committee in accordance with rules
established from time to time by the Committee.
(iii) Any Stock Surrender Withholding Election must be made prior to
the date on which the recipient recognizes taxable income with respect
to the receipt of such shares (the "Tax Date").
(iv) If a recipient is subject to Section 16 of the Act, or any
successor law, (A) the date of the actual surrender or withholding of
shares of Stock (the "Withholding Date") must be more than six months
after the date of grant of the Award with
19
respect to which such surrender or withholding is made (except
whenever such surrender or withholding is made by a disabled recipient
or the estate or personal representative of a deceased recipient); and
(B) the Stock Surrender Withholding Election (i) must be made six
months prior to the Withholding Date, or (ii) must be made, and the
Withholding Date occur, during a period beginning on the third
business day following the date of release by the Company for
publication of quarterly or annual summary statements of sales and
earnings and ending on the twelfth business day following such date,
or (iii) must be made in connection with a delivery to the Company of
shares of Stock owned by the recipient for at least six months prior
to the Withholding Date to satisfy the Portion of the tax required to
be withheld with respect to those shares of Stock received by the
recipient, pursuant to the grant of an Award for which payment of the
purchase price was made to the Company in shares of Stock owned by the
recipient for at least six months prior to the Withholding Date.
(v) When the Tax Date falls after the exercise of a Non-Qualified
Stock Option or issuance of shares pursuant to any other Award and the
recipient makes a Stock Surrender Withholding Election, the full
number of shares of Stock subject to the Non-Qualified Stock Option
being exercised or issuable pursuant to the Award will be issued, but
the recipient will be unconditionally obligated to deliver to the
Company on the Tax Date the number of shares of Stock having a value
on the Tax Date equal to the recipient's federal, state and local
withholding tax requirements.
(vi) For purposes of this Section 15, the Committee shall have the
discretion to provide (by general rule or a provision in the specific
Award agreement) that, at the election of the recipient, "federal,
state and local withholding tax requirements" shall be deemed to be
any amount designated by the recipient which does not exceed his
estimated federal, state and local tax obligations associated with the
transaction, including FICA taxes to the extent applicable.
16. Merger; Liquidation. If the Company shall be the surviving corporation
in any merger, recapitalization or similar reorganization, the optionee of each
outstanding Stock Option shall be entitled to purchase, at the same times and
upon the same terms and conditions as are then provided in the Stock Option, the
number and class of shares of Stock or other securities to which a holder of the
number of shares of Stock subject to the Stock Option at the time of such
transaction would have been entitled to receive as a result of such transaction,
and a corresponding adjustment shall be made in connection with determining the
value of any related Stock Appreciation Right. In the event of any such change
in capitalization of the Company, the Committee may make such additional
adjustments in the number and class of shares of stock or other securities with
respect to which outstanding Awards are exercisable and with respect to which
future Awards may be granted as the Committee in its sole discretion shall deem
equitable or appropriate, subject to the provisions of Section 18 below. In the
event of dissolution or liquidation of the Company or a merger in which the
Company is not the surviving corporation, the Committee in its sole discretion
may, as to any
20
outstanding Awards, make such substitution or adjustment in the aggregate number
of shares reserved for issuance under the Plan and in the number or purchase
price (if any) of shares subject to such Awards as it may determine, or
accelerate, amend, or terminate such Awards upon such terms and conditions as it
shall provide, which, in the case of the termination of the vested portion of
any Award, shall require payment or other consideration which the Committee
deems equitable in the circumstances.
17. Unfunded Status of Plan. With respect to the portion of any Award which
has not been exercised and any payments in cash, Stock or other consideration
not received by a Participant, a Participant shall have no rights greater than
those of a general creditor of the Company unless the Committee shall otherwise
expressly determine in connection with any Award or Awards. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Awards, provided that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
18. Amendments and Termination. The Board may amend, alter or discontinue
the Plan, but no amendment, alteration or discontinuance shall be made which
would impair the rights of an optionee under a Stock Option or a recipient of
another Award theretofore granted without the optionee's or recipient's consent;
provided, however, that any alteration or amendment which would (i) increase the
aggregate number of shares of Stock which may be issued under the Plan (other
than an increase merely reflecting a change in capitalization such as a stock
dividend or stock split), (ii) modify the designation of employees eligible to
receive Awards under the Plan, or (iii) materially increase the benefits
accruing to holders of Awards granted or to be granted under the Plan, within
the meaning the Rule 16b-3, shall be effective only if it is approved by the
shareholders of the Company at the next annual meeting of shareholders after the
date of adoption by the Board of such alteration or amendment. The Committee may
at any time amend or cancel any outstanding Award (or provide substitute Awards
at the same or a reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under the Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the recipient's consent (except to the extent provided
in Section 16 above).
19. General Provisions.
(a) Transfers. For purposes of the Plan, the transfer to the
employment by the Company from a Subsidiary or from the Company to a
Subsidiary, or from one Subsidiary to another, shall not be deemed a
termination of employment.
(b) Leaves of Absence. The Committee may in its discretion determine
whether a leave of absence constitutes a termination of employment for
purposes of the Plan and the impact, if any, of such leave of absence
on Awards previously granted to a holder who takes a leave of absence.
21
(c) Restrictions on Delivery and Sale of Shares. Each Award granted
under the Plan is subject to the condition that if at any time the
Committee, in its discretion. shall determine that the listing,
registration or qualification of the Stock covered by such Award upon
any securities exchange or under any state or federal law is necessary
or desirable as a condition of or in connection with the granting of
such Award or the purchase or delivery of Stock thereunder, the
delivery of any or all shares pursuant to such Award may be withheld
unless and until such listing, registration or qualification shall
have been effected. If a registration statement is not in effect
under the Securities Act of 1933 and any applicable state securities
laws with respect to the shares of Stock covered by Awards then
outstanding, the Committee may require, as a condition to any delivery
of Stock pursuant to an Award, that the recipient of Stock represent,
in writing, that the shares received pursuant to the Award are being
acquired for investment and not with a view to distribution and agree
that the Stock will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state
securities laws. The Company may endorse on certificates representing
shares delivered pursuant to an Award such legends referring to the
foregoing representations or restrictions or any applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
(d) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The
adoption of the Plan does not confer upon any employee any right to
continued employment with the Company or a Subsidiary, or affect the
right of the Company or any Subsidiary to terminate the employment of
any of its employees at any time.
(e) Governing Law. The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with laws
of the State of Texas.
20. Effective Date. The Plan shall become effective as of April 8, 1992,
the date of its adoption by the Board, upon the approval of the Plan by the
shareholders of the Company at their next Annual Meeting. Subject to approval by
the shareholders, and to the requirement that no Stock may be issued hereunder
prior to such approval, Awards may be granted hereunder on and after adoption of
the Plan by the Board. Unless shareholder approval is obtained by February 25,
1993, this Plan and any Award granted hereunder shall become void thereafter.
22
EXHIBIT 10.4
RULES OF THE CAMCO
1996 SAVINGS RELATED SHARE OPTION SCHEME
1. DEFINITIONS
(a) In these Rules the following words and expressions shall unless a
different meaning is deemed necessary have the following meanings:
"Act" the Income and Corporation Taxes Act 1988.
"Announcement Date" the date on which the Company announces its
quarterly, half yearly or final results to
the New York Stock Exchange.
"Approval Date" means the date on which the Scheme was
formally approved by the Inland Revenue.
"Board" the board of directors for the time being
of the Company or the directors present at
a duly convened meeting of the directors of
the Company at which a quorum is present or
a committee appointed by the board of
directors.
"Bonus" means any sum payable by way of terminal
bonus under the relevant Savings Contract.
"Company" Camco International Inc., a company
incorporated in Delaware, USA.
"Compensation Committee" the executive compensation committee of
the Board.
"Control" control within the meaning of Section 840
of the Act (and "Controlled" shall be
construed accordingly).
1
"Date of Grant" the date on which an Option is granted
under Rule 3 of these Rules.
"Eligible Employee" means any person who at the relevant
Invitation Date is a director or employee
of a Participating Company chargeable to
tax in respect of his office or employment
under Case 1 of Schedule E of the Act, is
not at the relevant Date of Grant
ineligible to participate in the Scheme by
virtue of the provisions of paragraph 8 of
Schedule 9 of the Act; and
(i) has been a director or employee of a
Group Company for a continuous period
of six (6) months on the Invitation
Date; or
(ii) is designated by the Board as an
Eligible Employee.
"Exercise Price" the L. Sterling price at which the Board
determines that Shares may be acquired in
respect of each Option being not less than
the greater of:
(i) 80 per cent (or such lower percentage
as may be permitted under paragraph 25
of Schedule 9 to the Act) of the
closing US dollar price of a Share on
the New York Stock Exchange (or, if
agreed in advance with the Inland
Revenue, such other exchange on which
the Shares are listed) on the dealing
day immediately preceding the
Invitation Date which shall be no
earlier than the thirtieth day
preceding the Date of Grant or on such
other day as may be agreed in advance
with the Inland Revenue; or
(ii) in respect of Options giving a right
to subscribe for Shares, the nominal
value of a Share,
2
where in each case the US dollar share
price shall be converted to L.
sterling a rate of exchange equal to
that quoted by any UK clearing bank on
the dealing day specified in respect
of (i) above or on the day on which
the Exercise Price is determined in
respect of (ii) above.
"Group" the Company and any Subsidiaries and
the term Group Company shall mean any
such company.
"Holding Company" in relation to the Company, a holding
company as defined in Section 736 of
the Companies Act 1985.
"Invitation Date" the date on which the Board invites
Eligible Employees to apply for the
grant of an Option.
"Maturity Date" the date on which the terminal bonus
is payable under the relevant Savings
Contract or such other date as may be
provided for in the Act from time to
time.
"Maximum Monthly Contribution" the maximum monthly savings limit
determined by the Board from time to
time being not more than the greater
of L.250 or the amount permitted from
time to time under paragraph 24 of
Schedule 9 to the Act.
"Minimum Monthly Contribution" L.10.00 or such other minimum monthly
savings limit, if any, determined by
the Board from time to time and
permitted under paragraph 24 of
Schedule 9 to the Act.
"Option" a right to acquire Shares to be
granted pursuant to the Scheme or
which has been so granted and is still
subsisting.
"Participant" any person who has been granted and
still holds a subsisting Option under
the Scheme. References to a
Participant shall include,
3
where the context so admits or
requires, his personal
representatives.
"Participating Company" means the Company and any other Group
Company incorporated in the UK,
provided such company has been
notified to the Inland Revenue as
being a Participating Company.
"Rules" rules as amended from time to time in
accordance with the provisions of
these rules.
"Savings Contract" means a savings contract made between
an Eligible Employee and an approved
savings authority (within the meaning
of Section 326 cf the Act).
"Scheme" the Camco 1996 Savings Related Share
Option Scheme operating in accordance
with these Rules.
"Shares" shares of common stock of the Company
that comply with paragraphs 10-14 of
Schedule 9 to the Act.
"Specified Age" age 65.
"Subsidiary" in relation to the Company, a
subsidiary as defined in Section 736
of the Companies Act 1985.
(b) Words or expressions defined in the Act and in the Great Britain
Companies Acts 1985 and 1989 shall bear the same meanings in these
Rules and where there is a conflict the definitions in the Act shall
take precedence.
(c) Where the context so admits or requires words importing the singular
shall include the plural and vice versa and words importing the
masculine shall include the feminine and neuter genders.
(d) Any reference to a statute or a statutory provision shall be construed
as if it referred also to that statute or provision as the same may
from time to time be consolidated, replaced, amended or re-enacted and
to any related statutory instrument or other subordinate legislation
in force from time to time.
4
2. APPLICATION FOR OPTIONS
(a) The Board may, in their absolute discretion, invite applications for
Options from all Eligible Employees at such time or times as they
consider appropriate. The type or types of Savings Contract offered
at each invitation shall be at the discretion of the Board.
(b) The Board shall determine and specify in any invitation to apply for
Options;
(i) the Invitation Date;
(ii) either the Exercise Price or the date on which the Exercise
Price will be fixed;
(iii) the maximum aggregate number of Shares over which Options
may be granted, if any;
(iv) the Minimum Monthly Contribution and Maximum Monthly
Contribution that may be made under the Savings Contracts;
(v) the method of calculating the amount of the Bonus;
(vi) the Maturity Date(s) of the Savings Contract(s) being offered to
the Eligible Employee; and
(vii) the closing date for receipt by the Company of applications for
Options being a date not less than 14 days and not more than 21
days after the Invitation Date or, if later, after the date upon
which Eligible Employees receive notification of the Exercise
Price.
(c) Invitations shall be given by means of notices on notice boards of
Participating Companies, circulars, letters or such other method as
the Board may determine.
(d) Each Eligible Employee may, before the closing date stated in the
invitation, apply for an Option. Each application shall be in writing
in such form as the Board may from time to time prescribe and shall:
(i) state the monthly amount which such Eligible Employee wishes to
save under the Savings Contract(s) for which he is applying;
(ii) state the duration of the Savings Contracts which the Eligible
Employee wishes to save under, if a choice has been given in the
invitation issued pursuant to Rule 2(b);
5
(iii) state the Eligible Employee's agreement to the terms of such
Savings Contract; and
(iv) authorise the Board to complete and/or amend such application on
behalf of the Eligible Employee in such manner as the Board may
determine having regard to the requirements of Rule 2(e), Rule
3(b) and Rule 4.
(e) Subject to reduction in accordance with the Rules of the Scheme, the
number of Shares over which an Option is applied for under this Rule
shall be deemed to be such whole number of Shares (rounding down as
necessary) which would be purchased on the Date of Grant with the sum
of money equal to the amount that would be repayable under the
relevant Savings Contract (including the Bonus) on the Maturity Date.
3. GRANT OF OPTIONS
(a) Options will be granted by the Board in accordance with Rule 2:
(i) within thirty days of determining the Exercise Price; or
(ii) within forty two days of determining the Exercise Price if the
number of applications results in the Board exercising the powers
of scaling down under Rule 3(b),
provided that the person is still an Eligible Employee at the Date of
Grant.
(b) In the event that following any invitation pursuant to Rule 2 the
Board receives valid applications which would result in the grant of
Options over a greater number of Shares than permitted under Rule 4 or
than specified by the Board in accordance with Rule 2(b)(iii) then the
Board shall scale down pro rata the monthly contribution proposed by
each Eligible Employee in excess of the Minimum Monthly Contribution.
In the event that this results in insufficient Shares to cover the
Minimum Monthly Contribution of applicants, Options based on the
Minimum Monthly Contribution shall be granted to those applicants who
are selected by lot.
(c) Option certificates will be issued to each Participant as soon as
practicable after the Date of Grant and will specify the Date of
Grant, the maximum number of Shares over which the Option may be
exercised, the Exercise Price and the Maturity Date.
(d) No Option shall be capable of transfer or assignment and if a
Participant shall do or suffer any act or thing whereby he parts with
or is deprived of the legal and/or beneficial ownership of an Option,
that Option shall lapse.
6
(e) The Board may determine that any Option granted under the Scheme shall
be subject to additional and/or modified terms and conditions relating
to the grant and terms of exercise as may be necessary to comply with
or take account of any securities, exchange control or taxation laws,
regulations or practice of any territory which may have application to
the relevant Eligible Employee, Participant or Participating Company,
provided that no such terms or conditions shall take effect until
approved by the Inland Revenue.
(f) In exercising their discretion under Rule 3(e) the Board may:
(i) require a Participant to make such declarations or take such
other action (if any) as may be required for the purpose of any
securities, taxes or other laws of any territory which may be
applicable to him at the Date of Grant or on exercise; and
(ii) adopt any supplemental rules or procedures governing the grant or
exercise of an option as may be required for the purpose of any
securities, tax or other laws of any territory which may be
applicable to an Eligible Employee or Participant, provided that
such rules or procedures may not be adopted to the extent that
they require the approval of the Company in general meeting in
accordance with Rule 11(d)(i), unless such approval has been
obtained.
(g) No Option shall be granted before the Approval Date.
4. LIMITATION ON THE ISSUE OF SHARES
(a) The Board may at any time determine a limit on the number of Shares
that may be available for use under the Scheme either in respect of a
particular invitation or generally.
(b) No Option shall be granted to an Eligible Employee if the contribution
payable by such Eligible Employee in any month under the Savings
Contract to be entered into by him in connection with the Option for
which he has applied:
(i) is less than the Minimum Monthly Contribution; or
(ii) when added to the contribution or contributions payable by the
Eligible Employee in such month under any other Savings Contract
in respect of this Scheme or any other Inland Revenue approved
savings related share option scheme is greater than the Maximum
Monthly Contribution, as specified by the Board from time to time
under Rule 2(b)(iv).
7
5. EXERCISE OF OPTIONS
(a) Subject to Rule 8 and paragraph (b) below Options may only be
exercised by a Participant within six months following the Maturity
Date of the relevant Savings Contract or, if earlier, within six
months of the Participant:
(i) ceasing to hold an office or employment with a Participating
Company by reason of injury, illness, disability, redundancy or
retirement at the Specified Age or any other age at which he is
bound to retire in accordance with his contract of employment;
or
(ii) attaining the Specified Age while continuing to hold an office
or employment with a Participating Company; or
(iii) ceasing to hold an office or employment with a Participating
Company Group by reason only that:
a) his office or employment is in a company of which the
Company ceases to have Control; or
b) his office or employment relates to a business or part of a
business which is transferred to a person who is neither an
associated company of the Company nor a company of which the
Company has Control; or
(iv) any of the circumstances specified in Rule 8 applying; or
(v) ceasing to hold an office or employment with a Participating
Company or in any associated company of the Company, for any
reason (except misconduct) at least three years after the Date of
Grant of the Option.
(b) If a Participant dies prior to the Maturity Date of the relevant
Savings Contract his Option may be exercised within the period of 12
months after the date of his death or if he dies within 6 months after
the Maturity Date of the Savings Contract, his Option may be exercised
within the period of 12 months after the Maturity Date of the Savings
Contract.
(c) Subject to Rule 5(b) no Option shall be exercisable more than six
months after a Bonus is paid under the relevant Savings Contract.
(d) Save as provided in Rule 5(a)(i), (iii), (iv) and (v) and Rule 5(b) an
Option shall be exercised by a Participant only if at the date of
exercise he is either a director or
8
employee of a Participating Company or, provided the date of exercise
takes place within 6 months following the Maturity Date, an employee
or office holder of the Company or an associated company (as defined
in section 187 (2) of the Act) or company of which the Company has
control, provided that, for these purposes, no Participant shall be
regarded as ceasing to hold an office or employment by virtue of which
he is eligible to participate in the Scheme until he ceases to hold an
office or employment in the Company or an associated company (as
defined in section 187(2) of the Act) or company of which the Company
has control.
(e) Subject to Rule 5(f) below an Option shall be exercisable once only in
whole or in part during the periods referred to in Rule 5(a) and (b)
above by the Participant delivering to the Company Secretary or
otherwise as the Board may notify in writing written notice in such
form as the Board may from time to time determine specifying the
amount or percentage of the amount repayable under the Savings
Contract that is to be applied in the acquisition of Shares together
with the appropriate remittance. Subject to Rule 8(c) the date of
receipt by the Company Secretary or otherwise as the Board may notify
in writing of such notice together with such remittance shall be the
date upon which the Option is deemed to be exercised.
(f) Upon exercise of an Option with the remittance as referred to in
paragraph (e) above the Option shall be deemed to be exercised in
respect of the largest whole number of Shares that may be acquired
with the amount of the remittance and the Option to the extent not so
deemed to be exercised shall immediately lapse. The balance of any
remittance not applied in the acquisition of Shares shall be returned
to the Participant.
(g) The Participant shall pay all expenses and taxes which arise or result
from the exercise of an Option or transfer of Shares, provided that
the Company in its absolute discretion may meet any taxes or expenses
which it deems necessary or appropriate.
(h) Shares acquired on exercise of an Option under the Scheme shall be
paid for with monies not exceeding the amount of repayment (including
any Bonus or interest) made under the related Savings Contract. For
this purpose repayment under the Savings Contract shall exclude the
repayment of any monthly contributions, the due date for payment of
which falls more than one month after the date on which repayment was
made.
(i) No Option may be exercised by a Participant who is excluded by
paragraph 8 of Schedule 9 of the Act.
9
6. LAPSE AND SURRENDER OF OPTIONS
(a) An Option shall immediately lapse and cease to be exercisable:-
(i) subject to Rule 5(b), six months after the Maturity Date of the
Savings Contract;
(ii) as provided in Rule 3(d);
(iii) upon the Participant ceasing to hold an office or employment
within the Group in any circumstances other than those described
in Rule 5(a)(i), (iii), (iv) and (v);
(iv) upon the expiration of any of the periods referred to in Rule
5(a) and (b) (except that referred to in Rule 5(a)(ii)) and in
the event of more than one period applying to an Option it shall
be upon the expiry of the earlier (except as provided for in
rule 5(b));
(v) as provided in Rule 5(f);
(vi) as provided in Rule 8;
(vii) upon the Participant:
a) giving notice to the nominated savings body, or where
relevant, the Company, for repayment or that he intends to
stop paying contributions under the related Savings
Contract; or
b) failing to pay a monthly contribution under the related
Savings Contract on or before the due date on seven
occasions,
in each case before the earliest date on which the Option
becomes exercisable under Rule 5(a);
(viii) upon the Participant being adjudicated bankrupt; or
(ix) the date on which a resolution is passed or order is made by
the Court for the compulsory winding up of the Company.
(b) It shall be a condition of the Scheme that a Participant shall not be
entitled to any compensation in the event of cessation, lapse or
alteration of any rights or rights in prospect under the Scheme or
under any Option granted under the Scheme subject always to Rule 11(d)
(ii) below. No provisions of the Scheme form part of any
10
contract of employment between the Company or any Participating
Company and a Participant.
(c) Nothing in this Scheme or in any instrument executed pursuant hereto
shall confer upon any person any right to continue in the employ of
the Company or any Group Company or shall affect the right of the
Company or any Group Company to terminate the employment of any person
without liability at any time with or without cause, or shall impose
upon the Company or any Group Company, the Board or their respective
agents and employees any liability for any forfeiture or termination
of Options which may result if that person's employment is so
terminated.
7. ADJUSTMENTS
(a) In the event of a variation of the issued share capital of the Company
by way of a capitalisation or rights issue, sub-division,
consolidation or reduction or otherwise then:
(i) the Exercise Price; and
(ii) the number of Shares subject to an Option;
shall be adjusted in such manner and with effect from such date,
as the Board may determine to be appropriate and as the auditors
of the Company shall confirm in writing to be, in their opinion,
fair and reasonable subject to prior Inland Revenue approval.
(b) Notice of any such adjustments shall be given to Participants by the
Board who may call in Option certificates for endorsement or
replacement.
8. CHANGE IN CONTROL, RECONSTRUCTION AND WINDING UP OF THE COMPANY
(a) If, in consequence of any general offer made to the holders of Shares
or otherwise, as specified in paragraph 15(1)(a) of Schedule 9 to the
Act, any person obtains Control of the Company, then the Board shall
as soon as practicable thereafter notify every Participant accordingly
and each Participant shall be entitled at any time within the period
of six months after such Control has been obtained but not later than
six months following the Maturity Date to exercise his Option. To the
extent that it has not been so exercised, any Option shall upon the
expiry of such period lapse provided that if during such period any
person becomes entitled or bound to acquire Shares in the Company
under Sections 428 and 430F of the Companies Act 1985 and gives notice
to any holders of Shares that he intends to exercise such rights the
Board shall
11
as soon as practicable thereafter notify each Participant accordingly.
All Options may be exercised at any time when such person remains so
entitled or bound and if not so exercised shall then lapse. For the
purpose of this paragraph Control shall include the obtaining of
Control by a person and others acting in concert with him
(b) If under Section 425 of the Companies Act 1985 the Court sanctions a
compromise or arrangement proposed for the purposes of or in
connection with a scheme for the reconstruction of the Company or its
amalgamation with any other companies any Option held by a Participant
may be exercised within six months of the Court sanctioning the
compromise or arrangement and if not so exercised shall lapse.
(c) If a resolution is passed for the voluntary winding-up of the Company,
Options granted under the Scheme may be exercised until the expiry of
six months following the passing of the resolution. Subject to the
above, all Options shall lapse upon the commencement of the winding-up
of the Company.
(d) Where the person mentioned in Rule 8(a) or Rule 8(b) is a company
within the meaning of Section 832 of the Act ("the Acquiring
Company"), any Participant may, by agreement with the Acquiring
Company and notwithstanding anything to the contrary in this Scheme,
release, within the appropriate period, (as defined in paragraph 15(2)
of Schedule 9 to the Act), his rights under this Scheme (the "old
rights") in consideration of the grant to him of rights (the "new
rights") which, within the meaning of paragraph 15(3) of Schedule 9 to
the Act, are equivalent to the old rights but relate to shares in a
different company (whether the Acquiring Company or some other company
falling within paragraph (b) or (c) of paragraph 10 of Schedule 9 to
the Act) and references in Rules 5, 7, 8, 9, 10 and 12 to the term
"Company" shall be construed accordingly with effect from the date of
release and references to "Shares" and "the Board" shall, in relation
to the new rights, be considered as references to shares in the
Acquiring Company or that other company and to the board of such
company as the case may be.
9. ALLOTMENT, TRANSFER AND LISTING
(a) Subject to receipt of the appropriate remittance and to paragraph (b)
below, any Shares to be issued pursuant to the exercise of an Option
will be allotted and issued, and any Shares to be transferred shall be
transferred to the relevant Participant or a nominee nominated by a
Participant no later than 30 days after the date of exercise of the
Option. Such Shares shall rank pari passu in all respects with other
shares of the same class save that newly issued Shares shall not rank
for dividend or other distribution payable by reference to a record
date that is before the date of allotment.
(b) Any allotment and issue or transfer of Shares under the Scheme shall
be subject to such consents (if any) of HM Treasury or other
authorities (whether of the United
12
Kingdom or elsewhere) as may from time to time be required and it
shall be the responsibility of the Participant to obtain such
consents.
(c) The Company will apply to the New York Stock Exchange or such other
exchange on which the Shares are listed for Shares subscribed to be
admitted to official listing on the exchange or equivalent on or as
soon as practicable after allotment.
10. AVAILABILITY OF SHARES
(a) The Company shall keep available for issue sufficient authorised and
unissued Shares to satisfy all subsisting rights to subscribe for
Shares granted pursuant to the Scheme, taking account of any other
obligations of the Company to allot and issue unissued Shares.
(b) The Company shall ensure that there are available for transfer
sufficient existing Shares to satisfy all subsisting rights to acquire
Shares granted pursuant to the Scheme, taking account of any other
obligations of the Company to arrange for the transfer of shares.
11. ADMINISTRATION, AMENDMENTS AND TERMINATION
(a) The Scheme shall be administered by the Board in accordance with the
Rules. Any question or dispute concerning the interpretation of the
Rules shall be determined by the Board in its sole discretion and its
decision on such matter shall be final and binding upon both the
Company and the Participant. The Board may delegate such of its
rights and obligations under these Rules to the Compensation
Committee, or otherwise as it considers appropriate.
(b) The Company shall bear the costs of establishing and administering the
Scheme and may pass these costs on to Participating Companies as it
considers appropriate.
(c) The Company shall maintain or cause to be maintained all necessary
accounts and records relating to the Scheme.
(d) The Board shall be entitled to amend the Rules provided that no
amendment:
(i) will prejudice the subsisting rights of any Participant, except
with the prior consent of such Participant; and
(ii) shall take effect without the prior approval of the Inland
Revenue pursuant to Part 1 of Schedule 9 to the Act.
13
(e) No Options shall be granted under the Scheme later than the tenth
anniversary of the date on which the Scheme is adopted by the Company.
Prior to this date the Board may determine to grant no further Options
and may from time to time modify or at any time suspend or terminate
the Scheme (but without prejudice to Options already granted).
12. NOTICES
(a) Notices or documents required to be given by the Company to an
Eligible Employee or Participant shall be properly given if delivered
to him at his normal place of work or sent to him by first class post
at his last known address and any notice or document required to be
given to the Company shall be properly given if delivered or sent by
air mail post to the registered office from time to time or by first
class post if directed to be sent to an address in the United Kingdom.
(b) Participation in the Scheme shall not entitle a Participant to receive
copies of any notice or other document sent by the Company to its
shareholders.
13. GOVERNING LAW
The operation of the Scheme shall be governed by and construed in
accordance with English Law.
14
EXHIBIT 10.5
CAMCO INTERNATIONAL INC.
AMENDED AND RESTATED STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
ARTICLE I
PURPOSES
The purposes of the Camco International Inc. Amended and Restated
Stock Option Plan for Nonemployee Directors (the "Plan") are to attract and
retain the services of experienced and knowledgeable nonemployee directors of
Camco International Inc. (the "Corporation") and to provide an incentive for
such directors to increase their proprietary interests in the Corporation's
long-term success and progress.
ARTICLE II
SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Article VI hereof, the total
number of shares of the Corporation's common stock, par value $.01 per share
(the "Common Stock"), which may be delivered upon the exercise of options
granted under the Plan is 250,000 (the "Shares"). The Shares shall be shares of
Common Stock presently authorized but unissued or subsequently acquired by the
Corporation. In the event that an option for Shares granted under the Plan
shall terminate, expire or be canceled or forfeited without being exercised in
whole or in part, new options for Shares may be granted covering such
unexercised shares.
ARTICLE III
ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator") shall be the
Board of Directors of the Corporation (the "Board") or any designated committee
thereof. Subject to the terms of the Plan, the Plan Administrator shall have
the power to construe the provisions of the Plan, to determine all questions
arising thereunder and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. No member of the Plan
Administrator shall participate in any vote by the Plan Administrator on any
matter materially affecting the rights of any such member under the Plan.
A-1
ARTICLE IV
PARTICIPATION IN THE PLAN
1. Initial and Annual Grants. Beginning on the Annual Meeting of
Stockholders of the Corporation to be held in 1996, each member of the Board
elected, or appointed, who is not otherwise an employee of the Corporation or
subsidiary corporation (an "Eligible Director") shall automatically receive an
initial grant of an option to purchase 10,000 shares, such grant to be received
on the 30th day following such member's initial election or appointment to the
Board or upon such member's reelection (the "Election Grant"), and shall also
receive an annual grant of an option (the "Annual Grant") to purchase 5,000
shares on the 30th day following each Annual Meeting of Stockholders (as
described in the Corporation's By-laws), provided such member continues to be a
member of the Board on such 30th day.
2. One-Time Grants. In addition to the options to be granted pursuant to
Section 1 of this Article IV, the following Eligible Directors shall receive a
one-time grant of an option (a "One-Time Grant") to purchase that number of
shares set forth opposite the Eligible Director's name, such grant to be
received upon approval of this Amended and Restated Plan by the stockholders of
the Corporation (provided such member continues to be a member of the Board on
such day):
NUMBER OF SHARES
SUBJECT TO
ELIGIBLE DIRECTORS OPTION
- ----------------------------- ----------------
Class I Directors
Robert L. Howard 6,666
Charles P. Siess, Jr. 6,666
- ------------------------------------------------
Class II Directors
William J. Johnson 10,000
Gilbert H. Tausch 10,000
- ------------------------------------------------
Class III Directors
Hugh H. Goerner 3,333
William A. Krause 3,333
- ------------------------------------------------
ARTICLE V
OPTION TERMS
Each option granted to an Eligible Director under the Plan and the
issuances of Shares thereunder shall be subject to the following terms:
A-2
1. Option Agreement
Each option to acquire Shares granted under the Plan shall be
evidenced by an option agreement (an "Agreement") duly executed on behalf of the
Corporation. Each Agreement shall comply with and be subject to the terms and
conditions of the Plan. Any Agreement may contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the Plan
Administrator.
2. Option Exercise Price
The option exercise price for an option granted under the Plan shall
be the fair market value of the Shares covered by the option at the time the
option is granted. For purposes of the Plan, "fair market value" on a date
shall be the average of the high and low sales prices at which the Common Stock
was sold on such date on the New York Stock Exchange or, if no Common Stock was
traded on such date, on the next preceding date on which Common Stock was so
traded.
3. Vesting and Exercisability
(a) Subject to paragraph (c) of this Section 3, each option granted
pursuant to Section 1 of Article IV shall become fully vested and become
nonforfeitable in three equal annual installments (rounding to the nearest Share
for the first two installments, with the remaining balance vesting on the third
installment) beginning on the first anniversary of the date of the grant of the
option, provided that an installment shall vest only if the optionee has
continued to serve as an Eligible Director until the applicable anniversary.
(b) Subject to paragraph (c) of this Section 3, options granted
pursuant Section 2 of Article IV shall become fully vested and nonforfeitable as
follows:
(i) with respect to options granted to a Class I Eligible
Director, 3,333 shares subject to option shall vest six months
following the date on which the Plan is approved by stockholders of
the Corporation, with the balance vesting on the first anniversary of
the date of such approval, provided that an installment shall vest
only if the optionee has continued to serve as an Eligible Director
until the applicable vesting date;
(ii) with respect to options granted to a Class II Eligible
Director, 3,333 shares shall vest six months following the date on
which the Plan is approved by the stockholders of the Corporation,
with the remaining two-thirds of the shares vesting in equal annual
installments (rounding to the nearest share for the first installment,
with the remaining balance vesting on the second installment)
beginning on the first anniversary date of the date of such approval,
provided that an installment shall vest only if the optionee has
continued to serve as an Eligible Director until the applicable date;
and
A-3
(iii) with respect to options granted to a Class III Eligible
Director, such option shall vest six months following the date on
which the Plan is approved by the stockholders of the Corporation.
(c) Notwithstanding the provisions on vesting set forth in paragraphs
(a) and (b) of this Section 3, an option shall become fully vested and become
nonforfeitable immediately upon the death, disability or retirement of the
optionee or upon the occurrence of a Change of Control; provided that in no
event will any director be entitled to receive any payment in excess of the
amount permitted to be paid without penalty under Section 4999 of the Internal
Revenue Code of 1986, as amended, and clause (ii) above shall not apply upon the
occurrence of a Change of Control to any option granted to a participant if, in
connection with a Change of Control pursuant to clause (1) of the definition
thereof, such participant is the Person or forms part of the Person referred to
in such clause (1). A "Change of Control" shall be deemed to have occurred if
(1) any Person (as defined below) is or becomes the Beneficial Owner (as defined
below) of securities of the Corporation representing 30% or more of the Voting
Power (as defined below), (2) there shall occur a change in the composition of a
majority of the Board within any period of four consecutive years which change
shall not have been approved by a majority of the Board as constituted
immediately prior to the commencement of such period, (3) at any meeting of the
stockholders of the Corporation called for the purpose of electing directors,
more than one of the persons nominated by the Board for election as directors
shall fail to be elected or (4) the stockholders of the Corporation approve a
merger, consolidation, sale of substantially all assets or other reorganization
of the Corporation, other than a reincorporation, in which the Corporation does
not survive.
(d) For purposes of this Section 3, (i) "Person" shall have the
meaning set forth in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, as in effect on September 1, 1993, (ii) "Beneficial Owner" shall
have the meaning set forth in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934 on September 1, 1993; and (iii) "Voting Power" shall mean
the voting power of the outstanding securities of the Corporation having the
right under ordinary circumstances to vote at an election of the Board.
(e) For purposes of the Plan "retirement" means cessation as a
director of the Corporation other than on account of any act of (i) fraud or
intentional misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Corporation or any direct or
indirect majority-owned subsidiary of the Corporation.
4. Time and Manner of Exercise of Option
Each vested option may be exercised in whole or in part at any time
and from time to time; provided, however, that no fewer than 100 Shares (or the
remaining Shares then purchasable under the option, if less than 100 Shares) may
be purchased upon any exercise of options rights hereunder and that only whole
Shares will be issued pursuant to the exercise of any option.
A-4
Any vested option may be exercised by giving written notice, signed by
the person exercising the option, to the Corporation stating the number of
Shares with respect to which the option is being exercised, accompanied by (i)
payment in full for such Shares, which payment may be in whole or in part (A) in
cash or by check or (B) in shares of Common Stock already owned by the person
exercising the option or (ii) an election to pay in full for such Shares by
having the Corporation withhold shares of Common Stock otherwise issuable to
such person as a result of the exercise of such option ("cashless exercise").
Shares of common Stock so delivered or withheld shall be valued at fair market
value at the time of such exercise.
5. Terms of Options
Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination in the event that an
optionee ceases to be a director of the Corporation for any reason other than
the retirement, death or disability of the optionee or upon a Change of Control.
Upon the retirement or disability of the optionee or upon a Change of Control,
the vested options granted to such optionee may be exercised by him or her only
within thirty-six months after the date such optionee ceases to be a director of
the Corporation. Upon the death of the optionee prior to retirement or
disability or a Change of Control, the vested options granted to such optionee
may be exercised only within twelve months thereafter. In the event of the
death of an optionee, whether during the optionee's service as a director or
during the period referred to in the second preceding sentence, the vested
options granted to such optionee shall be exercisable by the legal
representatives or the estate of such optionee, by any such person or persons
whom the optionee shall have designated in writing on forms prescribed by and
filed with the Corporation or, if no such designation has been made, by the
person or persons to whom the optionee's rights have passed by will or the laws
of descent and distribution.
6. Transferability
During an optionee's lifetime, a vested option may be exercised only
by the optionee. Options granted under the Plan and the rights and privileges
conferred thereby shall not be subject to execution, attachment or similar
process and may not be transferred, assigned, pledged or hypothecated in any
manner (whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution except that, to the extent
permitted by applicable law and Rule 16b-3 promulgated under Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), a
recipient of an option may designate in writing during the optionee's lifetime a
beneficiary to receive and exercise options in the event of the optionee's death
(as provided in Section 5). Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under the Plan or of any right or
privilege conferred thereby, contrary to the provisions of the Plan, or the sale
or levy or any attachment or similar process upon the rights and privileges
conferred hereby, shall be null and void.
A-5
7. Participant's or successor's Rights as Stockholder
Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a stockholder of the
Corporation with respect to any Shares subject to an option granted to such
person until such person becomes a holder of record of such Shares.
8. Limitation as to Directorship
Neither the Plan not the granting of an option nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.
9. Regulatory Approval and Compliance
The Corporation shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, without obtaining to the complete satisfaction of the
Plan Administrator the approval of all regulatory bodies deemed necessary by the
Plan Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under Federal, state or local law
deemed applicable by the Plan Administrator.
10. Withholding
Whenever the Corporation proposes or is required to issue or transfer
shares of Common Stock under the Plan, the Corporation shall have the right to
require the holder to pay an amount in cash or to retain or sell without notice,
or demand surrender of, shares of Common Stock in value sufficient to satisfy
and Federal, state or local withholding tax liability ("Withholding Tax") prior
to the delivery of any certificate for such shares (or remainder of shares if
Common Stock is retained to satisfy such tax liability). Whenever under the
Plan payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy any Federal, state or local withholding tax liability.
Whenever Common Stock is so retained or surrendered to satisfy
Withholding Tax, the value of shares of Common Stock so retained or surrendered
shall be the fair market value on the date that the amount of the Withholding
tax is to be determined, and the value of shares of Common Stock so sold shall
be the actual net proceeds (after deduction of commissions) received by the
Corporation from such sale.
A-6
ARTICLE VI
CAPITAL ADJUSTMENTS
The aggregate number and class of Shares for which options may be
granted under the Plan, the number and class of Shares covered by each Election
Grant, the Annual Grant and the One-Time Grant and each outstanding option and
the exercise price per Share thereof (but not the total price) shall all be
appropriately adjusted by the Plan Administrator for any stock dividends, stock
splits, recapitalizations, combinations, exchanges of shares, mergers,
consolidation, liquidations, split-ups, split-offs, spin-offs, or other similar
changes in capitalization, or any distribution to stockholders, including a
rights offering, other than regular cash dividends, changes in the outstanding
stock of the Corporation by reason of any increase or decrease in the number of
issued shares of Common Stock resulting form a split-up or consolidation of
shares or any similar capital adjustment or the payment of any stock dividend,
any share repurchase at a price in excess of the market price of the Common
Stock at the time such repurchase is announced or other increase or decrease in
the number of such shares, provided that counsel to the Corporation has
determined that such adjustment will not contravene the requirements of Rule
l6b-3(c)(2)(ii) of the Exchange Act.
In the event of any adjustment in the number of Shares covered by any
option, any fractional Shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full Shares
resulting from such adjustment.
ARTICLE VII
EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan
shall be borne by the Corporation; none of such expenses shall be charged to any
optionee.
ARTICLE VII
EFFECTIVE DATE AND DURATION OF THE PLAN
The amendments to the Corporation's Stock Option Plan for Nonemployee
Directors (the "Initial Plan") provided for in the Plan shall become effective
upon approval of the Corporation's stockholders and shall apply to all options
granted on or after the date of such approval. All grants of options under the
Initial Plan shall continue to be subject to the terms of the Initial Plan. The
Plan shall continue in effect until December 31, 2003, or such earlier date as
it is terminated by action of the Board or the Corporation's stockholder(s), but
such termination shall not affect the then outstanding terms of any options.
A-7
ARTICLE IX
TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time, in its
sole and absolute discretion; provided, however, that (i) no amendment shall
increase the number of Shares that may be issued under the Plan, other than
pursuant to Article VI, without stockholder approval and (ii) to the extent
required to qualify the Plan under Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act, no amendment may be made more than once every six (6) months.
A-8
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 21, 1998 appearing on page 44
of Schlumberger Limited's Annual Report on Form 10-K for the year ended December
31, 1997.
/s/ PricewaterhouseCoopers LLP
- --------------------------------
PricewaterhouseCoopers LLP
New York, New York
August 28, 1998
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, in the capacity or capacities set forth below
his or her signature as a member of the Board of Directors and/or an officer of
Schlumberger Limited (the "Corporation"), a Netherlands Antilles corporation,
hereby appoints David S. Browning, Arthur Lindenauer and Ellen S. Summer, and
each of them, the attorney or attorneys of the undersigned, with full power of
substitution and revocation, for and in the name, place and stead of the
undersigned to execute and file with the Securities and Exchange Commission the
Form S-8 Registration Statement under the Securities Act of 1933 (or such other
Form as may be required), relating to the offering of shares of capital stock of
the Corporation under any of the Camco Benefit Plans (as such term is defined in
that certain Agreement and Plan of Merger dated June 18, 1998 among Schlumberger
Technology Corporation, Schlumberger OFS, Inc. and Camco International Inc.),
and any amendment or amendments to any such Registration Statement and any
agreements, consents or waivers relative thereto, and to take any and all such
other action for and in the name and place and stead of the undersigned as may
be necessary or desirable in connection with any such Registration Statement.
/s/ D. Euan Baird /s/ William T. McCormick, Jr.
- -------------------------- -----------------------------
D. Euan Baird William T. McCormick, Jr.
Director Director
Chairman, President and
Chief Executive Officer
/s/ Don E. Ackerman /s/ Didier Primat
- -------------------------- -----------------------------
Don E. Ackerman Didier Primat
Director Director
/s/ John Deutch /s/ Nicolas Seydoux
- -------------------------- -----------------------------
John Deutch Nicolas Seydoux
Director Director
/s/ Victor E. Grijalva /s/ Linda G. Stuntz
- -------------------------- -----------------------------
Victor E. Grijalva Linda G. Stuntz
Director Director
/s/ Denys Henderson /s/ Sven Ullring
- -------------------------- -----------------------------
Denys Henderson Sven Ullring
Director Director
/s/ Andre Levy-Lang /s/ Yoshihiko Wakumoto
- -------------------------- -----------------------------
Andre Levy-Lang Yoshihiko Wakumoto
Director Director
Dated: July 16, 1998
--------------------
