Document:

EXHIBIT 10.6

 

THE CONAGRA 1990 STOCK
PLAN

 

ARTICLE I

 

NAME AND PURPOSE

 

1.1           NAME.
The name of the plan shall be The ConAgra 1990 Stock Plan (“Plan”).

 

1.2                                 PURPOSE.
The purpose of the Plan is to enable Employees and Directors to share in the
growth and prosperity of the Company by encouraging stock ownership by
Employees and Directors and to assist the Company to obtain and retain key
management personnel. Incentive Stock Options, Nonqualified Stock Options,
Restricted Shares, bargain stock, Stock Appreciation Rights, bonuses of Company
Stock and other types of stock awards and cash may be granted under this Plan.

 

ARTICLE II

 

DEFINITIONS

 

2.1           “Board”
means the Board of Directors of the Company.

 

2.2                                 “Code”
means the Internal Revenue Code of 1986, as amended.

 

2.3                                 “Committee”
shall mean the Compensation Committee of the Board.

 

2.4                                 “Company”
means ConAgra, Inc., a Delaware corporation.

 

2.5                                 “Company
Stock” means shares of common stock issued by the Company.

 

2.6                                 “Director”
means any person who is a member of the Board.

 

2.7                                 “Employee”
means any person employed by the Employer or a Subsidiary.

 

2.8                                 “Employer”
means the Company.

 

2.9                                 “Incentive
Stock Option” means any option granted to a Participant under the Plan, which
the Committee intends at the time it is granted, to be an incentive stock
option within the meaning of Section 422A of the Code.

 

2.10                           “Nonqualified
Stock Option” means any stock option granted under the Plan which is not an
Incentive Stock Option.

 

2.11                           “Optionee”
is any Employee who is granted options under the Plan.

 

2.12                           “Participant”
shall mean any Employee or Director who meets the requirements for
Participation in the Plan as described in Article III.

 

2.13                           “Qualifying
Stock” means Company Stock which has been owned by the Employee for at least
six months prior to the date of exercise and has not been used in a
stock-for-stock swap transaction within the preceding six months.

 

2.14                           “Subsidiary”
means a corporation which is a “subsidiary corporation” as defined in section
425 of the Code.

 

118

 

EXHIBIT 10.6

 

ARTICLE III

 

ELIGIBILITY AND
PARTICIPATION

 

3.1                                 ELIGIBILITY.
Every Employee and Director shall be eligible to become a Participant in the
Plan.

 

3.2                                 PARTICIPATION.
The Employees who shall participate in the Plan and thereby be eligible to
receive awards shall be such key Employees and Directors as the Committee shall
select from time to time. The Committee shall determine the number of and the
combination of stock options, restricted stock, stock appreciation rights and
other stock awards granted.

 

3.3                                 DIRECTOR
PARTICIPATION. Non-Employee Directors shall be granted annually a Nonqualified
Stock Option for 3,000 shares of Company Stock. In addition, Non-Employee
Directors shall be granted annually 600 shares of Company Stock; such shares
shall be issued without cost to each Non-Employee Director from the Company’s
treasury shares.

 

The Nonqualified Stock Options and shares of Company
Stock described in this Section 3.3 shall be granted each year immediately
following the annual stockholders’ meeting of the Company. The Nonqualified
Stock Options and shares of Company Stock shall be granted to those persons who
are Directors immediately following such meeting. Directors are not eligible to
receive any other Benefit under the Plan.

 

The number of shares referred to in this Section 3.3
shall be properly adjusted if the number of issued shares shall be increased or
reduced by change in par value, combination, split-up, reclassification,
distribution of a dividend payable in stock, or the like.

 

ARTICLE IV

 

TYPES OF BENEFITS

 

Benefits under the Plan (“Benefits”)
may be granted in any one or any combination of (a) Incentive Stock Options;
(b) Nonqualified Stock Options; (c) stock appreciation rights; (d) restricted
stock awards; (e) bargain purchase of common stock; (f) bonuses of common
stock; (g) any other form of stock benefit; or (h) cash.

 

Without limiting the
Committee’s authority, the Committee may: (a) make the grant of Benefits
conditional upon an election by a Participant to defer payment of a portion of
his salary; (b) give a Participant a choice between two Benefits or combination
of Benefits; (c) award Benefits in the alternative so that acceptance of or
exercise of one Benefit cancels the right of a Participant to another; and (d)
award Benefits in any combination or combinations and subject to any condition
or conditions consistent with, the terms of the Plan that the Committee in its
sole discretion may determine.

 

ARTICLE V

 

SHARES SUBJECT TO
PLAN

 

The total number of
shares for which options may be granted under this Plan shall not exceed in the
aggregate 6,000,000 shares; provided, if the merger of the Company and Beatrice
Company, as reflected in the Agreement and Plan of Merger dated as of June 7,
1990, is consummated, such aggregate number shall be 7,200,000 shares. This
number shall be appropriately adjusted if the number of issued shares shall be
increased or reduced by change in par value, combination, split-up,
reclassification, distribution of a dividend payable in

 

119

 

EXHIBIT 10.6

 

stock, or the like. The shares issued under the Plan
may be authorized and unissued shares or treasury shares.

 

In the event that any
outstanding option, restricted stock or other Benefit issued pursuant to the
Plan shall expire or terminate, the shares allocable to the unexercised or
forfeited portion of such Benefit may again be subject to an award under the
Plan. In addition, any shares which are used for the full or partial payment of
the purchase price (or applicable withholding taxes) for shares with respect to
which an option is exercised may again be used for an award under the Plan.

 

ARTICLE VI

 

OPTIONS

 

The Committee from time
to time may grant Incentive Stock Options and Nonqualified Stock Options. Each
option agreement between the Company and the Participant shall be in such form
and shall contain such provisions as the Committee from time to time shall deem
appropriate. Option agreements need not be identical. The option agreements
shall specify whether or not an option is an Incentive Stock Option.

 

The terms of Incentive
Stock Options granted shall include the following:

 

(a)           The
option price shall be fixed by the Committee in good faith, but in no event be
less than 100% of the fair market value of the shares subject to the option on
the date the option is granted.

 

(b)           The
Committee shall fix the term or duration of all Incentive Stock Options issued
under this Plan provided that such term shall not exceed ten years after the
date on which the option was granted and shall not extend beyond the Optionee’s
employment with the Company.  The
Committee shall also set the date or dates on, or after which, each option may
be exercised.

 

(c)           The
aggregate fair market value, determined as of the time the Incentive Stock
Option is granted, of the stock which may become exercisable for the first time
by any Employee during any calendar year shall not exceed $100,000.

 

(d)           Each
Incentive Stock Option agreement (and amendments) shall contain such terms and
provisions, consistent with the requirements of this Plan, as the Committee in
its discretion shall determine, including without limitation such terms and
provisions as shall be requisite to cause the options to qualify as Incentive
Stock Options.

 

Options and similar
Benefits (including Stock Appreciation Rights) shall not be transferable
otherwise than by will or the laws of descent and distribution, and during the
Participant’s lifetime, such a Benefit shall be exercisable only by the
Participant.

 

Notwithstanding any other
provisions of the Plan, no Incentive Stock Option shall be granted to an
Employee who, at the time the option is granted, owns stock representing more
than ten percent of the total combined voting power of all classes of stock of
the Employer. This stock ownership limitation will not apply if the option
price is at least 110 percent of the fair market value (at the time the option
is granted) of the stock subject to the option, and the option by its terms is
not exercisable more than five years from the date it is granted.

 

The Committee may grant a
replacement option (a “Replacement Option”) to any Employee who exercises all
or part of an option granted under this Plan

 

120

 

EXHIBIT 10.6

 

using Qualifying Stock as payment for the purchase
price. A Replacement Option shall grant to the Employee the right to purchase,
at the fair market value as of the date of said exercise and grant, the number
of shares of stock equal to the sum of the number of whole shares (i) used by
the Employee in payment of the purchase price for the option which was
exercised and (ii) used by the Employee in connection with applicable
withholding taxes on such transaction. A Replacement Option may not be
exercised for six months following the date of grant, and shall expire on the
same date as the option which it replaces.

 

ARTICLE VII

 

RESTRICTED SHARES

 

The Committee from time
to time may award restricted shares (“Restricted Shares”) to any Participant in
the Plan. Each Participant who is awarded Restricted Shares shall enter into an
agreement with the Company in a form specified by the Committee agreeing to the
terms and conditions of the award and such other matters consistent with the
Plan as the Committee in its sole discretion shall determine.

 

Restricted Shares awarded
to Participants may not be sold, transferred, pledged or otherwise encumbered
during the restricted period commencing on the date of the award and ending at
such later date as the Committee may designate at the time of the award. The
Participant shall have the entire beneficial ownership and all rights and
privileges of a shareholder with respect to Restricted Shares awarded to him,
including the right to receive dividends and the right to vote such Restricted
Shares.

 

The Committee may provide
any other terms or conditions with regard to Restricted Shares that it deems
appropriate. Restricted Shares and agreements related thereto need not be
identical.

 

ARTICLE VIII

 

STOCK APPRECIATION
RIGHTS

 

The Committee from time
to time may grant stock appreciation rights (“Stock Appreciation Rights”) to
any Participant in the Plan. A Stock Appreciation Right shall be evidenced by a
stock appreciation right agreement between the Company and the Participant,
which shall contain such terms and conditions consistent with the Plan as the
Committee from time to time shall deem appropriate.

 

A Stock Appreciation
Right may be satisfied by the Company in cash or in shares of common stock of
the Company, as determined by the Committee. The agreement may limit the
maximum amount of appreciation taken into account under a Stock Appreciation
Right.

 

A Stock Appreciation
Right may be granted in conjunction with an Incentive Stock Option, a
Nonqualified Stock Option, Restricted Shares or any other award hereunder. At
the discretion of the Committee, a Stock Appreciation Right may be exercisable
only to the extent that a related award is exercisable and only upon surrender
of a related award. In the event of the exercise of a Stock Appreciation Right
the exercise of which is conditioned upon surrender of a related award, the
number of shares that may be issued under this Plan shall be reduced by the
number of shares covered by the award or portion thereof surrendered.

 

The Committee may provide
any other terms or conditions with regard to Stock Appreciation Rights that it
deems appropriate. Stock Appreciation Rights and agreements related thereto
need not be identical.

 

121

 

EXHIBIT 10.6

 

ARTICLE IX

 

OTHER AWARDS

 

The Committee may grant
any other cash, stock or stock-related awards to a Participant under this Plan
that the Committee deems appropriate, including, but not limited to, the
bargain purchase of Company Stock and stock bonuses. Any such Benefits and any
related agreements shall contain such terms and conditions as the Committee
deems appropriate. Such awards and agreements need not be identical. With
respect to any Benefit under which shares of Company Stock are or may in the
future be issued (other than shares issued from the Company’s treasury) for
consideration other than prior services, the amount of such consideration shall
either (i) be equal to the amount (such as the par value of such shares)
required to be received by the Company in order to comply with applicable state
law or (ii) be equal to or greater than 50% of the fair market value of such
shares on the date of grant.

 

ARTICLE X

 

ADMINISTRATION

 

The Plan shall be
administered by the Committee. A majority vote of the Committee at which a
quorum is present, or acts reduced to or approved in writing by a majority of
the members of the Committee, shall be the valid acts of the Committee for the
purposes of this Plan.

 

The Committee shall have
plenary authority in its discretion, but subject to the express provisions of
the Plan, to determine the terms of all Benefits granted under the Plan
including, without limitation, the purchase price, if any, the Employees to whom,
and the time or times at which Benefits shall be granted, when an option can be
exercised, or Restricted Shares, Stock Appreciation Rights and other Benefits
become forfeitable, and whether in whole or in installments, and the number of
shares covered by a Benefit; and to interpret the Plan and to make all other
determinations deemed advisable for the administration of the Plan. All
determinations of the Committee shall be made by not less than a majority of
its members. The Committee may designate Employees of the Company to assist the
Committee in the administration of the Plan and may grant authority to such
persons to execute option agreements or other documents on behalf of the
Committee.

 

Payment in full for the
number of shares purchased under any Benefit, including an option, shall be
made to the Company at the time of such exercise. The Committee, in its
discretion, may provide that any Benefit by its terms may permit a Participant
to elect, subject to Committee approval, any of the following alternative
settlement methods: (i) cash equal to the excess of the value of one share over
the option or purchase price times the number of shares as to which the award
is exercised; (ii) the number of full shares having an aggregate value not
greater than the cash amount calculated under alternative (i); (iii) any
combination of cash and stock having an aggregate value not greater than the
cash amount calculated under alternative (i). For purposes of determining an
alternative settlement, the value per share shall be determined under the same
method as used to determine the option price in the case of stock options.

 

Payment for such shares
shall be made in cash, or with the consent of the Committee, in shares of the
Company’s common stock, or a combination thereof.

 

The interpretation and
construction by the Committee of any provisions of the Plan or of any benefit
granted under it shall be final. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
benefit granted under it.

 

122

 

EXHIBIT 10.6

 

ARTICLE XI

 

ADJUSTMENT UPON
CHANGES OF STOCK

 

If any change is made on
the shares of common stock of the Company by reason of any merger, consolidation,
reorganization, recapitalization, stock dividend, split up, combination of
shares, exchange of shares, change in corporate structure, or otherwise,
appropriate adjustments shall be made by the Committee to the kind and maximum
number of shares subject to the Plan and the kind and number of shares and
price per share of stock subject to each outstanding Benefit. No fractional
shares of stock shall be issued under the Plan on account of any such
adjustment, and rights to shares always shall be limited after such an
adjustment to the lower full share.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1                           CONTINUATION
OF EMPLOYMENT. Neither this Plan nor any Benefit granted hereunder shall confer
upon any Employee any right to continue in the employment of the Company or
limit in any respect the right of the Company to terminate his employment at
any time.

 

12.2                           ADMINISTRATION.
The Committee may make such rules and regulations and establish such procedures
as it deems appropriate for the administration of the Plan. In the event of a
disagreement as to the interpretation of the Plan or any amendment hereto or
any rule, regulation or procedure thereunder or as to any right or obligation
arising from or related to the Plan, the decision of the Committee shall be
final and binding.

 

12.3                           WITHHOLDING.
The Company shall have the right to withhold with respect to any payments made
to Participants under the Plan any taxes required by law to be withheld because
of such payments. With respect to any such withholding:

 

(a)           Each
Participant shall take whatever action that the Committee deems appropriate to
comply with the law regarding withholding of federal, state and local taxes.

 

(b)           When a
Participant is obligated to pay to the Company an amount required to be
withheld under applicable income tax laws in connection with a Benefit, the
Committee may, in its discretion and subject to such rules as it may adopt,
permit the Participant to satisfy this obligation, in whole or in part, either
(i) by having the Company withhold from the shares to be issued upon the
exercise of an option or a stock appreciation right or upon the receipt of a
Benefit, shares having a fair market value that would satisfy the withholding
amount due or (ii) by delivering to the Company already-owned shares to satisfy
the withholding amount.

 

12.4                           EFFECTIVE
DATE. This Plan is effective on July 12, 1990 (“Effective Date”). Benefits
hereunder may be granted at any time subject to the limitations contained
within the Plan. No Company Stock may be issued unless the Plan is approved by
a vote of the holders of a majority of the outstanding shares of the Company’s
common stock at a meeting of the stockholders of the Company held within twelve
months following the Effective Date.

 

ARTICLE XIII

 

AMENDMENT,
TERMINATION AND CHANGE IN CONTROL

 

123

 

EXHIBIT 10.6

 

13.1                           AMENDMENT.
The Board may amend the Plan from time to time as it deems desirable and shall
make any amendments which may be required so that options intended to be
Incentive Stock Options shall at all times continue to be Incentive Stock
Options for the purposes of the Code; PROVIDED, HOWEVER, the Plan may not be
amended to change the number of shares subject to the Plan or decrease the
price at which options may be granted.

 

13.2                           TERMINATION
OF PLAN. The Board may in its discretion Terminate the Plan at any time, but no
such termination shall deprive Participants of their rights under outstanding
Benefits. Notwithstanding the preceding sentence, no Incentive Stock Options
may be granted pursuant to the Plan later than ten years after the date the
Plan is adopted or the date the Plan is approved by the shareholders of the
Company, whichever is earlier.

 

13.3                           CHANGE
OF CONTROL. On the date of a Change of Control (as herein defined), all
outstanding options and stock appreciation rights shall become immediately
exercisable and all restrictions with respect to Restricted Stock shall lapse.
Following such a Change of Control, the Committee shall grant the request of
any Employee to pay for shares purchased under any Benefit by using an
alternative settlement method described in the third paragraph of Article X.
Change of Control shall mean:

 

(a)           The
acquisition (other than from the Company) by any person, entity or “group,”
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the “Exchange Act”), (excluding, for this purpose, the Company or
its subsidiaries, or any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of the
Company) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either the then outstanding shares of
common stock or the combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of directors; or

 

(b)           Individuals
who, as of the date hereof, constitute the Board (as of the date hereof the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for the election by the Company’s stockholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or

 

(c)           Approval
by the stockholders of the Company of a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company’s then outstanding voting
securities, or a liquidation or dissolution of the Company or of the sale of
all or substantially all of the assets of the Company.

 

124

 

EXHIBIT 10.6

 

FIRST AMENDMENT TO THE CONAGRA 1990 STOCK PLAN

 

The ConAgra 1990 Stock
Plan (the “Plan”), was approved by ConAgra stockholders on September 27, 1990.
The Plan is hereby amended by deleting in its entirety the last sentence of
Article V. The deleted sentence currently reads as follows:

 

In addition, any shares which are used for the full or
partial payment of the purchase price (or applicable withholding taxes) for
shares with respect to which an option is exercised may again be used for an
award under the Plan.

 

125

 

EXHIBIT 10.6

 

SECOND AMENDMENT

 

TO THE

 

CONAGRA 1990 STOCK PLAN

 

Effective January 1,
1993, The ConAgra 1990 Stock Plan (“Plan”) is amended, as follows:

 

ARTICLE I

 

Section 2.14 of the Plan
is amended to read, as follows:

 

“2.14 “Subsidiary” means
any corporation which is a “subsidiary corporation” as defined in Section 425
of the Code and any corporation, partnership, joint venture or other entity
which is, directly or indirectly, at least 25% owned by the Company.”

 

ARTICLE II

 

Article VI of the Plan is
amended by the addition thereto of the following paragraph:

 

“Notwithstanding any other provisions of the Plan, an
Incentive Stock Option may only be granted to Employees who are employed by the
Company or by a Subsidiary which is a “subsidiary corporation” as defined in
Section 425 of the Code.”

 

126EXHIBIT 10.7

 

CONAGRA 1995 STOCK PLAN

 

SECTION 1

 

NAME AND PURPOSE

 

1.1  Name.    The name of the plan shall be the ConAgra
1995 Stock Plan (the “Plan”).

 

1.2.  Purpose of Plan. The purpose of the Plan is to
foster and promote the long-term financial success of the Company and increase
stockholder value by (a) motivating superior performance by means of stock
incentives, (b) encouraging and providing for the acquisition of an ownership
interest in the Company by Employees and (c) enabling the Company to attract
and retain the services of a management team responsible for the long-term
financial success of the Company.

 

SECTION 2

 

DEFINITIONS

 

2.1  Definitions. Whenever used herein, the
following terms shall have the respective meanings set forth below:

 

(a)           “Act” means the Securities Exchange
Act of 1934, as amended.

 

(b)           “Award” means any Option, Stock
Appreciation Right, Restricted Stock, Stock Bonus, or any combination thereof,
including Awards combining two or more types of Awards in a single grant.

 

(c)           “Board” means the Board of Directors
of the Company.

 

(d)           “Code” means the Internal Revenue
Code of 1986, as amended.

 

(e)           “Committee” means the Human Resources
Committee of the Board, which shall consist of two or more members, each of
whom shall be a “disinterested person” within the meaning of Rule 16b-3 as
promulgated under the Act.

 

(f)            “Company” means ConAgra, Inc., a
Delaware corporation (and any successor thereto) and its Subsidiaries.

 

(g)           “Director Award” means an award of
Stock and an award of a Nonstatutory Stock Option granted to each Eligible
Director pursuant to Section 7.1 without any action by the Board or the
Committee.

 

(h)           “Eligible Director” means a person
who is serving as a member of the Board and who is not an Employee.

 

(i)            “Employee” means any employee of the
Company or any of its Subsidiaries.

 

(j)            “Fair Market Value” means, on any
date, the closing price of the Stock as reported on the New York Stock Exchange
(or on such other recognized market or quotation system on which the trading
prices of the Stock are traded or quoted at the relevant time) on such
date.  In the event that there are no
Stock transactions reported on such exchange (or such other system) on such
date, Fair Market Value shall mean the closing price on the immediately
preceding date on which Stock transactions were so reported.

 

(k)           “Option” means the right to purchase
Stock at a stated price for a specified period of time. For purposes of the
Plan, an Option may be either

 

127

 

EXHIBIT 10.7

 

(i) an Incentive Stock Option within the meaning of
Section 422 of the Code or (ii) a Nonstatutory Stock Option.

 

(l)            “Participant” means any Employee
designated by the Committee to participate in the Plan.

 

(m)          “Plan” means the ConAgra 1995 Stock
Plan, as in effect from time to time.

 

(n)           “Restricted Stock” shall mean a share
of Stock granted to a Participant subject to such restrictions as the Committee
may determine.

 

(o)           “Stock” means the Common Stock of the
Company, par value $5.00 per share.

 

(p)           “Stock Appreciation Right” means the
right, subject to such terms and conditions as the Committee may determine, to
receive an amount in cash or Stock, as determined by the Committee, equal to
the excess of (i) the Fair Market Value, as of the date such Stock Appreciation
Right is exercised, of the number shares of Stock covered by the Stock
Appreciation Right being exercised over (ii) the aggregate exercise price of
such Stock Appreciation Right.

 

(q)           “Stock Bonus” means the grant of
Stock as compensation from the Company, which may be in lieu of cash
compensation otherwise receivable by the Participant or in addition to such
cash compensation, and includes stock issued for service awards and other
Employee recognition programs.

 

(r)            “Subsidiary” means any corporation,
partnership, joint venture or other entity in which the Company owns, directly
or indirectly, 25% or more of the voting power or of the capital interest or
profits interest of such entity.

 

2.2  Gender and Number. Except when otherwise
indicated by the context, words in the masculine gender used in the Plan shall
include the feminine gender, the singular shall include the plural, and the
plural shall include the singular.

 

SECTION 3

 

ELIGIBILITY AND PARTICIPATION

 

Except as otherwise
provided in Section 7.1, the only persons eligible to participate in the Plan
shall be those Employees selected by the Committee as Participants.

 

SECTION 4

 

POWERS OF THE COMMITTEE

 

4.1  Power to Grant. The Committee shall determine
the Participants to whom Awards shall be granted, the type or types of Awards
to be granted, and the terms and conditions of any and all such Awards. The
Committee may establish different terms and conditions for different types of
Awards, for different Participants receiving the same type of Awards, and for
the same Participant for each Award such Participant may receive, whether or
not granted at different times.

 

4.2  Administration. The Committee shall be
responsible for the administration of the Plan. The Committee, by majority
action thereof, is authorized to prescribe, amend, and rescind rules and
regulations relating to

 

128

 

EXHIBIT 10.7

 

the Plan, to provide for conditions deemed necessary
or advisable to protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration and interpretation
of the Plan in order to carry out its provisions and purposes. Determinations,
interpretations, or other actions made or taken by the Committee pursuant to
the provisions of the Plan shall be final, binding, and conclusive for all
purposes and upon all persons. Notwithstanding anything else contained in the
Plan to the contrary, neither the Committee nor the Board shall have any
discretion regarding whether an Eligible Director receives a Director Award
pursuant to Section 7.1 or regarding the terms of any such Director Award,
including, without limitation, the number of shares subject to any such
Director Award.

 

SECTION 5

 

STOCK SUBJECT TO PLAN

 

5.1  Number. Subject to the provisions of Section
5.3, the number of shares of Stock subject to Awards (including Director
Awards) under the Plan may not exceed 11,000,000 shares of Stock. The shares to
be delivered under the Plan may consist, in whole or in part, of treasury Stock
or authorized but unissued Stock, not reserved for any other purpose. The
maximum number of shares of Stock with respect to which Awards may be granted
to any one Employee under the Plan is 10% of the aggregate number of shares of
Stock available for Awards under Section 5.1.

 

5.2  Cancelled, Terminated or Forfeited Awards. Any
shares of Stock subject to an Award which for any reason are cancelled,
terminated or otherwise settled without the issuance of any Stock shall again
be available for Awards under the Plan.

 

5.3  Adjustment in Capitalization. In the event of
any Stock dividend or Stock split, recapitalization (including, without
limitation, the payment of an extraordinary dividend), merger, consolidation,
combination, spin-off, distribution of assets to stockholders, exchange of
shares, or other similar corporate change, (i) the aggregate number of shares
of Stock available for Awards under Section 5.1 and (ii) the number of shares
and exercise price with respect to Options and the number, prices and dollar
value of other Awards, may be appropriately adjusted by the Committee, whose
determination shall be conclusive. If, pursuant to the preceding sentence, an
adjustment is made to the number of shares of Stock authorized for issuance
under the Plan, a corresponding adjustment shall be made to the number of
shares subject to each Director Award thereafter granted pursuant to Section
7.1.

 

SECTION 6

 

STOCK OPTIONS

 

6.1  Grant of Options. Options may be granted to
Participants at such time or times as shall be determined by the Committee.
Options granted under the Plan may be of two types: (i) Incentive Stock Options
and (ii) Nonstatutory Stock Options. The Committee shall have complete
discretion in determining the number of Options, if any, to be granted to a
Participant. Each Option shall be evidenced by an Option agreement that shall
specify the type of Option granted, the exercise price, the duration of the
Option, the number of shares of Stock to which the Option pertains, the
exercisability (if any) of the Option in the event of death, retirement,
disability or termination of employment, and such other terms and conditions
not inconsistent with the Plan as the Committee shall determine.

 

6.2  Option Price. Nonstatutory Stock Options and
Incentive Stock Options granted pursuant to the Plan shall have an exercise
price which is not less than the Fair Market Value on the date the Option is
granted.

 

129

 

EXHIBIT 10.7

 

6.3  Exercise of Options. Options awarded to a
Participant under the Plan shall be exercisable at such times and shall be
subject to such restrictions and conditions as the Committee may impose,
subject to the Committee’s right to accelerate the exercisability of such
Option in its discretion. Notwithstanding the foregoing, no Option shall be
exercisable for more than ten years after the date on which it is granted.

 

6.4  Payment. The Committee shall establish
procedures governing the exercise of Options, which shall require that written
notice of exercise be given and that the Option price be paid in full in cash
or cash equivalents, including by personal check, at the time of exercise or
pursuant to any arrangement that the Committee shall approve. The Committee
may, in its discretion, permit a Participant to make payment (i) in Stock
already owned by the Participant valued at its Fair Market Value on the date of
exercise (if such Stock has been owned by the Participant for at least six
months) or (ii) by electing to have the Company retain Stock which would
otherwise be issued on exercise of the Option, valued at its Fair Market Value
on the date of exercise. As soon as practicable after receipt of a written
exercise notice and full payment of the exercise price, the Company shall
deliver to the Participant a certificate or certificates representing the
acquired shares of Stock.

 

6.5  Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to
disqualify the Plan under Section 422 of the Code, or, without the consent of
any Participant affected thereby, to cause any Incentive Stock Option
previously granted to fail to qualify for the Federal income tax treatment
afforded under Section 421 of the Code. In furtherance of the foregoing, (i)
the aggregate Fair Market Value of shares of Stock (determined at the time of
grant of each Option) with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year shall
not exceed $100,000 or such other amount as may be required by the Code, (ii)
an Incentive Stock Option may not be exercised more than three months following
termination of employment (except as the Committee may otherwise determine in
the event of death or disability), and (iii) if the Employee receiving an
Incentive Stock Option owns Stock possessing more than 10% of the total
combined voting power of all classes of Stock of the Company, the exercise
price of the Option shall be at least 110% of Fair Market Value and the Option
shall not be exercisable after the expiration of five years from the date of
grant. An Incentive Stock Option may be granted only to Employees who are
employed by the Company or a “subsidiary corporation” as defined in Section 425
of the Code.

 

SECTION 7

 

DIRECTOR AWARDS

 

7.1  Amount of Award. Each Eligible Director shall
receive annually (i) a grant of a Nonstatutory Stock Option for 4,500 shares of
Stock and (ii) a grant of 900 shares of Stock from the Company’s treasury
shares. Such grants shall be made each year immediately following the annual
meeting of Company stockholders to those persons who are Eligible Directors
immediately following such meeting.

 

7.2  No Other Awards.  An Eligible Director shall not receive any
other Award under the Plan.

 

SECTION 8

 

STOCK APPRECIATION RIGHTS

 

130

 

EXHIBIT 10.7

 

8.1  SAR’s In Tandem with Options. Stock
Appreciation Rights may be granted to Participants in tandem with any Option
granted under the Plan, either at or after the time of the grant of such
Option, subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine. Each Stock
Appreciation Right shall only be exercisable to the extent that the
corresponding Option is exercisable, and shall terminate upon termination or
exercise of the corresponding Option. Upon the exercise of any Stock
Appreciation Right, the corresponding Option shall terminate.

 

8.2  Other Stock Appreciation Rights. Stock
Appreciation Rights may also be granted to Participants separately from any Option,
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine.

 

SECTION 9

 

RESTRICTED STOCK

 

9.1  Grant of Restricted Stock. The Committee may
grant Restricted Stock to Participants at such times and in such amounts, and
subject to such other terms and conditions not inconsistent with the Plan as it
shall determine. Each grant of Restricted Stock shall be subject to such
restrictions, which may relate to continued employment with the Company, performance
of the Company, or other restrictions, as the Committee may determine. Each
grant of Restricted Stock shall be evidenced by a written agreement setting
forth the terms of such Award.

 

9.2  Removal of Restrictions. The Committee may
accelerate or waive such restrictions in whole or in part at any time in its
discretion.

 

SECTION 10

 

STOCK BONUSES

 

10.1  Grant of Stock Bonuses. The Committee may
grant a Stock Bonus to a Participant at such times and in such amounts, and
subject to such other terms and conditions not inconsistent with the Plan, as
it shall determine.

 

10.2  Effect on Compensation. The Committee may from
time to time grant a Stock Bonus in lieu of salary or cash bonuses otherwise
payable to a Participant.

 

SECTION 11

 

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

 

11.1  General. The Board may from time to time
amend, modify or terminate any or all of the provisions of the Plan, subject to
the provisions of this Section 11.1. The Board may not change the Plan in a
manner which would prevent outstanding Incentive Stock Options granted under
the Plan from being Incentive Stock Options without the consent of the
optionees concerned. Furthermore, the Board may not make any amendment which
would (i) materially modify the requirements for participation in the Plan,
(ii) increase the number of shares of Stock subject to Awards under the Plan
pursuant to Section 5.1, or (iii) make any other amendments which would cause
the Plan not to comply with Rule 16b-3 under the Act, in each case without the
approval of the Company’s stockholders. No amendment or modification shall
affect the rights of any Employee with respect to a previously granted Award,
nor shall any amendment or modification affect the rights of any Eligible
Director pursuant to a previously granted Director Award.

 

131

 

EXHIBIT 10.7

 

11.2  Termination of Plan. No further Options shall
be granted under the Plan subsequent to September 30, 2005, or such earlier
date as may be determined by the Board.

 

SECTION 12

 

MISCELLANEOUS PROVISIONS

 

12.1  Nontransferability of Awards. No Awards
granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution; provided, the Committee may grant Options which are
transferable, without payment of consideration, to immediate family members of
the Participant or to trusts or partnerships for such family members, with any
such transferee subject to all conditions of the Option. Subject to the
preceding sentence, all rights with respect to Awards granted to a Participant
under the Plan shall be exercisable during the Participant’s lifetime only by
such Participant and all rights with respect to any Director Awards granted to
an Eligible Director shall be exercisable during the Director’s lifetime only
by such Eligible Director.

 

12.2  Beneficiary Designation. Each Participant
under the Plan may from time to time name any beneficiary or beneficiaries (who
may be named contingent or successively) to whom any benefit under the Plan is
to be paid or by whom any right under the Plan is to be exercised in case of
his death. Each designation will revoke all prior designations by the same
Participant shall be in a form prescribed by the Committee, and will be
effective only when filed in writing with the Committee. In the absence of any
such designation, Awards outstanding at death may be exercised by the
Participant’s surviving spouse, if any, or otherwise by his estate.

 

12.3  No Guarantee of Employment or Participation.
Nothing in the Plan shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant’s employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company or any Subsidiary. No Employee shall have a right to be selected as
a Participant, or, having been so selected, to receive any future Awards.

 

12.4  Tax Withholding. The Company shall have the
power to withhold, or require a Participant or Eligible Director to remit to
the Company, an amount sufficient to satisfy federal, state, and local
withholding tax requirements on any Award under the Plan, and the Company may
defer issuance of Stock until such requirements are satisfied. The Committee
may, in its discretion, permit a Participant to elect, subject to such
conditions as the Committee shall impose, (i) to have shares of Stock otherwise
issuable under the Plan withheld by the Company or (ii) to deliver to the Company
previously acquired shares of Stock, in each case having a Fair Market Value
sufficient to satisfy all or part of the Participant’s estimated total federal,
state and local tax obligation associated with the transaction.

 

12.5  Change of Control. On the date of a Change of
Control (as herein defined), all outstanding Options and Stock Appreciation
Rights shall become immediately exercisable and all restrictions with respect
to Restricted Stock shall lapse. Change of Control shall mean:

 

(a)           The acquisition (other than from the
Company) by any person, entity or “group,” within the meaning of Section
13(d)(3) or 14(d)(2) of the Act (excluding, for this purpose, the Company or
its subsidiaries, or any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of the
Company) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Act) of 30% or more of either

 

132

 

EXHIBIT 10.7

 

the then outstanding shares of common stock or the
combined voting power of the Company’s then outstanding voting securities
entitled to vote generally in the election of directors; or

 

(b)           Individuals who, as of the date
hereof, constitute the Board (as of the date hereof the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof whose
election, or nomination for the election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be, for purposes of this Plan, considered as though such
person were a member of the Incumbent Board; or

 

(c)           Approval by the stockholders of the
Company of a reorganization, merger or consolidation, in each case, with
respect to which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company’s then outstanding voting securities, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
assets of the Company.

 

12.6  Company Intent. The Company intends that the
Plan comply in all respects with Rule 16b-3 under the Act, and any ambiguities
or inconsistencies in the construction of the Plan shall be interpreted to give
effect to such intention.

 

12.7  Requirements of Law. The granting of Awards
and the issuance of shares of Stock shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
securities exchanges as may be required.

 

12.8  Effective Date. The Plan shall be effective
upon its adoption by the Board subject to approval by the Company’s
stockholders at the 1995 annual stockholders’ meeting.

 

12.9  Governing Law. The Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of
the State of Delaware.

 

133

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