Document:

exv10w38

 

Exhibit 10.38

UGI CORPORATION

2002 NON-QUALIFIED STOCK OPTION PLAN

AMENDED AND RESTATED AS OF MAY 24, 2005

1. PURPOSE AND DESIGN

The purpose of this Plan is to assist the Company in securing, motivating and retaining managerial
talent by affording managers and other key Employees an opportunity to purchase the Company’s Stock
under options. No grants may be made under this Plan after January 1, 2004.

2. DEFINITIONS

Whenever used in this Plan, the following terms will have the respective meanings set forth below:

2.01 “Board” means UGI’s Board of Directors as constituted from time to time.

2.02 “Change of Control” means a change of control as defined in a change of control agreement
between a Participant’s respective employer and certain of its employees.

2.03 “Committee” means the Compensation and Management Development Committee of the Board or
its successor.

2.04 “Company” means UGI Corporation, a Pennsylvania corporation, any successor thereto and
any Subsidiary.

2.05 “Date of Grant” means the effective date of an Option grant; provided, however, that no
retroactive grants will be made.

2.06 “Employee” means a regular full-time salaried employee (including officers and directors
who are also employees) of the Company.

2.07 “Fair Market Value” of Stock means the average, rounded to the next highest cent ($0.01),
of the highest and lowest sales prices thereof on the New York Stock Exchange on the day on which
Fair Market Value is being determined, as reported on the Composite Tape for transactions on the
New York Stock Exchange. Notwithstanding the foregoing, in the case of a cashless exercise pursuant
to Section 7.4, the Fair Market Value will be the actual sale price of the shares issued upon
exercise of the Option. In the event that there are no Stock transactions on the New York Stock
Exchange on such day, the Fair Market Value will be determined as of the immediately preceding day
on which there were Stock transactions on that exchange.

2.08 “Option” means the right to purchase Stock pursuant to the relevant provisions of this
Plan at the Option Price for a specified period of time, not to exceed ten years from the Date
of Grant, which period of time will be subject to earlier termination prior to exercise in
accordance with Section 7.3(b) of this Plan.

 

 

 

2.09 “Option Price” means an amount per share of Stock purchasable under an Option designated
by the Committee on the Date of Grant of an Option to be payable upon exercise of such Option. The
Option Price will not be less than 100% of the Fair Market Value of the Stock determined on the
Date of Grant.

2.10 “Participant” means an Employee designated by the Committee to participate in the Plan.

2.11 “Plan” means this 2002 Non-Qualified Stock Option Plan.

2.12 “Stock” means the Common Stock of UGI or such other securities of UGI as may be
substituted for Stock or such other securities pursuant to Section 13.

2.13 “Subsidiary” means any corporation or partnership, at least 20% of the outstanding voting
stock, voting power or partnership interest of which is owned respectively, directly or indirectly,
by the Company.

2.14 “Termination without Cause” means termination for the convenience of the Company for any
reason other than (i) misappropriation of funds, (ii) habitual insobriety or substance abuse, (iii)
conviction of a crime involving moral turpitude, or (iv) gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company. The Committee will have the sole
discretion to determine whether a significant reduction in the duties and responsibilities of a
Participant will constitute a Termination without Cause.

2.15 “UGI” means UGI Corporation, a Pennsylvania corporation or any successor thereto.

3. MAXIMUM NUMBER OF SHARES AVAILABLE FOR OPTIONS

The number of shares of Stock which may be made the subject of Options under this Plan may not
exceed 1,500,000 in the aggregate (after giving retroactive effect to the 2-for-1 Stock split
distributed May 24, 2005), subject, however, to the adjustment provisions of Section 13. If any
Option expires or terminates for any reason without having been exercised in full, the unpurchased
shares subject to the Option will again be available for the purposes of the Plan. Shares which are
the subject of Options may be previously issued and outstanding shares of Stock reacquired by the
Company and held in its treasury, or may be authorized but unissued shares of Stock, or may be a
combination of both.

4. DURATION OF THE PLAN

The Plan will remain in effect until all Stock subject to it has been transferred to Participants
or all Options have terminated or been exercised. Notwithstanding the foregoing, no Option may be
granted after December 31, 2011.

 

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5. ADMINISTRATION

The Plan will be administered by the Committee. Subject to the express provisions of the Plan, the
Committee will have authority, in its complete discretion, to determine the Employees to whom, and
the time or times at which grants will be made. In making such determinations, the Committee may
take into account the nature of the services rendered by an Employee, the present and potential
contributions of the Employee to the Company’s success and such other factors as the Committee in
its discretion deems relevant. Awards under a particular Section of the Plan need not be uniform as
among Participants. Subject to the express provisions of the Plan, the Committee will also have
authority to construe and interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective stock option agreements
required by Section 7.2 of the Plan, and to make all other determinations (including factual
determinations) necessary or advisable for the orderly administration of the Plan. All ministerial
functions, in addition to those specifically delegated elsewhere in the Plan, shall be performed by
a committee comprised of Company employees (“Administrative Committee”) appointed by the Committee.
A stock option agreement, as discussed below, shall be executed by each Participant receiving a
grant under the Plan and shall constitute that Participant’s acknowledgement and acceptance of the
terms of the Plan and the Committee’s authority and discretion.

6. ELIGIBILITY

Grants hereunder may be made only to managers and key Employees, other than executive officers, as
defined in the Securities Exchange Act of 1934, as amended, of UGI Corporation, who are selected by
the Committee, in its sole discretion, to participate in the Plan.

7. OPTIONS

7.01 Grant of Options. Subject to the provisions of Sections 2.09 and 3: (i) Options
may be granted to Participants at any time and from time to time as may be determined by the
Committee; and (ii) the Committee will have complete discretion in determining the Options to be
granted, the number of shares of Stock to be subject to each Option, the Option Price to be paid
for the shares upon the exercise of each option, the period within which each Option may be
exercised, and the vesting schedule associated with the option.

7.02 Option Agreement. As determined by the Committee on the Date of Grant, each
Option will be evidenced by a stock option agreement that will, among other things, specify the
Date of Grant, the Option Price, the duration of the option, the number of shares of Stock to which
the Option pertains and the Option’s vesting schedule.

7.03 Exercise and Vesting.

(a) Except as otherwise specified by the Committee in the stock option agreement, the option
shall become exercisable in equal one-third (1/3) installments on the first, second and third
anniversaries of the Date of Grant. Notwithstanding the foregoing, in the event that any such
Options are not by their terms immediately exercisable, the Committee may accelerate the
exercisability of any or all outstanding options at any time for any reason. No Option will be
exercisable on or after the tenth anniversary of the Date of Grant.

 

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(b) Except as otherwise specified by the Committee, in the event that a Participant holding an
option ceases to be an Employee, the Options held by such Participant will terminate on the date
such Participant ceases to be an Employee. The Committee will have authority to determine whether
an authorized leave of absence or absence on military or governmental service will constitute a
termination of employment for the purposes of this Plan. However, if a Participant holding an
option ceases to be an Employee by reason of (i) Termination without Cause, (ii) retirement, (iii)
disability, or (iv) death, the Option held by any such Participant will thereafter become
exercisable pursuant to the following:

(i) Termination Without Cause. If a Participant terminates employment on account of a
Termination without Cause, the Option held by such Participant will thereafter be exercisable only
with respect to that number of shares of Stock with respect to which it is already exercisable on
the date such Participant ceases to be an Employee; and such Option will terminate upon the earlier
of the expiration date of the option or the expiration of the 13 month period commencing on the
date such Participant ceases to be an Employee.

(ii) Retirement. If a Participant terminates employment on account of a retirement
under the Company’s retirement plan applicable to that Participant, the Option held by such
Participant will thereafter become exercisable as if such Participant had remained employed by the
Company for 36 months after the date of such retirement; and such Option will terminate upon the
earlier of the expiration date of the Option or the expiration of such 36 month period. Retirement
for Employees of AmeriGas Propane, Inc. (“API”) means termination of employment with API after
attaining age 55 with ten or more years of service with API and its affiliates.

(iii) Disability. If a Participant is determined to be “disabled” (as defined under
the Company’s long-term disability plan), the Option held by such Participant will thereafter
become exercisable as if such Participant had remained employed by the Company for 36 months after
the date of such disability; and such Option will terminate upon the earlier of the expiration date
of the Option or the expiration of such 36 month period.

(iv) Death. In the event of the death of a Participant while employed by the Company,
the Option theretofore granted to such Participant will be fully and immediately exercisable (to
the extent not otherwise exercisable by its terms) at any time prior to the earlier of the
expiration date of the Option or the expiration of the 12 month period following the Participant’s
death. Death of a Participant after such Participant has ceased to be employed by the Company will
not affect the otherwise applicable period for exercise of the Option determined pursuant to
Sections 7.3(b)(i), 7.3(b)(ii) or 7.3(b)(iii). Such Option may be exercised by the estate of the
Participant, by any person to whom the Participant may have bequeathed the option, any person the
Participant may have designated to exercise the same under the Participant’s last will, or by the
Participant’s personal representatives if the Participant has died intestate.

(c) Notwithstanding anything contained in this Section 7.3, with respect to the number of
shares of Stock subject to an option with respect to which such option is or is to become
exercisable, no option, to the extent that it has not previously been exercised, will be
exercisable after it has terminated, including without limitation, after any termination of such
Option pursuant to Section 7.3(b) hereof.

 

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7.04 Payment. The Option Price of any option will be payable to the Company in full
(i) in cash or its equivalent, (ii) by tendering shares of previously acquired Stock already
beneficially owned by the Participant for more than one year and having a Fair Market Value at the
time of exercise equal to the Option Price being paid thereby, (iii) by payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) by such
other method as the Committee may approve, or (v) by a combination of (i), (ii), (iii) and/or (iv).
The cash proceeds from such payment will be added to the general funds of the Company and will be
used for its general corporate purposes.

7.05 Written Notice. A Participant wishing to irrevocably exercise an Option must give
irrevocable written notice to the Company in the form and manner prescribed by the Administrative
Committee, indicating the date of award, the number of shares as to which the Option is being
exercised, and such other information as may be required by the Administrative Committee. Full
payment for the shares pursuant to the option must be received by the time specified by the
Committee depending on the type of payment being made but, in all cases, prior to the issuance of
the shares. Except as provided in Section 7.3(b), no option may be exercised at any time unless the
Participant is then an Employee of the Company.

7.06 Issuance of Stock. As soon as practicable after the receipt of irrevocable
written notice and payment, the Company will, without stock transfer taxes to the Participant or to
any other person entitled to exercise an Option pursuant to this Plan, deliver to, or credit
electronically on behalf of, the Participant, the Participant’s designee or such other person the
requisite number of shares of Stock.

7.07 Privileges of a Shareholder. A Participant or any other person entitled to
exercise an Option under this Plan will have no rights as a shareholder with respect to any Stock
covered by the Option until the due exercise of the Option and issuance of such Stock.

7.08 Partial Exercise. An Option granted under this Plan may be exercised as to any
lesser number of shares than the full amount for which it could be exercised. Such a partial
exercise of an option will not affect the right to exercise the option from time to time in
accordance with this Plan as to the remaining shares subject to the Option.

8. NON-TRANSFERABILITY

No Option granted under the Plan will be transferable otherwise than by will or the laws of descent
and distribution, and an Option may be exercised, during the lifetime of the Participant, only by
the Participant.

9. CONSEQUENCES OF A CHANGE OF CONTROL

9.01 Notice and Acceleration. Upon a Change of Control, unless the Committee
determines otherwise, (i) the Company will provide each Participant with outstanding grants written
notice of such Change of Control, and (ii) all outstanding options will automatically accelerate
and become fully exercisable.

9.02 Assumption of Grants. Upon a Change of Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation), unless the
Committee determines otherwise, all outstanding Options that are not exercised will be assumed
by, or replaced with comparable options or rights by, the surviving corporation (or a parent of the
surviving corporation).

 

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9.03 Other Alternatives. Notwithstanding the foregoing, subject to Section 9.4 below,
in the event of a Change of Control, the Committee may take any of the following actions with
respect to any or all outstanding Options: the Committee may (i) require that Participants
surrender their outstanding Options in exchange for a payment by the Company, in cash or Stock as
determined by the Committee, in an amount equal to the amount by which the then Fair Market Value
of the shares of Stock subject to the Participant’s unexercised Options exceeds the option Price of
the Options, as applicable, or (ii) after giving Participants an opportunity to exercise their
outstanding Options, terminate any or all unexercised options at such time as the Committee deems
appropriate. Such surrender, termination or settlement will take place as of the date of the Change
of Control or such other date as the Committee may specify.

9.04 Committee. The Committee making the determinations under this Section 9 following
a Change of Control must be comprised of the same members as those on the Committee immediately
before the Change of Control. If the Committee members do not meet this requirement, the automatic
provisions of Sections 9.1 and 9.2 will apply, and the Committee will not have discretion to vary
them.

9.05 Limitations. Notwithstanding anything in the Plan to the contrary, in the event
of a Change of Control, the Committee will not have the right to take any actions described in the
Plan (including without limitation actions described in this Section 9) that would make the Change
of Control ineligible for pooling of interests accounting treatment or that would make the Change
of Control ineligible for desired accounting treatment if, in the absence of such right, the Change
of Control would qualify for such treatment and the Company intends to use such treatment with
respect to the Change of Control.

10. ADJUSTMENT OF NUMBER AND PRICE OF SHARES, ETC.

Notwithstanding anything to the contrary in this Plan, in the event any recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of shares or
other securities of UGI, stock split or reverse split, extraordinary dividend, liquidation,
dissolution, significant corporate transaction (whether relating to assets or stock) involving UGI,
or other extraordinary transaction or event affects Stock such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of Participants’ rights
under the Plan, then the Committee may, in a manner that is equitable, adjust (i) any or all of the
number or kind of shares of Stock reserved for issuance under the Plan, (ii) the maximum number of
shares of Stock which may be the subject of grants to any one individual in any calendar year,
(iii) the number or kind of shares of Stock to be subject to grants of Options thereafter granted
under the Plan, (iv) the number and kind of shares of Stock issuable upon exercise of outstanding
Options, and (v) the Option Price per share thereof, provided that the number of shares subject to
any Option will always be a whole number. Any such determination of adjustments by the Committee
will be conclusive for all purposes of the Plan and of each Option, whether a stock option
agreement with respect to a particular Option has been theretofore or is thereafter executed.

 

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11. LIMITATION OF RIGHTS

Nothing contained in this Plan shall be construed to give an Employee any right to be granted an
option hereunder except as may be authorized in the discretion of the Committee. The granting of an
Option under this Plan shall not constitute or be evidence of any agreement or understanding,
expressed or implied, that the Company will employ a Participant for any specified period of time,
in any specific position or at any particular rate of remuneration.

12. AMENDMENT OR TERMINATION OF PLAN

Subject to Board approval, the Committee may at any time, and from time to time, alter, amend,
suspend or terminate this Plan without the consent of the Company’s shareholders or Participants,
except that any such alteration, amendment, suspension or termination will be subject to the
approval of the Company’s shareholders within one year after such Committee and Board action if
such shareholder approval is required by any federal or state law or regulation or the rules of any
stock exchange or automated quotation system on which the Stock is then listed or quoted, or if the
Committee in its discretion determines that obtaining such shareholder approval is for any reason
advisable. No termination or amendment of this Plan may, without the consent of the Participant to
whom any option has previously been granted, adversely affect the rights of such Participant under
such Option. Notwithstanding the foregoing, the Administrative Committee may make minor amendments
to this Plan which do not materially affect the rights of Participants or significantly increase
the cost to the Company.

13. TAX WITHHOLDING

Upon exercise of any option under this Plan, the Company will require the recipient of the Stock to
remit to the Company an amount sufficient to satisfy federal, state and local withholding tax
requirements. However, to the extent authorized by rules and regulations of the Administrative
Committee, the Company may withhold or receive Stock and make cash payments in respect thereof in
satisfaction of a recipient’s tax obligations in an amount that does not exceed the recipient’s
minimum applicable withholding tax obligations. In the event the Company receives Stock in
satisfaction of a recipient’s minimum applicable withholding tax obligations, the Stock must have
been held by the recipient for more than six months.

14. GOVERNMENTAL APPROVAL

Each Option will be subject to the requirement that if at any time the listing, registration or
qualification of the shares covered thereby upon any securities exchange, or under any state or
federal law, or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of or in connection with the granting of such Option or the purchase of
shares thereunder, no such option may be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval has been effected or obtained free of any
conditions not acceptable to the Board.

15. EFFECTIVE DATE OF PLAN

This Plan will become effective as of January 1, 2002.

 

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16. SUCCESSORS

This Plan will be binding upon and inure to the benefit of the Company, its successors and assigns
and the Participant and his heirs, executors, administrators and legal representatives.

17. HEADINGS AND CAPTIONS

The headings and captions herein are provided for reference and convenience only, shall not be
considered part of the Plan, and shall not be employed in the construction of the Plan.

18. GOVERNING LAW

The validity, construction, interpretation and effect of the Plan and option agreements issued
under the Plan will be governed exclusively by and determined in accordance with the law of the
Commonwealth of Pennsylvania.

 

8exv10w39

 

Exhibit 10.39

UGI CORPORATION

1992 NON-QUALIFIED STOCK OPTION PLAN

AMENDED AND RESTATED AS OF MAY 24, 2005

1. PURPOSE AND DESIGN

The purpose of this Plan is to assist the Company in securing, motivating and retaining managerial
talent by affording managers an opportunity to purchase the Company’s Stock under options. No
grants shall be made under this Plan after January 1, 2004.

2. DEFINITIONS

Whenever used in this Plan, the following terms will have the respective meanings set forth below:

(a) “Board” means the Company’s Board of Directors as constituted from time to time.

(b) “Committee” means the Compensation and Management Development Committee of the Board as
constituted from time to time.

(c) “Company” means UGI Corporation, a Pennsylvania corporation (which intends to change its
name after the effective date hereof to UGI Utilities, Inc.), or any successor thereto by merger,
consolidation or statutory share exchange; provided, however, that in the event that the Company’s
shareholders approve the formation of a public utility holding company to own 100%, of the Stock of
the Company prior to January 1, 1993, then from and after any reorganization (whether by merger or
statutory share exchange) effecting such a transaction, “Company” shall mean New UGI Corporation, a
Pennsylvania corporation (which intends to change its name after the effective date hereof to UGI
Corporation).

(d) “Employee” means a regular full-time salaried employee (including officers who are also
employees) of the Company or any Subsidiary of the Company.

(e) “Fair Market Value” of Stock means the average, rounded to the next highest one-eighth of
a point (.125), of the highest and lowest sales prices thereof on the New York Stock Exchange on
the day on which Fair Market Value is being determined, as reported on the Composite Tape for
transactions on the New York Stock Exchange; provided, however, in the case of a cashless exercise
pursuant to Section 7.4, the Fair Market Value shall be the actual sale price of the shares issued
upon exercise of the Option. In the event that there are no Stock transactions on the New York
Stock Exchange on such day, the Fair Market Value will be determined as of the immediately
preceding day on which there were Stock transactions on that exchange.

(f) “Option” means the right to purchase Stock pursuant to the relevant provisions of this
Plan at the option Price for a specified period of time, not to exceed ten years from date of
grant, which period of time shall be subject to earlier termination prior to exercise in
accordance with Sections 10, 11 and 12 of this Plan.

 

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(g) “Option Price” means an amount per share of Stock purchasable under an Option equal to
100% of the Fair Market Value of the Stock determined on the date of grant of an option to be
payable upon exercise of such option.

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

(i) “Subsidiary” means any corporation, at least 20% of the outstanding voting stock or voting
power of which is owned by the Company or a Subsidiary.

(j) “Stock” means the Common Stock of the Company, par value $2.25 per share, or, in the event
that, prior to January 1, 1993, the Company’s shareholders approve the formation of a public
utility holding company system in which 100% of the Stock of the Company is owned by a public
utility holding company, then from and after the effective date of any reorganization (whether by
merger or statutory share exchange) effecting such a transaction, “Stock” shall mean the Common
Stock of the Company, without par value, and, in either case, such other securities of the Company
as may be substituted for Stock or such other securities pursuant to Section 13.

3. NUMBER AND SOURCE OF SHARES AVAILABLE FOR OPTIONS — MAXIMUM ALLOTMENT

The number of shares of Stock which may be made the subject of Options under this Plan at any one
time may not exceed 1,500,000 in the aggregate (after giving retroactive effect to the 2-for-1
Stock split distributed May 24, 2005), including shares acquired by Participants through exercise
of options under this Plan, subject, however, to the adjustment provisions of Section 13 below. If
any Option expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject to the Option will again be available for the purposes of the Plan.
Shares which are the subject of options may be previously issued and outstanding shares of the
Stock reacquired by the Company and held in its treasury, or may be authorized but unissued shares
of Stock, or may be partly of each.

4. DURATION OF THE PLAN

The Plan will remain in effect until all Stock subject to it has been purchased pursuant to the
exercise of Options. Notwithstanding the foregoing, no Option may be granted after January 1, 2002.

5. ADMINISTRATION

The Plan will be administered by the Committee. Subject to the express provisions of the Plan, the
Committee will have authority, in its discretion, to determine the Employees to whom, and the time
or times at which, Options will be granted, the number of shares to be subject to each Option, the
Option Price to be paid for the shares upon the exercise of each Option, and the period within
which each Option may be exercised. In making such determinations, the Committee may take into
account the nature of the services rendered by an Employee, the present and potential contributions of the Employee to the Company’s success and such other factors
as the Committee in its discretion deems relevant. Subject to the express provisions of the Plan,
the Committee will also have authority to construe and interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and provisions of the
respective stock option agreements required by Section 7.2 of the Plan (which need not be
identical), and to make all other determinations necessary or advisable for the orderly
administration of the Plan. A Stock option agreement as discussed below shall be executed by each
Participant receiving a grant under the Plan and shall constitute that Participant’s
acknowledgement and acceptance of the terms of the Plan and the Committee’s authority and
discretion.

 

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6. ELIGIBILITY

Options may be granted only to key management Employees who do not participate in any of the
Company’s Stock Option and Dividend Equivalent Plans and who are selected by the Committee, in its
sole judgment, to participate in the Plan.

7. OPTIONS

7.1 Grant of Options. Subject to the provisions of Section 3, Options may be granted
to Participants at any time and from time to time as may be determined by the Committee. The
Committee will have complete discretion in determining the number of Options granted to each
Participant and the number of shares of Stock subject to such Options.

7.2 Option Agreement. As determined by the Committee on the date of grant, each Option
will be evidenced by a stock option agreement that shall, among other things, specify the Option
Price, the duration of the option and the number of shares of Stock to which the Option pertains.

7.3 Exercise and Vesting.

(a) Except as otherwise specified by the Committee, an option shall be fully and immediately
exercisable on the date of grant. Notwithstanding the foregoing, in the event that any such Options
are not by their terms immediately exercisable, the Committee may accelerate the exercisability of
any or all outstanding Options at any time for any reason. No Option shall be exercisable on or
after the tenth anniversary of the date of grant.

(b) If a Participant holding an option ceases to be an Employee, the Option held by such
Participant shall be exercisable only with respect to that number of shares of Stock with respect
to which it is already exercisable on the date such Participant ceases to be an Employee. However,
if a Participant holding an Option ceases to be an Employee by reason of a retirement under the
Company’s or a Subsidiary’s retirement plan, the Option held by any such participant shall
thereafter become exercisable with respect to that additional number of shares of Stock with
respect to which it becomes exercisable on any anniversary of the date on which the Participant was
granted the Option which occurs within thirteen (13) months after the date of such retirement and
such Option shall be exercisable during such thirteen-month period. Notwithstanding the foregoing,
the Committee shall have the power, in the event of any merger or consolidation of any other
corporation with or into the Company, or the sale of all or
substantially all of the assets of the Company or an offer to purchase made by a party other
than the Company to all shareholders of the Company for all or any substantial portion of the
outstanding Stock, to amend any or all outstanding Options to permit the exercise of all such
Options prior to the effectiveness of any such merger, consolidation or sale or the expiration of
any such offer to purchase, and to terminate such Options as of such effectiveness or expiration.
Notwithstanding anything contained in this Section 7.3 with respect to the number of shares with
respect to which an option is or is to become exercisable, no Option, to the extent that it has not
previously been exercised, shall be exercisable after it has terminated, including without
limitation, after any termination of such Option pursuant to Section 10 hereof.

 

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7.4 Payment of Option Price. The Option Price upon exercise of any Option shall be
payable to the Company in full (i) in cash or its equivalent, (ii) by tendering shares of
previously acquired Stock already beneficially owned by the Participant for more than one year and
having a Fair Market Value at the time of exercise equal to the total option Price, (iii) by
payment through a broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board, or (iv) by a combination of (i) (ii) and/or (iii). The cash proceeds from such
payment will be added to the general funds of the Company and shall be used for its general
corporate purposes. Any shares of previously acquired Stock tendered to the Company in payment of
the Option Price will be added by the Company to its treasury stock to be used for its general
corporate purposes.

8. WRITTEN NOTICE, ISSUANCE OF STOCK CERTIFICATES, STOCKHOLDER PRIVILEGES AND PARTIAL EXERCISE

8.1 Written Notice. A Participant wishing to exercise an Option must give irrevocable
written notice to the Company in the form and manner prescribed by the Committee, indicating the
date of award, the number of shares as to which the option is being exercised, and such other
information as may be required by the Committee. Full payment for the shares exercised pursuant to
the Option must be received by the Company by the time specified by the Committee depending on the
type of payment being made but, in all cases, prior to the issuance of the Stock. Except as
provided in Sections 10, 11 and 12, no option may be exercised at any time unless the Participant
is then an Employee of the Company or a Subsidiary.

8.2 Issuance of Stock Certificates. As soon as practicable, after the receipt of
irrevocable written notice and payment, the Company will, without stock transfer taxes to the
Participant or to any other person entitled to exercise an Option pursuant to this Plan, deliver to
the Participant or such other person or certificates for the requisite number of shares of Stock.

8.3 Privileges of a Shareholder. A Participant or any other person entitled to
exercise an Option under this Plan will have no rights as a shareholder with respect to any Stock
covered by the Option until the date of issuance of a share certificate for such Stock.

8.4 Partial Exercise. An Option granted under this Plan may be exercised as to any
lesser number of shares than the full amount for which it could be exercised. Such a partial
exercise of an option will not affect the right to exercise the option from time to time in
accordance with this Plan as to the remaining shares subject to the Option.

 

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9. NON-TRANSFERABILITY OF OPTIONS

No Option granted under the Plan shall be transferable otherwise than by will or the laws of
descent and distribution, and an Option may be exercised, during the lifetime of the Participant,
only by the Participant.

10. TERMINATION OF EMPLOYMENT (OTHER THAN BY REASON OF DEATH OR DISABILITY).

Each option, to the extent that it has not previously been exercised, will terminate when the
Participant holding such option (while living) ceases to be an Employee of the Company or a
Subsidiary, unless such cessation of employment is (i) for the convenience of the Company or a
Subsidiary, in which event the Option will terminate upon the expiration of ninety (90) days after
such cessation of employment, or (ii) a retirement under the Company’s or a Subsidiary’s retirement
plan, in which event the Option will terminate upon the expiration of thirteen (13) months after
the retirement of such Participant. In no event, however, will an option continue after ten years
from the date of granting of such Option. The Committee will have authority to determine whether an
authorized leave of absence or absence on military or governmental service will constitute a
severance of employment for the purposes of this Plan.

11. DISABILITY

If a Participant’s employment by the Company or a Subsidiary terminates by reason of disability (as
defined under Section 22(e)(3) of the Internal Revenue Code of 1986, as it may be amended or any
successor statute), the Option, to the extent exercisable as of the date of such termination, will
be exercisable at any time prior to the earlier of (i) the expiration date of the Option, or (ii)
the expiration of a thirteen-month period following the date of such termination. To the extent
that an Option was not exercisable as of the date of such termination of employment, such Option or
the non-exercisable portion thereof will be forfeited and no longer subject to any right to
exercise.

12. DEATH OF PARTICIPANT

In the event of the death of a Participant (i) while employed by the Company or a Subsidiary, (ii)
within the ninety (90) day period specified in clause (i) of Section 10 after cessation of
employment for the convenience of the Company or a Subsidiary, or (iii) within the thirteen (13)
month period specified in clause (ii) of Section 10 after cessation of employment by reason of
retirement under the Company’s or a Subsidiary’s retirement plan, the option theretofore granted to
such Participant may be exercised by the estate of the Participant or by any person to whom the
Participant may have bequeathed the Option or whom the Participant may have designated to exercise
the same under the Participant’s last will, or by the Participant’s personal representatives if the
Participant has died intestate, at any time within a period of one Year after the Participant’s
death, but not after ten years from the date of granting of such Option, and in all cases only if
and to the extent that the Participant was entitled to exercise the option at the time of the
Participant’s death.

 

5

 

13. ADJUSTMENT OF NUMBER, KIND AND PRICE OF SHARES

In the event any recapitalization, reorganization, merger, consolidation, spin-off, combination,
repurchase, exchange of shares or other securities of the Company, stock split or reverse split,
extraordinary dividend, liquidation, dissolution, or other similar corporate transaction or event
affects Stock such that an adjustment is determined by the Committee to be appropriate in order
prevent dilution or enlargement of Participants’ rights under the Plan, then the Committee will, in
a manner that is proportionate to the change to the Stock and is otherwise equitable, adjust (i)
any or all of the number or kind of shares of Stock reserved for issuance under the Plan, (ii) the
number or kind of shares of Stock to be subject to Options thereafter granted under the Plan, and
(iii) the number and kind of shares of Stock issuable upon exercise of outstanding options, or the
Option Price per share thereof, provided that the number of shares subject to any option will
always be a whole number. Any such determination of adjustments by the Committee will be conclusive
for all purposes of the Plan and of each Option, whether a stock option agreement with respect to a
particular option has been theretofore or is thereafter executed.

14. LIMITATION OF RIGHTS

Nothing in this Plan contained shall be construed to give an Employee any right to be granted an
Option except as may be authorized in the discretion of the Committee. The granting of an Option
under this Plan shall not constitute or be evidence of any agreement or understanding, expressed or
implied, that the Company or a Subsidiary will employ a Participant for any specified period of
time, in any specific position or at any particular rate or remuneration.

15. AMENDMENT OR TERMINATION OF PLAN

Subject to Board approval, the Committee may at any time, and from time to time, alter, amend,
suspend or terminate this Plan without the consent of the Company’s shareholders or Participants.
No termination or amendment of this Plan may, without the consent of the Participant to whom any
option has previously been granted, adversely affect the rights of such Participant under such
Option.

16. TAX WITHHOLDING

Upon exercise of any option under this Plan, the Company will require the recipient of the Stock to
remit to the Company an amount sufficient to satisfy federal, state and local withholding tax
requirements. However, to the extent authorized by rules and regulations of the Committee, the
Company may withhold or receive Stock and make cash payments in respect thereof in satisfaction of
a recipient’s tax obligations, including tax obligations in excess of mandatory withholding
requirements.

17. GOVERNMENTAL APPROVAL

Each Option will be subject to the requirements that if at any time the listing, registration or
qualification of the shares covered thereby upon any securities exchange, or under any state or
federal law, or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of or in connection with the granting of such option or the purchase of
shares thereunder, no such Option may be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval has been effected or obtained free of any
conditions not acceptable to the Board.

18. EFFECTIVE DATE OF PLAN

This Plan will become effective as of January 1, 1992.

 

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