Exhibit 10.1
Caterpillar Inc.
1996 Stock Option and Long-Term Incentive Plan
(Amended and
Restated through Fourth Amendment)
The Caterpillar
Inc. 1996 Stock Option and Long-Term Incentive Plan
(“Plan”) is designed to attract and retain outstanding
individuals as non-employee directors, officers and key employees
of Caterpillar Inc. and its subsidiaries (collectively, the
“Company”), and to furnish incentives to such
individuals through awards based upon the performance of the
Company and its stock. To this end, the Plan provides
for grants of stock options, stock appreciation rights
(“SARs”) , restricted stock, restricted stock
units, and performance awards, or combinations thereof, to
non-employee directors, officers and other key employees of the
Company, on the terms and subject to the conditions set forth in
the Plan.
Section
2. Shares Subject to the Plan
2.1
Shares Reserved for Issuance
Sixty-Four
Million shares of Company common stock (“Shares”) shall
be available for issuance under the Plan either from authorized but
unissued Shares or from Shares acquired by the Company, including
Shares purchased in the open market. An additional four
million Shares authorized but unissued under prior Company stock
option plans shall be available for issuance under this
Plan.
If Shares
subject to an award under the Plan are not acquired by
participants, or Shares issued under the Plan are reacquired by the
Company, because of lapse, expiration, or termination of an award,
such Shares shall again become available for issuance under the
Plan. Shares tendered upon exercise of an option by a
Plan participant may be added back and made available solely for
future awards under the Plan.
2.3
Adjustments in Authorized Shares
In the event of
any corporate event or transaction (including, but not limited to,
a change in the shares of the Company or the capitalization of the
Company) such as a merger, consolidation, reorganization,
recapitalization, separation, stock dividend, stock split, reverse
stock split, split up, spin-off, or other distribution of stock or
property of the Company, combination of Shares, exchange of Shares,
dividend in kind, or other like change in capital structure or
distribution (other than normal cash dividends) to stockholders of
the Company, or any similar corporate event or transaction, the
Committee, in its sole discretion, in order to prevent dilution or
enlargement of Participants’ rights under the Plan, shall
substitute or adjust, as applicable, the number and kind of Shares
that may be issued under the Plan or under particular forms of
awards, the number and kind of Shares subject to outstanding
awards, the option exercise price or base price applicable to
outstanding awards, the annual award limits, the limits on awards
set forth in Sections 5.1(a), 6.1(b) and 8.2, and other value
determinations applicable to outstanding awards.
The Committee,
in its sole discretion, may also make appropriate adjustments in
the terms of any awards under the Plan related to such changes or
distributions and to modify any other terms of outstanding awards,
including modifications of performance goals and changes in the
length of Performance Periods. The determination of the
Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on Participants under the Plan.
Section
3. Administration
Unless
otherwise provided in the Plan, the Committee shall have the
authority to grant awards under the Plan to non-employee directors,
officers, and other key employees of the Company. Except as limited
by the express provisions of the Plan or by resolutions adopted by
the Board, the Committee also shall have the authority and
discretion to interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for
administration of the Plan, except to the extent that such
authority or discretion would cause an award to fail to qualify as
performance based compensation for purposes of Section 162(m) of
the Code.
The Committee
shall be composed solely of members of the Board that satisfy
applicable tax, securities and stock exchange rules, and other
requirements determined to be necessary or advisable by the
Board. The Committee may delegate to one or more of its
members or to one or more officers of the Company, and/or its
Subsidiaries and Affiliates or to one or more agents or advisors
such administrative duties or powers as it may deem advisable, and
the Committee or any person to whom it has delegated duties or
powers as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may
have under the Plan.
Section
4. Eligibility and Participation
Individuals
eligible to participate in this Plan include non-employee
directors, officers, and other key employees.
Subject to the
provisions of the Plan, the Committee may, from time to time,
select from all eligible officers and key Employees those to whom
awards shall be granted. The Committee shall determine,
in its sole discretion, the nature of any and all terms (as
permissible by law) and the amount of each award. Directors who are
not employees shall only receive awards in accordance with the
terms set forth in this Plan.
The Committee
shall determine Company officers and key employees to whom options
shall be granted, the timing of such grants, and the number of
shares subject to the option; provided that the maximum number of
Shares upon which options may be granted to any employee in any
calendar year shall be 400,000. All Options granted
under the Plan will be evidenced by an Award Agreement.
(b) Option
Exercise Price
The exercise
price of each option shall not be less than 100% of the fair market
value of Shares underlying the option at the time the option is
granted. The fair market value for purposes of
determining the exercise price shall be the mean between the high
and the low prices at which Shares are traded on the New York Stock
Exchange on the day the option is granted. In the event
this method for determining fair market value is not practicable,
fair market value shall be determined by such other reasonable
method as the Committee shall select.
Options shall
be exercisable in such installments and during such periods as may
be fixed by the Committee at the time of grant. Each
Option granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant; provided, however,
no Option shall be exercisable later than the tenth (10
th
)
anniversary date of its grant.
Payment of the
exercise price shall be made upon exercise of all or a portion of
any option. Such payment shall be in cash or by
tendering Shares that have been owned by the participant for at
least six months having a fair market value equal to 100% of the
exercise price. The fair market value of Shares for this
purpose shall be the mean between the high and low prices at which
Shares are traded on the New York Stock Exchange on the date of
exercise. Upon exercise of an option, any applicable
taxes the Company is required to withhold shall be paid to the
Company. Shares to be received upon exercise may be
surrendered to satisfy withholding obligations.
(d) Termination
of Employment
The Committee
may require a period of continued employment before an option can
be exercised. That period shall not be less than one
year, except that the Committee may permit a shorter period in the
event of termination of employment by retirement or
death. An exception to the one-year period other than
retirement or death is applicable only for the 2004 year grant, of
which the options may be exercised as of January 3,
2005.
Termination of
employment with the Company shall terminate remaining rights under
options then held; provided, however, that an option
grant may provide that if employment terminates after completion of
a specific period, the option may be exercised during a period of
time after termination. That period may not exceed sixty
months where termination of employment is caused by retirement or
death or sixty days where termination results from any other cause
provided that such period shall not extend beyond the original
maximum term of the option. If death occurs after
termination of employment but during the period of time specified,
such period may be extended to not more than sixty-six months after
retirement, or thirty-eight months after termination of employment
for any other cause provided that such period shall not extend
beyond the original maximum term of the option. In the
event of termination within two years after a Change of Control as
defined in Section 10.2 of the Plan, options shall be exercisable
for a period of sixty months following the date of termination or
for the maximum term of the option, whichever is
shorter. Notwithstanding the foregoing, the Committee
may change the post-termination period of exercisability of an
option provided that change does not extend the original maximum
term of the option.
Notwithstanding
the foregoing or anything herein or in an award document to the
contrary, the Committee, in its sole discretion, shall have the
authority to accelerate the vesting of non-tandem SARs at any time
following the time of grant.
(e) Transferability
of Options
(i) Except
as otherwise permitted in Section 4.1(e)(ii), options shall not be
transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined by the Code or the Employee Retirement Income Security
Act. Options are exercisable during the holder’s
lifetime only by the holder, unless the holder becomes
incapacitated or disabled, in which case the option may be
exercised by the holder’s authorized
representative. A holder may file with the Company a
written designation of beneficiaries with the authority to exercise
options in the event of the holder’s death.
(ii) Notwithstanding
the provisions of Section 4.1(e)(i), and in addition to the
permissible transfers under that provision, options granted to
persons at the level of Vice President and above, as well as
directors of the Company and persons retired from those positions,
may be transferred to any one or more “Permitted
Transferees,” as long as those options are not incentive
stock options as defined below and are fully
vested. Options granted to employees below the level of
Vice President may be transferred upon prior approval of the
Company’s Director of Compensation and Benefits pursuant to
the terms of this section.
(iii) For
purposes of Section 4.1(e)(ii), the term "Permitted Transferees"
shall mean the members of the group that consists exclusively of
the individual to whom the option is granted, the spouse of the
individual to whom the option is granted, the lineal descendants of
the individual to whom the option is granted, the spouses of the
lineal descendents to whom the option is granted, the lineal
descendants of any spouse or former spouse of the individual to
whom the option is granted, the spouses of the lineal descendants
of any spouse or former spouse of the individual to whom the option
is granted, the estate (and any trust that serves a distributive
function of an estate) of the Permitted Transferee, all trusts that
an individual who is a Permitted Transferee can revoke and all
trusts, corporations, partnerships, limited liability companies and
other entities in which, directly or indirectly, but for the
exercise of a power of appointment or the death of the survivor of
the individual who are Permitted Transferees. Each owner
of an equitable interest is an individual who is a Permitted
Transferee.
(f) Incentive
Stock Options
Incentive stock
options (“ISOs”), as defined in Section 422 of the
Code, may be granted to key employees under the Plan. The decision
to grant ISOs to particular persons is within the Committee’s
discretion. An Option Award Agreement shall specify whether the
Option is intended to be an ISO or a Non-Qualified Stock Option
(“NQSO”). A NQSO is an option that does not
meet the definition of an ISO. ISOs shall not be
exercisable after expiration of ten years from the date of grant.
The amount of ISOs vesting in a particular calendar year for an
option recipient under this Plan and all incentive stock option
plans of the Company or any parent or subsidiary corporation cannot
exceed $100,000, based on the fair market value of the Shares
subject to the options on the date of grant; provided that any
portion of an option that cannot be exercised as an ISO because of
this limitation may be converted by the Committee to another form
of option. If any employee or former employee shall make any
disposition of Shares issued pursuant to the exercise of an ISO
under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), such employee or
former employee shall notify the Company of such disposition within
ten (10) days thereof. The Board may amend the Plan to
comply with Section 422 of the Code or other applicable laws and to
permit options previously granted to be converted to
ISOs.
5.2
Non-Employee Directors
Subject to the
share ownership requirements, options with a term of ten years are
granted to each non-employee director for 4,000 Shares, effective
as of the close of each annual meeting of stockholders at which an
individual is elected a director or following which such individual
continues as a director. Options granted to non-employee
directors shall become exercisable by one-third at the end of each
of the three successive one-year periods since the date of
grant. The exercise price of each option shall be 100%
of the fair market value of Shares underlying the option on the
date of grant.
(b) Termination
of Directorship
An option
awarded to a non-employee director may be exercised any time within
sixty months of the date the director terminates such
status. In the event of a director’s death, the
director’s authorized representative may exercise the option
within sixty months of the date of death, provided that if the
director dies after cessation of director status, the option is
exercisable within sixty-six months of such
cessation. In no event shall an option awarded to a
non-employee director be exercisable beyond the expiration date of
that option.
Section
6. Stock Appreciation Rights
The Committee
may grant “tandem” and “non-tandem” SARs
under the Plan. A tandem SAR shall be granted at the
same time as an option and may be exercised by the recipient as an
alternative to the option. The term of a tandem SAR, its
exercisability and any conditions or restrictions applicable to it
shall be the same as its related option, and its base price shall
be equal to the exercise price of the related option. In
addition, upon the exercise of the option, the tandem SAR (or the
portion related to the exercise) shall expire and upon exercise of
the tandem SAR, the related option (or such portion) shall
expire. The terms of a non-tandem SAR shall be
established by the Committee. A SAR that is not
otherwise designated but is granted at the same time as an option
shall be a tandem SAR.
The Committee
shall determine Company officers and employees to whom SARs shall
be granted, the timing of such grants, and the number of shares
subject to the SAR; provided that the maximum number of Shares upon
which non-tandem SARs may be granted to any employee in any
calendar year shall be 400,000.
The base price
of each non-tandem SAR shall not be less than one hundred percent
of the fair market value of Shares underlying the SAR at the time
the SAR is granted. The fair market value for purposes
of determining the base price shall be the mean between the high
and the low prices at which Shares are traded on the New York Stock
Exchange on the day the SAR is granted. In the event
this method for determining fair market value is not practicable,
fair market value shall be determined by such other reasonable
method as the Committee shall select.
Non-tandem SARs
shall be exercisable in such installments and during such periods
as may be fixed by the Committee at the time of
grant. Non-tandem SARs shall not be exercisable after
the expiration of ten years from the date of grant.
Upon exercise
of an SAR, the recipient shall be entitled to receive from the
Company that number of Shares having an aggregate fair market value
as of the date of exercise equal to the product of (i) the number
of Shares as to which the recipient is exercising the SAR, and (ii)
the excess of the fair market value (at the date of exercise) of a
Share over the base price of the SAR, provided that the Committee
may elect to settle all or a portion of the Company's obligation
arising out of the exercise of an SAR by the payment of cash in an
amount equal to the fair market value as of the date of exercise of
the Shares it would otherwise be obligated to
deliver. The fair market value of Shares for this
purpose shall be the mean between the high and low prices at which
Shares are traded on the New York Stock Exchange on the date of
exercise. Upon exercise of an SAR, any applicable taxes
the Company is required to withhold shall be paid to the
Company. Shares to be received upon exercise may be
surrendered to satisfy withholding obligations.
Notwithstanding
the foregoing or anything herein or in an award document to the
contrary, the Committee, in its sole discretion, shall have the
authority to accelerate the vesting of non-tandem SARs at any time
following the time of grant.
(e) Termination
of Employment
The Committee
may require a period of continued employment before a non-tandem
SAR can be exercised. That p
