Exhibit 4.3
CITIZENS UTILITIES COMPANY
MANAGEMENT EQUITY INCENTIVE PLAN
SECTION 1. Purpose
The
purpose of the Citizens Utilities Company Management Equity Incentive
Plan (the "Plan") is
to provide additional
compensation
incentives
for high
levels of performance and productivity by employees of the
Company's operations.
The Plan is intended to strengthen the Company's existing operations and its
ability to attract and retain outstanding management and employees upon whose
judgment, initiative
and efforts the continued success, growth and development
of the Company is dependent. The Plan would constitute the first
incentive award
plan of its type adopted by the Company.
SECTION 2. Definitions
When
used herein, the following terms have the following meanings:
(a)
"Affiliate" means any
company controlled by
the Company,
controlling
the Company or under common control with the Company.
(b)
"Award" means an award
granted to any Eligible Employee in accordance
with the provisions of the Plan.
(c)
"Award Agreement" means the written agreement or certificate
evidencing the terms
of the Award granted
to an Eligible Employee
under the Plan.
(d)
"Beneficiary"
means the beneficiary or beneficiaries designated
pursuant to Section 11 to receive the amount, if any, payable under
the Plan upon the death of an Eligible Employee.
(e)
"Board" means the
Board of Directors of the Company.
(f)
"Code" means the
Internal Revenue Code of 1986, as now in effect or as
hereafter amended.
(All citations to Sections of the Code are to such
Sections as they
are currently designated and reference to such
Sections shall include the provisions thereof as they may from time
to
time be amended or renumbered as well as any successor
provisions.)
(g)
"Company" means Citizens Utilities Company, and its successors and
assigns.
(h)
"Committee"
means the Committee appointed by the Board
pursuant to
Section 12.
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(i)
"Deferred Stock" means Stock credited to an Eligible
Employee under
the Plan subject to the requirements of Section 8 and such other
terms
and restrictions as the Committee deems appropriate or
desirable.
(j)
"Effective Date" means
June 22, 1990.
(k)
"Eligible Employee" means an employee of any
Participating
Company
whose responsibilities and decisions in the judgment of the
Committee,
directly affect the management, performance or profitability of any
Participating Company.
Where required by the context, "Eligible
Employee" includes an
individual who has been granted an Award but is
no longer an employee of any Participating Company.
(l)
"Fair Market Value" means, unless another reasonable method for
determining fair
market value is
specified by the Committee, the
average of the high and low sales prices of a share of the
appropriate
Series of Stock as reported by the NASDAQ National Market System (or
if such shares
are listed on a
national stock
exchange or another
national quotation
system, as reported or
quoted by such exchange or
system) for the date
in question or, if no
such sales were
reported
for such date, for the
most recent date on
which sales
prices were
quoted.
(m)
"Option" means an
option to purchase Stock, including Restricted Stock
or Deferred Stock,
if the Committee so determines, subject to the
applicable provisions
of Section 5 and awarded in accordance with the
terms of the Plan and which may be an incentive stock option
qualified
under Section 422 of the Code or a nonqualified stock option.
(n)
"Participating
Company" means the Company or any
subsidiary or other
affiliate of the
Company; provided,
however, for incentive stock
options only,
"Participating
Company"
means the Company, any
corporation which at
the time such option
is granted under the
Plan
qualifies as a
subsidiary
of the Company
under the definition of
"subsidiary corporation" contained in Section 425(f) of the
Code.
(o)
"Performance
Share"
means a performance share subject to the
requirements of
Section 6 and awarded in accordance with the terms of
the Plan.
(p)
"Plan" means the Citizens Utilities Company Management Equity
Incentive Plan,
as the same may be amended, administered or
interpreted from time to time.
(q)
"Restricted Stock"
means Stock delivered under the Plan subject to the
requirements of Section 7 and such other terms and restrictions as
the
Committee deems appropriate or desirable.
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(r)
"SAR" means a stock appreciation right subject to the appropriate
requirements under
Section 5 and awarded in accordance with the terms
of the Plan.
(s)
"Stock" means the
Series A or Series B Common Stock of the Company and
any successor Common Stock.
(t)
"Total Disability" means the complete and permanent
inability of an
Eligible Employee to
perform all of his or her duties under the terms
of his or her employment with any Participating Company, as
determined
by the Committee upon the basis of such evidence, including
independent medical reports and data, as the Company deems
appropriate
or necessary.
SECTION 3. Shares
Subject to the Plan
(a)
The maximum number of
shares of Stock which may be issued pursuant to
Awards under the Plan at any time is 5% of the issued and
outstanding
shares of Stock as determined at that time; provided that no more
than
2.2 million shares of Stock may be issued pursuant to incentive stock
options under the
Plan. In the
event that the number of shares of
Stock subject to
Awards or issued at any one time is in excess of the
above-stated 5% limit,
the number need not be
reduced if such excess
has resulted
solely from a reduction in the amount of issued and
outstanding shares of
Stock subsequent
to the time that such
awards
were granted or such
shares were issued.
Such shares
shall be made
available either from
authorized or unissued
shares, shares held
by
the Company in its treasury or reacquired shares. The term "issued"
shall include all
deliveries
to an Eligible Employee of shares of
Stock pursuant to
Awards under the Plan.
The Committee
may, in its
discretion, decide to
award other shares
issued by the Company
that
are convertible into
Stock or make such shares subject to purchase by
an Option, in which
event the maximum
number of shares of Stock into
which such
shares may be
converted shall be used in applying the
aggregate share limit
under this Section 3 and all provisions of the
Plan relating
to Stock shall apply with full force and effect
with
respect to such convertible shares.
(b)
If, for any reason,
any shares of Stock awarded or subject to purchase
or issuance under the
Plan are not delivered or are reacquired by the
Company for reasons
including, but not
limited to, a
forfeiture of
Restricted Stock or
Deferred Stock or
termination,
expiration or a
cancellation of an Option, SAR or a Performance Share, such
shares of
Stock shall be deemed not to have been issued pursuant to Awards
under
the Plan.
(c)
Shares of Stock received by the Company in connection with the
exercise of Options by delivery of shares or in connection with the
payment of withholding
taxes shall reduce the number of shares deemed
to have been issued
pursuant to Awards under the Plan for the purpose
of the 5% limit, but
not for the purpose
of the 2.2
million share
limit, both discussed in Section 3(a) hereof.
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SECTION 4. Grant of
Awards and Award Agreements
(a)
Subject to the provisions of the Plan, the Committee shall (i)
determine and designate from time to time those Eligible
Employees or
groups of Eligible
Employees to whom
Awards are to be granted; (ii)
grant Awards to Eligible Employee; (iii) determine the form or
forms
of Award to be granted to any Eligible Employee; (iv) determine the
amount or number of
shares of Stock,
including Restricted
Stock or
Deferred Stock if the Committee-so determines, subject to each Award;
(v) determine the terms and conditions (which need not be identical)
of each Award; (vi) establish and modify performance objectives;
(vii)
determine whether
and to what
extent Eligible Employees shall be
allowed or required to
defer receipt of any
Awards or other
amounts
payable under the Plan to the occurrence of a specified date or
event;
(viii) determine
the price at which
shares of Stock may be
offered
under each Award which
price may, except in
the case of Options,
be
zero; (ix) interpret, construe and administer the Plan and any
related
award agreement and define the terms employed therein; and (xi) make
all of the
determinations
necessary or advisable with respect to the
Plan or any Award granted thereunder.
(b)
Each Award granted under the Plan shall be
evidenced by a written
Award Agreement, in a
form approved by the Committee. Such agreement
shall be subject to and incorporate the express terms and
conditions,
if any, required under
the Plan or as required by the: Committee for
the form of Award
granted and such other terms and conditions as the
Committee may specify.
(c)
The Committee may modify or amend any Awards
(by cancellation and
regrant or
substitution
of Awards or
otherwise and with terms and
conditions more or less favorable to Eligible Employees) or waive any
restrictions or,
conditions applicable
to any Awards or the exercise
or realization
thereof (except that the Committee may not
undertake
any such
modifications,
amendments or waivers if the effect thereof,
taken as a whole,
adversely and materially affects the rights of any
recipient of
previously granted
Awards without his or her consent,
unless such
modification,
amendment
or waiver is necessary or
desirable for the
continued validity of the Plan or its
compliance
with Rule 16b-3 or any successor rule under the Securities Exchange
Act of 1934 or any other rule or regulation.
(d)
The Committee
may permit the
voluntary surrender of
all or a portion
of any Award
granted under the Plan to be conditioned upon the
granting of a new Award or may require such voluntary surrender as a
condition to a grant
of a new Award.
Any such new Award shall be
subject to such terms and conditions as are specified by the
Committee
at the time the new Award is granted, determined in accordance with
the provisions
of the Plan without regard to the terms of the
surrendered Award.
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SECTION 5. Stock Options and Stock Appreciation Rights
(a)
With respect to the Options and SARs, the Committee shall (i)
authorize the granting of incentive stock options, nonqualified stock
options, SARs
or a combination of incentive stock options,
nonqualified stock
options and SARS;
(ii) determine the number of
shares of Stock
subject to each
Option or the number of shares of
Stock that
shall be used to
determine the value of a SAR; (iii)
determine whether
such Stock shall be Restricted Stock or, with
respect to nonqualified stock options, Deferred Stock; (iv) determine
the time or times when and the manner in which each Option shall be
exercisable and the duration of the exercise period; and (v)
determine
whether or not
all or part of each
Option may be canceled by the
exercise of a SAR; provided, however, that the aggregate Fair Market
Value (determined
as of the date of
Option is granted) of
the Stock
(disregarding any
restrictions in the
case of Restricted
Stock) for
which incentive stock
options granted to any Eligible Employee under
this Plan may first become exercisable in any calendar year
shall not
exceed $100,000.
Notwithstanding
the foregoing,
to the extent that
incentive stock
options granted to an
Eligible Employee
under this
Plan for any reason exceed such limit on exercisability, the options
shall be treated as
nonqualified stock
options as provided under
Section 422(d) of the
Code, but shall in all
other respects
remain
outstanding and exercisable in accordance with their terms.
(b)
The exercise
period for a
nonqualified
stock option or SAR
shall be
ten years from the date of grant or such
shorter period as may be
specified by the Committee at the time of grant. The exercise period
for an incentive
stock option and any related
SAR, including any
extension which the
Committee may from
time to time decide to grant,
shall not exceed ten years from the date of grant; provided,
however,
that, in the case of an incentive stock option granted to an
Eligible
Employee who, at the time of grant, owns stock possessing more than
10
percent of the total combined voting power of all classes of
stock of
the Company (a "Ten
Percent Stockholder"),
such period, including
extensions, shall not exceed five years from the date of grant.
(c)
The Option or SAR
price per share shall be determined by the Committee
at the time any Option is granted and shall be not less than the
Fair
Market Value, or, in
the case of an incentive stock option granted to
a Ten Percent
Stockholder and any related tandem SARS, 110 percent of
the Fair Market Value,
disregarding any
restrictions in the
case of
Restricted Stock or Deferred Stock, on the date the Option is
granted,
as determined by the
Committee; provided,
however, that such price
shall be at least equal to the par value of one share of Stock.
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(d)
No part of any Option
or SAR may be
exercised until (i)
the Eligible
Employee who has been
granted the Award
shall have
remained in the
employ of a Participating Company for such period,
if any, after the
date on which the Option or SAR is granted, and (ii) achievement of
such performance or other criteria, if any, by the Eligible
Employee,
as the Committee may
specify, and the
Committee may further
require
that an Option or SAR become exercisable in installments; provided,
however, the
period during which a SAR or related Option is
exercisable shall
commence no earlier
than six months
following the
date
the Option or SAR is granted.
(e)
Except as otherwise
provided in the Plan,
the purchase
price of the
shares as to which an Option shall be exercised shall be paid to the
Company at the
time of exercise either in cash or in such other
consideration as the Committee deems appropriate, including, Stock,
or
with respect to
nonqualified options,
Restricted
Stock or Deferred
Stock, already owned
by the optionee
(subject to any minimum holding
period specified by the Committee), having a total Fair Market
Value,
as determined by the
Committee,
equal to the purchase
price, or a
combination of cash and such other consideration having a total Fair
Market Value, as so determined, equal to the purchase price;
provided,
however, that if
payment of the exercise price is made in whole or in
part in the form of
Restricted Stock or
Deferred Stock, the Stock
received upon the exercise of the Option shall be Restricted
Stock or
Deferred Stock, as the
case may be, at least with respect to the same
number of shares and subject to the same restrictions or other
limitations as the
Restricted
Stock or Deferred Stock paid on the
exercise of the Option. The Committee may provide that an Eligible
Employee who pays the exercise price of an Option, or the withholding
taxes related
to an Option
Exercise, with shares of Stock, shall
receive a replacement
Option to purchase a
number of shares of Stock
equal to the number of shares so paid to the Company. The replacement
Option shall have an exercise price equal to the Fair Market
Value on
the date of such
payment and
shall include such other terms and
conditions as the Committee may specify.
(f)
(i) If an Eligible
Employee who has been granted an Option or SAR dies
(A) while an employee of any Participating Company or (B) within
three
months after
termination
of his or her employment with all
Participating Companies because of his or her Total Disability, his
or
her Options or SARs may be exercised, to the extent that the
Eligible
Employee shall have
been entitled to do so
on the date of his or her
death or such
termination of employment, by the person or persons to
whom the Eligible
Employee's
rights under the
Option or SAR pass by
will, or if no such person has such right, by his or her executors or
administrators, at any
time, or from time to time, within twelve
months after the date of the Eligible Employee's death or within
such
other period,
and subject to such terms and conditions as the
Committee may
specify, but not later than the expiration date
specified in Section 5(b) above.
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(ii) If the
Eligible Employee's employment by any Participating
Company terminates
because of his or her
Total Disability
and such
Eligible Employee has
not died within the following three months, he
or she may exercise his or her Options and SARs, to the extent that
he
or she shall have been entitled to do so at the date of the
termination or his or
her employment,
at any time,
or from time to
time, within twelve months after the date of the termination of his
or
her employment or within such other period, and subject to such terms
and ocnditions as the
Committee may specify,
but not later than
the
expiration date specified in Section 5 (b) above.
(iii) If the Eligible Employee's employment terminates for any other
reason, he or she
may exercise his or her Options or SARs to the
extent that eh or she shall have been entitled to do so at the date
of
the termination of his
or her employment or within such other period,
and subject to such terms and conditions as the Committee may
specify,
but not later than the
expiration date
specified in Section 5(b)
above.
(g)
No Option or SAR
granted under the Plan
shall be transferable
other
than by will or by the laws of descent and distribution. During the
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