THE QUAKER LONG TERM INCENTIVE PLAN OF 1990
(As Amended and Restated Effective as of September 1, 1996)
NAME AND PURPOSE
1.1 Name. The Quaker Long Term Incentive Plan of 1990 (the "Plan")
is established by The Quaker Oats Company (the "Company").
1.2 Purpose. The Company has established the Plan to promote the
interests of the Company and its shareholders by providing officers and other
key employees of the Company and its related affiliates with additional
incentive and the opportunity, through stock ownership, to increase their
proprietary interest in the Company and their personal interest in its
continued success and progress.
2.1 General Definitions. The following words and phrases, when used
herein, unless otherwise specifically defined or unless the context clearly
indicates otherwise, shall have the following meanings:
(a) Affiliate. Any trade or business entity, or a predecessor
of such entity, if any, which is a member of a controlled group of
business entities of which the Company is also a member.
(b) Agreement. The document which evidences the grant of any
Benefit under the Plan and which sets forth the Benefit and the
terms, conditions and provisions of, and restrictions relating to,
(c) Benefit. Any benefit granted to a Participant under the
(d) Board. The Board of Directors of the Company.
(e) Change in Control. Occurrence upon events describe in
(f) Code. The Internal Revenue Code of 1986, as amended, and
including the regulations promulgated pursuant thereto.
(g) Committee. The Committee described in Section 5.1.
(h) Common Stock. The Company's $5.00 par value common stock.
(i) Company. The Quaker Oats Company.
(j) Effective Date. The date that the Plan is approved by the
shareholders of the Company, which must occur within one year before
or after original adoption by the Board. Any grants of Benefits
prior to the approval by the shareholders of the Company shall be
void if such approval is not obtained.
(k) Employee. Any person employed by the Employer as an
officer or key employee.
(l) Employer. The Company and all Affiliates.
(m) Exchange Act. The Securities Exchange Act of 1934, as
(n) Fair Market Value. The mean between the high and low sales
price of shares on the New York Stock Exchange (composite
transactions) on a given date, or, in the absence of sales on a given
date, the closing price (as so reported) on the New York Stock
Exchange on the last previous day on which a sale occurred prior to
(o) ISO. An Option that meets the requirements of Section 422A
of the Code.
(p) NSO. An Option that does not qualify as an ISO.
(q) Option. An option to purchase Shares granted under ARTICLE
XIII of the Plan.
(r) Other Stock Based Award. An award under ARTICLE XVIII that
is valued in whole or in part by reference to, or is otherwise based
on, Common Stock.
(s) Participant. An individual who is granted a Benefit under
the Plan. Benefits may be granted only to Employees.
(t) Performance Share. A Share awarded to a Participant under
ARTICLE XVI of the Plan.
(u) Performance Units. A Benefit awarded to a Participant
under ARTICLE XVII of the Plan.
(v) Plan. The Quaker Long Term Incentive Plan of 1990 and all
amendments and supplements thereto.
(w) Restricted Stock. Shares issued under ARTICLE XV of the
(x) Rule 16b-3. Rule 16b-3 promulgated by the SEC, as amended,
or any successor rule in effect from time to time.
(y) SEC. The Securities and Exchange Commission.
(z) Share. A share of Common Stock.
(aa) Stock Appreciation Right. A Benefit awarded to a
Participant under ARTICLE XIV of the Plan.
2.2 Other Definitions. In addition to the above definitions,
certain words and phrases used in the Plan and any Agreement may be defined
elsewhere in the Plan or in such Agreement.
3.1 Number of Shares. The number of Shares which may be issued or
sold or for which Options, Stock Appreciation Rights, or Performance Shares may
be granted under the Plan shall be 26,000,000 Shares (after adjustment for the
1994 2-for-1 stock split), subject to the provisions of Sections 3.2 and 3.3 of
the Plan. Such Shares may be authorized but unissued Shares, Shares held in
the treasury, or both.
3.2 Reusage. If an Option or Stock Appreciation Right expires or is
terminated, surrendered, or canceled without having been fully exercised, if
Restricted Stock or Performance Shares are forfeited, or if any other grant
results in any Shares not being issued, the Shares covered by such Option or
Stock Appreciation Right, grant of Restricted Stock, Performance Shares or
other grant, as the case may be, shall again be available for use under the
3.3 Adjustments. If there is any change in the Common Stock of the
Company by reason of any stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares, the number of Stock Appreciation Rights and number and
class of shares available for Options and grants of Restricted Stock,
Performance Shares and Other Stock Based Awards and the number of Shares
subject to outstanding Options, Stock Appreciation Rights, grants of Restricted
Stock and Performance Shares, and Other Stock Based Awards, and the price
thereof, as applicable, shall be appropriately adjusted by the Committee.
The Participants and the Benefits they receive under the Plan shall
be determined solely by the Committee. In making its determinations, the
Committee shall consider past, present and expected future contributions of
Employees and Participants to the Employer.
5.1 Committee. The Plan shall be administered by the Committee
(also known as the Compensation Committee of the Board). The Committee shall
consist of members of the Board, who shall not be eligible to participate in
the Plan. The members of the Committee shall be appointed by and shall serve
at the pleasure of the Board, which may from time to time appoint members in
substitution for members previously appointed and fill vacancies, however
caused, in the Committee.
5.2 Authority. Subject to the terms of the Plan, the Committee
shall have complete authority to:
(a) determine the individuals to whom Benefits are granted, the
type and amounts of Benefits to be granted and the time of all such
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;
(c) interpret and construe the Plan and all Agreements;
(d) prescribe, amend and rescind rules and regulations relating
to the Plan;
(e) determine the content and form of all Agreements;
(f) determine all questions relating to Benefits under the
(g) maintain accounts, records and ledgers relating to Benefits;
(h) maintain records concerning its decisions and proceedings;
(i) employ agents, attorneys, accountants or other persons for
such purposes as the Committee considers necessary or desirable;
(j) take, at anytime, any action permitted by Section 9.1
irrespective of whether any Change in Control has occurred or is
(k) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry out the
purposes of the Plan.
5.3 Determinations. All determinations of the Committee shall be
5.4 Delegation. Except as required by Rule 16b-3 with respect to
Benefits to individuals who are subject to Section 16 of the Exchange Act or as
otherwise required for compliance with Rule 16b-3 or other applicable law, the
Committee may delegate all or any part of its authority under the Plan to any
Employee, Employees or committee.
6.1 Power of Board. Except as hereinafter provided, the Board shall
have the sole right and power to amend the Plan at any time and from time to
6.2 Limitation. The Board may not amend the Plan, without approval
of the shareholders of the Company:
(a) in a manner which would increase the number of Shares which
may be issued or sold or for which Options, Stock
Appreciation Rights, or Performance Shares may be granted
under the plan; or
(b) in a manner which would violate applicable law.
TERM AND TERMINATION
7.1 Term. The Plan shall commence as of the Effective Date and,
subject to the terms of the Plan, including those requiring approval by the
shareholders of the Company and those limiting the period over ISOs or any
other Benefits may be granted, shall continue in full force and effect until
December 31, 1998.
7.2 Termination. The Plan may be terminated at any time by the
MODIFICATION OR TERMINATION OF BENEFITS
8.1 General. Subject to the provisions of Section 8.2, the
amendment or termination of the Plan shall not adversely affect a Participant's
right to any Benefit granted prior to such amendment or termination.
8.2 Committee's Right. Any Benefit granted may be converted,
modified, forfeited or canceled, in whole or in part, by the Committee if and
to the extent permitted in the Plan or applicable Agreement or with the consent
of the Participant to whom such Benefit was granted.
CHANGE IN CONTROL
9.1 Benefit Cancellation and Payment.
(a) Options. Upon the occurrence of a Change in Control,
Options outstanding on the date on which the Change in Control occurs
shall be canceled, and an immediate lump sum cash payment shall be paid to
the Participant equal to the product of (1) the higher of (i) the closing
price of the Common Stock as reported on the New York Stock Exchange
Composite Index on or nearest the date of payment (or, if not listed on
such exchange, on a nationally recognized exchange or quotation system on
which trading volume in the Common Stock is highest), or (ii) the highest
per Share price for the Common Stock actually paid in connection with the
Change in Control, over the per Share Option price of each such Option
held (whether or not then fully exercisable), and (2) the number of Shares
covered by each such Option.
(b) Stock Appreciation Rights. Upon the occurrence of a Change
in Control, Stock Appreciation Rights outstanding on the date on which the
Change in Control occurs shall be canceled, and an immediate lump sum cash
payment shall be paid to the Participant equal to the product of (1) the
higher of (i) the closing price of the Common Stock as reported on the New
York Stock Exchange Composite Index on or nearest the date of payment (or,
if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in the Common Stock is highest),
or (ii) the highest per Share price for the Common Stock actually paid in
connection with the Change in Control, over the Fair Market Value of one
Share on the date on which the Stock Appreciation Right was granted, and
(2) the number of such Stock Appreciation Rights held.
(c) Restricted Stock. Upon the occurrence of a Change in
Control, Restricted Stock outstanding on the date on which the Change in
Control occurs shall be canceled and an immediate lump sum cash payment
shall be paid to the Participant equal to the product of (1) the higher
(i) the closing price of Common Stock as reported on the New York Stock
Exchange Composite Index on or nearest the date of payment (or, if not
listed on such exchange, on a nationally recognized exchange or quotation
system on which trading volume in the Common Stock is highest) or (ii) the
highest per share price for Common Stock actually paid in connection with
the Change in Control and (2) the number of Shares of such Restricted
Stock; plus the value of any related Cash Award relating to such
(d) Performance Shares. Upon the occurrence of a Change in
Control, any Performance Shares previously granted, but still considered
outstanding (as a right to received Shares or cash equal to the Fair
Market Value of such Shares at a future date), shall be canceled and any
profit and/or performance objectives with respect to such Performance
Shares shall be deemed to have been attained to the full and maximum
extent; and an immediate lump sum cash payment shall be paid to the
Participant in an amount determined in accordance with the terms and
conditions set forth in the applicable Agreement.
(e) Performance Units. Upon the occurrence of a Change in
Control, any Performance Units previously granted, but still considered
outstanding (as a right to receive cash at a future date), shall be
canceled and any profit and/or performance objectives with respect to such
Performance Units shall be deemed to have been attained to the full and
maximum extent; and an immediate lump sum cash payment shall be paid to
the Participant in an amount determined in accordance with the terms and
conditions set forth in the applicable Agreement.
(f) Other Stock Based Awards and Other Benefits. Upon the
occurrence of a Change in Control, Other Stock Based Awards or other
Benefits previously granted under the Plan, but still considered
outstanding, shall be canceled and an immediate lump sum cash payment
shall be paid to the Participant in an amount determined in accordance
with the terms and conditions set forth in the applicable Agreement.
(g) Tax Penalties. If the making of payments pursuant to the
foregoing paragraphs of this Section 9.1 would subject the Participant to
an excise tax under Section 4999 of the Code, or would result in the
Company's loss of a federal income tax deduction for those payments
(either of these consequences is referred to individually herein as a "Tax
Penalty"), then the Company shall reduce the amount of Benefits to be
canceled to the extent necessary to avoid the imposition of such Tax
Penalty, and shall establish procedures necessary to maintain for the
Participants any form of benefit which may be provided under the Plan so
that such Participant will be in the same financial position with respect
to those Benefits not canceled as he would have been in the ordinary
course, absent a Change in Control and assuming his continued employment;
except that the foregoing provisions of this paragraph (g), with respect
to the cancellation of Benefits, shall not apply if such Participant (i)
is entitled to a tax reimbursement for such Tax Penalty under any other
agreement, plan or program of the Company, or (ii) may disclaim any
portion of or all payments to be made pursuant to or under any other
agreement, plan or program of the Company in order to avoid such Tax
Penalty. Disagreements as to whether payments pursuant to the foregoing
would result in the imposition of a Tax Penalty shall be resolved by an
opinion of counsel chosen by the Participant and reasonably satisfactory
to the Company.
9.2 Change in Control. A Change in Control shall be deemed to have
(a) any "Person," which shall mean a "person" as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding voting
securities; provided, however, that this paragraph (a) shall not apply to
any Person who becomes such a beneficial owner of such Company securities
pursuant to an agreement with the Company approved by the Board, entered
into before such Person has become such a beneficial owner of Company
securities representing 5% or more of the combined voting power of the
Company's then outstanding voting securities;
(b) during any period of 24 consecutive months (not including
any period prior to September 11, 1996), individuals, who at the beginning
of such period constitute the Board, and any new director (other than a
director designated by a Person who has entered into an agreement with the
Company to effect a transaction described in paragraph (a), (c) (2) or (d)
of this Section) whose election by the Board, or whose nomination for
election by the Company's stockholders, was approved by a vote of at least
two-thirds (2/3) of the directors before the beginning of the period cease
for any reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve (1) a plan of
complete liquidation of the Company or (2) the sale or disposition by the
Company of all or substantially all of the Company's assets unless the
acquirer of the assets or its directors shall meet the conditions for a
merger or consolidation in subparagraphs (d) (1) or (d) (2); or
(d) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other than:
(1) such a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 70% of
the combined voting power of the Company's or such surviving entity's
outstanding voting securities immediately after such merger or
(2) such a merger or consolidation which would result in
the directors of the Company who were directors immediately prior thereto
continuing to constitute at least 50% of the directors of the surviving
entity immediately after such merger or consolidation.
In this paragraph (d), "surviving entity" shall mean only an entity in which
all of the Company's stockholders immediately before such merger or
consolidation become stockholders by the terms of such merger or consolidation,
and the phrase "directors of the Company who were directors immediately prior
thereto" shall include only individuals who were directors of the Company at
the beginning of the 24 consecutive month period preceding the date of such
merger or consolidation, or who were new directors (other than any director
designated by a Person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a), (c)(2), (d)(1) or (d)(2) of
this Section) whose election by the Board, or whose nomination for election by
the Company's stockholders, was approved by a vote of at least two-thirds (2/3)
of the directors before the beginning of such period.
AGREEMENTS AND CERTAIN BENEFITS
10.1 Grant Evidenced by Agreement. The grant of any Benefit under
the Plan may be evidenced by an Agreement which shall describe the specific
Benefit granted and the terms and conditions of the Benefit. The granting of
any Benefit may be subject to, and conditioned upon, the recipient's execution
of any Agreement required by the Committee. Except as otherwise provided in an
Agreement, all capitalized terms used in the Agreement shall have the same
meaning as in the Plan, and the Agreement shall be subject to all of the terms
of the Plan.
10.2 Provisions of Agreement. Each Agreement shall contain such
provisions that the Committee shall determine to be necessary, desirable and
appropriate for the Benefit granted. Each Agreement may include, but shall not
be limited to, the following with respect to any Benefit: description of the
type of Benefit; the Benefit's duration; its transferability; if an Option, the
exercise price, the exercise period and the person or persons who may exercise
the Option; the effect upon such Benefit of the Participant's death or
termination of employment; the Benefit's conditions; when, if and how any
Benefit may be forfeited, converted into another Benefit, modified, exchanged
for another Benefit, or replaced; and the restrictions on any Shares purchased
or granted under the Plan.
10.3 Certain Benefits. Any Benefit granted to an individual who is
subject to Section 16 of the Exchange Act shall not be transferable other than
by will or the laws of descent and distribution and shall be exercisable during
his lifetime only by him, his guardian or his legal representative.
REPLACEMENT AND TANDEM AWARDS
11.1 Replacement. The Committee may permit a Participant to elect
to surrender a Benefit in exchange for a new Benefit.
11.2 Tandem Awards. Benefits may be granted by the Committee in
tandem. However, no Benefit may be granted in tandem with an ISO except a
Stock Appreciation Right.
PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING
12.1 Payment. Upon the exercise of an Option or in the case of any
other Benefit that requires a payment to the Company, the amount due the
Company is to be paid:
(a) in cash;
(b) by the tender to the Company of Shares owned by the
Participant and registered his name having a Fair Market Value equal to
the amount due to the Company;
(c) in other property, rights and credits, including the
Participant's promissory note; or
(d) by any combination of the payment methods specified in (a),
(b) and (c) above.
Notwithstanding the foregoing, any method of payment other than (a) may be used
only with the consent of the Committee, or if and to the extent so provided in
the applicable Agreement.
12.2 Dividend Equivalents. Grants of Benefits in Shares or Share
equivalents may include dividend equivalent payments or dividend credit rights.
12.3 Deferral. The right to receive any Benefit under the Plan may,
at the request of the Participant, be deferred for such period and upon such
terms as the Committee shall determine, which may include crediting of interest
on deferrals of cash and crediting of dividends on deferrals denominated in
12.4 Withholding. The Company, at the time any distribution is made
under the Plan, whether in cash or in Shares, may withhold from such
distribution any amount necessary to satisfy federal, state and local tax
withholding requirements with respect to such distribution. Such withholding
may be in cash or in Shares.
13.1 Types of Options. It is intended that both ISOs and NSOs may
be granted by the Committee under the Plan.
13.2 Shares for ISOs. The number of Shares for which ISOs may be
granted on or after the Effective Date shall not exceed 26,000,000 Shares,
subject to the overall Plan limitations, permitted reusage and adjustments
provided for in ARTICLE III.
13.3 Grant of Options and Option Price. Each Option must be granted
to an Employee and must be granted no later than December 31, 1998. No single
employee may be granted more than 1,000,000 Options (after adjustment for the
1994 2-for-1 stock split) during any Fiscal Year of the Company. The purchase
price for Shares under any Option shall be no less than the Fair Market Value
of the Shares at the time the Option is granted.
13.4 Early Termination of Option.
(a) Termination of Employment. All rights to exercise an
Option terminate when the Participant's employment terminates for any
reason other than his death or retirement. Transfer from the Company
to an Affiliate, or vice versa, or from one Affiliate to another, shall
not be deemed termination of employment. The Committee shall have the
authority to determine in each case whether an authorized leave of
absence or absence on military or government service shall be deemed a
termination of employment for purpose of this paragraph (a).
(b) Death or Retirement. Effective for Options granted
after November 9, 1994, if a Participant dies while an Employee or his
employment is terminated because of retirement, his Option shall
terminate within a period not exceeding five years following his death
or retirement, but not later than the date the Option expires pursuant
to its terms. The terms of Options outstanding, except for those
Options intended to qualify as an ISO, may also be amended at anytime
by the Committee or the Board to extend the Option's duration period
following a Participant's death or retirement, subject to the
limitations stated in the preceding sentence. In the meantime, subject
to the limitations in the applicable Agreement, it may be exercised by
the Participant, the executors or administrators of his estate, or by
his legatee or heirs. "Retirement" shall mean termination of
employment at age 55 for older for reasons other than death.
13.5 Other Requirements. The terms of each Option which is intended
to qualify as an ISO shall meet all requirements of Section 422 of the Code.
The terms of each NSO shall provide that such Option will not be treated as an
13.6 Determination by Committee. Except as otherwise provided in
Section 13.2 through Section 13.5, the terms of all Options shall be determined
by the Committee.
STOCK APPRECIATION RIGHTS
14.1 Description. The Committee may from time to time grant Stock
Appreciation Rights. Upon electing to receive payment of a Stock Appreciation
Right, a Participant shall receive an amount in cash, in Common Stock or in any
combination thereof, as the Committee shall determine, equal to the amount, if
any, by which the Fair Market Value of one Share on the date on which such
election is made exceeds the Fair Market Value of one Share on the date on
which the Stock Appreciation Right was granted.
14.2 Grant of Tandem Award. The Committee may grant a Stock
Appreciation Right in tandem with another Benefit, in which case: the exercise
of the other Benefit shall cause a correlative reduction in Stock Appreciation
Rights standing to a Participant's credit which were granted in tandem with the
other Benefit, and the payment of a Stock Appreciation Right shall cause a
correlative reduction of the Shares under such other Benefit.
14.3 ISO Tandem Award. When a Stock Appreciation Right is granted in
tandem with ISO, it shall have such terms and conditions as shall be required
for the ISO with which it is granted in tandem to qualify as an ISO.
14.4 Payment of Award. A Stock Appreciation Right shall be paid, to
the extent payment is elected by the Participant (and is otherwise due and
payable), as soon as practicable after the date on which such election is
15.1 Description. The Committee may grant Benefits in Shares
available under ARTICLE III of the Plan as Restricted Stock. Shares of
Restricted Stock shall be issued at the time of the grant but shall be subject
to forfeiture until provided otherwise in the applicable Agreement or the Plan.
15.2 Terms and Conditions of Restricted Stock Awards. All Shares of
Restricted Stock shall be subject to the following terms and conditions, and to
such other terms and conditions as may be provided under the Agreements
described in paragraph (f) next below:
(a) Payment of Par Value. The Committee, in its discretion,
may condition any grant of Shares of Restricted Stock on payment by the
Participant to the Company of an amount not in excess of the par value of
such Shares. If any such shares are subsequently forfeited by the
Participant, the Company shall pay an equivalent amount to the Participant
as soon as practicable after the forfeiture.
(b) Restricted Period. Shares of Restricted Stock granted to a
Participant may not be sold, assigned, transferred, pledged or otherwise
encumbered during a "Restricted Period" commencing on the date of the
grant and ending on such date as the Committee may designate, subject to
(1) The Committee may, at any time and in its sole
discretion, reduce or terminate the Restricted Period with
respect to any outstanding Shares of Restricted Stock, any
accrued dividends in accordance with paragraph (g) below, and
any corresponding Cash Award pursuant to Section 15.3.
(2) The Restricted Period applicable to any Participant's
Shares of Restricted Stock shall end as of the date on which the
Participant's employment with the Company and its Affiliates is
terminated by reason of the Participant's death, physical or
mental disability (as determined by the Committee), or for such
other reasons as the Committee may provide.
(3) The Committee may, at any time, and in its sole
discretion, allow a Participant to use his Restricted Stock
during the Restricted Period as payment of the Option price (in
accordance with Section 12.1) for Options which he has been
granted. In such an event, a number of the Shares issued upon
the exercise of the Option, equal to the number of Shares of
Restricted Stock used as payment therefore, shall be subject to
the same restrictions as the Restricted Stock so used, plus any
additional restrictions that may be imposed by the Committee.
Such terms and conditions relating to such use of Restricted
Stock shall be provided under the Agreements described in
paragraph (f) of this Section.
(c) Transfer of Restricted Stock. At the end of the
Restricted Period applicable to any Restricted Stock, such Shares, any
accrued dividends and any corresponding Cash Award, will be transferred
free of all restrictions to the Participant (or, to the Participant's
legal representative, beneficiary or heir).
(d) Forfeitures. Subject to paragraph 15.2(b), a Participant
whose employment with the Company and its Affiliates is terminated prior
to the last day of the applicable Restricted Period shall forfeit all
shares of Restricted Stock, and any accrued dividends, and any
corresponding Cash Award.
(e) Certificate Deposited With Company. Each certificate
issued in respect of Shares of Restricted Stock granted to a Participant
under the Plan shall be registered in the name of the Participant and
deposited, together with a stock power endorsed in blank, with the
Company. At the discretion of the Committee, any such certificates may be
deposited in a bank designated by the Committee. Each such certificate
shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeitures) contained in The Quaker
Long Term Incentive Plan of 1990 and an Agreement entered
into between the registered owner and The Quaker Oats
Company. A copy of the Plan and Agreement is on file in
the office of the Secretary of The Quaker Oats Company, 321
North Clark Street, Chicago, Illinois 60610."
(f) Restricted Stock Agreement. The Participant shall enter
into an Agreement with the Company in a form specified by the Committee
and containing such additional terms and conditions, if any, as the
Committee in its sole discretion shall determine, which are not
inconsistent with the provisions of the Plan.
(g) Dividends. Regular cash dividends payable with respect to
shares of Restricted Stock shall, in accordance with the terms of the
applicable Agreement, be paid to the Participant currently or accrued. If
dividends are accrued, interest may be payable on such dividends at such
rate, if any, as is established from time to time by the Committee.
(h) Substitution of Rights. Prior to the end of the Restricted
Period with respect to any Shares of Restricted Stock awarded to a
Participant, the Committee may, with the consent of the Participant,
substitute an unsecured obligation of the Company to pay cash or stock
(on such reasonable terms and conditions as the Committee may, in its sole
discretion, determine) in lieu of its obligations under this ARTICLE XV to
deliver unrestricted Shares plus accrued dividends.
(i) Stockholder Rights. Subject to the foregoing restrictions,
each Participant shall have all the rights of a stockholder with respect
to Shares of Restricted Stock including, but not limited to, the right to
vote such Shares.
15.3 Cash Awards and Restricted Stock. The Committee, at the time it
grants Restricted Stock to a Participant or at any time thereafter may grant a
corresponding Cash Award which will entitle the Participant to receive cash as
of the date as of which the Restricted Stock is transferred to him pursuant to
paragraph 15.2(c), in an amount which is not in excess of 200 percent of the
Fair Market Value of the Restricted Stock as of that date. Any such Cash Award
shall be in addition to the Participant's rights to the Shares of Restricted
Stock and shall be subject to such additional terms and conditions, if any, as
the Committee determines which are not inconsistent with the terms and
conditions of the Plan. The Committee may, at any time, grant unrestricted
Shares (in lieu of such a Cash Award and subject to the limitations thereof) to
any participant under the Plan subject to such terms and conditions as the
Committee may determine.
16.1 Description. Performance Shares are the right of an individual
to whom a grant of such Shares is made to receive Shares or cash equal to the
Fair Market Value of such Shares at a future date in accordance with the terms
of such grant. Generally, such right shall be based upon the attainment of
profit and/or performance objectives.
16.2 Grant. The Committee may grant an award of Performance Shares.
The number of Performance Shares and the terms and conditions of the grant
shall be set forth in the applicable Agreement.
17.1 Description. Performance Units are the right of an individual
to whom a grant of such Units is made to receive cash at a future date in
accordance with the terms of such grant. Generally, such right shall be based
upon the attainment of profit and/or performance objectives.
17.2 Grant. The Committee may grant an award of Performance Units.
The number of Performance Units and the terms and conditions of the grant shall
be set forth in the applicable Agreement.
OTHER STOCK BASED AWARDS AND OTHER BENEFITS
18.1 Other Stock Based Awards. The Committee shall have the right to
grant Other Stock Based Awards which may include, without limitation, the grant
of Shares based on certain conditions, the payment of cash based on the
performance of the Common Stock, and the grant of securities convertible into
18.2 Other Benefits. The Committee shall have the right to provide
types of Benefits under the Plan in addition to those specifically listed, if
the Committee believes that such Benefits would further the purposes for which
the Plan was established.
19.1 Underscored References. The underscored references contained in
the Plan are included only for convenience, and they shall not be construed as
a part of the Plan or in any respect affecting or modifying its provisions.
19.2 Number and Gender. The masculine and neuter, wherever used in
the Plan, shall refer to either the masculine, neuter or feminine; and, unless
the context otherwise requires, the singular shall include the plural and the
plural the singular.
19.3 Governing Law. This Plan shall be construed and administered in
accordance with the laws of the State of Illinois.
19.4 Purchase for Investment. The Committee may require each person
purchasing Shares pursuant to an Option or other award under the Plan to
represent to and agree with the Company in writing that such person is
acquiring the Shares for investment and without a view to distribution or
resale. The certificates for such Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer. All
certificates for Shares delivered under the Plan shall be subject to such stock-
transfer orders and other restrictions as the Committee may deem advisable
under all applicable laws, rules and regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
19.5 No Employment Contract. The adoption of the Plan or the
granting of a Benefit shall not confer upon any Employee any right to continued
employment nor shall it interfere in any way with the right of the Employer to
terminate the employment of any of its Employees at any time.
19.6 No Effect on Other Benefits. The receipt of Benefits under the
Plan shall have no effect on any benefits to which a Participant may be
entitled from the Employer, under another plan or otherwise, or preclude a
Participant from receiving any such benefits.
IN WITNESS WHEREOF, this Program is executed by a duly
authorized officer of the Company.
THE QUAKER OATS COMPANY
October 14, 1996 By: /s/Douglas J. Ralston
Its Senior Vice President