1
EXHIBIT 10.7
WASHINGTON MUTUAL
RESTRICTED STOCK PLAN
AS AMENDED AND RESTATED AS OF JANUARY 18, 2000
2
WASHINGTON MUTUAL RESTRICTED STOCK PLAN
TABLE OF CONTENTS
Page
----
ARTICLE 1. PURPOSE OF THE PLAN
ARTICLE 2. DEFINITIONS
2.1 Affiliate......................................................... 1
2.2 Agreement......................................................... 1
2.3 Award............................................................. 1
2.4 Board............................................................. 1
2.5 Code.............................................................. 2
2.6 Committee......................................................... 2
2.7 Company........................................................... 2
2.8 Exchange Act...................................................... 2
2.9 Grant Date........................................................ 2
2.10 Participant....................................................... 2
2.11 Plan.............................................................. 2
2.12 Restricted Stock.................................................. 2
2.13 Stock............................................................. 2
2.14 Unrestricted Stock................................................ 2
ARTICLE 3. ADMINISTRATION
3.1 Administration of Plan............................................ 2
3.2 Authority to Grant Awards......................................... 2
3.3 Participants' Accounts............................................ 3
3.4 Transfer of Unrestricted Stock.................................... 3
3.5 Discretionary Authority of Committee.............................. 4
3.6 Persons Subject to Section 162(m)................................. 5
3.7 Shareholder Rights................................................ 5
ARTICLE 4. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation..................................................... 5
4.2 Limitations on Grants............................................. 5
ARTICLE 5. STOCK SUBJECT TO PLAN
5.1 Maximum Number of Shares.......................................... 5
ARTICLE 6. RESTRICTIONS AND FORFEITURES
6.1 General Restrictions.............................................. 6
6.2 Termination of Employment......................................... 6
6.3 Retirement........................................................ 6
6.4 Lapse of Restrictions - General................................... 6
6.5 Employee Status................................................... 7
-i-
3
6.6 Performance-Based Grants.......................................... 7
6.7 Surrender of Restricted Stock..................................... 9
ARTICLE 7. ADJUSTMENT UPON CORPORATE CHANGES
7.1 Adjustments to Shares............................................. 9
7.2 Substitution of Awards on Merger or Acquisition................... 10
7.3 Effect of Certain Transactions.................................... 10
7.4 No Preemptive Rights.............................................. 11
ARTICLE 8. COMPLIANCE WITH LAW AND APPROVAL
OF REGULATORY BODIES
8.1 General........................................................... 11
8.2 Representations by Participants................................... 11
ARTICLE 9. TAXES
9.1 Immediate Taxation................................................ 11
9.2 Deferred Taxation................................................. 11
ARTICLE 10. GENERAL PROVISIONS
10.1 Effect on Employment.............................................. 12
10.2 Unfunded Plan..................................................... 12
10.3 Rules of Construction............................................. 12
10.4 Governing Law..................................................... 12
10.5 Compliance With Section 16 of the Exchange Act.................... 12
10.6 Amendment......................................................... 12
10.7 Effective Date of Plan............................................ 12
-ii-
4
WASHINGTON MUTUAL RESTRICTED STOCK PLAN
As Amended and Restated as of January 18, 2000
ARTICLE 1. PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Company, to
provide a performance incentive and to align the interests of the Participants
with the interests of the Company, its Affiliates and its shareholders through
increased stock ownership by the Participants. It is intended that Participants
may acquire or increase their proprietary interests in the Company and that
Participant employees will be encouraged to remain in the employ of the Company
or of its Affiliates.
The Plan was established January 1, 1986 as the WM Financial, Inc.
Restricted Stock Plan. Washington Mutual Savings Bank, the prior Plan sponsor,
amended the Plan by a First Amendment, effective as of July 1, 1987, a Second
Amendment, effective as of March 31, 1988, a Third Amendment, effective as of
June 30, 1991, a Fourth Amendment, effective as of June 18, 1991, and a Fifth
Amendment, effective as of October 20, 1992.
By action of the respective boards of directors of Washington Mutual
Savings Bank and the Company, the Company became the sponsor of the Plan,
effective November 29, 1994, after which the Company adopted an amendment and
restatement of the Plan, effective November 29, 1994, that incorporated all
material provisions of the Plan prior to such date and amended the Plan in
certain respects.
The Company amended and restated the Plan, effective February 18, 1997,
and amended the Amended and Restated Plan twice in 1999. Finally, the Plan was
amended by action of the Board of Directors on January 18, 2000, subject to
approval by the shareholders of the Company.
The Board approved this restatement of the Plan to incorporate all such
amendments.
ARTICLE 2. DEFINITIONS
2.1 AFFILIATE. A "parent corporation," as defined in section 424(e)
of the Code, or "subsidiary corporation," as defined in section 424(f) of the
Code, of the Company.
2.2 AGREEMENT. A written agreement (including any amendment or
supplement thereto) between the Company or an Affiliate and a Participant
specifying the terms and conditions of an Award granted to such Participant.
2.3 AWARD. An award under the Plan that is expressed as a stated
number of whole shares of Restricted Stock. An Award shall be subject to the
terms of an Agreement.
2.4 BOARD. The board of directors of the Company.
-1-
5
2.5 CODE. The Internal Revenue Code of 1986, as amended.
2.6 COMMITTEE. A committee composed of two or more members of the
Board who are not officers or employees of the Company or an Affiliate, who are
otherwise qualified as Non-Employee Directors as defined under Rule 16b-3(i) of
the Exchange Act, and who qualify as outside directors as defined in Section
162(m) of the Code.
2.7 COMPANY. Washington Mutual, Inc., successor to Washington Mutual
Savings Bank as Plan sponsor, and its successors.
2.8 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
2.9 GRANT DATE. The date that an Award of Restricted Stock is
granted to a Participant hereunder.
2.10 PARTICIPANT. A person who is awarded Restricted Stock hereunder.
Members of the Board, and employees, consultants and advisors of the Company or
of an Affiliate, are the only persons who are eligible to be Participants.
2.11 PLAN. The Washington Mutual Restricted Stock Plan, as embodied
herein and as amended from time to time, and including all predecessor versions
of this Plan.
2.12 RESTRICTED STOCK. Stock that is awarded subject to restrictions
hereunder and has not become Unrestricted Stock in accordance with Article 6.
2.13 STOCK. The common stock of the Company.
2.14 UNRESTRICTED STOCK. Shares of Stock granted under this Plan that
are no longer subject to restrictions that constitute a substantial risk of
forfeiture, in accordance with Article 6.
ARTICLE 3. ADMINISTRATION
3.1 ADMINISTRATION OF PLAN. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Award. The
Company shall bear all expenses of Plan administration.
3.2 AUTHORITY TO GRANT AWARDS. The Committee shall have authority to
grant Awards upon such terms as the Committee deems appropriate and that are not
inconsistent with the provisions of Articles 4 and 5 of this Plan. Such terms
may include restrictions on the transfer of all or any portion of the Stock
granted under an Award.
-2-
6
3.3 PARTICIPANTS' ACCOUNTS. The Committee shall establish and
maintain adequate records to disclose the Participants and their respective
Awards, the restrictions thereon, the stock certificates related thereto, any
dividends or distributions payable or paid thereon, any votes taken with respect
thereto, and such other matters as may be relevant to the proper administration
of this Plan.
(a) DIVIDENDS AND DISTRIBUTIONS. All cash dividends and
other cash distributions paid in respect of Restricted Stock shall be
credited to the account of the Participant and invested in Stock
pursuant to the Company's general dividend reinvestment program for
shareholders of the Company. All such amounts and their proceeds shall
be subject to the same restrictions on the same basis as the underlying
Restricted Stock and shall be treated as Restricted Stock for all
purposes under this Plan.
(b) FORFEITURES. Upon the occurrence of a forfeiture
hereunder, all shares of Restricted Stock subject to the Award
(including any Restricted Stock purchased with dividends paid on the
underlying Restricted Stock) shall be retained by the Company.
3.4 TRANSFER OF UNRESTRICTED STOCK. The Company shall generally
transfer Unrestricted Stock to the Participant at an administratively feasible
time after the lapse of restrictions hereunder on an Award of Restricted Stock.
Any fractional shares of Unrestricted Stock shall be paid to the Participant in
cash.
(a) TERMINATION OF EMPLOYMENT. Upon the termination of
employment for any reason of a Participant who is an employee of the
Company or an Affiliate (including upon the Participant's death), or
upon such a Participant's retirement or permanent and total disability,
the Company shall deliver to the Participant (or his personal
representative) all Unrestricted Stock held for his account.
(b) DEATH OF PARTICIPANT. Each Participant shall have the
right, at any time, to designate any person or persons as his
beneficiary or beneficiaries (both principal as well as contingent) to
whom all amounts that are otherwise due hereunder after termination of
employment shall be paid upon his death. Each beneficiary designation
shall become effective only when filed in writing with the Committee
during the Participant's lifetime on a form acceptable to the Committee.
(1) If the Participant is married as of the date of
filing a beneficiary designation and names a principal
beneficiary other than his spouse, such designation shall not be
effective unless the spouse consents to the beneficiary
designation in writing, witnessed by a notary public.
(2) The filing of a new beneficiary designation form
as provided herein shall cancel all beneficiary designations
previously filed. Any finalized divorce or marriage (other than
a common law marriage) of a Participant subsequent to the date
of filing a beneficiary designation form, which divorce or
marriage is communicated to the Committee in writing, shall
revoke any prior designation. As
-3-
7
used herein "divorce" includes a dissolution of a marriage or an
annulment of a marriage.
(3) If all designated beneficiaries predecease a
Participant or die prior to complete distribution, the Committee
shall make distributions to the Participant's personal
representative or executor. If a Participant fails to designate
a beneficiary as provided above, the Committee shall make
distributions to the Participant's personal representative or
executor.
3.5 DISCRETIONARY AUTHORITY OF COMMITTEE. The Committee shall have
full discretionary power, subject to, and within the limits of, Articles 4 and 5
of the Plan:
(a) To determine from time to time who of the eligible
persons shall be granted Awards, and the time or times when, and the
number of shares for which, an Award or Awards shall be granted to such
persons.
(b) To prescribe the other terms and provisions (which need
not be identical) of each Award granted under the Plan to eligible
persons.
(c) To modify or amend any term or provision of any Award
granted under the Plan (including without limitation in the ways
described in Sections 3.5 (f), (g) and (h) below), provided that the
consent of the holder thereof must be obtained for any modification or
amendment that reduces the benefits to the holder of the Award.
(d) To construe and interpret the Plan and Awards granted
hereunder, and to establish, amend, and revoke rules and regulations for
administration. The Committee, in the exercise of this power, may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any Award or Agreement, in the manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective. In exercising this power the Committee may retain
counsel at the expense of the Company. All decisions and determinations
by the Committee in exercising this power shall be final and binding
upon the Company and the Participants.
(e) To determine the duration and purposes of leaves of
absence which may be granted to a Participant without constituting a
termination of his or her employment for purposes of the Plan or an
Agreement.
(f) To accelerate the time at which the restrictions on
Restricted Stock granted under an Award will lapse, or otherwise modify
the restrictions on Restricted Stock in a manner favorable to the
Participant.
(g) To determine, for any group or class of Participants,
that restrictions on Restricted Stock shall lapse upon specified events
occurring upon or after a change in control of the Company or an
Affiliate, subject to such terms and limitations as the Committee may
determine.
-4-
8
(h) To waive or modify the application of Section 6.2
(forfeiture of Restricted Stock upon termination of employment) as to
any Award, in whole or in part.
(i) To authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Award
previously granted hereunder.
(j) To interpret the Plan and make any determinations that
are necessary or desirable in the administration of the Plan.
(k) To exercise such powers and to make all other
determinations deemed necessary or expedient to promote the best
interests of the Company with respect to the Plan.
3.6 PERSONS SUBJECT TO SECTION 162(M). Notwithstanding anything in
the Plan to the contrary, the Committee, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of certain
provisions of the Plan by Participants who are officers subject to Section
162(m) of the Code, without so restricting, limiting or conditioning the Plan
with respect to other Participants.
3.7 SHAREHOLDER RIGHTS. Except as provided in Section 6.1, each
Participant shall have, with respect to Restricted Stock, all the rights of a
shareholder of Stock including the right to vote the shares.
ARTICLE 4. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 PARTICIPATION. The Committee may from time to time designate
persons to whom Awards are to be granted from among those who are eligible to
become Participants. Such designation shall specify the number of shares of
Restricted Stock subject to each Award. All Awards granted under this Plan shall
be evidenced by Agreements which shall be subject to applicable provisions of
this Plan or such other provisions as the Committee may adopt that are not
inconsistent with the Plan.
4.2 LIMITATIONS ON GRANTS. Awards may be granted only to persons who
are eligible to be Participants. The maximum number of shares of Stock with
respect to which Awards may be granted to any Participant in any calendar year
under the Plan is 225,000.
ARTICLE 5. STOCK SUBJECT TO PLAN
5.1 MAXIMUM NUMBER OF SHARES. The maximum aggregate number of shares
of Stock that may be issued pursuant to Awards under this Plan (including all
predecessors of this Plan) is two million seventy-five thousand one hundred
twenty-two (2,075,122) shares, subject to adjustments as provided in Article 7
made after January 18, 2000.
-5-
9
ARTICLE 6. RESTRICTIONS AND FORFEITURES
6.1 GENERAL RESTRICTIONS. A Participant shall not be permitted (i)
to sell, transfer, pledge (as collateral for a loan or as security for the
performance of an obligation or for any other purpose) or assign shares of
Restricted Stock awarded (or purchased through dividend or distribution
reinvestment) under the Plan, (ii) to receive payment of any dividends or
distributions made in respect of Restricted Stock, or (iii) to receive a stock
certificate representing Restricted Stock, until, in each case, the restrictions
stated in the Participant's Agreement lapse.
6.2 TERMINATION OF EMPLOYMENT. Upon the termination of employment
for any reason of a Participant who is an employee of the Company or an
Affiliate before the Participant has attained age 60 (including termination
because of the death or permanent disability of the Participant), all Restricted
Stock shall be forfeited without compensation to the Participant, unless
otherwise determined by the Committee.
6.3 RETIREMENT. In the event of a Participant's retirement from the
Company and its Affiliates or a Participant's death or permanent disability
after the Participant has attained age 60, all remaining restrictions on such
Participant's Restricted Stock that relate solely to the Participant's length of
service with the Company or an Affiliate shall automatically be waived.
Restrictions not related solely to the Participant's length of service with the
Company or an Affiliate (such as restrictions tied to the performance of the
Company) shall remain in effect unless otherwise determined by the Committee.
6.4 LAPSE OF RESTRICTIONS - GENERAL. Each Award of Restricted Stock
granted to a Participant shall become Unrestricted Stock according to the terms
established by the Committee and specified in the Participant's Agreement. The
Committee is authorized but not required to subject an Award to the restrictions
described in Schedule A or Schedule B below by setting forth this determination
in the Participant's Agreement.
SCHEDULE A
YEARS OF CONTINUED EMPLOYMENT PERCENTAGE UNRESTRICTED
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
-6-
10
SCHEDULE B
YEARS OF CONTINUED EMPLOYMENT PERCENTAGE UNRESTRICTED
Less than 3 0%
3 but less than 4 33.33%
4 but less than 5 66.67%
5 or more 100%
For purposes of Schedules A and B, unless otherwise determined by the
Committee and stated in the relevant Agreement, a Year of Continued Employment
shall be credited to a Participant with respect to each Award on each March 31,
beginning in the calendar year that follows the Grant Date of an Award, provided
that the Participant has been continuously employed by the Company or one of its
Affiliates since the Grant Date of the Award.
The lapse of restrictions on Restricted Stock (including, if applicable,
the number of Years of Continued Employment) shall be calculated separately with
respect to each Award granted to a Participant.
6.5 EMPLOYEE STATUS. As provided in Section 3.5(e), the Committee
shall determine the extent to which a leave of absence for military or
government service, illness, temporary disability, or other reasons shall be
treated as termination or interruption of employment for purposes of determining
questions of forfeiture and Years of Employment for purposes of the lapse of
restrictions on Restricted Stock.
6.6 PERFORMANCE-BASED GRANTS. The Committee may provide in any Award
for the restrictions on Restricted Stock to lapse upon the Company's attainment
of performance-based goals established by the Committee. Any such Award may, but
need not be, granted under and pursuant to the terms of this Section 6.6. In
addition, the Committee may determine that any performance-based Award granted
by the Committee before the adoption of this Amended and Restated Plan shall be
treated as if granted under this Section 6.6, provided that the Award is
modified so as to comply with the terms of this Section 6.6.
(a) INTENT TO QUALIFY UNDER SECTION 162(M). This Section 6.6
is intended to qualify the Awards granted under it as performance-based
compensation under Section 162(m) of the Code. All Awards granted
pursuant to this Section 6.6 shall be construed in a manner consistent
with that intent.
(b) SHAREHOLDER APPROVAL. As to Awards granted under this
Section 6.6, no Restricted Stock may become Unrestricted Stock until
after the material terms of the performance goals set out below are
disclosed to and approved by the Company's shareholders. To the extent
necessary for Awards under this Section 6.6 to qualify as
performance-based compensation under Section 162(m) of the Code under
then applicable law, the material terms of the performance goals shall
be disclosed to and reapproved by the shareholders no later than the
first shareholder meeting that occurs in
-7-
11
the fifth year following the year in which shareholders previously
approved the performance goals.
(c) BUSINESS CRITERIA ON WHICH PERFORMANCE GOALS SHALL BE
BASED. The lapse of restrictions on Awards granted under this Section
6.6 shall be based on the Company's attainment of performance goals
based on one or more of the following business criteria:
Return on average common equity.
Return on average equity.
Efficiency ratio (other expense as a percentage of other income
plus net interest income), either before or after amortization
of intangible assets (goodwill).
Net operating expense (other income less other expense), either
before or after amortization of intangible assets (goodwill).
Earnings per diluted share of common stock.
Operating earnings (earnings before transaction-related expense)
per diluted share of common stock, either before or after
amortization of intangible assets (goodwill).
Return on average assets.
Ratio of nonperforming assets to total assets.
Return on an investment in an affiliate.
These business criteria shall be construed consistent with the use of
the same terms in Washington Mutual's published financial statements.
All business criteria other than earnings per diluted share of common
stock shall exclude transaction-related expense unless otherwise
determined by the Compensation Committee in selecting the business
criteria for a particular Award pursuant to Section 6.6(d) below. In
selecting any business criteria other than earnings per diluted share of
common stock, the Compensation Committee may elect, pursuant to Section
6.6(d) below, to exclude amortization of intangible assets (goodwill),
or to exclude depreciation and amortization.
(d) ESTABLISHING PERFORMANCE GOALS. The Compensation
Committee shall establish, for each Award granted under this Section
6.6: (i) the measurement period(s) to which the performance goals will
be applied, (ii) the specific business criterion or criteria, or
combination thereof, that will be used; (iii) the specific performance
targets that will be used for the selected business criterion or
criteria; (iv) any special adjustments that will be applied in
calculating whether the performance targets have been met to factor out
extraordinary items, and (v) the formula for calculating the lapse of
restrictions in relation to the performance targets. These
determinations shall be set out
-8-
12
in the Agreement for each Award. Except as otherwise permitted under
Section 162(m) of the Code, each Award under this Section 6.6 shall be
granted no later than 90 days after the start of any applicable
measurement period, on or before the date that 25 percent of each
applicable measurement period has elapsed, and while the outcome is
substantially uncertain.
(e) DETERMINATION OF ATTAINMENT OF PERFORMANCE GOALS. The
Committee shall determine, pursuant to the performance goals and other
elements established pursuant to Section 6.6(d) above, whether the
criteria for the lapse of restrictions have been satisfied. The
Committee's determinations shall be final and binding on all
Participants. These determinations must be certified in writing before
Stock is transferred to the Participant. This requirement may be
satisfied by a writing that sets out the determinations made by the
Committee that is signed on behalf of the Committee by the Committee's
secretary.
(f) LAPSE OF RESTRICTIONS UPON DEATH, DISABILITY OR CHANGE
OF OWNERSHIP OR CONTROL. Notwithstanding the other terms of this Section
6.6, the performance-related criteria for the lapse of restrictions on
an Award made under this Section 6.6: (i) may lapse (A) as provided in
Section 7.3, or (B) upon a participant's disability or upon a change of
ownership or control, to the extent so provided in any Agreement,
employment agreement or action of the Committee, and (ii) shall lapse
upon the Participant's death.
(g) OTHER RESTRICTIONS. In addition to the performance goals
described above, the Committee may determine to subject any Award
granted under this Section 6.6 to other, additional restrictions,
including restrictions requiring the Participant to remain in the employ
of the Company or an Affiliate for specified lengths of time.
6.7 SURRENDER OF RESTRICTED STOCK. A Participant who also is a
participant in the Washington Mutual, Inc. Deferred Compensation Plan for
Directors and Certain Highly Compensated Employees (the "DCP") may surrender to
the Company all or a portion of an Award pursuant to the terms and provisions of
the DCP relating to surrender of restricted stock in return for a contribution
credit under the DCP.
ARTICLE 7. ADJUSTMENT UPON CORPORATE CHANGES
7.1 ADJUSTMENTS TO SHARES. The maximum number and kind of shares of
Stock with respect to which Awards hereunder may be granted and which are the
subject of outstanding Awards shall be adjusted by way of increase or decrease
as the Committee determines (in its sole discretion) to be appropriate, in the
event that:
(a) the Company effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other
similar events;
(b) the Company or an Affiliate engages in a transaction to
which section 424 of the Code applies; or
-9-
13
(c) there occurs any other event which in the judgment of
the Committee necessitates such action.
Provided, however, that if an event described in paragraph (a) or (b) above
occurs, the Committee shall make adjustments to the limits on Awards specified
in Section 4.2 and in the limitation on aggregate Awards under Section 5.1 that
are proportionate to the modifications of the Stock that are on account of such
corporate changes.
7.2 SUBSTITUTION OF AWARDS ON MERGER OR ACQUISITION. The Committee
may grant Awards in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee of the Company or an Affiliate in connection with a transaction to
which section 424(a) of the Code applies. The terms of such substituted Awards
shall be determined by the Committee in its sole discretion, subject only to the
limitations of Article 5.
7.3 EFFECT OF CERTAIN TRANSACTIONS. Upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (an "Event"),
restrictions on any Award of Restricted Stock granted hereunder shall lapse,
whether or not the requirements for lapse of restrictions set forth in any
Agreement have been satisfied, unless otherwise specifically stated in the
Agreement. The foregoing notwithstanding, an Event shall not cause restrictions
related solely to the Participant's length of service with the Company or any
Affiliate to lapse on any Awards that the Committee elects, before the Event, to
convert into restricted stock of an acquiring corporation. If the Committee so
elects to convert the Awards, the number of shares of such converted restricted
stock shall be determined by adjusting the amount and price of the Awards
granted hereunder in the same proportion as used for determining the number of
shares of stock of the acquiring corporation the holders of the Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization, and the schedule for lapse of restrictions set forth in the
Agreement shall continue to apply to the converted restricted stock. Nothing in
this Section 7.3 or elsewhere in the Plan shall authorize the Committee to take
any action contrary to any provision regarding lapse of restrictions that is
contained in any Agreement or employment agreement if the action would reduce
the benefits to the Participant, unless the Participant consents to the action.
7.4 NO PREEMPTIVE RIGHTS. The issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services rendered, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Awards.
-10-
14
ARTICLE 8. COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
15
8.1 GENERAL. No Award shall be granted, no Stock shall be issued,
and no certificates for shares of Stock shall be delivered under this Plan
except in compliance with all federal and state laws and regulations (including,
without limitation, withholding tax requirements), federal and state securities
laws and regulations and the rules of all national securities exchanges or
self-regulatory organizations on which the Company's shares may be listed. The
Company shall have the right to rely on an opinion of its counsel as to such
compliance. Any certificate issued to evidence shares of Stock awarded hereunder
may bear such legends and statements as the Committee upon advice of counsel may
deem advisable to assure compliance with federal and state laws and regulations.
No Award shall be granted, no Stock shall be issued, and no certificate for
shares shall be delivered under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
8.2 REPRESENTATIONS BY PARTICIPANTS. As a condition to receiving an
Award, the Company may require a Participant to represent and warrant at the
time of any such award that the shares are being held only for investment and
without any present intention to sell or distribute such shares, if, in the
opinion of counsel for the Company, such representation is required by any
relevant provision of the laws referred to in Section 8.1. At the option of the
Company, a stop transfer order against any shares of Stock may be placed on the
official stock books and records of the Company, and a legend indicating that
the Stock may not be pledged, sold or otherwise transferred unless an opinion of
counsel is provided (concurred in by counsel for the Company) and stating that
such transfer is not in violation of any applicable law or regulation may be
stamped on the stock certificate in order to assure exemption from registration.
The Committee may also require such other action or agreement by the
Participants as may from time to time be necessary to comply with the federal
and state securities laws. This provision shall not obligate the Company or any
Affiliate to undertake registration of Stock hereunder.
ARTICLE 9. TAXES
9.1 IMMEDIATE TAXATION. If an employee elects, pursuant to Section
83(b) of the Code, to include in gross income for federal income tax purposes an
amount equal to the fair market value of Restricted Stock subject to an Award,
the employee shall make arrangements satisfactory to the Company to pay to the
Company or its Affiliate any federal, state or local taxes required to be
withheld with respect to such Stock. If an employee who makes such an election
fails to pay the necessary amounts to the Company or its Affiliate, the Company
or its Affiliate shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to the employee any taxes of any kind
required by law to be withheld with respect to the Stock covered by the Award.
9.2 DEFERRED TAXATION. If an election under Section 83(b) of the
Code has not been made, then at the time Restricted Stock becomes Unrestricted
Stock, the Participant shall, upon notification of the amount due and prior to
or concurrently with the delivery of the certificates representing the shares of
Stock to which the Participant is entitled hereunder, pay to the Company or its
Affiliate amounts necessary to satisfy applicable federal, state and local
-11-
16
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements. The Company or its Affiliate shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the employee any federal, state or local taxes of any kind
required by law to be withheld with respect to the Restricted Stock becoming
Unrestricted Stock.
ARTICLE 10. GENERAL PROVISIONS
10.1 EFFECT ON EMPLOYMENT. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 UNFUNDED PLAN. The Plan shall be unfunded, and the Company shall
not be required to segregate any assets that may at any time be represented by
grants under this Plan. Any liability of the Company to any person with respect
to any grant under this Plan shall be based solely upon contractual obligations
that may be created hereunder. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Company.
10.3 RULES OF CONSTRUCTION. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 GOVERNING LAW. The laws of the State of Washington shall apply
to all matters arising under this Plan, to the extent that federal law does not
apply.
10.5 COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT. With respect to
persons subject to Section 16 of the Exchange Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of this Plan or
action by the Committee fails to so comply, it shall be deemed null and void to
the extent permitted by law and deemed advisable by the Committee.
10.6 AMENDMENT. The Committee may amend or terminate this Plan at any
time; provided, however, an amendment that would have a material adverse effect
on the rights of a Participant under an outstanding Award is not valid with
respect to such Award without the Participant's consent. Provided further that
the shareholders of the Company must approve any amendment that changes the
number of shares in the aggregate which may be issued pursuant to Awards granted
under the Plan or the maximum number of shares with respect to which any
Participant may be granted Awards in any calendar year, except pursuant to
Article 7.
10.7 EFFECTIVE DATE OF PLAN. No Award under the terms of the Plan as
amended and restated as of January 18, 2000, will be effective unless and until
the amendments approved by
-12-
17
the Board on January 18, 2000, are approved by shareholders holding a majority
of the Company's outstanding voting stock present or represented by proxy and
entitled to vote at the Company's next annual shareholders' meeting, which is
duly held, that occurs after January 18, 2000, the date that the Board
authorized the Company to adopt the amendments to the Plan which are being
submitted to the shareholders in such annual shareholders meeting. If such
amendments are not so approved by the shareholders of the Company, then this
version of the Plan shall be of no force or effect and the Plan as amended and
restated as of February 18, 1997, and amended prior to January 18, 2000, shall
continue to govern.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this the __________ day of _____________, 2000, but to be effective on January
18, 2000.
WASHINGTON MUTUAL, INC.
By:
-----------------------------
X. Xxxx Xxxxx
Its: Senior Vice President
-13-
