AMERICAN HOME PRODUCTS CORPORATION
DIRECTORS' DEFERRAL PLAN
(as amended to June 21, 2001)
SECTION 1. ESTABLISHMENT OF THE PLAN
Effective May 1, 1997, there is hereby established a plan whereby Directors
of the Company who are not current employees of the Company may voluntarily
defer compensation (the "Deferred Compensation" portion of the Plan), and may
share in the long-term growth of the Company (the "Deferred Stock" portion of
the Plan). Prior to May 1, 1997, the Company maintained the Deferred
Compensation portion of the Plan as a separate plan, The AHPC Nonfunded Deferred
Compensation Plan for Directors (the "Prior Plan"). The Plan is deemed to
consist, in part, of the amounts held under the Prior Plan and any election made
by a Director under the Prior Plan, unless and until amended by the Director in
accordance with this Plan, shall remain in effect under this Plan.
SECTION 2. DEFINITIONS
When used in the Plan, the following terms shall have the definitions set
forth in this Section 2:
2.1. Average Closing Price. The term "Average Closing Price" means the
average closing market price of the Shares on the Consolidated Transaction
Reporting System for the New York Stock Exchange for the last five (5)
consecutive trading days on which at least one sale of Shares took place on such
System up to and including the date of determination.
2.2. Beneficiary. The term "Beneficiary" means the beneficiary or
beneficiaries (including any contingent beneficiary or beneficiaries) designated
by the Participant pursuant to Section 7.3 hereof.
2.3. Board of Directors. The term "Board of Directors" means the Board of
Directors of the Company.
2.4. Company. The terms "Company" or "AHPC" mean American Home Products
Corporation, a Delaware corporation.
2.5. Company Credit. The term "Company Credit" means an amount computed and
credited to a Participant's Deferred Compensation Account, as described in
Section 6.3, at an annual rate based on the average of the quarter-end yields
for a ten-year period (ending September 30 of the prior year) of ten-year U.S.
Treasury notes plus two percent (2%).
2.6. Compensation. The term "Compensation" means the retainer and the
aggregate of all fees for service and attendance at Board of Director and
committee meetings to which a Director is entitled for services rendered to the
Company as a Director.
2.7. Deferral Allocation Date. The term "Deferral Allocation Date" means
the third Monday of any month, or if Shares are not traded on the New York Stock
Exchange on such third Monday of the month, the last day before the third Monday
of the month on which Shares are traded on the New York Stock Exchange, that
follows the date on which an amount deferred under the Plan would have been paid
in cash if a deferral election had not been made hereunder.
2.8. Deferred Amount. The term "Deferred Amount" means the amount of
Compensation that a Deferred Compensation Participant elects to defer in
accordance with Section 4 hereof.
2.9. Deferred Compensation Account. The term "Deferred Compensation
Account" means the account described in Section 6.1.
2.10. Deferred Compensation Participant. The term "Deferred Compensation
Participant" means a Director who is not a current employee of the Company and
who has currently or previously elected to defer all or part of his/her
Compensation pursuant to the Prior Plan or in accordance with Section 4 of this
Plan, and for whom a Deferred Compensation Account is currently maintained.
2.11. Deferred Stock Participant. The term "Deferred Stock Participant"
means a Director who is not a current employee of the Company and who becomes a
Participant in the Plan in accordance with Section 3 hereof.
2.12. Director. The term "Director" means each member of the Board of
Directors.
2.13. Disability. The term "Disability" means the complete and permanent
inability of an individual, by reason of illness or accident, to perform the
individual's duties as a Director. The determination whether a Director has
suffered a Disability shall be made by the Board of Directors based upon such
evidence as it deems appropriate.
2.14. Dividend Allocation Date. The term "Dividend Allocation Date" means
the first Monday that (a) follows a Dividend Payment Date and (b) is the third
Monday of a month.
2.15. Dividend Payment Date. The term "Dividend Payment Date" means the
date as of which the Company pays a cash dividend on Shares.
2.16. Dividend Record Date. The term "Dividend Record Date" means, with
respect to any Dividend Payment Date, the date established by the Board of
Directors as the record date for determining shareholders entitled to receive
payment of the dividend on such Dividend Payment Date.
2.17. Individual Accounts. The term "Individual Accounts" or "Accounts"
means the separate Deferred Compensation Account and Share Accounts, described
in Section 6 hereof, which are established under the Plan for each Participant.
When used in the singular, the term shall refer to one of these accounts, as the
context requires.
2.18. Participant. The term "Participant" means a Director who is a
Deferred Stock Participant, a Deferred Compensation Participant, or both, as the
case may be.
2.19. Plan. The term "Plan" means the AHPC Directors' Deferral Plan, as set
forth herein and as it may be amended from time to time.
2.20. Prior Plan. The term "Prior Plan" has the meaning set forth in
Section 1 hereof.
2.21. Share. The term "Share" means a share of Common Stock, par value
$.33-1/3 per share, of the Company.
2.22. Share Accounts. The term "Share Accounts" means a Participant's
Vested Share Account and Unvested Share Account.
2.23. Share Equivalents. The term "Share Equivalents" means bookkeeping
entries credited to a Participant's Share Accounts and denominated in Shares.
2.24. Unvested Share Account. The term "Unvested Share Account" means an
account consisting of amounts transferred under Section 5.4 for which the
vesting requirements of Section 5.5(ii) have not been satisfied, and which are
denominated in Share Equivalents as described in Section 6.2.
2.25. Vested Share Account. The term "Vested Share Account" means an
account consisting of amounts transferred under Section 5.4 for which the
vesting requirements of Section 5.5(ii) have been satisfied together with
amounts deferred hereunder, and which are denominated in Share Equivalents as
described in Section 6.2, and including any amounts previously maintained in a
Participant's Unvested Share Account which are transferred to such account
following satisfaction of the vesting requirements described in Section 5.5(ii).
2.26. Year of Service. The term "Year of Service" means each full year and
any partial year an individual served as a Director. For this purpose a "year"
is the twelve-month period commencing with the first day of the individual's
service as a Director of the Company both before and after the effective date of
the Plan.
SECTION 3. DEFERRED STOCK PARTICIPANT
Each person who as of the effective date of this Plan is currently serving
or who is hereafter elected or appointed to serve as a Director, as the case may
be, who is not an employee of the Company, and who elects to become a
Participant by making a deferral under Section 5.2, or for whom a transfer is
made under Section 5.4, shall become a Deferred Stock Participant. A Deferred
Stock Participant shall cease to participate in the Plan when the Participant
ceases to be a Director. For purposes of the Plan, a Director shall be deemed to
cease to be a Deferred Stock Participant on the first day of the month next
following the month in which he/she last serves as a Director.
SECTION 4. DEFERRED COMPENSATION PARTICIPANT
Prior to the beginning of any calendar quarter in each calendar year, any
Director who is not an employee of the Company may defer the receipt of
Compensation to be earned by the Director during such calendar quarter and the
ensuing calendar quarters by filing with the Company a written election that:
(i) defers payment of a designated amount (of One Thousand Dollars
($1,000) or more) or a percentage of his/her Compensation for services
attributable to such calendar quarters (the "Deferred Amount");
(ii) specifies the payment option selected by the Participant pursuant
to Section 7.2 hereof for such Deferred Amount; and
(iii) specifies the options selected by the Participant pursuant to
Section 5 hereof for such Deferred Amount.
The amount deferred may not exceed the Director's Compensation for the
period of deferral. Notwithstanding the foregoing, any individual who is not an
employee of the Company, and who is newly elected or appointed to serve as a
Director may, not later than thirty (30) days after his/her election or
appointment as a Director becomes effective, elect in accordance with the
preceding provisions of this Section 4, to defer the receipt of Compensation
earned during the portion of the current calendar quarter that follows his/her
filing of the election with the Company. Any elections made pursuant to this
Section 4 shall be irrevocable when made. Notwithstanding the foregoing, the
Board of Directors in its sole discretion, may make a distribution to a
Participant under either Section 7.2(i)(a) or 7.4. If a Participant fails to
discontinue an election under Section 5 with respect to his/her Deferred Amount
for a future period, the Participant's current election shall remain in effect,
provided, however, that the Participant may thereafter make a new election with
regard to a future period at any time in accordance with the first paragraph of
this Section 4.
SECTION 5. FORM OF DEFERRED COMPENSATION CREDITS
5.1. Deferred Compensation Account. Except with respect to the deferral of
Compensation for a quarter in which a Deferred Compensation Participant elects
to have all or a percentage of the Deferred Amount credited in Shares in
accordance with Section 5.2 hereof, the Deferred Amount shall be denominated in
U.S. dollars and credited to the Participant's Deferred Compensation Account
pursuant to Section 6.1 hereof.
5.2. Shares. Prior to the beginning of any calendar quarter, a Deferred
Compensation Participant may elect, by filing a written election with the Board
of Directors, to have all or a percentage of the Deferred Amount for the
following calendar quarter and/or ensuing calendar quarters credited in Share
Equivalents and allocated to the Participant's Vested Share Account pursuant to
Section 6.2 hereof. Any elections made pursuant to this Section 5.2 shall be
irrevocable when made. If a Participant fails to discontinue an election under
this Section 5 with respect to his/her Deferred Amount for a future period,
his/her current election shall remain in effect, provided, however, that the
Participant may thereafter make a new election with regard to a future period at
any time.
5.3. Transfer of Deferred Compensation Account Balance to Share Account.
Prior to the effective date of the Plan, a Deferred Compensation Participant may
elect to have all or a portion of his/her final credited account balance in the
Prior Plan ( i.e. , the balance as of April 30, 1997) converted to Share
Equivalents and credited to the Participant's Vested Share Account. Such
conversion shall take place as of May 1, 1997, based on the Average Closing
Price as of May 1, 1997.
5.4. Transfer of Present Value of Accrued Benefits Under Retirement Plan to
Share Account Prior to the effective date of the Plan, a Deferred Compensation
Participant shall have allocated to his/her Unvested Share Account, or if a
Participant has satisfied the vesting requirements set forth in Section 5.5(ii)
hereof, to his/her Vested Share Account, the number of Share Equivalents
(maintained in fractions and rounded to three (3) decimal places) having a
market value (calculated as set forth below) equal to the actuarial present
value as of May 1, 1997, of the amount that would have been due to such
Participant under the AHPC Retirement Plan for Outside Directors at the time of
his/her earliest retirement date assuming that the Participant has then
satisfied the vesting requirements thereunder. Such actuarial present value
calculation shall be performed by the Company in its discretion and shall be
converted to Share Equivalents and credited to the Participant's Unvested or
Vested Share Account, as the case may be. such conversion shall take place as of
May 1, 1997, based on the Average Closing Price as of that date.
5.5. Vesting of Unvested Share Account.
(i) All amounts transferred pursuant to Section 5.4 shall be
maintained in a Vested Share Account to the extent vested at the time of
transfer. All amounts which are not vested will be held in an Unvested
Share Account until the Participant shall have satisfied the vesting
requirements set forth in Section 5.5(ii), at which time such amounts in
the Participant's Unvested Share Account shall be transferred from such
Unvested Share Account and shall become a part of or be added to the
Participant's Vested Share Account.
(ii) A Participant shall have satisfied the vesting requirements upon
completion of at least ten (10) Years of Service and attainment of age
sixty-five (65), provided, however, that a Participant who ceases to be a
Director prior to attainment of age sixty-five (65) with at least ten (10)
Years of Service shall be deemed to have satisfied the vesting requirements
upon the first to occur of (1) attainment of age sixty-five (65), (2)
death, or (3) Disability.
SECTION 6. INDIVIDUAL ACCOUNTS
The Company shall maintain Individual Accounts for Participants, as
follows:
6.1. Deferred Compensation Account. The Company shall maintain a Deferred
Compensation Account in the name of each Deferred Compensation Participant with
respect to any amounts deferred under the Plan which the Deferred Compensation
Participant does not elect to have credited in Share Equivalents pursuant to
Section 5.2 or 5.3 hereof. The opening balance of each Participant's Deferred
Compensation Account on the effective date of this Plan shall be equal to the
closing balance on the immediately preceding date of the corresponding account
maintained on the Participant's behalf under the Prior Plan, if any, less any
portion of such account converted to Share Equivalents and allocated to the
Participant's Vested Share Account pursuant to Section 5.3 hereof. The Deferred
Compensation Account shall be denominated in U.S. dollars, rounded to the
nearest whole cent. A Deferred Amount allocated to a Deferred Compensation
Account pursuant to Section 5.1 hereof shall be credited to the Deferred
Compensation Account as of the Deferral Allocation Date.
6.2. Share Accounts. The Company shall maintain Share Accounts consisting
of (i) a Vested Share Account and (ii) an Unvested Share Account. The Share
Accounts shall be denominated in Share Equivalents, and shall be maintained in
fractions rounded to three (3) decimal places. Share Equivalents allocated to a
Deferred Stock Participant's Vested Share Account in accordance with the
Participant's election under Section 5.2 hereof, shall be credited to the
Participant's Vested Share Account as of the Deferral Allocation Date. Share
Equivalents and, if necessary, fractional Share Equivalents, shall be credited
to a Participant's Vested Share Account based on the Average Closing Price at
the Deferral Allocation Date.
6.3. Accrual of Company Credit. The Treasurer of the Company shall
determine the annual rate of Company Credit on or before December 31 of each
calendar year. This rate shall be effective for the following calendar year. The
Company Credit shall be compounded and credited to each Deferred Compensation
Account as of the last day of each calendar quarter for each month (or part
thereof) that the Participant serves as a Director during such calendar quarter.
If a Participant elects the payment option under either Section 7.2(i)(b) or
Section 7.2(i)(c) below, the Company Credit shall continue to be credited to the
Participant's account until distributed.
6.4. Cash Dividends. Cash dividends paid on Shares shall be deemed to have
been paid on the Share Equivalents allocated to each Participant's Share
Accounts and shall be treated as if the allocated Share Equivalents were actual
Shares issued and outstanding on the Dividend Record Date. An amount equal to
the amount of such dividends shall be credited in Share Equivalents to each
Share Account as of each Dividend Allocation Date based on the Average Closing
Price at the Dividend Allocation Date.
6.5. Capital Adjustments. The number of Share Equivalents allocated to
Share Accounts shall be adjusted by the Board of Directors, as it deems
appropriate, to reflect stock dividends, stock splits, reclassifications,
spinoffs, and other extraordinary distributions, as if those Share Equivalents
were actual Shares.
6.6. Account Statements. Within a reasonable time following the end of each
calendar year, the Company shall provide an annual statement to each
Participant. The annual statement for each Participant shall report the number
of Share Equivalents credited to each of the Participant's Share Accounts and
shall report the dollar amount credited to the Participant's Deferred
Compensation Account as of December 31 of that year.
SECTION 7. PAYMENT PROVISIONS
7.l. Method of Payment All payments to a Participant (or to a Participant's
Beneficiary or estate, as the case may be) with respect to the Participant's
Deferred Compensation Account and Vested Share Account shall be paid in cash
only, with Share Equivalents valued as set forth in Section 7.2 below.
7.2. Payment Options
(i) At the time each Director elects to make a deferral or, for
Participants who are Directors on May 1, 1997, prior to the effective date
of the Plan, the Participant shall select a payment option with respect to
the payment of the Participant's Individual Accounts from the following
payment options:
(a) a lump sum paid in the calendar quarter first day of the
calendar quarter following the calendar quarter in which the
Participant ceases to be a Director;
(b) payments in substantially equal annual installments over a
period of between two (2) to ten (10) years, as elected by the
Participant at the time he/she makes his/her election under this
paragraph (i)(b), commencing in January of the calendar year following
the calendar year during which the Participant ceases to be a Director
with Share Equivalents in the Participant's Vested Share Account
treated as described in paragraph (iii) below; or
(c) payments in annual installments over a period of between two
(2) to ten (10) years as elected by the Participant at the time he/she
makes his/her election under this paragraph (i)(c), commencing in
January of the calendar year following the calendar year during which
the Participant ceases to be a Director, with Share Equivalents in the
Participant's Vested Share Account treated as described in paragraph
(iv) below.
(ii) If the payment option described in paragraph (i)(a) above has
been elected, the amount of the lump sum with respect to the Participant's
Deferred Compensation Account shall be equal to the amount credited to the
Participant's Deferred Compensation Account as of the last business day of
the calendar quarter preceding the date of payment, and the amount of the
lump sum with respect to the Participant's Vested Share Account shall be
equal to the Average Closing Price as of last business day of the calendar
quarter preceding the date of payments multiplied by the number of Share
Equivalents credited to the Participant's Vested Share Account as of such
date.
(iii) If the payment option described in paragraph (i)(b) above has
been elected, the value of the Participant's Vested Share Account shall be
added to the amount in such Participant's Deferred Compensation Account
based on the Average Closing Price at the date of the first payment and the
amount of each installment with respect to the Participant's Deferred
Compensation Account (including the amount transferred from the
Participant's Vested Share Account) shall be paid annually, in
substantially equal installment amounts. The determination of the amount of
substantially equal installment payments shall be a fixed annuity
computation determined based on the amount of the Participant's Deferred
Compensation Account (including the amount transferred from the
Participant's Vested Share Account) at the time of the first payment, the
annual rate of the Company Credit at that time and the number of
installments selected, assuming compounding of the Company Credit on a
quarterly basis.
(iv) If the payment option described in paragraph (i)(c) above has
been elected, the amount of each installment with respect to the
Participant's Deferred Compensation Account and Vested Share Account shall
be paid annually, in installment amounts. The amount to be distributed
annually with respect to Share Equivalents shall be computed by dividing
the number of Share Equivalents in the Participant's Vested Share Account
by the number of installment payments selected, with the resulting number
of Share Equivalents paid in cash, based on the Average Closing Price as of
the December 31 preceding each date of payment. Any additional amounts in
respect of Share Equivalents relating to dividend equivalents during the
duration of installment payments shall be included with and paid as part of
the last installment.
(v) If the Participant fails to elect a payment option, the amount
credited to the Participant's Deferred Compensation Account and Vested
Share Account shall be distributed in a lump sum in accordance with the
payment option described in paragraph (i)(a) and paragraph (ii) above. If,
at the time a Participant ceases to be a Director, the amount credited to a
Participant's Deferred Compensation Account and the value of Share
Equivalents credited to a Participant's Share Accounts is less than $25,000
in the aggregate, the Board of Directors, in its sole discretion, may pay
out the amount credited to such Account in a lump sum as if such
Participant elected distribution under paragraph (i)(a) above.
(vi) Notwithstanding the foregoing, any amounts in a Participant's
Unvested Share Account at the time the Participant ceases to be a Director
shall be (a) forfeited if the Participant has not completed at least ten
(10) Years of Service, or (b) if the Participant has completed at least ten
(10) Years of Service, shall be paid to the Participant, in the manner
selected in paragraph (i)(a), (i)(b), or (i)(c) above, upon the first to
occur of (1) attainment of age sixty-five (65),or (2) Disability, provided,
however, that if the payment option described in paragraph (i)(a) above has
been selected, the value of such Unvested Share Account shall be determined
based on the Average Closing Price as of the December 31 preceding the date
of payment , and thereafter shall be treated as if it were part of the
Participant's Deferred Compensation Account. If the payment option
described in paragraph (i)(b) above has been selected, payment shall be
made in accordance with Section 7.2(iii). If the payment option in
paragraph (i)(c) above has been selected, payment shall be made in
accordance with Section 7.2(iv). Notwithstanding the foregoing, any
benefits in the Unvested Share Account at the date of a Participant's death
shall be paid to the Participant's Beneficiary or estate, as the case may
be, in accordance with Section 7.3.
7.3. Payment Upon Death. Notwithstanding any other provision of the Plan to
the contrary, within a reasonable period of time following the death of a
Participant, the amount credited to the Participant's Deferred Compensation
Account and all of the Share Equivalents credited to the Participant's Share
Accounts shall be paid by the Company in a lump sum to the Participant's
Beneficiary. For purposes of this Section 7.3, the amount credited to the
Participant's Deferred Compensation Account, and the number and value of Share
Equivalents credited to the Participant's Share Accounts, shall be determined as
of the date of payment using the Average Closing Price. A Participant may
designate a Beneficiary, in writing, in a form acceptable to the Board of
Directors. A Participant may revoke a prior designation of a Beneficiary and may
also designate a new Beneficiary without the consent of the previously
designated Beneficiary, provided, however, that such revocation and new
designation (if any) are in writing, in a form acceptable to the Board of
Directors, and filed with the Board of Directors before the Participant's death.
If the Participant does not designate a Beneficiary, or if no designated
Beneficiary survives the Participant, any amount not distributed to the
Participant during the Participant's life shall be paid to the Participant's
estate in a lump sum in accordance with this Section 7.3.
7.4. Payment on Unforeseeable Emergency. The Board of Directors may, in its
sole discretion, direct payment to a Participant of all or of any portion of the
vested portion of a Participant's Accounts, notwithstanding an election of a
payment option under Section 7.2 above, at any time that the Board of Directors
determines that such Participant has an unforeseeable emergency, and then only
to the extent reasonably necessary to meet the emergency. For purposes of this
section, "unforeseeable emergency" means severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent of the Participant, loss of the Participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.
SECTION 8. OWNERSHIP OF SHARES
A Participant shall have no rights as a shareholder of the Company with
respect to any Shares represented by the Share Equivalents described hereunder.
SECTION 9. PROHIBITION AGAINST TRANSFER
The right of a Participant to receive payments under the Plan may not be
transferred except by will or applicable laws of descent and distribution. A
Participant may not assign, sell, pledge, or otherwise transfer amounts to which
he/she is entitled hereunder prior to payment thereof to the Participant.
SECTION 10. GENERAL PROVISIONS
10.1. Director's Rights Unsecured. The Plan is unfunded. The right of any
Participant to receive payments of cash under the provisions of the Plan shall
be an unsecured claim against the general assets of the Company.
10.2. Administration. Except as otherwise provided in the Plan, the Plan
shall be administered by the Board of Directors, which shall have the authority
to adopt rules and regulations for carrying out the Plan, and which shall
interpret, construe, and implement the provisions of the Plan. This Plan is
intended to comply with Section 16 of the Securities Exchange Act of 1934, as
amended (the "Act") and the rules promulgated thereunder. Any election by a
Participant which would be in violation of the Act or the rules thereunder
causing short-swing liability shall be deemed ineffective under the Plan, and
such election shall be deemed to be null and void.
10.3. Legal Opinions. The Board of Directors may consult with legal
counsel, who may be counsel for the Company or other counsel, with respect to
its obligations and duties under the Plan, or with respect to any action,
proceeding, or any questions of law, and shall not be liable with respect to any
good faith action taken, or omitted, by it pursuant to the advice of such
counsel.
10.4. Liability. Any decision made or action taken by the Board of
Directors, or any employee of the Company or any of its subsidiaries, arising
out of or in connection with the construction, administration, interpretation,
or effect of the Plan, shall be absolutely discretionary, and shall be
conclusive and binding on all parties. Neither the Board of Directors nor any
employee of the Company or any of its subsidiaries shall be liable for any act
or action hereunder, whether of omission or commission, by any other member or
employee or by any agent to whom duties in connection with the administration of
the Plan have been delegated or, except in circumstances involving bad faith,
for anything done or omitted to be done.
10.5. Withholding. The Company shall have the right to deduct from all
payments hereunder any taxes required by law to be withheld from such payments.
The recipients of such payments shall bear all taxes on amounts paid under the
Plan to the extent that no taxes are withheld thereon, irrespective of whether
withholding is required.
10.6. Legal Holidays. If any day on (or on or before) which action under
the Plan must be taken falls on a Saturday, Sunday, or legal holiday, such
action may be taken on (or on or before) the next succeeding day that is not a
Saturday, Sunday, or legal holiday; provided, however, that this Section 10.6
shall not permit any action that must be taken in one calendar year to be taken
in any subsequent calendar year.
SECTION 11. AMENDMENT, SUSPENSION, AND TERMINATION
The Board of Directors shall have the right at any time, and for any
reason, to amend, suspend, or terminate the Plan, provided, however, that no
amendment, suspension, or termination shall reduce the number of Share
Equivalents or the cash balance in an Individual Account.
SECTION 12. APPLICABLE LAW
The Plan shall be governed by, and construed in accordance with, the laws
of the State of Delaware, except to the extent that such laws are preempted by
federal law.
SECTION 13. EFFECTIVE DATE
The effective date of this Plan is May 1, 1997. Nothing herein shall
invalidate or adversely affect any previous election, designation, deferral, or
accrual in accordance with the terms of the Prior Plan that were in effect prior
to the effective date of this Plan.
SECTION 14. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, all Accounts under the Plan
that are not fully vested as of the date of such occurrence (and which have not
previously been forfeited) will become fully vested. Furthermore,
notwithstanding any prior election by a Participant to the contrary, at any time
following a Change in Control a Participant may elect to accelerate any or all
payments due under the Plan to a single sum payment to be made on a date at
least twelve (12) months subsequent to such election; provided, however, that
such an election may be made for an immediate single sum payment, in which six
percent (6%) of the amount of the accelerated payment shall be permanently
forfeited to the Company. For purposes of this provision, a Change in Control
will be deemed to have occurred if:
(i) any person or persons acting in concert (excluding Company benefit
plans) becomes the beneficial owner of securities of the Company having at
least 20% of the voting power of the Company's then outstanding securities
(unless the event causing the 20% threshold to be crossed is an acquisition
of voting common securities directly from the Company); or
(ii) the consummation of any merger or other business combination of
the Company, sale or lease of the Company's assets or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company who owned
shares immediately prior to the Transaction (including any trustee or
fiduciary of any Company employee benefit plan) own, by virtue of their
prior ownership of the Company's shares, at least 65% of the voting power,
directly or indirectly, of (a) the surviving corporation in any such merger
or other business combination; (b) the purchaser or lessee of the Company's
assets; or (c) both the surviving corporation and the purchaser or lessee
in the event of any combination of Transactions; or
(iii) within any 24 month period, the persons who were directors
immediately before the beginning of such period (the "Incumbent Directors")
shall cease (for any reason other than death) to constitute at least a
majority of the Board or the board of directors of a successor to the
Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors (so long as such director was not
nominated by a person who has expressed an intent to effect a Change in
Control or engage in a proxy or other control contest).