Exhibit 10.5
KIMBERLY-CLARK CORPORATION
1992 EQUITY PARTICIPATION PLAN
(AS AMENDED EFFECTIVE NOVEMBER 20, 1997)
1. PURPOSE
This 1992 Equity Participation Plan (the "Plan") of Kimberly-Clark
Corporation (the "Corporation") is intended to aid in attracting and
retaining highly qualified personnel and to encourage those employees
who materially contribute, by managerial, scientific or other innovative
means, to the success of the Corporation or of an Affiliate, to acquire
an ownership interest in the Corporation, thereby increasing their
motivation for and interest in the Corporation's or Affiliate's long-term
success.
2. EFFECTIVE DATE
The Plan was originally adopted effective as of April 24, 1992, upon
approval by the stockholders of the Corporation at the 1992 Annual
Meeting. The Plan as hereby amended and restated is adopted effective as
of November 1, 1996, upon approval by the stockholders of the Corporation
at the 1997 Annual Meeting.
3. DEFINITIONS
"Account" has the meaning set forth in subsection 7(a) of this Plan.
"Affiliate" means any company in which the Corporation owns 20% or
more of the equity interest (collectively, the "Affiliates").
"Award" has the meaning set forth in section 6 of this Plan.
"Award Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions
applicable to the Award granted to the Participant.
"Base Value" has the meaning set forth in subsection 7(a) of this
Plan.
"Board" means the Board of Directors of the Corporation.
"Book Value" has the meaning set forth in subsection 7(a) of this
Plan.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, provided
that if the requisite number of members of the Compensation Committee are
not Disinterested Persons, the Plan shall be administered by a committee,
all of whom are Disinterested Persons, appointed by the Board and
consisting of two or more directors with full authority to act in the
matter. The term "Committee" shall mean the Compensation Committee or
the committee appointed by the Board, as the case may be.
"Committee Rules" means the interpretative guidelines approved by
the Committee providing the foundation for administration of this Plan.
"Common Stock" means the common stock, par value $1.25 per share, of
the Corporation and shall include both treasury shares and authorized but
unissued shares and shall also include any security of the Corporation
issued in substitution, in exchange for, or in lieu of the Common Stock.
"Disinterested Person" means a person who is a "Non-Employee
Director" for purposes of rule 16b-3 under the Exchange Act, or any
successor provision, and who is also an "outside director" for purposes
of section 162(m) of the Code or any successor section.
"Dividend Shares" has the meaning set forth in subsection 7(c) of
this Plan.
"Dividend Share Value" means Dividend Share Value as defined in
subsection 7(c) of this Plan.
"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations thereunder, as amended from time to time.
"Fair Market Value" means the reported closing price of the Common
Stock, on the relevant date as reported on the composite list used by The
Wall Street Journal for reporting stock prices, or if no such sale shall
have been made on that day, on the last preceding day on which there was
such a sale.
"Incentive Stock Option" means an Option which is so defined for
purposes of section 422 of the Code or any successor section.
"Insider" has the meaning set forth in subsection 15(k) of this
Plan.
"Maturity Date" has the meaning set forth in subsection 7(b) of this
Plan.
"Maturity Value" has the meaning set forth in subsection 7(c) of
this Plan.
"Nonqualified Stock Option" means any Option which is not an
Incentive Stock Option.
"Option" means a right to purchase a specified number of shares of
Common Stock at a fixed option price equal to no less than 100% of the
Fair Market Value of the Common Stock on the date the Award is granted.
"Option Price" has the meaning set forth in subsection 8(b) of this
Plan.
"Participant" means an employee who the Committee selects to
participate in and receive Awards under the Plan (collectively, the
"Participants").
"Participation Shares" means the right, as described in section 7,
to receive an amount equal to the increase in Book Value on a specified
number of shares of Common Stock.
"Retirement" and "Retires" means the termination of employment on or
after the date the Participant is entitled to receive immediate payments
under a qualified retirement plan of the Corporation or an Affiliate;
provided, however, if the Participant is not eligible to participate
under a qualified retirement plan of the Corporation or its Affiliates
then such Participant shall be deemed to have retired if his termination
of employment is on or after the date such Participant has attained age
55.
"Severe Financial Hardship" means a severe financial hardship as
defined in subsection 15(h) of this Plan.
"Stock Appreciation Right (SAR)" has the meaning set forth in
subsection 8(j)(i) of this Plan.
"Total and Permanent Disability" means Totally and Permanently
Disabled as defined in the Kimberly-Clark Corporation Salaried Employees'
Retirement Plan.
4. ADMINISTRATION
The Plan and all Awards granted pursuant thereto shall be
administered by the Committee. The Committee, in its absolute discretion,
shall have the power to interpret and construe the Plan and any Award
Agreements; provided, however, that no such action or determination may
increase the amount of compensation payable that would otherwise be due
in a manner that would result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor section.
Any interpretation or construction of any provisions of this Plan or the
Award Agreements by the Committee shall be final and conclusive upon all
persons. No member of the Board or the Committee shall be liable for any
action or determination made in good faith.
Within 60 days following the close of each calendar year that the
Plan is in operation, the Committee shall make a report to the Board.
The report shall specify the employees who received Awards under the Plan
during the prior year, the form and size of the Awards to the individual
employees, and the status of prior Awards.
The Committee shall have the power to promulgate Committee Rules and
other guidelines in connection with the performance of its obligations,
powers and duties under the Plan, including its duty to administer and
construe the Plan and the Award Agreements.
The Committee may authorize persons other than its members to carry
out its policies and directives subject to the limitations and guidelines
set by the Committee, except that: (a) the authority to grant Awards,
the selection of officers and directors for participation and decisions
concerning the timing, pricing and amount of a grant or Award shall not
be delegated by the Committee; (b) the authority to administer Awards
with respect to persons who are subject to section 16 of the Exchange Act
shall not be delegated by the Committee; (c) any delegation shall satisfy
all applicable requirements of rule 16b-3 of the Exchange Act, or any
successor provision; and (d) no such delegation shall result in the
disallowance of a deduction to the Corporation under section 162(m) of
the Code or any successor section. Any person to whom such authority is
granted shall continue to be eligible to receive Awards under the Plan.
5. ELIGIBILITY
The Committee shall from time to time select the Plan Participants
from those employees whom the Committee determines either to be in a
position to contribute materially to the success of the Corporation or
Affiliate or to have in the past so contributed. Only employees
(including officers and directors who are employees) of the Corporation
and its Affiliates are eligible to participate in the Plan.
6. FORMS OF AWARDS
All Awards under the Plan shall be made in the form of Participation
Shares or Options. The Committee may make Awards solely in Options or
Participation Shares, or in any combination of the two. Notwithstanding
anything in this Plan to the contrary, any Awards shall contain the
restriction on assignability in subsection 15(f) of this Plan to the
extent required under rule 16b-3 of the Exchange Act.
7. PARTICIPATION SHARES
The Committee shall from time to time designate those Participants
who shall receive Participation Share awards. The Committee shall advise
such Participants of their Participation Share awards by a letter
indicating the number of Participation Shares awarded and the following
terms and conditions of the award.
(a) Base Value of Participation Shares. The number of
Participation Shares awarded to a Participant shall be entered in
such Participant's memorandum account (the "Account") established
for this purpose as of the date of the award. Each Participation
Share shall be assigned a base value equal to the book value of one
share of Common Stock as of the close of the fiscal year of the
Corporation preceding the date of the award (the "Base Value").
Book value per share shall be defined for purposes of the Plan as
common stockholders' equity, as reported in the year-end audited
consolidated financial statements, or in the quarter-end unaudited
consolidated financial statements, of the Corporation (as the case
may be), divided by the number of shares of Common Stock outstanding
as of the date of such financial statements, as adjusted pursuant to
the provisions of the Plan (the "Book Value"). The term "book
value", when used without initial capital letters, shall be defined
as in the preceding sentence without the adjustments.
(b) Maturation of Participation Shares. An Award of
Participation Shares shall reach maturity at the close of the fiscal
year (i) in which either the fifth or seventh anniversary, as
determined by the Committee when the Award is granted, of the date
the Award occurs, (ii) the Participant who holds such Award dies,
Retires, or becomes Totally and Permanently Disabled, or (iii) the
events described in subsection 9(a) occur, whichever is earlier (the
"Maturity Date"). The Book Value at the Maturity Date shall be the
Book Value as of the close of the fiscal year of the Corporation in
which such Maturity Date occurs.
(c) Participation Share Payments. Each Participant shall be
entitled to receive a payment equal to the sum of the Maturity Value
and the Dividend Share Value for his or her Participation Share
award, payable as provided in subsection 7(g). Such payment shall
be payable either in cash, or partly in cash and up to 50% in Common
Stock, as determined by the Committee when the Award is granted.
Such payment in Common Stock shall be payable in the number of
shares of Common Stock that could have been purchased with the
amount equal to the sum of the Maturity Value and the Dividend Share
Value for that portion of his or her Participation Share award which
is payable in Common Stock, at the average of the Fair Market Value
of shares of Common Stock on each business day during the month
immediately preceding the month of such payment. A Participation
Share award shall only be paid in Common Stock as provided above to
the extent shares of Common Stock are available under section 10
hereof, with the remainder settled in cash. To the extent shares of
Common Stock are not fully available under section 10 hereof to
fully pay such portion of the Award in shares of Common Stock then
the available shares of Common Stock shall be paid on a pro rata
basis, with the remainder settled in cash.
The "Maturity Value" of an Award of Participation Shares shall
be equal to the Book Value of the Participation Shares subject to
such Award at the Maturity Date less the Base Value of such
Participation Shares.
Participants are not entitled to receive current dividends on
their Participation Shares, but in lieu thereof their Accounts shall
be credited with dividend shares (the "Dividend Shares"). The
"Dividend Share Value" of an award shall be equal to the product of
(A) the number of Dividend Shares credited to a Participant's
Account and (B) the Book Value per share of the Common Stock at the
Maturity Date. The amount available for the acquisition of Dividend
Shares for a Participant's Account at the end of each fiscal quarter
of the Corporation shall be determined by multiplying the total cash
dividend declared per share of Common Stock during such quarter (but
subsequent to the date of the award in the case of Participation
Shares and subsequent to the date of crediting in the case of
Dividend Shares) by the total of the Participation Shares and
Dividend Shares in the Participant's Account. The amount so
determined shall be divided by the Book Value of one share of Common
Stock as of the close of such fiscal quarter, and the quotient shall
represent the number of full and fractional Dividend Shares credited
to the Participant's Account for that quarter.
(d) Dividend Maintenance. No Dividend Shares shall be
credited to a Participant's Account in any quarter (i) in which the
total cash dividends declared per share of Common Stock are less
than $.205 or (ii) in which the total cash dividends declared per
share of Common Stock are less than the total cash dividends
declared per share of Common Stock in the same quarter of the
immediately preceding year, except that the determination of whether
the total cash dividends per share of Common Stock are less than in
the immediately preceding year shall be made after adjustment for
the two-for-one stock split which occurred in 1992 and the two-for-
one stock split which was declared on February 20, 1997, in
accordance with generally accepted accounting principles. When
total cash dividends declared per share of Common Stock are less
than total cash dividends declared per share of Common Stock in the
same quarter of the immediately preceding year as described above,
the book value of each Participation Share held by a Participant
shall be reduced by an amount equal to the difference between the
cash dividend declared in such immediately preceding quarter less
the cash dividend declared in the quarter the cash dividend is
reduced.
(e) Adjustments. To preserve the benefit to the Participant
and the Corporation contemplated hereby, stock repurchases (other
than Common Stock transferred to the Corporation upon the exercise
of an Option pursuant to subsection 8(f)) or changes in the
Corporation's accounting policies during any fiscal year shall be
automatically excluded for purposes of determining Book Value for
purposes of this Plan for such fiscal year and for all future years
with respect to any outstanding Participation Share Awards;
provided, however, that the Committee shall have the discretion to
waive any such exclusion that would have the effect of increasing
Book Value (to the extent that such discretion does not result in
the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section). To further preserve
the benefit to the Participant and the Corporation contemplated
hereby, if a cash dividend is declared in any quarter and the
payment date for such cash dividend is later than the immediately
subsequent quarter, then such cash dividend will be deemed to be
declared in the quarter immediately preceding the payment date for
all purposes of this Plan, as of the first date the Board meets in
such quarter, or if the Board does not meet in such quarter, on the
first business day of such quarter, including, but not limited to,
the determination of (i) Book Value in subsection 7(a), (ii)
Dividend Shares in subsection 7(c) and (iii) whether the total cash
dividends declared per share of Common Stock in a quarter is less
than $.205 or whether the total cash dividends declared per share of
Common Stock are less than the total cash dividends declared per
share of Common Stock in the same quarter of the immediately
preceding year in subsection 7(d).
(f) Absence of Rights as a Stockholder. A Participant shall
not be entitled, on the basis of a Participation Share award, to any
of the rights of a stockholder of the Corporation, including the
right to vote and receive dividends on Common Stock.
(g) Date of Payment. Except as provided in subsection 15(h),
the payment provided for in subsection 7(c) shall be payable within
90 days following the Maturity Date.
(h) Termination of Employment. Except as provided in
subsection 9(a), any Participation Shares or Dividend Shares
credited to a Participant's Account shall be forfeited if the
Participant is dismissed or leaves the service of the Corporation or
Affiliate prior to the Maturity Date of the award for any reason
other than death, Retirement or Total and Permanent Disability.
(i) Termination of Award. After the Corporation makes the
cash payment provided for in subsection 7(c), any rights of the
Participant (or the Participant's estate or beneficiaries) in the
Participation Share award shall end.
8. STOCK OPTIONS
The Committee shall determine and designate from time to time those
Participants to whom Options are to be granted and the number of shares
of Common Stock to be optioned to each. Such Options may be in the form
of Incentive Stock Options or in the form of Nonqualified Stock Options.
After granting an Option to a Participant, the Committee shall cause to
be delivered to the Participant an Award Agreement evidencing the
granting of the Option. The Award Agreement shall be in such form as the
Committee shall from time to time approve. The terms and conditions of
all Options granted under the Plan need not be the same, but all Options
must meet the applicable terms and conditions specified in subsections
8(a) through 8(h).
(a) Period of Option. The Period of each Option shall be no
more than 10 years from the date it is granted.
(b) Option Price. The Option price shall be determined by the
Committee, but shall not in any instance be less than the Fair
Market Value of the Common Stock at the time that the Option is
granted (the "Option Price").
(c) Limitations on Exercise. The Option shall not be
exercisable until at least one year has expired after the granting
of the Option, during which time the Participant shall have been in
the continuous employ of the Corporation or an Affiliate. At any
time during the period of the Option after the end of the first
year, the Participant may purchase up to 30 percent of the shares
covered by the Option; after the end of the second year, an
additional 30 percent; and after the end of the third year, the
remaining 40 percent of the total number of shares covered by the
Option; provided, however, that if the Participant's employment is
terminated for any reason other than death, Retirement or Total and
Permanent Disability, the Option shall be exercisable only for three
months following such termination and only for the number of shares
of Common Stock which were exercisable on the date of such
termination. In no event, however, may an Option be exercised more
than 10 years after the date of its grant.
(d) Exercise after Death, Retirement, or Disability. If a
Participant dies or becomes Totally and Permanently Disabled,
without having exercised the Option in full, the remaining portion
of such Option may be exercised, without regard to the limitations
in subsection 8(c), within (i) three years from the date of any such
event or (ii) the remaining period of the Option, whichever is
earlier. Upon a Participant's death, the Option may be exercised by
the person or persons to whom such Participant's rights under the
Option shall pass by will or by applicable law or, if no such person
has such rights, by his executor or administrator. If a Participant
Retires without having exercised the Option in full, the remaining
portion of such Option may be exercised, without regard to the
limitations in subsection 8(c), within the remaining period of the
Option.
(e) Non-transferability. During the Participant's lifetime,
Options shall be exercisable only by such Participant. Options
shall not be transferable other than by will or the laws of descent
and distribution upon the Participant's death. Notwithstanding
anything in this subsection 8(e) to the contrary, at the same time
as Nonqualified Stock Options are granted the Committee may also
grant to designated Participants the right to transfer such Options,
to the extent allowed under rule 16b-3 of the Exchange Act, subject
to the terms and conditions of the Committee Rules on the date of
grant.
(f) Exercise; Notice Thereof. Options shall be exercised by
delivering to the Corporation, at the office of the Treasurer at the
World Headquarters, written notice of the number of shares with
respect to which Option rights are being exercised and by paying in
full the Option Price of the shares at the time being acquired.
Payment may be made in cash, a check payable to the Corporation or
in shares of Common Stock transferable to the Corporation and having
a Fair Market Value on the transfer date equal to the amount payable
to the Corporation. The date of exercise shall be deemed to be the
date the Corporation receives the written notice and payment for the
shares being purchased. A Participant shall have none of the rights
of a stockholder with respect to shares covered by such Option until
the Participant becomes the record holder of such shares.
(g) Purchase for Investment. It is contemplated that the
Corporation will register shares sold to Participants pursuant to
the Plan under the Securities Act of 1933. In the absence of an
effective registration, however, a Participant exercising an Option
hereunder may be required to give a representation that he/she is
acquiring such shares as an investment and not with a view to
distribution thereof.
(h) Limitations on Incentive Stock Option Grants.
(i) An Incentive Stock Option shall be granted only
to an individual who, at the time the Option is granted, does
not own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the
Corporation or Affiliates.
(ii) The aggregate Fair Market Value of all shares
with respect to which Incentive Stock Options are exercisable
by a Participant for the first time during any year shall not
exceed $100,000. The aggregate Fair Market Value of such
shares shall be determined at the time the Option is granted.
(i) Options for Nonresident Aliens. In the case of any Option
awarded to a Participant who is not a resident of the United States
or who is employed by an Affiliate other than an Affiliate that is
incorporated, or whose place of business is, in a State of the
United States, the Committee may (i) waive or alter the conditions
set forth in subsections 8(a) through 8(h) to the extent that such
action is necessary to conform such Option to applicable foreign
law, or (ii) take any action, either before or after the award of
such Option, which it deems advisable to obtain approval of such
Option by an appropriate governmental entity; provided, however,
that no action may be taken hereunder if such action would (1)
increase any benefits accruing to any Participants under the Plan,
(2) increase the number of securities which may be issued under the
Plan, (3) modify the requirements for eligibility to participate in
the Plan, (4) result in a failure to comply with applicable
provisions of the Securities Act of 1933, the Exchange Act or the
Code or (5) result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor
section.
(j) Election to Receive Cash Rather than Stock.
(i) At the same time as Nonqualified Stock Options
are granted the Committee may also grant to designated
Participants the right to convert a specified number of shares
of Common Stock covered by such Nonqualified Stock Options to
cash, subject to the terms and conditions of this subsection
8(j). For each such Option so converted, the Participant shall
be entitled to receive cash equal to the difference between the
Participant's Option Price and the Fair Market Value of the
Common Stock on the date of conversion. Such a right shall be
referred to herein as a Stock Appreciation Right ("SAR").
Participants to which an SAR has been granted shall be notified
of such grant and of the Options to which such SAR pertains.
An SAR may be revoked by the Committee, in its sole discretion,
at any time, provided, however, that no such revocation may be
taken hereunder if such action would result in the disallowance
of a deduction to the Corporation under section 162(m) of the
Code or any successor section.
(ii) A person who has been granted an SAR may
exercise such SAR during such periods as provided for in the
rules promulgated under section 16 of the Exchange Act. The
SAR shall expire when the period of the subject Option expires.
(iii) At the time a Participant converts one or
more shares of Common Stock covered by an Option to cash
pursuant to an SAR, such Participant must exercise one or more
Nonqualified Stock Options, which were granted at the same time
as the Option subject to such SAR, for an equal number of
shares of Common Stock. In the event that the number of shares
and the Option Price per share of all shares of Common Stock
subject to outstanding Options is adjusted as provided in the
Plan, the above SARs shall automatically be adjusted in the
same ratio which reflects the adjustment to the number of
shares and the Option Price per share of all shares of Common
Stock subject to outstanding Options.
9. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS
(a) A Participation Share award shall be considered to reach
maturity as of the close of the fiscal year in which (i) a
Participant's employment terminates because such Participant enters
governmental service or (ii) the Participant's employment with the
Corporation or an Affiliate is terminated by reason of a shutdown or
divestiture of all or a portion of the Corporation's or its
Affiliate's business.
(b) An authorized leave of absence, or qualified military
leave in accordance with section 414(u) of the Code, shall not be
deemed to be a termination of employment for purposes of the Plan.
A termination of employment with the Corporation or an Affiliate to
accept immediate reemployment with the Corporation or an Affiliate
likewise shall not be deemed to be a termination of employment for
purposes of the Plan.
10. SHARES SUBJECT TO THE PLAN
The number of shares of Common Stock available with respect to all
Awards granted under this Plan shall not exceed 40,000,000 in the
aggregate, of which not more than 40,000,000 shall be available for
option and sale, subject to the adjustment provision set forth in section
12 hereof. The shares of Common Stock subject to the Plan may consist in
whole or in part of authorized but unissued shares or of treasury shares,
as the Board may from time to time determine. Participation Shares which
are retired through forfeiture or maturity, other than those
Participation Shares which are retired through the payment of Common
Stock, and shares subject to Options which become ineligible for purchase
will be available for Awards under the Plan to the extent permitted by
section 16 of the Exchange Act (or the rules and regulations promulgated
thereunder) and to the extent determined to be appropriate by the
Committee. Shares of Common Stock which are distributed through the
payment of Participation Share Awards pursuant to subsection 7(c) will
not be available for Awards under the Plan.
11. INDIVIDUAL LIMITS
The maximum number of Participation Shares or shares of Common Stock
covered by Options which may be granted to any Participant within any 2
consecutive calendar year period shall not exceed 1,000,000 in the
aggregate. If an Option which had been granted to a Participant is
canceled, the shares of Common Stock which had been subject to such
canceled Option shall continue to be counted against the maximum number
of shares for which Options may be granted to the Participant. In the
event that the number of Participation Shares which may be awarded or
Options which may be granted is adjusted as provided in the Plan, the
above limits shall automatically be adjusted in the same ratio which
reflects the adjustment to the number of Participation Shares or Options
available under the Plan.
12. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or the
capitalization of the Corporation through a corporate transaction, such
as any merger, any acquisition through the issuance of capital stock of
the Corporation, any consolidation, any separation of the Corporation
(including a spin-off or other distribution of stock of the Corporation),
any reorganization of the Corporation (whether or not such reorganization
comes within the definition of such term in section 368 of the Code), or
any partial or complete liquidation by the Corporation, recapitalization,
stock dividend, stock split or other change in the corporate structure,
appropriate adjustments and changes shall be made by the Committee, to
the extent necessary to preserve the benefit to the Participant
contemplated hereby, to reflect such changes in (a) the aggregate number
of shares subject to the Plan, (b) the maximum number of shares for which
Options or Participation Shares may be granted or awarded to any
Participant, (c) the number of shares and the Option Price per share of
all shares of Common Stock subject to outstanding Options, (d) the number
of Participation Shares, the Base Value per Participation Share awarded
to Participants, and the number of Dividend Shares credited to
Participants' Accounts, and (e) such other provisions of the Plan as may
be necessary and equitable to carry out the foregoing purposes, provided,
however that no such adjustment or change may be made to the extent that
such adjustment or change will result in the disallowance of a deduction
to the Corporation under section 162(m) of the Code or any successor
section.
13. EFFECT ON OTHER PLANS
All payments and benefits under the Plan shall constitute special
compensation and shall not affect the level of benefits provided to or
received by any Participant (or the Participant's estate or
beneficiaries) as part of any employee benefit plan of the Corporation or
an Affiliate. The Plan shall not be construed to affect in any way a
Participant's rights and obligations under any other plan maintained by
the Corporation or an Affiliate on behalf of employees.
14. TERM OF THE PLAN
The term of the Plan shall be ten years, beginning April 24, 1992,
and ending April 23, 2002, unless the Plan is terminated prior thereto by
the Committee. No Option may be granted or Participation Share awarded
after the termination date of the Plan, but Options and Participation
Shares theretofore granted or awarded shall continue in force beyond that
date pursuant to their terms.
15. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who shall be
granted a Participation Share award under the Plan may designate a
beneficiary or beneficiaries with the Committee on a form to be
prescribed by it; provided that no such designation shall be
effective unless so filed prior to the death of such Participant.
(b) No Right of Continued Employment. Neither the
establishment of the Plan nor the payment of any benefits hereunder
nor any action of the Corporation, its Affiliates, the Board of
Directors of the Corporation or its Affiliates, or the Committee
shall be held or construed to confer upon any person any legal right
to be continued in the employ of the Corporation or its Affiliates,
and the Corporation and its Affiliates expressly reserve the right
to discharge any Participant without liability to the Corporation,
its Affiliates, the Board of Directors of the Corporation or its
Affiliates or the Committee, except as to any rights which may be
expressly conferred upon a Participant under the Plan.
(c) Binding Effect. Any decision made or action taken by the
Corporation, the Board or by the Committee arising out of or in
connection with the construction, administration, interpretation and
effect of the Plan shall be conclusive and binding upon all persons.
(d) Modification of Awards.
(1) The Committee may in its sole and absolute
discretion, by written notice to a Participant, (i) limit
or eliminate the ability of the Participant's
Participation and Dividend Shares to generate additional
Dividend Shares, and/or (ii) fix the Book Value of all or
any portion of the Participant's existing Participation
and existing or future Dividend Shares for the purposes of
any payments that might be made under subsection 7(c) at
their Book Value as of the end of the fiscal year of the
Corporation in which such notice is dated so that no
further appreciation occurs in such Book Value, and/or
(iii) limit the period in which an Option may be exercised
to a period ending at least three months following the
date of such notice, and/or (iv) limit or eliminate the
number of shares subject to Option after a period ending
at least three months following the date of such notice.
Notwithstanding anything in this subsection 15(d) to the
contrary, the Committee may not take any action to the
extent that such action would result in the disallowance
of a deduction to the Corporation under section 162(m) of
the Code or any successor section.
(2) A Participant's Participation Share or Dividend
Share which has had its ability to generate additional
Dividend Shares limited or eliminated and for which the
Book Value is fixed pursuant to subsection 15(d)(1)(i) of
the Plan shall be credited with interest equal to the
product of (i) the number of Interest Credits (determined
pursuant to subsection 15(d)(3) below) credited to such
Participant's Account as of the Maturity Date and (ii) the
Book Value at which such Participation Share or Dividend
Share has been fixed.
(3) The number of Interest Credits to be credited to
a Participant's Account for each fiscal quarter of the
Corporation ending after the date as of which the Book
Value of such Participant's Participation Shares or
Dividend Shares is fixed shall be determined as follows.
The total cash dividend declared per share of Common Stock
during such quarter (but subsequent to the date of the
award in the case of Participation Shares and subsequent
to the date of crediting in the case of Dividend Shares)
shall be multiplied by the total of the Participation
Shares, Dividend Shares and Interest Credits in the
Participant's Account. The amount so determined shall be
divided by the Book Value of one share of Common Stock as
of the close of such fiscal quarter. The quotient shall
represent the number of full and fractional Interest
Credits credited to such Participant's Account for that
quarter.
(e) No Segregation of Cash or Stock. The Accounts established
for Participants are merely a bookkeeping convenience and neither
the Corporation nor its Affiliates shall be required to segregate
any cash or stock which may at any time be represented by Awards.
Nor shall anything provided herein be construed as providing for
such segregation. Neither the Corporation, its Affiliates, the
Board nor the Committee shall, by any provisions of the Plan, be
deemed to be a trustee of any property, and the liability of the
Corporation or its Affiliates to any Participant pursuant to the
Plan shall be those of a debtor pursuant to such contract
obligations as are created by the Plan, and no such obligation of
the Corporation or its Affiliates shall be deemed to be secured by
any pledge or other encumbrance on any property of the Corporation
or its Affiliates.
(f) Inalienability of Benefits and Interest. Except as
provided in subsections 8(e) and 15(a), no benefit payable under or
interest in the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any such attempted action shall be void and no such
benefit or interest shall be in any manner liable for or subject to
debts, contracts, liabilities, engagements, or torts of any
Participant or beneficiary.
(g) Delaware Law to Govern. All questions pertaining to the
construction, interpretation, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the
laws of the State of Delaware.
(h) Election to Defer Receipt.
(1) A Participant may, with the consent of the
Committee, elect to defer the receipt of all or any portion of
amounts which may otherwise become payable under subsection
7(c). A Participant's receipt of any portion of the amount
payable with respect to one or more outstanding Participation
Share awards shall be deferred if, prior to the Maturity Date
of any such award, or if earlier, such Participant's
termination of employment, such Participant irrevocably elects
such deferral by written notice to the Committee signed by the
Participant and delivered to the Committee, and the Committee
consents to such deferral. Such notice must clearly specify
the manner of distribution described in paragraph (2) below
which shall apply with respect to such deferred amounts. After
adjustment for any resulting interest, the deferred amount
shall be paid at the date or dates specified in the
Participant's letter, and such adjusted amount shall not be
subject to forfeiture as otherwise provided in subsection 7(h).
Notwithstanding the foregoing, with the consent of the
Committee, an election made prior to January 1, 1999 pursuant
to this paragraph may be irrevocably modified by a Participant
prior to the earlier of (i) January 1, 1999, (ii) such
Participant's termination of employment or (iii) the payment of
the first installment pursuant to subsection 15(h)(2) below.
(2) Amounts deferred pursuant to this subsection
15(h) shall be distributed in accordance with clause (i), (ii),
or (iii), below, as elected by the Participant: (i) up to 20
annual installments commencing in the year after the
termination of employment by reason of retirement; (ii) up to
five annual installments, commencing 13 months after the
Participant's repatriation to his home country following a
foreign assignment; or (iii) up to five annual installments,
commencing as of a date requested by the Participant; provided,
however, that such date shall not be more than 20 years after
the Maturity Date. The amount of each installment under clause
(i), (ii) or (iii) above shall be equal to the product of the
amount which has not been distributed immediately prior to such
installment and a fraction, the numerator of which is one and
the denominator of which is the number of installments yet to
be paid.
(3) (i) Notwithstanding any other
provision of this Plan to the contrary, deferred
amounts shall be paid in one lump sum as soon as
practicable after the death of the Participant or the
termination of employment of the Participant with the
Corporation for reasons other than Retirement or
Total and Permanent Disability; however, if a
Participant is or has been on foreign assignment in
the 12 months immediately prior to the date of his
termination of employment, and if the termination of
employment is for any reason other than Retirement or
Total and Permanent Disability, any remaining amounts
shall be paid in one lump sum 13 months following the
earlier of (A) the date of the Participant's
repatriation to his home country following the
foreign assignment or (B) the date of such
termination of employment.
(ii) Upon written application by a
Participant or his legal representative stating that
severe financial hardship will result from continued
deferral, the Committee in its sole discretion may
authorize payment of such Participant's deferred
amounts prior to the date specified in the written
notice described in subparagraph (h)(1) above. For
purposes of this Plan, a "severe financial hardship"
is an unanticipated emergency that is caused by an
event beyond the control of the Participant and that
would result in severe financial hardship to the
individual if the emergency distribution were not
permitted. Cash needs arising from foreseeable
events, such as the purchase of a residence or
education expenses for children shall not be
considered the result of a severe financial hardship.
For purposes of this Plan, a "severe financial
hardship" is limited to an event described in
Treasury Regulation section 1.401(k)-
1(d)(2)(iv)(A)(1) or (4). For purposes of this Plan,
a distribution is in "the amount necessary to satisfy
the emergency" only if the requirements of Treasury
Regulation section 1.401(k)-1(d)(2)(iv)(B) are
satisfied. A Participant must provide the Committee
with substantiation of any such claim of severe
financial hardship.
(4) Amounts deferred hereunder shall be credited
with interest, compounded quarterly, from the date such amount
otherwise would have been paid at a rate yielding interest
equivalent to the per annum market discount rate for six-month
U.S. Treasury Bills as published by the Federal Reserve Board
for the seven calendar days prior to January 1 (for interest to
be credited for the subsequent fiscal quarters ending March 31
and June 30) and prior to July 1 (for interest to be credited
for the subsequent fiscal quarters ending on September 30 and
December 31).
(i) Purchase of Common Stock. The Corporation and its
Affiliates may purchase from time to time shares of Common Stock in
such amounts as they may determine for purposes of the Plan. The
Corporation and its Affiliates shall have no obligation to retain,
and shall have the unlimited right to sell or otherwise deal with
for their own account, any shares of Common Stock purchased pursuant
to this paragraph.
(j) Use of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to the exercise of Options
shall be used for general corporate purposes.
(k) Withholding. The Committee shall require the withholding
of all taxes as required by law. In the case of payments of Awards
in shares of Common Stock or other securities, withholding shall be
as required by law and in the Committee Rules. A Participant may
elect to have any portion of the federal, state or local income tax
withholding required with respect to an exercise of a Nonqualified
Stock Option satisfied by tendering to the Corporation shares of
Common Stock, which, in the absence of such an election, would have
been issued to such Participant in connection with such exercise.
In the event that the value of the shares of Common Stock tendered
to satisfy the withholding tax required with respect to an exercise
exceeds the amount of such tax, the excess of such market value over
the amount of such tax shall be returned to the Participant, to the
extent possible, in whole shares of Common Stock, and the remainder
in cash. The value of a share of Common Stock tendered pursuant to
this subsection 15(k) shall be the Fair Market Value of the Common
Stock on the date on which such shares are tendered to the
Corporation. An election pursuant to this subsection 15(k) shall be
made in writing and signed by the Participant. An election pursuant
to this subsection 15(k) is irrevocable. A Participant who
exercises an option and who is required to report to the Securities
and Exchange Commission under section 16(a) of the Exchange Act (an
"Insider") may satisfy the income tax withholding due in respect of
such exercise pursuant to this subsection 15(k) only if the Insider
also satisfies an exemption under section 16(a) of the Exchange Act
(or the rules or regulations promulgated thereunder) for such
withholding.
(l) Amendments. The Committee may at any time amend, suspend,
or discontinue the Plan or alter or amend any or all Awards and
Award Agreements under the Plan to the extent (1) permitted by law,
(2) permitted by the rules of any stock exchange on which the Common
Stock or any other security of the Corporation is listed, (3)
permitted under applicable provisions of the Securities Act of 1933,
as amended, the Exchange Act (including rule 16b-3 thereof) and (4)
that such action would not result in the disallowance of a deduction
to the Corporation under section 162(m) of the Code or any successor
section (including the rules and regulations promulgated
thereunder); provided, however, that if any of the foregoing
requires the approval by stockholders of any such amendment,
suspension or discontinuance, then the Committee may take such
action subject to the approval of the stockholders. Except as
provided in subsections 8(i) and 15(d) no such amendment,
suspension, or termination of the Plan shall, without the consent of
the Participant, adversely alter or change any of the rights or
obligations under any Awards or other rights previously granted the
Participant under the Plan.