Exhibit 10-A
HERCULES INCORPORATED
ANNUAL MANAGEMENT INCENTIVE COMPENSATION PLAN
(AMENDED AND RESTATED FEBRUARY 21, 2003)
ARTICLE I PURPOSE
The Hercules Incorporated Annual Management Incentive Compensation Plan,
the terms of which are herein set forth (as the same is now in effect or
as hereafter amended from time to time, the "Plan"), is intended to enable
the Company to secure, retain and motivate highly qualified and
experienced management personnel by providing to employees (including
officers and directors who are employees) who (i) occupy positions that
affect the annual performance of the Company and of such of its
participating related companies as shall from time to time be designated
by the Board for participation in the Plan and (ii) are designated as
Participants in the Plan, incentive compensation linked to (a) the
Company's success in meeting prescribed corporate goals, (b) the
performance of the employee's organizational unit in meeting its
prescribed goals and (c) the employee's individual performance in meeting
its prescribed personal performance goals.
ARTICLE II DEFINITIONS AND CONSTRUCTION
Section 2.1 Definitions
The following words and phrases when used in the Plan with an initial
capital letter, unless their context clearly indicates to the contrary,
shall have the respective meanings set forth below in this Section 2.1:
Beneficiary. As defined in Subsection 17.7.1.
Board. The Board of Directors of the Company.
CEO. The Chief Executive Officer of the Company.
Change in Control. As defined in Section 15.1.
Committee. The Compensation Committee of the Board or such other
committee as may be designated by the Board to administer the Plan.
Common Stock. The common stock of the Company.
Company. Hercules Incorporated and its successors and assigns.
Corporate Payout Curves. As defined in Section 7.1.
Corporate Performance Goals. Performance goals for a Plan Year based
upon corporate performance during that Plan Year.
Determination Date. As defined in Article X.
Employee. An employee of the Company or of a Participating
Subsidiary.
Exchange Act. The Securities Exchange Act of 1934, as now in effect
or as hereafter amended from time to time.
Grantor. The Board, when used in reference to an Incentive Award
granted to the CEO; the Committee, when used in reference to an
Incentive Award granted to a Reporting Person; or the CEO, when used
in reference to an Incentive Award granted to a Nonreporting Person.
Group. One of the operating groups or corporate staff departments of
either the Company or a Participating Subsidiary.
Group Head. The individual occupying the highest organizational
position within a particular Group.
Group Payout Curves. As defined in Section 7.1.
Group Performance Goals. Performance goals for a Plan Year based
upon the performance of a particular Group during that Plan Year.
Incentive Award. The actual cash and/or stock distribution made to
any Participant pursuant to the Plan, the amount and payment of
which is determined as set forth in the Plan.
Incentive Awards Pool. As defined in Article IV.
Incumbent Board. As defined in Section 15.1.
Individual Performance Goals. Performance goals for a Plan Year
based upon the performance of a particular Participant during that
Plan Year.
Individual Target Award. As defined in Section 5.1.
LTICP. The Company's Long-Term Incentive Compensation Plan or any
successor thereto or any other plan pursuant to which the Company
has the ability to grant restricted shares of Common Stock.
Maximum. The level of achievement of a particular Performance Goal
at which the amount distributed with respect to the applicable
component of the relevant Incentive Award will reach its highest
possible level.
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Nonreporting Person. An Employee who is not subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to
the Company.
Participant. An Employee who is designated as a Participant in the
Plan for a given Plan Year pursuant to Article III.
Participating Subsidiary. A Subsidiary designated by the Board as a
Participating Subsidiary.
Payout Curve. The proposed Incentive Awards distribution scheme
established for a given Plan Year established pursuant to Article
VII hereof.
Performance Goals. Corporate Performance Goals, Group Performance
Goals and Individual Performance Goals.
Plan. As defined in Article I.
Plan Year. A calendar year for which any Participant is given the
opportunity to earn an Incentive Award under the Plan.
Reporting Person. An Employee subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to the Company,
other than the CEO.
Restricted Common Stock. As defined in Article X.
Subsidiary. Any corporation, partnership, joint venture or other
entity (i) that, directly or indirectly through one or more
intermediaries, is controlled by the Company or (ii) a majority or
more of whose outstanding voting stock or voting power for election
of directors or equivalent governing body is beneficially owned by
the Company directly or indirectly through one or more
intermediaries.
Target. The targeted level of performance with respect to any
particular Performance Goal.
Target Incentive Awards Pool. As defined in Article IV.
Threshold. The minimum level of achievement of a Performance Goal.
Section 2.2 Construction
Whenever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all
cases where they would so apply, and wherever any words are used herein in
the singular
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form they shall be construed as though they were also used in the plural
form in all cases where they would so apply. Headings of sections and
subsections of the Plan are inserted for convenience of reference, are not
a part of the Plan, and are not to be considered in the construction
hereof. The words "hereof," "herein," "hereunder" and other similar
compounds of the word "here" shall mean and refer to the entire Plan, and
not to any particular provision or section. All references herein to
specific Articles, Sections or Subsections shall mean Articles, Sections
or Subsections of this document unless otherwise qualified.
ARTICLE III PARTICIPATION AND GRANT OF INCENTIVE AWARDS
Section 3.1 Power to Designate Participants and Make Incentive Awards
3.1.1: The Board shall have the exclusive power to designate the CEO as a
Participant and to make all decisions concerning the Incentive Awards of
the CEO, including without limitation the terms and conditions of the
CEO's Incentive Award opportunities and the amounts actually payable to
the CEO pursuant to Incentive Awards, subject to the terms of the Plan and
after taking into account the recommendations of the Committee.
3.1.2: The Committee shall have the exclusive power to designate Reporting
Persons as Participants and to make all decisions concerning the Incentive
Awards of Reporting Persons, including without limitation the terms and
conditions of their Incentive Award opportunities and the amounts actually
payable to them pursuant to Incentive Awards, subject to the terms of the
Plan.
3.1.3: The CEO shall have the power to designate Nonreporting Persons as
Participants and to make all decisions concerning the Incentive Awards of
Nonreporting Persons, including without limitation the terms and
conditions of their Incentive Award opportunities and the amounts actually
payable to them pursuant to Incentive Awards, subject to the terms of the
Plan and to the authority and oversight of the Committee.
Section 3.2 Establishment of Terms of Awards
The terms and conditions of Incentive Award opportunities shall be
established in accordance with the process set forth in Articles IV
through VII below. Such process shall be completed not later than the end
of the first calendar quarter of the applicable Plan Year.
Section 3.3 Notification of Participation
Employees designated as Participants shall be so advised in writing, and
shall also be informed of the amount of their Individual Target Awards and
the other terms and conditions of their Incentive Award opportunities.
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ARTICLE IV INCENTIVE AWARDS POOLS
The Committee shall recommend to the Board, and the Board shall determine
and approve, the aggregate dollar amount of the Incentive Awards that
would be payable to all Participants if all Performance Goals were met at
the Target level (the "Target Incentive Awards Pool" for that Plan Year)
and the maximum aggregate dollar amount of the Incentive Awards that would
become payable to all Participants if all Performance Goals were met at
the Maximum level (the "Incentive Awards Pool"). However, the Board may
adjust the amount of the Target Incentive Awards Pool and/or the Incentive
Awards Pool upwards or downwards at any time before the end of the Plan
Year.
ARTICLE V INDIVIDUAL TARGET AWARDS
Section 5.1 Target Awards
The Grantor shall establish an incentive opportunity (an "Individual
Target Award") for each Participant who will be eligible to receive an
Incentive Award for each Plan Year, such that the aggregate of the
Individual Target Awards does not exceed the Target Incentive Awards Pool
for that Plan Year. The Individual Target Award shall be a percentage of
the Participant's base salary or the benchmark for the Participant's
position, or a flat dollar amount, as determined by the Grantor, but need
not be the same for any other Participant or group of Participants. In
selecting such percentage or amount, the Grantor shall consider, among
other criteria, survey data regarding competitive industry practices for
similar positions in comparable-sized chemical companies.
Section 5.2 Components
Each Individual Target Award will consist of two parts: a corporate
component, to be earned based upon achievement of the applicable Corporate
Performance Goals, and a Group component, to be earned based upon
achievement of the applicable Group Performance Goals (in each case
subject to adjustment based on the achievement of the applicable
Individual Performance Goals). The Grantor shall determine the percentage
assigned to each of the two components.
ARTICLE VI PERFORMANCE GOALS
Section 6.1 Corporate Performance Goals
The Committee shall recommend to the Board, and the Board shall determine
and approve, the Corporate Performance Goals for each Plan Year, including
the Threshold, Target and Maximum levels of achievement. After such
approval, the Board may modify the Corporate Performance Goals in any
manner that it deems equitable and appropriate as a result of an
extraordinary and material change in the Company's business, operations,
corporate or capital structure, in
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the manner in which it conducts business or any other extraordinary and
material change affecting the Company.
Section 6.2 Group Performance Goals
Group Performance Goals for Participants in each Group shall be
established for each Plan Year by the CEO after consultation with the
applicable Group Head, including the Threshold, Target and Maximum levels
of achievement. After such establishment, the CEO may approve a
modification to such Group Performance Goals in any manner that he deems
equitable and appropriate as a result of an extraordinary and material
change in the Company's business, operations, corporate or capital
structure, in the manner in which it conducts business or any other
extraordinary and material change affecting the Company.
Section 6.3 Individual Performance Goals
Individual Performance Goals shall be established for each Participant for
each Plan Year, as follows:
6.3.1: Individual Performance Goals for the CEO shall be established
by the Board, after consultation with the Committee and the CEO.
Individual Performance Goals for a Reporting Person shall be
established by the Committee after consultation with the CEO and the
Reporting Person. Individual Performance Goals for a Nonreporting
Person shall be established by the Group Head for whom he works
after consultation with such Nonreporting Person.
6.3.2: After Individual Performance Goals have been established
under Section 6.3.1, the Board, the Committee or the Group Head, as
applicable, may approve a modification to the Individual Performance
Goals in any manner that it or he deems equitable and appropriate as
a result of a change in the Participant's duties and
responsibilities or the manner in which he discharges his duties and
responsibilities or any other change, in each case if it or he
determines such change to be extraordinary and material.
Section 6.4 Certain Modifications
In the event of a modification of the Corporate Performance Goals or the
Group Performance Goals for any Plan Year pursuant to Section 6.1 or 6.2,
the Grantor may modify the Individual Performance Goals of any Participant
affected by the change resulting in such modification as deemed
appropriate and equitable in his sole and absolute discretion.
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ARTICLE VII PAYOUT CURVE
Section 7.1 Establishment of Payout Curves
The Committee shall establish the Payout Curves for the corporate
component of Incentive Awards (the "Corporate Payout Curve"), and the CEO
shall establish the Payout Curves for the Group component of Incentive
Awards (the "Group Payout Curves").
Section 7.2 Requirements
Each Payout Curve shall, within the framework of the applicable
Performance Goals, Individual Target Awards, Thresholds and other terms
and conditions established pursuant to Articles III through VI:
7.2.1: Establish Threshold, Target, Maximum and intermediate(s)
performance and distribution levels for determining the amounts to
be distributed to Participants pursuant to their Incentive Awards;
and
7.2.2: Provide for distributions ranging from 0% to 200% of the
Target Incentive Awards Pool, depending on the application of actual
performance against the distribution levels set forth on such Payout
Curve.
Section 7.3 Modification
From time to time, at any time before distributions are made with respect
to Incentive Awards for a Plan Year, the Committee in its sole discretion
may modify the Corporate Payout Curve, and the CEO, in his sole
discretion, may modify or amend the Group Payout Curve for any Group, in
order to reflect changed business or economic conditions.
ARTICLE VIII DETERMINATION OF PERFORMANCE RESULTS
As soon as practicable following the end of each Plan Year (1) the
Committee shall determine whether and the extent to which the applicable
Corporate Performance Goals were attained, (2) the CEO shall determine
whether and the extent to which each Group attained its applicable Group
Performance Goals, and (3) the Board, the CEO or the relevant Group Head,
as applicable, shall determine whether and the extent to which each
Participant attained his Individual Performance Goals. All such
determinations shall be conclusive and binding with respect to all
Participants and their Beneficiaries, except as they may be modified
pursuant to other provisions of the Plan.
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ARTICLE IX DETERMINATION OF INCENTIVE AWARDS
Section 9.1 Calculation
As soon as practicable after the determinations required by Article VIII
have been made, the actual Incentive Awards to be made to Participants
shall be calculated, based upon such determinations, and in the following
manner:
9.1.1: The corporate component of each Participant's Incentive Award
shall be determined by the application of the Corporate Payout Curve
to the achievement of the applicable Corporate Performance Goals.
9.1.2: The relevant Group component of each Participant's Incentive
Award shall be determined by the application of the achievement of
the relevant Group Payout Curve to the applicable Group Performance
Goals.
9.1.3: The actual Incentive Award for each Participant, subject to
Subsection 9.1.4, shall be calculated by adding the corporate and
Group components as so calculated, and then adjusting the result as
appropriate based upon the Participant's achievement of the
applicable Individual Performance Goals and such other factors as
the Grantor may deem appropriate.
9.1.4: If the total amount of the Incentive Awards as thus
determined for all Participants exceeds the Incentive Awards Pool,
Incentive Awards shall be adjusted so that the total equals the
Incentive Awards Pool.
Section 9.2 Threshold Requirement
Notwithstanding any other provision of the Plan, if the achievement of the
Corporate Performance Goals for a given Plan Year is below the stated
Threshold, no Participant shall receive any payment under Incentive Awards
for that Plan Year unless the Board determines otherwise in its sole
discretion.
ARTICLE X PAYMENT OF INCENTIVE AWARDS
Promptly following the date on which the final determination of Incentive
Awards for a Plan Year is made (the "Determination Date"), subject to
Articles XI through XIII below, each Participant shall be entitled to have
his Incentive Award distributed to him in cash, in restricted shares of
common stock pursuant to the LTICP ("Restricted Common Stock") or partly
in each, as the Committee shall determine (and such determination need not
be the same for all Participants). If any portion of any Incentive Award
is distributed in Restricted Common Stock of the Company, the number of
shares shall be determined by dividing (1) the dollar amount of such
portion of the Incentive Award by (2) 85% of the fair market value of one
share of Common Stock on the applicable Determination Date. For purposes
of this Article X, the term "fair market value" shall mean, as of any
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given Determination Date, the closing price for one share of Common Stock
on that Determination Date, as reported on the Composite Tape for New York
Stock Exchange Listed Companies and published in the Eastern Edition of
The Wall Street Journal or, if there is no trading on that Determination
Date, the closing price of the Common Stock as so reported and published
on the next preceding date on which there was trading in Common Stock.
ARTICLE XI PRO-RATED INCENTIVE AWARDS
Section 11.1 New Participants
Notwithstanding any provision of the Plan other than Article XV, if an
Employee becomes a Participant during a given Plan Year, such
Participant's Incentive Award may (but need not) be pro-rated, if so
determined by the Grantor, to reflect the partial year of participation.
Section 11.2 Transferred Participants
Notwithstanding any provision of the Plan other than Article XV, a
Participant whose employment is transferred from one Group to another
during a given Plan Year may have his Incentive Award pro-rated between or
among such Groups as determined by the Grantor, including without
limitation by applying different Group Performance Goals to different
portions of his Incentive Award.
Section 11.3 Position Change
Notwithstanding any provision of the Plan other than Article XV, if during
any Plan Year a Participant moves from one position to another position in
the Company or a Participating Subsidiary, the Grantor may, if the Grantor
determines it is warranted, approve appropriate and equitable
modifications to the performance requirements applicable to such
Participant for such Plan Year to take account of such change.
ARTICLE XII SUBSTANDARD PERFORMANCE
Notwithstanding any provision of the Plan other than Article XV, if, at
any time before a Participant has received distribution of any particular
Incentive Award, the Grantor shall determine that a given Participant has
performed any of his employment obligations in an unsatisfactory manner,
the Grantor may decrease or may entirely eliminate the amount of the
distribution that the Participant would otherwise be entitled to receive
with respect to that Incentive Award.
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ARTICLE XIII TERMINATION OF EMPLOYMENT
Section 13.1 General Rule
Except as provided below in this Article XIII and in Article XV, a
Participant shall not be entitled to receive any distribution pursuant to
an Incentive Award for a particular Plan Year unless he is employed by the
Company or a Participating Subsidiary, as applicable, on December 31 of
such Plan Year.
Section 13.2 Death, Disability, Retirement or Reduction in Force
A Participant (or, as appropriate, his Beneficiary or his estate) whose
employment terminates during a Plan Year due to death, disability,
retirement or reduction in force, may receive a pro-rated portion of his
Incentive Award for such Plan Year, if so determined by the Grantor.
Section 13.3 Termination for Cause
Notwithstanding any other provision of the Plan, except as provided in the
next sentence, a Participant whose employment is involuntarily terminated
for cause (as determined by the Committee) shall not receive any
distributions with respect to any Incentive Award for the Plan Year that
has not actually been distributed before such termination. However, the
foregoing shall not apply to any payment to the Participant pursuant to
Article XV unless both the Participant's termination of employment and the
Committee's determination that such termination was for cause occur before
the relevant Change in Control.
ARTICLE XIV ADMINISTRATION OF THE PLAN AND DELEGATIONS OF AUTHORITY
Section 14.1 Committee Authority and Responsibility
The Committee shall have primary responsibility for the administration of
the Plan, and shall make all determinations under the Plan with respect to
Reporting Persons. Without limiting the generality of the foregoing, the
Committee shall (i) grant Incentive Awards to Reporting Persons, (ii)
establish the maximum aggregate amount of Incentive Awards to be granted
to Nonreporting Persons as a Group and (iii) establish the guidelines and
oversight under which, pursuant to authorities granted by the Committee
and the provisions of the Plan, the CEO may grant Incentive Awards to, and
make determinations under the Plan with respect to, Nonreporting Persons,
as more fully provided in Section 3.2. Furthermore, the Committee shall
have final authority, in its sole discretion, to interpret the Plan and to
make rules regarding its operation and administration, which shall be
final and binding upon all Participants. The Committee may delegate to any
of its members or to one or more employees of the Company the
responsibility for the day-to-day administration of the Plan, provided
that the delegated responsibilities are ministerial in nature.
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Section 14.2 Board Authority and Responsibility
The Board shall make all determinations under the Plan with respect to the
CEO in his capacity as a Participant, taking into account the
recommendations of the Committee. Notwithstanding anything to the contrary
in the Plan, the Board may exercise any authority under the Plan that is
given to the Committee or the CEO.
Section 14.3 CEO Authority and Responsibility
In making awards to Nonreporting Persons and carrying out his other
responsibilities under the Plan, the CEO is acting as a delegee of the
Committee and is at all times accountable to the Committee and authorized
to act only in accordance with the provisions of the Plan and the
guidelines and direction provided by the Committee from time to time.
Furthermore, notwithstanding anything to the contrary in the Plan, the
Committee may at any time revoke any or all authority given to the CEO
under the Plan, in which event such authority shall be exercised by the
Committee unless and until the Committee determines otherwise. The CEO
shall report to the Committee as and when requested by the Committee
regarding the manner in which the CEO has exercised his power under the
Plan. The CEO is not intended to be, nor shall the CEO be construed to be,
a member of the Committee. The CEO may delegate all or part of his
authority and responsibilities under the Plan to one or more other
appropriate officers or employees of the Company or any Participating
Subsidiary.
ARTICLE XV CHANGE IN CONTROL
Section 15.1 Definition
A "Change in Control" shall mean the occurrence of any of the following
events:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act (a
"Person")) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power
of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that, for purposes
of this part (1), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any Affiliated Company, or (iv) any acquisition by
any corporation pursuant to a transaction that complies with parts
(3)(A), (3)(B) and (3)(C) of this definition;
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(2) Individuals who, as of August 24, 2000, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;
(3) Consummation of a reorganization, merger, consolidation or sale or
other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, 60% or more of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such
transaction, owns the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to
the extent that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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Section 15.2 Effect of Change in Control
In the event of a Change in Control of the Company during a given Plan
Year, each Participant who is employed by the Company or a Participating
Subsidiary on the date of the Change in Control, or whose employment was
terminated during the Plan Year but before the Change in Control, shall
receive a cash payment, in full settlement of his Incentive Award for that
Plan Year, equal to the Individual Target Award established for such
Participant at the beginning of such Plan Year, times (in the case of a
Participant not so employed on the date of the Change in Control) a
fraction, the numerator of which is the number of days in the Plan Year
through the date of the Change in Control, and the denominator of which is
the number of days in the Plan Year. The Incentive Award payable to each
Participant as a result of such Change in Control shall be paid in full
within thirty (30) days after the effective date of such Change in
Control. In the case of a Participant who is a party to any Individual
Agreement under which the Participant is or may become entitled to
payments with respect to the same Incentive Award as described above, the
Company or its successor may make the right of such Participant to receive
the payment set forth above conditioned upon the execution by such
Participant of a waiver of the right to receive such payments under the
Individual Agreement to the extent they would duplicate such payment. In
the case of a Participant who is a party to any individual agreement under
which the Participant is or may become entitled to additional payments
with respect to the same Incentive Award, the Company or its successor may
make the right of such Participant to receive the payment set forth above
conditioned upon the execution by such Participant of a waiver of the
right to receive such payments under the individual agreement to the
extent they would duplicate such payment.
ARTICLE XVI AMENDMENT, SUSPENSION AND TERMINATION
The Board reserves the right to amend, suspend or terminate, in whole or
in part, at any time and from time to time, any or all of the provisions
of the Plan; provided, that no amendment, suspension or termination of the
Plan that is made in anticipation of, in connection with or following a
Change in Control, or at the request of a third party seeking to effect a
Change in Control, shall have any effect on Article XV or the second
sentence of Section 13.3, as they apply to that Change in Control, unless
such effect is in no way adverse to the interests of Participants.
ARTICLE XVII MISCELLANEOUS
Section 17.1 Shares Available for Awards
Shares of Restricted Common Stock delivered under the Plan shall be taken
from the share authorization under the LTICP, and shall be subject to all
of the terms, conditions and provisions thereof, including without
limitation periods of restriction, transferability restrictions, risk of
forfeiture and such other conditions
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as the Committee, in accordance with the terms of the Long-Term Incentive
Compensation Plan, may establish at the time the shares are delivered.
Section 17.2 Incentive Awards Pool Adjustments
The Committee from time to time, either during a given Plan Year or
subsequent to the conclusion thereof, at any time prior to the
commencement of distribution of Incentive Award payments for such Plan
Year to Participants, may recommend to the Board that the amount of the
Target Incentive Awards Pool and/or the Incentive Awards Pool for such
Plan Year be increased or decreased, in order to reflect changed business
or economic conditions.
Section 17.3 Deferral of Payment of Incentive Awards
A Participant shall be eligible to defer the payment of any Incentive
Award that the Committee determines will be paid in cash, if he is
eligible to participate in any deferred compensation plan that permits
such deferral. Any such deferral shall be made under and subject to the
provisions of the applicable deferred compensation plan.
Section 17.4 Unfunded Plan
The Plan shall be unfunded, and the Company shall not be required to
segregate any assets which may at any time be represented by Incentive
Awards under the Plan. The Incentive Awards payable under the Plan are
contingent in character and, therefore, no rights shall vest in any
Participant under the Plan until either the amount of such Participant's
Incentive Award has been determined and paid by the Company pursuant to
the Plan, or receipt thereof has been deferred by such Participant
pursuant to the Hercules Deferred Compensation Plan.
Section 17.5 Inalienability of Rights and Interests
The rights and interests of a Participant under the Plan are personal to
the Participant and to any person or persons who may become entitled to
distribution or payments under the Plan by reason of death of the
Participant, and the rights and interests of the Participant or any such
person (including, without limitation, any Incentive Award distributable
or payable under the Plan) shall not 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 Participants. If any
Participant shall attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge any of his rights or interests under the Plan
(including without limitation, any Incentive Award payable under the
Plan), then the Committee may hold or apply such benefit or any part
thereof to or for the benefit of such Participant or his Beneficiary, his
spouse, children, blood relatives or other dependents, or any
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of them in such manner and in such proportions as the Committee may
consider proper.
Section 17.6 Withholding Taxes
The Company shall deduct, or cause to be deducted, from all distributions
pursuant to Incentive Awards, all Federal, state and local taxes that the
Company is required by any law to withhold on such payments. Restricted
Common Stock that is distributed in settlement or partial settlement of
Incentive Awards shall be subject to the applicable tax withholding
provisions of the Long-Term Incentive Compensation Plan. Cash
distributions that are deferred as permitted by Section 17.3 shall be
subject to the tax withholding provisions of the applicable deferred
compensation plan.
Section 17.7 Designation of Beneficiaries
17.7.1: Each Participant shall be permitted to file with the Company a
written designation, on such form and in accordance with such procedures
and rules as the Committee may prescribe, of one or more persons (each, a
"Beneficiary") to receive the Incentive Award, if any, payable under the
Plan upon the Participant's death. If a Participant has filed more than
one such designation, the designation most recently received by the
Company shall be controlling; provided, however, that no designation,
change or revocation thereof shall be effective unless received by the
Company prior to the Participant's death. If no such Beneficiary
designation is in effect at the time of a Participant's death, or if no
designated Beneficiary survives a Participant, all distributions of that
Participant's Incentive Awards shall be made to the Participant's estate.
17.7.2: The Committee may disregard the provisions of Section 17.7.1 to
the extent distributions of Incentive Awards of a deceased Participant are
required to be made in some other manner pursuant to applicable law. If
the Committee is in doubt as to the right of any person to receive such
Incentive Award, the Company may retain such Incentive Award, without
liability for any interest thereon, until the Committee determines the
rights thereto, or the Company may pay such Incentive Award to any court
of appropriate jurisdiction and such payment shall be a complete discharge
of the liability of the Company therefor.
Section 17.8 No Right to an Incentive Award Payment or to Continued Employment
Eligibility for Incentive Awards is determined annually. No Participant or
other person shall have any claim or right to be granted an Incentive
Award under the Plan or to receive a distribution pursuant to an Incentive
Award. Neither the action of the Company in establishing the Plan nor any
provisions hereof, nor any action taken by the Company, any Participating
Subsidiary, the Committee or the CEO, or any of their respective delegees,
pursuant to such provisions shall be construed as creating in any employee
or class of employees any right with respect to continuation of employment
by the Company or any of the Participating
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Subsidiaries, and they shall not be deemed to interfere in any way with
the Company's or any Participating Subsidiary's right to employ,
discipline, discharge, terminate, lay off or retire any Participant with
or without cause, to discipline any Participant, or to otherwise affect
the Company's right to make employment decisions with respect to any
Participant.
Section 17.9 Indemnification and Exculpation
17.9.1: Indemnification. Each person who is or shall have been a member of
the Committee and each director, officer or employee of the Company or any
Participating Subsidiary to whom any duty or power related to the
administration or interpretation of the Plan may be delegated, shall be
indemnified and held harmless by the Company against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action,
suit or proceeding to which he may be or become a party or in which he may
be or become involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof (with the Company's written approval) or paid by him in
satisfaction of a judgment in any such action, suit or proceeding, except
a judgment in favor of the Company based upon a finding of his bad faith;
subject, however, to the condition that upon the institution of any claim,
action, suit or proceeding against him, he shall in writing give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other
right to which such person may be entitled under the Company's Restated
Certificate of Incorporation, as a matter of law or otherwise, or any
power that the Company may have to indemnify him or hold him harmless.
17.9.2: Exculpation. Each member of the Committee, and each director,
officer and employee of the Company or of any Participating Subsidiary
shall be fully justified in relying or acting upon in good faith any
information furnished in connection with the administration of the Plan by
any appropriate person or persons other than himself. In no event shall
any person who is or shall have been a member of the Committee, or a
director, officer or employee of the Company or any Participating
Subsidiary be liable for any determination made or other action taken or
any omission to act in reliance upon such report or information, or for
any action (including the furnishing of information) taken or any failure
to act, if in good faith.
Section 17.10 Communications
17.10.1: Communications by the Committee. All notices, statements, reports
and other communications made, delivered or transmitted to a Participant,
Beneficiary or other person under the Plan shall be deemed to have been
duly given, made or transmitted when delivered to, or when mailed by
first-class mail, postage
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prepaid and addressed to such Participant, Beneficiary or other person at
his address last appearing on the records of the Committee.
17.10.2: Communications by the Participants and Others. All elections,
designations, requests, notices, instructions and other communications
made, delivered or transmitted by the Company or a Participating
Subsidiary, Participant, Beneficiary or other person to the Committee
required or permitted under the Plan shall be in such form as is
prescribed from time to time by each such Committee, shall be mailed by
first-class mail or delivered to such location as shall be specified by
each such Committee, and shall be deemed to have been given and delivered
only upon actual receipt thereof by such Committee at such location.
Section 17.11 Parties in Interest
The provisions of the Plan and the terms and conditions of any Incentive
Award shall, in accordance with their terms, be binding upon, and inure to
the benefit of, all successors of each Participant, including, without
limitation, such Participant's estate and the executors, administrators,
or trustees thereof, heirs and legatees, and any receiver, trustee in
bankruptcy or representative of creditors of such Participant. The terms
of the Plan shall be binding upon the Company and its successors and
assigns.
Section 17.12 No Strict Construction
No rule of strict construction shall be implied against the Company, the
Committee or any other person in the interpretation of any of the terms of
the Plan, any Incentive Award granted under the Plan or any rule or
procedure established by the Committee.
Section 17.13 Governing Law
All questions pertaining to the validity, construction and administration
of the Plan shall be determined with reference to, and the provisions of
the Plan shall be governed by, and shall be construed in conformity with,
the internal laws of the State of Delaware.
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