1994 LONG-TERM INCENTIVE PLAN
OF
COLTEC INDUSTRIES INC
1. PURPOSE. The purpose of the 1994 Long-Term Incentive Plan of
Coltec Industries Inc (the "PLAN") is to benefit and advance the interests of
Coltec Industries Inc, a Pennsylvania corporation ("COLTEC"), by rewarding
certain officers and key employees of Coltec and its direct and indirect
Subsidiaries (collectively, the "COMPANY") for their contributions to the
financial success of the Company and thereby motivate them to continue to make
such contributions in the future. The Plan provides for grants of Performance
Units, the value of which is based upon the achieved level of Cumulative
Operating Profit (as hereinafter defined) over the Performance Cycle (as
hereinafter defined) applicable to such units. Subject to certain limits and
exceptions set forth in the Plan, Performance Units are generally settled by the
payment to Participants of a combination of cash and Restricted Stock (as
hereinafter defined) equal to the Award Value (as hereinafter defined) of such
units following the end of the applicable
Performance Cycle.
2. DEFINED TERMS. For purposes of the Plan, capitalized terms used
herein, and not otherwise defined herein, shall have the meanings assigned to
such terms in Section 13 hereof.
3. ADMINISTRATION OF THE PLAN.
(a) MEMBERS OF THE COMMITTEE. The Plan shall be administered, and
Performance Units shall be granted hereunder, by the Committee, which shall
consist of two or more members of the Board, duly appointed by the Board. Each
member of the Committee shall be a "disinterested person" within the meaning of
Rule 16b-3 under the Exchange Act and, for periods on and after the date of the
first annual meeting of shareholders to occur after July 1, 1994 at which
directors are elected, an "outside director" within the meaning of Section
162(m) of the Code.
(b) AUTHORITY OF THE COMMITTEE. The Committee may adopt such rules
as it may deem appropriate in order to carry out the purpose of the Plan.
Following the end of each Performance Cycle, the Committee shall determine and
certify in the manner required by Section 162(m) of the Code the extent to which
the Performance Targets applicable to the Performance Cycle have been achieved.
All questions of interpretation, administration and application of the Plan
shall be determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more of its members,
or any officer of Coltec, (i) to execute and deliver
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documents on behalf of the Committee or (ii) to serve as the designated person
or persons to receive notices, elections or other communications to the
Committee under the Plan. The determination of such majority shall be final and
binding in all matters relating to the Plan, including, without limitation, any
grant of Performance Units or any Award under the Plan.
(c) LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be liable for anything whatsoever in connection with the administration of the
Plan except such member's own willful misconduct. Under no circumstances shall
any member of the Committee be liable for any act or omission of any other
member of the Committee. In the performance of its functions with respect to
the Plan, the Committee shall be entitled to rely upon information and advice
furnished by Coltec's officers, Coltec's accountants, Coltec's legal counsel and
any other party that the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance upon any
such advice.
4. ELIGIBLE PERSONS; DETERMINATION OF GRANTS. Performance Units may
be awarded only to officers of Coltec and to senior operations management
employees of the
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Company. The Committee shall have the authority to select the Participants from
among such class of eligible persons to whom Performance Units may be granted.
5. AGGREGATE AND INDIVIDUAL LIMITS.
(a) MAXIMUM NUMBER OF PERFORMANCE UNITS AND RESTRICTED SHARES. A
maximum of 300,000 Performance Units may be awarded under the Plan for any
Performance Cycle. The number of Restricted Shares that may be paid to
Participants in any Payment Year shall not exceed 0.5% of the number of issued
and outstanding shares of Common Stock on the first day of such Payment Year;
PROVIDED, HOWEVER, that 1% shall be substituted for .5% for the Payment Year
beginning January 1, 1997. A Performance Unit that is forfeited for a given
Performance Cycle may not be subsequently awarded with respect to that
Performance Cycle. A Restricted Share that is forfeited under the terms of the
Plan may not be subsequently reawarded under the Plan.
(b) INDIVIDUAL LIMIT ON PERFORMANCE UNITS. The maximum number of
Performance Units that may be granted to any Participant for a given Performance
Cycle shall not exceed 50,000.
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6. PERFORMANCE UNITS.
(a) IN GENERAL. The Committee shall grant Performance Units to
eligible persons prior to the inception of the Performance Cycle to which such
units relate; PROVIDED, HOWEVER, that, for the Performance Cycle beginning
January 1, 1994, the grants may be made at any time prior to March 15, 1994.
In the event (i) a new employee is hired by the Company who is otherwise
eligible to participate in the Plan as of the date of hire or (ii) an employee
of the Company (whether or not a current Participant in the Plan) is promoted to
a more senior position with the Company and is otherwise eligible as of the date
of the promotion to participate in the Plan, the Committee may make an interim
or supplemental grant of Performance Units to such individual following the
inception of a Performance Cycle to which such units relate, subject to the
provisions of Section 5 above and to such equitable adjustments as the Committee
may deem necessary or advisable to take into account the lapse of time between
the start of the Performance Cycle and the date of such interim or supplemental
grant. A Participant may receive grants of Performance Units under the Plan for
more than one Performance Cycle.
Performance Units granted under the Plan to a Participant shall be
credited to a Performance Unit Account to be maintained for such Participant.
With respect to each
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grant of Performance Units to a Participant, the Performance Unit Account for
such Participant shall reflect:
(i) the number of Performance Units granted;
(ii) the Performance Cycle with respect to which the Performance Units
have been granted;
(iii) the Performance Targets applicable to such Performance Units;
(iv) the Award Value to be earned with respect to a Performance Unit
if the Performance Targets are achieved; and
(v) the Award Value Schedule applicable to such Performance Units.
(b) AWARD CERTIFICATE. At the time of grant of Performance Units
under the Plan, the Committee shall notify the Participant of the grant of such
Performance Units in the form of an Award Certificate which shall state (i) the
number of Performance Units granted, (ii) the principal terms of the grant as
enumerated in Section 6(a) above, (iii) that the grant of Performance Units is
subject to all of the terms and conditions of the Plan and (iv) such other
information and such other terms and conditions as the Committee shall determine
to be necessary or advisable.
(c) THRESHOLD TARGET; PERFORMANCE TARGETS; AND AWARD VALUE SCHEDULE.
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The Threshold Target, the Performance Targets and Award Value Schedule for a
given Performance Cycle shall be the applicable targets and schedule specified
in Appendix A to the Plan unless, prior to the inception of a Performance Cycle,
the Committee approves a Threshold Target, Performance Target and Award Value
Schedule for that Performance Cycle which vary in whole or in part from the
targets and schedule set forth in Appendix A. In no event will any Award Value
be payable for a Performance Unit granted in respect of a Performance Cycle
unless the Threshold Target for the Performance Cycle has been achieved. Unless
the Committee determines otherwise, there shall be no upper limit on the amount
of Award Value that may be earned with respect to a Performance Unit.
(d) PAYMENT OF AWARDS APPLICABLE TO PERFORMANCE UNITS. Subject to
Sections 6(e), 7 and 8, the Award Value of a Performance Unit granted with
respect to such Performance Cycle shall be determined by the Committee as soon
as practicable following the end of the Performance Cycle, and a Participant who
has been granted Performance Units for the Performance Cycle shall receive an
Award from the Company equal to the Award Value as so determined multiplied by
the number of Performance Units granted to such Participant for the Performance
Cycle. Subject to Section 9 below,
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such Award shall be paid by the Company to the Participant on (or as soon as
practicable following) the Payment Date applicable to the Performance Cycle.
(e) FORM OF PAYMENT. Subject to the provisions of this Section 6(e)
and Section 7 below, two-thirds of the Award payable for a Performance Cycle
will be paid in cash (including check or bank draft) (the "CASH PORTION") and
one-third shall be paid in Restricted Shares (the "SHARE PORTION"). The number
of Restricted Shares payable in respect of the Share Portion shall be determined
by dividing the dollar value of the Share Portion by the Value of a share of
Common Stock on the business day immediately preceding the Payment Date. Any
partial Restricted Share resulting from this calculation will be settled in
cash. In the event that Coltec is precluded from issuing some or all of the
Restricted Shares in settlement of the Share Portion as a result of the limit in
Section 5(a) above on the number of Restricted Shares that may be issued under
the Plan in any Payment Year, the Committee may elect (i) to pay all
Participants a reduced number of Restricted Shares and to settle the remaining
amount of the Share Portion that is not paid in Restricted Shares in cash, (ii)
to delay the payment of a portion of the Restricted Shares payable to all
Participants until January of the next Payment Year or (iii) to take such other
action as the Committee deems equitable. Any action taken by the Committee in
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accordance with the previous sentence shall be applied ratably to all
Participants who are entitled to receive a portion of their Award for the
applicable Performance Cycle in Restricted Shares in the proportion that the
number of Restricted Shares that such Participant would have been entitled to
receive if the limit in Section 5(a) of the Plan did not apply bears to the
total number of Restricted Shares that would have been awarded to all
Participants for such Performance Cycle without regard to such limit. If the
Committee elects the alternative described in clause (ii) above and Coltec is
precluded in the subsequent Payment Year from paying some or all of the deferred
Restricted Shares to a Participant in that year, the Participant shall receive
by no later than January 31 of that Payment Year a cash payment equal to the
Value (determined as of the last business day in January before the scheduled
date of payment) of the deferred Restricted Shares which Coltec is precluded
from paying to the Participant.
(f) ADJUSTMENTS TO AWARD VALUE SCHEDULE OR THE DURATION OF A
PERFORMANCE CYCLE. Anything in the Plan to the contrary notwithstanding, in the
event of a change in the Fiscal Year of Coltec, the Committee may make such
adjustments to the terms and provisions of outstanding grants of Performance
Units as the Committee deems necessary or advisable to take into account such
change, including, without limitation, (i) adjusting
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the applicable Award Values, Performance Targets or both, (ii) changing the
duration of the affected Performance Cycles, or (iii) providing that any short
Fiscal Year occurring in a Performance Cycle (and the Company's Operating Profit
attributable to such short Fiscal Year) shall be disregarded for purposes of
measuring the duration of the applicable Performance Cycle and the Company's
achievement of the Performance Targets related to such Performance Cycle. The
Committee shall also have the right to elect at any time prior to the end of a
Performance Cycle to terminate such Performance Cycle on 30 days prior written
notice to all affected Participants (a "SPECIAL TERMINATION"). In the event of
a Special Termination, the Awards payable to Participants in respect of such
Performance Cycle shall be paid to Participants at the time and in the manner
provided in Sections 6(d) and 6(e) above, but the amount of each such Award
shall be determined in accordance with the formula [(X) x (Y)], where "X" equals
the Award that would have been payable to a Participant if the Special
Termination had not occurred and "Y" equals a fraction (not greater than 1), the
numerator of which is the number of days in the Performance Cycle up to and
including the date of the Special Termination and the denominator of which is
the number of days that would have been in the Performance Cycle if the Special
Termination had not occurred. Unless the Committee determines otherwise, a
Special
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Termination shall not affect any Share Elections previously made by
Participants.
(g) ACQUISITIONS AND DISPOSITIONS. Anything in the Plan to the
contrary notwithstanding, in the event that (i) the Company makes a material
acquisition or divestiture, (ii) the Company materially expands its operations
into new businesses or markets, (iii) Coltec merges with or into, or
consolidates with, any entity (other than a Subsidiary), (iv) the Company
undertakes a recapitalization or reorganization or (v) the Company undertakes
any other transaction which substantially affects the Performance Targets
applicable to outstanding grants of Performance Units, the Committee may make
such equitable adjustments to the terms and provisions of such outstanding
grants of Performance Units to take into account such event, including, without
limitation, any of the adjustments described in clause (i) or (ii) of the first
sentence of Section 6(f) above.
(h) CANCELLATION OF PERFORMANCE UNITS. Upon payment of an Award in
respect of a Performance Unit to a Participant (or the early settlement of
Performance Units in the manner provided in Section 7(b) below in the event of
the termination of a Participant's employment with the Company as a result of
death, Disability or Retirement), the Performance Unit shall terminate and be of
no further force and effect.
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7. TERMINATION OF EMPLOYMENT.
(a) GENERAL RULE APPLICABLE TO EMPLOYMENT TERMINATIONS. Except as
may be provided to the contrary in Section 7(b) below, a Participant who ceases
to be employed by the Company shall forfeit as of the date of the Participant's
termination or resignation of employment all Performance Units granted to such
Participant for which the Payment Date has not occurred.
(b) EXCEPTION FOR TERMINATIONS OF EMPLOYMENT AS A RESULT OF DEATH,
DISABILITY OR RETIREMENT. Notwithstanding Section 7(a) above, unless the
Committee determines otherwise, if a Participant's employment with the Company
ceases as a result of his death, Disability or Retirement, the Performance Units
granted to such Participant shall remain outstanding and the Award Value thereof
shall be paid to such Participant (or in the case of the Participant's death, to
the Participant's Beneficiary) on (or as soon as practicable after) the Payment
Date applicable to the Performance Cycle in the manner provided in Section 6(d)
above, except that (i) the Award in respect thereof shall be paid entirely in
cash and (ii) such Award shall be determined in accordance with the formula [(X)
x (Y)], where "X" equals the Award that would have been payable to a Participant
if such termination or resignation of employment had not occurred, and "Y"
equals a
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fraction (not greater than 1), the numerator of which is the number of days in
the Performance Cycle up to and including the date of such termination or
resignation of employment and the denominator of which is the number of days
that would have been in the Performance Cycle if such termination or resignation
of employment had not occurred. Notwithstanding the previous sentence, in the
event a Participant's employment with the Company ends as a result of death,
Disability or Retirement, the Committee may elect to accelerate the settlement
of outstanding Performance Units for which the applicable Performance Cycle has
not been completed to any date after the Participant's termination of employment
with the Company and prior to the last fiscal quarter of the last Fiscal Year in
such Performance Cycle. The Committee's decision to accelerate (or not to
accelerate) the settlement of outstanding Performance Units with respect to a
Performance Cycle shall not be controlling with respect to the Committee's
decision with regard to any other Performance Units granted to the affected
Participant or to any other Participant. In the event that the Committee elects
to accelerate the settlement of outstanding Performance Units as provided
herein, the Committee shall calculate the amount payable to the Participant to
take into account such factors as the Committee deems appropriate, including,
without limitation, (i) the circumstances resulting in the termination or
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resignation of employment, (ii) a discount to reflect the time value of the
early payment, (iii) the period of time during the Performance Cycle during
which the Participant was in the employ of the Company and (iv) the Committee's
estimate of the likelihood that the Performance Targets would have been achieved
for the Performance Cycle. Any such action by the Committee may be taken
without the consent of the Participant or the Participant's Beneficiary, shall
be subject to such terms and conditions as the Committee deems appropriate, and
shall be final and binding for all purposes of the Plan.
8. ELECTION TO RECEIVE ADDITIONAL RESTRICTED SHARES.
(a) IN GENERAL. Subject to the approval of the Compensation
Committee, a Participant may make a Share Election to receive some or all of the
Cash Portion of an Award in the form of Restricted Shares (the "ELECTIVE
SHARES"); PROVIDED, HOWEVER, that, if Coltec is unable to pay the full amount of
the Share Portion to all Participants in any Payment Year as a result of the
limit in Section 5(a) above on Restricted Shares that may be issued under the
Plan in such Payment Year, then the amount of the Cash Portion subject to the
Share Election shall be paid to the Participant in cash in the manner provided
in Section 6(e) above and the corresponding Share Election shall be deemed void
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and of no further force and effect; and PROVIDED FURTHER that, if, after paying
the Share Portion for a given Payment Year, Coltec is prohibited by the limit in
Section 5(a) above from issuing in such year the full number of Elective Shares
for which Share Elections have been made, then the amount of the Cash Portion
subject to all such Share Elections shall be reduced ratably (in substantially
the same manner as described in Section 6(e) above) until the limit on the
number of Restricted Shares that may be issued in the Payment Year is satisfied.
The amount of the Cash Portion subject to such reduction described in the
previous sentence shall be paid to the Participant in cash in the manner
provided in Sections 6(d) and 6(e) above, and the Share Election shall be deemed
void and of no further force and effect with respect to the portion so paid.
The Committee shall have the authority at any time prior to payment of Elective
Shares to a Participant to disallow such Participant's Share Election in whole
or in part, and any action by the Committee shall be final and binding on all
interested persons. A Share Election shall immediately terminate and be of no
further force and effect if a Participant's employment with the Company ends for
any reason prior to the payment of the Award subject to the election.
(b) FORM AND TIMING OF SHARE ELECTIONS. A Share Election with
respect to
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the Award payable for a given Performance Cycle (i) shall be in writing and
shall be received by the Committee prior to beginning of the third Fiscal Year
in the Performance Cycle to which the election relates, (ii) shall state that it
may not be revoked by the Participant after the beginning of the third Fiscal
Year of the Performance Cycle to which the election relates without the prior
consent of the Committee, and (iii) shall specify the percentage (in multiples
of 10%, but not greater than 100%) of the Cash Portion subject to the Election.
A Share Election may apply to more than one Performance Cycle and, unless the
Committee determines otherwise, may be revoked in writing by a Participant with
respect to the Award payable for a given Performance Cycle if the written
revocation is delivered to the Committee prior to the beginning of the third
Fiscal Year of such Performance Cycle.
(c) NUMBER OF ELECTIVE SHARES. The number of Elective Shares awarded
to a Participant as a result of a Share Election shall be determined by the
formula:
[(W x X) x Z], where
Y
"W" equals the value of the Cash Portion of the Award subject to the
Share Election;
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"X" equals the percentage of the Cash Portion specified in the written
Share Election form (as such percentage may have been reduced by the
Committee in accordance with Section 8(a) above);
"Y" equals the Value of a share of Common Stock on the business day
prior to the Payment Date applicable to the Award; and
"Z" equals 1.15.
Any partial Elective Share resulting from this formula shall be rounded to the
next nearest whole number (with .50 being rounded down to the next lowest whole
number).
(d) DELIVERY OF ELECTIVE SHARES. Elective Shares shall be paid to
the Participant at the same time as the balance of the Award for the applicable
Performance Cycle is paid to the Participant.
9. RESTRICTED SHARES.
(a) VESTING. The Restricted Shares awarded to a Participant (whether
under Section 6(e) or 8 above) shall vest and become nonforfeitable in
accordance with the following vesting schedule:
Anniversary of the First
January 1st following the
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End of the Applicable Cumulative Percent
Performance Cycle Vested
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First 33 1/3
Second 66 2/3
Third 100
Any partially vested Restricted Share resulting from the schedule above shall be
rounded to the next nearest whole number (with .50 being rounded down to the
next lowest whole number). Notwithstanding the foregoing, a Participant shall
be 100% vested in his Restricted Shares (including his then nonvested Elective
Shares) if his employment with the Company ends as a result of his death,
Disability or Normal Retirement. If a Participant's employment with the Company
ends as a result of Early Retirement, then the Participant will be 100% vested
in his Restricted Shares (other than his then nonvested Incremental Elective
Shares), and will forfeit, unless the Committee determines otherwise, all
nonvested Incremental Elective Shares as of the date of such Early Retirement.
If a Participant's employment with the Company ends for any reason other than a
reason specified in the two preceding sentences, then, unless the Committee
determines otherwise, the Participant will forfeit all nonvested Restricted
Shares as of the date of his
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termination or resignation of employment.
(b) DELIVERY AND OWNERSHIP OF RESTRICTED SHARES. A Participant shall
be the beneficial owner of the Restricted Shares granted to him under the Plan
and, except for the risk of forfeiture noted above and the restrictions on
transfer described below (which risk of forfeiture and restrictions may apply to
any dividends, distributions or other rights related to such Restricted Shares,
as determined by the Committee), a Participant shall be entitled to all rights
of ownership, including, without limitation, the right (i) to vote such
Restricted Shares and (ii) to receive cash or stock dividends thereon. Upon the
request of a Participant, Coltec shall deliver to the person or persons
designated by the Participant certificate(s) representing those Restricted
Shares which have vested. The certificates so delivered may contain such
legends as the Committee determines to be necessary or advisable. Until such
time as a Participant makes a valid disposition of his vested Restricted Shares
or requests delivery of the vested Restricted Shares in accordance with the
previous sentence, the Company shall maintain possession of the certificates
representing the vested Restricted Shares.
(c) Restriction on Transfer. Prior to the vesting of the Restricted
Shares as provided in Section 9(a) above, none of the Restricted Shares may be
sold, assigned,
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exchanged, transferred, pledged, hypothecated, mortgaged, or otherwise disposed
of or encumbered, directly or indirectly, whether or not for value, and whether
or not voluntarily, except that the Participant shall be entitled to designate a
Beneficiary to receive his Restricted Shares, if any, in the event of the
Participant's death.
(d) COMPLIANCE WITH LAW. As a condition to the delivery of
Restricted Shares to a Participant, Coltec may require the Participant (i) to
furnish evidence satisfactory to Coltec (including a written and signed
representation letter) to the effect that all such Restricted Shares are being
acquired for investment only and not for resale or distribution, (ii) to agree
that all such Restricted Shares shall only be sold by the Participant following
registration under the Securities Act or pursuant to an exemption therefrom and
(iii) that, following the vesting of the Restricted Shares, any subsequent sale,
assignment, transfer, pledge, mortgage, encumbrance or other disposition,
directly or indirectly, whether or not for value, and whether or not
voluntarily, of such Restricted Shares shall be made in compliance with any
applicable Federal or state securities laws and the rules or regulations of any
exchange or automated quotation system on which the Common Stock is listed.
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10. MISCELLANEOUS PROVISIONS.
(a) RESTRICTIONS ON TRANSFER. The rights of a Participant with
respect to Performance Units may not be assigned or transferred, otherwise than
by will or by the laws of descent and distribution, except that the Participant
shall be entitled to designate the Beneficiary to receive payments, if any,
under the Plan in the event of the Participant's death.
(b) NO RIGHTS TO GRANTS OR CONTINUED EMPLOYMENT. No employees of the
Company or other person shall have any claim or right to be granted Performance
Units under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of the
Company.
(c) SHAREHOLDER RIGHTS. Except as expressly provided in Section 9(b)
above, the grant of Performance Units under the Plan shall not entitle a
Participant or Beneficiary thereof to any dividend or distribution rights, any
voting rights or any other rights of a shareholder with respect to the Common
Stock.
(d) TAX WITHHOLDING AND TAX ELECTION. The Company shall have the
right to withhold any amounts required by Federal, state or local law to be
withheld in connection with the payment of an Award or the vesting or delivery
of Restricted Shares.
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The Committee may, as a condition to the delivery of Restricted Shares to a
Participant, require the Participant to agree to make (or to refrain from
making) an election with respect to such Restricted Shares under Section 83(b)
of the Code. If the Committee so determines, Participants will have the right
to elect to have a portion of the Restricted Shares awarded to them delivered to
the Company to satisfy any Federal, state or local tax liability incurred by
them in connection with the vesting of such shares. Any such election by a
Participant shall be subject to the approval of the Committee and shall be made
in accordance with the procedures established by the Committee from time to
time.
(e) NO FUNDING OF THE PLAN. The Plan shall not be funded, the
Company shall not be required to segregate any funds representing Performance
Units awarded to Participants or amounts payable to any Participant in respect
of any Award, and nothing in the Plan should be construed as providing for such
segregation. A Participant's rights to payment under the Plan shall be those of
a general creditor of the Company.
(f) NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.
The Plan shall not affect in any way the right or power of Coltec or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the
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Company, or any issue of stock or of options, warrants or rights to purchase
stock or of bonds, debentures, preferred or prior preference stocks whose rights
are superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
(g) HEADINGS. The headings of Sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
(h) GOVERNING LAW. The Plan and all rights hereunder shall be
construed in accordance with and governed by the laws of the State of New York.
11. AMENDMENTS AND TERMINATION. The Board may at any time alter,
amend, suspend or terminate the Plan in whole or in part. No termination or
amendment of the Plan may, without the consent of the Participant to whom any
Performance Units shall previously have been granted, adversely affect the
rights of such Participant in such Performance Units; PROVIDED, HOWEVER, that
nothing in this Plan shall limit the right of the
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Committee in accordance with Section 6(f) above to terminate as of any date
selected by the Committee the Performance Cycles then in effect.
12. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of
January 1, 1994, subject to the approval of the Plan by the shareholders of
Coltec at the first annual meeting of shareholders to be held after the
Effective Date. If the Plan is not approved by the shareholders of Coltec at
such annual meeting, the Plan and any grants of Performance Units made under the
Plan on or prior to the date of such annual meeting shall be void AB INITIO and
of no further force and effect.
13. DEFINITIONS.
AWARD: the payment made to a Participant, pursuant to Sections 6(d),
6(f), 7(b) and 8 of the Plan in respect of the Participant's Performance Units
following the end of a Performance Cycle. An Award for a given Performance
Cycle shall include the Cash Portion, the Share Portion and any applicable
Elective Shares.
AWARD CERTIFICATE: the certificate from Coltec to the Participant
notifying the Participant in accordance with Section 6(b) of the terms and
conditions of a grant of Performance Units under the Plan.
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AWARD VALUE: the amount payable in respect of a Performance Unit,
determined by the Committee on the basis of the Award Value Schedule and the
extent to which the Performance Targets applicable to such Performance Unit has
been achieved over the Performance Cycle.
AWARD VALUE SCHEDULE: the schedule determined by the Committee in
accordance with Section 6(c) of the Plan which specifies the Award Value of a
Performance Unit based on the achievement of the Performance Targets over a
Performance Cycle. Subject to Section 6(c) above, the Award Value Schedule for
each Performance Cycle is attached as Appendix A.
BENEFICIARY: the person designated in writing from time to time by
the Participant on a form specified by the Committee for this purpose to receive
payments, if any, under the Plan in the event of such Participant's death or, if
no such person has been designated, the Participant's estate; PROVIDED, HOWEVER,
no written Beneficiary designation shall be effective unless it is received by
the Company prior to the date of death of the Participant.
BOARD: the Board of Directors of Coltec.
CASH PORTION: the portion of the Award for a Performance Cycle paid
in
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cash in accordance with Section 6(e).
CODE: the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
COLTEC: Coltec Industries Inc.
COMPANY: Coltec and its Subsidiaries.
COMMITTEE: the Stock Option and Compensation Committee of the Board.
COMMON STOCK: the common stock, par value $0.01 per share, of Coltec.
CUMULATIVE OPERATING PROFIT: the sum of the Operating Profit for each
Fiscal Year in a Performance Cycle.
DISABILITY: illness or incapacity as a result of which the
Participant is entitled to receive, and actually receives, payments under the
long-term disability policy of the Company applicable to the Participant at the
time of the participant's termination of employment. All determinations as to
the date and extent of disability of any Participant shall be made by the
Committee, upon the basis of such evidence as the Committee deems necessary and
desirable.
EARLY RETIREMENT: resignation or termination of employment after
attainment of an age required for payment of an immediate pension pursuant to
the terms of the
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qualified defined benefit pension plan of the Company in which the Participant
participates; PROVIDED, HOWEVER, that no resignation prior to a Participant's
55th birthday or which qualifies as a Normal Retirement shall be deemed an
Early Retirement.
ELECTIVE SHARES: Restricted Shares (including Incremental Elective
Shares) awarded to a Participant as a result of a Share Election made in
accordance with Section 8 above.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and
the applicable rulings and regulations thereunder.
FISCAL YEAR: the fiscal year of Coltec as determined by the Board
from time to time. As of the Effective Date, the Fiscal Year is the calendar
year.
INCREMENTAL ELECTIVE SHARES: that number of the Elective Shares
granted to a Participant as a result of a Share Election equal to the difference
which results from subtracting "A" from "B", where "A" equals the number of
Elective Shares that would have been granted to the Participant in connection
with such Share Election if "Z" in the formula set forth in Section 8(c) above
were equal to 1, and "B" equals the total number of Elective Shares actually
granted to the Participant in connection with such Share Election. For purposes
of Section 9(a) above, the Incremental Elective Shares shall vest
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ratably on each applicable vesting date.
NORMAL RETIREMENT: resignation or termination of employment after
attainment of an age required for payment of an immediate pension pursuant to
the terms of the qualified defined benefit pension plan of the Company in which
the Participant participates; PROVIDED, HOWEVER, that no resignation or
termination prior to a Participant's 65th birthday shall be deemed a Normal
Retirement unless the Committee so determines in its sole discretion.
OPERATING PROFIT: with respect to any full Fiscal Year, the net
earnings of Coltec and its consolidated subsidiaries, plus interest expense and
provisions for income taxes, minus interest income and excluding nonrecurring
items, extraordinary items, accounting principle changes and discontinued
operations (as such terms are defined under United States generally accepted
accounting principles ("GAAP") as in effect from time to time) in such Fiscal
Year, as determined by the Committee from the Consolidated Statement of Earnings
of Coltec and its consolidated subsidiaries for such Fiscal Year reported on by
Coltec's independent public accountants and after taking account of accruals for
such year with respect to then outstanding Performance Units. Nonrecurring
items are material events or transactions that are unusual in nature or occur
infrequently.
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Accounting principle changes result from the adoption of GAAP different from the
GAAP at the start of a Performance Cycle.
PARTICIPANTS: the individuals selected by the Committee from the
group of eligible persons specified in Section 4 for a grant of Performance
Units under the Plan.
PAYMENT DATE: with respect to a Performance Cycle, the tenth business
day following the press release announcing the Company's unaudited annual
financial results for the last Fiscal Year of such Performance Cycle.
PAYMENT YEAR: the calendar year in which the Payment Date applicable
to a Performance Cycle occurs.
PERFORMANCE CYCLE: subject to Section 6(f) above, a period of 3
consecutive Fiscal Years, as designated by the Committee pursuant to
Section 7(b) of the Plan. Subject to Section 12 above, the first Performance
Cycle under the Plan shall commence on January 1, 1994.
PERFORMANCE TARGETS: the goals for Cumulative Operating Profit
established by the Committee for a given Performance Cycle.
PERFORMANCE UNIT: a contractual right to receive Award Value based
on the realization of the Performance Targets for a given Performance Cycle,
subject to such
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terms and conditions of the Plan and the Award Certificate.
PERFORMANCE UNIT ACCOUNT: the account established in respect of the
grant of Performance Units to a Participant in accordance with Section 6(a)
above.
RESTRICTED SHARE: a forfeitable share of Common Stock granted to a
Participant in accordance with Section 6(e) or 8 above.
RETIREMENT. Early Retirement or Normal Retirement.
SECURITIES ACT: the Securities Act of 1933, as amended, and the
applicable rulings and regulations thereunder.
SHARE ELECTION: an election by a Participant in accordance with
Section 8 above to receive a percentage of the Cash Portion of an Award in
Restricted Shares.
SHARE PORTION: the portion of the Award for a Performance Cycle paid
in Restricted Shares in accordance with Section 6(e).
SUBSIDIARY: any corporation of which 50% or more of the issued and
outstanding voting securities are beneficially owned by Coltec. For purposes of
this definition and the other provisions of the Plan, "beneficial ownership"
shall be determined in accordance with Section 13(d) of the Exchange Act.
THRESHOLD TARGET: the minimum Performance Target which must be
achieved
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in order for an Award to be paid in respect of a Performance Unit. Subject to
Section 6(c) above, the Threshold Target for each Performance Cycle will be
Cumulative Operating Profit of $600 million.
VALUE: the "Value" of a share of Common Stock on a given date shall
be the average closing price of a share of Common Stock on such national
securities exchange as may be designated by the Committee or, in the event that
the Common Stock is not listed for trading on a national securities exchange but
is quoted on an automated quotation system, the average closing bid price per
share of Common Stock on such automated quotation system or, in the event that
the Common Stock is not quoted on any such system, the average of the closing
bid prices per share of Common Stock as furnished by a professional marketmaker
making a market in the Common Stock designated by the Committee (the "AVERAGE
CLOSING PRICE"), for the 30-day period ending on such date. The Average Closing
Price of a share of Common Stock shall be determined by dividing (X) by (Y),
where (X) shall equal the sum of the closing prices for the Common Stock on each
day that the Common Stock was traded and a closing price was reported on such
national securities exchange or on such automated quotation system or by such
marketmaker, as the case may be, during such period, and (Y) shall equal the
number of
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days on which the Common Stock was traded and a closing price was reported on
such national securities exchange or on such automated quotation system or by
such marketmaker, as the case may be, during such period.
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APPENDIX A
AWARD VALUE SCHEDULES
Three-Year Performance Cycle
BEGINNING JANUARY 1, 1994
----------------------------
Performance Targets for
CUMULATIVE OPERATING PROFIT AWARD VALUE
- -------------------------------------------------------------
Less than $600 million* $ 0.00
$600 million $36.00
Over $600 million $36.00 plus $0.10 for each $1 million over
$600 million
* Threshold Target
Three-Year Performance Cycles
BEGINNING AFTER DECEMBER 31, 1994
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Performance Targets for:
CUMULATIVE OPERATING PROFIT AWARD VALUE
- -------------------------------------------------------------
Less than $600 million* $ 0.00
$600 million $12.00
Over $600 million $12.00 plus $0.0333 for each $1 million over
$600 million
* Threshold Target
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1994 LONG-TERM INCENTIVE PLAN
OF
COLTEC INDUSTRIES INC
Effective January 1, 1994
(as adopted January 12, 1994)