TOOTSIE ROLL INDUSTRIES, INC.
CAREER ACHIEVEMENT PLAN
1. PURPOSE. The purpose of the Career Achievement Plan (the "Plan")
of Tootsie Roll Industries, Inc. (the "Company") is to promote the financial
interests and growth of the Company by increasing motivation on the part of
its senior officers and key employees by creating an incentive for them to
remain in the long term employ of the Company and to work to the best of
their abilities for the achievement of the Company's strategic growth
objectives.
2. PARTICIPATION. Participation in the Plan will be limited to those
senior officers and other key employees of the Company as the Board of
Directors (the "Board") in its sole discretion shall designate from time to
time to be eligible to receive Career Achievement Awards hereunder.
3. CAREER ACHIEVEMENT AWARDS. As of the date determined by the Board
for any calendar year during the term of the Plan, the Board may, but shall
not be required to, grant an award to any or all of the participants of the
Plan. Each such award (a "Career Achievement Award") shall be for a fixed
dollar amount, and shall be calculated based on such formulas or other
criteria as may be established by the Board in its sole discretion, PROVIDED,
HOWEVER, that the Board shall be prohibited from adopting formulas or other
criteria which would cause Career Achievement Awards to be subject to Section
16 of the Securities Exchange Act of 1934 or the rules promulgated
thereunder. Each Career Achievement Award shall be communicated in a written
notice to the affected participant as soon as practicable
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after the amount has been determined by the Board. Such written notice shall
state the amount of the award, and shall set forth the non-competition
provisions of Section 7 hereof and any other terms or conditions that may be
established by the Board consistent with the provisions of this Plan. Except
as otherwise provided in Section 5 hereof, once an award has been
communicated to a participant pursuant to this Section 3, such award may not
be canceled, reduced or diminished in any manner without the written consent
of the participant.
4. CAREER ACHIEVEMENT ACCOUNT.
(a) ESTABLISHMENT OF ACCOUNTS. There shall be established on the
books of the Company a Career Achievement Account in the name of each
participant in the Plan. Career Achievement Awards made under the Plan shall
be credited to a participant's Career Achievement Account as of the January
1st specified in the written notice of the award delivered to the
participant.
(b) CAREER ACHIEVEMENT ACCOUNT EARNINGS.
(1) PRIOR TO TERMINATION OF EMPLOYMENT. Each participant's
Career Achievement Account shall consist of the aggregate amount of all
Career Achievement Awards and any "interest" previously credited to the
participant's account with respect to such Career Achievement Awards under
this Section 4(b)(1). Such account balance shall be credited with "interest"
as of the last day of each calendar quarter in which the participant remains
an employee of the Company at a rate equal to one-fourth of the published
yield of Moody's Seasoned Bond Index as of the last day of such quarter.
Notwithstanding the preceding sentence, if the date
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of termination of a participant's employment is other than the last day of a
calendar quarter, no "interest" shall be credited to the participant's
account under this Section 4(b)(1) for the calendar quarter in which such
termination occurs.
(2) AFTER TERMINATION OF EMPLOYMENT. From and after the date on
which a participant's employment with the Company terminates until payment is
made hereunder, the "vested" portion of the participant's Career Achievement
Account (as determined under Section 5(a)) shall be credited with "interest"
as of the last day of each calendar quarter beginning with the calendar
quarter in which such termination occurs and ending with the calendar quarter
in which the participant's Career Achievement Account is distributed. For
purposes of this Section 4(b)(2), the rate of "interest" shall equal one-
fourth of the annual yield on five-year United States Treasury Notes as of
the last day of each relevant calendar quarter. If the participant's Career
Achievement Account is distributed on a date other than the last day of a
calendar quarter, the rate of interest set forth in the preceding sentence
for such quarter shall be multiplied by a fraction, the numerator of which is
the number of days from the beginning of the calendar quarter to the date of
distribution and the denominator of which is the total number of days in such
calendar quarter.
5. PAYMENT OF CAREER ACHIEVEMENT ACCOUNT UPON TERMINATION OF
EMPLOYMENT. A participant's Career Achievement Account shall be paid to the
participant, shall be paid to the participant's designated beneficiary in the
event of the participant's death, or shall be forfeited, depending upon the
time and
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circumstances of the participant's termination of employment, as provided
below:
(a) TERMINATION OF EMPLOYMENT OTHER THAN FOR DEATH OR DISABILITY.
Subject to Sections 5(c), 5(d) and 5(e) hereof, if a participant's employment
with the Company terminates other than as a result of the participant's death
or permanent disability, the participant shall be entitled to receive, on the
"date of distribution", a lump sum payment equal to (x) the "vested" portion
of the participant's Career Achievement Account as of the date of termination
of employment (as such "vested" portion is determined below) and (y) amounts
credited to the participant's account under Section 4(b)(2) following such
date of termination of employment. For purposes of this Section 5(a), the
"date of distribution" means the later of (i) the second anniversary of the
date of the participant's termination of employment or (ii) sixty (60) days
after the earlier of the participant's 65th birthday or his or her death.
The portion of a participant's Career Achievement Account which has not
"vested" as of the date of the participant's termination of employment shall
be forfeited, and the participant shall not be entitled to any payment of
such forfeited amount or any interest thereon.
The "vested" portion of a participant's Career Achievement Account
as of the date of termination shall equal the aggregate of the "vested"
portions of each Career Achievement Award previously granted to the
participant. The "vested" portion of each Career Achievement Award shall be
separately determined and shall equal the product of the Career Achievement
Award (plus any "interest" previously credited to the participant's account
with respect to such Career Achievement Award
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under Section 4(b)(1) hereof) multiplied by the Vested Percentage of such
award. The Vested Percentage of a Career Achievement Award shall be
determined according to the number of the participant's consecutive full
calendar years of employment with the Company beginning with the calendar
year in which such award was credited to the participant's Career Achievement
Account and ending with the calendar year immediately prior to the year in
which termination occurs, pursuant to the following table:
Years of Continuous Vested
Employment Percentage
------------------- ----------
1 20%
2 40%
3 60%
4 80%
5 or more 100%
For purposes of this Section 5(a), if a participant first becomes an employee
of the Company during the calendar year in which a Career Achievement Award
is credited to such participant's account, such year shall count as a full
calendar year of employment.
(b) TERMINATION OF EMPLOYMENT BY REASON OF DEATH OR
DISABILITY. Subject to Section 5(e) hereof, if a participant's employment
with the Company terminates by reason of the participant's death or permanent
disability, the Company shall pay to the participant or the beneficiary
designated by the participant pursuant to Section
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9(a) hereof, as the case may be, a lump sum amount equal to the full balance
of the participant's Career Achievement Account as of the date of
termination, and any amounts credited to the participant's account under
Section 4(b)(2) following such termination of employment. Such payment shall
be made not later than sixty (60) days after the participant's termination of
employment. For purposes of this Plan, a participant shall be deemed to be
permanently disabled if such participant is unable to perform his or her
stated duties with the Company by reason of illness, accident or other
incapacity and is not engaged in any occupation or employment for wage or
profit for which he or she is reasonably qualified by education, training, or
experience, provided however, that in the event the Company maintains a long-
term disability plan in which the participant is entitled to receive
benefits, the participant shall be deemed to be permanently disabled when he
or she suffers a physical illness, injury or other impairment in respect to
which the participant is entitled to receive benefits under such long-term
disability plan.
(c) TERMINATION OF EMPLOYMENT FOR CAUSE. Notwithstanding any
provision of this Plan to the contrary, if the Board, in its sole discretion,
shall determine that the participant's employment with the Company was
terminated for "cause" (as defined below), the participant's Career Achieve-
ment Account shall be forfeited in its entirety, and the participant shall
not be entitled to any payments under this Plan. For purposes of this Plan,
"cause" shall mean any act or conduct by a participant that consists of or
constitutes fraud, theft, dishonesty, alcohol or drug use on the job, willful
injury to or destruction of the Company's property or property of any person
dealing with the Company, any act or conduct injurious to the goodwill of the
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Company or its relations with its customers or any other person dealing with
the Company or derogatory of any of the Company's methods or products, any
violation of the duty imposed upon employees by contract or by law in their
relationship with the Company, or engages in any activities in violation of
Section 7 hereof.
(d) FORFEITURE OF CAREER ACHIEVEMENT ACCOUNT. Notwithstanding any
provision of this Plan to the contrary, a participant will forfeit all rights
to any amounts previously credited to his or her Career Achievement Account
if, after the termination of the participant's employment, the participant
engages in any activities in violation of Section 7 hereof.
(e) FURTHER DEFERRAL. To the extent determined by the Board in its
sole discretion, the Board shall have the authority to delay any payments
otherwise due under this Plan to the extent necessary to avoid a limitation
on the deductibility of compensation paid to a participant pursuant to
Section 162(m) of the Internal Revenue Code of 1986, or any successor
provision. To the extent any payments under this Plan are deferred under
this Section 5(e), such amounts shall continue to accrue "interest" pursuant
to Section 4(b)(2) hereof, and shall be paid at such time or from time to
time to the extent such payments would not cause or increase a limitation on
deductibility under such Section 162(m).
6. IMMEDIATE DISTRIBUTION OF CAREER ACHIEVEMENT ACCOUNTS UPON CHANGE
OF CONTROL OF THE COMPANY. Notwithstanding any provision of this Plan to
the
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contrary, the Company shall pay the entire balance of a participant's Career
Achievement Account to such participant within three business days after the
occurrence of a "change of control" of the Company. A "change of control" of
the Company shall occur when: (1) any person, including a "group," as
described in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, acquires after the effective date of this Plan the beneficial
ownership of, and the right to vote, shares having the right to cast at least
twenty percent (20%) of the votes permitted to be cast in any election of
members to the Board of Directors of the Company; or (2) as the result of any
tender or exchange offer, substantial purchase of the Company's equity
securities, merger, consolidation, sale of assets or contested election, or
any combination of the foregoing transactions, the persons who were directors
of the Company immediately prior to such transaction or transactions do not
constitute a majority of the Board (or of the board of directors of any
successor to or assignee of the Company) immediately after the next meeting
of stockholders of the Company (or any successor or assignee) following such
transaction; except that no event described in clause (1) or (2) above shall
constitute a "change of control" if immediately after such event Melvin J.
Gordon, Ellen R. Gordon, their descendants (and spouses of such descendants)
and any trusts or estates in which such persons have an interest own,
directly or indirectly, shares having the right to cast at least fifty
percent (50%) of the votes permitted to be cast in any election of members of
the Board of Directors of the Company.
7. NONCOMPETITION. In connection with the receipt of a Career
Achievement Award hereunder, each participant will be required to enter into
an
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agreement with the Company which provides that during the term of employment,
and for a period ending on the second anniversary of the effective date of
the participant's termination of employment by the Company, the participant
will not:
(1) directly or indirectly engage in, own, manage, operate,
participate in, render advice to or have any interest in any person,
firm, corporation, or business (whether as an owner, partner, employee,
officer, director, agent, security holder, creditor, consultant, or
otherwise) that engages in any activity which is the same as, similar
to, or competitive with any activity then, or within the prior twelve
(12) months, engaged in by the Company or any affiliate of the Company;
or
(2) directly or indirectly solicit for employment or employ or
become employed by any person then, or within the prior twelve (12)
months, employed by the Company or any affiliate of the Company, or
request, influence or advise any person who is or shall be employed by
or is in the service of the Company or any affiliate of the Company to
leave such employment or service of the Company or any affiliate of the
Company; or
(3) directly or indirectly influence or advise any competitor of
or anyone intending to compete with the Company or any affiliate of the
Company to employ or otherwise engage the services of any person who is
or shall be employed by or is in the service of the Company or any
affiliate of the Company; or
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(4) directly or indirectly solicit or accept any business which is
the same as, similar to or competitive with that of the Company or any
affiliate of the Company from customers of the Company or any affiliate
of the Company or request, induce or advise customers of the Company or
any affiliate of the Company to withdraw, curtail or cancel their
business with the Company or any affiliate of the Company.
For purposes of this Plan, the term "affiliate" means any entity engaged in
the same or similar business as the Company or a related business, which is
controlled by or under common control with the Company.
8. ADMINISTRATION OF THE PLAN. The Plan shall be administered and
interpreted by the Board. The Board shall, subject to the terms of the Plan,
make or refrain from making Career Achievement Awards, determine the amount
of Career Achievement Awards, establish rules and regulations for the
administration of the Plan, impose conditions with respect to competitive
employment or other activities with respect to any such award, and establish
the written form to be used to evidence such awards pursuant to Section 3
hereof. The Board shall have full authority to construe and interpret the
terms and provisions of the Plan, to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan and to
perform all acts, including the delegation of its administrative
responsibilities as it shall, from time to time, deem advisable, and to
otherwise supervise the administration of this Plan. All such rules,
regulations and interpretations relating to the Plan which are
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adopted by the Board shall be conclusive and binding on all parties. The
Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any award granted hereunder, in the manner
and to the extent it shall deem necessary to carry the Plan into effect.
9. MISCELLANEOUS.
(a) DESIGNATION OF BENEFICIARY. In the event of the death of a
participant, the amount payable under Section 5 hereof shall, unless the
participant shall designate to the contrary as provided below, thereafter be
made to such person or persons who, as of the date payment is to be made
under this Plan, would receive distribution of the participant's account
balance under the terms of the Tootsie Roll Employee's Pension Plan.
Notwithstanding the preceding sentence, a participant may specifically
designate the person or persons (who may be designated successively or
contingently) to receive payments under this Plan following the participant's
death by filing a written beneficiary designation with the Company during the
participant's lifetime. Such beneficiary designation shall be in such form
as may be prescribed by the Company and may be amended from time to time or
may be revoked by the participant pursuant to written instruments filed with
the Company during his or her lifetime. Beneficiaries designated by a
participant may be any natural or legal person or persons, including a
fiduciary, such as a trustee of a trust or the legal representative of an
estate. Unless otherwise provided by the beneficiary designation filed by a
participant, if all of the persons so designated die before a participant on
the occurrence of a contingency not contemplated in such beneficiary
designation, then the amount payable under this Plan shall be paid to the
person or persons
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determined in accordance with the first sentence of this Section 9(a).
(b) ASSETS. No assets shall be segregated or earmarked in respect
of any Career Achievement Award or Career Achievement Account and no
participant shall have any right to assign, transfer, pledge or hypothecate
his or her interest, or any portion thereof, in his or her Career Achievement
Account. The Plan and the crediting of Career Achievement Accounts hereunder
shall not constitute a trust and shall be structured solely for the purpose
of recording an unsecured contractual obligation. All amounts payable
pursuant to the terms of this Plan shall be paid from the general assets of
the Company.
(c) REPORTS. Until a participant's entire Career Achievement
Account shall have been paid in full or forfeited, the Company will furnish
to the participant a report, at least annually, setting forth transactions in
such account and the status of such account with respect to the vested and
unvested portions thereof and the "interest" credited thereon.
(d) ACCELERATION OF VESTING AND PAYMENT. Notwithstanding any
other provision of this Plan to the contrary, the Board, in its sole
discretion, is empowered to accelerate the vesting and to accelerate the
payment of all or a portion of a participant's Career Achievement Account for
any reason the Board may determine to be appropriate. Neither the Company
nor the Board shall have any obligation to make any such acceleration for any
reason whatsoever.
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(e) LIABILITY. No member of the Board shall be liable for any act
or action hereunder, whether of omission or commission, by any other member
or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in circumstances
involving such member's bad faith, gross negligence or fraud, for anything
done or omitted to be done by such member. The Company will fully indemnify
and hold each member of the Board harmless from any liability hereunder,
except in circumstances involving such member's bad faith, gross negligence
or fraud. The Company or the Board may consult with legal counsel, who may
be counsel for the Company, with respect to its obligations or duties
hereunder, or with respect to any action or proceeding or any question of
law, and shall not be liable with respect to any action taken or omitted by
it in good faith pursuant to the advice of such counsel.
(f) AMENDMENT OR TERMINATION. Notwithstanding any other provision
of this Plan, the Board may at any time, and from time to time, amend, in
whole or in part, any or all of the provisions of the Plan, or suspend or
terminate it entirely, retroactively or otherwise; provided, however that any
such amendment, suspension or termination may not, without the participant's
consent, adversely affect any Career Achievement Awards previously credited
to the participant's account prior to the effective date of such amendment,
suspension or termination. Notwithstanding the foregoing, upon any
termination of this Plan, the Board may in its sole discretion accelerate the
vesting and payment of the entire balance of all Career Achievement Accounts
as of the date of termination of this Plan. The Plan shall remain in effect
until terminated pursuant to this Section 9(f).
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(g) EXPENSES. The Company will bear all expenses incurred by it
in administering this Plan.
(h) WITHHOLDING. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan or to otherwise require prior to
the payment of any amount hereunder, payment by the participant of any
Federal, state or local taxes required by law to be withheld.
(i) NO OBLIGATION. The Board's designation of an individual as a
participant in any year shall not require the Board to designate such person
to receive a Career Achievement Award in any other year. Neither this Plan
nor any Career Achievement Awards made hereunder shall create any obligation
on the Company to continue any other existing award plans or policies or to
establish or continue any other programs, plans or policies of any kind.
Neither this Plan nor any Career Achievement Award made pursuant to this Plan
shall give any participant or other employee any right with respect to
continuance of employment by the Company or any of its affiliates or of any
specific aggregate amount of compensation, nor shall there be a limitation in
any way on the right of the Company or any of its affiliates by which an
employee is employed to terminate such employee at any time for any reason
whatsoever, nor shall this Plan nor any Career Achievement Award made
hereunder create a contract of employment.
(j) NO ASSIGNMENT; RESOLUTION OF DISPUTES. Except as otherwise
permitted under Section 9(a), no right or interest in any Career Achievement
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Account under this Plan shall be assignable or transferable, and no right or
interest of any participant in any Career Achievement Account hereunder shall
be subject to any lien, obligation or liability of such participant. In the
event any conflicting demands are made upon the Company with respect to any
payments due as a result of this Plan, provided that the Company shall not
have received prior written notice that said conflicting demands have been
finally settled by court adjudication, arbitration, joint order or otherwise,
the Company may pay to the participant any and all amounts due hereunder and
thereupon the Company shall stand fully relieved and discharged of any
further duties or liabilities under this Plan.
(k) GOVERNING LAW. This Plan and all actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
State of Illinois (regardless of the law that might otherwise govern under
applicable Illinois principles of conflict of laws).
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