Exhibit 10(j)
LINCOLN NATIONAL CORPORATION
INCENTIVE COMPENSATION PLAN
(As Amended and Restated March 8, 2001)
LINCOLN NATIONAL CORPORATION
INCENTIVE COMPENSATION PLAN
Page
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1. Purpose 1
2. Definitions 1
3. Administration 3
(a) Authority of the Committee 3
(b) Manner of Exercise of Committee 3
(c) Limitation of Liability 3
4. Stock Subject to Plan 4
(a) Overall Number of Shares Available for Delivery 4
(b) Application of Limitation to Grants of Awards 4
(c) Availability of Shares Not Delivered Under Awards 4
5. Eligibility; Per-Person Award Limitations 4
6. Specific Terms of Awards 4
(a) General 4
(b) Options 5
(c) Stock Appreciation Rights 5
(d) Restricted Stock 5
(e) Deferred Stock Units 6
(f) Bonus Stock and Awards in Lieu of Obligations 6
(g) Other Stock-Based Awards 6
7. Certain Provisions Applicable to Awards 7
(a) Stand-Alone, Additional, Tandem, and Substitute Awards;
No Repricing 7
(b) Term of Awards 7
(c) Form and Timing of Payment Under Awards; Deferrals 7
(d) Exemptions from Section 16(b) Liability 8
(e) Cancellation and Rescission of Awards 8
8. Performance and Annual Incentive Awards 8
(a) Performance Conditions 8
(b) Performance Awards Granted to Designated Covered Employees 9
(c) Annual Incentive Awards Granted to Designated Covered Employees 9
(d) Written Determinations 9
(e) Status of Section 8(b) and 8(c) Awards Under Code Section 162(m) 9
9. Change of Control 11
(a) Options and SARs 11
(b) Restricted Stock and Deferred Stock Units 11
(c) Other Awards 11
10. General Provisions 11
(a) Compliance with Legal and Other Requirements 11
(b) Limits on Transferability; Beneficiaries 12
(c) Adjustments 12
(d) Taxes 12
(e) Changes to the Plan and Awards 13
(f) Limitation on Rights Conferred Under Plan 13
(g) Unfunded Status of Awards; Creation of Trusts 13
(h) Nonexclusivity of the Plan 13
(i) Payments in the Event of Forfeitures; Fractional Shares 13
(j) Governing Law 14
(k) Awards Under Preexisting Plans 14
(l) Plan Effective Date and Shareholder Approval 14
LINCOLN NATIONAL CORPORATION
INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this Incentive Compensation Plan (the
"Plan") is to assist Lincoln National Corporation, an Indiana
corporation (the "Corporation"), and its subsidiaries in attracting,
retaining, and rewarding high-quality executives, employees, and other
persons who provide services to the Corporation and/or its subsidiaries,
enabling such persons to acquire or increase a proprietary interest in
the Corporation in order to strengthen the mutuality of interests
between such persons and the Corporation's shareholders, and providing
such persons with annual and long-term performance incentives to expend
their maximum efforts in the creation of shareholder value. The Plan is
also intended to qualify certain compensation awarded under the Plan for
tax deductibility under Code Section 162(m) (as hereafter defined) to
the extent deemed appropriate by the Committee (or any successor
committee) of the Board of Directors of the Corporation.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section
1 hereof:
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock
or other Award, unless otherwise determined by the Committee, after the
end of a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock Units, Stock granted as a bonus or in lieu of
another award, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which
Awards or other rights are transferred if and to the extent permitted
under Section 10(b) hereof. If, upon a Participant's death, there is no
designated Beneficiary or surviving designated Beneficiary, then the
term Beneficiary means the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such benefits.
(d) "Board" means the Corporation's Board of Directors.
(e) "Change of Control" shall have the same meaning ascribed to such
term in the Lincoln National Corporation Executives' Severance Benefit
Plan (the "Severance Benefit Plan") on the date immediately preceding
the Change of Control.
(f) "Change of Control Price" means an amount in cash equal to the
higher of (i) the amount of cash and Fair Market Value of property that
is the highest price per share paid (including extraordinary dividends)
in any transaction triggering the Change of Control or any liquidation
of shares following a sale of substantially all assets of the
Corporation, or (ii) the highest Fair Market Value per share at any time
during the 60-day period preceding and 60-day period following the
Change of Control.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.
(h) "Committee" means at any date each of those members of the
Compensation Committee of the Board who shall be (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act,
unless administration of the Plan by "non-employee directors" is not
then required in order for exemptions under Rule 16b-3 to apply to
transactions under the Plan, and (ii) an "outside director" as defined
under Code Section 162(m), unless the action taken pursuant to the Plan
is not required to be taken by "outside directors" in order to qualify
for tax deductibility under Code Section 162(m). Unless otherwise
designated by the Board, the Committee shall include not fewer than
three members. In the event that fewer than three members of the
Compensation Committee are eligible to serve on the Committee, the
Board may appoint one or more of its other members who is otherwise
eligible to serve on the Committee until such time as three members of
the Compensation Committee are eligible to serve.
(i) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(j) "Deferred Stock Unit" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.
(k) "Effective Date" means January 1, 1997.
(l) "Eligible Person" means each Executive Officer and other officers
and employees of the Corporation or of any subsidiary, including
employees, agents and brokers who may also be directors of the
Corporation. An employee on leave of absence may be considered as still
in the employ of the Corporation or a subsidiary for purposes of
eligibility for participation in the Plan.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions
and rules thereto.
(n) "Executive Officer" means an executive officer of the Corporation as
defined under the Exchange Act.
(o) "Fair Market Value" means the Fair Market Value of Stock, Awards or
other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the
Committee the Fair Market Value of Stock shall be the average of the
highest and lowest prices of a share of Stock, as quoted on the
composite transactions table on the New York Stock Exchange, on the last
trading day prior to the date on which the determination of Fair Market
Value is being made.
(p) "Incentive Stock Option" or "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of Code
Section 422 or any successor provision thereto.
(q) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(r) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(s) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(g) hereof.
(t) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(u) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee.
(v) "Preexisting Plans" mean the Lincoln National Corporation 1986 Stock
Option Incentive Plan (the "Stock Option Plan") and the 1994 Amended and
Restated Lincoln National Corporation Executive Value Sharing Plan (the
"EVSP").
(w) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a
risk of forfeiture.
(x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act or any
similar law or regulation that may be a successor thereto.
(y) "Stock" means the Corporation's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant
to Section 10(c) hereof.
(z) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each
case subject to and consistent with the provisions of the Plan, to
interpret the provisions of the Plan, select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms
and conditions of, and all other matters relating to, Awards, prescribe
Award agreements (which need not be identical for each Participant),
adopt, amend and rescind rules and regulations for the administration of
the Plan, construe and interpret the Plan and Award agreements and
correct defects, supply omissions or reconcile inconsistencies therein,
ensure that awards continue to qualify under Rule 16b-3, and make all
other decisions and determinations as the Committee may deem necessary
or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee. Any action of the Committee shall
be final, conclusive and binding on all persons, including the
Corporation, its subsidiaries, Participants, Beneficiaries, transferees
under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and shareholders. The Committee shall exercise
its authority only by a majority vote of its members at a meeting or
without a meeting by a writing signed by a majority of its members. The
express grant of any specific power to the Committee, and the taking of
any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to
officers or managers of the Corporation or any subsidiary, or committees
thereof, the authority, subject to such terms as the Committee shall
determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform
such other functions as the Committee may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other
functions of the Committee as the Committee may determine to the extent
performance of such functions will not result in the loss of an
exemption under Rule 16b-3 otherwise available for transactions by such
persons, in each case to the extent permitted under applicable law and
subject to the requirements and restrictions set forth in Section 8(e).
The Committee may appoint agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee and each member thereof
shall be entitled, in good faith, to rely or act upon any report or
other information furnished to it, him or her by any executive officer,
other officer or employee of the Corporation or a subsidiary, the
Corporation's independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Committee
and any officer or employee of the Corporation or a subsidiary acting at
the direction or on behalf of the Committee shall not be personally
liable for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such
action or determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares Available for Delivery. Subject to
adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with
Awards under the Plan shall be 32,226,512; provided, however, that the
total number of shares of Stock with respect to which ISOs may be
granted shall not exceed 2,000,000; and provided, further, that the
total number of shares of Stock that may be granted in payment of Awards
other than Options and SARs shall not exceed 5,889,512. Shares of Stock
with respect to Awards granted prior to the March 8, 2001 amendment and
restatement of the Plan which were counted against the shares reserved
and available for delivery under the Plan, as in effect prior to that
date, shall be counted against the shares reserved and available for
delivery under the Amended and Restated Plan.
(b) Application of Limitation to Grants of Awards. No Award may be
granted if the number of shares of Stock to be delivered in connection
with such Award or, in the case of an Award measured solely by the
increase in value of shares of Stock but settleable only in cash (such
as cash-only SARs), the number of shares to which such Award relates,
exceeds the number of shares of Stock remaining available under the Plan
minus the number of shares of Stock issuable in settlement of or
relating to then-outstanding Awards. The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards)
and make adjustments if the number of shares of Stock actually delivered
differs from the number of shares previously counted in connection with
an Award.
(c) Availability of Shares Not Delivered Under Awards. Shares of Stock
subject to an Award under the Plan or award under a Preexisting Plan
that is canceled, expired, forfeited, settled in cash or otherwise
terminated without a delivery of shares to the Participant, including
(i) the number of shares withheld in payment of any exercise or purchase
price of an Award or award or taxes relating to Awards or awards, and
(ii) the number of shares surrendered in payment of any exercise or
purchase price of an Award or award or taxes relating to any Award or
award, will again be available for Awards under the Plan, except that if
any such shares could not again be available for Awards to a particular
Participant under any applicable law or regulation, such shares shall be
available exclusively for Awards to Participants who are not subject to
such limitation.
5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any
part of which the Plan is in effect, an Eligible Person may not be
granted Awards relating to more than 2,000,000 shares of Stock, subject
to adjustment as provided in Section 10(c), under each of the following
separate provisions: Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 8(b)
and 8(c). In addition, the maximum cash amount that may be earned under
Section 8(c) of the Plan as an Annual Incentive Award or other cash
annual Award payable in cash (currently or on a deferred basis) in
respect of any fiscal year by any one Participant shall be $8,000,000,
and the maximum cash amount that may be earned under Section 8(b) of the
Plan as a Performance Award or other cash Award payable in cash
(currently or on a deferred basis) in respect of any individual
performance period by any one Participant shall be $8,000,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6, provided, however, that no Award shall be made
under this Section 6 prior to the date on which shareholders of the
Corporation approve the adoption of the Plan. In addition, the
Committee may impose on any Award or the exercise thereof, at the date
of grant or thereafter (subject to Section 10(e)), such additional terms
and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment by the Participant and
terms permitting a Participant to make elections relating to his or her
Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an
Award that is not mandatory under the Plan. Except in cases in which
the Committee is authorized to require other forms of consideration
under the Plan, or to the extent other forms of consideration must be
paid to satisfy the requirements of Indiana law, no consideration other
than services may be required for the grant (but not the exercise) of
any Award. Any Award or the value of any Award that is made under this
Plan may, subject to any requirements of applicable law or regulation,
in the Committee or its designee's sole discretion, be converted into
Deferred Stock Units and treated as provided in Section 6(e) below.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee, provided that such
exercise price shall be not less than the Fair Market Value of a share
of Stock on the date of grant of such Option.
(ii) Time and Method of Exercise. The Committee shall determine, at the
date of grant or thereafter, the time or times at which or the
circumstances under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under other
plans of the Corporation or any subsidiary, or other property (including
notes or other contractual obligations of Participants to make payment
on a deferred basis), and the methods by or forms in which Stock will be
delivered or deemed to be delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply in
all respects with the provisions of Code Section 422. Anything in the
Plan to the contrary notwithstanding, no term of the Plan relating to
ISOs (including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted under
the Plan be exercised, so as to disqualify either the Plan or any ISO
under Code Section 422, unless the Participant has first requested the
change that will result in such disqualification.
(c) Stock Appreciation Rights. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise (or,
in the case of a "Limited SAR," the Fair Market Value determined by
reference to the Change of Control Price) over (B) the grant price of
the SAR as determined by the Committee.
(ii) Other Terms. The Committee shall determine, at the date of grant
or thereafter, the time or times at which and the circumstances under
which a SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements),
the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which any Stock payable
will be delivered or deemed to be delivered to Participants, whether or
not a SAR shall be in tandem or in combination with any other Award, and
any other terms and conditions of any SAR. Limited SARs that may only
be exercised in connection with a Change of Control or other events as
specified by the Committee may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine.
SARs and Limited SARs may be either freestanding or in tandem with other
Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which restrictions
may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise,
as the Committee may determine at the date of grant or thereafter.
Except to the extent restricted under any Award agreement relating to
the Restricted Stock, a Participant granted Restricted Stock shall have
all of the rights of a shareholder, including the right to vote the
Restricted Stock and the right to receive dividends thereon (subject to
any mandatory reinvestment or other requirement imposed by the
Committee). During the restricted period applicable to the Restricted
Stock, subject to Section 10(b) below, the Restricted Stock may not be
sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Corporation; provided that the Committee
may, in its discretion, in any individual case provide for waiver in
whole or in part of restrictions or forfeiture conditions relating to
Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, the Committee may require that such certificates bear
an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Corporation
retain physical possession of the certificates, and that the Participant
deliver a stock power to the Corporation, endorsed in blank, relating to
the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require that any cash dividends paid
on a share of Restricted Stock be automatically reinvested in additional
shares of Restricted Stock or applied to the purchase of additional
Awards under the Plan. Unless otherwise determined by the Committee,
Stock distributed in connection with a Stock split or Stock dividend,
and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has
been distributed.
(e) Deferred Stock Units. The Committee is authorized to grant to
Participants Deferred Stock Units, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral
period. Unless otherwise specified by the Committee, Deferred Stock
Units shall be credited as of the date of award to a bookkeeping reserve
account maintained by the Employer under the Lincoln National
Corporation Executive Deferred Compensation Plan for Employees or its
successor (the "Deferred Compensation Plan") in units which are
equivalent in value to shares of Common Stock ("Deferred Stock Units").
Once credited to such account, Deferred Stock Units shall be governed by
the terms of the Deferred Compensation Plan.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards
in lieu of obligations to pay cash or deliver other property under the
Plan or under other plans or compensatory arrangements, provided that,
in the case of Participants subject to Section 16 of the Exchange Act,
the amount of such grants remains within the discretion of the Committee
to the extent necessary to ensure that acquisitions of Stock or other
Awards do not impair a participant's exemption from liability under
Section 16(b) of the Exchange Act. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the
Committee.
(g) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other
Awards that may be denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Stock, as deemed
by the Committee to be consistent with the purposes of the Plan,
including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock,
purchase rights for Stock, Awards with value and payment contingent upon
performance of the Corporation or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or
the value of securities of or the performance of specified subsidiaries.
The Committee shall determine the terms and conditions of such Awards.
Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(g) shall be purchased for such
consideration, paid for at such times, by such methods, and in such
forms, including, without limitation, cash, Stock, other Awards, or
other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 6(g).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards; No
Repricing. Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or
in substitution or exchange for, any other Award or any award granted
under another plan of the Corporation, any subsidiary, or any business
entity to be acquired by the Corporation or a subsidiary, or any other
right of a Participant to receive payment from the Corporation or any
subsidiary. Such additional, tandem, and substitute or exchange Awards
may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the
surrender of such other Award or award in consideration for the grant of
the new Award. Notwithstanding any other provision of this Plan, no
Option that has been granted by the Corporation or a subsidiary thereof
shall be thereafter repriced, replaced or regranted through
cancellation, or otherwise modified without shareholder approval (except
in connection with a change in the Corporation's capitalization), if the
effect would be to reduce the exercise price for the shares underlying
such Option.
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the
term of any Option or SAR exceed a period of ten years (or such shorter
term as may be required in respect of an ISO under Code Section 422).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be
made by the Corporation or a subsidiary upon the exercise of an Option
or other Award or settlement of an Award may be made in such forms as
the Committee shall determine, including, without limitation, cash,
Stock, other Awards or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of
Stock in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events (in
addition to a Change of Control). Installment or deferred payments may
be required by the Committee (subject to Section 10(e) of the Plan,
including the consent provisions thereof) in the case of any deferral of
an outstanding Award not provided for in the original Award agreement,
except that this provision shall not prevent the Committee or its
designee from converting an Award to Deferred Stock Units as provided
under Section 6(a) above or permitted at the election of the Participant
on terms and conditions established by the Committee. Payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of dividend equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the
Corporation that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be
exempt under Rule 16b-3 (except for transactions acknowledged in writing
to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award agreement does not comply with the requirements
of Rule 16b-3 as then applicable to any such transaction, unless the
Participant shall have acknowledged in writing that a transaction
pursuant to such provision is to be non-exempt, such provision shall be
construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 so that such Participant shall
avoid liability under Section 16(b) of the Exchange Act.
(e) Cancellation and Rescission of Awards. Unless the Award agreement
specifies otherwise, the Committee may cancel any unexpired, unpaid, or
deferred Awards at any time, and the Corporation shall have the
additional rights set forth in Section 7(e)(iv) below, if the
Participant is not in compliance with all applicable provisions of the
Award agreement and the Plan including the following conditions:
(i) A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of
the Chief Executive Officer of the Corporation or other senior officer
designated by the Committee, is or becomes competitive with the
Corporation. For Participants whose employment has terminated, the
judgment of the Chief Executive Officer or other senior officer
designated by the Committee shall be based on the Participant's position
and responsibilities while employed by the Corporation, the
Participant's post-employment responsibilities and position with the
other organization or business, the extent of past, current and
potential competition or conflict between the Corporation and the other
organization or business, the effect on the Corporation's shareholders,
customers, suppliers and competitors of the Participant assuming the
post-employment position and such other considerations as are deemed
relevant given the applicable facts and circumstances. A Participant
who has terminated employment shall be free, however, to purchase as an
investment or otherwise, stock or other securities of such organization
or business so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment does not
represent a greater than five percent equity interest in the
organization or business.
(ii) A Participant shall not, without prior written authorization from
the Corporation, disclose to anyone outside the Corporation, or use in
other than the Corporation's business, any confidential information or
material relating to the business of the Corporation that is acquired by
the Participant either during or after employment with the Corporation.
(iii) A Participant shall disclose promptly and assign to the
Corporation all right, title, and interest in any invention or idea,
patentable or not, made or conceived by the Participant during
employment by the Corporation, relating in any manner to the actual or
anticipated business, research or development work of the Corporation
and shall do anything reasonably necessary to enable the Corporation to
secure a patent where appropriate in the United States and in foreign
countries.
(iv) Upon exercise, settlement, payment or delivery pursuant to an
Award, the Participant shall certify on a form acceptable to the
Committee that he or she is in compliance with the terms and conditions
of the Plan. Failure to comply with the provisions of this Section 7(e)
prior to, or during the six months after, any exercise, payment or
delivery pursuant to an Award shall cause such exercise, payment or
delivery to be rescinded. The Corporation shall notify the Participant
in writing of any such rescission within two years after such exercise,
payment or delivery; provided, however, that the Corporation may, in its
discretion, in any individual case provide for waiver in whole or in
part of compliance with the provisions of this Section 7(e). Within ten
days after receiving such a notice from the Corporation, the Participant
shall pay to the Corporation the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery
pursuant to an Award. Such payment shall be made either in cash or by
returning to the Corporation the number of shares of Stock that the
Participant received in connection with the rescinded exercise, payment
or delivery. In the case of any Participant whose employment is
terminated by the Corporation and its subsidiaries without "cause" (as
defined in the Award agreement), however, a failure of the Participant
to comply with the provisions of Section 7(e)(i) after such termination
of employment shall not in itself cause rescission or require repayment
with respect to any Award exercised, paid or delivered before such
termination.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may
be subject to such performance conditions as may be specified by the
Committee. The Committee may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or
increase the amounts payable under any Award subject to performance
conditions, except as limited under Sections 8(b) and 8(c) hereof in the
case of a Performance Award or Annual Incentive Award intended to
qualify under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an
Eligible Person who is or may become a Covered Employee should qualify
as "performance-based compensation" for purposes of Code Section 162(m),
the grant, exercise and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance and associated maximum Award
payments with respect to each of such criteria, as specified by the
Committee consistent with this Section 8(b). Performance goals shall be
objective and shall otherwise meet the requirements of Code Section
162(m) and regulations thereunder (including Regulation 1.162-27 and
successor regulations thereto), including the requirement that the level
or levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain." The
Committee may determine that such Performance Awards shall be granted,
exercised and/or settled upon achievement of any performance goal or
that more than one performance goal must be achieved as a condition to
grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
(ii) Business Criteria. One or more of the following business criteria
for the Corporation, as defined by the Committee, on a consolidated
basis, and/or for specified subsidiaries or business units of the
Corporation (except with respect to the total shareholder return and
earnings per share criteria), shall be used by the Committee in
establishing performance goals for such Performance Awards: (1) earnings
per share; (2) revenues; (3) cash flow; (4) cash flow return on
investment; (5) return on assets, return on investment, return on
capital, return on equity; (6) economic value added; (7) operating
margin; (8) net income; pretax earnings; pretax earnings before
interest, depreciation and amortization; pretax operating earnings after
interest expense and before incentives, service fees, and extraordinary
or special items; operating earnings; income from operations; (9) total
shareholder return; (10) any of the above goals as compared to the
performance of a published or special index deemed applicable by the
Committee including, but not limited to, the Standard & Poor's 500 Stock
Index or a group of comparator companies; and (11) any criteria
comparable to those listed above that shall be approved by the
Committee. One or more of the foregoing business criteria shall also be
exclusively used in establishing performance goals for Annual Incentive
Awards granted to a Covered Employee under Section 8(c) hereof.
(iii) Performance Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period, which may overlap with
another performance period or periods, of up to ten years, as specified
by the Committee. Performance goals shall be established not later than
90 days after the beginning of any performance period applicable to such
Performance Awards, or at such other date as may be required or
permitted for "performance-based compensation" under Code Section
162(m).
(iv) Performance Award Pool. The Committee may establish a Performance
Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Corporation in connection with Performance Awards.
The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria,
a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such
business criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Stock, other Awards or other
property, including deferred payments in any such forms, in the
discretion of the Committee. The Committee may, in its discretion,
reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in respect of a
Performance Award subject to this Section 8(b). The Committee shall
specify the circumstances in which such Performance Awards shall be paid
or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement of
Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees. If
the Committee determines that an Annual Incentive Award to be granted to
an Eligible Person who is or may become a Covered Employee should
qualify as "performance-based compensation" for purposes of Code Section
162(m), the grant, exercise and/or settlement of such Annual Incentive
Award shall be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish an Annual
Incentive Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Corporation in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The Committee
may specify the amount of the Annual Incentive Award pool as a
percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the
90th day after the beginning of each fiscal year, or at such other date
as may be required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. In the case of individual Annual
Incentive Awards intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria
set forth in Section 8(b)(ii) hereof in the given performance year, as
specified by the Committee; in other cases, such amount shall be based
on such criteria as shall be established by the Committee. In all
cases, the maximum Annual Incentive Award of any Participant shall be
subject to the limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal
year, the Committee shall determine the amount, if any, of (A) the
Annual Incentive Award pool, and the maximum amount of potential Annual
Incentive Award payable to each Participant in the Annual Incentive
Award pool, or (B) the amount of potential Annual Incentive Award
otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as a
final Annual Incentive Award shall be increased or reduced from the
amount of his or her potential Annual Incentive Award, including a
determination to make no final Award whatsoever, but may not exercise
discretion to increase any such amount in the case of an Annual
Incentive Award intended to qualify under Code Section 162(m). The
Committee shall specify the circumstances in which an Annual Incentive
Award shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a fiscal year or
settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance
Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under
Section 8(b), and the amount of any Annual Incentive Award pool or
potential individual Annual Incentive Awards and the amount of final
Annual Incentive Awards under Section 8(c), shall be made in writing in
the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section
162(m). It is the intent of the Corporation that Performance Awards and
Annual Incentive Awards under Sections 8(b) and 8(c) hereof granted to
persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder (including Regulation 1.162-27 and successor regulations
thereto) shall, if so designated by the Committee, constitute
"performance-based compensation" within the meaning of Code Section
162(m) and regulations thereunder. Accordingly, the terms of Sections
8(b), (c), (d) and (e), including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. If any
provision of the Plan as in effect on the date of adoption or any
agreements relating to Performance Awards or Annual Incentive Awards
that are designated as intended to comply with Code Section 162(m) does
not comply or is inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.
9. Change of Control. In the event of a "Change of Control," the
following provisions shall apply unless otherwise provided in the Award
agreement:
(a) Options and SARs. Any Option or SAR carrying a right to exercise
that was not previously exercisable and vested shall become fully
exercisable and vested as of the time of the Change of Control and shall
remain exercisable and vested for the balance of the stated term of such
Option or SAR without regard to any termination of employment by the
Participant, subject only to applicable restrictions set forth in
Section 10(a) hereof;
(b) Restricted Stock and Deferred Stock Units. The restrictions,
deferral of settlement, and forfeiture conditions applicable to any
Restricted Stock or Deferred Stock Unit granted under the Plan shall
lapse and such Awards shall be deemed fully vested as of the time of the
Change of Control, except to the extent of any waiver by the Participant
and subject to applicable restrictions set forth in Section 10(a)
hereof; and
(c) Other Awards. The rights and obligations respecting, and the
payment of, all other Awards under the Plan shall be governed solely by
the provisions of the Severance Benefit Plan.
10. General Provisions.
(a) Compliance with Legal and Other Requirements. The Corporation may,
to the extent deemed necessary or advisable by the Committee, postpone
the issuance or delivery of Stock or payment of other benefits under any
Award until completion of such registration or qualification of such
Stock or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock
exchange or automated quotation system upon which the Stock or other
securities of the Corporation are listed or quoted, or compliance with
any other obligation of the Corporation, as the Committee may consider
appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject
to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Stock or payment of other benefits in
compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in
connection with a Change of Control, the Corporation shall take or cause
to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits
under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or
other condition would represent a greater burden on a Participant than
existed on the 90th day preceding the Change of Control.
(b) Limits on Transferability; Beneficiaries. No Award or other right
or interest of a Participant under the Plan shall be pledged,
hypothecated or otherwise encumbered or subject to any lien, obligation
or liability of such Participant to any party (other than the
Corporation or a subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and
distribution or to a Beneficiary upon the death of a Participant, and
such Awards or rights that may be exercisable shall be exercised during
the lifetime of the Participant only by the Participant or his or her
guardian or legal representative, except that Awards and other rights
(other than ISOs and SARs in tandem therewith) may be transferred to one
or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with
the terms of such Award, but only if and to the extent such transfers
are permitted by the Committee pursuant to the express terms of an Award
agreement (subject to any terms and conditions which the Committee may
impose thereon). A Beneficiary, transferee, or other person claiming
any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the
Committee, and to any additional terms and conditions deemed necessary
or appropriate by the Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event
affects the Stock such that an adjustment is determined by the Committee
to be appropriate under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of Stock which may be delivered in connection with Awards
granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof,
(iii) the number and kind of shares of Stock subject to or deliverable
in respect of outstanding Awards and (iv) the exercise price, grant
price or purchase price relating to any Award and/or make provision for
payment of cash or other property in respect of any outstanding Award.
In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards (including
Performance Awards and performance goals, and Annual Incentive Awards
and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well
as acquisitions and dispositions of businesses and assets) affecting the
Corporation, any subsidiary or any business unit, or the financial
statements of the Corporation or any subsidiary, or in response to
changes in applicable laws, regulations, accounting principles, tax
rates and regulations or business conditions or in view of the
Committee's assessment of the business strategy of the Corporation, any
subsidiary or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of
a Participant, and any other circumstances deemed relevant; provided
that no such adjustment shall be authorized or made if and to the extent
that such authority or the making of such adjustment would cause
Options, SARs, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to
Participants designated by the Committee as Covered Employees and
intended to qualify as "performance-based compensation" under Code
Section 162(m) and regulations thereunder to otherwise fail to qualify
as "performance-based compensation" under Code Section 162(m) and
regulations thereunder.
(d) Taxes. The Corporation and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee may deem advisable
to enable the Corporation and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to
any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Participant's tax obligations, either
on a mandatory or elective basis in the discretion of the Committee.
However, this authority shall not include withholding of taxes above the
statutorily required withholding amounts where such excess withholding
would result in an earnings charge to the Corporation under U.S.
Generally Accepted Accounting Principles.
(e) Changes to the Plan and Awards. The Board, or the Committee acting
pursuant to such authority as may be delegated to it by the Board, may
amend, alter, suspend, discontinue or terminate the Plan or the
Committee's authority to grant Awards under the Plan without the consent
of shareholders or Participants, except that any amendment or alteration
to the Plan shall be subject to the approval of the Corporation's
shareholders not later than the annual meeting next following such Board
action if such shareholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other
such changes to the Plan to shareholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that,
without the consent of an affected Participant, no such Committee action
may materially and adversely affect the rights of such Participant under
such Award. Notwithstanding anything in the Plan to the contrary, if any
right under this Plan would cause a transaction to be ineligible for
pooling of interest accounting that would, but for the right hereunder,
be eligible for such accounting treatment, the Committee may modify or
adjust the right so that pooling of interest accounting shall be
available, including the substitution of Stock having a Fair Market
Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interest
accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible
Person or Participant the right to continue as an Eligible Person or
Participant or in the employ or service of the Corporation or a
subsidiary, (ii) interfering in any way with the right of the
Corporation or a subsidiary to terminate any Eligible Person's or
Participant's employment or service at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under
the Plan or to be treated uniformly with other Participants and
employees, or (iv) conferring on a Participant any of the rights of a
shareholder of the Corporation unless and until the Participant is duly
issued or transferred shares of Stock in accordance with the terms of an
Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation.
With respect to any payments not yet made to a Participant or obligation
to deliver Stock pursuant to an Award, nothing contained in the Plan or
any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Corporation; provided that the
Committee may authorize the creation of trusts and deposit therein cash,
Stock, other Awards or other property, or make other arrangements to meet
the Corporation's obligations under the Plan. Such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan
unless the Committee otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject
to such terms and conditions as the Committee may specify and in accordance
with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Corporation for
approval shall be construed as creating any limitations on the power of
the Board or a committee thereof to adopt such other compensation and
incentive arrangements for employees, agents and brokers of the
Corporation and its subsidiaries as it may deem desirable.
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of
an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash
or other consideration. No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards or other property shall be issued
or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan,
any rules and regulations under the Plan, and any Award agreement shall
be determined in accordance with Indiana law, without giving effect to
principles of conflicts of laws, and applicable federal law.
(k) Awards Under Preexisting Plans. No further awards shall be granted
under the Preexisting Plans, after the Effective Date with respect to
the EVSP and after Midnight, May 15, 1997 with respect to the Stock
Option Plan. The Committee may waive any conditions or rights under or
amend or alter any awards granted under the Preexisting Plans to the
extent provided in either (i) the Preexisting Plan under which the award
was made or (ii) Section 10(e) hereof.
(l) Plan Effective Date and Shareholder Approval. The Plan as
originally adopted by the Board as of the Effective Date, subject to
approval by the shareholders of the Corporation on May 15, 1997, was
amended and restated to its current form by the Board on March 8, 2001,
subject to approval of the amendment and restatement by the shareholders
of the Corporation.