Exhibit 10-2
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SUNOCO, INC.
LONG-TERM PERFORMANCE ENHANCEMENT PLAN II
(Amended and Restated as of February 6, 2002)
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ARTICLE I
Definitions
As used in this Plan, the following terms shall have the meanings herein
specified:
1.1 Affiliate - shall mean any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Sunoco, Inc.
1.2 Board of Directors - shall mean the Board of Directors of Sunoco,
Inc.
1.3 Business Combination - shall have the meaning provided herein at
Section 1.4(c).
1.4 Change in Control - shall mean the occurrence of any of the following
events:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (2) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that, for purposes of this
Section (a), the following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Company, (B) any acquisition by
the Company, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any company controlled by, controlling
or under common control with the Company (an "Affiliated Company") or (D) any
acquisition by any entity pursuant to a transaction that complies with Sections
(c)(1), (c)(2) and (c)(3) of this definition;
(b) Individuals who, as of September 6, 2001, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board of Directors;
(c) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Company
or any of its subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its subsidiaries (each, a "Business
Combination"), in each case unless, following such Business Combination, (1) all
or substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such transaction, owns
the Company or all or substantially all of
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the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (2) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (3) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board of
Directors providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
1.5 Code - shall mean the Internal Revenue Code of 1986, as amended.
1.6 Committee - shall mean the committee appointed to administer this
Plan by the Board of Directors of the Company, as constituted from time to time.
The Committee shall consist of at least two (2) members of the Board of
Directors, each of whom shall meet applicable requirements set forth in the
pertinent regulations under Section 16 of the Exchange Act and Section 162(m) of
the Code.
1.7 Common Stock - shall mean the authorized and unissued or treasury
shares of common stock of Sunoco, Inc.
1.8 Common Stock Units - shall have the meaning provided herein at
Section 6.1.
1.9 Company - shall mean Sunoco, Inc., a Pennsylvania corporation. The
term "Company" shall include any successor to Sunoco, Inc., any Subsidiary or
Affiliate which has adopted the Plan, or a corporation succeeding to the
business of Sunoco, Inc., or any Subsidiary or Affiliate by merger,
consolidation, liquidation or purchase of assets or stock or similar
transaction.
1.10 CSU Payout Date - shall have the meaning provided herein at
Section 6.9
1.11 Dividend Equivalents - shall have the meaning provided herein at
Section 6.3.
1.12 Dividend Equivalent Account - shall have the meaning provided herein
at Section 6.3.
1.13 Employment Termination Date - shall mean the date on which the
employment relationship between the Participant and the Company is terminated,
or on which the Participant ceases to be a director of the Company.
1.14 Exchange Act - shall mean the Securities Exchange Act of 1934, as
amended.
1.15 Exercise Period - shall have the meaning provided herein at
Section 5.3.
1.16 Fair Market Value - shall mean, as of any date and in respect of any
share of Common Stock, the opening price on such date of a share of Common Stock
(which price shall be the
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closing price on the previous trading day of a share of Common Stock as
reflected in the consolidated trading tables of the Wall Street Journal under
the caption "New York Stock Exchange Composite Transactions" or any other
publication selected by the Committee). If there is no sale of shares of Common
Stock on the New York Stock Exchange for more than ten (10) days immediately
preceding such date, or if deemed appropriate by the Committee for any other
reason, the Fair Market Value of the shares of Common Stock shall be as
determined by the Committee in such other manner as it may deem appropriate. In
no event shall the Fair Market Value of any share of Common Stock be less than
its par value.
1.17 Immediate Family Member - shall mean spouse (or common law spouse),
siblings, parents, children, stepchildren, adoptive relationships and/or
grandchildren of the Participant (and, for this purpose, also shall include the
Participant).
1.18 Incentive Stock Options - shall have the meaning provided herein at
Section 4.1.
1.19 Incumbent Board - shall have the meaning provided herein at Section
1.4(b).
1.20 Just Cause - shall mean, for any Participant who is a participant in
the Company's Special Executive Severance Plan, "Just Cause" as defined in such
plan, and for any other Participant:
(a) the willful and continued failure of the Participant to perform
substantially the Participant's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness or following
notice of employment termination by the Participant pursuant to Section 1.34),
after a written demand for substantial performance is delivered to the
Participant by the Board of Directors or any employee of the Company with
supervisory authority over the Participant that specifically identifies the
manner in which the Board of Directors or such supervising employee believes
that the Participant has not substantially performed the Participant's duties,
or
(b) the willful engaging by the Participant in illegal conduct or
gross misconduct that is materially and demonstrably injurious to the Company.
1.21 Limited Rights - shall have the meaning provided herein at
Section 5.1.
1.22 Market Price - shall have the meaning provided herein at Section 5.4.
1.23 Option - shall mean Stock Option and/or Incentive Stock Option.
1.24 Option Price - shall mean the purchase price per share of Common
Stock deliverable upon the exercise of an Option.
1.25 Optionee - shall mean the holder of an Option.
1.26 Outstanding Company Common Stock - shall have the meaning provided
herein at Section 1.4(a).
1.27 Outstanding Company Voting Securities - shall have the meaning
provided herein at Section 1.4(a).
1.28 Participant - shall have the meaning provided herein at
Section 2.4(a).
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1.29 Performance Factors - shall mean the various payout percentages
related to the attainment levels of one or more Performance Goals, as determined
by the Committee.
1.30 Performance Goals - shall mean the specific targeted amounts of, or
changes in, financial or operating goals including: revenues; expenses; net
income; operating income; equity; return on equity, assets or capital employed;
working capital; shareholder return; operating capacity utilized; production or
sales volumes; or throughput. Other financial or operating goals may also be
used as determined by the Committee. Such goals may be applicable to the Company
as a whole or one or more of its business units and may be applied in total or
on a per share, per barrel or percentage basis and on an absolute basis or
relative to other companies, industries or indices or any combination thereof,
as determined by the Committee.
1.31 Performance Period - shall have the meaning provided herein at
Section 6.4.
1.32 Person - shall have the meaning provided herein at Section 1.4(a).
1.33 Plan - shall have the meaning provided herein at Section 2.2.
1.34 Qualifying Termination - shall mean, with respect to the employment
of any Participant who is a participant in the Company's Special Executive
Severance Plan, a "Qualifying Termination" as defined in such plan, and with
respect to the employment of any other Participant, the following:
(a) a termination of employment by the Company within seven (7) months
after a Change in Control, other than for Just Cause, death or permanent
disability;
(b) a termination of employment by the Participant within seven (7)
months after a Change in Control for one or more of the following reasons:
(1) the assignment to such Participant of any duties
inconsistent in a way significantly adverse to such Participant, with
such Participant's positions, duties, responsibilities and status with
the Company immediately prior to the Change in Control, or a
significant reduction in the duties and responsibilities held by the
Participant immediately prior to the Change in Control, in each case
except in connection with such Participant's termination of employment
by the Company for Just Cause; or
(2) a reduction by the Company in the Participant's combined
annual base salary and guideline (target) bonus as in effect
immediately prior to the Change in Control; or
(3) the Company requires the Participant to be based
anywhere other than the Participant's present work location or a
location within thirty-five (35) miles from the present location; or
the Company requires the Participant to travel on Company business to
an extent substantially more burdensome than such Participant's travel
obligations during the period of twelve (12) consecutive months
immediately preceding the Change in Control;
provided, however, that in the case of any such termination of employment
by the Participant under this subparagraph (b), such termination shall not
be deemed to be a Qualifying Termination unless the termination occurs
within 120 days after the occurrence of the event or events constituting
the reason for the termination; or
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(c) before a Change in Control, a termination of employment by
the Company, other than a termination for Just Cause, or a termination of
employment by the Participant for one of the reasons set forth in (b)
above, if the affected Participant can demonstrate that such termination or
circumstance in (b) above leading to the termination:
(1) was at the request of a third party with which the Company
had entered into negotiations or an agreement with regard to a Change
in Control; or
(2) otherwise occurred in connection with a Change in
Control;
provided, however, that in either such case, a Change in Control actually
occurs within one (1) year following the Employment Termination Date.
1.35 Stock Options - shall have the meaning provided herein at
Section 3.1.
1.36 Subsidiary - shall mean any corporation of which, at the time, more
than fifty percent (50%) of the shares entitled to vote generally in an election
of directors are owned directly or indirectly by Sunoco, Inc. or any subsidiary
thereof.
ARTICLE II
Background, Purpose and Term of Plan; Participation & Eligibility for Benefits
2.1 Background. Effective on December 31, 2001, no further awards shall
be made under the Sunoco, Inc. Long-Term Performance Enhancement Plan adopted in
May, 1997; provided, however, that any rights theretofore granted under that
plan shall not be affected.
2.2 Purpose of the Plan. The purposes of this Sunoco, Inc. Long-Term
Performance Enhancement Plan II (the "Plan") are to:
(a) better align the interests of shareholders and management of the
Company by creating a direct linkage between Participants' rewards and
shareholders' gains;
(b) provide management with the ability to increase equity ownership
in Sunoco, Inc.;
(c) provide competitive compensation opportunities that can be
realized through attainment of performance goals; and
(d) provide an incentive to management for continuous employment with
the Company.
It is intended that most awards made under the Plan will qualify as
performance-based compensation under Section 162(m) of the Code.
2.3 Term of the Plan. This Plan will become effective upon approval by the
holders of a majority of the votes present, in person or represented by proxy,
at the 2001 Annual Meeting of Shareholders of the Company. No awards will be
made under the Plan after December 31, 2006, unless the Board of Directors
extends this date to a date no later than December 31, 2011. The Plan and all
awards made under the Plan prior to such date (or extended date) shall remain in
effect until such awards have been satisfied or terminated in accordance with
the Plan and the terms of such awards.
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2.4 Administration. The Plan shall be administered by the Committee, which
shall have the authority, in its sole discretion and from time to time to:
(a) designate the employees or directors, or classes of employees or
directors, eligible to participate in the Plan (each such employee or
director being, a "Participant");
(b) grant awards provided in the Plan in such form and amount as the
Committee shall determine;
(c) impose such limitations, restrictions and conditions upon any
such award as the Committee shall deem appropriate; and
(d) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of
the Plan.
The decisions and determinations of the Committee on all matters relating
to the Plan shall be in its sole discretion and shall be conclusive. No member
of the Committee shall be liable for any action taken or not taken or decision
made or not made in good faith relating to the Plan or any award thereunder.
2.5 Eligibility for Participation. Participants in the Plan shall be:
(a) non-employee members of the Board of Directors of the Company; and
(b) those officers and other key employees occupying responsible
managerial or professional positions at the Company, and capable of
substantially contributing to its success.
In making this selection and in determining the amount of awards, the
Committee shall consider any factors deemed relevant, including the individual's
functions, responsibilities, value of services to the Company and past and
potential contributions to its profitability and sound growth.
2.6 Types of Awards Under the Plan. Awards under the Plan may be in the
form of any one or more of the following:
(a) Stock Options, as described in Article III;
(b) Incentive Stock Options, as described in Article IV;
(c) Limited Rights, as described in Article V; and/or
(d) Common Stock Units, as described in Article VI.
2.7 Aggregate Limitation on Awards. Shares of stock which may be issued
under the Plan shall be Common Stock. The maximum number of shares of Common
Stock which may be issued under the Plan shall be four million (4,000,000). No
Option may be granted if the number of shares of Common Stock to which such
Option relates, when added to the number of shares of Common Stock previously
issued under the Plan, exceeds the number of such shares reserved
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under the preceding sentence. For purposes of calculating the maximum number of
shares of Common Stock which may be issued under the Plan:
(a) all the shares issued (including the shares, if any, withheld for
tax withholding requirements) shall be counted when cash is used as full
payment for shares issued upon exercise of an Option;
(b) only the shares issued (including the shares, if any, withheld for
tax withholding requirements) net of shares of Common Stock used as full or
partial payment for such shares upon exercise of an Option, shall be
counted; and
(c) only the shares issued (including the shares, if any, withheld for
tax withholding) upon vesting and payment of Common Stock Units, shall be
counted.
In addition to shares of Common Stock actually issued pursuant to the
exercise of Options, there shall be deemed to have been issued a number of
shares equal to the number of shares of Common Stock in respect of which Limited
Rights (as described in Article V) shall have been exercised. Shares tendered by
a Participant as payment for shares issued upon exercise of an Option shall be
available for issuance under the Plan. Any shares distributed pursuant to an
Option may consist, in whole or in part, of authorized and unissued shares or
treasury shares including shares of Common Stock acquired by purchase in the
open market or in private transactions. Any shares of Common Stock subject to an
Option, which for any reason is terminated, unexercised or expires shall again
be available for issuance under the Plan, but shares subject to an Option that,
as a result of the exercise of Limited Rights, are not issued, shall not be
available for issuance under the Plan.
(d) The maximum number of Options that shall be granted in any
calendar year to a Participant shall be four hundred thousand (400,000).
(e) The maximum number of Common Stock Units granted in any calendar
year to a Participant shall be fifty thousand (50,000).
(f) The maximum number of Common Stock Units granted under the Plan
will be one million (1,000,000).
The share limits set forth in this Section 2.7 shall be adjusted to reflect
any capitalization changes as discussed in Section 7.9.
ARTICLE III
Stock Options
3.1 Award of Stock Options. The Committee, from time to time, and subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, may grant to any Participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of options to a Participant pursuant to the Plan.
3.2 Stock Option Agreements. The grant of a Stock Option shall be evidenced
by a written Stock Option Agreement, executed by the Company and the holder of a
Stock Option, stating the
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number of shares of Common Stock subject to the Stock Option evidenced thereby,
and in such form as the Committee may from time to time determine.
3.3 Stock Option Price. The Option Price per share of Common Stock
deliverable upon the exercise of a Stock Option shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date the Stock Option is
granted.
3.4 Term and Exercise. The term and the vesting schedule of the Stock
Options shall be determined by the Committee. However, except as otherwise
provided in Section 3.11, no Stock Option may be exercisable before the first
anniversary of the date of grant or after the tenth anniversary of the date of
grant. No Stock Option shall be exercisable after the expiration of its term.
3.5 Transferability. No Stock Option may be transferred by the Participant
other than by will, by the laws of descent and distribution or, to the extent
not inconsistent with the applicable provisions of the Code, pursuant to a
domestic relations order under applicable provisions of law, and during the
Participant's lifetime the option may be exercised only by the Participant;
provided, however, that, subject to such limits as the Committee may establish,
the Committee, in its discretion, may allow the Participant to transfer a Stock
Option for no consideration to, or for the benefit of, an Immediate Family
Member or to a bona fide trust for the exclusive benefit of such Immediate
Family Members, or a partnership or limited liability company in which such
Immediate Family Members are the only partners or members.
Such transfer may only be effected following the advance written notice
from the Participant to the Committee, describing the terms and conditions of
the proposed transfer, and such transfer shall become effective only when
recorded in the Company's record of outstanding Stock Options. Any such
transferable Stock Option is further conditioned on the Participant and such
Immediate Family Member or other transferee agreeing to abide by the Company's
then-current Stock Option transfer guidelines. In the discretion of the
Committee, the foregoing right to transfer a Stock Option also will apply to the
right to transfer ancillary rights associated with such Stock Option, and to the
right to consent to any amendment to the applicable Stock Option Agreement.
Subsequent transfers shall be prohibited except in accordance with the laws
of descent and distribution, or by will. Following transfer, any such Stock
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, and the terms "Optionee" or
"Participant" shall be deemed to include the transferee; provided, however, that
the events of termination of employment of Sections 3.8 ("Retirement or
Disability"), 3.9 ("Termination for Other Reasons") and 3.10 ("Death of
Optionee") hereof shall continue to be applied with respect to the original
Optionee, following which the options shall be exercisable by the transferee
only to the extent, and for the respective periods specified therein. Neither
the Committee nor the Company will have any obligation to inform any transferee
of a Stock Option or stock appreciation right of any expiration, termination,
lapse or acceleration of such Option. The Company will have no obligation to
register with any federal or state securities commission or agency any Common
Stock issuable or issued under a Stock Option or stock appreciation right that
has been transferred by a Participant under this Section 3.5.
3.6 Manner of Payment. Each Stock Option Agreement shall set forth the
procedure governing the exercise of the Stock Option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of Common Stock
subject thereto, the Optionee shall pay to the Company, in full, the Option
Price for such shares (together with payment for any taxes which the Company is
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required by law to withhold by reason of such exercise) with cash or with Common
Stock. All shares of Common Stock issued under this Plan, or any other Company
plan, must be held at least six (6) months before they may be used as payment of
the Option Price.
3.7 Issuance and Delivery of Shares. As soon as practicable after receipt
of payment, the Company shall deliver to the Optionee a certificate or
certificates for, or otherwise register the Optionee on the books and records of
the Company as a holder of, such shares of Common Stock. The Optionee shall
become a shareholder of the Company with respect to the Common Stock so
registered, or represented by share certificates so issued, and as such shall be
fully entitled to receive dividends, to vote and to exercise all other rights of
a shareholder except to the extent otherwise provided in the Option award.
(a) Notwithstanding the foregoing, and at the discretion of the
Committee, any Optionee subject to minimum stock ownership guidelines (as
established from time to time by the Committee or the Company), but failing
to meet the applicable personal ownership requirement within the prescribed
period may, upon exercise of the Options, receive a number of shares of
Common Stock subject to the following restrictions which shall remain in
place until compliance with such ownership guidelines is attained:
(1) The number of shares subject to the restrictions shall be
equal to the total number of shares received in the exercise of the
Options, minus the sum of:
(i) to the extent that shares received upon exercise of the
Option are used to pay the Option Price, the number of shares
which have a Fair Market Value on the date of the Option exercise
equal to the total amount paid for all the shares received in the
Option exercise; and
(ii) to the extent that shares received upon exercise of the
Option are used to pay taxes and brokerage fees, the number of
shares which have a Fair Market Value on the date of the Option
exercise equal to the applicable federal, state and local
withholding tax on the total Option exercise and any brokerage
commission or interest charges, if applicable to the exercise.
(2) Other than transfers to family members or trusts that are
permitted in accordance with the applicable stock ownership guidelines,
and that will not result in a reduction in the level of ownership
attributable to the Participant under such guidelines, the Optionee
shall be prohibited from effecting the sale, exchange, transfer,
pledge, hypothecation, gift or other disposition of such shares of
Common Stock until the earlier of:
(i) attainment of compliance with applicable stock
ownership guidelines;
(ii) the Optionee's death, retirement, or permanent
disability (as determined by the Committee); or
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(iii) occurrence of the Optionee's Employment Termination
Date, for any reason other than Just Cause.
Notwithstanding the foregoing, six (6) months after the exercise
of the Stock Option, such shares of Common Stock may be used as payment
of the Option Price of shares issued upon the exercise of other Stock
Options. However, all such shares issued will be restricted shares.
(3) The restrictions shall apply to any new, additional or
different securities the Optionee may become entitled to receive with
respect to such shares by virtue of a stock split or stock dividend or
any other change in the corporate or capital structure of the Company.
(b) Until such time as the restrictions hereunder lapse, the shares
will be held in "book-entry form" and appropriate notation of these
restrictions will be maintained in the records of the Company's transfer
agent and registrar. Any share certificate representing such shares will
bear a conspicuous legend evidencing these restrictions, and the Company
may require the Optionee to deposit the share certificate with the Company
or its agent, endorsed in blank or accompanied by a duly executed
irrevocable stock power or other instrument of transfer.
3.8 Retirement or Disability. Upon termination of the Optionee's
employment by reason of retirement or permanent disability (as each is
determined by the Committee), the Optionee may, within sixty (60) months from
the date of termination, exercise any Stock Options to the extent such options
are exercisable during such 60-month period.
3.9 Termination for Other Reasons. Except as provided in Sections 3.8 and
3.10, or except as otherwise determined by the Committee, upon termination of an
Optionee's employment, all unvested Stock Options shall terminate immediately,
and all vested Stock Options shall terminate:
(a) immediately, in the case of an Optionee terminated by the Company
for Just Cause; or
(b) upon the expiration of ninety (90) calendar days following the
occurrence of the Optionee's Employment Termination Date, other than for
Just Cause;
provided, however, that the Limited Rights awarded in tandem with such Stock
Options shall not terminate and such Limited Rights shall remain exercisable
during the Exercise Period for any Optionee whose employment relationship with
the Company has been terminated as a result of any Qualifying Termination.
3.10 Death of Optionee. Any rights in respect of Stock Options to the
extent exercisable on the date of the Optionee's death may be exercised by the
Optionee's estate or by any person that acquires the legal right to exercise
such Stock Option by bequest, inheritance, or otherwise by reason of the death
of the Optionee. Any such exercise to be valid must occur within the remaining
option term of the Stock Option. The foregoing provisions of this Section 3.10
shall apply to an Optionee who dies while employed by the Company and to an
Optionee whose employment may have terminated prior to death; provided, however,
that:
(a) an Optionee who dies while employed by the Company will be treated
as if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a
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person who acquires the right to exercise such Stock Option by bequest or
inheritance will have the right to exercise the Stock Option in accordance
with Section 3.8; or
(b) the estate or a person who acquires the right to exercise a Stock
Option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Sections 3.8 and 3.9.
3.11 Acceleration of Options. Notwithstanding any provisions to the
contrary in agreements evidencing Options granted thereunder or in this Plan,
each outstanding Option shall become immediately and fully exercisable upon the
occurrence of any Change in Control.
3.12 Effect of Exercise. The exercise of any Stock Options shall cancel
that number of related Limited Rights, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said Options.
ARTICLE IV
Incentive Stock Options
4.1 Award of Incentive Stock Options. The Committee, from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, may grant to any Participant in the Plan one or
more "incentive stock options" (intended to qualify as such under the provisions
of Section 422 of the Code ("Incentive Stock Options")) to purchase for cash or
shares the number of shares of Common Stock allotted by the Committee. The date
an Incentive Stock Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of options to a
Participant pursuant to the Plan. Notwithstanding the foregoing, Incentive Stock
Options shall not be granted to any owner of ten percent (10%) or more of the
total combined voting power of the Company and its subsidiaries.
4.2 Incentive Stock Option Agreements. The grant of an Incentive Stock
Option shall be evidenced by a written Incentive Stock Option Agreement,
executed by the Company and the holder of an Incentive Stock Option stating the
number of shares of Common Stock subject to the Incentive Stock Option evidenced
thereby, and in such form as the Committee may from time to time determine.
4.3 Incentive Stock Option Price. The Option Price per share of Common
Stock deliverable upon the exercise of an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted.
4.4 Term and Exercise. The term and the vesting schedule of the Incentive
Stock Option shall be determined by the Committee. However, no Incentive Stock
Option may be exercisable before the first anniversary of the date of grant or
after the tenth anniversary of such date. No Incentive Stock Option shall be
exercisable after the expiration of its term.
4.5 Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of
grant with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year, under this Plan or any other
stock option plan of the Company exceeds One Hundred Thousand Dollars
($100,000.00), then the Option, as to the excess shall be treated as a
non-qualified stock option.
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An Incentive Stock Option shall not be granted to any person who is not an
"employee" of the Company (within the meaning of Section 424(f) of the Code).
4.6 Retirement or Disability. Upon the termination of the Optionee's
employment by reason of retirement or permanent disability (as each is
determined by the Committee), the Optionee may, within sixty (60) months from
the date of such termination of employment, exercise any Incentive Stock Options
to the extent such Incentive Stock Options are exercisable during such 60-month
period. Notwithstanding the foregoing, the tax treatment available pursuant to
Section 422 of the Code upon the exercise of an Incentive Stock Option will not
be available to an Optionee who exercises any Incentive Stock Option more than:
(a) twelve (12) months after the date of termination of employment due
to permanent disability; or
(b) three (3) months after the date of termination of employment due
to retirement.
4.7 Termination for Other Reasons. Except as provided in Sections 4.6 and
4.8, or except as otherwise determined by the Committee, upon termination of an
Optionee's employment, all unvested Incentive Stock Options shall terminate
immediately, and all vested Incentive Stock Options shall terminate:
(a) immediately, in the case of an Optionee terminated by the Company
for Just Cause; or
(b) upon the expiration of ninety (90) calendar days following the date
of termination of an Optionee's employment other than for Just Cause;
provided, however, that the Limited Rights awarded in tandem with such Incentive
Stock Options shall not terminate and such Limited Rights shall remain
exercisable during the Exercise Period for any Optionee whose employment
relationship with the Company has been terminated as a result of any Qualifying
Termination.
4.8 Death of Optionee. Any rights in respect of Incentive Stock Options to
the extent exercisable on the date of the Optionee's death may be exercised by
the Optionee's estate or by any person that acquires the legal right to exercise
such Stock Option by bequest, inheritance, or otherwise by reason of the death
of the Optionee. Any such exercise to be valid must occur within the remaining
option term of the Incentive Stock Option. The foregoing provisions of this
Section 4.8 shall apply to an Optionee who dies while employed by the Company
and to an Optionee whose employment may have terminated prior to death;
provided, however, that:
(a) an Optionee who dies while employed by the Company will be treated
as if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a person who acquires the right to exercise such
Incentive Stock Option by bequest or inheritance will have the right to
exercise the Incentive Stock Option in accordance with Section 4.6; or
(b) the estate or a person who acquires the right to exercise a stock
option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Section 4.6 and 4.7.
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4.9 Applicability of Stock Options Selections. Section 3.6 ("Manner of
Payment"), Section 3.7 ("Issuance and Delivery of Shares"), Section 3.11
("Acceleration of Options") and Section 3.12 ("Effect of Exercise"), applicable
to Stock Options, shall apply equally to Incentive Stock Options. Said Sections
are incorporated by reference in this Article IV as though fully set forth
herein.
ARTICLE V
Limited Rights
5.1 Award of Limited Rights. Concurrently with or subsequent to the award
of any Option, the Committee may, subject to the provisions of the Plan and such
other terms and conditions as the Committee may prescribe, award to the Optionee
with respect to each Option, a related limited right permitting the Optionee,
during a specified limited time period, to be paid the appreciation on the
Option in lieu of exercising the Option ("Limited Right").
5.2 Limited Rights Agreement. Limited Rights granted under the Plan shall
be evidenced by written agreements in such form as the Committee may from time
to time determine.
5.3 Exercise Period. Limited Rights are immediately exercisable in full
upon grant for a period of up to seven (7) months following the date of a Change
in Control (the "Exercise Period").
5.4 Amount of Payment. The amount of payment to which an Optionee shall be
entitled upon the exercise of each Limited Right shall be equal to 100% of the
amount, if any, which is equal to the difference between the Option Price of the
related Option and the Market Price of a share of such Common Stock. "Market
Price" is defined to be the greater of:
(a) the highest price per share of Common Stock paid in connection
with any Change in Control during the period from the sixtieth (60th) calendar
day immediately prior to the Change in Control through the ninetieth (90th)
calendar day following the Change in Control; and
(b) the highest trading price per share of Common Stock reflected in
the consolidated trading tables of The Wall Street Journal (presently the New
York Stock Exchange Composite Transactions quotations) during the 60-day period
immediately prior to the Change in Control.
5.5 Form of Payment. Payment of the amount to which an Optionee is entitled
upon the exercise of Limited Rights, as determined pursuant to Section 5.4,
shall be made solely in cash.
5.6 Effect of Exercise. If Limited Rights are exercised, the Stock Options,
if any, related to such Limited Rights cease to be exercisable to the extent of
the number of shares with respect to which the Limited Rights were exercised.
Upon the exercise or termination of the Options, if any, related to such Limited
Rights, the Limited Rights granted with respect thereto terminate to the extent
of the number of shares as to which the related Options were exercised or
terminated; provided, however, that with respect to Options that are terminated
as a result of the termination of the Optionee's employment status, the Limited
Rights awarded in tandem therewith shall not terminate and such Limited Rights
shall remain exercisable during the Exercise Period for any Optionee whose
employment relationship with the Company has been terminated as a result of any
Qualifying Termination.
5.7 Retirement or Disability. Upon termination of the Optionee's employment
by reason of permanent disability or retirement (as each is determined by the
Committee), the Optionee may,
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within six (6) months from the date of termination, exercise any Limited Rights
to the extent such Limited Right is exercisable during such six-month period.
5.8 Death of Optionee or Termination for Other Reasons. Except as provided
in Sections 5.7 and 5.9 or except as otherwise determined by the Committee, all
Limited Rights granted under the Plan shall terminate upon the termination of
the Optionee's employment or upon the death of the Optionee.
5.9 Termination Related to a Change in Control. The requirement that an
Optionee be terminated by reason of retirement or permanent disability or be
employed by the Company at the time of exercise pursuant to Sections 5.7 and 5.8
respectively, is waived during the Exercise Period as to any Optionee whose
employment relationship with the Company has been terminated as a result of any
Qualifying Termination.
ARTICLE VI
Common Stock Units
6.1 Award of Common Stock Units. The Committee, from time to time, and
subject to the provisions of the Plan, may grant to any Participant in the Plan
rights to receive shares of Common Stock which are subject to a risk of
forfeiture by the Participant ("Common Stock Units"). At the time it grants any
Common Stock Units, the Committee shall determine whether the payment of such
Common Stock Units shall be conditioned upon either:
(a) the Participant's continued employment with the Company
throughout a stated period (Section 6.4); or
(b) the attainment of certain predetermined performance objectives
during a stated period (Section 6.5).
The date Common Stock Units are granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of Common Stock
Units to a Participant pursuant to the Plan.
6.2 Common Stock Unit Agreements. Common Stock Units granted under the Plan
shall be evidenced by written agreements stating the number of Common Stock
Units evidenced thereby or in such form and as the Committee may from time to
time determine.
6.3 Dividend Equivalents. A holder of Common Stock Units will be entitled
to receive payment from the Company in an amount equal to each cash dividend
("Dividend Equivalent") the Company would have paid to such holder had he, on
the record date for payment of such dividend, been the holder of record of
shares of Common Stock equal to the number of Common Stock Units which had been
awarded to such holder as of the close of business on such record date. The
Company shall establish a bookkeeping account on behalf of each Participant in
which the Dividend Equivalents that would have been paid to the holder of Common
Stock Units ("Dividend Equivalent Account") shall be credited. The Dividend
Equivalent Account will not bear interest.
6.4 Performance Period. Upon making an award, the Committee shall determine
(and the Common Stock Unit Agreement shall state) the length of the applicable
period during which employment must be maintained or certain performance targets
must be attained (the "Performance Period"). Performance Periods will normally
be from three (3) to five (5) years;
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provided, however, that the Committee at its sole discretion may establish other
time periods; and further provided, that the Performance Period for an award
conditioned upon a Participant's continued employment with the Company shall not
be less than three (3) years.
6.5 Performance Goals. Common Stock Units and the related Dividend
Equivalent Account earned may be based upon the attainment of Performance Goals
established by the Committee in accordance with Section 162(m) of the Code.
Within the first ninety (90) days of the Performance Period, the Committee shall
establish, in writing, the weighted Performance Goals and related Performance
Factors for various goal achievement levels for the Company. In establishing the
weighted Performance Goals, the Committee shall take the necessary steps to
insure that the Company's ability to achieve the pre-established goals is
uncertain at the time the goals are set. The established written Performance
Goals, assigned weights, and Performance Factors shall be written in terms of an
objective formula, whereby any third party having knowledge of the relevant
Company performance results could calculate the amount to be paid. Such
Performance Goals may vary by Participant and by grant.
The number of Common Stock Units and Dividend Equivalents earned will be
equal to the amounts awarded multiplied by the applicable Performance Factors.
However, the Committee shall have the discretion, by Participant and by grant,
to reduce (but not to increase) some or all of the amount that would otherwise
be payable by reason of the satisfaction of the Performance Goals. In making any
such determination, the Committee is authorized to take into account any such
factor or factors it determines are appropriate, including but not limited to
Company, business unit and individual performance.
6.6 Payment of Common Stock Units and Dividend Equivalent Account. Payment
in respect of Common Stock Units earned (as determined under Sections 6.4 and
6.5) shall be made to the holder thereof within ninety (90) days after the
Performance Period for such units has ended, but only to the extent the
Committee certifies in writing that the continuing employment and/or any
applicable performance targets have been met.
Payment for Common Stock Units earned shall be made in shares of Common
Stock, except as provided in Section 6.9. The number of shares paid shall be
equal to the number of Common Stock Units earned. The holder may elect to reduce
this amount by the number of shares of Common Stock which have, on the date the
Common Stock Units are paid, a Fair Market Value equal to the applicable
federal, state and local withholding tax due on the receipt of Common Stock, in
lieu of making a cash payment equal to the amount of such withholding tax due. A
holder of Common Stock Units will be entitled to receive from the Company, at
the end of the Performance Period, payment of an amount in cash equal to the
Dividend Equivalent Account earned (as determined under Sections 6.4 and 6.5) by
the holder minus applicable federal, state and local withholding tax due.
(a) Notwithstanding the foregoing, and at the discretion of the
Committee, any Participant subject to minimum stock ownership guidelines
(as established from time to time by the Committee or the Company), but
failing to meet the applicable personal ownership requirement within the
prescribed period may receive a number of shares of Common Stock upon
payment of the Common Stock Units, subject to the following restrictions
which shall remain in place until compliance with such ownership guidelines
is attained:
(1) The number of shares subject to the restrictions shall be
equal to the total number of Common Stock Units being paid out, minus
the
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number of shares of Common Stock used to pay applicable federal,
state and local withholding tax on the total payment of such Common
Stock Units.
(2) Other than transfers to family members or trusts that are
permitted in accordance with the applicable stock ownership guidelines,
and that will not result in a reduction in the level of ownership
attributable to the Participant under such guidelines, the Participant
shall be prohibited from effecting the sale, exchange, transfer,
pledge, hypothecation, gift or other disposition of such shares of
Common Stock until the earlier of:
(i) attainment of compliance with applicable stock
ownership guidelines;
(ii) the Participant's death, retirement, or permanent
disability (as determined by the Committee); or
(iii) occurrence of the Participant's Employment Termination
Date, for any reason other than Just Cause.
(3) These restrictions shall apply to any new, additional or
different securities the Participant may become entitled to receive
with respect to such shares by virtue of a stock split or stock
dividend or any other change in the corporate or capital structure of
the Company.
(b) Until such time as the restrictions hereunder lapse, the shares
will be held in "book-entry form" and appropriate notation of these
restrictions will be maintained in the records of the Company's transfer
agent and registrar. Any share certificate representing such shares will
bear a conspicuous legend evidencing these restrictions, and the Company
may require the Participant to deposit the share certificate with the
Company or its agent, endorsed in blank or accompanied by a duly executed
irrevocable stock power or other instrument of transfer.
6.7 Death, Disability or Retirement.
(a) Upon the occurrence of a Participant's Employment Termination
Date, by reason of death, permanent disability or retirement (as each is
determined by the Committee) prior to the end of the Performance Period:
(1) in the case of an award of Common Stock Units made pursuant
to Section 6.1(a) hereof and conditioned upon the Participant's
continued employment, the conditions to payout, if any, shall be
determined by the Committee and shall be as set forth in the agreement
granting the Common Stock Units.
(2) in the case of an award of Common Stock Units made pursuant
to Section 6.1(b) hereof and conditioned upon the attainment of certain
predetermined performance objectives, no portion of the Participant's
Common Stock Units and the Dividend Equivalent Account related to such
award shall be forfeited, and the Common Stock Units, together with
related Dividend Equivalents, shall be paid out as though such
Participant continued
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to be an employee or director of the Company through any applicable
Performance Period, and as, if, and when the applicable Performance
Goals have been met.
6.8 Termination of Employment. Except as provided in Sections 6.7 and 6.9,
or as determined by the Committee, 100% of all Common Stock Units of a
Participant under the Plan shall be forfeited and the Dividend Equivalent
Account shall be forfeited upon the occurrence of the Participant's Employment
Termination Date prior to the end of the Performance Period, and in such event
the Participant shall not be entitled to receive any Common Stock or any payment
of the Dividend Equivalent Account regardless of the level of Performance Goals
achieved for the respective Performance Periods.
6.9 Change in Control. In the event of a Change in Control, Common Stock
Units shall be paid to the Participant no later than ninety (90) days following
the date of occurrence of such Change in Control (the "CSU Payout Date"),
regardless of whether the applicable Performance Period has expired or whether
the applicable Performance Goals have been met. For a Change in Control
occurring within the first consecutive twelve-month period following the date of
grant, the number of performance-based Common Stock Units paid out with regard
to such grant shall be equal to the total number of Common Stock Units
outstanding in such grant as of the Change in Control, not adjusted for any
Performance Factors described in Section 6.5 For a Change in Control occurring
after the first consecutive twelve-month period following the date of grant, the
number of performance-based Common Stock Units paid out with regard to such
grant shall be the greater of (i) the total number of Common Stock Units
outstanding in such grant as of the Change in Control, not adjusted for any
Performance Factors described in Section 6.5 or (ii) the total number of such
Common Stock Units outstanding in such grant, multiplied by the applicable
Performance Factors related to the Company's actual performance immediately
prior to the Change in Control. In the case of an award of Common Stock Units
conditioned upon the Participant's continued employment, the total number of
Common Stock Units outstanding in such grant as of the Change in Control shall
be paid to the Participant. The Participant's Common Stock Units shall be
payable to the Participant in cash or stock, as determined by the Committee
prior to the Change in Control, as follows:
(a) if the Participant is to receive stock, the Participant will
receive shares of Common Stock equal in number to the total number of
Common Stock Units as stated above in this Section 6.9; or
(b) if the Participant is to receive cash, the Participant will be
paid an amount in cash equal to the number of Common Stock Units stated
above in this Section 6.9 multiplied by the Market Price as defined in
Section 5.4 Such amount will be reduced by the applicable federal, state
and local withholding taxes due.
On or before the CSU Payout Date, the Participant will be paid an amount in
cash equal to the applicable Dividend Equivalents on the number of Common Stock
Units being paid pursuant to this Section 6.9 for the time period immediately
preceding the Change in Control. Payout of Common Stock Units and the Dividend
Equivalents shall be made to each Participant:
(c) who is employed by the Company on the CSU Payout Date; or
(d) whose employment relationship with the Company is terminated:
(1) as a result of any Qualifying Termination prior to the CSU
Payout Date; or
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(2) as a result of death, permanent disability or retirement (as
each is determined by the Committee), that has occurred prior to
the CSU Payout Date.
The Committee may establish, at the time of the grant of Common Stock
Units, other conditions which must be met for payout to occur. These conditions
shall be set forth in the Committee's resolution granting the Common Stock Units
and in the Agreement with the holders.
ARTICLE VII
Miscellaneous
7.1 General Restriction. Each award under the Plan shall be subject to
the requirement that if, at any time, the Committee shall determine that:
(a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or Federal law; or
(b) the consent or approval of any government regulatory body; or
(c) an agreement by the recipient of an award with respect to the
disposition of shares of Common Stock,
is necessary or desirable as a condition of, or in connection with, the granting
of such award or the issue or purchase of shares of Common Stock thereunder,
then such award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
7.2 Non-Assignability. Awards under the Plan shall not be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution except as otherwise determined by the Committee. Accordingly,
during the life of the recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative, unless the
Committee determines otherwise.
7.3 Right to Terminate Employment. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right to
continue in the employment of the Company, to continue to be nominated or serve
on the Board of Directors, or affect any right which the Company may have to
terminate the employment of such Participant.
7.4 Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation, determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions of
such awards, and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
7.5 Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect thereto unless and until
shares of Common Stock are issued on behalf of such recipient in "book-entry"
form, in the records of the Company's transfer agent and registrar, or
certificates have been issued for such shares.
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7.6 Leaves of Absence. The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by the recipient of any award. Without limiting
the generality of the foregoing, the Committee shall be entitled to determine
(a) whether or not any such leave of absence shall constitute a termination of
employment within the meaning of the Plan and (b) the impact, if any, of any
such leave of absence on awards under the Plan theretofore made to any recipient
who takes such leaves of absence.
7.7 Newly Eligible Employees. The Committee shall be entitled to make such
rules, regulations, determinations and awards as it deems appropriate in respect
of any employee who becomes eligible to participate in the Plan or any portion
thereof after the commencement of an award or incentive period.
7.8 Adjustments. In any event of any change in the outstanding Common Stock
by reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee may appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the number of Common Stock Units theretofore
awarded under the Plan and any and all other matters deemed appropriate by the
Committee.
7.9 Amendment of the Plan.
(a) The Committee may, without further action by the shareholders
and without receiving further consideration from the Participants, amend
this Plan or condition or modify awards under this Plan in response to
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock
exchange rules or requirements.
(b) The Committee may at any time, and from time to time, modify
or amend the Plan, or any award granted under the Plan, in any respect;
provided, however, that, without shareholder approval the Committee may
not:
(1) increase the maximum award levels established in Section 2.7,
including the maximum number of shares of Common Stock which may be
issued under the Plan (other than increases pursuant to Section 7.8);
(2) extend the term during which an Option may be exercised
beyond ten years from the date of grant; or
(3) alter the terms of any Option to reduce the Option Price, or
cancel any outstanding Option award and replace it with a new Option,
having a lower Option Price, where the economic effect would be the
same as reducing the Option Price of the cancelled Option.
Except as provided in Section 7.9(a) above, no termination, modification or
amendment of the Plan (or any award granted under the Plan), shall, without the
consent of a Participant, affect the Participant's rights under an award
previously granted.
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