EXHIBIT 10.20
THOMAS & BETTS CORPORATION
EQUITY COMPENSATION PLAN
1. PURPOSE
The purpose of the Thomas & Betts Corporation Equity Compensation Plan
(the "Plan") is to aid the Company and its subsidiaries in securing and
retaining key employees of outstanding ability and to motivate them to exert
their best efforts to achieve the long-term goals of the Company and its
subsidiaries. The Company believes that the ownership or increased ownership of
the Company's Common Stock by employees will further align their interests with
those of the Company's other shareholders and will promote the long-term success
of the Company.
2. DEFINITIONS
Unless the context clearly indicates otherwise, for purposes of the
Plan, the following terms shall have the respective meanings indicated below:
"AWARD" means an award granted under the Plan, which may be in the form
of Restricted Shares or a Stock Option.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended. A reference
to any provision of the Code shall include reference to any successor provision
of the Code.
"COMMON STOCK" means the common stock, par value $0.10 per share, of
the Company.
"COMPANY" means Thomas & Betts Corporation, a Tennessee corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. A
reference to any provision of the Exchange Act or rule promulgated under the
Exchange Act shall include reference to any successor provision or rule.
"INCENTIVE STOCK OPTION" means a Stock Option or portion thereof that
is intended to be an "incentive stock option" within the meaning of Section 422
of the Code and the regulations promulgated thereunder.
"NON-QUALIFIED OPTION" means a Stock Option or portion thereof that is
not an Incentive Stock Option.
"PARTICIPANT" means any individual who receives an Award.
"RESTRICTED SHARES" means shares of Common Stock granted under the Plan
that are subject to certain restrictions as provided in Section 8.
"RESTRICTED STOCK AWARD" means a grant of Restricted Shares under the
Plan.
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"STOCK OPTION" is a right granted under the Plan to purchase a
specified number of shares of Common Stock at a specified price. A Stock Option
may be an Incentive Stock Option or a Non-Qualified Option.
3. TERM OF THE PLAN
The Plan shall be effective as of the date on which it is approved by
the Company's shareholders. Unless the Plan is earlier terminated in accordance
with the provisions hereof, no Award shall be granted under the Plan after March
5, 2014, but outstanding Stock Options and restrictions on Restricted Shares may
extend beyond such date.
4. ADMINISTRATION OF THE PLAN
(a) The Committee. The Plan shall be administered by those members, not
less than two, of the Compensation Committee of the Board of Directors, each of
whom qualifies as both an "outside director" within the meaning of Section
162(m) of the Code and a "non-employee director" as defined in Rule 16b-3 under
the Exchange Act (the "Committee").
(b) Authority of the Committee.
(1) Subject to the provisions of the Plan, the Committee
shall have sole and complete authority and discretion
to: (i) select Participants and make Awards; (ii)
determine the types of Awards and the number of
shares of Common Stock covered by Awards; (iii)
establish the terms, conditions, restrictions and
other provisions of Awards; and (iv) amend, modify,
cancel or suspend Awards.
(2) The Committee shall have sole and complete authority
and discretion to interpret the Plan and all
agreements and other documents and instruments
relating to Awards, to adopt, amend and rescind rules
for the administration of the Plan and to make such
other determinations and take such other actions that
it deems necessary or advisable for the effective
administration of the Plan.
(3) All decisions of the Committee relating to the Plan
or any Award shall be final, conclusive and binding
on all persons. Committee decisions shall be made by
a majority of its members present at any meeting at
which a quorum is present. Any decision reduced to
writing and signed by all of the members of the
Committee shall be as fully effective as if it had
been made at a meeting duly held.
(c) Limitation of Liability. Neither the Board of Directors nor the
Committee, nor any member of either, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan or any Award. Each member of the Committee, while serving as such,
shall be deemed to be acting in his or her capacity as a director of the
Company.
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5. TYPES OF AWARDS
The Committee may grant Stock Options and Restricted Shares under and
subject to the provisions of the Plan.
6. STOCK SUBJECT TO THE PLAN
(a) Restricted Shares. The maximum number of shares of Common Stock
available to be issued under the Plan pursuant to Restricted Stock Awards is
500,000 shares (subject to adjustment as provided in Section 14).
(b) Stock Options. The maximum number of shares of Common Stock that
may be optioned and sold under the Plan pursuant to Stock Options is 3,000,000
shares (subject to adjustment as provided in Section 14).
(c) Restoration of Shares. To the extent any shares of Common Stock
covered by an Award are forfeited, not issued or cease to be issuable for any
reason, including, without limitation, because the Award is terminated, canceled
or expires in whole or in part unexercised, then such shares of Common Stock may
again be used for further Awards under the Plan.
(d) Source of Stock. Shares of Common Stock issued under the Plan shall
consist of authorized but unissued shares. No fractional shares of Common Stock
shall be issued under the Plan.
7. ELIGIBILITY AND PARTICIPATION IN THE PLAN
(a) Eligible Recipients. Unless otherwise determined by the Committee,
key employees, including officers, of the Company and its subsidiaries who are
from time to time responsible for the management, growth and protection of the
business of the Company and its subsidiaries are eligible to receive Restricted
Shares and Stock Options.
(b) Grant of Awards. The Committee shall, in its sole and complete
discretion and subject to the provisions of the Plan, (1) select from time to
time the employees, from among those eligible, who shall receive Awards, (2)
determine the type of Award to be granted and (3) determine and establish the
terms, provisions, conditions and restrictions of each Award, including the
number of shares of Common Stock subject to the Award. Subject to the provisions
of the Plan, Awards may be granted singly or in combination with other Awards or
in combination with, in replacement of, as alternatives to or as the payment
form for grants or rights under any other compensation plan, contract or
agreement of the Company or any subsidiary.
(c) No Right to Receive Award. No employee shall have any right to
receive an Award or, having received an Award, to receive a future Award.
(d) Rights of Employees and Others.
(1) Neither the Plan nor any Award shall (i) confer upon
any employee any right to remain employed by, or to
continue to provide services to, the Company or any
subsidiary, or (ii) limit in any way the right of the
Company or any subsidiary to terminate any
individual's employment by or service on behalf of
the Company or any subsidiary, whether or not such
individual is a Participant.
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(2) No person shall have any rights or claims under or
pursuant to the Plan, except in accordance with the
provisions of the Plan.
8. PROVISIONS APPLICABLE TO RESTRICTED STOCK AWARDS
(a) Terms, Conditions and Restrictions. The Committee shall establish
the terms, conditions, restrictions and other provisions of each Restricted
Stock Award. Shares subject to a Restricted Stock Award shall be restricted
during such period of time and prior to satisfaction of such conditions, if any,
as the Committee shall determine (the "Restriction Period"). Except as provided
in Section 8(f) below or otherwise determined by the Committee, the Participant
must remain employed by the Company or a subsidiary during the Restriction
Period or otherwise forfeit all right, title and interest in and to the
Restricted Shares.
(b) Agreements; Stock Legend. Each Restricted Stock Award will be
evidenced by a written agreement, in such form as may be specified by the
Committee, issued by the Company and setting forth the terms, conditions,
restrictions and other provisions of such Award. As a condition to receiving a
Restricted Stock Award, each proposed recipient must execute and deliver such
agreement to the Company. Certificates for Restricted Shares may, if the
Committee so determines, bear a legend referring to the restrictions and the
instruments to which such shares are subject.
(c) Rights with Respect to Shares. A Participant who receives a
Restricted Stock Award shall have all rights of ownership with respect to such
underlying shares of Common Stock, including the right to vote such shares and
to receive any dividends paid thereon, subject, however, to the provisions of
the Plan, the agreement relating to the Restricted Stock Award and any legend on
the certificate for such shares. Until such time as any restrictions imposed
pursuant to Section 8(a) on any Restricted Shares shall terminate, the Company
or its designee will hold the certificate(s) for such Restricted Shares in
escrow on such Participant's behalf.
(d) Transferability Restriction. Shares of Common Stock subject to a
Restricted Stock Award may not be sold, pledged, assigned, exchanged,
encumbered, hypothecated, transferred or disposed of in any manner during the
Restriction Period applicable thereto.
(e) Additional Shares Received With Respect to Restricted Shares. Any
shares of Common Stock or other securities of the Company received by a
Participant as a stock dividend on, or in connection with a stock split or
combination, share exchange, reorganization, recapitalization, merger,
consolidation or otherwise with respect to, shares of Common Stock received as a
Restricted Stock Award shall have the same status, be subject to the same
restrictions and bear the same legend, if any, as the shares received pursuant
to the Restricted Stock Award.
(f) Lapse of Restrictions. Unless otherwise determined by the
Committee, any restrictions imposed pursuant to Section 8(a) on Restricted
Shares shall terminate with respect to such shares on the earliest to occur of
the following:
(1) the expiration of the Restriction Period (including
pursuant to Section 15(b)(1) below);
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(2) the Participant's retirement in accordance with the
Company's retirement practices and policies (or six
months after the date of the Award, if later);
(3) the Participant's permanent disability (or six months
after the date of the Award, if later); or
(4) the Participant's death.
Upon the termination of such restrictions, the certificates for such shares of
Common Stock shall be released from escrow and delivered to the Participant or,
in the event of the Participant's death, the Participant's personal
representative and any legend on such certificates shall be removed.
9. PROVISIONS APPLICABLE TO STOCK OPTIONS
(a) Limit on Awards. No Participant shall receive Stock Options for
more than 200,000 shares of Common Stock (subject to adjustment as provided in
Section 14) during any fiscal year of the Company.
(b) Agreements. Each Stock Option will be evidenced by a written or
electronic agreement, in such form as may be specified by the Committee, issued
by the Company and setting forth the terms, conditions and other provisions of
the Stock Option, including the number of shares of Common Stock covered by the
Stock Option, the exercise price per share, the term of the Stock Option and the
vesting schedule. A Participant may not exercise a Stock Option until he or she
executes and delivers such agreement to the Company.
(c) Terms and Conditions. All Stock Options shall be subject to the
following terms and conditions and to such other terms and conditions consistent
with the terms of the Plan as the Committee shall determine:
(1) Option Price. The exercise price per share shall be determined
by the Committee, but shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant. The
"Fair Market Value" of the Common Stock on a particular date
shall mean, for all purposes under the Plan, the average of
the high and low sales prices of the Common Stock as reported
on the New York Stock Exchange on that date. In the event that
such method for determining Fair Market Value is not
practicable, then the Committee shall determine the Fair
Market Value of the Common Stock in such manner as it deems
appropriate.
(2) Time of Exercise of Option. Each Stock Option shall be
exercisable during and over such period, ending not later than
ten years from the grant date, as determined by the Committee.
Unless otherwise determined by the Committee, no Stock Option
shall be exercisable prior to the first anniversary of the
grant date, except as provided in Sections 9(c)(4) and
15(b)(2) below.
(3) Method of Exercise and Payment. Each Stock Option may be
exercised by giving notice to the Company (or a designated
broker) in a form acceptable to the Company, specifying the
number of shares to be purchased and, in the case of exercise
through the Company, accompanied by payment in full (including
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applicable taxes, if any) in cash therefore. No Stock Option
shall be exercised for less than the lesser of 50 shares or
the full number of shares for which the Stock Option is then
exercisable. No Participant shall have any rights to dividends
or other rights of a shareholder with respect to shares
subject to his or her Stock Option until he or she has paid in
full for such shares and a stock certificate has been issued
to him or her for such shares.
(4) Rights After Termination of Employment.
(i) Retirement. Unless otherwise determined by the
Committee, if a Participant's employment terminates
by reason of his or her retirement on or after his or
her Early Retirement Date or Normal Retirement Date
(as such terms are defined in the Thomas & Betts
Pension Plan as in effect on November 30, 2003), the
Participant's Stock Option may thereafter be
exercised in full (except that no Stock Option may be
exercised less than six months from the grant date)
for a period of three years from the date of such
retirement, or the stated period of the Stock Option,
whichever period is the shorter; provided, however,
that if the Participant dies after such termination
of employment, any unexercised Stock Option, to the
extent to which it was exercisable at the time of the
Participant's death, may thereafter be exercised by
the legal representative of the estate or by the
legatee of the Stock Option under the last will for a
period of 12 months from the date of the
Participant's death or the expiration of the stated
period of the Stock Option, whichever period is the
shorter.
(ii) Disability. Unless otherwise determined by the
Committee, if a Participant's employment terminates
by reason of permanent disability (as defined in
Section 22(e)(3) of the Code), the Participant's
Stock Option may thereafter be exercised in full
(except that no Stock Option may be exercised less
than six months from the grant date) for a period of
24 months from the date of such termination of
employment or the stated period of the Stock Option,
whichever period is the shorter; provided, however,
that if the Participant dies within a period of 24
months after such termination of employment, any
outstanding Stock Option may thereafter be exercised
by the legal representative of the estate or by the
legatee of the Stock Option under the last will for a
period of 12 months from the date of the
Participant's death or the expiration of the stated
period of the Stock Option, whichever period is the
shorter.
(iii) Death. Unless otherwise determined by the Committee,
if a Participant's employment terminates by reason of
the Participant's death, the Participant's Stock
Option may thereafter be exercised in full by the
legal representative of the estate or by the legatee
of the Stock Option under the last will for a period
of 12 months from the date of the Participant's death
or the expiration of the stated period of the Stock
Option, whichever period is the shorter.
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(iv) Other. Unless otherwise determined by the Committee,
if a Participant's employment terminates for any
reason other than death, retirement or permanent
disability (as defined above), the Participant's
Stock Option may thereafter be exercised, to the
extent exercisable on the date of such termination of
employment, for a period of 60 days from the date of
such termination of employment or the expiration of
the stated period of the Stock Option, whichever
period is the shorter.
(d) Designation of Certain Options as Incentive Stock Options. Stock
Options, or portions thereof, granted to employees may in the discretion of the
Committee be designated as Incentive Stock Options. In addition to the other
applicable terms and conditions contained in this Section 9, the aggregate Fair
Market Value of the shares of Common Stock covered by an Incentive Stock Option
(determined at the time the Stock Option is granted) with respect to which an
Incentive Stock Option is exercisable for the first time by any individual
Participant during any calendar year (under the Plan and all other similar plans
of the Company and its subsidiaries) shall not exceed $100,000 (or such other
amount as may be specified by Section 422(d) of the Code).
(e) Transferability Restriction. Unless otherwise determined by the
Committee, a Stock Option by its terms shall be personal and may not be sold,
pledged, assigned, exchanged, encumbered, hypothecated, transferred or disposed
of in any manner by the Participant other than by will or by the laws of descent
and distribution. During a Participant's lifetime, only the Participant or a
duly appointed legal representative may exercise the Stock Option, unless
otherwise determined by the Committee.
(f) Repricing Prohibited. Neither the Committee nor the Company shall
"reprice" outstanding Stock Options for any reason. For purposes of the Plan, a
"repricing" means lowering the exercise price per share of an outstanding Stock
Option or any other action that has the same effect or is treated as a repricing
under generally accepted accounting principles and includes, without limitation,
a tandem cancellation of a Stock Option at a time when its exercise price per
share exceeds the fair market value of the underlying Common Stock and exchange
for another option or other equity security (unless such cancellation and
exchange occurs in connection with a merger, acquisition, spin-off or other
similar corporate transaction).
(g) Use of Proceeds. Proceeds received by the Company pursuant to the
exercise of Stock Options shall constitute general funds of the Company.
10. COMPLIANCE WITH APPLICABLE LAWS; INVESTMENT REPRESENTATION
Notwithstanding any other provision of the Plan or any agreement
relating to a particular Award, the Company shall have no obligation to issue
any shares of Common Stock under the Plan unless such issuance would comply with
all applicable laws and the applicable requirements of any securities exchange
or similar entity. Prior to the issuance of any shares of Common Stock under the
Plan, the Company may require a written statement that the Participant is
acquiring such shares for his or her own account for investment and not for the
purpose or with the intention of distributing the shares or any part thereof.
The certificates representing shares of Common Stock issued under the Plan may
bear such legend or legends as the Committee deems appropriate in order to
assure compliance with applicable securities laws and regulations and to reflect
any restrictions on transfers.
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11. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, (a) a transfer of an employee from the
Company to a subsidiary, or vice versa, or from one subsidiary to another, and
(b) a leave of absence, duly authorized in writing by the Company or a
subsidiary, shall not be deemed a termination of employment.
12. TAX WITHHOLDING
All distributions under the Plan (including, without limitation, the
grant of Awards and the issuance of Common Stock pursuant to an Award) are
subject to withholding of all applicable taxes, and the Committee may condition
the delivery of any Award or the issuance of any Common Stock pursuant to an
Award on the satisfaction of applicable withholding obligations (including,
without limitation, by requiring a Participant to relinquish a portion of any
proceeds received by the Participant in connection with the sale of shares
acquired upon exercise of a Stock Option).
13. PROHIBITION ON LOANS
The Company shall not loan funds to any Participant for the purpose of
paying the exercise price associated with any Stock Option or for the purpose of
paying any taxes associated with the issuance, exercising or vesting of any
Award.
14. CHANGES IN CAPITALIZATION
If the event of any stock dividend, stock split, share combination,
spin-off, exchange or reclassification, recapitalization, merger, consolidation
or other corporate reorganization affecting the Common Stock, (a) the number and
kind of shares that have been issued and that may thereafter be issued under the
Plan (as limited by Sections 6(a), 6(b) and 9(a)), (b) the exercise prices and
the number and kind of shares subject to outstanding Stock Options and (c) such
other terms of Awards as the Committee deems appropriate, shall be appropriately
and equitably adjusted by the Committee in its sole and complete discretion. The
number and kind of shares underlying Restricted Stock Awards still subject to a
Restriction Period shall be adjusted in the same manner as issued shares of
Common Stock not subject to a Restriction Period.
15. CHANGE OF CONTROL
(a) Definition. For the purpose of the Plan, a "Change of Control"
shall, without limitation, be deemed to have occurred if:
(1) A third person, including a "group" as such term is
used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), becomes
the beneficial owner, directly or indirectly, of 25%
or more of the combined voting power of the Company's
outstanding voting securities ordinarily having the
right to vote for the election of directors of the
Company;
(2) Individuals who were members of the Board of
Directors immediately prior to the execution of an
agreement providing for a transaction listed in
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(c) below cease for any reason to constitute at least
a majority of the Board, provided that any person
becoming a director subsequent to the date of such
agreement whose election, or nomination for election
by the Company's shareholders, was approved by a vote
of at least three-quarters of the directors
comprising the Board as of such date (other than an
election or nomination of an individual whose initial
assumption of office is in connection with an actual
or threatened election contest relating to the
election of directors of the Company) shall be
considered as though such person were a member of the
Board as of such date;
(3) The consummation of (i) any consolidation, share
exchange, merger or amalgamation of the Company as a
result of which the individuals and entities who were
the respective beneficial owners of the outstanding
common stock of the Company and the voting securities
of the Company immediately prior to such
consolidation, share exchange, merger or amalgamation
do not beneficially own, immediately after such
consolidation, share exchange, merger or
amalgamation, directly or indirectly, 50% or more,
respectively, of the common stock and combined voting
power of the voting securities entitled to vote of
the company resulting from such consolidation, share
exchange, merger or amalgamation; or (ii) any sale,
lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or
substantially all the assets or earning power of the
Company; or
(4) The approval by the shareholders of a plan of
complete liquidation or dissolution of the Company.
(b) Effect of Change of Control. Notwithstanding any other provision of
the Plan, upon a Change of Control:
(1) Restricted Shares. In the event of a Change of
Control, the Restriction Periods with respect to all
outstanding Restricted Shares shall immediately
lapse.
(2) Stock Options. In the event of a Change of Control,
all outstanding Stock Options shall become fully
vested and immediately exercisable. The surviving or
successor corporation (if any) shall assume each
outstanding Stock Option or substitute a new stock
option for each outstanding Stock Option; provided,
however, that the Committee may terminate all or a
portion of outstanding Stock Options, effective
immediately after the Change of Control, if it
determines that such termination is in the best
interest of the Company. If the Committee decides so
to terminate outstanding Stock Options, the Committee
shall give each Participant holding a Stock Option to
be terminated not less than seven days' notice prior
to any such termination.
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16. AMENDMENTS
The Board of Directors or the Committee may suspend or terminate the
Plan at any time and the Committee may amend or modify the Plan and amend,
modify, cancel or suspend any Award at any time and from time to time; provided,
however, that without the consent of the Participant affected, no such
suspension, termination, cancellation, amendment or modification may materially
impair the rights of any Participant under any Award theretofore granted, except
as provided in Section 15(b)(2) above and Section 17 below. Notwithstanding the
foregoing, without the requisite vote of the Company's shareholders, no such
amendment or modification may:
(a) increase the total number of shares of Common Stock issuable under
the Plan pursuant to Section 6 (except as provided in Section 14);
(b) expand the type of Awards available under the Plan;
(c) materially expand the class of persons eligible to receive Awards;
(d) extend the term of the Plan;
(e) materially change the method of determining the exercise price per
share of Stock Options;
(f) re-price an outstanding Stock Option;
(g) increase the maximum number of shares subject to Stock Options that
may be granted to a Participant (except as provided in Section 14); or
(h) delete or limit the provisions of Section 9(f) (repricing
prohibition) or Section 13 (loan prohibition).
In addition, any "material revision" of the Plan (within the meaning of the
rules of the New York Stock Exchange) not listed in Sections 16(a)-(h) above
also shall require the requisite vote of the Company's shareholders.
17. CANCELLATION OF OUTSTANDING OPTIONS
If the Committee, after consulting with management of the Company,
determines that application of an accounting standard in compliance with any
statement issued by the Financial Accounting Standards Board concerning the
treatment of Stock Options would have a significant adverse effect on the
Company's financial statements because of the fact that Stock Options granted
before the issuance of such statement are subject to new accounting rules, then
the Committee in its absolute discretion may cancel and revoke all outstanding
Stock Options to which such adverse effect is attributed and the holders of such
Stock Options shall have no further rights in respect thereof. Such cancellation
and revocation shall be effective upon written notice by the Committee to the
holders of such Stock Options.
18. FOREIGN JURISDICTIONS
Awards granted to Participants who are foreign nationals or who are
employed by the Company or any of its subsidiaries outside of the United States
may have such terms and conditions different from those specified in the Plan
and such additional terms and conditions as
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the Committee, in its judgment, determines to be necessary, appropriate or
desirable to foster and promote achievement of the material purposes of the Plan
and to fairly accommodate for differences in local law, tax policy or custom or
to facilitate administration of the Plan. The Committee may approve such
sub-plans, appendices or supplements to, or amendments, restatements or
alternative versions of, the Plan as it may consider necessary, appropriate or
desirable, without thereby affecting the terms of the Plan as in effect for any
other purpose. The special terms and any appendices, supplements, amendments,
restatements or alternative versions, however, shall not include any provisions
that are inconsistent with the terms of the Plan as then in effect, unless the
Plan could have been amended to eliminate such inconsistency without further
approval by the Company's shareholders.
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