INTERNATIONAL FLAVORS & FRAGRANCES INC.
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2000 STOCK AWARD AND INCENTIVE PLAN
AS AMENDED AND RESTATED MAY 7, 2002
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
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2000 STOCK AWARD AND INCENTIVE PLAN
AS AMENDED AND RESTATED MAY 7, 2002
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Page
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1. Purpose................................................................. 1
2. Definitions............................................................. 1
3. Administration.......................................................... 3
4. Stock Subject to Plan................................................... 4
5. Eligibility; Per-Person Award Limitations .............................. 5
6. Specific Terms of Awards................................................ 6
7. Performance Awards, Including Annual Incentive Awards.................. 10
8. Certain Provisions Applicable to Awards................................. 14
9. Change in Control....................................................... 15
10. Additional Award Forfeiture Provisions.................................. 18
11. General Provisions...................................................... 20
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
2000 STOCK AWARD AND INCENTIVE PLAN
AS AMENDED AND RESTATED MAY 7, 2002
1. PURPOSE. The purpose of this 2000 Stock Award and Incentive Plan (the
"Plan") is to aid International Flavors & Fragrances Inc., a New York
corporation (the "Company"), in attracting, retaining, motivating and rewarding
employees, non-employee directors, and other persons who provide substantial
services to the Company or its subsidiaries or affiliates, to provide for
equitable and competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and promote the creation
of long-term value for shareholders by closely aligning the interests of
Participants with those of shareholders. The Plan authorizes stock-based and
cash-based incentives for Participants.
2. DEFINITIONS. In addition to the terms defined in Section 1 above and
elsewhere in the Plan, the following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
(a) "Annual Incentive Award" means a type of Performance Award
granted to a Participant under Section 7(c) representing a conditional
right to receive cash, Stock or other Awards or payments, as determined
by the Committee, based on performance in a performance period of one
fiscal year or a portion thereof.
(b) "Award" means any cash award, Option, SAR, Restricted Stock,
Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any related right or interest, granted to
a Participant under the Plan.
(c) "Beneficiary" means any family member or members, including by
marriage or adoption, any trust in which the Participant or any family
member or members have more than 50% of the beneficial interest, and any
other entity in which the Participant or any family member or members own
more than 50% of the voting interests, in each case designated by the
Participant in his most recent written Beneficiary designation filed with
the Committee as entitled to exercise rights or receive benefits in
connection with the Award (or any portion thereof), or if there is no
surviving designated Beneficiary, then the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to
exercise rights or receive benefits in connection with the Award on
behalf or in lieu of such non-surviving designated Beneficiary.
(d) "Board" means the Company's Board of Directors.
(e) "Change in Control" and related terms have the meanings
specified in Section 9.
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(f) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code or regulation (including a
proposed regulation) thereunder shall include any successor provisions
and regulations.
(g) "Committee" means a committee of two or more directors
designated by the Board to administer the Plan; provided, however, that,
directors appointed or serving as members of a Board committee designated
as the Committee shall not be employees of the Company or any subsidiary
or affiliate. In appointing members of the Committee, the Board will
consider whether a member is or will be a Qualified Member, but such
members are not required to be Qualified Members at the time of
appointment or during their term of service on the Committee. The full
Board may perform any function of the Committee hereunder, in which case
the term "Committee" shall refer to the Board.
(h) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 11(j).
(i) "Deferred Stock" means a right, granted to a Participant under
Section 6(e), to receive Stock or other Awards or a combination thereof
at the end of a specified deferral period.
(j) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g), to receive cash, Stock, other Awards or other
property equal in value to all or a specified portion of the dividends
paid with respect to a specified number of shares of Stock.
(k) "Effective Date" means the effective date specified in Section
11(p).
(l) "Eligible Person" has the meaning specified in Section 5.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to any provision of the Exchange Act or rule
(including a proposed rule) thereunder shall include any successor
provisions and rules.
(n) "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 closing sale
price reported on the composite tape of the New York Stock Exchange on
the day as of which such value is being determined or, if there is no
sale on that day, then on the last previous day on which a sale was
reported.
(o) "Incentive Stock Option" or "ISO" means any Option designated
as an incentive stock option within the meaning of Code Section 422 or
any successor provision thereto and qualifying thereunder.
(p) "Option" means a right, granted to a Participant under Section
6(b), to purchase Stock or other Awards at a specified price during
specified time periods.
(q) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h).
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(r) "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.
(s) "Performance Award" means a conditional right, granted to a
Participant under Sections 6(i) and 7, to receive cash, Stock or other
Awards or payments, as determined by the Committee, based upon
performance criteria specified by the Committee.
(t) "Qualified Member" means a member of the Committee who is a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and an
"outside director" within the meaning of Regulation 1.162-27 under Code
Section 162(m).
(u) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) which is subject to certain restrictions and to a risk of
forfeiture.
(v) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
and applicable to Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(w) "Stock" means the Company's Common Stock, and any other equity
securities of the Company that may be substituted or resubstituted for
Stock pursuant to Section 11(c).
(x) "Stock Appreciation Rights" or "SAR" means a right granted to
a Participant under Section 6(c).
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by
the Committee, which shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select
Eligible Persons to become Participants; to grant Awards; to determine
the type and number of Awards, the dates on which Awards may be exercised
and on which the risk of forfeiture or deferral period relating to Awards
shall lapse or terminate, the acceleration of any such dates, the
expiration date of any Award, whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, and other
terms and conditions of, and all other matters relating to, Awards; to
prescribe documents evidencing or setting terms of Awards (such Award
documents need not be identical for each Participant), amendments
thereto, and rules and regulations for the administration of the Plan and
amendments thereto; to construe and interpret the Plan and Award
documents and correct defects, supply omissions or reconcile
inconsistencies therein; and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan. Decisions of the Committee with respect to
the administration and interpretation of the Plan shall be final,
conclusive, and binding upon all persons interested in the Plan,
including Participants, Beneficiaries, transferees under Section 11(b)
and other persons claiming rights from or through a Participant, and
shareholders. The foregoing notwithstanding, the Board shall perform the
functions of the Committee for purposes of granting Awards under the Plan
to non-employee directors (authority with respect to other aspects of
non-employee director
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awards is not exclusive to the Board, however).
(b) Manner of Exercise of Committee Authority. At any time that a
member of the Committee is not a Qualified Member, (i) any action of the
Committee relating to an Award intended by the Committee to qualify as
"performance-based compensation" within the meaning of Code Section
162(m) and regulations thereunder may be taken by a subcommittee,
designated by the Committee or the Board, composed solely of two or more
Qualified Members, and (ii) any action relating to an Award granted or to
be granted to a Participant who is then subject to Section 16 of the
Exchange Act in respect of the Company may be taken either by such a
subcommittee or by the Committee but with each such member who is not a
Qualified Member abstaining or recusing himself or herself from such
action, provided that, upon such abstention or recusal, the Committee
remains composed of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the abstention
or recusal of such non-Qualified Member(s), shall be the action of the
Committee for purposes of the Plan. 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
Company or any subsidiary or affiliate, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the
Committee may determine, to the extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d) for Awards granted
to Participants subject to Section 16 of the Exchange Act in respect of
the Company and will not cause Awards intended to qualify as
"performance-based compensation" under Code Section 162(m) to fail to so
qualify.
(c) Limitation of Liability. The Committee and each member
thereof, and any person acting pursuant to authority delegated by the
Committee, shall be entitled, in good faith, to rely or act upon any
report or other information furnished by any executive officer, other
officer or employee of the Company or a subsidiary or affiliate, the
Company's independent auditors, consultants or any other agents assisting
in the administration of the Plan. Members of the Committee, any person
acting pursuant to authority delegated by the Committee, and any officer
or employee of the Company or a subsidiary or affiliate acting at the
direction or on behalf of the Committee or a delegee 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 Company 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 11(c), the total number of shares of
Stock reserved and available for delivery in connection with Awards under
the Plan shall be 9,000,000 shares plus the number of shares reserved for
options under the Company's 1997 Employee Stock Option Plan (the "1997
Plan") but which have not been issued and delivered under the 1997 Plan,
including such 1997 Plan shares as may become available in accordance
with Section 4(b) hereof; provided, however, that the total number of
shares with respect to which ISOs may be granted shall not exceed
9,000,000; and provided further, that the total number of shares which
may be issued and delivered in connection with Awards other than Options
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and SARs shall not exceed 2,700,000. Any shares of Stock delivered under
the Plan shall consist of authorized and unissued shares or treasury
shares.
(b) Share Counting Rules. 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.
Shares subject to an Award or a 1997 Plan award that is canceled,
expired, forfeited, settled in cash or otherwise terminated without a
delivery of shares to the Participant will again be available for Awards,
and shares withheld in payment of the exercise price or taxes relating to
an Award or 1997 Plan award and shares equal to the number surrendered in
payment of any exercise price or taxes relating to an Award or 1997 Plan
award shall be deemed to constitute shares not delivered to the
Participant and shall be deemed to again be available for Awards under
the Plan. In addition, in the case of any Award granted in substitution
for an award of a company or business acquired by the Company or a
subsidiary or affiliate, shares issued or issuable in connection with
such substitute Award shall not be counted against the number of shares
reserved under the Plan, but shall be available under the Plan by virtue
of the Company's assumption of the plan or arrangement of the acquired
company or business. This Section 4(b) shall apply to the number of
shares reserved and available for ISOs only to the extent consistent with
applicable regulations relating to ISOs under the Code.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted under
the Plan only to Eligible Persons. For purposes of the Plan, an "Eligible
Person" means an employee of the Company or any subsidiary or affiliate,
including any executive officer, a non-employee director of the Company, a
consultant or other person who provides substantial services to the Company or a
subsidiary or affiliate, and any person who has been offered employment by the
Company or a subsidiary or affiliate, provided that such prospective employee,
non-employee director, consultant or other person may not receive any payment or
exercise any right relating to an Award until such person has commenced
employment with or providing of services to the Company or a subsidiary or
affiliate. An employee on leave of absence may be considered as still in the
employ of the Company or a subsidiary or affiliate for purposes of eligibility
for participation in the Plan. For purposes of the Plan, a joint venture in
which the Company or a subsidiary has a substantial direct or indirect equity
investment shall be deemed an affiliate, if so determined by the Committee. In
each calendar year during any part of which the Plan is in effect, an Eligible
Person may be granted Awards intended to qualify as "performance-based
compensation" under Code Section 162(m) under each of Section 6(b), 6(c), 6(d),
6(e), 6(f), 6(g) or 6(h) relating to up to his or her Annual Limit (such Annual
Limit to apply separately to the type of Award authorized under each specified
subsection, except that the limitation applies to Dividend Equivalents under
Section 6(g) only if such Dividend Equivalents are granted separately from and
not as a feature of another Award). A Participant's Annual Limit, in any year
during any part of which the Participant is then eligible under the Plan, shall
equal two million shares plus the amount of the Participant's unused Annual
Limit relating to the same type of Award as of the close of the previous year,
subject to adjustment as provided in Section 11(c). In the case of an Award
which is not valued in a way in which the limitation set forth in the preceding
sentence would operate as an effective limitation satisfying Treasury Regulation
1.162-27(e)(4) (including Performance Awards under Section 7 not related to an
Award specified
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in Section 6), the maximum amount of an Annual Incentive Award under Section
7(c) that may be earned by an Eligible Person in any year shall be 50% of the
amount of the Annual Incentive Pool specified in Section 7(c)(ii), and the
maximum amount of such an Award other than an Annual Incentive Award under
Section 7(c) that may be earned by an Eligible Person during any calendar year
shall be equal to the Participant's Annual Limit, which for this purpose shall
equal $6 million plus the amount of the Participant's unused cash Annual Limit
for such Awards other than Annual Incentive Awards as of the close of the
previous year. For purposes of this Section 5, (i) the limitation on share-based
awards, the limitation on the earning of Annual Incentive Awards, and the
limitation on the earning of non-share-based Awards other than Annual Incentive
Awards each is a separate limitation, which is not decreased by the
authorization or payout of Awards that are subject to the other limitations;
(ii) "earning" means satisfying performance conditions so that an amount becomes
payable, without regard to whether it is to be paid currently or on a deferred
basis or continues to be subject to any service requirement or other
non-performance condition; and (iii) a Participant's Annual Limit is used to the
extent an amount or number of shares may be potentially earned or paid under an
Award, regardless of whether such amount or shares are in fact earned or paid.
6. SPECIFIC TERMS OF AWARDS.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any
Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 11(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 or service 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 with respect to any
term or condition of an Award that is not mandatory under the Plan. The
Committee shall require the payment of lawful consideration for an Award
to the extent necessary to satisfy the requirements of the New York
Business Corporation Law, and may otherwise require payment of
consideration for an Award except as limited by the Plan.
(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 (including both ISOs and non-qualified
Options) 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, subject to
Sections 6(f) and 8(a).
(ii) Option Term; Time and Method of Exercise. The Committee
shall determine the term of each Option, provided that in no event
shall the term of any ISO or SAR in tandem therewith exceed a
period of ten years from the date of grant. The Committee shall
determine 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 and the form of such payment (subject to
Section 11(k)), including, without limitation, cash, Stock, other
Awards or awards granted under other plans of the Company or any
subsidiary or
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affiliate, or other property (including notes and other
contractual obligations of Participants to make payment on a
deferred basis, such as through "cashless exercise" arrangements,
to the extent permitted by applicable law), and the methods by or
forms in which Stock will be delivered or deemed to be delivered
in satisfaction of Options to Participants (including deferred
delivery of shares representing the Option "profit," at the
election of the Participant or as mandated by the Committee, with
such deferred shares subject to any vesting, forfeiture or other
terms as the Committee may specify).
(iii) ISOs. The terms of any ISO granted under the Plan
shall comply in all respects with the provisions of Code Section
422, including but not limited to the requirement that no ISO
shall be granted more than ten years after the Effective Date.
(c) Stock Appreciation Rights. The Committee is authorized to
grant SAR's to Participants on the following terms and conditions:
(i) Right to Payment. An 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 in Control
Price, as defined under Section 9(d) hereof) 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 Stock will be delivered or deemed to be
delivered to Participants, and whether or not a SAR shall be
free-standing or in tandem or combination with any other Award.
Limited SARs that may only be exercised in connection with a
Change in Control or other event as specified by the Committee may
be granted on such terms, not inconsistent with this Section 6(c),
as the Committee may determine.
(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 and under such
other circumstances as the Committee may determine at the date of
grant or thereafter. The foregoing notwithstanding, Restricted
Stock will vest over a minimum period of one year except in the
event of a Participant's death, disability, or retirement, or in
the event of a Change in Control or other special circumstances.
For purposes of this Section 6(d), vesting over a one-year period
will include periodic vesting over such period if the rate of such
vesting is proportional throughout such period. Except to the
extent restricted under the terms of the Plan
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and any Award document 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).
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or service during the
applicable restriction period, Restricted Stock that is at that
time subject to restrictions shall be forfeited and reacquired by
the Company; provided that the Committee may provide, by rule or
regulation or in any Award document, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Restricted Stock will lapse in whole or in part,
including in the event of terminations resulting from specified
causes.
(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 Company retain physical possession
of the certificates, and that the Participant deliver a stock
power to the Company, 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
dividends paid on a share of Restricted Stock shall be either (A)
paid with respect to such Restricted Stock at the dividend payment
date in cash, in kind, or in a number of shares of unrestricted
Stock having a Fair Market Value equal to the amount of such
dividends, or (B) automatically reinvested in additional
Restricted Stock or held in kind, which shall be subject to the
same terms as applied to the original Restricted Stock to which it
relates, or (C) deferred as to payment, either as a cash deferral
or with the amount or value thereof automatically deemed
reinvested in shares of Deferred Stock, other Awards or other
investment vehicles, subject to such terms as the Committee shall
determine or permit a Participant to elect. 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. The Committee is authorized to grant Deferred
Stock to Participants, which are rights to receive Stock, other Awards,
or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Issuance of Stock will occur
upon expiration of the deferral period specified for an Award of
Deferred Stock by the Committee (or, if permitted by the
Committee, as elected by the Participant). In addition, Deferred
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 at the
expiration of the deferral period or at earlier specified times
(including based on achievement of performance goals and/or future
service requirements), separately or
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in combination, in installments or otherwise, and under such other
circumstances as the Committee may determine at the date of grant
or thereafter. Deferred Stock may be satisfied by delivery of
Stock, other Awards, or a combination thereof (subject to Section
11(k)), as determined by the Committee at the date of grant or
thereafter.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or service during the
applicable deferral period or portion thereof to which forfeiture
conditions apply (as provided in the Award document evidencing the
Deferred Stock), all Deferred Stock that is at that time subject
to such forfeiture conditions shall be forfeited; provided that
the Committee may provide, by rule or regulation or in any Award
document, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock
will lapse in whole or in part, including in the event of
terminations resulting from specified causes.
(iii) Dividend Equivalents. Unless otherwise determined by
the Committee, Dividend Equivalents on the specified number of
shares of Stock covered by an Award of Deferred Stock shall be
either (A) paid with respect to such Deferred Stock at the
dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends,
or (B) deferred with respect to such Deferred Stock, either as a
cash deferral or with the amount or value thereof automatically
deemed reinvested in additional Deferred Stock, other Awards or
other investment vehicles having a Fair Market Value equal to the
amount of such dividends, as the Committee shall determine or
permit a Participant to elect.
(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 of the Company or a subsidiary or affiliate
to pay cash or deliver other property under the Plan or under other plans
or compensatory arrangements, subject to such terms as shall be
determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to
receive cash, Stock, other Awards, or other property equivalent to all or
a portion of the dividends paid with respect to a specified number of
shares of Stock. Dividend Equivalents may be awarded on a free-standing
basis or in connection with another Award. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall
be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to restrictions on transferability,
risks of forfeiture and such other terms as the Committee may specify.
(h) 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 or factors
that may influence the value of Stock, 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 Company or business units
thereof 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 or affiliates or other
business units. The Committee shall determine the terms and conditions of
such Awards. Stock
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delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(h) 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, notes, 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(h).
(i) Performance Awards. Performance Awards, denominated in cash or
in Stock or other Awards, may be granted by the Committee in accordance
with Section 7.
7. PERFORMANCE AWARDS, INCLUDING ANNUAL INCENTIVE AWARDS.
(a) Performance Awards Generally. The Committee is authorized to
grant Performance Awards on the terms and conditions specified in this
Section 7. Performance Awards may be denominated as a cash amount, number
of shares of Stock, or specified number of other Awards (or a
combination) which may be earned upon achievement or satisfaction of
performance conditions specified by the Committee. In addition, the
Committee may specify that any other Award shall constitute a Performance
Award by conditioning the right of a Participant to exercise the Award or
have it settled, and the timing thereof, upon achievement or satisfaction
of 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 7(b) and 7(c) in the case of a Performance
Award intended to qualify as "performance-based compensation" under Code
Section 162(m).
(b) Performance Awards Granted to Covered Employees. If the
Committee determines that a Performance Award to be granted to an
Eligible Person who is designated by the Committee as likely to be 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 a
preestablished performance goal and other terms set forth in this Section
7(b).
(i) Performance Goal Generally. The performance goal for
such Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with
respect to each of such criteria, as specified by the Committee
consistent with this Section 7(b). The performance goal 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 one performance goal or that two or more of the
performance goals 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.
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(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis, and/or
for specified subsidiaries or affiliates or other business units
of the Company shall be used by the Committee in establishing
performance goals for such Performance Awards: (1) net sales; (2)
earnings from operations, earnings before or after taxes, earnings
before or after interest, depreciation, amortization, or
extraordinary or special items; (3) net income or net income per
common share (basic or diluted); (4) return on assets (gross or
net), return on investment, return on capital, or return on
equity; (5) cash flow, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital; (6)
economic value created; (7) operating margin or profit margin; (8)
stock price or total shareholder return; (9) dividend payout as a
percentage of net income; and (10) strategic business criteria,
consisting of one or more objectives based on meeting specified
market penetration, geographic business expansion goals, cost
targets, customer satisfaction, employee satisfaction, management
of employment practices and employee benefits, supervision of
litigation and information technology, and goals relating to
acquisitions or divestitures of subsidiaries, affiliates or joint
ventures. The targeted level or levels of performance with respect
to such business criteria may be established at such levels and in
such terms as the Committee may determine, in its discretion,
including in absolute terms, as a goal relative to performance in
prior periods, or as a goal compared to the performance of one or
more comparable companies or an index covering multiple companies.
(iii) Performance Period; Timing for Establishing
Performance Goals; Per-Person Limit. Achievement of performance
goals in respect of such Performance Awards shall be measured over
a performance period of up to one year or more than one year, as
specified by the Committee. A performance goal shall be
established not later than the earlier of (A) 90 days after the
beginning of any performance period applicable to such Performance
Award or (B) the time 25% of such performance period has elapsed.
In all cases, the maximum Performance Award of any Participant
shall be subject to the limitation set forth in Section 5.
(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 Company 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
7(b)(ii) during the given performance period, as specified by the
Committee in accordance with Section 7(b)(iv). 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, in the discretion of the
Committee. The Committee may, in its discretion, increase or
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
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Section 7(b). Any settlement which changes the form of payment
from that originally specified shall be implemented in a manner
such that the Performance Award and other related Awards do not,
solely for that reason, fail to qualify as "performance-based
compensation" for purposes of Code Section 162(m). 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 or other event (including a Change
in Control) prior to the end of a performance period or settlement
of such Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered
Employees. The Committee may grant an Annual Incentive Award to an
Eligible Person who is designated by the Committee as likely to be a
Covered Employee. Such Annual Incentive Award will be intended to qualify
as "performance-based compensation" for purposes of Code Section 162(m),
and therefore its grant, exercise and/or settlement shall be contingent
upon achievement of preestablished performance goals and other terms set
forth in this Section 7(c).
(i) Grant of Annual Incentive Awards. Not later than the
earlier of 90 days after the beginning of any performance period
applicable to such Annual Incentive Award or the time 25% of such
performance period has elapsed, the Committee shall determine the
Covered Employees who will potentially receive Annual Incentive
Awards, and the amount(s) potentially payable thereunder, for that
performance period. The amount(s) potentially payable as Annual
Incentive Awards may be earned and become payable under the Plan
only if and to the extent the Annual Incentive Pool, specified in
Section 7(c)(ii), has become hypothetically funded. The portion of
the Annual Incentive Award pool potentially payable to each
Covered Employee shall be preestablished by the Committee. The
foregoing notwithstanding, if any portion of the Annual Incentive
Pool for a given fiscal year is not allocated and paid out for
that year, the Committee, at any time after such fiscal year, may
allocate and pay out from such then-unallocated amounts of
hypothetical funding remaining an Award to any Eligible Person
other than a Covered Employee, but such allocations may not affect
the allocations or payouts to any Covered Employee. In all cases,
the maximum Annual Incentive Award of any Participant shall be
subject to the limitation set forth in Section 5. This Section
7(c) does not preclude the Committee from granting a Performance
Award under Section 7(b) based on performance in a period of one
year or less, in addition to or in lieu of an Annual Incentive
Award under this Section 7(c).
(ii) Creation of Annual Incentive Pool. The Annual Incentive
Pool for each fiscal year of the Company shall equal 10% of the
amount by which the "pretax consolidated earnings" (as hereinafter
defined) for such year shall exceed 20% of "net capital" (as
hereinafter defined) for such year; provided, however, that the
Annual Incentive Pool shall not exceed for any year 10% of the
amount of cash dividends paid by the Company in such year. As soon
as practicable after the end of each year the amount of the Annual
Incentive Pool for such year shall be audited by the Company's
independent public accountants and shall be reported by them to
the Committee. The term "pretax consolidated earnings" for any
fiscal year means the sum of (i) the consolidated net earnings of
the Company and its subsidiaries for such year before (A)
extraordinary items determined in accordance with generally
accepted accounting principles and (B) the cumulative effect of
accounting changes,
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as contained in the financial statements audited by the Company's
independent public accountants and reported by the Company in its
annual report to shareholders for such year, (ii) the provision
for all taxes on income for such year, as contained in the
financial statements audited by the Company's independent public
accountants and reported by the Company in its annual report to
shareholders for such year, and (iii) the amount of the Annual
Incentive Pool for such year, as audited by the Company's
independent public accountants and reported to the Committee as
contemplated above. The term "net capital" for any year shall mean
the arithmetic average of the amounts of the consolidated capital
and surplus of the Company as at the beginning and the end of such
year before (A) and (B) above, as such consolidated capital and
surplus as of each such date is audited by the Company's
independent public accountants and reported by the Company in its
annual report to shareholders for the prior year (with respect to
the consolidated capital and surplus as at the beginning of such
year) and for such year (with respect to the consolidated capital
and surplus as at the end of such year). The Annual Incentive Pool
shall be an unfunded pool established for the purpose of measuring
performance of the Company to determine compensation in connection
with Awards. Unallocated amounts of hypothetical funding of the
Annual Incentive Pool for a given fiscal year will not be added to
the Annual Incentive Pool for a subsequent year.
(iii) Payout of Annual Incentive Awards. After the end of
each performance period, the Committee shall determine the amount,
if any, of the Annual Incentive Award for that performance period
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 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. 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 or other event (including a Change in Control) prior
to the end of a performance period or settlement of such Annual
Incentive Award.
(d) Written Determinations. Determinations by the Committee as to
the establishment of performance goals, the amount potentially payable in
respect of Performance Awards and Annual Incentive Awards, the level of
actual achievement of the specified performance goals relating to
Performance Awards and Annual Incentive Awards, the level of hypothetical
funding of the Annual Incentive Pool and the amount of any final
Performance Award and Annual Incentive Award shall be recorded in writing
in the case of Performance Awards intended to qualify under Section
162(m). Specifically, the Committee shall certify in writing, in a manner
conforming to applicable regulations under Section 162(m), prior to
settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and other
material terms of the Award upon which settlement of the Award was
conditioned have been satisfied.
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8. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. 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 Company, any subsidiary or affiliate, or any business
entity to be acquired by the Company or a subsidiary or affiliate, or any
other right of a Participant to receive payment from the Company or any
subsidiary or affiliate. Awards granted in addition to or in tandem with
other Awards or awards may be granted either as of the same time as or a
different time from the grant of such other Awards or awards. Subject to
Section 11(k), the Committee may determine that, in granting a new Award,
the in-the-money value of any surrendered Award or award may be applied
to reduce the exercise price of any Option, grant price of any SAR, or
purchase price of any other Award.
(b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee, subject to the express
limitations set forth in Section 6(b)(ii).
(c) Form and Timing of Payment under Awards; Deferrals. Subject to
the terms of the Plan (including Section 11(k)) and any applicable Award
document, payments to be made by the Company or a subsidiary or affiliate
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 (subject to Section 11(k)). Installment or deferred payments may
be required by the Committee (subject to Section 11(e)) 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. With respect to a
Participant who is then subject to the reporting requirements of Section
16(a) of the Exchange Act in respect of the Company, the Committee shall
implement transactions under the Plan and administer the Plan in a manner
that will ensure that each transaction with respect to such a Participant
is exempt from liability under Rule 16b-3 or otherwise not subject to
liability under Section 16(b)), except that this provision shall not
limit sales by such a Participant, and such a Participant may engage in
other non-exempt transactions under the Plan. The Committee may authorize
the Company to repurchase any Award or shares of Stock deliverable or
delivered in connection with any Award (subject to Section 11(k)) in
order to avoid a Participant who is subject to Section 16 of the Exchange
Act incurring liability under Section 16(b). Unless otherwise specified
by the Participant, equity securities or derivative securities acquired
under the Plan which are disposed of by a Participant shall be deemed to
be disposed of in the order acquired by the Participant.
(e) Loan Provisions. With the consent of the Committee, and
subject at all times to, and only to the extent, if any, permitted under
and in accordance with, laws and regulations and other binding
obligations or provisions applicable to the Company, the
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Company may make, guarantee, or arrange for a loan or loans to a
Participant with respect to the exercise of any Option or other payment
in connection with any Award, including the payment by a Participant of
any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee
shall have full authority to decide whether to make a loan or loans
hereunder and to determine the amount, terms, and provisions of any such
loan or loans, including the interest rate, if any, to be charged in
respect of any such loan or loans, whether the loan or loans are to be
with or without recourse against the borrower, the terms on which the
loan is to be repaid and conditions, if any, under which the loan or
loans may be forgiven.
9. CHANGE IN CONTROL.
(a) Effect of "Change in Control" on Non-Performance Based Awards.
In the event of a "Change in Control," the following provisions shall
apply to non-performance based Awards, including Awards as to which
performance conditions previously have been satisfied or are deemed
satisfied under Section 9(b), unless otherwise provided by the Committee
in the Award document:
(i) All deferral of settlement, forfeiture conditions and
other restrictions applicable to Awards granted under the Plan
shall lapse and such Awards shall be fully payable as of the time
of the Change in Control without regard to deferral and vesting
conditions, except to the extent of any waiver by the Participant
or other express election to defer beyond a Change in Control and
subject to applicable restrictions set forth in Section 11(a);
(ii) Any Award 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 in Control and shall
remain exercisable and vested for the balance of the stated term
of such Award without regard to any termination of employment or
service by the Participant other than a termination for "cause"
(as defined in any employment or severance agreement between the
Company or a subsidiary or affiliate and the Participant then in
effect or, if none, as defined by the Committee and in effect at
the time of the Change in Control), subject only to applicable
restrictions set forth in Section 11(a); and
(iii) The Committee may, in its discretion, determine to
extend to any Participant who holds an Option the right to elect,
during the 60-day period immediately following the Change in
Control, in lieu of acquiring the shares of Stock covered by such
Option, to receive in cash the excess of the Change in Control
Price over the exercise price of such Option, multiplied by the
number of shares of Stock covered by such Option, and to extend to
any Participant who holds other types of Awards denominated in
shares the right to elect, during the 60-day period immediately
following the Change in Control, in lieu of receiving the shares
of Stock covered by such Award, to receive in cash the Change in
Control Price multiplied by the number of shares of Stock covered
by such Award.
(b) Effect of "Change in Control" on Performance-Based Awards. In
the event of a "Change in Control," with respect to an outstanding Award
subject to achievement of performance goals and conditions, such
performance goals and conditions shall be
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deemed to be met or exceeded if and to the extent so provided by the
Committee in the Award document governing such Award or other agreement
with the Participant.
(c) Definition of "Change in Control." A "Change in Control" shall
be deemed to have occurred if, after the Effective Date, there shall have
occurred any of the following:
(i) Any "person," as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, or any company owned, directly or indirectly, by
the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), acquires
voting securities of the Company and immediately thereafter is a
"40% Beneficial Owner." For purposes of this provision, a "40%
Beneficial Owner" shall mean a person who is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's
then-outstanding voting securities; provided, however, that the
term "40% Beneficial Owner" shall not include any person who was a
beneficial owner of outstanding voting securities of the Company
at February 20, 1990, or any person or persons who was or becomes
a fiduciary of any such person or persons who is, or in the
aggregate, are a "40% Beneficial Owner" (an "Existing
Shareholder"), including any group that may be formed which is
comprised solely of Existing Shareholders, unless and until such
time after February 20, 1990 as any such Existing Shareholder
shall have become the beneficial owner (other than by means of a
stock dividend, stock split, gift, inheritance or receipt or
exercise of, or accrual of any right to exercise, a stock option
granted by the Company or receipt or settlement of any other
stock-related award granted by the Company) by purchase of any
additional voting securities of the Company; and provided further,
that the term "40% Beneficial Owner" shall not include any person
who shall become the beneficial owner of 40% or more of the
combined voting power of the Company's then-outstanding voting
securities solely as a result of an acquisition by the Company of
its voting securities, until such time thereafter as such person
shall become the beneficial owner (other than by means of a stock
dividend or stock split) of any additional voting securities and
becomes a 40% Beneficial Owner in accordance with this Section
9(c)(i);
(ii) Individuals who on September 1, 2000 constitute the
Board, and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election consent, including but not limited to a consent
solicitation, relating to the election of directors of the
Company) whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors on September 1, 2000 or whose election or
nomination for election was previously so approved or recommended,
cease for any reason to constitute at least a majority thereof;
(iii) There is consummated a merger, consolidation,
recapitalization, or reorganization of the Company, or a reverse
stock split of any class of voting securities of the Company, if,
immediately following consummation of any of the foregoing, either
(A) individuals who, immediately prior to such consummation,
constitute the Board do not constitute at least a majority of the
members of the board of directors of the Company or the surviving
or parent entity, as the case may be, or
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(B) the voting securities of the Company outstanding immediately
prior to such recommendation do not represent (either by remaining
outstanding or by being converted into voting securities of a
surviving or parent entity) at least 60% or more of the combined
voting power of the outstanding voting securities of the Company
or such surviving or parent entity; or
(iv) The shareholders of the Company have approved a plan
of complete liquidation of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction have
a similar effect).
(d) Definition of "Change in Control Price." The "Change in
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 in Control or any liquidation of shares
following a sale of substantially all assets of the Company, 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 in Control.
10. ADDITIONAL AWARD FORFEITURE PROVISIONS.
(a) Forfeiture of Options and Other Awards and Gains Realized Upon
Prior Option Exercises or Award Settlements. Unless otherwise determined
by the Committee, each Award granted hereunder shall be subject to the
following additional forfeiture conditions, to which the Participant, by
accepting an Award hereunder, agrees. If any of the events specified in
Section 10(b)(i), (ii), or (iii) occurs (a "Forfeiture Event"), all of
the following forfeitures will result:
(i) The unexercised portion of the Option, whether or not
vested, and any other Award not then settled (except for an Award
that has not been settled solely due to an elective deferral by
the Participant and otherwise is not forfeitable in the event of
any termination of service of the Participant) will be immediately
forfeited and canceled upon the occurrence of the Forfeiture
Event; and
(ii) The Participant will be obligated to repay to the
Company, in cash, within five business days after demand is made
therefor by the Company, the total amount of Award Gain (as
defined herein) realized by the Participant upon each exercise of
an Option or settlement of an Award (regardless of any elective
deferral) that occurred on or after (A) the date that is six
months prior to the occurrence of the Forfeiture Event, if the
Forfeiture Event occurred while the Participant was employed by
the Company or a subsidiary or affiliate, or (B) the date that is
six months prior to the date the Participant's employment by the
Company or a subsidiary or affiliate terminated, if the Forfeiture
Event occurred after the Participant ceased to be so employed. For
purposes of this Section, the term "Award Gain" shall mean (i), in
respect of a given Option exercise, the product of (X) the Fair
Market Value per share of Stock at the date of such exercise
(without regard to any subsequent change in the market price of
shares) minus the exercise price times (Y) the number of shares as
to which the Option was exercised at that date, and (ii), in
respect of any other settlement of an Award granted to the
Participant, the Fair Market Value of the cash
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or Stock paid or payable to Participant (regardless of any
elective deferral) less any cash or the Fair Market Value of any
Stock or property (other than an Award or award which would have
itself then been forfeitable hereunder and excluding any payment
of tax withholding) paid by the Participant to the Company as a
condition of or in connection such settlement.
(b) Events Triggering Forfeiture. The forfeitures specified in
Section 10(a) will be triggered upon the occurrence of any one of the
following Forfeiture Events at any time during the Participant's
employment by the Company or a subsidiary or affiliate or during the
one-year period following termination of such employment:
(i) The Participant, acting alone or with others, directly
or indirectly, prior to a Change in Control, (A) engages, either
as employee, employer, consultant, advisor, or director, or as an
owner, investor, partner, or shareholder unless the Participant's
interest is insubstantial, in any business in an area or region in
which the Company conducts business at the date the event occurs,
which is directly in competition with a business then conducted by
the Company or a subsidiary or affiliate; (B) induces any customer
or supplier of the Company or a subsidiary or affiliate, or other
company with which the Company or a subsidiary or affiliate has a
business relationship, to curtail, cancel, not renew, or not
continue his or her or its business with the Company or any
subsidiary or affiliate; or (C) induces, or attempts to influence,
any employee of or service provider to the Company or a subsidiary
or affiliate to terminate such employment or service. The
Committee shall, in its discretion, determine which lines of
business the Company conducts on any particular date and which
third parties may reasonably be deemed to be in competition with
the Company. For purposes of this Section 10(b)(i), a
Participant's interest as a shareholder is insubstantial if it
represents beneficial ownership of less than five percent of the
outstanding class of stock, and a Participant's interest as an
owner, investor, or partner is insubstantial if it represents
ownership, as determined by the Committee in its discretion, of
less than five percent of the outstanding equity of the entity;
(ii) The Participant discloses, uses, sells, or otherwise
transfers, except in the course of employment with or other
service to the Company or any subsidiary or affiliate, any
confidential or proprietary information of the Company or any
subsidiary or affiliate, including but not limited to information
regarding the Company's current and potential customers,
organization, employees, finances, and methods of operations and
investments, so long as such information has not otherwise been
disclosed to the public or is not otherwise in the public domain,
except as required by law or pursuant to legal process, or the
Participant makes statements or representations, or otherwise
communicates, directly or indirectly, in writing, orally, or
otherwise, or takes any other action which may, directly or
indirectly, disparage or be damaging to the Company or any of its
subsidiaries or affiliates or their respective officers,
directors, employees, advisors, businesses or reputations, except
as required by law or pursuant to legal process; or
(iii) The Participant fails to cooperate with the Company or
any subsidiary or affiliate by making himself or herself available
to testify on behalf of the Company or such subsidiary or
affiliate in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, or otherwise fails to
assist the Company or any
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subsidiary or affiliate in any such action, suit, or proceeding by
providing information and meeting and consulting with members of
management of, other representatives of, or counsel to, the
Company or such subsidiary or affiliate, as reasonably requested.
(c) Agreement Does Not Prohibit Competition or Other Participant
Activities. Although the conditions set forth in this Section 10 shall be
deemed to be incorporated into an Award, a Participant is not thereby
prohibited from engaging in any activity, including but not limited to
competition with the Company and its subsidiaries and affiliates. Rather,
the non-occurrence of the Forfeiture Events set forth in Section 10(b) is
a condition to the Participant's right to realize and retain value from
his or her compensatory Options and Awards, and the consequence under the
Plan if the Participant engages in an activity giving rise to any such
Forfeiture Event are the forfeitures specified herein. The Company and
the Participant shall not be precluded by this provision or otherwise
from entering into other agreements concerning the subject matter of
Section 10(a) and 10(b).
(d) Committee Discretion. The Committee may, in its discretion,
waive in whole or in part the Company's right to forfeiture under this
Section, but no such waiver shall be effective unless evidenced by a
writing signed by a duly authorized officer of the Company. In addition,
the Committee may impose additional conditions on Awards, by inclusion of
appropriate provisions in the document evidencing or governing any such
Award.
11. GENERAL PROVISIONS.
(a) Compliance with Legal and Other Requirements. The Company 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 Company are listed or quoted, or compliance with any
other obligation of the Company, 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 in Control, the Company 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 in 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 Company or
a subsidiary or affiliate thereof), or assigned or transferred by such
Participant, and such Awards or rights that may be exercisable shall be
exercised during
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the lifetime of the Participant only by the Participant or his or her
guardian or legal representative, except that (i) Awards and related
rights shall be transferred to a Participant's Beneficiary or
Beneficiaries upon the death of the Participant, and (ii) Awards and
other rights (other than ISOs and SARs in tandem therewith) may be
transferred to one or more Beneficiaries during the lifetime of the
Participant, and rights thereunder may be exercised by such transferees
in accordance with the terms of such Award, but only if and to the extent
such transfers are then permitted by the Committee, subject to any terms
and conditions which the Committee may impose thereon (including
limitations the Committee may deem appropriate in order that offers and
sales under the Plan will meet applicable requirements of registration
forms under the Securities Act of 1933 specified by the Securities and
Exchange Commission). A Beneficiary 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 document 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 large, special and
non-recurring dividend or other distribution (whether in the form of cash
or property other than Stock), recapitalization, forward or reverse
split, Stock dividend, 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, including all
applicable limitations specified in Section 4(a), (ii) the number and
kind of shares of Stock by which annual per-person Award limitations are
measured under Section 5, (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 or,
if deemed appropriate, the Committee may make provision for a payment of
cash or property to the holder of an outstanding Option (subject to
Section 11(k)). 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 any
hypothetical funding pool 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 Company, any subsidiary or affiliate
or other business unit, or the financial statements of the Company or any
subsidiary or affiliate, 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 Company, any subsidiary or affiliate 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 the existence of such
authority (i) would cause Options, SARs, or Performance Awards granted
under Section 8 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, or (ii) would cause the Committee to be deemed to
have authority to change the targets, within the meaning of Treasury
Regulation 1.162-27(e)(4)(vi), under the
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performance goals relating to Options or SARs granted to Covered
Employees and intended to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder.
(d) Tax Provisions.
(i) Withholding. The Company and any subsidiary or affiliate
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 Company 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 withholding
obligations, either on a mandatory or elective basis in the
discretion of the Committee. Other provisions of the Plan
notwithstanding, only the minimum amount of Stock deliverable in
connection with an Award necessary to satisfy statutory
withholding requirements will be withheld.
(ii) Required Consent to and Notification of Code Section
83(b) Election. No election under Section 83(b) of the Code (to
include in gross income in the year of transfer the amounts
specified in Code Section 83(b)) or under a similar provision of
the laws of a jurisdiction outside the United States may be made
unless expressly permitted by the terms of the Award document or
by action of the Committee in writing prior to the making of such
election. In any case in which a Participant is permitted to make
such an election in connection with an Award, the Participant
shall notify the Company of such election within ten days of
filing notice of the election with the Internal Revenue Service or
other governmental authority, in addition to any filing and
notification required pursuant to regulations issued under Code
Section 83(b) or other applicable provision.
(iii) Requirement of Notification Upon Disqualifying
Disposition Under Code Section 421(b). If any Participant shall
make any disposition of shares of Stock delivered pursuant to the
exercise of an Incentive Stock Option under the circumstances
described in Code Section 421(b) (relating to certain
disqualifying dispositions), such Participant shall notify the
Company of such disposition within ten days thereof.
(e) Changes to the Plan. The Board may amend, suspend or terminate
the Plan or the Committee's authority to grant Awards under the Plan
without the consent of shareholders or Participants; provided, however,
that any amendment to the Plan shall be submitted to the Company's
shareholders for approval not later than the earliest annual meeting for
which the record date is after the date of 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
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and the Board may otherwise, in its discretion, determine to submit other
amendments to the Plan to shareholders for approval; and provided
further, that, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such
Participant under any outstanding Award. Without the approval of
shareholders, the Committee will not amend or replace previously granted
Options in a transaction that constitutes a "repricing," as such term is
used in Instruction 3 to Item 402(b)(2)(iv) of Regulation S-K, as
promulgated by the Securities and Exchange Commission. The Committee
shall have no authority to waive or modify any other Award term after the
Award has been granted to the extent that the waived or modified term was
mandatory under the Plan.
(f) Right of Setoff. The Company or any subsidiary or affiliate
may, to the extent permitted by applicable law, deduct from and set off
against any amounts the Company or a subsidiary or affiliate may owe to
the Participant from time to time, including amounts payable in
connection with any Award, owed as wages, fringe benefits, or other
compensation owed to the Participant, such amounts as may be owed by the
Participant to the Company, including but not limited to amounts owed
under Section 10(a), although the Participant shall remain liable for any
part of the Participant's payment obligation not satisfied through such
deduction and setoff. By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 11(f).
(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 Company; 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 Company'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.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan
by the Board nor its submission to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of
the Board or a committee thereof to adopt such other incentive
arrangements, apart from the Plan, as it may deem desirable, including
incentive arrangements and awards which do not qualify under Code Section
162(m), and such other arrangements may be either applicable generally or
only in specific cases.
(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
consideration, the Participant shall be repaid the amount of such cash
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) Compliance with Code Section 162(m). It is the intent of the
Company that
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Options and SARs granted to Covered Employees and other Awards designated
as Awards to Covered Employees subject to Section 7 shall constitute
qualified "performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder, unless otherwise determined by
the Committee at the time of allocation of an Award. Accordingly, the
terms of Sections 7(b), (c), and (d), 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.
The foregoing notwithstanding, because the Committee cannot determine
with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by
the Committee as likely to be a Covered Employee with respect to a
specified fiscal year. If any provision of the Plan or any Award document
relating to a Performance Award that is 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, and no provision shall be deemed to confer
upon the Committee or any other person discretion to increase the amount
of compensation otherwise payable in connection with any such Award upon
attainment of the applicable performance objectives.
(k) Certain Limitations Relating to Accounting Treatment of
Awards. Other provisions of the Plan notwithstanding, the Committee's
authority under the Plan (including under Sections 8(c), 8(d), 11(c) and
11(d)) is limited to the extent necessary to ensure that any Option or
other Award of a type that the Committee has intended to be subject to
fixed accounting with a measurement date at the date of grant or the date
performance conditions are satisfied under APB 25 shall not become
subject to "variable" accounting solely due to the existence of such
authority, unless the Committee specifically determines that the Award
shall remain outstanding despite such "variable" accounting. In addition,
other provisions of the Plan notwithstanding, (i) if any right under this
Plan would cause a transaction to be ineligible for pooling-of-interests
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, such right shall be automatically adjusted so that
pooling-of-interests accounting shall be available, including by
substituting Stock or cash having a Fair Market Value equal to any cash
or Stock otherwise payable in respect of any right to cash which would
cause the transaction to be ineligible for pooling-of-interests
accounting, and (ii) if any authority under Section 9(c) would cause a
transaction to be ineligible for pooling-of-interests accounting that
would, but for such authority, be eligible for such accounting treatment,
such authority shall be limited to the extent necessary so that such
transaction would be eligible for pooling-of-interests accounting.
(l) Governing Law. The validity, construction, and effect of the
Plan, any rules and regulations relating to the Plan and any Award
document shall be determined in accordance with the laws of the State of
New York, without giving effect to principles of conflicts of laws, and
applicable provisions of federal law.
(m) Awards to Participants Outside the United States. The
Committee may modify the terms of any Award under the Plan made to or
held by a Participant who is then resident or primarily employed outside
of the United States in any manner deemed by the Committee to be
necessary or appropriate in order that such Award shall conform to laws,
regulations, and customs of the country in which the Participant is then
resident or primarily
-25-
employed, or so that the value and other benefits of the Award to the
Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant's residence or employment
abroad shall be comparable to the value of such an Award to a Participant
who is resident or primarily employed in the United States. An Award may
be modified under this Section 11(m) in a manner that is inconsistent
with the express terms of the Plan, so long as such modifications will
not contravene any applicable law or regulation or result in actual
liability under Section 16(b) for the Participant whose Award is
modified.
(n) 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 Company or a
subsidiary or affiliate, (ii) interfering in any way with the right of
the Company or a subsidiary or affiliate 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 Company unless and until the Participant is duly
issued or transferred shares of Stock in accordance with the terms of an
Award or an Option is duly exercised. Except as expressly provided in the
Plan and an Award document, neither the Plan nor any Award document shall
confer on any person other than the Company and the Participant any
rights or remedies thereunder.
(o) Severability; Entire Agreement. If any of the provisions of
this Plan or any Award document is finally held to be invalid, illegal or
unenforceable (whether in whole or in part), such provision shall be
deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability, and the remaining provisions
shall not be affected thereby; provided, that, if any of such provisions
is finally held to be invalid, illegal, or unenforceable because it
exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be
modified to the minimum extent necessary to modify such scope in order to
make such provision enforceable hereunder. The Plan and any Award
documents contain the entire agreement of the parties with respect to the
subject matter thereof and supersede all prior agreements, promises,
covenants, arrangements, communications, representations and warranties
between them, whether written or oral with respect to the subject matter
thereof.
(p) Plan Effective Date and Termination. The Plan shall become
effective if, and at such time as, the shareholders of the Company have
approved it by the affirmative votes of the holders of a majority of the
voting securities of the Company present, or represented, and entitled to
vote on the subject matter at a duly held meeting of shareholders. Unless
earlier terminated by action of the Board of Directors, the Plan will
remain in effect until such time as no Stock remains available for
delivery under the Plan and the Company has no further rights or
obligations under the Plan with respect to outstanding Awards under the
Plan.
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