EXHIBIT 10.21
POPULAR, INC.
2004 OMNIBUS INCENTIVE PLAN
(AS AMENDED BY THE BOARD OF DIRECTORS OF POPULAR, INC. ON FEBRUARY 16, 2005)
ARTICLE I
PURPOSE
The Corporation has previously adopted the Popular, Inc., 2001 Stock
Option Plan (the "Stock Option Plan"), which was intended to provide
equity-based compensation incentives through the grant of stock options.
Effective upon the adoption of the "Popular, Inc. 2004 Omnibus Incentive Plan"
(the "Plan") by shareholders of Popular, Inc. (the "Corporation") the Plan will
replace and supersede the Stock Option Plan. All outstanding award grants under
the Stock Option Plan shall continue in full force and effect, subject to their
original terms, after the Plan replaces and supersedes the Stock Option Plan
under the terms and conditions noted above.
The purpose of the Plan is to provide flexibility to the Corporation and
its Affiliates (as hereinbelow defined) to attract, retain and motivate their
officers, executives and other key employees through the grant of awards and to
adjust its compensation practices to the best compensations practices and
corporate government trends as they develop from time to time. The Plan is
further intended to help retain and align the interests of the non-employee
members of the Board of Directors of the Corporation and its Affiliates with the
Corporation's shareholders.
ARTICLE II
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
Adjusted Net Income. "Adjusted Net Income" means the Corporation's
consolidated net income applicable to common stockholders as it appears on
an income statement of the Company prepared in accordance with generally
accepted accounting principles, excluding the effects of Extraordinary
Items.
Adjustment Event. "Adjustment Event" means any stock dividend, stock
split or share combination of, or extraordinary cash dividend on, the
Common Stock or recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, dissolution, liquidation, exchange of
shares, warrants or rights offering to purchase Common Stock at a price
substantially below Fair Market Value, or other similar event affecting
the Common Stock of the Corporation.
Affiliate. "Affiliate" means any corporation or other form of entity
of which the Corporation owns, from time to time, directly or indirectly,
50% or more of the total combined voting power of all classes of stock or
other equity interests.
Alternative Awards. "Alternative Awards" shall have the meaning set
forth in Section 10.3.
Annual Incentive Awards. "Annual Incentive Awards" means an Award
made pursuant to Article IX of the Plan with a Performance Cycle of one
year or less.
Approved Retirement. "Approved Retirement" means, in the case of a
Participant who is a common law employee of the Corporation or an
Affiliate, termination of a Participant's employment (i) on or after the
normal retirement date or any early retirement date established under any
defined benefit pension plan maintained by the Corporation or an Affiliate
and in which the Participant participates or (ii) on or after attaining
age 55 and completing such period of service as the Committee shall
determine from time to time, to the extent the Participant does not
participate in any such defined benefit pension plan maintained by the
Corporation or an Affiliate. Notwithstanding the foregoing, the term
"Approved Retirement" shall not apply to any Participant whose employment
with the Corporation or an Affiliate has been terminated for Cause,
whether or not such individual is deemed to be retirement eligible or is
receiving retirement benefits under any defined benefit pension plan
maintained by the Corporation or an Affiliate and in which the Participant
participates or would otherwise satisfy the criteria set forth by the
Committee as noted in the preceding sentence.
Award. An "Award" means the award of an Annual Incentive Award, a
Long-Term Performance Unit Award, an Option, a SAR, Restricted Stock,
Restricted Unit or Performance Share, including any associated Dividend
Equivalents, under the Plan.
Beneficial Owner. "Beneficial Owner" means any "person," as such
term is used in Section 13(d) of the Act, who, directly or indirectly, has
or shares the right to vote, dispose of, or otherwise has "beneficial
ownership" of such securities (within the meaning of Rule 13d-3 and Rule
13d-5 under the Act), including pursuant to any agreement, arrangement or
understanding (whether or not in writing).
Board. "Board" means the Board of Directors of the Corporation.
Cause. "Cause" means, with respect to a Participant, any of the
following (as determined by the Committee in its sole discretion): (i)
dishonesty, fraud or misrepresentation; (ii) inability to obtain or retain
appropriate licenses; (iii) violation of any rule or regulation of any
regulatory agency or self-regulatory agency; (iv) violation of any policy
or rule of the Corporation or any Affiliate; (v) commission of a crime;
(vi) breach by a Participant of any written covenant or agreement with the
Corporation or
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any Affiliate not to disclose or misuse any information pertaining to, or
misuse any property of, the Corporation or any Affiliate, or (vii) any act
or omission detrimental to the conduct of the business of the Corporation
or any Affiliate in any way.
Change of Control. A "Change of Control" shall be deemed to have
occurred if:
(i) any Person acquires direct or indirect ownership of 50% or
more of the combined voting power of the then outstanding securities
of the Corporation as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise; or
(ii) the shareholders of the Corporation approve (A) any
consolidation or merger of the Corporation in which the Corporation
is not the surviving corporation (other than a merger of the
Corporation in which the holders of Common Stock immediately prior
to the merger have the same or substantially the same proportionate
ownership of the surviving corporation immediately after the
merger), or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation to an entity
which is not a wholly-owned subsidiary of the Corporation.
Change of Control Price. "Change of Control Price" means the highest
price per share of Common Stock paid in conjunction with any transaction
resulting in a Change of Control (as determined in good faith by the
Committee if any part of the offered price is payable other than in cash).
Committee. "Committee" means the Compensation Committee of the Board
or such other committee of the Board as the Board shall designate from
time to time, which committee shall consist of two or more members, each
of whom shall be a "Non Employee Director" within the meaning of Rule
16b-3, as promulgated under the Exchange Act, an "outside director" within
the meaning of section 162(m) of the U.S. Code, and an "independent
director" under the rules of NASDAQ, or any successors thereto.
Common Stock. "Common Stock" means the common stock of the
Corporation, par value $6.00 per share.
Corporate Event. "Corporate Event" means a merger, consolidation,
recapitalization or reorganization, share exchange, division, sale, plan
of complete liquidation or dissolution, or other disposition of all or
substantially all of the assets of the Corporation, which has been
approved by the shareholders of the Corporation.
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Corporation. "Corporation" means Popular, Inc., a Puerto Rico
Corporation, and any successor thereto.
Covered Employees. "Covered Employees" are any Executive Officers or
other Eligible Individuals who are "covered employees" within the meaning
of U.S. Code section 162(m).
Disability. "Disability" means with respect to any Participant,
long-term disability as defined under the welfare benefit plan maintained
by either the Corporation or an Affiliate and in which the Participant
participates and from which the Participant is receiving a long-term
disability benefit.
Dividends. "Dividends" means the regular cash dividends paid by the
Corporation upon one share of Common Stock from time to time.
Dividend Equivalents. "Dividend Equivalents" means an amount equal
to the regular cash dividends paid by the Corporation upon one share of
Common Stock in connection with the grant of Restricted Units, Performance
Shares, Options, and/or SARs awarded to a Participant in accordance with
Article VIII of the Plan.
Effective Date. "Effective Date" generally means the first date upon
which the Plan shall become effective, which will be the date the Plan has
been both (a) approved by the Board on February 24, 2004 and (b) approved
by a majority of the votes cast at a duly held stockholders' meeting
(currently scheduled for April 30, 2004) at which the requisite quorum, as
set forth in the Corporation's Certificate of Incorporation, of
outstanding voting stock of the Corporation is, either in person or by
proxy, present and voting on the Plan. However, for purposes of any Option
grant that is an ISO or QSO, the term "Effective Date" shall mean solely
the adoption of the Plan by the Board.
Eligible Individual. For purposes of this Plan only, "Eligible
Individual" means (i) any individual who is a common law employee
(including each officer or employee who is a member of the Board) of the
Corporation or any such Affiliate, and (ii) any Non- employee Director.
Exchange Act. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
Executive Officer. "Executive Officer" means each person who is an
officer of the Corporation or any Affiliate and who is subject to the
reporting requirements under Section 16(a) of the Exchange Act.
Extraordinary Items. "Extraordinary Items" means (i) extraordinary,
unusual and/or non-recurring items of gain or loss, including but not
limited to, restructuring or
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restructuring-related charges, (ii) gains or losses on the disposition of
a business, (iii) changes in tax or accounting regulations or laws, (iv)
the effect of a merger or acquisition, all of which are identified in the
Corporation's audited financial statements or the Corporation's annual
report to stockholders, or (v) those other items determined by the
Committee.
Fair Market Value. "Fair Market Value" means, on any date, the price
of the last trade, in the Common Stock on such date on the NASDAQ National
Market System or, if at the relevant time, the Common Stock is not listed
to trade on the NASDAQ National Market System, on such other recognized
quotation system on which the trading prices of the Common Stock are then
quoted (the "Applicable Exchange"). In the event that (i) there are no
Common Stock transactions on the Applicable Exchange on any relevant date,
Fair Market Value for such date shall mean the closing price on the
immediately preceding date on which Common Stock transactions were so
reported and (ii) the Applicable Exchange adopts a trading policy
permitting trades after 5 P.M. Eastern Standard Time ("EST"), Fair Market
Value shall mean the last trade, regular way, reported on or before 5 P.M.
EST (or such earlier or later time as the Committee may establish from
time to time).
ISO. "ISO" means an Option that is an "incentive stock option"
within the meaning of U.S. Code section 422.
Long-Term Performance Unit Award. A "Long-Term Performance Unit
Award" means an Award made pursuant to Article IX of the Plan, which are
units valued by reference to Common Stock, the number or value of such
units which may be adjusted over a Performance Cycle based on the
satisfaction of Performance Goals.
Nonemployee Director. "Nonemployee Director" means a member of the
Board of Directors of the Corporation or an Affiliate who is not a common
law employee of the Corporation or any Affiliate.
Nonstatutory Stock Option. "Nonstatutory Stock Option" means an
Option that is not an ISO or a QSO.
Option (including ISOs, QSOs and Nonstatutory Stock Options).
"Option" means the right to purchase Common Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be
either (i) an ISO, (ii) a QSO or (iii) a Nonstatutory Stock Option.
P.R. Code. "P.R. Code" means the Puerto Rico Internal Revenue Code
of 1994, as amended, including, for these purposes, any regulations
promulgated by the Puerto Rico Department of the Treasury with respect to
the provisions of the P.R Code, and any successor thereto.
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Participant. "Participant" shall have the meaning set forth in
Article III of the Plan.
Performance Cycle. "Performance Cycle" means the period selected by
the Committee during which the performance of the Corporation or any
Affiliate or unit thereof or any individual is measured for the purpose of
determining the extent to which an Award subject to Performance Goals has
been earned.
Performance Goals. "Performance Goals" means the objectives for the
Corporation, any Affiliate or business unit thereof, or an Eligible
Individual that may be established by the Committee for a Performance
Cycle with respect to any performance based Awards contingently granted
under the Plan.
Performance Shares. "Performance Shares" means an Award made
pursuant to Article IX of the Plan, which are units denominated in Common
Stock, the number of such units which may be adjusted over a Performance
Cycle based upon the satisfaction of Performance Goals.
Person. "Person" means any person (within the meaning of Section
3(a)(9) of the Exchange Act), including any group (within the meaning of
Rule 13d-5(b) under the Exchange Act), but excluding the Corporation, any
Affiliate or any employee benefit plan sponsored or maintained by the
Corporation or any Affiliate.
Plan Year. "Plan Year" means a period of twelve months commencing on
January 1st and ending on the next December 31st.
QSO. "QSO" means an Option that is a "qualified stock option" within
the meaning of P.R. Code section 1046.
Restricted Period. "Restricted Period" means the period of time
during which Restricted Units or shares of Restricted Stock are subject to
forfeiture or restrictions on transfer (if applicable) pursuant to Article
VIII of the Plan.
Restricted Stock. "Restricted Stock" means Common Stock awarded to a
Participant pursuant to the Plan that is subject to forfeiture and
restrictions on transferability in accordance with Article VIII of the
Plan.
Restricted Unit. "Restricted Unit" means a Participant's right to
receive, pursuant to this Plan, one share of Common Stock at the end of a
specified period of time, which right is subject to forfeiture in
accordance with Article VIII of the Plan.
SAR. "SAR" means a stock appreciation right granted under Article
VII in respect of one or more shares of Common Stock that entitles the
holder thereof to receive, in cash or Common Stock, at the discretion of
the Committee (which discretion may be
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exercised at or after grant, including after exercise of the SAR), an
amount per share of Common Stock equal to the excess, if any, of the Fair
Market Value on the date the SAR is exercised over the Fair Market Value
on the date the SAR is granted.
U.S. Code. "U.S. Code" means the U.S. Internal Revenue Code of 1986,
as amended, including, for these purposes, any regulations promulgated by
the Internal Revenue Service with respect to the provisions of the U.S.
Code ("Treasury Regulations"), and any successor thereto.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Participants. Participants in the Plan shall be those Eligible
Individuals designated by the affirmative action of the Committee (or its
delegate) to participate in the Plan.
3.2 Types of Awards. The Committee (or its delegate) may grant any or all
of the Awards specified herein to any particular Participant (subject to the
applicable limitations set forth in the Plan). Any Award may be made for one (1)
year or multiple years without regard to whether any other type of Award is made
for the same year or years.
ARTICLE IV
POWERS OF THE COMMITTEE
4.1 Power to Grant. The Committee shall have the authority, subject to the
terms of the Plan, to determine those Eligible Individuals to whom Awards shall
be granted and the terms and conditions of any and all Awards including, but not
limited to:
(a) the number of shares of Common Stock to be covered by each Award;
(b) the time or times at which Awards shall be granted;
(c) the terms and provisions of the instruments by which Options may be
evidenced, including the designation of Options as ISOs, QSOs or
Nonstatutory Stock Options;
(d) the determination of the period of time during which restrictions on
Restricted Stock or Restricted Units shall remain in effect;
(e) the establishment and administration of any Performance Goals
applicable to Awards granted under the Plan;
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(f) the determination of Participants' Long Term Performance Unit Awards
or Performance Share Awards, including any Performance Goals and
Performance Cycles;
(g) the development and implementation of specific stock-based programs
for the Corporation and its Affiliates that are consistent with the
intent and specific terms of the framework created by this Plan; and
(h) the right of a Participant to defer receipt of payment of an Award,
including the establishment of a trust to hold the amounts payable
pursuant to an Award, including, but not limited to shares of Common
Stock.
Appropriate officers of the Corporation or any Affiliate may suggest to the
Committee the Eligible Individuals who should receive Awards, which the
Committee may accept or reject in its sole discretion. The Committee shall
determine the terms and conditions of each Award at the time of grant. The
Committee may establish different terms and conditions for different
Participants and for the same Participant for each Award such Participant may
receive, whether or not granted at different times.
4.2 Administration.
(a) Rules, Interpretations and Determinations. The Committee shall
administer the Plan. Any Award granted by the Committee under the Plan may
be subject to such conditions, not inconsistent with the terms of the
Plan, as the Committee shall determine. The Committee shall have full
authority to interpret and administer the Plan, to establish, amend, and
rescind rules and regulations relating to the Plan, to provide for
conditions deemed necessary or advisable to protect the interests of the
Corporation, to construe the respective Award agreements and to make all
other determinations necessary or advisable for the administration and
interpretation of the Plan in order to carry out its provisions and
purposes. Determinations, interpretations, or other actions made or taken
by the Committee shall be final, binding, and conclusive for all purposes
and upon all persons.
The Committee's determinations under the Plan (including the
determination of the Eligible Individuals to receive Awards, the form,
amount and timing of such Awards, the terms and provisions of such Awards
and the agreements hereunder) may vary, and need not be uniform, whether
or not any such Eligible Individuals could be deemed to be similarly
situated.
(b) Agents and Expenses. The Committee may appoint agents (who may
be officers or employees of the Corporation) to assist in the
administration of the Plan and may grant authority to such persons to
execute agreements or other documents on its behalf. All expenses incurred
in the administration of the Plan, including, without
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limitation, for the engagement of any counsel, consultant or agent, shall
be paid by the Corporation. Any proceeds received by the Corporation in
connection with any Award will be used for general corporate purposes.
(c) Delegation of Authority. Notwithstanding anything else contained
in the Plan to the contrary herein, the Committee may delegate, subject to
such terms or conditions or guidelines as it shall determine, to any
employee of the Corporation or any group of employees of the Corporation
or its affiliates any portion of its authority and powers under the Plan
with respect to Participants who are not Executive Officers. Only the
Committee may select, grant, administer, or exercise any other
discretionary authority under the Plan in respect of Awards granted to
such Participants who are Executive Officers.
4.3 Newly Eligible Participants. The Committee shall be entitled to make
such rules, determinations and adjustments, as it deems appropriate with respect
to any Participant who becomes eligible to receive a performance-based Award
after the commencement of a Performance Cycle.
4.4 Restrictive Covenants and Other Conditions. Without limiting the
generality of the foregoing, the Committee may condition the grant of any Award
under the Plan upon the Participant to whom such Award would be granted agreeing
in writing to certain conditions in addition to the provisions regarding
exercisability of the Award (such as restrictions on the ability to transfer the
underlying shares of Common Stock) or covenants in favor of the Corporation
and/or one or more Affiliates (including, without limitation, covenants not to
compete, not to solicit employees and customers and not to disclose confidential
information) that may have effect during or following the termination of the
Participant's employment with the Corporation and its Affiliates and before or
after the Award has been exercised, including, without limitation, the
requirement that the Participant disgorge any profit, gain or other benefit
received in respect of the exercise of the Award prior to any breach of any such
covenant by the Participant.
4.5 Performance Based Compensation Interpretations; Limitations on
Discretion. Notwithstanding anything contained in the Plan to the contrary, to
the extent the Committee has required upon grant that any Annual Incentive
Award, Long-Term Performance Unit Award, Performance Share, Restricted Unit or
Restricted Stock must qualify as "other performance based compensation" within
the meaning of Section 162(m)(4)(C) of the U.S. Code, the Committee shall (a)
specify and approve the specific terms of any Performance Goals with respect to
such Awards in writing no later than ninety (90) days from the commencement of
the Performance Cycle to which the Performance Goal or Goals relate, and (b) not
be entitled to exercise any subsequent discretion otherwise authorized under the
Plan (such as the right to authorize payout at a level above that dictated by
the achievement of the relevant Performance Goals) with respect to such Award if
the ability to exercise discretion (as opposed to the exercise of such
discretion) would cause such Award to fail to qualify as other performance based
compensation.
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4.6 Indemnification. No member of the Committee, nor any officer or
employee of the Corporation acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation taken or made
in good faith with respect to the Plan and all members of the Committee and each
and any officer or employee of the Corporation acting on their behalf, to the
extent permitted by law, shall be entitled to full indemnification,
reimbursement and protection by the Corporation in respect of any such action,
determination or interpretation. In the performance of its functions under the
Plan, the Committee and any officer or employee of the Corporation acting on
their behalf, shall be entitled to rely upon information and advice furnished to
them by the Corporation's officers, accountants, counsel and any other party
they deem necessary, and no member of the Committee, nor any officer or employee
of the Corporation acting on behalf of the Committee, shall be liable for any
action taken or not taken in reliance upon any such advice.
ARTICLE V
COMMON STOCK SUBJECT TO PLAN; OTHER LIMITATIONS
5.1 Plan Limits.
(a) Shares Available for Awards: Subject to the provisions of
Section 5.4, the number of shares of Common Stock issuable under the Plan
for Awards shall be 10,000,000.
(b) The shares to be delivered under the Plan may consist, in whole
or in part, of Common Stock purchased by the Corporation for such purpose,
treasury Common Stock or authorized but unissued Common Stock, not
reserved for any other purpose.
5.2 Individual Performance-Based Limitations: Subject to the provisions of
Section 5.4, to the extent that any Annual Incentive, Long-Term Performance
Unit, Restricted Stock, Restricted Unit and Performance Share Awards to a
Participant are intended to satisfy the requirements of U.S. Code section
162(m)(4)(C) as "other performance based compensation," the maximum aggregate
amount of such Award(s) paid or otherwise made available to such Participant
shall not exceed one-half of one percent (0.5%) of Adjusted Net Income for the
most recently reported year ending December 31st prior to the year such Award or
Awards is or are paid or otherwise made available.
5.3 Cancelled, Terminated, or Forfeited Awards. Should an Award under this
Plan for any reason expire without having been exercised, be cancelled,
repurchased by the Corporation, terminated or forfeited or otherwise settled
without the issuance of any Common Stock (including, but not limited to, shares
tendered to exercise outstanding Options, shares tendered or withheld for taxes
on Awards or shares issued in connection with a Restricted Stock Award that is
subsequently forfeited), any such shares of Common Stock subject to such Award
shall again be available for grants of Awards under the Plan.
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5.4 Adjustment in Capitalization. In the event of any Adjustment Event,
(a) the aggregate number of shares of Common Stock available for Awards under
Section 5.1, (b) the aggregate limitations on the number of shares that may be
awarded as a particular type of Award or that may be awarded to any particular
Participant in any particular period under Section 5.2 and (c) the aggregate
number of shares subject to outstanding Awards and the respective exercise
prices or base prices applicable to outstanding Awards shall be appropriately
adjusted by the Committee, in its discretion, with respect to such Adjustment
Event, and the Committee's determination shall be conclusive. To the extent
deemed equitable and appropriate by the Committee and subject to any required
action by shareholders of the Corporation, in any Adjustment Event that is a
merger, consolidation, reorganization, liquidation, dissolution or similar
transaction, any Award granted under the Plan shall be deemed to pertain to the
securities and other property, including cash, to which a holder of the number
of shares of Common Stock covered by the Award would have been entitled to
receive in connection with such Adjustment Event.
Any shares of stock (whether Common Stock, shares of stock into which shares of
Common Stock are converted or for which shares of Common Stock are exchanged or
shares of stock distributed with respect to Common Stock) or cash or other
property received with respect to any award of Restricted Stock or Restricted
Units granted under the Plan as a result of any Adjustment Event or any
distribution of property shall, except as provided in Article X or as otherwise
provided by the Committee, be subject to the same terms and conditions,
including restrictions on transfer, as are applicable to such shares of
Restricted Stock or Restricted Units and any stock certificate(s) representing
or evidencing any shares of stock so received shall be legended in such manner
as the Corporation deems appropriate.
ARTICLE VI
STOCK OPTIONS
6.1 Grant of Options. Subject to the provisions of Section 5.1, Options
may be granted to Participants at such time or times as shall be determined by
the Committee. Options granted under the Plan may be of three types: (i) ISOs,
(ii) QSOs and (iii) Nonstatutory Stock Options. Except as otherwise provided
herein, the Committee shall have complete discretion in determining the Number
of Options, if any, to be granted to a Participant, except that ISOs and QSOs
may only be granted to Eligible Individuals who satisfy the requirements for
eligibility set forth under U.S. Code section 424 and P.R. Code section 1046,
respectively. The date of grant of an Option under the Plan will be the date on
which the Option is awarded by the Committee or, if so determined by the
Committee, the date on which occurs any event (including, but not limited to,
the completion of an individual or corporate Performance Goal) the occurrence of
which is an express condition precedent to the grant of the Option. Subject to
Section 5.4, the Committee shall determine the number of Options, if any, to be
granted to the Participant. Each Option grant shall be evidenced by an Option
agreement (in electronic or written form) that shall specify the type of Option
granted, the exercise price, the duration of the Option, the number of shares of
Common Stock to which the Option pertains, and such other terms and conditions
as the
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Committee shall determine which are not inconsistent with the provisions of the
Plan. Options may be granted in tandem with SARs (as described in more detail in
Article VII), and/or with associated Dividend Equivalents (as described in more
detail in Article VIII).
6.2 Exercise Price; No Repricing or Substitution of Options. Nonstatutory
Stock Options and QSOs and ISOs granted pursuant to the Plan shall have an
exercise price no less than the Fair Market Value of a share of Common Stock on
the date the Option is granted. Except as a result of any Adjustment Event, the
Committee shall not have the power or authority to reduce, whether through
amendment or otherwise, the exercise price of any outstanding Option nor to
grant any new Options or other Awards in substitution for or upon the
cancellation of Options previously granted which shall have the effect of
reducing the exercise price of any outstanding Option.
6.3 Exercise of Options. Each Option granted pursuant to the Plan shall
become exercisable as determined by the committee at the time of grant; provided
that the Committee may establish performance-based criteria for exercisability
of any Option. Subject to the provisions of this Article VI, once any portion of
any Option has become exercisable it shall remain exercisable for its remaining
term. Once exercisable, an Option may be exercised from time to time, in whole
or in part, up to the total number of shares of Common Stock with respect to
which it is then exercisable. The Committee shall determine the term of each
Option granted, but, except as expressly provided below, in no event shall any
such Option be exercisable for more than 10 years after the date on which it is
granted.
6.4 Payment. The Committee shall establish procedures governing the
exercise of Options. No shares shall be delivered pursuant to any exercise of an
Option unless arrangements satisfactory to the Committee have been made to
assure full payment of the exercise price therefore. Without limiting the
generality of the foregoing, payment of the exercise price may be made: (a) in
cash or its equivalent; (b) by exchanging shares of Common Stock (which are not
the subject of any pledge or other security interest) owned by the person
exercising the Option (through actual tender or by attestation); (c) with the
approval of the Board or the Committee, by authorizing the Corporation, Popular
Securities, Inc. or a broker-dealer approved by the Corporation, to sell, on
behalf of the Participant, the appropriate number of shares of Common Stock
otherwise issuable to the Participant upon exercise of an Option; (d) with the
approval of the Board or the Committee and at the election of the Participant,
by withholding from those shares of Common Stock that would otherwise be
obtained upon exercise of the Option a number of shares having a Fair Market
Value equal to the exercise price; (e) by any combination of the foregoing; or
(f) by other means that the Board or the Committee deems appropriate; provided
that the combined value of all cash and cash equivalents paid and the Fair
Market Value of any such shares of Common Stock so tendered to the Corporation,
valued as of the date of such tender, is at least equal to such exercise price.
The Corporation may not make a loan to a Participant to facilitate such
Participant's exercise of any of his or her Options or payment of taxes.
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6.5 ISOs and QSOs. Notwithstanding anything in the Plan to the contrary,
no Option that is intended to be an ISO or QSO may be granted after the tenth
anniversary of the Effective Date of the Plan. In addition, the Fair Market
Value of the Common Stock with respect to any QSO granted under this Plan (and
any other plan maintained by the Corporation or any Affiliate that employs the
Participant) exercisable for the first time during any calendar year may not
(with respect to any Participant) exceed $100,000, with such Fair Market Value
to be determined as of the date the QSO is granted. Except as may otherwise be
provided for under the provisions of Article X of the Plan, no term of this Plan
relating to ISOs or QSOs shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to
disqualify the ISO, QSO or the Plan under Section 422 of the US Code , or PR
Code Section 1046, respectively, or without the consent of any Participant
affected thereby, to disqualify any ISO or QSO under such Section 422 or Section
1046.
6.6 Termination of Employment or Service as a Nonemployee Director. Unless
otherwise determined by the Committee at or following the time of grant, the
following provisions of the Plan shall apply in the event of the Participant's
termination of employment or service as a Nonemployee Director:
(a) Due to Death. In the event a Participant's employment terminates
by reason of death, any Options granted to such Participant shall become
immediately exercisable in full and may be exercised by the Participant's
estate or as may otherwise be provided for in accordance with the
requirements of Section 12.2, at any time prior to the earlier to occur of
the (i) expiration of the term of the Options or (ii) such date as the
Committee shall determine at the time of grant; provided, however, that
Nonstatutory Stock Options shall be deemed to be amended to provide that
they are exercisable for not less than one (1) year after a Participant's
death even if such period exceeds the expiration of the term of the
original grant of such Nonstatutory Stock Options.
(b) Due to Disability. In the event a Participant's employment is
terminated by his or her employer by reason of Disability, any Options
granted to such Participant shall become immediately exercisable in full
and may be exercised by the Participant (or, in the event of the
Participant's death after termination of employment when the Option is
exercisable pursuant to its terms, by the Participant's designated
beneficiary, and if none is named, by the person determined in accordance
with the requirements of Section 12.2), at any time prior to the
expiration date of the term of the Options or within such period as the
Committee shall determine at the time of grant following the Participant's
termination of employment, whichever period is shorter.
(c) Due to Approved Retirement. In the event a Participant's
employment terminates by reason of Approved Retirement, any Options
granted to such Participant which are then outstanding shall become
immediately exercisable in full and may be exercised by the Participant
(or, in the event of the Participant's death after termination of
employment when the Option is exercisable pursuant to its terms, by the
Participant's estate or as otherwise may be provided for in accordance
with Section 12.2), at any time
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prior to the expiration date of the term of the Options or within five (5)
years (or such shorter period as the Committee shall determine at the time
of grant) following the Participant's Approved Retirement, whichever
period is shorter.
(d) Due to Cause. In the event a Participant's employment is
terminated by the Corporation or any Affiliate for Cause, any Options
granted to such Participant that are then not yet exercised shall be
forfeited at the time of such termination and shall not be exercisable
thereafter and the Committee may, consistent with Section 4.5 of the Plan,
require that such Participant disgorge any profit, gain or other benefit
received in respect of the exercise of any such Award for a period of up
to twelve (12) months prior to the Participant's termination of employment
for Cause. For purposes of this Section 6.6, in the event a Participant's
employment is terminated by the Corporation or any Affiliate for Cause,
the provisions of this Section 6.6(d) will apply notwithstanding any
assertion (by the Participant or otherwise) of a termination of employment
for any other reason enumerated under this Section.
(e) Due to Resignation. Unless otherwise determined by the
Committee, in the event a Participant's employment ends as a result of
such Participant's resignation from the Corporation or any Affiliate, any
Options granted to such Participant that are then not yet exercised shall
be forfeited at the time of such termination and shall not be exercisable
thereafter.
(f) Due to Any Other Reason. In the event the employment of the
Participant shall terminate for any reason other than one described in
Section 6.6 (a) through (e), any Options granted to such Participant which
are exercisable at the date of the Participant's termination of employment
may be exercised by the Participant (or, in the event of the Participant's
death after termination of employment when the Option is exercisable
pursuant to its terms, by the Participant's estate or as may otherwise be
provided for in accordance with the requirements of Section 12.2) at any
time prior to the expiration of the term of the Options or the ninetieth
(90th) day following the Participant's termination of employment,
whichever period is shorter, and any Options that are not exercisable at
the time of termination of employment shall be forfeited at the time of
such termination and not be exercisable thereafter.
(g) Termination of Service as a Nonemployee Director. If a
Nonemployee Director shall terminate his service as a director for reasons
other than removal for cause, any Options granted to such Participant
shall become immediately exercisable in full and may be exercised by the
Participant (or the Participant's estate, as the case may be) at any time
before the expiration of the term of the Option.
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7.1 Grant of SARs. SARs may be granted to any Participants, all
Participants or any class of Participants at such time or times as shall be
determined by the Committee. SARs may be granted in tandem with an Option, on a
freestanding basis, not related to any other Award, and/or with associated
Dividend Equivalents. A grant of a SAR shall be evidenced in writing, whether as
part of the agreement governing the terms of the Option, if any, to which such
SARs relate or pursuant to a separate written agreement with respect to
freestanding SARs, in each case containing such provisions not inconsistent with
the Plan as the Committee shall approve.
7.2 Terms and Conditions of SARs. Notwithstanding the provisions of
Section 7.1, unless the Committee shall otherwise determine the terms and
conditions (including, without limitation, the exercise period of the SAR, the
vesting schedule applicable thereto and the impact of any termination of service
on the Participant's rights with respect to the SAR) applicable with respect to
(i) SARs granted in tandem with an Option shall be substantially identical (to
the extent possible taking into account the differences related to the character
of the SAR) to the terms and conditions applicable to the tandem Options and
(ii) freestanding SARs shall be substantially identical (to the extent possible
taking into account the differences related to the character of the SAR) to the
terms and conditions that would have been applicable under Section 6 were the
grant of the SARs a grant of an Option (including, but not limited to, the
application of Section 6.6).
7.3 Exercise of Tandem SARs. SARs that are granted in tandem with an
Option may only be exercised upon the surrender of the right to exercise such
Option for an equivalent number of shares and may be exercised only with respect
to the shares of Stock for which the related Award is then exercisable.
7.4 Payment of SAR Amount. Upon exercise of a SAR, the holder shall be
entitled to receive payment, in cash, in shares of Common Stock or in a
combination thereof, as determined by the Committee, of an amount determined by
multiplying:
(a) the excess, if any, of the Fair Market Value of a share of Stock
at the date of exercise over the Fair Market Value of a share of Common
Stock on the date of grant, by
(b) the number of shares of Common Stock with respect to which the
SARs are then being exercised;
provided, however, that at the time of grant with respect to any SAR
payable in cash, the Committee may establish, in its sole discretion, a maximum
amount per share which will be payable upon the exercise of such SAR.
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ARTICLE VIII
RESTRICTED STOCK, RESTRICTED UNITS AND DIVIDEND EQUIVALENTS
8.1 Grant of Restricted Stock and Restricted Units. The Committee, in its
sole discretion, may make Awards to Participants of Restricted Stock or
Restricted Units. Any Award made hereunder of Restricted Stock or Restricted
Units shall be subject to the terms and conditions of the Plan and to any other
terms and conditions not inconsistent with the Plan (including, but not limited
to, requiring the Participant to pay the Corporation an amount equal to the par
value per share for each share of Restricted Stock awarded) as shall be
prescribed by the Committee in its sole discretion, either at the time of grant
or thereafter. As determined by the Committee, with respect to an Award of
Restricted Stock, the Corporation shall either (i) transfer or issue to each
Participant to whom an award of Restricted Stock has been made the number of
shares of Restricted Stock specified by the Committee or (ii) hold such shares
of Restricted Stock for the benefit of the Participant for the Restricted
Period. In the case of an Award of Restricted Units, no shares of Common Stock
shall be issued at the time an Award is made, and the Company shall not be
required to set aside a fund for the payment of such Award. Dividends or
Dividends Equivalents (if connected with the grant of Restricted Units) may be
subject to the same terms and conditions as the underlying Award of Restricted
Stock or Restricted Units.
8.2 Grant, Terms and Conditions of Dividend Equivalents. The Committee, in
its sole discretion, may make Awards to Participants of Dividend Equivalents in
connection with the grant of Restricted Units, Options, SARs and/or Performance
Shares. Unless the Committee shall otherwise determine, the terms and conditions
(including, without limitation, the vesting schedule applicable thereto and the
impact of any termination of service on the Participant's rights with respect to
the Dividend Equivalent) shall be substantially identical (to the extent
possible taking into account the differences related to the character of the
Dividend Equivalent) to the terms and conditions applicable to the associated
Award.
8.3 Restrictions On Transferability. Shares of Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by
the Participant during the Restricted Period, except as hereinafter provided.
Notwithstanding the foregoing, the Committee may permit (on such terms and
conditions as it shall establish) shares of Restricted Stock and Restricted
Units to be transferred during the Restricted Periods pursuant to Section 12.1,
provided that any shares of Restricted Stock or Restricted Units so transferred
shall remain subject to the provisions of this Article VIII.
8.4 Rights as a Shareholder. Except for the restrictions set forth herein
and unless otherwise determined by the Committee, the Participant shall have all
the rights of a shareholder with respect to such shares of Restricted Stock,
including but not limited to, the right to vote and the right to receive
dividends. A Participant shall not have any right, in respect of Restricted
Units or Dividend Equivalents awarded pursuant to the Plan, to vote on any
matter submitted to the Corporation's stockholders until such time as the shares
of Common Stock attributable to such Restricted Units (and, if applicable,
Dividend Equivalents) have been issued.
8.5 Restricted Period. The Restricted Period shall commence upon the date
of grant by the Committee and shall lapse with respect to the shares of
Restricted Stock or Restricted Units on such date as determined by the Committee
at the date an Award of Restricted Stock or
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Restricted Units (including any Dividend Equivalents issued) is made to the
Participant by the Committee, unless sooner terminated as otherwise provided
herein.
8.6 Legending or Equivalent. To the extent that certificates are issued to
a Participant in respect of shares of Restricted Stock awarded under the Plan
(or in the event that such Restricted Stock are held electronically), such
shares shall be registered in the name of the Participant and shall have such
legends (or account restrictions) reflecting the restrictions of such Awards in
such manner as the Committee may deem appropriate.
8.7 Termination of Employment or Service as a Nonemployee Director. Unless
the Committee shall otherwise determine at or subsequent to the date of grant:
(a) Due to Death. In the event a Participant's employment terminates
by reason of death, the Restricted Period will lapse as to the entire
portion of the shares of Restricted Stock and/or Restricted Units
(including any associated Dividend Equivalents) transferred or issued to
such Participant under the Plan.
(b) Due to Disability. In the event a Participant's employment
terminates by reason of Disability, the Restricted Period will lapse as to
the entire portion of the shares of Restricted Stock and/or Restricted
Units (including any associated Dividend Equivalents) transferred or
issued to such Participant under the Plan.
(c) Due to Approved Retirement. In the event a Participant's
employment terminates by reason of Approved Retirement, the Restricted
Period will lapse as to the entire portion of the shares of Restricted
Stock and/or Restricted Units transferred or issued to such Participant
under the Plan (including any associated Dividend Equivalents).
(d) Due to Cause. In the event a Participant's employment is
terminated by the Corporation or any Affiliate for Cause, any Restricted
Stock or Restricted Units (including any associated Dividend Equivalents)
granted to such Participant shall be forfeited at the time of such
termination, and the Committee may, consistent with Section 4.5 of the
Plan, require that such Participant disgorge any profit, gain or other
benefit received in respect of the lapse of restrictions on any prior
grant of Restricted Stock or Restricted Units (including any Dividend
Equivalents) for a period of up to twelve (12) months prior to the
Participant's termination of employment for Cause. For purposes of this
Section 8.7, in the event a Participant's employment is terminated by the
Corporation or any Affiliate for Cause, the provisions of this Section
8.7(d) will apply notwithstanding any assertion (by the Participant or
otherwise) of a termination of employment for any other reason enumerated
under this Section.
(e) Due to Resignation. Unless otherwise determined by the
Committee, in the event a Participant's employment ends as a result of
such Participant's resignation
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from the Corporation or any Affiliate, any Restricted Stock granted to
such Participant and all Restricted Units (including any associated
Dividend Equivalents) credited to such Participant shall be forfeited upon
the Participant's termination of employment.
(f) Due to Any Other Reason. In the event a Participant's employment
is terminated by the Corporation or any Affiliate for any other reason
during the applicable vesting period, the Participant (or the
Participant's estate or beneficiaries, if the participant subsequently
dies) shall receive a payment calculated in the following manner: (i) the
number of shares of Restricted Stock or Restricted Units granted will be
reduced by multiplying the grant by a fraction, the numerator of which is
the number of full months in the applicable vesting period during which
the Participant was an active employee and the denominator of which is the
number of months in the applicable vesting period (with a partial month
worked shall be counted as a full month if the Participant is an active
employee for 15 days or more in that month); and (ii) the resulting
reduced number of Restricted Stock or Restricted Units shall be considered
vested and payment of such pro-rated Awards is to be made to the
Participant (or beneficiaries or estate, if the Participant subsequently
dies) as soon as practicable after the Participant's termination of
employment.
(g) Termination of Service as a Nonemployee Director. In the event a
Participant's service as a Nonemployee Director shall terminate for
reasons other than removal for cause, the Restriction Period will lapse as
to the entire portion of the shares of Restricted Stock and/or Restricted
Units (including any associated Dividend Equivalents) transferred or
issued to such Participant under the Plan.
8.8 Issuance of New Certificate or Equivalent; Settlement of Restricted
Units and Dividend Equivalents. Upon the lapse of the Restricted Period with
respect to any shares of Restricted Stock, such shares shall no longer be
subject to the restrictions imposed under Section 8.3 and the Corporation shall
issue or have issued new share certificates (or remove any such restrictions
that may have been established electronically) without the legend or equivalent
described in Section 8.6 in exchange for those previously issued. Upon the lapse
of the Restricted Period with respect to any Restricted Units, the Corporation
shall deliver to the Participant, or the Participant's beneficiary or estate, as
provided in Section 12.2, one share of Common Stock for each Restricted Unit as
to which restrictions have lapsed and any Dividend Equivalents credited with
respect to any Restricted Units, and any interest thereon. The Committee may, in
its sole discretion, elect to pay cash or part cash and part Common Stock in
lieu of delivering only Common Stock and/or Dividend Equivalents. If a cash
payment is made in lieu of delivering Common Stock for the Restricted Units, the
amount of such cash payment for each share of Common Stock to which a
Participant is entitled shall be equal to the Fair Market Value of the Common
Stock on the date on which the Restricted Period lapsed with respect to the
related Restricted Unit.
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ARTICLE IX
ANNUAL INCENTIVE AWARDS,
LONG-TERM PERFORMANCE UNIT AWARDS
AND PERFORMANCE SHARE AWARDS
9.1 Annual Incentive Awards.
(a) General Description. At the direction of the Committee, Annual
Incentive Awards may be made to Participants and, unless determined
otherwise by the Committee at or after the date of grant, shall be paid in
cash.
(b) Requirements for Covered Employees. For any Covered Employees
and to the extent the Committee intends to comply with the requirements
for performance-based Awards described generally under U.S. Code section
162(m), the Committee must certify, prior to payment of any such amounts,
that any applicable Performance Goals and/or other requirements have been
satisfied, and that such amounts are consistent with the limits provided
under Section 5.2(b).
(c) Payment of Annual Incentive Awards. Unless the Committee
determines otherwise either at grant or thereafter, in the event a
Participant terminates employment before the end of an annual Performance
Cycle due to death, Disability, or Approved Retirement, such Participant,
or his or her estate, shall be eligible to receive a prorated Annual
Incentive Award based on (a) in the case of death or Disability, full
achievement of the Participant's Performance Goals for such Performance
Cycle, and (b) in the case of Approved Retirement, the actual achievement
of the Performance Goals for such Performance Cycle , in each case
prorated for the portion of the Performance Cycle completed before the
Participant's termination of employment. If a Participant terminates
employment before payment of an Annual Incentive Award is authorized by
the Committee for any reason other than death, Disability or Approved
Retirement, the Participant shall forfeit all rights to such Annual
Incentive Award unless otherwise determined by the Committee.
9.2 Long-Term Performance Unit Awards.
(a) General Description. At the discretion of the Committee, grants
of Long-Term Performance Unit Awards may be made to Participants.
(b) Requirements for Covered Employees. For any Covered Employees
and to the extent the Committee intends to comply with the requirements
for performance-based Awards described generally under U.S. Code section
162(m), the Committee must certify, prior to payment of any such amounts,
that any applicable Performance Goals and/or other requirements have been
satisfied, and that such amounts paid are consistent with the limits
provided under Section 5.2(b).
(c) Payment of Long-Term Performance Unit Awards. Long-Term
Performance Unit Awards shall be payable in cash, Common Stock, or a
combination of
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cash and Common Stock at the discretion of the Committee. Unless the
Committee shall otherwise determine at or subsequent to the date of grant:
(i) Due to Death. In the event a Participant's employment
terminates by reason of death during the applicable Performance
Cycle, the Participant's estate or beneficiaries will receive a lump
sum payment as soon as practicable of such Long-Term Performance
Unit Award, calculated as if the target value or equivalent value
for each Unit had, in fact, been achieved.
(ii) Due to Disability. In the event a Participant's
employment terminates by reason of Disability during the applicable
Performance Cycle, the Participant (or the Participant's estate or
beneficiaries, if the Participant subsequently dies) will receive a
lump sum payment as soon as practicable of such Long-Term
Performance Unit Award, calculated as if the target value or
equivalent value for each Unit had, in fact, been achieved.
(iii) Due to Approved Retirement. In the event a Participant's
employment terminates by reason of Approved Retirement during the
applicable Performance Cycle, the Participant (or the Participant's
estate or beneficiaries, if the Participant subsequently dies) shall
receive a payment calculated in the following manner: (i) the number
of Long-Term Performance Units granted will be reduced by
multiplying the grant by a fraction, the numerator of which is the
number of full months in the Performance Cycle during which the
Participant was an active employee and the denominator of which is
the number of months in the Performance Cycle (with a partial month
worked shall be counted as a full month if the Participant is an
active employee for 15 days or more in that month); and (ii) the
resulting reduced number of Long-Term Performance Units shall be
considered vested and payment made to the Participant in a lump sum
as soon as practicable after the completion of the respective
Performance Cycle and the final valuation of such Units is
determined.
(iv) Due to Cause. In the event a Participant's employment is
terminated by the Corporation or any Affiliate for Cause, any outstanding
Long-Term Performance Unit Awards shall be cancelled and the Committee
may, consistent with Section 4.5 of the Plan, require that such
Participant disgorge any profit, gain or other benefit received in respect
of the payment of any prior Long-Term Performance Unit Awards received
within a period of twelve (12) months prior to the Participant's
termination of employment for Cause. For purposes of this Section
9.2(c)(iv), in the event a Participant's employment is terminated by the
Corporation or any Affiliate for Cause, the provisions of this Section
9.2(c)(iv) will apply notwithstanding any assertion (by the Participant or
otherwise) of a termination of employment for any other reason enumerated
under this Section.
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(v) Due to Resignation. Unless otherwise determined by the
Committee, in the event a Participant's employment ends as a result of
such Participant's resignation from the Corporation or any Affiliate, any
Long-Term Performance Units credited to such Participant shall be
forfeited upon the Participant's termination of employment.
(vi) Due to Any Other Reason. In the event a Participant's
employment is terminated by the Corporation or any Affiliate for any other
reason during the applicable Performance Cycle, the Participant (or the
Participant's estate Participant (or the Participant's estate or
beneficiaries, if the Participant subsequently dies) shall receive a
payment calculated in the following manner: (i) the number of Long-Term
Performance Units granted will be reduced by multiplying the grant by a
fraction, the numerator of which is the number of full months in the
Performance Cycle during which the Participant was an active employee and
the denominator of which is the number of months in the Performance Cycle
(with a partial month worked shall be counted as a full month if the
Participant is an active employee for 15 days or more in that month); and
(ii) the resulting reduced number of Long-Term Performance Units shall be
considered vested and payment made to the Participant of a lump sum
payment as soon as practicable of such pro-rated Long-Term Performance
Unit Award, calculated as if the target value or equivalent value for each
Unit had, in fact, been achieved.
9.3 Performance Shares.
(a) General Description. At the discretion of the Committee, grants
of Performance Share Awards may be made to Participants.
(b) Requirements for Covered Employees. For any Covered Employees
and to the extent the Committee intends to comply with the requirements
for performance-based Awards described generally under U.S. Code section
162(m), the Committee must certify, prior to payment of any such amounts,
that any applicable Performance Goals and/or other requirements have been
satisfied, and that such amounts paid are consistent with the limits
provided under Section 5.2(b).
(c) Payment of Performance Share Awards. Performance Share Awards
shall be payable in Common Stock. Unless the Committee shall otherwise
determine at or subsequent to the date of grant:
(i) Due to Death. In the event a Participant's employment
terminates by reason of death during the applicable Performance
Cycle, the Participant's estate or beneficiaries will receive a lump
sum payment as soon as practicable of such Performance Share Award,
calculated as if the target number of Performance Shares had, in
fact, been earned.
(ii) Due to Disability. In the event a Participant's
employment terminates by reason of Disability during the applicable
Performance Cycle, the
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Participant (or the Participant's estate or beneficiaries, if the
Participant subsequently dies) will receive a lump sum payment as
soon as practicable of such Performance Share Award, calculated as
if the target number of Performance Shares had, in fact, been
earned.
(iii) Due to Approved Retirement. In the event a Participant's
employment terminates by reason of Approved Retirement during the
applicable Performance Cycle, the Participant (or the Participant's
estate or beneficiaries, if the Participant subsequently dies) shall
receive a payment calculated in the following manner: (i) the number
of Performance Shares granted will be reduced by multiplying the
grant by a fraction, the numerator of which is the number of full
months in the Performance Cycle during which the Participant was an
active employee and the denominator of which is the number of months
in the Performance Cycle (with a partial month worked shall be
counted as a full month if the Participant is an active employee for
15 days or more in that month); and (ii) the resulting reduced
number of Performance Shares shall be considered vested and payment
made to the Participant in a lump sum as soon as practicable after
the completion of the respective Performance Cycle and the final
number of Performance Shares has been determined.
(iv) Due to Cause. In the event a Participant's employment is
terminated by the Corporation or any Affiliate for Cause, any
outstanding Performance Share Awards shall be cancelled and the
Committee may, consistent with Section 4.5 of the Plan, require that
such Participant disgorge any profit, gain or other benefit received
in respect of the payment of any prior Performance Share Awards
received within a period of twelve (12) months prior to the
Participant's termination of employment for Cause. For purposes of
this Section 9.3(c)(iv), in the event a Participant's employment is
terminated by the Corporation or any Affiliate for Cause, the
provisions of this Section 9.3(c)(iv) will apply notwithstanding any
assertion (by the Participant or otherwise) of a termination of
employment for any other reason enumerated under this Section.
(v) Due to Resignation. Unless otherwise determined by the
Committee, in the event a Participant's employment ends as a result
of such Participant's resignation from the Corporation or any
Affiliate, any Performance Share Awards credited to such Participant
shall be forfeited upon the Participant's termination of employment.
(vi) Due to Any Other Reason. In the event a Participant's
employment is terminated by the Corporation or an Affiliate for any
other reason during the applicable Performance Cycle, the
Participant (or the Participant's estate or beneficiaries, if the
Participant subsequently dies) shall receive a payment calculated in
the following manner: (i) the number of Performance Shares granted
will be reduced by multiplying the grant by a fraction, the
numerator of which is
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the number of full months in the Performance Cycle during which the
Participant was an active employee and the denominator of which is
the number of months in the Performance Cycle (with a partial month
worked shall be counted as a full month if the Participant is an
active employee for 15 days or more in that month); and (ii) the
resulting reduced number of Performance Shares shall be considered
vested and payment made to the Participant of a lump sum payment as
soon as practicable of such pro-rated Performance Share Award,
calculated as if the target number of Performance Shares had, in
fact, been earned.
ARTICLE X
CHANGE OF CONTROL
10.1 Accelerated Vesting and Payment of Awards. Subject to the provisions
of Section 10.3, in the event of a Change of Control each Option and SAR then
outstanding shall be fully exercisable regardless of the exercise schedule
otherwise applicable to such Option and/or SAR, and the Restricted Period shall
lapse as to each share of Restricted Stock and each Restricted Unit then
outstanding. In connection with such a Change of Control, the Committee may, in
its discretion, provide that each Option, SAR, Restricted Stock and/or
Restricted Unit shall, upon the occurrence of such Change of Control, be
cancelled in exchange for a payment per share/unit (the "Settlement Payment") in
an amount based on the Change of Control Price. Such Settlement Payment shall be
in the form of cash.
10.2 Long Term Performance Unit Awards and Performance Share Awards.
Subject to the provisions of Section 10.3, in the event of a Change of Control,
(a) any outstanding Long Term Performance Unit Awards or Performance Share
Awards relating to Performance Cycles ending prior to the Change of Control
which have been earned but not paid shall become immediately payable, (b) all
then-in-progress Performance Cycles for Long Term Performance Unit Awards or
Performance Share Awards that are outstanding shall end, and all Participants
shall be deemed to have earned an award equal to the Participant's target award
opportunity for the Performance Cycle in question, and (c) the Corporation shall
pay all such Long Term Performance Unit Awards and Performance Share Awards as a
Settlement Payment within thirty (30) days of such Change of Control, based on
the Change of Control Price. Such Settlement Payment shall be in cash.
10.3 Alternative Awards. Notwithstanding Section 10.1 or 10.2, no
cancellation, acceleration of exercisability, vesting, cash settlement or other
payment shall occur with respect to any Option, SAR, Restricted Stock,
Restricted Unit, Long-Term Performance Unit and/or Performance Share if the
Committee reasonably determines in good faith prior to the occurrence of a
Change of Control that such Option, SAR, Restricted Stock, Restricted Unit,
Long-Term Performance Unit and/or Performance Share shall be honored or assumed,
or new rights substituted therefore (such honored, assumed or substituted award
hereinafter called an "Alternative Award"), by a Participant's employer (or the
parent or an affiliate of such employer) immediately following the Change of
Control; provided that any such Alternative Award must:
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(a) be based on stock that is traded on an established securities
market;
(b) provide such Participant with rights and entitlements
substantially equivalent to or better than the rights, terms and
conditions applicable under such Option, SAR, Restricted Stock, Restricted
Unit, Long-Term Performance Unit and/or Performance Share, including, but
not limited to, an identical or better exercise or vesting schedules;
(c) have substantially equivalent value to such Option, SAR,
Restricted Stock, Restricted Unit, Long-Term Performance Unit and/or
Performance Share (determined at the time of the Change in Control); and
(d) have terms and conditions which provide that in the event that
the Participant's employment is involuntarily terminated for any reason
other than for Cause, all of such Participant's Options, SARs, Restricted
Stock, Long-Term Performance Units and/or Performance Shares shall be
deemed immediately and fully exercisable and/or all restrictions shall
lapse, and shall be settled for a payment per each share of stock subject
to the Alternative Award in cash, in immediately transferable, publicly
traded securities, or in a combination thereof, in an amount equal to (i)
the Fair Market Value of such stock on the date of the Participant's
termination (with respect to any Restricted Stock and/or Restricted Units,
(ii) the excess of the Fair Market Value of such stock on the date of the
Participant's termination over the corresponding exercise or base price
per share, if any (with respect to any Option and/or SARs), or (iii) the
Participant's target award opportunity for the Performance Cycle in
question (with respect to any Long-Term Performance Units or Performance
Shares).
ARTICLE XI
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
11.1 General. The Board may, at any time and from time to time amend,
modify, suspend, or terminate this Plan, in whole or in part, without notice to
or the consent of any participant or employee; provided, however, that any
amendment which would (i) increase the number of shares available for issuance
under the Plan, (ii) lower the minimum exercise price at which an Option (or the
base price at which a SAR) may be granted or (iii) change the individual Award
limits or (iv) require shareholder approval under NASDAQ rules or the rules of
any other exchange where the Common Stock may then be traded, shall be subject
to the approval of the Corporation's shareholders. No amendment, modification or
termination of the Plan shall in any manner adversely affect any Award
theretofore granted under the Plan, without the consent of the Participant,
provided, however, that
(a) any change pursuant to, and in accordance with the requirements of,
Article X;
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(b) any acceleration of payments of amounts accrued under the Plan by
action of the Committee or by operation of the Plan's terms; or (c) any decision
by the Committee to limit participation (or other features of the Plan)
prospectively under the Plan shall not be deemed to violate this provision.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Transferability of Awards. No Awards granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. No transfer of an
Award by will or by the laws of descent and distribution shall be effective to
bind the Corporation unless the Corporation shall have been furnished with
written notice thereof and a copy of the will and/or such other evidence as the
Board of Directors or the Committee may determine necessary to establish the
validity of the transfer.
12.2 Treatment of Any Outstanding Rights or Features Upon Participant's
Death. Any Awards, rights or features remaining unexercised or unpaid at the
Participant's death shall be paid to, or exercised by, the Participant's estate
except where otherwise provided by law, or when done in accordance with other
methods (including a beneficiary designation process) put in place by the
Committee or a duly appointed designee from time to time. Except as otherwise
provided herein, nothing in this Plan is intended or may be construed to give
any person other than Participants any options, rights or remedies under this
Plan.
12.3 Deferral of Payment. The Committee may, in the Award agreement or
otherwise, permit a Participant to elect, upon such terms and conditions as the
Committee may establish, to defer receipt of shares of Common Stock that would
otherwise be issued upon exercise or vesting of an Award. Notwithstanding
anything else contained herein to the contrary, deferrals shall not be permitted
hereunder in a way that will result in the Corporation or any Affiliate being
required to recognize a financial accounting charge due to such deferral that is
substantially greater than the charge, if any, that was associated with the
underlying Award.
12.4 Awards In Substitution for Awards Granted By Other Companies. Awards
may be granted under the Plan from time to time as replacements for awards
(including, but not limited to, options, common stock, restricted stock,
performance shares or performance units) held by employees of other companies
who become Employees of the Corporation or of any Affiliate as a result of a
merger or consolidation of the employing Corporation with the Corporation, or
such Affiliate, or the acquisition by the Corporation or an Affiliate of all or
a portion of the assets of the employing Corporation. Shares issued in
connection with such substitute Awards shall not reduce the number of shares of
Common Stock issuable under Section 5.1 of the Plan.
12.5 No Guarantee of Employment or Participation. The existence of the
Plan shall not be deemed to constitute a contract of employment between the
Corporation or any affiliate and any Eligible Individual or Participant, nor
shall it constitute a right to remain in the employ of the
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Corporation or any affiliate. The terms or existence of this Plan, as in effect
at any time or from time to time, or any Award granted under the Plan, shall not
interfere with or limit in any way the right of the Corporation or any Affiliate
to terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Corporation or any
Affiliate of the Corporation. Each employee of the Corporation or any Affiliate
remains at will. Except to the extent expressly selected by the Committee to be
a Participant, no person (whether or not an Eligible Individual or a
Participant) shall at any time have a right to be selected for (or additional)
participation in the Plan, despite having previously participated in an
incentive or bonus plan of the Corporation or an Affiliate.
12.6 Tax Withholding. The Corporation or an Affiliate shall have the right
and power to deduct from all payments or distributions hereunder, or require a
Participant to remit to the Corporation promptly upon notification of the amount
due, an amount (which may include shares of Common Stock) to satisfy any Puerto
Rico, federal, state, local or foreign taxes or other obligations required by
law to be withheld with respect thereto with respect to any Award. The
Corporation may defer payments of cash or issuance or delivery of Common Stock
until such withholding requirements are satisfied. The Committee may, in its
discretion, permit a Participant to elect, subject to such conditions as the
Committee shall impose, (a) to have shares of Common Stock otherwise issuable
under the Plan withheld by the Corporation or (b) to deliver to the Corporation
previously acquired shares of Common Stock (through actual tender or
attestation), in either case for the greatest number of whole shares having a
Fair Market Value on the date immediately preceding the date of exercise not in
excess of the amount required to satisfy the withholding tax obligations.
12.7 Tax Offset Payments. The Committee shall have the authority at the
time of any award under this Plan or anytime thereafter to make Tax Offset
Payments to assist Participants in paying income taxes incurred as a result of
their participation in this Plan. The Tax Offset Payments shall be determined by
multiplying a percentage established by the Committee by all or a portion (as
the Board or the Committee shall determine) of the taxable income recognized by
a Participant upon (i) the exercise of a Nonstatutory Stock Option, or (ii) the
disposition of shares received upon exercise of a QSO or an ISO. The percentage
shall be established, from time to time, by the Committee at that rate which the
Committee, in its sole discretion, determines to be appropriate and in the best
interests of the Corporation to assist Participants in paying income taxes
incurred as a result of the events described in the preceding sentence. Tax
Offset Payments shall be subject to the restrictions on transferability
applicable to Options set forth in Section 12.1.
12.8 No Limitation on Compensation; Scope of Liabilities. Nothing in the
Plan shall be construed to limit the right of the Corporation to establish other
plans if and to the extent permitted by applicable law. The liability of the
Corporation, or any Affiliate under this Plan is limited to the obligations
expressly set forth in the Plan, and no term or provision of this Plan may be
construed to impose any further or additional duties, obligations, or costs on
the Corporation or any affiliate thereof or the Committee not expressly set
forth in the Plan.
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12.9 Requirements of Law. The granting of Awards and the issuance of
shares of Common Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
12.10 Term of Plan. The Plan shall be effective upon the Effective Date.
The Plan shall terminate on the earlier of (a) the termination of the Plan
pursuant to Article XI, or (b) when no more shares are available for issuance of
Awards under the Plan.
12.11 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the Commonwealth of
Puerto Rico without regard to principles of conflict of laws.
12.12 Securities Law Compliance. Instruments evidencing Awards may contain
such other provisions, not inconsistent with the Plan, as the Committee deems
advisable, including a requirement that the Participant represent to the
Corporation in writing, when an Award is granted or when he receives shares with
respect to such Award (or at such other time as the Committee deems appropriate)
that he is accepting such Award, or receiving or acquiring such shares (unless
they are then covered by a Securities Act of 1933 registration statement), for
his own account for investment only and with no present intention to transfer,
sell or otherwise dispose of such shares except such disposition by a legal
representative as shall be required by will or the laws of any jurisdiction in
winding up the estate of the Participant. Such shares shall be transferable, or
may be sold or otherwise disposed of only if the proposed transfer, sale or
other disposition shall be permissible pursuant to the Plan and if, in the
opinion of counsel satisfactory to the Corporation, such transfer, sale or other
disposition at such time will be in compliance with applicable securities laws.
12.13 No Impact On Benefits. Except as may otherwise be specifically
provided for under any employee benefit plan, policy or program provision to the
contrary, Awards shall not be treated as compensation for purposes of
calculating an Eligible Individual's right under any such plan, policy or
program.
12.14 No Constraint on Corporate Action. Except as provided in Article XI,
nothing contained in this Plan shall be construed to prevent the Corporation, or
any affiliate, from taking any corporate action (including, but not limited to,
the Corporation's right or power to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets) which is deemed by it to be appropriate, or in its best
interest, whether or not such action would have an adverse effect on this Plan,
or any Awards made under this Plan. No employee, beneficiary, or other person,
shall have any claim against the Corporation or any of its Affiliates, as a
result of any such action.
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12.15 Captions. The headings and captions appearing herein are inserted
only as a matter of convenience. They do not define, limit, construe, or
describe the scope or intent of the provisions of the Plan.
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