Exhibit 10.2
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SUN COMPANY, INC.
EXECUTIVE LONG-TERM STOCK INVESTMENT PLAN
(Amended and Restated as of December 3, 1997)
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ARTICLE I
Definitions
As used in this Plan, the following terms shall have the meanings herein
specified:
1.1 Affiliate - shall mean any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Sun Company, Inc.
1.2 Alternate Appreciation Rights - shall have the meaning provided herein
at Section 6.1.
1.3 Board of Directors - shall mean the Board of Directors of Sun Company,
Inc.
1.4 Change in Control - shall mean the occurrence of any of the following
events or transactions:
(a) Continuing Directors cease, within one year of a Control
Transaction, to constitute a majority of the Board of Directors of Sun
Company, Inc. (or of the Board of Directors of any successor to Sun
Company, Inc. or to all or substantially all of its assets), or
(b) any entity, person or Group acquires shares of Sun Company, Inc.
in a transaction or series of transactions that result in such entity,
person or Group directly or indirectly owning beneficially more than twenty
percent (20%) of the outstanding voting shares.
1.5 Code - shall mean the Internal Revenue Code of 1986, as amended.
1.6 Committee - shall mean the committee appointed to administer this Plan
by the Board of Directors of the Company, as constituted from time to time. The
Committee shall consist of at least two (2) members of the Board of Directors,
each of whom shall meet applicable requirements set forth in the pertinent
regulations under Section 16 of the Securities Exchange Act of 1934, as amended,
and Section 162(m) of the Code.
1.7 Common Stock - shall mean the authorized and unissued or treasury
shares of common stock of Sun Company, Inc.
1.8 Common Stock Units - shall have the meaning provided herein at Section
8.1.
1.9 Company - shall mean Sun Company, Inc., a Pennsylvania corporation.
The term "Company" shall include any successor to Sun Company, Inc., any
Subsidiary or Affiliate which has adopted the Plan, or a corporation succeeding
to the business of Sun Company, Inc., or any Subsidiary or Affiliate by merger,
consolidation, liquidation or purchase of assets or stock or similar
transaction.
1.10 Continuing Director - shall mean a Director who was a member of the
Board of Directors immediately prior to a Control Transaction which results in a
Change in Control.
1.11 Control Transaction - shall mean any of the following transactions or
any combination thereof:
(a) any tender offer for or acquisition of capital stock of Sun
Company, Inc.;
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(b) any merger, consolidation, or sale of all or substantially all of
the assets of Sun Company, Inc.; or
(c) the submission of a nominee or nominees for the position of
director of Sun Company, Inc. by a shareholder or a Group of shareholders
in a proxy solicitation or otherwise.
1.12 CSU Payout Date - shall have the meaning provided herein at Section
8.9.
1.13 Disability - shall mean any illness, injury or incapacity of such
duration and type as to render a Participant eligible to receive long-term
disability benefits under the applicable broad-based long-term disability
program of the Company.
1.14 Dividend Equivalents - shall have the meaning provided herein at
Section 8.3.
1.15 Dividend Equivalent Account - shall have the meaning provided herein
at Section 8.3.
1.16 Employment Termination Date - shall mean the date on which the
employment relationship between the Participant and the Company is terminated.
1.17 Exercise Period - shall have the meaning provided herein at Section
7.3.
1.18 Fair Market Value - shall mean, as of any date and in respect of any
share of Common Stock, the opening price on such date of a share of Common Stock
(which price shall be the closing price on the previous trading day of a share
of Common Stock as reported on the New York Stock Exchange Composite
Transactions Tape, and as reflected in the consolidated trading tables of the
Wall Street Journal or any other publication selected by the Committee). If
there is no sale of shares of Common Stock on the New York Stock Exchange for
more than ten (10) days immediately preceding such date, or if deemed
appropriate by the Committee for any other reason, the fair market value of the
shares of Common Stock shall be as determined by the Committee in such other
manner as it may deem appropriate. In no event shall the fair market value of
any share of Common Stock be less than its par value.
1.19 Group - shall mean persons who act in concert as described in Sections
13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended.
1.20 Incentive Stock Options - shall have the meaning provided herein at
Article IV.
1.21 Just Cause - shall mean:
(a) a judicial determination that the Participant has committed fraud,
misappropriation, or embezzlement against the Company; or
(b) a non-appealable conviction of, or entry of a plea of nolo
contendere for, an act by the Participant constituting a felony which, as
determined by the Company in good faith, constitutes a crime involving
moral turpitude and has resulted in material harm to the Company, its
subsidiaries and affiliates taken as a whole.
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No termination of employment shall be deemed an effective termination
for Just Cause unless accompanied by a copy of a resolution duly adopted by
the affirmative vote of not less a majority of the Continuing Directors at
a meeting of the Board of Directors which was called and held for the
purpose of considering such termination, or if there are no Continuing
Directors, then by at least three quarters (3/4) of the entire Board of
Directors (after reasonable notice to the Participant and an opportunity
for the Participant, together with the Participant's counsel, to be heard
before the Board of Directors) finding that, in the good faith opinion of
the Board of Directors, the Participant was guilty of conduct set forth in
the preceding sentence, and specifying the particulars thereof in detail.
In any deliberations or votes by the Board of Directors concerning a
determination under this Section, the Participant shall recuse himself from
such deliberations and votes.
1.22 Limited Rights - shall have the meaning provided herein at Article
VII.
1.23 Market Price - shall have the meaning provided herein at Section 7.4.
1.24 Option - shall mean Stock Option, Incentive Stock Option and/or Reload
Option.
1.25 Option Price - shall mean the purchase price per share of Common Stock
deliverable upon the exercise of an Option.
1.26 Optionee - shall mean the holder of an Option.
1.27 Participant - shall have the meaning provided herein at Section
2.4(a).
1.28 Performance Factors - shall mean the various payout percentages
related to the attainment levels of one or more Performance Goals, as determined
by the Committee.
1.29 Performance Goals - shall mean the specific targeted amounts of, or
changes in, financial or operating goals including: revenues; expenses; net
income; operating income; equity; return on equity, assets or capital employed;
working capital; shareholder return; operating capacity utilized; production or
sales volumes; or throughput. Other financial or operating goals may also be
used as determined by the Committee. Such goals may be applicable to the
Company as a whole or one or more of its business units and may be applied in
total or on a per share, per barrel or percentage basis and on an absolute basis
or relative to other companies, industries or indices or any combination
thereof, as determined by the Committee.
1.30 Performance Period - shall have the meaning provided herein at Section
8.4.
1.31 Potential Change in Control - shall mean the occurrence of any of the
following events or transactions:
(a) any person (other than Sun Company, Inc., or any affiliate or
subsidiary thereof) makes a tender offer for capital stock of Sun Company,
Inc.;
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(b) any person becomes the beneficial owner, directly or indirectly,
of capital stock of Sun Company, Inc. in an amount which requires the
filing of Schedule 13D or its equivalent form pursuant to the Rules and
Regulations under the Securities Exchange Act of 1934 as from time to time
amended;
(c) the submission of a nominee or nominees for the position of
director of Sun Company, Inc. by a shareholder or Group of shareholders in
a proxy solicitation or otherwise which, in its judgment, the Board of
Directors determines by adoption of a resolution within thirty (30) days of
such submission, might result in a Change in Control of Sun Company, Inc.;
(d) any person files a pre-merger notification for the acquisition of
capital stock of Sun Company, Inc. pursuant to the Hart-Scott-Rodino Act;
or
(e) the Board of Directors in its judgment determines by adoption of a
resolution that a Potential Change in Control of Sun Company, Inc. for
purposes of this Plan has occurred.
1.32 Qualifying Termination - shall mean, with respect to the employment of
any Participant, the following:
(a) a termination of employment by the Company within seven (7) months
after a Change in Control, other than for Just Cause, death or Disability;
(b) a termination of employment by the Participant within seven (7)
months after a Change in Control for one or more of the following reasons:
(1) the assignment to such Participant of any duties inconsistent
in a way adverse to such Participant, with such Participant's
positions, duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a reduction in the
duties and responsibilities held by the Participant immediately prior
to the Change in Control; a change in the Participant's reporting
responsibilities, title or offices as in effect immediately prior to
the Change in Control that is adverse to the Participant; or any
removal of the Participant from or any failure to re-elect the
Participant to any position with the Company that such Participant
held immediately prior to the Change in Control except in connection
with such Participant's:
(i) assignment to a new position at a higher combined annual
base salary and guideline (target) bonus; or
(ii) termination of employment by the Company for Just
Cause; or
(2) with respect to any Participant who is a member of the Board
of Directors immediately prior to the Change in Control, any failure
of the shareholders of the Company to elect or reelect, or of the
Company to appoint or reappoint, the Participant as a member of the
Board of Directors;
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(3) a reduction by the Company in either of the Participant's
annual base salary or guideline (target) bonus as in effect
immediately prior to the Change in Control; the failure by the Company
to continue in effect, or the taking of any action by the Company that
would adversely affect such Participant's participation in or
significantly reduce such Participant's benefits under, any employee
benefit plan or compensation plan in which such Participant was
participating immediately prior to the Change in Control, provided,
however, that in the aggregate such actions by the Company
significantly reduce the Participant's total compensation (i.e., the
sum of Participant's annual base salary, guideline (target) bonus, and
the aggregate value to the Participant of all employee benefit and
compensation plans); or the failure by the Company, without the
Participant's consent, to pay to the Participant any portion of the
Participant's current compensation, or to pay to the Participant any
portion of an installment of deferred compensation under any deferred
compensation program of the Company; or
(4) The Company requires the Participant to be based anywhere
other than the Participant's present work location or a location
within thirty-five (35) miles from the present location; or the
Company requires the Participant to travel on Company business to an
extent substantially more burdensome than such Participant's travel
obligations during the period of twelve (12) consecutive months
immediately preceding the Change in Control;
provided, however, that in the case of any such termination of employment
by the Participant under this subparagraph (b), such termination shall not
be deemed to be a Qualifying Termination unless the termination occurs
within 120 days after the occurrence of the event or events constituting
the reason for the termination; or
(c) a termination of employment by the Company other than a
termination for Just Cause, or a termination of employment by the
Participant for one of the reasons set forth in (b) above, following a
Potential Change in Control, if the Participant can demonstrate that such
termination or circumstance in (b) above leading to termination:
(1) was at the request of a third party with which the Company
had entered into negotiations or an agreement with regard to a Change
in Control; or
(2) otherwise occurred in connection with, or in anticipation of,
a Change in Control;
provided, however, that in either such case, such Change in Control
actually occurs within one (1) year following the Employment Termination
Date.
1.33 Reload Options - shall have the meaning provided herein at Section
5.1.
1.34 Stock Options - shall have the meaning provided herein at Section 3.1.
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1.35 Subsidiary - shall mean any corporation of which, at the time more
than fifty percent (50%) of the shares entitled to vote generally in an election
of directors are owned directly or indirectly by Sun Company, Inc. or any
subsidiary thereof.
ARTICLE II
Background, Purpose and Term of Plan; Participation
& Eligibility for Benefits
2.1 Background. Effective on December 31, 1991, no further awards shall be
made under the Sun Company, Inc. Long-Term Incentive Plan adopted in June, 1986;
provided, however, that any rights theretofore granted under that plan shall not
be affected.
2.2 Purpose of the Plan. The purposes of this Sun Company, Inc. Long-Term
Performance Enhancement Plan (the "Plan") are to:
(a) better align the interests of shareholders and management of the
Company by creating a direct linkage between Participants' rewards and
shareholders' gains;
(b) provide management with an equity ownership in Sun Company, Inc.
commensurate with Company performance, as reflected in increased
shareholder value;
(c) maintain competitive compensation levels; and
(d) provide an incentive to management for continuous employment with
the Company.
It is intended that most awards made under the Plan will qualify as
performance-based compensation under Section 162(m) of the Code.
2.3 Term of the Plan. This Plan became effective upon approval by the
holders of a majority of the votes present, in person or represented by proxy,
at the 1991 Annual Meeting of Shareholders of Sun Company, Inc. No awards will
be made under the Plan after December 31, 1996. The Plan and all awards made
under the Plan prior to such date shall remain in effect until such awards have
been satisfied or terminated in accordance with the Plan and the terms of such
awards.
2.4 Administration. The Plan shall be administered by the Committee which
shall have the authority, in its sole discretion and from time to time to:
(a) designate the employees or classes of employees eligible to
participate in the Plan (each such employee being, a "Participant");
(b) grant awards provided in the Plan in such form and amount as the
Committee shall determine;
(c) impose such limitations, restrictions and conditions upon any such
award as the Committee shall deem appropriate; and
(d) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of
the Plan.
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The decisions and determinations of the Committee on all matters relating
to the Plan shall be in its sole discretion and shall be conclusive. No member
of the Committee shall be liable for any action taken or not taken or decision
made or not made in good faith relating to the Plan or any award thereunder.
2.5 Eligibility for Participation. Participants in the Plan shall be the
officers and other key employees of the Company who occupy responsible
managerial or professional positions and who have the capability of making a
substantial contribution to the success of the Company. In making this
selection and in determining the amount of awards, the Committee shall consider
any factors deemed relevant, including the individual's functions,
responsibilities, value of services to the Company and past and potential
contributions to its profitability and sound growth.
2.6 Types of Awards Under the Plan. Awards under the Plan may be in the
form of any one or more of the following:
(a) Stock Options, as described in Article III;
(b) Incentive Stock Options, as described in Article IV;
(c) Reload Options, as described in Article V;
(d) Alternate Appreciation Rights, as described in Article VI;
(e) Limited Rights, as described in Article VII; and/or
(f) Common Stock Units, as described in Article VIII.
2.7 Aggregate Limitation on Awards. Shares of stock which may be issued
under the Plan shall be Common Stock. The maximum number of shares of Common
Stock which may be issued under the Plan shall be 5.8 million. For purposes of
calculating the maximum number of shares of Common Stock which may be issued
under the Plan:
(a) all the shares issued (including the shares, if any, withheld for
tax withholding requirements) shall be counted when cash is used as full
payment for shares issued upon exercise of an Option;
(b) only the shares issued (including the shares, if any, withheld for
tax withholding requirements) as a result of an exercise of Alternate
Appreciation Rights shall be counted;
(c) only the shares issued (including the shares, if any, withheld for
tax withholding requirements) net of shares of Common Stock used as full or
partial payment for such shares upon exercise of an Option; and
(d) only the shares issued (including the shares, if any, withheld for
tax withholding) upon vesting and payment of the Common Stock Units, shall
be counted.
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In addition to shares of Common Stock actually issued pursuant to the
exercise of Options, there shall be deemed to have been issued a number of
shares equal to the number of shares of Common Stock in respect of which Limited
Rights (as described in Article VII) shall have been exercised. Shares tendered
by a Participant as payment for shares issued upon exercise of an Option, shall
be available for issuance under the Plan. Any shares of Common Stock subject to
an Option, which for any reason is terminated unexercised or expires shall again
be available for issuance under the Plan, but shares subject to an Option which
are not issued as a result of the exercise of Limited Rights shall not be
available for issuance under the Plan.
ARTICLE III
Stock Options
3.1 Award of Stock Options. The Committee, from time to time, and subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, may grant to any Participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of options to a Participant pursuant to the Plan.
3.2 Stock Option Agreements. The grant of a Stock Option shall be
evidenced by a written Stock Option Agreement, executed by the Company and the
holder of a Stock Option, stating the number of shares of Common Stock subject
to the Stock Option evidenced thereby, and in such form as the Committee may
from time to time determine.
3.3 Stock Option Price. The Option Price per share of Common Stock
deliverable upon the exercise of a Stock Option shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date the Stock Option is
granted.
3.4 Term and Exercise. Each Stock Option shall be fully exercisable six
(6) months from the date of its grant or such longer period as the Committee
shall determine in its discretion and, unless a shorter period is provided by
the Committee or by another Section of this Plan, may be exercised during a
period of ten (10) years from the date of grant thereof. No Stock Option shall
be exercisable after the tenth anniversary of the date of its grant.
3.5 Manner of Payment. Each Stock Option Agreement shall set forth the
procedure governing the exercise of the Stock Option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of Common Stock
subject thereto, the Optionee shall pay to the Company, in full, the Option
Price for such shares with cash or with Common Stock. All shares of Common
Stock issued under the Sun Company, Inc. Long-Term Incentive Plan, this Plan, or
any similar executive stock option plan must be held at least six (6) months
before they may be used as payment of the Option Price.
3.6 Issuance and Delivery of Shares. As soon as practicable after receipt
of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock. The Optionee shall become a
shareholder of the Company with respect to Common Stock represented by share
certificates so issued and as such shall be fully entitled to receive dividends,
to vote and to exercise all other rights of a shareholder.
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3.7 Retirement or Disability. Upon termination of the Optionee's
employment by reason of retirement or Disability (as each is determined by the
Committee), the Optionee may, within sixty (60) months from the date of
termination, exercise any Stock Options to the extent such options are
exercisable during such 60-month period.
3.8 Termination for Other Reasons. Except as provided in Sections 3.7 and
3.9, or except as otherwise determined by the Committee, all Stock Options shall
terminate upon the termination of the Optionee's employment; provided, however,
that the Limited Rights awarded in tandem with such Stock Options shall not
terminate and such Limited Rights shall remain exercisable during the Exercise
Period for any Optionee whose employment relationship with the Company has been
terminated as a result of any Qualifying Termination.
3.9 Death of Optionee. Any rights in respect of Stock Options to the
extent exercisable on the date of the Optionee's death may be exercised by the
Optionee's estate or by any person that acquires the legal right to exercise
such Stock Option by bequest, inheritance, or otherwise by reason of the death
of the Optionee. Any such exercise to be valid must occur within the remaining
option term of the Stock Option. The foregoing provisions of this Section 3.9
shall apply to an Optionee who dies while employed by the Company and to an
Optionee whose employment may have terminated prior to death; provided, however,
that:
(a) an Optionee who dies while employed by the Company will be treated
as if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a person who acquires the right to exercise such Stock
Option by bequest or inheritance will have the right to exercise the Stock
Option in accordance with Section 3.7; or
(b) the estate or a person who acquires the right to exercise a Stock
Option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Sections 3.7 and 3.8.
3.10 Acceleration of Options. Notwithstanding any provisions to the
contrary in agreements evidencing Options granted thereunder, each outstanding
Option shall become immediately and fully exercisable upon the occurrence of any
Change in Control of Sun Company, Inc.
3.11 Effect of Exercise. The exercise of any Stock Options shall cancel
that number of related Limited Rights, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said options.
ARTICLE IV
Incentive Stock Options
4.1 Award of Incentive Stock Options. The Committee, from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any Participant in the Plan one or more
incentive stock options ("Incentive Stock Options") (intended to qualify as such
under the provisions of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) to purchase for cash or shares the number of shares of
Common Stock allotted by the Committee. The date an Incentive Stock Option is
granted shall mean the date selected by the Committee as of which the Committee
allots a specific number of options to a Participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall not be granted to
any owner of ten percent (10%) or more of the total combined voting power of the
Company and its subsidiaries.
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4.2 Incentive Stock Option Agreements. The grant of an Incentive Stock
Option shall be evidenced by a written Incentive Stock Option Agreement,
executed by the Company and the holder of an Incentive Stock Option stating the
number of shares of Common Stock subject to the Incentive Stock Option evidenced
thereby, and in such form as the Committee may from time to time determine.
4.3 Incentive Stock Option Price. The Option Price per share of Common
Stock deliverable upon the exercise of an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted.
4.4 Term and Exercise. Each Incentive Stock Option shall be fully
exercisable six (6) months from the date of its grant and unless a shorter
period is provided by the Committee or another Section of this Plan, may be
exercised during a period of ten (10) years from the date of grant thereof. No
Incentive Stock Option shall be exercisable after the tenth anniversary of the
date of its grant.
4.5 Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of
grant with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year, under this Plan or any other
stock option plan of the Company exceeds One Hundred Thousand Dollars
($100,00.00), then the option, as to the excess shall be treated as a non-
qualified stock option. An Incentive Stock Option shall not be granted to any
person who is not an "employee" of the Company (within the meaning of Section
424(f) of the Code).
4.6 Retirement or Disability. Upon the termination of the Optionee's
employment by reason of retirement or Disability (as each is determined by the
Committee), the Optionee may, within sixty (60) months from the date of such
termination of employment, exercise any Incentive Stock Options to the extent
such Incentive Stock Options are exercisable during such 60-month period.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Internal Revenue Code of 1986 upon the exercise of an Incentive Stock
Option will not be available to an Optionee who exercises any Incentive Stock
Option more than:
(a) twelve (12) months after the date of termination of employment due
to Disability; or
(b) three (3) months after the date of termination of employment due
to retirement.
4.7 Termination for Other Reasons. Except as provided in Sections 4.6 and
4.8 or except as otherwise determined by the Committee, all Incentive Stock
Options shall terminate upon the termination of the Optionee's employment;
provided, however, that the Limited Rights awarded in tandem with such Incentive
Stock Options shall not terminate and such Limited Rights shall remain
exercisable during the Exercise Period for any Optionee whose employment
relationship with the Company has been terminated as a result of any Qualifying
Termination.
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4.8 Death of Optionee. Any rights in respect of Incentive Stock Options
to the extent exercisable on the date of the Optionee's death may be exercised
by the Optionee's estate or by any person that acquires the legal right to
exercise such Stock Option by bequest, inheritance, or otherwise by reason of
the death of the Optionee. Any such exercise to be valid must occur within the
remaining option term of the Incentive Stock Option. The foregoing provisions
of this Section 4.8 shall apply to an Optionee who dies while employed by the
Company and to an Optionee whose employment may have terminated prior to death;
provided, however, that:
(a) an Optionee who dies while employed by the Company will be treated
as if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a person who acquires the right to exercise such
Incentive Stock Option by bequest or inheritance will have the right to
exercise the Incentive Stock Option in accordance with Section 4.6; or
(b) the estate or a person who acquires the right to exercise a Stock
Option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Section 4.6 and 4.7.
4.9 Applicability of Stock Options Selections. The following Sections
of this Plan that apply to Stock Options shall apply equally to Incentive Stock
Options:
(a) Section 3.5 (Manner of Payment);
(b) Section 3.6 (Issuance and Delivery of Shares);
(c) Section 3.10 (Acceleration of Options); and
(d) Section 3.11 (Effect of Exercise).
Said Sections are incorporated by reference in this Article IV as though
fully set forth herein.
ARTICLE V
Reload Options
5.1 Authorization of Reload Options. Concurrently with the award of Stock
Options and/or the award of Incentive Stock Options to any Participant in the
Plan, the Committee may authorize reload options ("Reload Options") to purchase
for cash or shares a number of shares of Common Stock. The number of Reload
Options shall equal:
(a) the number of shares of Common Stock used to exercise the
underlying Stock Options or Incentive Stock Options; and
(b) to the extent authorized by the Committee, the number of shares of
Common Stock used to satisfy any tax withholding requirement incident to
the exercise of the underlying Stock Options or Incentive Stock Options.
The grant of a Reload Option will be effected upon the exercise of
underlying Stock Options, Incentive Stock Options or Reload Options through the
use of shares of Common Stock held by the Optionee for at least twelve (12)
months. Notwithstanding the fact that the underlying Option may be an Incentive
Stock Option, a Reload Option is not intended to qualify as an "incentive stock
option" under Section 422 of the Internal Revenue Code of 1986.
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5.2 Reload Option Amendment. Each Stock Option Agreement and Incentive
Stock Option Agreement shall state whether the Committee has authorized Reload
Options with respect to the underlying Stock Options and/or Incentive Stock
Options. Upon the exercise of an underlying Stock Option, Incentive Stock
Option or other Reload Option, the Reload Option will be evidenced by an
amendment to the underlying Stock Option Agreement or Incentive Stock Option
Agreement.
5.3 Reload Option Price. The Option Price per share of Common Stock
deliverable upon the exercise of a Reload Option shall be the Fair Market Value
of a share of Common Stock on the date of grant of the Reload Option.
5.4 Term and Exercise. Each Reload Option is fully exercisable six (6)
months from the effective date of grant. The term of each Reload Option shall
be equal to the remaining option term of the underlying Stock Option and/or
Incentive Stock Option. No additional Reload Options may be authorized in
connection with the award of Stock Options or Incentive Stock Options on or
after October 1, 1996.
5.5 Termination of Employment. No additional Reload Options shall be
granted to an Optionee when Stock Options, Incentive Stock Options and/or Reload
Options are exercised pursuant to the terms of this Plan following termination
of such Optionee's employment.
5.6 Applicability of Stock Options Sections. The following Sections of
this Plan that apply to Stock Options shall apply equally to Reload Options :
(a) Section 3.5 (Manner of Payment);
(b) Section 3.6 (Issuance and Delivery of Shares);
(c) Section 3.7 (Retirement or Disability);
(d) Section 3.8 (Termination for Other Reasons);
(e) Section 3.9 (Death of Optionee); and
(f) Section 3.11 (Effect of Exercise).
Said Sections are incorporated by reference in this Article V as though
fully set forth herein.
ARTICLE VI
Alternate Appreciation Rights
6.1 Award of Alternate Appreciation Rights. Concurrently with or
subsequent to the award of any Stock Option, Incentive Stock Option or Reload
Option to purchase one or more shares of Common Stock, the Committee may,
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award to the Optionee with respect to each share of
Common Stock, a related stock appreciation right ("Alternate Appreciation
Right"), permitting the Optionee to be paid the appreciation on the Option in
lieu of exercising the Option.
6.2 Alternate Appreciation Rights Agreement. Alternate Appreciation
Rights shall be evidenced by written agreements in such form as the Committee
may from time to time determine.
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6.3 Exercise. An Optionee who has been granted Alternate Appreciation
Rights may, from time to time, in lieu of the exercise of an equal number of
Options, elect to exercise one or more Alternate Appreciation Rights and thereby
become entitled to receive from the Company payment in Common Stock the number
of shares determined pursuant to Sections 6.4 and 6.5 hereof. Alternate
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Options related thereto are exercisable, as provided
in this Plan. The Committee may, in its discretion, prescribe additional
conditions to the exercise of any Alternate Appreciation Rights.
6.4 Amount of Payment. The amount of payment to which an Optionee shall
be entitled upon the exercise of each Alternate Appreciation Right shall be
equal to 100% of the amount, if any, by which the Fair Market Value of a share
of Common Stock on the exercise date exceeds the Fair Market Value of a share of
Common Stock on the date the Option related to said Alternate Appreciation Right
was granted.
6.5 Form of Payment. The number of shares to be paid shall be determined
by dividing the amount of payment determined pursuant to Section 6.4 by the Fair
Market Value of a share of Common Stock on the exercise date of such Alternate
Appreciation Rights. As soon as practicable after exercise, the Company shall
deliver to the Optionee a certificate or certificates for such shares of Common
Stock. All such shares shall be issued with the rights and restrictions
specified in Section 3.6 of this Plan.
6.6 Effect of Exercise. The exercise of any Alternate Appreciation Rights
shall cancel an equal number of Stock Options, Incentive Stock Options, Reload
Options and Limited Rights, if any, related to said Alternate Appreciation
Rights.
6.7 Retirement or Disability. Upon termination of the Optionee's
employment by reason of retirement or Disability (as each is determined by the
Committee), the Optionee may, within six (6) months from the date of such
termination, exercise any Alternate Appreciation Rights to the extent such
Alternate Appreciation Rights are exercisable during such six-month period.
6.8 Death of Optionee or Termination for Other Reasons. Except as
provided in Section 6.7, or except as otherwise determined by the Committee, all
Alternate Appreciation Rights shall terminate upon the termination of the
Optionee's employment or upon the death of the Optionee.
ARTICLE VII
Limited Rights
7.1 Award of Limited Rights. Concurrently with or subsequent to the award
of any Option, the Committee may, subject to the provisions of the Plan and such
other terms and conditions as the Committee may prescribe, award to the Optionee
with respect to each Option, a related limited right permitting the Optionee,
during a specified limited time period, to be paid the appreciation on the
Option in lieu of exercising the Option ("Limited Right").
7.2 Limited Rights Agreement. Limited Rights granted under the Plan shall
be evidenced by written agreements in such form as the Committee may from time
to time determine.
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7.3 Exercise Period. Limited Rights are immediately exercisable in full
upon grant for a period of up to seven (7) months following the date of a Change
in Control (the "Exercise Period").
7.4 Amount of Payment. The amount of payment to which an Optionee shall
be entitled upon the exercise of each Limited Right shall be equal to 100% of
the amount, if any, which is equal to the difference between the Option Price of
the related Option and the Market Price of a share of such Common Stock. Market
Price is defined to be the greater of:
(a) the highest price per share of Common Stock paid in connection
with any Change in Control; and
(b) the highest price per share of Common Stock reflected in the
consolidated trading tables of The Wall Street Journal (presently the New
York Stock Exchange Composite Transactions quotations) during the 60-day
period prior to the Change in Control.
7.5 Form of Payment. Payment of the amount to which an Optionee is
entitled upon the exercise of Limited Rights, as determined pursuant to Section
7.4, shall be made solely in cash.
7.6 Effect of Exercise. If Limited Rights are exercised, the Options and
Alternate Appreciation Rights, if any, related to such Limited Rights cease to
be exercisable to the extent of the number of shares with respect to which the
Limited Rights were exercised. Upon the exercise or termination of the Options
and Alternate Appreciation Rights, if any, related to such Limited Rights, the
Limited Rights granted with respect thereto terminate to the extent of the
number of shares as to which the related Options and/or Alternate Appreciation
Rights were exercised or terminated; provided, however, that with respect to
Options and/or Alternate Appreciation Rights that are terminated as a result of
the termination of the Optionee's employment status, the Limited Rights awarded
in tandem therewith shall not terminate and such Limited Rights shall remain
exercisable during the Exercise Period for any Optionee whose employment
relationship with the Company has been terminated as a result of any Qualifying
Termination.
7.7 Retirement or Disability. Upon termination of the Optionee's
employment by reason of Disability or retirement (as each is determined by the
Committee), the Optionee may, within six (6) months from the date of
termination, exercise any Limited Rights to the extent such Limited Right is
exercisable during such six-month period.
7.8 Death of Optionee or Termination for Other Reasons. Except as
provided in Sections 7.7 and 7.9 or except as otherwise determined by the
Committee, all Limited Rights granted under the Plan shall terminate upon the
termination of the Optionee's employment or upon the death of the Optionee.
7.9 Termination Related to a Change in Control. The requirement that an
Optionee be terminated by reason of retirement or Disability or be employed by
the Company at the time of exercise pursuant to Sections 7.7 and 7.8
respectively, is waived during the Exercise Period as to any Optionee whose
employment relationship with the Company has been terminated as a result of any
Qualifying Termination.
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ARTICLE VIII
Common Stock Units
8.1 Award of Common Stock Units. The Committee, from time to time, and
subject to the provisions of the Plan, may grant to any Participant in the Plan
rights to receive shares of Common Stock which are subject to a risk of
forfeiture by the Participant ("Common Stock Units"). At the time it grants any
Common Stock Units, the Committee shall determine whether the payment of such
Common Stock Units shall be conditioned upon either:
(a) the Participant's continued employment with the Company throughout
a stated period (Section 8.4); or
(b) the attainment of certain predetermined performance objectives
during a stated period (Section 8.5).
The date Common Stock Units are granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of Common Stock
Units to a Participant pursuant to the Plan.
8.2 Common Stock Unit Agreements. Common Stock Units granted under the
Plan shall be evidenced by written agreements stating the number of Common Stock
Units evidenced thereby or in such form and as the Committee may from time to
time determine.
8.3 Dividend Equivalents. A holder of Common Stock Units will be entitled
to receive payment from the Company in an amount equal to each cash dividend
("Dividend Equivalent") the Company would have paid to such holder had he, on
the record date for payment of such dividend, been the holder of record of
shares of Common Stock equal to the number of Common Stock Units which had been
awarded to such holder as of the close of business on such record date. The
Company shall establish a bookkeeping account on behalf of each Participant in
which the Dividend Equivalents that would have been paid to the holder of Common
Stock Units ("Dividend Equivalent Account") shall be credited. The Dividend
Equivalent Account will not bear interest.
8.4 Performance Period. Upon making an award, the Committee shall
determine (and the Common Stock Unit Agreement shall state) the length of the
applicable period during which employment must be maintained or certain
performance targets must be attained (the "Performance Period"). Performance
Periods will normally be from three to five years; provided, however, the
Committee at its sole discretion may establish other time periods.
8.5 Performance Goals. Common Stock Units and the related Dividend
Equivalent Account earned may be based upon the attainment of Performance Goals
established by the Committee in accordance with Section 162(m). Within the
first ninety (90) days of the Performance Period, the Committee shall establish,
in writing, the weighted Performance Goals and related Performance Factors for
various goal achievement levels for the Company. In establishing the weighted
Performance Goals, the Committee shall take the necessary steps to insure that
the Company's ability to achieve the pre-established goals is uncertain at the
time the goals are set. The established written Performance Goals, assigned
weights, and Performance Factors shall be written in terms of an objective
formula, whereby any third party having knowledge of the relevant Company
performance results could calculate the amount to be paid. Such Performance
Goals may vary by Participant and by grant.
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The number of Common Stock Units and Dividend Equivalents earned will be
equal to the amounts awarded multiplied by the Performance Factor. However, the
Committee shall have the discretion, by Participant and by grant, to reduce (but
not to increase) some or all of the amount that would otherwise be payable by
reason of the satisfaction of the Performance Goals. In making any such
determination, the Committee is authorized to take into account any such factor
or factors it determines are appropriate, including but not limited to Company,
business unit and individual performance.
8.6 Payment of Common Stock Units and Dividend Equivalent Account. Payment
in respect of Common Stock Units earned (as determined under Sections 8.4 and
8.5) shall be made to the holder thereof within ninety (90) days after the
Performance Period for such units has ended, but only to the extent the
Committee determines that the continuing employment and/or any applicable
performance targets have been met.
Payment for Common Stock Units earned shall be made in shares of Common
Stock, except as provided in Section 8.9. The number of shares paid shall be
equal to the number of Common Stock Units earned. The holder may elect to
reduce this amount by the number of shares of Common Stock which have, on the
date the Common Stock Units are paid, a fair market value equal to the
applicable federal, state and local withholding tax due on the receipt of Common
Stock, in lieu of making a cash payment equal to the amount of such withholding
tax due. A holder of Common Stock Units will be entitled to receive payment
from the Company at the end of the Performance Period an amount in cash equal to
the Dividend Equivalent Account earned (as determined under Sections 8.4 and
8.5) by the holder minus applicable federal, state and local withholding tax
due.
8.7 Death, Disability or Retirement. A portion of the Common Stock and
the Dividend Equivalent Account shall be forfeited upon the death of a
Participant or the termination of a Participant's employment by reason of
retirement or Disability (as each is determined by the Committee) prior to the
end of the Performance Period.
The number of Common Stock Units forfeited will be equal to the remaining
number of months in the Performance Period divided by the total number of months
in the Performance Period times the number of Common Stock Units outstanding and
will be rounded down to the next lowest whole amount. The Dividend Equivalent
account will be reduced in a similar fashion. The Common Stock Units and the
Dividend Equivalent Account retained will remain subject to adjustment for any
Performance Factors in accordance with Section 8.5.
8.8 Termination of Employment. Except as provided in Sections 8.7 and
8.9, or as determined by the Committee, 100% of all Common Stock Units of a
Participant under the Plan shall be forfeited and the Dividend Equivalent
Account shall be forfeited upon termination of the Participant's employment with
the Company prior to the end of the Performance Period, and in such event the
Participant shall not be entitled to receive any Common Stock or any payment of
the Dividend Equivalent Account regardless of the level of Performance Goals
achieved for the respective Performance Periods.
8.9 Change in Control. The number of Common Stock Units earned by the
Participant shall be determined by multiplying:
(a) the total number of all the Participant's granted and outstanding
Common Stock Units; by
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(b) a percentage equal to:
(1) the number of full and partial calendar months which the
Common Stock Units have been outstanding as of the date of the Change
in Control; divided by
(2) the number of full and partial calendar months in the
applicable Performance Period.
In the event of a Change in Control, the Common Stock Units earned by the
Participant shall be payable to the Participant in cash or stock, as follows:
(c) if pooling of interests accounting treatment is to be used with
respect to such Change in Control, the Participant will receive shares of
Common Stock equal in number to the number of Common Stock Units earned by
such Employee; or
(d) if pooling of interests accounting treatment is not to be used
with respect to such Change in Control, the Participant will be paid an
amount in cash equal to the number of Common Stock Units earned by such
Participant outstanding multiplied by the Market Price as defined in
Section 7.4. Such amount will be reduced by the applicable federal, state
and local withholding taxes due.
The cash or stock, as the case may be, shall be paid out to the Participant
no later than ninety (90) days following the date of occurrence of such Change
in Control (the "CSU Payout Date"), regardless of whether the applicable
Performance Period has expired or whether performance targets have been met.
There will be no adjustment for any Performance Factors described in Section
8.5.
On or before the CSU Payout Date, and regardless of whether pooling of
interests accounting treatment is to be used with respect to such Change in
Control, the Participant will be paid an amount in cash equal to the value of
the amounts accrued in the Participant's Dividend Equivalent Account immediately
preceding the Change in Control. Payout of Common Stock Units and the Dividend
Equivalent Account shall be made to each Participant:
(e) who is employed by the Company on the CSU Payout Date; or
(f) whose employment relationship with the Company is terminated:
(1) as a result of any Qualifying Termination prior to the CSU
Payout Date; or
(2) as a result of death or Disability following the occurrence
of any Change in Control but prior to the CSU Payout Date.
The Committee may establish, at the time of the grant of Common Stock
Units, other conditions which must be met for payout to occur. These conditions
shall be set forth in the Committee's resolution granting the Common Stock Units
and in the Agreement with the holder.
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ARTICLE IX
Miscellaneous
9.1 General Restriction. Each award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that:
(a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or Federal law; or
(b) the consent or approval of any government regulatory body; or
(c) an agreement by the recipient of an award with respect to the
disposition of shares of Common Stock,
is necessary or desirable as a condition of, or in connection with, the granting
of such award or the issue or purchase of shares of Common Stock thereunder,
then such award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
9.2 Accounting and Tax Treatment for Change in Control. Notwithstanding
anything in this Plan to the contrary, in the event of a Change in Control, the
Committee shall not have the right to take any actions described in the Plan
that would make the Change in Control ineligible for pooling of interests
accounting treatment or that would make the Change in Control ineligible for
desired tax treatment if, in the absence of such right, the Change in Control
would qualify for such treatment and the Company intends to use such treatment
with respect to the Change in Control.
9.3 Non-Assignability. Awards under the Plan shall not be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution except as otherwise determined by the Committee. Accordingly,
during the life of the recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative, unless the
Committee determines otherwise.
9.4 Right to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any Participant
the right to continue in the employment of the Company or effect any right which
the Company may have to terminate the employment of such Participant.
9.5 Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation, determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions of
such awards, and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
9.6 Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect thereto unless and until
certificates for shares of Common Stock are issued on behalf of such recipient.
20
9.7 Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of any award. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine:
(a) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan; and
(b) the impact, if any, of any such leave of absence on awards under
the Plan theretofore made to any recipient who takes such leaves of
absence.
9.8 Newly Eligible Employees. The Committee shall be entitled to make
such rules, regulations, determinations and awards as it deems appropriate in
respect of any employee who becomes eligible to participate in the Plan or any
portion thereof after the commencement of an award or incentive period.
9.9 Adjustments. In any event of any change in the outstanding Common
Stock by reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee may appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the number of Common Stock Units theretofore
awarded under the Plan and any and all other matters deemed appropriate by the
Committee.
9.10 Amendment of the Plan.
(a) The Committee may, without further action by the shareholders and
without receiving further consideration from the Participants, amend this
Plan or condition or modify awards under this Plan in response to changes
in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock
exchange rules or requirements;
(b) The Committee may at any time, and from time to time, modify or
amend the Plan in any respect, except that without shareholder approval the
Committee may not:
(1) increase the maximum number of shares of Common Stock which
may be issued under the Plan (other than increases pursuant to Section
9.9);
(2) extend the term during which any award may be granted or
exercised; or
(3) extend the term of the Plan.
The termination or any modification or amendment of the Plan, except as
provided in Section 9.10(a) above, shall not without the consent of a
Participant, affect the Participant's rights under an award previously granted.