Exhibit 10.3
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SUN COMPANY, INC.
LONG-TERM INCENTIVE 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 4.1.
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 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 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.
1.9 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.
1.10 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.
1.11 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.
1.12 Dividend Equivalents - shall have the meaning provided herein at
Section 6.5.
1.13 Employment Termination Date - shall mean the date on which the
employment relationship between the Participant and the Company is terminated.
1.14 Exercise Period - shall have the meaning provided herein at Section
5.3.
1.15 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.
1.16 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.
1.17 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.
1.18 Limited Rights - shall have the meaning provided herein at Article V.
1.19 Option Price - shall mean the purchase price per share of Common Stock
deliverable upon the exercise of an Option.
1.20 Optionee - shall mean the holder of an Option.
1.21 Participant - shall have the meaning provided herein at Section
2.4(a).
1.22 Plan - shall have the meaning provided herein at Section 2.2.
1.23 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.;
(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.
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1.24 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;
provided, however, that any Participant who also is eligible to receive
benefits under the Sun Company, Inc. Executive Involuntary Severance Plan
shall not receive benefits thereunder, but shall instead receive the
Benefits provided under this Plan;
(b) a termination of employment by the Participant within two (2)
years 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;
(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
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(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.
1.25 Restricted Stock Unit - shall have the meaning provided herein at
Section 6.1.
1.26 Restriction Period - shall have the meaning provided herein at Section
6.4.
1.27 RSU Payout Date - shall have the meaning provided herein at Section
6.11.
1.28 Stock Option - shall have the meaning provided herein at Section 3.1.
1.29 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, 1986, no further awards shall
be made under the Sun Company, Inc. Executive Long-Term Incentive Plan adopted
in June, 1978 provided, however, that any rights theretofore granted under that
plan shall not be affected.
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2.2 Purpose of the Plan. The purposes of this Sun Company, Inc. Long-Term
Incentive Plan (the "Plan") are to:
(a) more closely associate the interests of the Company with the
shareholders by relating capital accumulation with increases in shareholder
value;
(b) encourage management success by providing capital accumulation as
an incentive;
(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 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 1986 Annual Meeting of Shareholders of Sun Company, Inc. No awards will
be made under the Plan after December 31, 1991. 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.
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.
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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) Alternate Appreciation Rights, as described in Article IV;
(c) Limited Rights, as described in Article V; and/or
(d) Restricted Stock Units, as described in Article VI.
2.7 Aggregate Limitation on Awards. Shares of stock which may be issued
under the Plan shall be Common Stock. The maximum number of shares of Common
Stock which may be issued under the Plan shall be three million (3,000,000).
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 a Stock Option;
(b) only the shares issued (including the shares, if any, withheld for
tax withholding requirements) net of shares of Common Stock used as full or
partial payment for such shares upon exercise of a Stock Option, shall be
counted; and
(c) only the shares issued (including the shares, if any, withheld for
tax withholding) upon vesting and payment of the Restricted Stock Units,
shall be counted.
In addition to shares of Common Stock actually issued pursuant to the
exercise of Stock 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
Alternate Appreciation Rights and Limited Rights shall have been exercised.
Shares tendered by a Participant as payment for shares issued upon exercise of a
Stock Option, shall be available for issuance under the Plan. Any shares of
Common Stock subject to a Stock Option, which for any reason is terminated
unexercised or expires shall again be available for issuance under the Plan, but
shares subject to a Stock Option which are not issued as a result of the
exercise of Alternate Appreciation Rights or 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.
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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. Except as provided in Section 3.10 hereof, and
unless otherwise determined by the Committee, each Stock Option granted under
the Plan shall become exercisable with respect to twenty-five percent (25%) of
the shares subject thereto on the first anniversary of the date of grant
thereof, and with respect to an additional twenty-five percent (25%) of such
shares on each of the second, third and fourth anniversaries of such date of
grant. Stock Options may be partially exercised from time to time within such
percentage limitations. Stock Options granted under the Plan shall be
exercisable during such period or periods as the Committee shall determine;
provided, however, that no Stock Option shall be exercisable more than ten (10)
years after the date of grant thereof.
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 previously owned Common Stock.
Notwithstanding the foregoing, if previously owned Common Stock is used in
payment of the Option Price, the Optionee may not use the shares received upon
such exercise to immediately satisfy the exercise price of additional Stock
Options.
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.
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 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.
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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 Alternate Appreciation Rights, if any, and Limited
Rights, if any, which is equal to the number of shares of Common Stock purchased
pursuant to said options.
ARTICLE IV
Alternate Appreciation Rights
4.1 Award of Alternate Appreciation Rights. Concurrently with or
subsequent to the award of any Stock 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 Stock Option in lieu of exercising the Stock Option.
4.2 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.
4.3 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
Stock 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 4.4 and 4.5 hereof. Alternate
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Stock 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.
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4.4 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 Stock Option related to said Alternate Appreciation
Right was granted.
4.5 Form of Payment. The number of shares to be paid shall be determined
by dividing the amount of payment determined pursuant to Section 4.4 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.
4.6 Effect of Exercise. The exercise of any Alternate Appreciation Rights
shall cancel an equal number of Stock Options and Limited Rights, if any,
related to said Alternate Appreciation Rights.
4.7 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.
4.8 Death of Optionee or Termination for Other Reasons. Except as
provided in Section 4.7, 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 V
Limited Rights
5.1 Award of Limited Rights. Concurrently with or subsequent to the award
of any Stock Option and Alternate Appreciation Rights, 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 Stock
Option, a related limited right permitting the Optionee, during a specified
limited time period, to be paid the appreciation on the Stock Option in lieu of
exercising the Stock Option ("Limited Right").
5.2 Limited Rights Agreement. Limited Rights granted under the Plan shall
be evidenced by written agreements in such form as the Committee may from time
to time determine.
5.3 Exercise Period. Limited Rights are immediately exercisable in full
upon grant for a period of up to seven (7) months following the date of a Change
in Control (the "Exercise Period").
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5.4 Amount of Payment. The amount of payment to which an Optionee shall
be entitled upon the exercise of each Limited Right shall be equal to 100% of
the amount, if any, which is equal to the difference between the Option Price of
the related Stock 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.
5.5 Form of Payment. Payment of the amount to which an Optionee is
entitled upon the exercise of Limited Rights, as determined pursuant to Section
5.4, shall be made solely in cash.
5.6 Effect of Exercise. If Limited Rights are exercised, the Stock
Options, if any, related to such Limited Rights cease to be exercisable to the
extent of the number of shares with respect to which the Limited Rights were
exercised. Upon the exercise or termination of the Stock Options, if any,
related to such Limited Rights, the Limited Rights granted with respect thereto
terminate to the extent of the number of shares as to which the related Stock
Options were exercised or terminated; provided, however, that with respect to
Stock Options that are terminated as a result of the termination of the
Optionee's employment status, the Limited Rights awarded in tandem therewith
shall not terminate and such Limited Rights shall remain exercisable during the
Exercise Period for any Optionee whose employment relationship with the Company
has been terminated as a result of any Qualifying Termination.
5.7 Retirement or Disability. Upon termination of the Optionee's
employment by reason of 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.
5.8 Death of Optionee or Termination for Other Reasons. Except as
provided in Sections 5.7 and 5.9 or except as otherwise determined by the
Committee, all Limited Rights granted under the Plan shall terminate upon the
termination of the Optionee's employment or upon the death of the Optionee.
5.9 Termination Related to a Change in Control. The requirement that an
Optionee be terminated by reason of retirement or permanent disability or be
employed by the Company at the time of exercise pursuant to Sections 5.7 and 5.8
respectively, is waived during the Exercise Period as to any Optionee whose
employment relationship with the Company has been terminated as a result of any
Qualifying Termination.
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ARTICLE VI
Restricted Stock Units
6.1 Award of Restricted Stock Units. The Committee may 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 rights to
receive shares of Common Stock which are subject to a risk of forfeiture by the
Participant ("Restricted Stock Units"). At the time it grants any Restricted
Stock Units, the Committee shall determine whether the payment of such
Restricted Stock Units shall be conditioned solely upon the Participant's
continued employment with the Company throughout the Restriction Period or upon
the attainment of certain performance targets.
6.2 Restricted Stock Unit Agreements. Restricted Stock Units granted
under the Plan shall be evidenced by written agreements in such form as the
Committee may from time to time determine.
6.3 Number of Restricted Stock Units. Upon making an award, the Committee
shall determine (and the Restricted Stock Unit Agreement shall state) the number
of Restricted Stock Units granted to the grantee. The initial number of
Restricted Stock Units granted may be adjusted by a performance factor, in
accordance with Section 6.8, to be applied at the conclusion of the Restriction
Period to determine the final number of Restricted Stock Units to be paid.
6.4 Length of Restriction Period. Upon making an award, the Committee
shall determine (and the Restricted Stock Unit Agreement shall state) the length
of the Restriction Period. Restriction Periods will normally be from three (3)
to five (5) years; however, the Committee may establish other time periods in
its sole discretion.
6.5 Dividend Equivalents. At the Committee's discretion, each holder of
Restricted 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 or she, on the record date for payment of such
dividend, been the holder of record of shares of Common Stock equal to the
number of Restricted Stock Units which had been awarded to such holder as of the
close of business on such record date. Payment of Dividend Equivalents is
expressly conditioned on continued employment with the Company at the time of
payment. Each such payment shall be made by the Company on the payment date of
the cash dividend in respect of which it is to be made, or as soon as
practicable thereafter.
6.6 Payment of Restricted Stock Units.
(a) Payment in respect of Restricted Stock Units conditioned solely
upon the Participant's continued employment with the Company throughout the
Restriction Period shall be made within ninety (90) days after the
Restriction Period for such Restricted Stock Units has ended;
(b) Payment in respect of Restricted Stock Units conditioned upon the
attainment of performance targets shall be made to the grantee thereof
within ninety (90) days after the Restriction Period for such Restricted
Stock Units has ended, but only to the extent the Committee determines that
the applicable performance targets have been met and subject to any
adjustment made to the number of Restricted Stock Units which shall be
paid, pursuant to Section 6.8(b) hereof.
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6.7 Form of Payment. Payment for Restricted Stock Units shall be made in
shares of Common Stock, except as provided in Section 6.11 hereof. The number
of shares paid shall be equal to the number of Restricted 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 Restricted 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.
6.8 Performance Targets.
(a) Upon the award of Restricted Stock Units, the Committee may
establish (and the Restricted Stock Unit Agreement shall state) the
performance targets to be attained within the Restriction Period as a
condition of such Restricted Stock Units being earned out. Performance
targets may be based entirely on each participant's business unit goals, or
partially on business unit goals and partially on corporate goals, or
entirely on corporate goals. Goals may include qualitative as well as
quantitative measures. Performance targets may be adjusted during the
Restriction Period, at the Committee's sole discretion, to reflect
extraordinary events beyond management's control;
(b) Attainment by the participant of performance targets in respect of
a Restriction Period will result in 100% of the Restricted Stock Units
being earned out. Attainment of performance below the performance targets
in respect of a Restriction Period shall result in a proportionate amount
of the value of the Restricted Stock Units (on a scale from 0 to 100%)
being earned out, as determined by the Committee.
6.9 Termination of Employment. Except as provided in Sections 6.10 and
6.11, or except as otherwise determined by the Committee, all Restricted Stock
Units granted to a Participant under the Plan shall terminate upon termination
of the Participant's employment with the Company prior to the end of the
Restriction Period applicable to such Restricted Stock Units, and in such event
the Participant shall not be entitled to receive any payment in respect thereof.
6.10 Death, Disability or Retirement. In the event that the employment of
a Participant who has been granted Restricted Stock Units under the Plan shall
terminate during a Restriction Period by reason of death, Disability (as
determined by the Committee), or retirement, such Participant shall be entitled,
in the sole discretion of the Committee, to receive upon the expiration of the
Restriction Period payment in respect of said Restricted Stock Units; provided,
however, that such Restricted Stock Units shall be adjusted by multiplying the
amount thereof by a fraction, the numerator of which shall be the number of full
and partial calendar months between the date of award of the Restricted Stock
Units and the date that employment terminated, and the denominator of which
shall be the number of full and partial calendar months from the date of award
to the end of the Restriction Period.
6.11 Change in Control. In the event of a Change in Control, all the
Participant's outstanding Restricted Stock Units shall be payable to the
Participant in cash or stock, as follows:
(a) 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 total number of Restricted Stock Units
granted to such Participant; or
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(b) 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 Restricted Stock Units outstanding
multiplied by the Market Price as defined in Section 5.4. Such amount will
be reduced by the applicable federal, state and local withholding taxes
due.
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 "RSU Payout Date"), regardless of whether the applicable
Restriction Period has expired or whether performance targets have been met.
There will be no adjustment for any performance factors described in Section
6.8.
On or before the RSU 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 related accrued Dividend Equivalents immediately preceding the Change in
Control. Payout of Restricted Stock Units and the related Dividend Equivalents
shall be made to each Participant:
(c) who is employed by the Company on the RSU Payout Date; or
(d) whose employment relationship with the Company is terminated:
(1) as a result of any Qualifying Termination prior to the RSU
Payout Date; or
(2) as a result of death or Disability following the occurrence
of any Change in Control but prior to the RSU 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.
ARTICLE VII
Miscellaneous
7.1 General Restriction. Each award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that:
(a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or Federal law; or
(b) the consent or approval of any government regulatory body, or
(c) an agreement by the recipient of an award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such award or the
issue or purchase of shares of Common Stock thereunder, 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.
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7.2 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 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.
7.3 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. During the life of the recipient, such award shall be
exercisable only by such person or by such person's guardian or legal
representative.
7.4 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.
7.5 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.
7.6 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.
7.7 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 (i) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan and (ii) the impact, if
any, of any such leave of absence on awards under the Plan theretofore made to
any recipient who takes such leaves of absence.
7.8 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.
7.9 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
Stock Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the number of Restricted Stock Units
theretofore awarded under the Plan and any and all other matters deemed
appropriate by the Committee.
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7.10 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 award levels established in Section 2.7,
including the maximum number of shares of Common Stock which may be
issued under the Plan (other than increases pursuant to Section 7.9);
(2) extend the term during which any Stock Option may be
exercised beyond ten (10) years from the date of grant; or
(3) extend the term of the Plan, except that the Board may extend
the period during which awards may be made in accordance with Section
2.3.
The termination or any modification or amendment of the Plan, except as
provided in Section 7.10(a) above, shall not without the consent of a
Participant, affect the Participant's rights under an award previously granted.
7.11 Withholding Taxes. Whenever the Company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Company shall have
the right to require the grantee to remit to the Company an amount sufficient to
satisfy any Federal, state and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. Whenever under
the Plan payments are to be made in cash, such payments shall be net of an
amount sufficient to satisfy any Federal, state and/or local withholding tax
requirements.