Exhibit 10.4
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DIRECTORS' DEFERRED COMPENSATION PLAN
Amended and restated as of October 2, 1997
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ARTICLE I
Definitions
As used in this Plan, the following terms shall have the meanings herein
specified:
1.1 Cash Unit - shall mean the entry in a Deferred Compensation Account of
a credit equal to One Dollar ($1.00).
1.2 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 results in such entity,
person or Group directly or indirectly owning beneficially more than twenty
percent (20%) of the outstanding voting shares of Sun Company, Inc.
1.3 Committee - shall mean the Governance Committee of the Board of
Directors of Sun Company, Inc.
1.4 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.
1.5 Compensation - shall mean those fees and retainers payable by the
Company to a Director in consideration for his or her service as a Director.
1.6 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.
1.7 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.;
(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.
1.8 Deferred Compensation Account - shall mean, with respect to any
Participant, the total amount of the Company's liability for payment of
voluntary deferred compensation to the Participant under this Plan, including
any accumulated interest and/or Dividend Equivalents.
1.9 Director - shall mean a member of the Board of Directors of Sun
Company, Inc.
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1.10 Dividend Equivalent - shall mean the entry in a Deferred Compensation
Account or a Restricted Deferred Compensation Account of a dividend credit with
respect to a Share Unit, each Dividend Equivalent being equal to the dividend
paid from time to time on a Share.
1.11 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.
1.12 Interest Equivalent - shall mean the entry in a Deferred Compensation
Account of an interest credit with respect to a Cash Unit, the interest factor
being equal to the interest rate for ten-year U.S. Treasury Notes as of December
31 of the preceding year, to be compounded on the basis of the balance in the
Participant's Deferred Compensation Account.
1.13 Participant - shall mean a Director who has elected to defer the
receipt of compensation or a Director who is required to defer the receipt of
the Restricted Share Units in accordance with the terms of this Plan.
1.14 Plan - shall mean this Directors' Deferred Compensation Plan, as it
may be amended from time to time.
1.15 Restricted Deferred Compensation Account - shall mean, with respect to
any Participant, the total amount of the Company's liability for payment of
Restricted Share Units to the Participant under this Plan.
1.16 Restricted Share Unit - shall mean the entry in a Restricted Deferred
Compensation Account of a credit equal to one Share that will be restricted
until death, retirement or termination of Board service.
1.17 Share - shall mean a share of the Company's authorized voting Common
Stock ($1.00 par value per share) and any share or shares of stock of the
Company hereafter issued or issuable in substitution or exchange for each such
share, except for the Company's Series A Preference Stock.
1.18 Share Unit - shall mean the entry in a Deferred Compensation Account
of a credit equal to one Share.
ARTICLE II
Voluntary Deferral of Directors' Compensation
2.1 Election to Defer. A Director may elect to defer all or a portion of
his or her Compensation by filing a written election with the Committee on forms
prescribed by the Committee. Such election must include the following:
(a) percentage of Compensation to be deferred;
(b) the form of deferral, being either Cash Units, Share Units, or a
combination of the two and the percentage allocations of such;
(c) a designation of beneficiary as set forth in Article V; and
(d) an irrevocable election of a method of payment as set forth in
Article III.
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Except as otherwise determined by the Committee in its sole discretion, any
such election shall apply only to Compensation to be earned on or after the
first day of the quarter following the calendar quarter in which the election is
received by the Committee. Such election shall continue, and be effective,
until revoked.
2.2 Amount of Deferral. The amount of Compensation to be deferred shall be
designated by the Participant as a percentage of the Director's Compensation in
multiples of five percent (5%) but shall not be less than ten percent (10%).
Effective with the first quarter 1992, from time to time, but not more than once
in any one quarter, a Participant may designate the portion of fees to be
deferred and the fractions of such Compensation to be allocated to Share Units
and Cash Units. Such a designation shall not apply to any previously credited
balance in the Participant's Deferred Compensation Account, but is only
applicable to Compensation to be earned on or after the first day of the quarter
following the calendar quarter in which the designation request is received by
the Committee.
2.3 Time of Election. Except as otherwise determined by the Committee in
its sole discretion, an election to defer must be filed and received by the
Committee by the end of the quarter preceding the quarter in which the
Compensation is to be earned. A new Director may also elect to defer
Compensation prior to the commencement of his or her term in office. Any
election by a Participant with respect to Compensation to be earned in a given
quarter will not preclude a different action with respect to Compensation to be
earned in subsequent quarters, consistent with the provisions of this Article II
with respect to the giving of notice of deferral election.
ARTICLE III
Voluntary Deferred Compensation Accounts
3.1 Creation of Voluntary Deferred Compensation Accounts. Compensation
deferred hereunder shall be credited to a Deferred Compensation Account
established by the Company for each Participant. The Participant must elect to
convert the deferred compensation to either Cash Units or Share Units, which
shall be credited to a Participant's Deferred Compensation Account as set forth
in the Plan.
3.2 Crediting Share Units. Share Units shall be credited to a
Participant's Deferred Compensation Account at the time the Compensation would
otherwise have been paid had no election to defer been made. The number of
Share Units to be credited to the Deferred Compensation Account shall be
determined by dividing the Compensation by the average closing price for Shares
as reported on the New York Stock Exchange-Composite Transactions for the ten
(10) day period prior to the day on which the Compensation would otherwise have
been paid. Any fractional Share Units shall also be credited to a Participant's
Deferred Compensation Account. The number of Share Units in a Deferred
Compensation Account shall be appropriately adjusted by the Committee in the
event of changes in the Company's outstanding common stock by reason of a stock
dividend or distribution, recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like, and such adjustments shall be
conclusive. Share Units shall not entitle any person to the rights of a
stockholder.
3.3 Crediting Cash Units. Cash Units shall be credited to a Participant's
Deferred Compensation Account at the time Compensation would otherwise have been
paid had no election to defer been made.
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3.4 Crediting Dividend Equivalents. For Share Units, the Company shall
credit the Participant's Deferred Compensation Account with Dividend Equivalents
being equal to the dividends declared on the Company's Shares. The crediting
shall occur as of the date on which said dividends are paid. The number of
Share Units to be credited to the Deferred Compensation Account shall be
calculated by dividing the Dividend Equivalents by the average closing price for
Shares as reported on the New York Stock Exchange-Composite Transactions for the
period of ten (10) trading days prior to the day on which the dividends are paid
on the Company's Shares. Any fractional Share Units shall also be credited to a
Participant's Deferred Compensation Account.
3.5 Crediting Interest Equivalents. For Cash Units credited to their
Deferred Compensation Accounts, the Company shall credit the Participant's
Deferred Compensation Account on a quarterly basis with an Interest Equivalent.
3.6 Share Unit Conversion. Immediately upon termination of Board service,
and so prior to the commencement of any payout or distribution of any amounts
hereunder, a Participant may make a one-time election to convert to Cash Units
all or a portion of the balance of Share Units in such Participant's Deferred
Compensation Account. Any Share Units so converted to Cash Units as a result of
this one-time conversion election shall be valued at the average closing price
for Shares as reported on the New York Stock Exchange - Composite Transactions
for the ten (10) day period immediately prior to such one-time conversion
election.
3.7 Time of Payment. Except as provided in Article VII hereof, all
payments of a Participant's Deferred Compensation Account shall be made at, or
shall commence on, the date selected by the Participant in accordance with the
terms of this Article III. The date of payment or distribution must be
irrevocably specified by the Participant in his or her written notice of
election. The Participant may elect to defer the receipt of his or her
Compensation to:
(a) the first day of any calendar year, provided such date is at least
six (6) months after the end of the quarter in which the Compensation is
earned; or
(b) the first day of the year following the date of:
(1) retirement as a Director;
(2) termination of Board membership; or
(3) death. Upon the death of a Director or former Director,
prior to the final payment of all amounts credited to his or her
Deferred Compensation Account, the balance of the Deferred
Compensation Account shall be paid in accordance with Article V,
commencing on the first day of the calendar year following the year of
death.
Notwithstanding the foregoing provisions of this Section 3.7, and except as
provided in Article VII, in no event shall any payment or distribution be made
within six (6) months of the Compensation being earned or awarded. The benefit
commencement date may not be later than the third calendar year following the
attainment of mandatory retirement age for Directors.
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3.8 Method of Payment. A Participant in this portion of the Deferred
Compensation Plan shall have the option of:
(a) selecting a lump-sum payment;
(b) selecting a series of approximately equivalent annual installments
(adjusted as necessary to reflect Dividend Equivalents and/or Interest
Equivalents accrued during the installment payout period) in such number of
installments as the Participant shall specify (not exceeding ten (10)
installments); or
(c) not selecting a method of payment at the time the Form for
Deferred Payment Election/Designation of Beneficiary is prepared. If the
Participant does not select a method of payment, he or she must, at least
twelve months prior to the time the deferral amount is scheduled to be
paid, notify the Corporate Secretary as to the specific method of payment
which will be either in a lump sum or in approximately equivalent annual
installments, and such election shall be subject to the consent of the
Committee. Failure to provide appropriate notification to the Corporate
Secretary will result in a lump sum payment on the deferral payment date.
Participant shall receive in cash all deferred compensation credited to
such Participant's Deferred Compensation Account. Share Units credited to the
Participant's Deferred Compensation Account shall be valued at the average
closing price for Shares as reported on the New York Stock Exchange-Composite
Transactions for the ten (10) day period prior to each new calendar year.
ARTICLE IV
Restricted Deferred Compensation Accounts
4.1 Creation of Restricted Deferred Compensation Accounts. Compensation
deferred under this Article IV shall be credited to a Restricted Deferred
Compensation Account established by the Company for each Participant. The
Restricted Deferred Compensation Accounts will be initialized as of February 15,
1996 by transferring to the Plan the present value of the accrued benefits of
each Participant in the Non-Employee Directors' Retirement Plan. The present
value of these accrued benefits will then be converted into Restricted Share
Units. The number of Restricted Share Units to be credited to the Restricted
Deferred Compensation Account of each Participant will be determined by using
the average closing price for Shares as reported on the New York Stock Exchange-
Composite Transactions for the ten (10) business days prior to February 15,
1996. Payout of these Restricted Share Units shall not commence until death,
retirement or the termination of Board service.
4.2 Crediting Share Units. If the Committee elects to do so, each year in
conjunction with either the Participant's election or re-election to the Board,
a yearly dollar amount ("Yearly Credit") will be credited to a Participant's
Restricted Deferred Compensation Account in the form of Restricted Share Units.
The number of Restricted Share Units credited to a Participant's Restricted
Deferred Compensation Account shall be determined by dividing the Yearly Credit
by the average closing price for Shares as reported on the New York Stock
Exchange-Composite Transactions for the ten (10) day period prior to the
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Company's annual meeting. Any fractional Restricted Share Units shall also be
credited to a Participant's Restricted Deferred Compensation Account. The
number of Restricted Share Units in a Restricted Deferred Compensation Account
shall be appropriately adjusted by the Committee in the event of changes in the
Company's outstanding common stock by reason of a stock dividend or
distribution, recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like, and such adjustments shall be conclusive.
Restricted Share Units shall not entitle any person to the rights of a
stockholder.
4.3 Crediting Dividend Equivalents. The Company shall credit the
Participant's Restricted Deferred Compensation Account with Dividend Equivalents
being equal to the dividends declared on the Company's Shares. The crediting
shall occur as of the date on which said dividends are paid. The number of
Restricted Share Units to be credited to the Restricted Deferred Compensation
Account shall be calculated by dividing the Dividend Equivalents by the average
closing price for Shares as reported on the New York Stock Exchange-Composite
Transactions for the period of ten (10) trading days prior to the day on which
the dividends are paid on the Company's Shares. Any fractional Restricted Share
Units shall also be credited to a Participant's Restricted Deferred Compensation
Account.
4.4 Restricted Share Unit Conversion. Immediately upon termination of
Board service, and so prior to the commencement of any payout or distribution of
any amounts hereunder, a Participant may make a one-time election to convert to
Cash Units all or a portion of the balance of Restricted Share Units in such
Participant's Restricted Deferred Compensation Account. Any Restricted Share
Units so converted to Cash Units as a result of this one-time conversion
election shall be valued at the average closing price for Shares as reported on
the New York Stock Exchange - Composite Transactions for the ten (10) day period
immediately prior to such one-time conversion election.
4.5 Time of Payment. All payments of a Participant's Restricted Deferred
Compensation Account shall be made at, or shall commence on, the date selected
by the Participant in accordance with the terms of this Article IV. The date of
payment or distribution must be specified by the Director in his or her written
Form of Continuing Deferral unless such election is revoked. A Participant's
revocation must be submitted to the Corporate Secretary in writing. If the
Participant selects a new election with regard to the date of payment or
distribution, such election will apply only prospectively to any additional
Restricted Share Units to be credited to a Director's Restricted Deferred
Compensation Account. If the Participant fails to designate a time of payment,
payment shall commence on the first day of the calendar year following
termination of Board service. The Participant may elect to defer the receipt of
his or her Compensation to the first day of the year following the date of:
(a) retirement as a Director;
(b) termination of Board service; or
(c) death. Upon the death of a Director or former Director, prior to
the final payment of all amounts credited to his or her Account, the
balance of the Restricted Deferred Compensation Account shall be paid in
accordance with Article V, commencing on the first day of the calendar year
following the year of death.
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Notwithstanding the foregoing provisions of this Section 4.4, in no event,
however, shall any payment or distribution be made within the six (6) months of
the Compensation being earned. The benefit commencement date may not be later
than the third calendar year following the attainment of mandatory retirement
age for Participants.
4.6 Method of Payment. Participant shall have the option of:
(a) selecting a lump sum payment;
(b) selecting a series of approximately equivalent annual installments
(adjusted as necessary to reflect Dividend Equivalents and/or Interest
Equivalents accrued during the installment payout period) in such number of
installments as the Participant shall specify (not exceeding ten (10)
installments); or
(c) not selecting a method of payment at the time the Form for
Continuing Deferral is prepared. If the Participant does not select a
method of payment, he or she must, at least twelve months prior to the time
the deferral amount is scheduled to be paid, notify the Corporate Secretary
as to the specific method of payment which will be either in a lump sum or
in approximately equivalent annual installments, and such election shall be
subject to the consent of the Committee. Failure to provide appropriate
notification to the Corporate Secretary will result in a lump sum payment
on the deferral payment date.
Share Units credited to the Participant's Restricted Deferred Compensation
Account shall be valued at the average closing price for Shares as reported on
the New York Stock Exchange-Composite Transactions for the ten (10) day period
prior to each new calendar year.
ARTICLE V
Designation of Beneficiaries
The Participant shall name a beneficiary and a contingent beneficiary to
receive any payments due him or her at the time of his or her death, with the
right to change such beneficiary at any time. In case of a failure of
designation or the death of the designated beneficiary with a designated
successor, distribution shall be made to the estate of the Participant. No
designation of beneficiaries shall be valid unless in writing signed by the
Participant, dated and filed with the Committee. Upon the Participant's death,
any balance in the Participant's Deferred Compensation Account and Restricted
Deferred Compensation Account is payable under the method and form elected by
the Participant.
ARTICLE VI
Source of Payments
All payments of deferred compensation shall be paid in cash from the
general funds of the Company and the Company shall be under no obligation to
segregate any assets in connection with the maintenance of a Deferred
Compensation Account or Restricted Deferred Compensation Account, nor shall
anything contained in this Plan nor any action taken pursuant to the Plan create
or be construed to create a trust of any kind, or a fiduciary relationship
between the Company and Participant. Title to the beneficial ownership of any
assets, whether cash or investments, which the Company may designate to pay the
amount credited to the Deferred Compensation Account or a Restricted Deferred
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Compensation Account shall at all times remain in the Company and Participant
shall not have any property interest whatsoever in any specific assets of the
Company. Participant's interest in the Deferred Compensation Account or a
Restricted Deferred Compensation Account shall be limited to the right to
receive payments pursuant to the terms of this Plan and such rights to receive
shall be no greater than the right of any other unsecured general creditor of
the Company.
ARTICLE VII
Change in Control
7.1 Acceleration of Payment Upon Change in Control. The terms of this
Section 7.1 shall immediately become operative, without further action or
consent by any person or entity, upon a Change in Control, and once operative
shall supersede and control over any other provisions of this Plan. Upon the
occurrence of a Change in Control, and for twelve (12) months thereafter, each
Participant, whether or not he or she is still a Director, shall have the right
to withdraw, in a single lump-sum cash payment, an amount equal to ninety-five
percent (95%) of the balance of each of his or her Deferred Compensation Account
and Restricted Deferred Compensation Account, as of the valuation date
immediately preceding the date of withdrawal; provided, however, that if this
option is exercised, such Participant will forfeit to the Company the remaining
five percent (5%) of the balance of each such account (as of the valuation date
immediately preceding the date of withdrawal) from which the funds are withdrawn
as a penalty. Payments under this Section 7.1 shall be made as soon as
practicable, but no later than thirty (30) days after the Participant notifies
the Committee in writing that he/she is exercising his/her right to withdraw
pursuant to this Section 7.1.
7.2 Amendment on or after Change in Control. On or after a Change in
Control, no action, including by way of example and not of limitation, the
amendment, suspension or termination of the Plan, shall be taken which would
affect the rights of any Participant or the operation of this Plan with respect
to the balance in the Participant's Accounts.
7.3 Attorney's Fees. The Company shall pay all legal fees and related
expenses incurred by a Participant in seeking to obtain or enforce any payment,
benefit or right such Participant may be entitled to under the plan after a
Change in Control. The Participant shall reimburse the Company for such fees
and expenses at such time as a court of competent jurisdiction, or another
independent third party having similar authority, determines that the
Participant's claim was frivolously brought without reasonable expectation of
success on the merits thereof.
ARTICLE VIII
Nonalienation of Benefits
Participant shall not have the right to sell, assign, transfer or otherwise
convey or encumber in whole or in part the right to receive any payment under
this Plan except in accordance with Article V.
ARTICLE IX
Acceptance of Terms
The terms and conditions of this Plan shall be binding upon the heirs,
beneficiaries and other successors in interest of Participant to the same extent
that said terms and conditions are binding upon the Participant.
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ARTICLE X
Administration of the Plan
The Plan shall be administered by the Committee which may make such rules
and regulations and establish such procedures for the administration of this
Plan as it deems appropriate. In the event of any dispute or disagreements as
to the interpretation of this Plan or of any rule, regulation or procedure or as
to any questioned right or obligation arising from or related to this Plan, the
decision of the Committee shall be final and binding upon all persons.
ARTICLE XI
Termination and Amendment
The Plan may be terminated at any time by the Board of Directors of Sun
Company, Inc. and may be amended at any time by the Committee provided, however,
that no such amendment or termination shall adversely affect the rights of
Participants or their beneficiaries with respect to amounts credited to Deferred
Compensation Accounts or Restricted Deferred Compensation Accounts prior to such
amendment or termination, without the written consent of the Participant.
ARTICLE XII
Construction
In the case any one or more of the provisions contained in this Plan shall
be invalid, illegal or unenforceable in any respect the remaining provisions
shall be construed in order to effectuate the purposes hereof and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
ARTICLE XIII
Governing Law
This Plan shall be construed in accordance with and governed by the laws of
the Commonwealth of Pennsylvania.