TOOTSIE ROLL INDUSTRIES, INC.
CAREER ACHIEVEMENT PLAN
(As Amended and Restated Effective as of March 30, 1999)
1. PURPOSE. The purpose of the Career Achievement Plan (the "Plan")
of Tootsie Roll Industries, Inc. (the "Company") is to promote the financial
interests and growth of the Company by increasing motivation on the part of
its senior officers and key employees by creating an incentive for them to
remain in the long term employ of the Company and to work to the best of
their abilities for the achievement of the Company's strategic growth
objectives.
2. PARTICIPATION. Participation in the Plan will be limited to those
senior officers and other key employees of the Company as the Board of
Directors (the "Board") in its sole discretion shall designate from time to
time to be eligible to receive Career Achievement Awards hereunder. The Board
may, in its sole discretion, delegate to the Administrative Committee (as
defined in Section 8) the power to designate those key employees of the
Company who shall be selected for participation in this Plan, provided that
the Board reserves the sole right to determine participation with respect to
any key employee of the Company who is required to comply with the
requirements of Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
3. CAREER ACHIEVEMENT AWARDS. As of the date determined by the Board
for any calendar year during the term of the Plan, the Board may, but shall
not be required to, grant an award to any or all of the participants of the
Plan. Each such award (a "Career
Achievement Award") shall be for a fixed dollar amount, and shall be
calculated based on such formulas or other criteria as may be established by
the Board in its sole discretion. Each Career Achievement Award shall be
communicated in a written notice to the affected participant setting forth
the amount thereof. Such notice shall be provided to the participant as soon
as practicable after the amount of the Career Achievement Award has been
determined by the Board. Except as otherwise provided in Section 5 hereof,
once an award has been communicated to a participant pursuant to this Section
3, such award may not be canceled, reduced or diminished in any manner
without the written consent of the participant. The Board may, in its sole
discretion, delegate to the Administrative Committee its powers and duties
under this Section 3 with respect to any participant herein other than a
participant who is required to comply with the requirements of Section 16 of
the Exchange Act.
4. CAREER ACHIEVEMENT ACCOUNT.
(a) ESTABLISHMENT OF ACCOUNTS. There shall be established
on the books of the Company a Career Achievement Account in the name of each
participant in the Plan. Career Achievement Awards made under the Plan shall
be credited to a participant's Career Achievement Account as of the January
1st specified in the written notice of the award delivered to the
participant. Each participant's Career Achievement Account shall consist of
the aggregate amount of such Career Achievement Awards credited thereto, and
earnings and losses on such amounts determined in the manner prescribed by
Section 4(b). Nothing contained in this Section 4 shall require the Company
to invest any assets of the Company in
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any particular investment vehicle, or to set aside any assets to provide for
the payment of benefits hereunder.
(b) CAREER ACHIEVEMENT ACCOUNT EARNINGS AND LOSSES. (1)
DEEMED INVESTMENT OF ACCOUNT. For bookkeeping purposes only, each participant
may from time to time direct that the balance of his or her Career
Achievement Account be deemed to be invested in certain investment
alternatives described in Section 4(b)(2). Each such direction made by the
participant shall be effective until a new direction is filed by him or her
with the Company. If the participant fails to direct the manner in which any
portion of his or her Career Achievement Account is deemed to be invested,
the balance credited to such account shall be deemed to be invested in any
investment alternative designated by the Board in its sole discretion. The
Board shall prescribe rules governing a participant's deemed investment
direction of his or her Career Achievement Account hereunder, including, but
not limited to, the time and manner pursuant to which a participant may
provide deemed investment directions to the Company, and the frequency at
which a participant may make changes with respect to such investment
directions as they relate to the existing balance of his or her Career
Achievement Account as well as to future Career Achievement Awards. Although
the Company might actually invest assets of the Company according to a
participant's investment directions, it is not required to do so nor to set
aside an amount equal to all or any portion of a Participant's Career
Achievement Account. The balance in the participant's Career Achievement
Account shall be increased by gains or decreased by losses that would be
realized
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or paid by the Company as if assets of the Company in an amount equal to such
balance were actually invested in the investment alternatives specified by the
participant.
(2) INVESTMENT ALTERNATIVES. The Company shall make available
a number of investment alternatives for purposes of determining the deemed
earnings to be credited and the deemed losses to be debited to a participant's
Career Achievement Account under Section 4(b)(1). Such investment alternatives
shall be designated from time to time by the Board, including, but not limited
to, (i) for periods prior to a participant's termination of employment, an
investment alternative the performance of which is based on the yield of the
Moody's Seasoned Bond Index, (ii) for periods after a participant's termination
of employment, an investment alternative the performance of which is based on
the yield on five-year United States Treasury Notes and (iii) for all periods
hereunder, investment alternatives the performance of which is based on publicly
traded mutual funds. The Company also may make available for all periods
hereunder an investment alternative the performance of which is based on the
price of the Company's common stock (referred to herein as the "Company Stock
Alternative"). Each participant's proportional interest in the Company Stock
Alternative shall be represented by units of participation, each of which shall
be equivalent to one share of common stock of the Company. The Board shall
prescribe rules relating to the deemed investment of a participant's Career
Achievement Account among the available investment alternatives, including, but
not limited to, a maximum limitation on the amount that a participant can direct
to be deemed invested in any particular investment alternative, restrictions on
a participant's ability to direct a deemed transfer from any particular
investment
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alternative to another, and the manner in which any deemed cash dividends that
are paid with respect to a participant's units of participation in the Company
Stock Alternative shall deemed to be invested.
(3) DELEGATION OF POWERS. The Board may, in its sole
discretion, delegate to the Administrative Committee its powers and duties under
this Section 4(b).
5. PAYMENT OF CAREER ACHIEVEMENT ACCOUNT UPON TERMINATION OF
EMPLOYMENT. A participant's Career Achievement Account shall be paid to the
participant, shall be paid to the participant's designated beneficiary in the
event of the participant's death, or shall be forfeited, depending upon the time
and circumstances of the participant's termination of employment, as provided
below:
(a) TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT, DEATH
OR DISABILITY. Subject to Sections 5(c), 5(d), 5(e) and 5(f) hereof, if a
participant's employment with the Company terminates other than as a result of
the participant's retirement, death or permanent disability, the participant
shall be entitled to receive, on the "date of distribution", a lump sum payment
equal to the "vested" portion of the participant's Career Achievement Account as
of the date of termination of employment (as such "vested" portion is determined
below), plus any earnings credited, and minus any losses debited, to the
participant's account under Section 4(b)(2) following such date of termination
of employment. For purposes of this Section 5(a), the "date of distribution"
means the later of (i) the first anniversary of the date of
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the participant's termination of employment or (ii) sixty (60) days after the
earlier of the participant's 65th birthday or his or her death. The portion of a
participant's Career Achievement Account which has not "vested" as of the date
of the participant's termination of employment shall be forfeited, and the
participant shall not be entitled to any payment of such forfeited amount or any
earnings or losses thereon.
The "vested" portion of a participant's Career Achievement
Account as of the date of termination shall equal the aggregate of the "vested"
portions of each Career Achievement Award previously granted to the participant.
The"vested" portion of each Career Achievement Award shall be separately
determined and shall equal the product of the Career Achievement Award (plus any
earnings previously credited, and minus any losses previously debited, to the
participant's account with respect to such Career Achievement Award under
Section 4(b) hereof) multiplied by the Vested Percentage of such award. The
Vested Percentage of a Career Achievement Award shall be determined according to
the number of the participant's consecutive full calendar years of employment
with the Company beginning with the calendar year in which such award was
credited to the participant's Career Achievement Account and ending with the
calendar year immediately prior to the year in which termination occurs,
pursuant to the following table:
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Years of Continuous Vested
Employment Percentage
------------------- ----------
1 20%
2 40%
3 60%
4 80%
5 or more 100%
For purposes of this Section 5(a), if a participant first becomes an employee of
the Company during the calendar year in which a Career Achievement Award is
credited to such participant's account, such year shall count as a full calendar
year of employment.
(b) TERMINATION OF EMPLOYMENT BY REASON OF RETIREMENT, DEATH
OR DISABILITY. Subject to Sections 5(d), 5(e) and 5(f) hereof, if a
participant's employment with the Company terminates by reason of the
participant's retirement, death or permanent disability, the Company shall pay
to the participant or the beneficiary designated by the participant pursuant to
Section 9(a) hereof, as the case may be, a lump sum amount equal to the full
balance of the participant's Career Achievement Account as of the date of
termination, plus any earnings credited, and minus any losses debited, to the
participant's account under Section 4(b)(2) following such termination of
employment. Such payment shall be made not later than sixty (60) days after the
date of the participant's termination of employment. For purposes of this Plan,
(i) a participant shall be considered to have retired if the participant's
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employment with the Company terminates on or after the participant's 65th
birthday and (ii) a participant shall be deemed to be permanently disabled if
such participant is unable to perform his or her stated duties with the Company
by reason of illness, accident or other incapacity and is not engaged in any
occupation or employment for wage or profit for which he or she is reasonably
qualified by education, training or experience, provided however, that in the
event the Company maintains a long-term disability plan in which the participant
is entitled to receive benefits, the participant shall be deemed to be
permanently disabled when he or she suffers a physical illness, injury or other
impairment in respect to which the participant is entitled to receive benefits
under such long-term disability plan.
(c) TERMINATION OF EMPLOYMENT FOR CAUSE. Notwithstanding any
provision of this Plan to the contrary, if the Board, in its sole discretion,
shall determine that the participant's employment with the Company was
terminated for "cause" (as defined below), the participant's Career Achievement
Account shall be forfeited in its entirety, and the participant shall not be
entitled to any payments under this Plan. For purposes of this Plan, "cause"
shall mean any act or conduct by a participant that consists of or constitutes
fraud, theft, dishonesty, alcohol or drug use on the job, willful injury to or
destruction of the Company's property or property of any person dealing with the
Company, any act or conduct injurious to the goodwill of the Company or its
relations with its customers or any other person dealing with the Company or
derogatory of any of the Company's methods or products, any violation of the
duty imposed upon employees by contract or by law in their relationship with
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the Company, or engaging in any activities described in Section 7(1), 7(2), 7(3)
or 7(4) hereof.
(d) ELECTION OF ALTERNATIVE PAYMENT OPTION. Notwithstanding
Sections 5(a) and 5(b), a Participant may elect to receive payment of the
balance of his or her Career Achievement Account in the form of annual
installment payments in lieu of a lump sum distribution. The participant may
elect that such installment payments be made over any whole number of years not
less than two nor more than ten. The first such installment payment shall be
made at the same time as the lump sum payment described in Section 5(a) or 5(b),
as the case may be, would have been made. The amount of each installment payment
shall be equal to the balance of the Participant's Career Achievement Account
determined as near as practicable to the date of payment, divided by the number
of annual installment payments remaining to be made. For the period during which
such installment payments are being made until the date as near as practicable
to the date on which the final installment payment is made, a participant's
remaining Career Achievement Account shall continue to be adjusted for earnings
and losses pursuant to Section 4(b) hereof.
A participant may change his or her distribution election
under this Section 5(d) from time to time. The failure to elect the annual
installment payment option, or the revocation of an installment payment option,
shall be treated as a deemed election to receive payment in the form of a lump
sum. Notwithstanding any provision contained herein to the contrary, no election
of an annual installment payment option, change of any such installment
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payment option, or revocation of an installment payment option shall be
effective if it is made during the one-year period ending on the date of the
participant's termination of employment on account of retirement or otherwise.
Notwithstanding any provision contained herein to the
contrary, payment to a participant's beneficiary in the event of the
participant's death shall be made only in the form of a lump sum payment. In the
case of a participant who had commenced receiving installment payments prior to
the date of his or her death, such lump sum payment shall be equal to the
remaining balance of the participant's Career Achievement Account, and shall be
paid as soon as administratively practicable after the date of the participant's
death.
(e) FORFEITURE OF CAREER ACHIEVEMENT ACCOUNT. Notwithstanding
any provision of this Plan to the contrary, a participant will forfeit all
rights to any amounts previously credited to his or her Career Achievement
Account if, after the termination of the participant's employment, the
participant engages in any activities in violation of Section 7 hereof or fails
to enter into the agreement described in Section 7 hereof as provided in such
Section 7.
(f) FURTHER DEFERRAL. To the extent determined by the Board in
its sole discretion, the Board shall have the authority (i) to delay any
payments otherwise due under this Plan to the extent necessary to avoid a
limitation on the deductibility of compensation paid to a participant pursuant
to Section 162(m) of the Internal Revenue Code of 1986, or any
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successor provision, and (ii) to take such action as it shall deem appropriate
to specifically approve or delay any payments otherwise due under this Plan to a
participant who is subject to Section 16 of the Exchange Act in order to enable
such participant to comply with such Section 16. To the extent any payments
under this Plan are deferred under this Section 5(f), such amounts shall
continue to be adjusted for earnings and losses pursuant to Section 4(b) hereof,
and shall be paid at such time or from time to time to the extent such payments
would not cause or increase a limitation on deductibility under such Section
162(m), or would not result in a participant subject to Section 16 of the
Exchange Act failing to comply with such Section 16, as the case may be.
6. IMMEDIATE DISTRIBUTION OF CAREER ACHIEVEMENT ACCOUNTS UPON CHANGE OF
CONTROL OF THE COMPANY. Notwithstanding any provision of this Plan to the
contrary, and provided that the participant enters into the agreement described
in Section 7 hereof as provided in such Section 7, the Company shall pay the
entire balance of a participant's Career Achievement Account to such participant
in a lump sum payment within three business days after the occurrence of a
"change of control" of the Company. A "change of control" of the Company shall
occur when: (1) any person, including a "group," as described in Section
13(d)(3) of the Exchange Act, acquires after the effective date of this Plan the
beneficial ownership of, and the right to vote, shares having the right to cast
at least twenty percent (20%) of the votes permitted to be cast in any election
of members to the Board; or (2) as the result of any tender or exchange offer,
substantial purchase of the Company's equity securities, merger, consolidation,
sale of assets or contested election, or any combination of the foregoing
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transactions, the persons who were directors of the Company immediately prior to
such transaction or transactions do not constitute a majority of the Board (or
of the board of directors of any successor to or assignee of the Company)
immediately after the next meeting of stockholders of the Company (or any
successor or assignee) following such transaction; except that no event
described in clause (1) or (2) above shall constitute a "change of control" if
immediately after such event Melvin J. Gordon, Ellen R. Gordon, their
descendants (and spouses of such descendants) and any trusts or estates in which
such persons have an interest own, directly or indirectly, shares having the
right to cast at least fifty percent (50%) of the votes permitted to be cast in
any election of members of the Board.
7. NONCOMPETITION. As a condition to the payment of any portion of the
participant's Career Achievement Account following a change of control of the
Company pursuant to Section 6 or upon the participant's termination of
employment with the Company pursuant to Section 5 (other than by reason of the
participant's death), the participant shall be required to enter into an
agreement with the Company which provides that, for the period commencing on the
effective date of the change of control of the Company or the effective date of
the participant's termination of employment with the Company, as the case may
be, and ending on the first anniversary of the participant's termination of
employment with the Company, the participant will not:
(1) directly or indirectly engage in, own, manage, operate,
participate in, render advice to or have any interest in any person,
firm, corporation, or business
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(whether as an owner, partner, employee, officer, director, agent,
security holder, creditor, consultant, or otherwise) that engages in
any activity which is the same as, similar to, or competitive with any
activity then, or within the prior twelve (12) months, engaged in by
the Company or any affiliate of the Company; or
(2) directly or indirectly solicit for employment or employ or
become employed by any person then, or within the prior twelve (12)
months, employed by the Company or any affiliate of the Company, or
request, influence or advise any person who is or shall be employed by
or is in the service of the Company or any affiliate of the Company to
leave such employment or service of the Company or any affiliate of the
Company; or
(3) directly or indirectly influence or advise any competitor
of or anyone intending to compete with the Company or any affiliate of
the Company to employ or otherwise engage the services of any person
who is or shall be employed by or is in the service of the Company or
any affiliate of the Company; or
(4) directly or indirectly solicit or accept any business
which is the same as, similar to or competitive with that of the
Company or any affiliate of the Company from customers of the Company
or any affiliate of the Company or request, induce or advise customers
of the Company or any affiliate of the Company to withdraw, curtail or
cancel their business with the Company or any affiliate of the Company.
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For purposes of this Plan, the term "affiliate" means any entity engaged in the
same or similar business as the Company or a related business, which is
controlled by or under common control with the Company.
8. ADMINISTRATION OF THE PLAN.
(a) POWERS AND DUTIES OF THE BOARD. The Plan shall be
administered and interpreted by the Board. The Board shall, subject to the terms
of the Plan, make or refrain from making Career Achievement Awards, determine
the amount of Career Achievement Awards, establish rules and regulations for the
administration of the Plan, impose conditions with respect to competitive
employment or other activities with respect to any such award, and establish the
written form to be used to evidence such awards pursuant to Section 3 hereof.
The Board shall have full authority to construe and interpret the terms and
provisions of the Plan, to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and to perform all acts, including
the delegation of its administrative responsibilities as it shall, from time to
time, deem advisable, and to otherwise supervise the administration of this
Plan. All such rules, regulations and interpretations relating to the Plan which
are adopted by the Board shall be conclusive and binding on all parties. The
Board may correct any defect, supply any omission or reconcile any inconsistency
in the Plan or in any award granted hereunder, in the manner and to the extent
it shall deem necessary to carry the Plan into effect.
(b) ADMINISTRATIVE COMMITTEE. The Board may, in its sole
discretion, appoint a committee of two or more employees of the Company which
shall be designated the
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"Administrative Committee." The Administrative Committee shall have such powers
and responsibilities under this Plan as shall be delegated to such committee by
the Board from time to time pursuant to resolutions adopted by the Board. The
Board, in its sole discretion, may remove any member of the Administrative
Committee at any time, may appoint additional employees of the Company to be
members of the Administrative Committee from time to time, and may fill any
vacancies that arise upon the death, resignation or removal of any member of the
Administrative Committee. The Board also shall have the power, in its sole
discretion, to discontinue the existence of the Administrative Committee at any
time and assume any powers and duties which it previously delegated to such
committee.
9. MISCELLANEOUS.
(a) DESIGNATION OF BENEFICIARY. In the event of the death of a
participant, the amount payable under Section 5 hereof shall, unless the
participant shall designate to the contrary as provided below, thereafter be
made to such person or persons who, as of the date payment is to be made under
this Plan, would receive distribution of the participant's account balance under
the terms of the Tootsie Roll Employee's Pension Plan. Notwithstanding the
preceding sentence, a participant may specifically designate the person or
persons (who may be designated successively or contingently) to receive payments
under this Plan following the participant's death by filing a written
beneficiary designation with the Company during the participant's lifetime. Such
beneficiary designation shall be in such form as may be prescribed by the
Company and may be amended from time to time or may be revoked by the
participant pursuant to written instruments filed with the Company during his or
her lifetime.
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Beneficiaries designated by a participant may be any natural or legal person or
persons, including a fiduciary, such as a trustee of a trust or the legal
representative of an estate. Unless otherwise provided by the beneficiary
designation filed by a participant, if all of the persons so designated die
before a participant on the occurrence of a contingency not contemplated in such
beneficiary designation, then the amount payable under this Plan shall be paid
to the person or persons determined in accordance with the first sentence of
this Section 9(a).
(b) ASSETS. No assets shall be segregated or earmarked in
respect of any Career Achievement Award or Career Achievement Account and no
participant shall have any right to assign, transfer, pledge or hypothecate his
or her interest, or any portion thereof, in his or her Career Achievement
Account. The Plan and the crediting of Career Achievement Accounts hereunder
shall not constitute a trust and shall be structured solely for the purpose of
recording an unsecured contractual obligation. All amounts payable pursuant to
the terms of this Plan shall be paid from the general assets of the Company.
(c) REPORTS. Until a participant's entire Career Achievement
Account shall have been paid in full or forfeited, the Company will furnish to
the participant a report, at least annually, setting forth transactions in such
account and the status of such account with respect to the vested and unvested
portions thereof and the earnings and losses related thereto.
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(d) ACCELERATION OF VESTING AND PAYMENT. Notwithstanding any
other provision of this Plan to the contrary, the Board, in its sole discretion,
is empowered to accelerate the vesting and to accelerate the payment of all or a
portion of a participant's Career Achievement Account for any reason the Board
may determine to be appropriate. Neither the Company nor the Board shall have
any obligation to make any such acceleration for any reason whatsoever.
(e) LIABILITY. No member of the Board or of the Administrative
Committee shall be liable for any act or action hereunder, whether of omission
or commission, by any other member or employee or by any agent to whom duties in
connection with the administration of the Plan have been delegated or, except in
circumstances involving such member's bad faith, gross negligence or fraud, for
anything done or omitted to be done by such member. The Company will fully
indemnify and hold each member of the Board and of the Administrative Committee
harmless from any liability hereunder, except in circumstances involving such
member's bad faith, gross negligence or fraud. The Company, the Board or the
Administrative Committee may consult with legal counsel, who may be counsel for
the Company, with respect to its obligations or duties hereunder, or with
respect to any action or proceeding or any question of law, and shall not be
liable with respect to any action taken or omitted by it in good faith pursuant
to the advice of such counsel.
(f) AMENDMENT OR TERMINATION. Notwithstanding any other
provision of this Plan, the Board may at any time, and from time to time, amend,
in whole or in part, any
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or all of the provisions of the Plan, or suspend or terminate it entirely,
retroactively or otherwise; provided, however that any such amendment,
suspension or termination may not, without the participant's consent, adversely
affect any Career Achievement Awards previously credited to the participant's
account prior to the effective date of such amendment, suspension or
termination. Notwithstanding the foregoing, upon any termination of this Plan,
the Board may in its sole discretion accelerate the vesting and payment of the
entire balance of all Career Achievement Accounts as of the date of termination
of this Plan. The Plan shall remain in effect until terminated pursuant to this
Section 9(f).
(g) EXPENSES. The Company will bear all expenses incurred by
it in administering this Plan.
(h) WITHHOLDING. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan or to otherwise require prior
to the payment of any amount hereunder, payment by the participant of any
Federal, state or local taxes required by law to be withheld.
(i) NO OBLIGATION. The designation by the Board or the
Administrative Committee of an individual as a participant in any year shall not
require the Board or the Administrative Committee to designate such person to
receive a Career Achievement Award in any other year. Neither this Plan nor any
Career Achievement Awards made hereunder shall create any obligation on the
Company to continue any other existing award plans or policies or
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to establish or continue any other programs, plans or policies of any kind.
Neither this Plan nor any Career Achievement Award made pursuant to this Plan
shall give any participant or other employee any right with respect to
continuance of employment by the Company or any of its affiliates or of any
specific aggregate amount of compensation, nor shall there be a limitation in
any way on the right of the Company or any of its affiliates by which an
employee is employed to terminate such employee at any time for any reason
whatsoever, nor shall this Plan nor any Career Achievement Award made hereunder
create a contract of employment.
(j) NO ASSIGNMENT; RESOLUTION OF DISPUTES. Except as otherwise
permitted under Section 9(a), no right or interest in any Career Achievement
Account under this Plan shall be assignable or transferable, and no right or
interest of any participant in any Career Achievement Account hereunder shall be
subject to any lien, obligation or liability of such participant. In the event
any conflicting demands are made upon the Company with respect to any payments
due as a result of this Plan, provided that the Company shall not have received
prior written notice that said conflicting demands have been finally settled by
court adjudication, arbitration, joint order or otherwise, the Company may pay
to the participant any and all amounts due hereunder and thereupon the Company
shall stand fully relieved and discharged of any further duties or liabilities
under this Plan.
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(k) GOVERNING LAW. This Plan and all actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of Illinois (regardless of the law that might otherwise govern
under applicable Illinois principles of conflict of laws).
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