EXHIBIT 10.10
CROMPTON CORPORATION
1988 LONG TERM INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is to attract and retain key
employees of the Company and its Subsidiaries and to motivate
such employees to put forth maximum efforts for the success of
the business by offering them long term performance-based
incentives and an opportunity to acquire ownership of the
Company's Stock.
Section 2. Definitions
For purposes of the Plan, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of the
Company.
(b) "Change in Control", "Potential Change in
Control", and "Change in Control Price" have the meanings set
forth in Sections 10(b), (c), and (d), respectively.
(c) "Code" means the Internal Revenue Code of 1986,
as amended from time to time.
(d) "Commission" means the Securities and Exchange
Commission or any successor agency.
(e) "Committee" means the Committee referred to in
Section 3.
(f) "Company" means Crompton Corporation, a
corporation organized under the laws of the State of Delaware, or
any successor corporation.
(g) "Disability" means permanent and total disability
as determined under procedures established by the
Committee for purposes of the Plan.
(h) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3(d)(3), as promulgated by the Commission under
the Exchange Act, or any successor definition adopted by the
Commission.
(i) "Early Retirement" means retirement, with the
consent for purposes of the Plan of the Committee or such
officer of the Company as may be designated from time to time by
the Committee, from active employment with the Company or
a Subsidiary prior to Normal Retirement.
(j) "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time.
(k) "Fair Market Value" means, except as provided in
Section 7(b), the mean, as of any given date, between the highest
and lowest reported sales prices of the Stock on the New York
Stock Exchange Composite Index on such date (or, if there is no
reported sale on such date, on the last preceding date on which
any reported sale occurred), or if no such reported sales prices
are available, the fair market value of the Stock as determined
by the Committee in good faith.
(l) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock option"
within the meaning of Section 422A of the Code.
(m) "Long Term Performance Award" or "Long Term
Award" means an award under Section 9.
(n) "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(o) "Normal Retirement" means retirement from active
employment with the Company or a Subsidiary at or after age 65.
(p) "Plan" means the Crompton Corporation 1988 Long
Term Incentive Plan, as set forth herein and as hereafter amended
from time to time.
(q) "Restricted Stock" means an award under Section
8.
(r) "Retirement" means Normal or Early Retirement.
(s) "Rule 16b-3" means Rule 16b-3 as promulgated by
the Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
(t) "Stock" means the Common Stock, $1.00 par value,
of the Company.
(u) "Stock Appreciation Right" means a right granted
under Section 7.
(v) "Stock Option" or "Option" means an option
granted under Section 6.
(w) "Subsidiary" means any business entity in which
the Company, directly or indirectly, owns 50 percent or more of
the total combined voting power of all classes of stock or other
equity interest.
Section 3. Administration
The Plan shall be administered by the Organization,
Compensation and Governance Committee of the Board, or such other
committee of the Board, composed of not less than three
Disinterested Persons, as shall be designated by the Board from
time to time. If at any time no Committee designated to
administer the Plan shall be in office, the functions of the
Committee specified in the Plan shall be exercised by the Board.
Except as limited by the express provisions of the Plan,
the Committee shall have the sole and complete authority:
(a) to select the officers and other key employees to
whom Stock Options, Stock Appreciation Rights, Restricted Stock,
and Long Term Performance Awards may from time to time be
granted;
(b) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Long Term Performance Awards, or any
combination thereof are to be granted, hereunder;
(c) to determine the number of shares to be covered
by each award granted hereunder;
(d) to determine the terms and conditions of any
award granted hereunder (including, but not limited to, the share
price, any restriction or limitation, and any vesting
acceleration or forfeiture waiver regarding any Stock Option or
other award and the shares of Stock relating thereto), based on
such factors as the Committee shall determine;
(e) to adjust the performance goals and measurements
applicable to performance-based awards pursuant to the terms of
the Plan; and
(f) to determine to what extent and under what
circumstances Stock and other amounts payable with respect to an
award shall be deferred.
The Committee shall have the authority to adopt, alter,
and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable,
to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreement relating thereto), and
otherwise to supervise the administration of the Plan. The
Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or
more of their number or any officer of the Company to execute and
deliver documents on behalf of the Committee. Any determination
made by the Committee pursuant to the provisions of the Plan with
respect to any award shall be made in its sole discretion at the
time of the grant of the award or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions
made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company
Plan participants.
Section 4. Stock Subject to Plan
The total number of shares of Stock reserved for
distribution pursuant to Stock Options or other awards under the
Plan shall be 10,000,000 shares. Such shares may consist, in
whole or in part, of authorized and unissued shares or issued
shares heretofore or hereafter reacquired and held as treasury
shares. Upon the exercise of a Stock Appreciation Right, the
full number of shares to which the Stock Appreciation Right
relates shall be deemed to have been distributed under the Plan,
and upon the payment of a Long Term Performance Award in the form
of cash, the full number of shares that could have been purchased
with such cash at the Fair Market Value of the Stock on the date
of such payment shall be deemed to have been distributed under
the Plan. If the outstanding Stock Option or Stock Appreciation
Right shall expire or terminate without having been exercised in
full, or if any Restricted Stock award or Long Term Performance
Award is forfeited in whole or in part, the shares subject to the
unexercised or forfeited portion of such award shall again be
available for distribution in connection with awards under the
Plan.
In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, or
other change in corporate structure affecting the Stock, such
substitution or adjustments shall be made in the aggregate number
of shares reserved for issuance under the Plan, in the number and
option price of shares subject to outstanding Stock Options, in
the determination of the amount payable upon exercise of
outstanding Stock Appreciation Rights, and in the number of
shares subject to other outstanding awards granted under the Plan
as may be determined by the Committee, in its sole discretion, to
be equitable to prevent substantial dilution or enlargement of
the rights granted to participants hereunder, provided, however,
that the number of shares subject to any award will always be a
whole number. The Committee shall give notice to each
participant of any adjustment made pursuant to this paragraph,
and upon such notice, such adjustment shall be effective and
binding for all purposes of the Plan.
Section 5. Eligibility
Officers and other key employees of the company and its
Subsidiaries (but excluding members of the Committee and any
person who serves only as a director) who in the opinion of the
Committee are responsible for or contribute to the management,
growth, and profitability of the business of the Company or its
Subsidiaries are eligible to be granted awards under the Plan.
Section 6. Stock Options
Stock Options may be granted alone or in addition to
other awards granted under the Plan and may be of two types:
Incentive Stock Options and Non-Qualified Stock Options. Any
Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve. The Committee shall
have the authority to grant any optionee Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights). To the
extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock
Option. The Committee shall not grant Stock Options to any one
individual with respect to more than twenty-five percent (25%) of
the shares of Stock reserved for distribution pursuant to Stock
Options or other awards under the Plan.
Stock Options shall be evidenced by option agreements,
the terms and provisions of which may differ. An option
agreement shall indicate on its face whether it is an agreement
for Incentive Stock Options or Non-Qualified Stock Options. The
grant of a Stock Option shall occur on the date the Committee by
resolution selects an employee as a participant in any grant of
Stock Options, determines the number of Stock Options to be
granted to such employee, and specifies the terms and provisions
of the option agreement; provided, however, that the Committee
may designate in such resolution a later date as the date of
grant of any or all of the Stock Options covered thereby. The
Company shall notify a participant of any grant of Stock Options,
and a written option agreement or agreements shall be duly
executed between the Company and the participant.
Anything in the Plan to the contrary notwithstanding, no
term of the Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered nor shall any discretion or
authority granted under the Plan be exercised so as to disqualify
the Plan under Section 422A of the Code or, without the consent
of the optionee affected, to disqualify any Incentive Stock
Option under such Section 422A.
Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions as the Committee shall deem desirable:
(a) Option Price. The option price per share of
Stock purchasable under a Stock Option shall be equal to the Fair
Market Value of the Stock on the date of grant or such higher
price as shall be determined by the Committee at grant.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no incentive Stock Option shall be
exercisable more than 10 years after the date of grant of the
Option, and no Non-Qualified Stock Option shall be exercisable
more than 10 years and one month after the date of grant of the
Option.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided,
however, that, except as provided in Sections 6(f), (g), (h), and
10, no Stock Option shall be exercisable prior to the first
anniversary date of the granting of the Stock Option. If the
Committee provides that any Stock Option is exercisable only in
installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on
such factors as the Committee may determine.
(d) Method of Exercise. Subject to the provisions of
this Section 6, Stock Options may be exercised, in whole or in
part, at any time during the option term by giving written notice
of exercise to the Company specifying the number of shares to
be purchased. Such notice shall be accompanied by payment in
full of the purchase price in cash (including check, bank draft,
money order, or such other instrument as the Company may accept).
Unless otherwise determined by the Committee at any time or from
time to time, payment in full or in part may also be made (i) by
delivering a duly executed notice of exercise together with
irrevocable instructions by the optionee to a broker to deliver
promptly to the Company sufficient proceeds from a sale or loan
of the shares subject to the Stock Option to pay the purchase
price (provided, however, that the amount of any shares sold
shall not exceed the amount necessary to satisfy required U.S.
federal, state, local and foreign withholding obligations using
the minimum statutory rate), or (ii) in the form of unrestricted
Stock already owned by the optionee and acquired more than six
(6) months prior to such tender or, in the case of the exercise
of a Non-Qualified Stock Option, Restricted Stock subject to an
award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the Stock Option is exercised). If payment
of the option exercise price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto)
shall remain restricted in accordance with the original terms of
the Restricted Stock award in question, and any additional Stock
received upon the exercise shall be subject to the same
forfeiture restrictions, unless otherwise determined by the
Committee.
No shares of Stock shall be issued until full payment
therefor has been made. Subject to any forfeiture restrictions
that may apply if a Stock Option is exercised using Restricted
Stock, an optionee shall have all of the rights of a stockholder
of the Company, including the right to vote the shares and the
right to receive dividends, with respect to shares subject to the
Stock Option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested,
has given the representation described in Section 13(a).
(e) Non-transferability of Options. No Stock Option
shall be transferable by the optionee other than by will or by
the laws of descent and distribution, and all Stock Options shall
be exercisable, during the optionee's lifetime, only by the
optionee or by the guardian or legal representative of the
optionee, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the
optionee named in the option agreement and any person to whom an
option is transferred by will or the laws of descent and
distribution. Shares issued upon exercise of a Stock Option
shall be issued in the name of the optionee or, at the request of
the optionee, in the name of such optionee and the optionee's
spouse with right of survivorship.
(f) Termination by Death. Subject to Section 6(j),
if an optionee's employment terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised,
to the extent then exercisable or on such accelerated basis as
the Committee may determine, for a period of two years from the
date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Subject to
Section 6(j), if an optionee's employment terminates by reason of
Disability, any Stock Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at
the time of termination or on such accelerated basis as the
Committee may determine, for a period of two years from the date
of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter; provided, however, that, if the optionee dies within
such two-year period, any unexercised Stock Option held by such
optionee shall, notwithstanding the expiration of such two-year
period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from
the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter. In the
event of termination of employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422A of the
Code, such Stock Option will thereafter be treated as
Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject to
Section 6(j), if an optionee's employment terminates by reason of
Retirement, any Stock Option held by such optionee that was
granted on or after October 1, 2001, or that had an option price
greater than the Fair Market Value of the Stock on January 22,
2002, may thereafter be exercised by the optionee, to the extent
it was exercisable at the time of Retirement or on such
accelerated basis as the Committee may determine, for a period of
five years from the date of such termination of employment or
until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the
optionee dies within such five-year period, any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such five-year period, continue to be exercisable
to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option whichever
period is the shorter. For all other Stock Options awarded
under the Plan, the provisions of the immediately preceding
sentence shall be applicable, with the sole exception that the
five-year period referred to therein shall be three years. In
the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422A of
the Code, such Stock Option will thereafter be treated as a Non-
Qualified Stock Option.
(i) Other Termination. Subject to Section 6(j), if
an optionee's employment terminates for any reason other than
death, Disability, Retirement, or cause, any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the
extent it was exercisable at the time of termination, for a
period of three months from the date of such termination of
employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however,
that if the optionee dies within such three-month period, any
unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from
the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter. If an
optionee's employment is terminated for cause, all rights under
any Stock Option held by such optionee shall expire immediately
upon the giving to the optionee of notice of such termination,
unless otherwise determined by the Committee.
(j) Incentive Stock Option Limitations. To the
extent required for "incentive stock option" status under Section
422A of the Code, the aggregate Fair Market Value (determined as
of the time of grant) of the Stock with respect to which
Incentive Stock Options granted after 1986 are exercisable for
the first time by an optionee during any calendar year under the
Plan and any other stock option plan of the Company or any
subsidiary or parent corporation (within the meaning of Section
425 of the Code) after 1986 shall not exceed $100,000. In the
event a portion of a Stock Option designated as an Incentive
Stock Option exceeds said $100,000 limitation, such portion shall
be treated as a Non-Qualified Stock Option.
The Committee is authorized to provide at grant that,
to the extent permitted under Section 422A of the Code, if a
participant's employment with the Company and its Subsidiaries is
terminated by reason of death, Disability or Retirement and the
portion of any Incentive Stock Option that is otherwise
exercisable during the post-termination period specified under
Sections 6(f), (g), or (h), applied without regard to this
Section 6(j), is greater than the portion of such option that is
exercisable as an "incentive stock option" during such
post-termination period under Section 422A, such post-termination
period shall automatically be extended (but not beyond the stated
term of such Stock Option) to the extent necessary to permit the
optionee to exercise such Incentive Stock Option (either as an
Incentive Stock Option or, if exercised after the expiration
periods that apply for the purposes of Section 422A, as a
Non-Qualified Stock Option). The Committee is also authorized to
provide at grant for a similar extension of the post-termination
exercise period in the event of a Change in Control or a
Potential Change in Control.
(k) Cashing Out of Options. In an case when a Stock
Option is exercised after the death of an optionee, the Committee
may elect to cash out all or any part of the Stock Option by
paying the person to whom the Stock Option has been transferred
by reason of the death of the Optionee an amount, in cash or
shares of Stock, equal in value to the excess of the Fair Market
Value of the Stock over the option price on the effective date of
such cash out.
(l) Substitute Options. Stock Options or Stock
Appreciation Rights may be granted under the Plan from time to
time in substitution for stock options or stock appreciation
rights held by employees of any corporation who, as the result
of a merger, consolidation, or combination of such other
corporation with, or the acquisition of all or substantially all
of the assets or stock of such other corporation by, the Company
or a Subsidiary, become employees of the Company or a Subsidiary.
The terms and conditions of any substitute Stock Options or Stock
Appreciation Rights so granted may vary from the terms and
conditions set forth in the Plan to such extent as the Committee
at the time of grant may deem appropriate to conform, in whole or
in part, to the provisions of the stock options or stock
appreciation rights in substitution for which they are
granted; provided, however, that in the event a stock option for
which a substitute Stock Option is being granted is an incentive
stock option, no such variation shall be permitted the effect of
which would be to adversely affect the status of any such
substitute Stock Options as an Incentive Stock Option.
Section 7. Stock Appreciation Rights
A Stock Appreciation Right may be granted in conjunction
with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such Right may be
granted either at or after the time of grant of such Stock
Option. In the case of an Incentive Stock Option, such Right may
be granted only at the time of grant of such Stock Option. A
Stock Appreciation Right independent of a Stock Option grant may
also be awarded by the Committee, in which event the provisions
of this Section 7 shall be applied for purposes of determining
the operation of such Stock Appreciation Right as if a
Non-Qualified Stock Option had been granted on the date of the
grant of and in conjunction with such independent Stock
Appreciation Right.
A Stock Appreciation Right granted with respect to a
given Stock Option shall terminate and no longer be exercisable
to the extent of the shares with respect to which the related
Stock Option is exercised or terminates. A Stock Appreciation
Right may be exercised by an optionee in accordance with the
provisions of this Section 7 by surrendering the applicable
portion of the related Stock Option in accordance with procedures
established by the Committee. Upon such exercise and surrender,
the optionee shall be entitled to receive an amount determined in
the manner prescribed in Section 7(b). The Stock Option which
has been so surrendered shall no longer be exercisable to the
extent the related Stock Appreciation Right has been exercised.
Stock Appreciation Rights shall be subject to such terms
and conditions as shall be determined by the Committee, including
the following:
(a) Exercisability. A Stock Appreciation Right shall
be exercisable only at such time or times and to the extent that
the Stock Option to which it relates is exercisable in accordance
with the provisions of Section 6 and this Section 7; provided,
however, that a Stock Appreciation Right shall not be exercisable
during the first six months of its term by an optionee who is
actually or potentially subject to Section 16(b) of the Exchange
Act, unless otherwise determined by the Committee in the event of
death or Disability of the optionee prior to the expiration of
the six-month period.
(b) Payment Upon Exercise. Upon the exercise of a
Stock Appreciation Right, an optionee shall be entitled to
receive an amount in cash, shares of Stock, or both equal in
value to the excess of the Fair Market Value on the date of
exercise of one share of Stock over the option exercise price per
share specified in the related Stock Option multiplied by the
number of shares in respect of which the Stock Appreciation Right
shall have been exercised. The Committee shall have the right to
determine the form of payment in each case.
In the case of a Stock Appreciation Right held by an
optionee who is actually or potentially subject to Section 16(b)
of the Exchange Act, the Committee:
(i) may require that such Stock Appreciation
Right be exercised only in accordance with the applicable
"window period" provisions of Rule 16b-3; and
(ii) in the case of a Stock Appreciation Right
relating to a Non-Qualified Stock Option, may provide that the
amount to be paid upon exercise of such Stock Appreciation Right
during a Rule 16b-3 "window period" shall be based on the
highest mean sales price of the Stock as reported on the New
York Stock Exchange Composite Index on any day during such
"window period".
(c) Non-transferability. A Stock Appreciation Right
shall be transferable only when and to the extent that the
related Stock Option would be transferable under Section 6(e).
(d) Effect of Change in Control. The Committee may
provide, at the time of grant, that a Stock Appreciation Right
can be exercised only in the event of a Change in Control or a
Potential Change in Control, subject to such terms and
conditions as the Committee may specify at grant. The Committee
may also provide that, in the event of a Change in Control or a
Potential Change in Control, the amount to be paid upon the
exercise of a Stock Appreciation Right shall be based on the
Change in Control Price, subject to such terms and conditions as
the Committee may specify at grant.
Section 8. Restricted Stock
(a) Administration. Shares of Restricted Stock may
be issued either alone or in addition to other awards granted
under the Plan. The Committee shall determine the officers and
key employees to whom and the time or times at which grants of
Restricted Stock will be made, the number of shares to be
awarded, the time or times within which such awards may be
subject to forfeiture, and any other terms and conditions of
the awards, in addition to those contained in Section 8(c). The
Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors
or criteria as the Committee shall determine. The provisions of
Restricted Stock awards need not be the same with respect to each
recipient.
(b) Awards and Certificates. Each participant receiving
a Restricted Stock award shall be issued a certificate in
respect of such shares of Restricted Stock. Such certificate
shall be registered in the name of such participant and shall
bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Crompton & Knowles
Corporation 1988 Long Term Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the
offices of Crompton & Knowles Corporation, One Station Place,
Metro Center, Stamford, Connecticut 06902."
The Committee may require that the certificates
evidencing such shares be held in custody by the Company until
the restrictions thereon shall have lapsed and that, as a
condition of any Restricted Stock award, the participant shall
have delivered a stock power, endorsed in blank, relating to the
Stock covered by such award.
(c) Terms and Conditions. Shares of Restricted Stock
shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and
the Restricted Stock Agreement referred to in Section
8(c)(vi), during such period commencing with the date of such
award as shall be set by the Committee (the "Restriction
Period"), the participant shall not be permitted to sell,
assign, transfer, pledge, or otherwise encumber shares of
Restricted Stock. Within these limits, the Committee may
provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions, in whole or in part,
based on service, performance, and such other facts or
criteria as the Committee may determine.
(ii) Except as provided in Section 8(c)(i), the
participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive
any cash dividends thereon; provided, however, that the Committee
may provide at the time of an award that cash dividends shall be
automatically deferred and reinvested in additional Restricted
Stock. Dividends on Restricted Stock which are payable in Stock
shall be paid in the form of additional shares of Restricted
Stock.
(iii) Except to the extent otherwise provided
in the applicable Restricted Stock Agreement and Sections
8(c)(i) and (iv), upon termination of a participant's employment
for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant.
(iv) In the event of the death of a participant
during the Restriction Period or in the event of hardship or
other special circumstances of a participant whose employment is
involuntarily terminated (other than for cause) during the
Restriction Period, the Committee may waive in whole or in part
any or all remaining restrictions with respect to such
participant's shares of Restricted Stock.
(v) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, unlegended certificates for
such shares shall be delivered to the participant.
(vi) Each award shall be confirmed by, and be
subject to the terms of, a Restricted Stock Agreement.
Section 9. Long Term Performance Awards
(a) Awards and Administration. Long Term Performance
Awards may be awarded either alone or in addition to other awards
granted under the Plan. The Committee shall determine the
nature, length, and starting date of the performance period (the
"Performance Period") for each Long Term Performance Award, which
shall be at least two years (subject to Section 10), and shall
determine the performance objectives to be used in valuing Long
Term Performance Awards and determining the extent to which such
Long Term Performance Awards have been earned. Performance
objectives may vary from participant to participant and between
groups of participants and shall be based upon such Company,
Subsidiary, business unit, or individual performance factors or
criteria as the Committee may deem appropriate, including, but
not limited to, earnings per share or return on equity.
Performance Periods may overlap and participants may participate
simultaneously with respect to Long Term Performance Awards that
are subject to different Performance Periods and different
performance factors and criteria. Long Term Performance Awards
shall be confirmed by, and be subject to the terms of, a Long
Term Performance Award Agreement. The terms of such awards need
not be the same with respect to each participant.
At the beginning of each performance Period, the
Committee shall determine for each Long Term Performance Award
subject to such Performance Period the range of dollar values or
number of shares of Stock (including Restricted Stock) to be
awarded to the participant at the end of the Performance Period
if and to the extent that the relevant measures of performance
for such Long Term Performance Award are met. Such dollar values
or number of shares of Stock may be fixed or may vary in
accordance with such performance or other criteria as may be
determined by the Committee.
(b) Adjustment of Awards. The Committee may adjust
the performance goals and measurements applicable to Long
Term Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the
Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual
items, events, or circumstances in order to avoid windfalls or
hardships.
(c) Termination of Employment. Subject to Section 10
and unless otherwise provided in the applicable Long Term
Performance Award Agreement, if a participant terminates
employment during a Performance Period because of death,
Disability, or Retirement, such participant shall be entitled to
a payment with respect to each outstanding Long Term Performance
Award at the end of the applicable Performance Period:
(i) based, to the extent relevant under the
terms of the award, upon the participant's performance for
the portion of such Performance Period ending on the date of
termination and the performance of the Company or any
applicable business unit for the entire Performance
Period, and
(ii) prorated for the portion of the Performance
Period during which the participant was employed by the Company
or a Subsidiary, all as determined by the Committee. The
Committee may provide for an earlier payment in settlement of
such award in such amount and under such terms and conditions
as the Committee deems appropriate. Subject to Section 10
and except as otherwise provided in the applicable Long Term
Performance Award Agreement, if a participant terminates
employment during a Performance Period for any other reason, then
such participant shall not be entitled to any payment with
respect to the Long Term Performance Awards subject to such
Performance Period, unless the committee shall otherwise
determine.
(d) Form of Payment. The earned portion of a Long
Term Performance Award may be paid currently or on a deferred
basis with such interest or earnings equivalent as may be
determined by the Committee. Payment shall be made in the form
of cash or whole shares of Stock, including Restricted Stock, or
a combination thereof, either in a lump sum payment or in annual
installments, all as the Committee shall determine.
Section 10. Change in Control Provisions
(a) Impact of Event. In the event of:
(i) a "Change in Control" as defined in
Section 10(b), unless otherwise determined by the Committee or
the Board prior to the occurrence of such Change in Control, or
(ii) a "Potential Change in Control" as defined
in Section 10(c), but only if and to the extent so determined
by the Committee or the Board, the following acceleration and
valuation provisions shall apply:
(1) Any Stock Options and Stock Appreciation
Rights outstanding as of the date such Change in Control or such
Potential Change in Control is determined to have occurred and
not then exercisable and vested shall become fully exercisable
and vested; provided, however, that, in the
case of Stock Appreciation Rights held by an optionee who is
actually subject to Section 16(b) of the Exchange Act,
such Stock Appreciation Rights shall not become
exercisable and vested unless they shall have been outstanding
for at least six months at the date such Change
in Control is determined to have occurred.
(2) The restrictions and forfeiture provisions
applicable to any Restricted Stock shall lapse, and such
Restricted Stock shall become fully vested.
(3) The value of all outstanding Stock Options,
Stock Appreciation Rights, and Restricted Stock shall,
unless otherwise determined by the Committee at or after grant,
but prior to a Change in Control or Potential Change in Control,
be either, in the Committee's sole discretion pursuant to a
resolution adopted prior to the occurrence of a Change in Control
or Potential Change in Control: (i) cashed out on the basis of
the "Change in Control Price," as defined in Section 10(d), as of
the date such Change in Control or such Potential Change in
Control is determined to have occurred or such date as the
Committee may determine prior to the Change in Control; or (ii)
adjusted by substituting for Stock subject to such Stock Option,
Stock Appreciation Right or Restricted Stock, stock or other
securities of the surviving corporation or any successor
corporation to the Company, or a parent or subsidiary thereof, or
that may be issuable by another corporation that is a party to
the transaction resulting in the Change in Control or Potential
Change in Control.
(4) Any outstanding Long Term Performance Awards
shall, unless the Committee otherwise determines, be
vested and paid out based on the prorated target results for the
Performance Periods in question, unless the Committee provides
prior to the Change in Control event for a
different payment.
(b) Definition of "Change in Control". For purposes
of Section 10(a), a "Change in Control" means a change in control
of the Company of a nature that would be required, to be reported
in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the effective date of the Plan, pursuant to Section 13
or 15(d) of the Exchange Act; provided that, without
limitation, such a "Change in Control" shall be deemed to have
occurred if:
(i) A third person, including a "group" as
such term is used in Section 13(d)(3) of the Exchange Act, other
than the trustee of a Company employee benefit plan, becomes the
beneficial owner, directly or indirectly, of 20 percent or more
of the combined voting power of the Company's outstanding voting
securities ordinarily having the right to vote for the
election of directors of the Company;
(ii) During any period of 24 consecutive months
individuals who, at the beginning of such consecutive 24-month
period, constitute the Board of Directors of the Company (the
"Board" generally and as of the effective date of the Plan the
"Incumbent Board") cease for any reason (other than
retirement upon reaching normal retirement age, disability, or
death) to constitute at least a majority of the Board; provided
that any person becoming a director subsequent to
the effective date of the Plan whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least three-quarters of the directors comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in connection
with an actual or threatened election contest
relating to the election of the Directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member
of the Incumbent Board; or
(iii) The Company shall cease to be a publicly
owned corporation having its outstanding Stock listed on the New
York Stock Exchange or quoted in the NASDAQ National Market
System.
(c) Definition of "Potential Change in Control". For
purposes of Section 10(a), a "Potential Change in Control" means
the happening of any one of the following:
(i) The entering into an agreement by the
Company, the consummation of which would result in a
Change in Control of the Company as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person, or group (other
than the trustee of a Company employee benefit plan) of
securities of the Company representing five percent or more of
the combined voting power of the Company's outstanding
voting securities and the adoption by the Board of a resolution
to the effect that a Potential Change in Control
of the Company has occurred for purposes of the Plan.
(d) Change in Control Price. For purposes of this
Section 10, "Change in Control Price" means the highest price per
share paid in any transaction reported on the New York Stock
Exchange Composite Index or paid or offered in any bona fide
transaction related to an actual or potential Change in Control
of the Company at any time during the preceding 60-day period as
determined by the Committee, except that, in the case of
Incentive Stock Options and Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be based
only on transactions reported for the date on which the
Committee decides to cash out such Stock Options.
Section 11. Amendments and Termination
The Board may amend, alter, or discontinue the Plan, but
no amendment, alteration, or discontinuation shall be made which
would impair the rights of an optionee under a Stock Option or a
recipient of a Stock Appreciation Right, Restricted Stock award,
or Long Term Performance Award theretofore granted without the
optionee's or recipient's consent or which, without the approval
of the Company's stockholders, would:
(a) except as expressly Provided in the Plan,
increase the total number of shares reserved for the purpose of
the Plan;
(b) decrease the option price of any Stock Option to
less than the Fair Market Value on the date of grant;
(c) change the class of employees eligible to
participate in the Plan; or
(d) extend the maximum option periods under Section
6(b).
The Committee may amend the terms of any Stock Option or
other award theretofore granted, prospectively or retroactively,
but no such amendment shall impair the right of any holder
without the holder's consent. Subject to the above provisions,
the Board shall have authority to amend the Plan to take into
account changes in law and tax and accounting rules, as well as
other developments.
Section 12. Unfunded Status of Plan
It is presently intended that the Plan constitute an
"unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver Stock or make payments; provided, however, that, unless
the Committee otherwise determines, the existence of such trusts
or other arrangements is consistent with the "unfunded" status of
the Plan.
Section 13. General Provisions
(a) All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to such
stock transfer orders and other restrictions as the committee may
deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the
Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference
to such restrictions. The Committee may require any optionee
purchasing shares pursuant to a Stock Option to represent to and
agree with the Company in writing that the optionee is acquiring
the shares without a view to the distribution thereof.
(b) Nothing contained in this Plan shall prevent the
Company or a Subsidiary from adopting other or additional
compensation arrangements for its employees.
(c) The adoption of the Plan shall not confer upon
any employee any right to continued employment nor shall it
interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any employee at
any time.
(d) No later than the date on which the Company is
required to withhold taxes in respect of an award, the
participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any
Federal, state, local, or other taxes of any kind required by law
to be withheld with respect to such award or any payment or
distribution made in connection therewith. Unless otherwise
determined by the Committee, withholding obligations may be
settled with Stock, including Stock that is part of the award
that gives rise to the withholding requirement; provided,
however, that in the case of any optionee who is actually subject
to Section 16(b) of the Exchange Act, any such settlement shall
comply with the applicable requirements of Rule 16(b)-3. The
obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to
the participant.
(e) The reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall only
be permissible if sufficient shares of Stock are available under
Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Plan awards).
(f) The Committee shall establish such procedures as
it deems appropriate for a participant to designate a beneficiary
to whom any amounts payable with respect to outstanding awards
under the Plan in the event of the participant's death are to be
paid.
(g) The Plan and all awards made and actions
taken thereunder shall be governed by and construed in accordance
with the laws of the State of Connecticut.
Section 14. Effective Date of Plan; Shareholder Approval
The Plan shall be effective as of the date it is adopted
by the Board, subject however to the approval of the Plan by the
holders of at least a majority of the outstanding shares of Stock
of the Company present or represented and entitled to vote at a
meeting of shareholders of the Company. Awards may be made under
the Plan on and after its effective date; provided, however, that
any such awards shall be null and void if shareholder approval of
the Plan is not obtained within 12 months of the adoption of the
Plan by the Board.
Section 15. Term of Plan
No Stock Option, Stock Appreciation Right, Restricted
Stock award, or Long Term Performance Award shall be granted on
or after the tenth anniversary of the effective date of the Plan,
but awards granted prior to such tenth anniversary (including,
without limitation, Long Term Performance Awards for Performance
Periods commencing prior to such tenth anniversary) may extend
beyond that date.
Adopted: April 11, 1989
Amended: October 17, 1990
Amended: May 19, 1993
Amended: October 20, 1993
Amended: August 21, 1996
Amended: January 29, 2001
Amended: March 14, 2002