EXHIBIT 10.21
CROMPTON CORPORATION
1998 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) "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.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
(j) "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.
(k) "Holder" means an Optionee or a Transferee, as defined
in Sections 2(p) and (y), respectively.
(l) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock option"
within the meaning of Section 422 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) "Optionee" means a person who is granted a Stock Option
under Section 6.
(q) "Plan" means the Crompton & Knowles Corporation 1998
Long Term Incentive Plan, as set forth herein and as hereafter
amended from time to time.
(r) "Restricted Stock" means an award under Section 8.
(s) "Retirement" means Normal or Early Retirement.
(t) "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.
(u) "Stock" means the Common Stock, $.10 par value, of the
Company.
(v) "Stock Appreciation Right" means a right granted under
Section 7.
(w) "Stock Option" or "Option" means an option granted
under Section 6.
(x) "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.
(y) "Transferee" means a member of an Optionee's Immediate
Family, a partnership or a trust to whom or which any Option is
transferred as provided in Section 6.
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 non-
employee members of the Board, 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, any vesting acceleration or
any 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 equal to the sum of (i) such shares, if any, as are
available for awards under the Company's 1988 Long Term Incentive
Plan and 1993 Stock Option Plan for Non-Employee Directors on
October 18, 1998, and (ii) such shares, if any, which are the
subject of awards granted under any prior plan of the Company and
which are forfeited for any reason, which expire, which are not
earned as a result of the failure to meet the requirements of an
award, which are tendered as full or partial payment of the
option exercise price for other shares, or which are tendered or
withheld for the payment of taxes in connection with any award
under any such plan. 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.
If an 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 not earned or 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 that a Stock Option is
exercised by tendering shares to the Company as full or partial
payment of the option exercise price, only the number of shares
issued net of the shares tendered shall be deemed delivered under
the Plan. Further, shares tendered or withheld for the payment
of taxes in connection with any 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.
Shares issued under the Plan as the result of the settlement
or assumption of, or substitution of awards under the Plan for,
any awards or obligations to grant future awards of any entity
acquired by or merging with the Company shall not reduce the
number of shares available for delivery under the Plan.
The maximum number of shares available for delivery under
the Plan through Incentive Stock Options shall be 2,500,000
shares. The maximum number of shares available for awards under
Sections 8 and 9 hereof shall be equal to thirty-five percent of
the total shares available for distribution under the Plan.
Section 5. Eligibility
All employees of the Company and its Subsidiaries (but
excluding, except as otherwise provided in Section 6, 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); provided,
however, that the Committee shall not have the authority to grant
Incentive Stock Option to any non-employee director. 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 422 of the Code or, without the consent of
the Optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
On the date of the first meeting of the Board in the fourth
quarter of each year, the Committee may grant to each non-
employee director a Non-Qualified Stock Option to purchase up to
20,000 shares of Stock.
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) Transferability of Options.
(i) No Stock Option shall be transferable by the
Optionee other than by will, by the laws of descent and
distribution or in accordance with the provisions of Section
6(c)(ii).
(ii) Subject to applicable securities laws, the
Committee may determine that a Non-Qualified Stock Option may be
transferred by the Optionee to one or more members of the
Optionee's Immediate Family, as defined in Section 6(c)(iii), to
a partnership of which the only partners are members of the
Optionee's Immediate Family, or to a trust established by the
Optionee for the benefit of one or more members of the Optionee's
Immediate Family. No Transferee to whom or which a Non-Qualified
Stock Option is transferred may further transfer such Stock
Option. A Non-Qualified Stock Option transferred pursuant to
this Section shall remain subject to the provisions of the Plan,
including, but not limited to, the provisions of this Section 6
relating to the exercise of the Stock Option upon the death,
Disability, Retirement or other termination of employment of the
Optionee, and shall be subject to such other rules as the
Committee shall determine.
(iii) For purposes of this Section 6, "Immediate Family"
of the Optionee means the Optionee's spouse, parents, children
and grandchildren.
(d) 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(e), (f), (g), 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.
(e) Termination by Death. Subject to Section 6(j), if an
Optionee's employment or service on the Board terminates by
reason of death, any Stock Option held by such Optionee or any
Transferee of 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; provided, however,
that if the expiration of the stated term of any such Stock
Option is less than one year following the death of the Optionee,
the Stock Option shall be exercisable for a period of one year
from the date of such death.
(f) Termination by Reason of Disability. Subject to
Section 6(j), if an Optionee's employment or service on the Board
terminates by reason of Disability, any Stock Option held by such
Optionee or any Transferee of such Optionee may thereafter be
exercised by the Holder, 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 Holder dies while any
such Stock Option remains exercisable , any unexercised Stock
Option held by such Holder at death shall continue to be
exercisable to the extent to which it was exercisable at the time
of the Holder's death for a period of 12 months from the date of
such death. 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 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(g) Termination by Reason of Retirement. Subject to
Section 6 (j), if an Optionee's employment or service on the
Board terminates by reason of Retirement, any Stock Option held
by such Optionee or any Transferee of 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 Holder, 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 Holder dies
within such five-year period, any unexercised Stock Option held
by such Holder 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 the purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option."
(h) 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 or any Transferee of such Optionee may thereafter
be exercised by the Holder, 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 Holder dies within such
three-month period, any unexercised Stock Option held by such
Holder 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. If an Optionee's employment is
terminated for cause, all rights under any Stock Option held by
such Optionee or any Transferee of such Optionee shall expire
immediately upon the giving to the Optionee of notice of such
termination, unless otherwise determined by the Committee.
(i) Method of Exercise. Stock Options shall be exercisable
(i) during the Holder's lifetime, only by the Holder or by the
guardian or legal representative of the Holder, and (ii)
following the death of the Holder, only by the person to whom
they are transferred by will or the laws of descent and
distribution. For purposes of this Section 6(i) only, the term
"Holder" shall include any person to whom a Stock Option is
transferred by will or the laws of descent and distribution.
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 from the Holder 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, or (ii) in
the form of unrestricted Stock already owned by the Holder 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, a Holder 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 Holder 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).
Shares issued upon exercise of a Stock Option shall be
issued in the name of the Holder or, at the request of the
Holder, in the names of such Holder and the Holder's spouse with
right of survivorship.
(j) Cashing Out of Options. In any case when a Stock
Option is exercised after the death of a Holder, 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 Holder 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.
(k) 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. No Stock Option or
Stock Appreciation Right shall be granted under the Plan in
substitution for any Stock Option or Stock Appreciation Right
previously issued under the Plan if the exercise price of the
substitute Stock Option or Stock Appreciation Right is less than
the exercise price of the previously issued Stock Option or Stock
Appreciation Right.
(l) Deferral of Option Gains. An Optionee may elect to
defer to a future date receipt of the shares of Stock to be
acquired upon exercise of a Stock Option. Such election shall be
made by delivering to the Company not later than six months prior
to the exercise of the Stock Option a written notice of the
election specifying the future date (the "Deferral Date") for
receipt of the shares. At any time, and from time to time, prior
to the delivery to the Optionee of shares the receipt of which
has been deferred as provided in this section, the Optionee may
designate by written notice to the Company a new date, which date
shall be later than the Deferral Date, and such new date shall
thereafter be the Deferral Date with respect to such shares.
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 a Holder 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 Holder
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, a Holder 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 any 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(c).
(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 1998
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. The maximum award
for any individual with respect to any one year of any
Performance Period shall be 200,000 shares of Stock. Performance
objectives may vary from participant to participant and between
groups of participants and shall be based upon one or more of the
following Company, Subsidiary, business unit, or individual
performance factors or criteria (on a pre- or post-tax basis and
on an aggregate or per share basis) as the Committee may deem
appropriate: earnings, sales, Stock price, return on equity,
assets or capital, economic value added, cash flow, total
shareholder return, costs, margins, market share, any combination
of the foregoing. 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) 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, suspend, or discontinue the Plan or any
portion thereof at any time, but no amendment, suspension, or
discontinuation shall be made which would impair the rights of a
Holder under a Stock Option or a recipient of a Stock
Appreciation Right, Restricted Stock award, or Long Term
Performance Award theretofore granted without the Holder'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;
(d) extend the maximum option periods under Section 6(b);
or
(e) amend, suspend or discontinue this Section 11.
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) Neither the adoption of the Plan nor the granting of
any Stock Option, Stock Appreciation Right, Restricted Stock or
Long Term Award shall confer upon any employee any right to
continued employment or constitute an agreement or understanding
that the Company will retain a director for any period of time or
at any particular rate of compensation, nor shall the same
interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any employee or the
service of any director 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. Notwithstanding the
above, the Committee may, in its discretion and pursuant to
procedures approved by the Committee, permit the participant to
(i) elect withholding by the Company of Stock otherwise
deliverable to such participant pursuant to his or her award
(provided, however, that the amount of any Stock so withheld
shall not exceed the amount necessary to satisfy required U.S.
federal, state, local and foreign withholding obligations using
the minimum statutory rate) and/or (ii) tender to the Company
Stock owned by the participant (or by such participant and his or
her spouse jointly) and acquired more than six (6) months prior
to such tender in full or partial satisfaction of such tax
obligations, based, in each case, on the Fair Market Value of the
Stock on the payment date as determined by the Committee.
(e) The reinvestment of dividends in additional Restricted
Stock at the time of any dividend payment shall be permissible
only 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: October 14, 1998
Amended: November 1, 2000
Amended: January 22, 2002
Revised: March 8, 2002