EXHIBIT 10(c)
________________________________________________________________________________
XXXXXX-XXXXXXX COMPANY
-------------------
1996 STOCK PLAN
AS AMENDED TO FEBRUARY 6, 2000
________________________________________________________________________________
XXXXXX-XXXXXXX COMPANY
1996 STOCK PLAN
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. Purpose.
(a) The purpose of the 1996 Stock Plan is to provide additional incentive to
selected officers and other employees of the Company (as hereinafter defined),
to recognize and reward their efforts and accomplishments in order to strengthen
the desire of employees to remain with the Company and stimulate their efforts
on behalf of the Company and to attract and retain persons of competence, and,
by encouraging ownership of a stock interest in the Company, to gain for the
Company the advantages inherent in employees having a sense of proprietorship.
(b) In addition, the Plan (as hereinafter defined) will assist in the
attraction and retention of non-employee members of the Board of Directors by
providing the opportunity for such Directors to obtain a proprietary interest in
the Company's success and progress and with increased flexibility in the timing
of the receipt of fees for services on, and attending meetings of, the Board of
Directors and committees thereof.
ARTICLE II
DEFINITIONS
SECTION 2.1. Definitions. Whenever used herein, unless the context otherwise
indicates, the following terms shall have the respective meaning set forth
below:
Account: A Cash Account or a Stock Account.
Act: The Securities Exchange Act of 1934, as amended.
Affiliate: Any corporation, partnership, association, joint-stock company,
business trust, joint venture or unincorporated organization controlled,
directly or indirectly, by Xxxxxx-Xxxxxxx. Xxxxxx-Xxxxxxx shall be deemed to
control any such entity if Xxxxxx-Xxxxxxx possesses, directly or indirectly, the
power to direct or cause the direction of its management and policies, whether
through the ownership of voting securities, by contract or otherwise.
Board of Directors (or Board): The Board of Directors of Xxxxxx-Xxxxxxx.
Business Day: A day except for a Saturday, Sunday or a legal holiday.
Cash Account: The Account which reflects the Compensation deferred by a
Director pursuant to Section 11.3.
Cash Credit: A credit to a Director's Cash Account, expressed in whole
dollars and fractions thereof, pursuant to Section 11.3.
Closing Price: The closing price of the Common Stock on the Composite Tape
for New York Stock Exchange issues.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan in accordance with
Section 12.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of Xxxxxx-Xxxxxxx.
Company: Xxxxxx-Xxxxxxx and its Affiliates.
Compensation: All cash remuneration payable to a Director for services to
the Company as a Director or as a consultant, other than reimbursement for
expenses, and shall include retainer fees for service on, and fees for
attendance at meetings of, the Board and any committees thereof.
1
Deferred Compensation Account: An account established by the Company for a
Director under a Predecessor Plan.
Director: Any member of the Board of Directors who is not an employee of the
Company or any of its Affiliates.
Effective Date: The date specified in Article XV hereof.
Employee: Officers and other employees of the Company or any of its
Affiliates (including such persons who are also members of the Board of
Directors).
Fair Market Value: As used in the Plan, the term 'Fair Market Value' shall
be the mean between the high and low sales prices for Common Stock on the
Composite Tape for New York Stock Exchange issues on the date the calculation
thereof shall be made. In the event the date of calculation shall be a date on
which the Common Stock shall not trade on the New York Stock Exchange,
determination of Fair Market Value shall be made as of the first date prior
thereto on which the Common Stock shall have traded on the New York Stock
Exchange.
Grantee: A Participant to whom Rights have been granted in accordance with
the provisions of Articles IV and VI hereof.
Option: The grant to Participants of options to purchase shares of Common
Stock in accordance with the provisions of Articles IV and V hereof.
Optionee: A Participant to whom one or more Options have been granted in
accordance with the provisions of Articles IV and V hereof.
Option Period: The period of time during which an Option may be exercised in
accordance with the provisions hereof.
Option Price: The price per share payable to the Company for shares of
Common Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is granted under the Plan.
Performance Awards: Awards made to Employees in accordance with the
provisions of Article VIII hereof.
Plan: The Xxxxxx-Xxxxxxx Company 1996 Stock Plan.
Plan Year: The calendar year.
Predecessor Plans: The Xxxxxx-Xxxxxxx Directors' Fees Deferral Plan, the
Xxxxxx-Xxxxxxx Consulting Fees Deferral Plan, the Deferred Compensation Plan for
Directors of Xxxxxx-Xxxxxxx Company and the Xxxxxx-Xxxxxxx 1992 Stock Plan.
Reference Option: An Option, other than an incentive stock option, to which
a Right shall relate.
Reporting Person: A person subject to the reporting requirements of
Section 16(a) of the Act, excluding former officers and directors whose
transactions in Common Stock are no longer subject to Section 16 of the Act.
Restricted Period: The period of time from the date of grant of Restricted
Stock until the lapse of restrictions attached thereto.
Restricted Stock: Common Stock granted under the Plan which is subject to
restrictions in accordance with the provisions of Article VII hereof.
Right: The grant to Participants of rights to acquire shares of Common Stock
in accordance with the provisions of Articles IV and VI hereof.
Secretary: The Secretary of Xxxxxx-Xxxxxxx.
Spread: The amount by which the Option Price that would be payable by the
Grantee upon the exercise of the Reference Option is less than the Fair Market
Value of a share of Common Stock on the date the related Right was granted.
Stock Account: The Account which reflects the Compensation deferred by a
Director pursuant to Section 11.4.
2
Stock Award: A grant of Options, Rights, Restricted Stock or Performance
Awards in accordance with the provisions hereof.
Stock Credit: A credit to a Director's Stock Account, expressed in whole
shares and fractions thereof, pursuant to Section 11.4.
Subsidiary: Any corporation (other than Xxxxxx-Xxxxxxx) in an unbroken chain
of corporations beginning with and including Xxxxxx-Xxxxxxx if, at the time of
the granting of a Stock Award, each of the corporations other than the last
corporation in said unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
Valuation Date: The date on which a Right is exercised.
Xxxxxx-Xxxxxxx: Xxxxxx-Xxxxxxx Company or any successor to it in ownership
of substantially all of its assets, whether by merger, consolidation or
otherwise.
ARTICLE III
ELIGIBILITY AND GRANTS
SECTION 3.1. Eligibility and Grants. The Committee shall determine the
Employees who shall be granted Stock Awards and the number of shares thereof.
The Committee may make more than one grant to an Employee during the life of the
Plan. Each grant shall be evidenced by a written instrument duly executed by or
on behalf of the Company.
SECTION 3.2. Share Limitation.
(a) Stock Awards may not be granted in any year which provide for the
issuance of more than 1.65% of the shares of Common Stock outstanding (including
issued shares reacquired by the Company) on the January 1 of the year of grant.
Restricted Stock may not be granted in any year for more than 20% of the shares
authorized under the preceding sentence. Shares of Common Stock issued under the
Plan may be either authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, in any year in which Stock
Awards (including Restricted Stock) are granted which provide for the issuance
of less than the maximum permissible number of shares, the balance of such
unused shares shall be added to the limitation in subsequent years. In addition,
if any Option granted under the Plan shall expire, terminate or be cancelled for
any reason without having been exercised in full, the corresponding number of
unpurchased shares shall be added to the limitation in subsequent years;
provided, however, that if such expired, terminated or cancelled Option shall
have been a Reference Option, none of such unpurchased shares shall again become
available for purposes of the Plan to the extent that the related Right granted
under the Plan is exercised. Further, if any shares of Common Stock granted
hereunder are forfeited or such award otherwise terminates without the delivery
of such shares upon the lapse of restrictions, the shares subject to such grant,
to the extent of such forfeiture or termination, shall be added to the
limitation in subsequent years so long as the Participant received no 'benefits
of ownership' (within the meaning of Section 16 of the Act) in connection with
such grant. To the extent permitted by Section 16 of the Act, any shares of
Common Stock issued under the Plan through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available under the Plan.
(b) Stock Awards may not be granted in any year to any individual which
provide for the issuance of more than 600,000 shares of Common Stock (as such
number shall be adjusted in accordance with Article X). Notwithstanding the
above limitation, in any year in which Stock Awards are granted which provide
for the issuance of less than the maximum permissible number of shares, the
balance of such unused shares shall be added to the limitation in subsequent
years.
ARTICLE IV
GENERAL TERMS OF OPTIONS AND RIGHTS
SECTION 4.1. Consideration. The Committee shall determine the consideration
to the Company for the granting of Options and Rights under the Plan, as well as
the conditions, if any, which it may deem
3
appropriate to ensure that such consideration will be received by, or will
accrue to, the Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options and Rights granted
under the Plan at the same time or from time to time.
SECTION 4.2. Number of Options and Rights.
(a) The Committee may grant more than one Option or Right to an individual
during the life of the Plan and, subject to the requirements of Section 422 of
the Code with respect to incentive stock options, such Option or Right may be in
addition to, in tandem with, or in substitution for, options or rights
previously granted under the Plan or under another stock plan of the Company or
of another corporation and assumed by the Company.
(b) The Committee may permit the voluntary surrender of all or a portion of
any Option granted under the Plan or any prior plan to be conditioned upon the
granting to the Employee of a new Option for the same or a different number of
shares as the Option surrendered, or may require such voluntary surrender as a
condition precedent to a grant of a new Option to such Employee. Such new Option
shall be exercisable at the price, during the period, and in accordance with any
other terms or conditions specified by the Committee at the time the new Option
is granted.
SECTION 4.3. Option and Right Agreements. The Company shall effect the grant
of Options and Rights under the Plan, in accordance with determinations made by
the Committee, by execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and conditions (which
need not be the same for all Options and Rights, whether granted at the same
time or at different times) as the Committee shall deem to be appropriate. The
Committee may, in its sole discretion, and subject to such terms and conditions
as it may adopt, accelerate the date or dates on which some or all outstanding
Options and Rights may be exercised. Except as otherwise provided by the
Committee, Options and Rights shall be exercised by submitting to the Company a
signed copy of a notice of exercise in a form to be supplied by the Company and
the exercise of an Option or Right shall be effective on the date on which the
Company receives such notice at its principal corporate offices.
SECTION 4.4. Non-Transferability of Option or Right. Except as otherwise
provided by the Committee, no Option or Right granted under the Plan to an
Employee shall be transferable by the Employee otherwise than by will or by the
laws of descent and distribution or pursuant to a 'qualified domestic relations
order' (as defined in the Code), and such Option and Right shall be exercisable,
during the Employee's lifetime, only by such Employee.
SECTION 4.5. Optionees and Grantees not Stockholders. An Optionee or Grantee
or legal representative thereof shall have none of the rights of a stockholder
with respect to shares subject to Options or Rights until such shares shall be
issued upon exercise of the Option or Right.
SECTION 4.6. Certain Events. (a) As used in the Plan, a 'Change in Control
of Xxxxxx-Xxxxxxx' shall be deemed to have occurred if (i) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Xxxxxx-Xxxxxxx representing twenty percent (20%) or
more of the combined voting power of Xxxxxx-Xxxxxxx'x then outstanding
securities, (ii) upon the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Xxxxxx-Xxxxxxx'x assets or plan of
liquidation which is approved by the stockholders of Xxxxxx-Xxxxxxx (a
'Transaction'), or (iii) the composition of the Board at any time during any
consecutive twenty-four (24) month period changes such that the Continuity
Directors (as hereinafter defined) cease for any reason to constitute at least
fifty-one percent (51%) of the Board. For purposes of the foregoing clause
(iii), 'Continuity Directors' means those members of the Board who either (a)
were directors at the beginning of such consecutive twenty-four (24) month
period, or (b)(1) filled a vacancy during such twenty-four (24) month period
created by reason of (x) death, (y) a medically determinable physical or mental
impairment which renders the director substantially unable to function as a
director or (z) retirement at the last mandatory retirement age in effect for at
least two (2) years, and (2) were elected, nominated or voted for by at least
fifty-one percent (51%) of the current directors who were also directors at the
commencement of such twenty-four (24) month period. Notwithstanding the
provisions of Article II hereof, upon the exercise of a Right during the 30-day
period following Xxxxxx-Xxxxxxx obtaining actual knowledge of a
4
Change in Control of Xxxxxx-Xxxxxxx, 'Fair Market Value' of a share of Common
Stock on the Valuation Date shall be equal to the higher of (i) the highest
closing sale price per share of Common Stock of Xxxxxx-Xxxxxxx on the Composite
Tape for New York Stock Exchange issues during the period commencing 30 days
prior to such Change in Control and ending immediately prior to such exercise or
(ii) if the Change in Control of Xxxxxx-Xxxxxxx occurs as a result of a tender
or exchange offer or consummation of a Transaction, then the highest price per
share of Common Stock pursuant thereto. Any consideration other than cash
forming a part or all of the consideration for Common Stock to be paid pursuant
to the applicable transaction shall be valued at the valuation placed thereon by
the Board. Adjustments, if any, shall be made in accordance with Section 10.1
hereof.
(b) As used in the Plan, a 'Merger of Equals' shall mean either: (a) a
Change in Control of Xxxxxx-Xxxxxxx Company, pursuant to the terms of which the
stockholders of Xxxxxx-Xxxxxxx Company receive consideration, including
securities, with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of Xxxxxx-Xxxxxxx
Company on the Composite Tape for New York Stock Exchange issues for the twenty
business days immediately preceding the earlier of the execution of the
definitive agreement pertaining to the transaction or the public announcement of
the transaction; or (b) any other Change in Control of Xxxxxx-Xxxxxxx Company
which the Board of Directors, in its sole discretion, determines to be a 'Merger
of Equals' for the purposes of this provision. For purposes of this section,
'Aggregate Value' shall mean the consideration to be received by the
stockholders of Xxxxxx-Xxxxxxx Company equal to the sum of (A) cash, (B) the
value of any securities and (C) the value of any other non-cash consideration.
The value of securities received shall equal the average closing price of the
security on the principal security exchange on which such security is listed for
the twenty business days immediately preceding the earlier of the execution of
the definitive agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on a security
exchange, and for any other non-cash consideration that is received, the value
of such security or such non-cash consideration shall be determined by the Board
of Directors.
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
SECTION 5.1. Types of Options. Options granted under the Plan shall be in
the form of (i) incentive stock options as defined in Section 422 of the Code,
or (ii) options not qualifying under such section, or both, in the discretion of
the Committee. The status of each Option shall be identified in the Option
agreement.
SECTION 5.2. Option Price. The Option Price shall be such as shall be fixed
by the Committee, subject to adjustment pursuant to Section 10.1 hereof;
provided, however, that the Option Price shall not be less than the Fair Market
Value of Xxxxxx-Xxxxxxx Common Stock on the date of grant. The date of the
granting of an Option under the Plan shall be the date fixed by the Committee.
SECTION 5.3. Period of Option.
(a) No part of an Option may be exercised unless the Optionee remains in the
continuous employ of the Company for the period of time specified by the
Committee, except that upon the occurrence of a Change in Control of
Xxxxxx-Xxxxxxx all Options may be exercised without giving effect to the period
of employment limitation and the limitations, if any, which may have been
imposed by the Committee pursuant to Section 5.3(b) with respect to the percent
of the total number of shares to which the Option relates which may be purchased
from time to time during the Option Period.
(b) Options will be exercisable thereafter over the Option Period, which, in
the case of each Option, shall be a period determined by the Committee and will
be exercisable at such times and in such amounts as determined by the Committee
at the time each Option is granted. Notwithstanding any other provision
contained in this Plan, no Option shall be exercisable after the expiration of
the Option Period. Except as provided in Sections 5.4, 5.5 and 5.6 hereof or as
otherwise determined by the Committee, no Option may be exercised unless the
Optionee is then in the employ of the Company and shall have been continuously
so employed since the date of the grant of such Option.
5
SECTION 5.4. Termination of Employment Before Age 55. An Optionee whose
employment terminates before age 55, by reason other than death, shall be
entitled to exercise such Option, only within the three-month period after the
date of such termination of employment and in no event after the expiration of
the Option Period, and then only if and to the extent that the Optionee was
entitled to exercise the Option at the date of the termination of employment,
giving effect to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the percent of the total
number of shares to which the Option relates which may be purchased from time to
time during the Option Period and have not been removed pursuant to
Section 5.3(a).
SECTION 5.5. Termination of Employment On or After Age 55. An Optionee whose
employment terminates on or after age 55, by reason other than death, shall be
entitled to exercise such Option if the Optionee was entitled to exercise the
Option at the date of the termination, without, however, giving effect to the
limitations, if any, which may have been imposed by the Committee pursuant to
Section 5.3(b) with respect to the percent of the total number of shares to
which the Option relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be exercisable until
the later of (i) the three-year period after termination of employment, or (ii)
the period after termination of employment which is equal to the number of full
months that the Option has been outstanding prior to such termination, but in no
event after the expiration of the Option Period.
SECTION 5.6. Death of Optionee. If an Optionee should die:
(a) while in the employ of the Company, the Option theretofore granted
shall, if the Optionee was entitled to exercise the Option at the date of
death, be exercisable by the estate of the Optionee, or by a person who
acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, without, however, giving effect to the
limitations, if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) with respect to the percent of the total number of shares
to which the Option relates which may be purchased from time to time during
the Option Period; provided, however, that such Option shall be exercisable
until the later of (i) the three-year period after termination of
employment, or (ii) the period after termination of employment which is
equal to the number of full months that the Option has been outstanding
prior to such termination, but in no event after the expiration of the
Option Period;
(b) within the three-month period after the date of the termination of
employment before age 55, the Option theretofore granted shall be
exercisable by the estate of the Optionee, or by a person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, but then only if and to the extent that the Optionee
was entitled to exercise the Option at the date of death, giving effect to
the limitations, if any, which may have been imposed by the Committee
pursuant to Section 5.3(b) with respect to the percent of the total number
of shares to which the Option relates which may be purchased from time to
time during the Option Period and have not been removed pursuant to
Section 5.3(a); provided, however, that such Option shall be exercisable
only within the twelve-month period next succeeding the death of the
Optionee and in no event after the expiration of the Option Period; or
(c) after the date of the termination of employment on or after age 55,
the Option theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by the estate of
the Optionee, or by a person who acquired the right to exercise such Option
by bequest or inheritance or by reason of the death of the Optionee,
without, however, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option relates which may
be purchased from time to time during the Option Period; provided, however,
that such Option shall be exercisable until the latest of (i) the three-year
period after termination of employment, (ii) the period after termination of
employment which is equal to the number of full months that the Option has
been outstanding prior to such termination, or (iii) the twelve-month period
after the death of the Optionee provided such death occurs before the later
of (i) or (ii), but in no event after the expiration of the Option Period.
6
SECTION 5.7. Payment for shares. Payment for shares of Common Stock shall be
made in full at the time of exercise of the Option. Nothing herein shall be
construed to prohibit the Company from making a loan or advance to the Optionee
for the purpose of financing, in whole or in part, the purchase of optioned
shares. Payment of the Option Price shall be made in cash or, with the consent
of the Committee, in whole or in part in Common Stock, Stock Awards or other
consideration. Payment may also be made by delivering a properly executed
exercise notice together with irrevocable instructions to a third party to
promptly deliver to the Company the amount of sale or loan proceeds to pay the
exercise price.
SECTION 5.8. Incentive Stock Options. Options granted in the form of
incentive stock options shall be subject, in addition to the foregoing
provisions, to the following provisions:
(a) Annual Limit. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Optionee
during any calendar year (under the Plan or under any other stock plan of
the Company) exceeds $100,000, such options shall be treated as options
which are not incentive stock options.
(b) Ten Percent Shareholder. No incentive stock option shall be granted
to any individual who, at the time of the proposed grant, owns Common Stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of Xxxxxx-Xxxxxxx or any Subsidiary.
(c) Option Period. No incentive stock option shall be exercisable after
the expiration of ten years from the date of grant.
(d) Option Price. The Option Price of an incentive stock option shall
not be less than the Fair Market Value per share on the date of grant.
(e) Subsidiary. Incentive stock options may only be granted to employees
of Xxxxxx-Xxxxxxx and its Subsidiaries.
(f) Aggregate Limit. The aggregate number of shares of Common Stock
which may be issued pursuant to the exercise of incentive stock options
shall not exceed the lesser of (i) 20,000,000 shares or (ii) the number of
shares determined in accordance with the share limitation specified in
Section 3.2 hereof.
The Company intends that Options designated by the Committee as incentive
stock options shall constitute incentive stock options under Section 422 of the
Code. Should any of the foregoing provisions not be necessary in order to so
comply or should any additional provisions be required, the Committee may amend
the Plan accordingly, without the necessity of obtaining the approval of
stockholders of Xxxxxx-Xxxxxxx.
SECTION 5.9. Rollover Options. Notwithstanding anything herein to the
contrary, in the event of a Merger of Equals all Options granted hereunder shall
become immediately exercisable by the Optionee and the Options shall be
converted into options to purchase the stock of the company which other
shareholders of Xxxxxx-Xxxxxxx Company receive in the transaction (the 'Rollover
Options'). The Rollover Options shall be subject to the same terms and
conditions as those applicable to the Options held prior to the Merger of
Equals, including, but not limited to, exercisability and Option Period, except
as hereinafter provided. If the Aggregate Value consists only of shares of a
publicly traded security ('New Security'), each Rollover Option shall entitle
the holder to purchase the number of shares of New Security which is equal to
the product of (a) the Exchange Ratio (as hereinafter defined) and (b) the
number of shares of Common Stock subject to the Option immediately prior to the
effective date of the Merger of Equals (rounded to the nearest full number of
shares). The exercise price for each Rollover Option shall be the exercise price
per share of each Option divided by the Exchange Ratio (rounded to the nearest
full cent). For purposes hereof, 'Exchange Ratio' shall mean the ratio for
exchanging Common Stock held by the stockholders of Xxxxxx-Xxxxxxx Company for
shares of New Security which is set forth in the definitive agreement pertaining
to the transaction. If the Aggregate Value consists of consideration other than
New Securities, the Board shall make appropriate adjustments to the number of
Rollover Options and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not 55 years old is
terminated within three (3) years following the Merger of Equals (for a reason
other than 'Termination for Just Cause,'
7
as defined in the Xxxxxx-Xxxxxxx Company Enhanced Severance Plan), such
optionee's Options shall remain exercisable notwithstanding such termination of
employment by the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination of employment,
but in no event after the expiration of the Option Period.
ARTICLE VI
TERMS OF RIGHTS
SECTION 6.1. Relation to Option. Each Right shall relate specifically to a
Reference Option, then held by, or concurrently granted to, the Grantee. Upon
exercise of a Right an amount shall be payable from Xxxxxx-Xxxxxxx, determined
in accordance with Section 6.3 hereof. The Reference Option shall terminate to
the extent that the related Right is exercised.
SECTION 6.2. Exercise of Right. A Right shall become exercisable at such
time, and in respect of such number of shares of Common Stock, as the Reference
Option is then exercisable and such Right shall terminate upon termination of
the Reference Option, provided, however, that no Right shall be exercisable
unless the Grantee shall have remained in the continuous employ of the Company
for the period specified by the Committee, except that upon the occurrence of a
Change in Control of Xxxxxx-Xxxxxxx, all Rights may be exercised without giving
effect to the period of employment limitation and the limitations, if any, which
may have been imposed by the Committee pursuant to Section 5.3(b) with respect
to the percent of the total number of shares to which the Right relates which
may be purchased from time to time during the Option Period. Except as provided
in this Section 6.2, Section 6.5 and Section 6.6, or as otherwise determined by
the Committee, no Right shall be exercisable unless at the time of such exercise
the Grantee shall be in the employ of the Company.
SECTION 6.3. Amount Payable Upon Exercise of Right. Upon the exercise of a
Right the amount payable shall be equal to:
(i) 100% of the Spread but not exceeding the difference between the
Option Price and the Fair Market Value of a share of Common Stock on the
Valuation Date; plus
(ii) 125% of the amount, if any, by which the Fair Market Value of a
share of Common Stock on the Valuation Date exceeds the Fair Market Value on
the date the Right was granted;
multiplied by the number of shares with respect to which the Right is being
exercised; provided, however, that the Committee may grant Rights which provide
that upon exercise the amount payable shall be equal to 100% of the amount by
which the Fair Market Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was granted.
SECTION 6.4. Form of Payment. The amount payable on exercise of a Right
shall be payable in cash, shares of Common Stock valued at their Fair Market
Value as of the Valuation Date, or in any combination thereof; provided,
however, that the form of payment shall be in the sole discretion of the
Committee. In the event that any payment in the form of both cash and shares of
Common Stock is made to a Reporting Person, the cash portion of such payment
shall be made upon the Grantee becoming taxable in respect of the Common Stock
received upon exercise of the Right. Notwithstanding the foregoing, a payment,
in whole or in part, of cash may be made to a Reporting Person upon exercise of
a Right only if the Right is exercised (i) during the period beginning on the
third business day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of the Company and
ending on the twelfth business day following such date, or (ii) during any other
period permitted under the provisions of Rule 16b-3 promulgated pursuant to the
Act. In addition, a payment of cash shall be made to a Reporting Person who has
held the Right at least six months from the date of its grant promptly following
a Change in Control of Xxxxxx-Xxxxxxx which Change in Control is outside the
control of any Reporting Person within the meaning of the aforesaid Rule 16b-3.
The Company intends that this provision shall comply with the requirements of
Rule 16b-3 under the Act. Should this provision not be necessary to comply with
the requirements of such Rule or should any additional provision be necessary in
order to comply with the requirements of such Rule, the Committee may amend the
Plan accordingly, without the necessity of obtaining the approval of
stockholders of the Company. Any fraction of a share resulting from the above
calculation shall be disregarded.
8
SECTION 6.5. Termination of Employment. If, prior to the expiration of a
Reference Option, the employment of the Grantee by the Company should terminate,
by reason other than death, the related Right shall terminate, except that if,
after a Grantee shall have remained in the employ of the Company for the period
specified by the Committee, such Xxxxxxx's employment should terminate on or
after age 55, the Right theretofore granted shall be exercisable until the later
of (i) the three-year period after termination of employment, or (ii) the period
after termination of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such termination, but in no
event after the expiration of the Option Period, without, however, giving effect
to the limitations, if any, which may have been imposed by the Committee
pursuant to Section 5.3(b) hereof.
SECTION 6.6. Death of Grantee. If a Grantee should die prior to the
termination of the Reference Option:
(a) while in the employ of the Company, the Right theretofore granted
shall, if the Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a person who
acquired the right to exercise such Right by bequest or inheritance or by
reason of the death of the Grantee, without, however, giving effect to the
limitations, if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) hereof with respect to the percent of the total number of
shares to which the Right relates which may be purchased from time to time
during the Option Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period after termination
of employment, or (ii) the period after termination of employment which is
equal to the number of full months that the Reference Option has been
outstanding prior to such termination, but in no event after the expiration
of the Option Period; or
(b) after the date of the termination of employment on or after age 55,
the Right theretofore granted shall, if the Grantee was entitled to exercise
the Right at the date of death, be exercisable by the estate of the Grantee,
or by a person who acquired the right to exercise such Right by bequest or
inheritance or by reason of the death of the Grantee, without, however,
giving effect to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) hereof with respect to the percent of
the total number of shares to which the Right relates which may be purchased
from time to time during the Option Period; provided, however, that such
Right shall be exercisable until the latest of (i) the three-year period
after termination of employment, (ii) the period after termination of
employment which is equal to the number of full months that the Reference
Option has been outstanding prior to such termination, or (iii) the
twelve-month period after the death of the Grantee provided such death
occurs before the later of (i) or (ii), but in no event after the expiration
of the Option Period.
SECTION 6.7. Limited Rights. Notwithstanding anything herein to the
contrary, Limited Rights may be granted hereunder by the Committee with respect
to the options granted under this Plan or any other stock option plan of the
Company which shall entitle the holder to receive a payment of cash promptly
following a Change in Control of Xxxxxx-Xxxxxxx which Change in Control is
outside the control of any Reporting Person within the meaning of Rule 16b-3
under the Act. Such payment of cash shall be made to a Reporting Person only if
such person has held such Limited Right at least six months from the date of its
grant. Promptly following any such Change in Control, the Optionee shall be
entitled to receive a cash payment equal to the excess of the Fair Market Value
of a share of Common Stock on the Valuation Date over the Option Price of the
related Option multiplied by the number of shares with respect to which the
Limited Right relates (in such case the method of determining the Fair Market
Value in the third sentence of Section 4.6(a) shall apply). Limited Rights shall
expire on the first to occur of their date of payment or expiration of the
Limited Right or the related Option. Further, upon payment of a Limited Right,
the related Option (and any other Right related thereto) shall be cancelled.
Except as otherwise provided herein, the provisions of the Plan relating to
Rights shall also apply to Limited Rights.
9
ARTICLE VII
TERMS AND CONDITIONS OF RESTRICTED STOCK
SECTION 7.1. General. The restrictions set forth in Section 7.2 shall apply
to each grant of Restricted Stock for the duration of the Restricted Period.
SECTION 7.2. Restrictions. A stock certificate representing the number of
shares of Restricted Stock granted shall be registered in the Participant's name
but shall be held in custody by the Company for the Participant's account.
Subject to the provisions of Section 7.3, the Participant shall have all rights
and privileges of a stockholder as to such Restricted Stock, including the right
to receive dividends and the right to vote such shares, and the following
restrictions shall apply: (i) the Participant shall not be entitled to delivery
of the certificate until the expiration of the Restricted Period; (ii) none of
the shares of Restricted Stock may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restricted Period; (iii) the
Participant shall, if requested by the Company, execute and deliver to the
Company, a stock power endorsed in blank; and (iv) all of the shares of
Restricted Stock still subject to restrictions shall be forfeited and all rights
of the Participant to such shares shall terminate without further obligation on
the part of the Company if the Participant ceases to be an Employee prior to the
expiration of the Restricted Period applicable to such shares. Upon the
forfeiture (in whole or in part) of shares of Restricted Stock, such forfeited
shares shall become treasury shares of the Company without further action by the
Participant. The Participant shall have the same rights and privileges, and be
subject to the same restrictions, with respect to any shares received pursuant
to Section 10.1 hereof.
SECTION 7.3. Terms and Conditions. The Committee shall establish the terms
and conditions, which need not be the same for all grants made under the Plan,
applicable to the Restricted Stock, and which may include restrictions based
upon periods of time, performance (corporate, group, individual or otherwise),
combinations thereof or such other restrictions as the Committee shall determine
to be appropriate. The Committee may provide for the restrictions to lapse with
respect to a portion or portions of the Restricted Stock at different times or
upon the occurrence of different events and the Committee may waive, in whole or
in part, any or all restrictions applicable to a grant of Restricted Stock.
Restricted Stock awards may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
SECTION 7.4. Delivery of Restricted Shares. At the end of the Restricted
Period as herein provided, a stock certificate for the number of shares of
Restricted Stock with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the Participant or the
Participant's beneficiary or estate, as the case may be. The Company shall not
be required to deliver any fractional share of Common Stock but shall pay, in
lieu thereof, the fair market value (measured as of the date the restrictions
lapse) of such fractional share to the Participant or the Participant's
beneficiary or estate, as the case may be. Notwithstanding the foregoing, the
Committee may authorize the delivery of the Restricted Stock to a Participant
during the Restricted Period, in which event any stock certificates in respect
of shares of Restricted Stock thus delivered to a Participant during the
Restricted Period applicable to such shares shall bear an appropriate legend
referring to the terms and conditions, including the restrictions, applicable
thereto.
SECTION 7.5. Certain Events.
(a) In the event of a Change in Control of Xxxxxx-Xxxxxxx the rights and
privileges of Participants hereunder shall be governed by the following clause
(i), (ii), (iii), or (iv) as appropriate:
(i) Value of Restricted Stock. All shares of Restricted Stock then
outstanding shall be immediately forfeited and shall revert to the Company
as treasury shares and, in lieu thereof, each Participant shall receive a
cash payment equal to the Value of the Restricted Stock (as hereinafter
defined); provided, however, that if the Participant is a Reporting Person
at the time of the Change in Control of Xxxxxx-Xxxxxxx, the provisions of
clause (ii) shall govern the rights and privileges of such Participant.
10
(ii) Reporting Persons. All shares of Restricted Stock previously
granted to Participants who are Reporting Persons at the time of the Change
in Control of Xxxxxx-Xxxxxxx, which Change in Control is outside the control
of any Reporting Person within the meaning of Rule 16b-3 under the Act, and
which are then outstanding and have been outstanding for a period of at
least six (6) months, shall be immediately forfeited and shall revert to the
Company as treasury shares and, in lieu thereof, such Participant shall
receive a cash payment equal to the Value of the Restricted Stock.
(iii) Lapse of Restrictions. In the event that clause (ii) shall not
become operational with respect to a Participant who is a Reporting Person,
all restrictions applicable to shares of Restricted Stock previously granted
to such Participant and then outstanding shall expire and such shares shall
thereupon be delivered to the Participant free of all restrictions.
(iv) Notwithstanding anything herein to the contrary, in the case of the
Change in Control transaction contemplated by the Agreement and Plan of
Merger, dated as of February 6, 2000, among Pfizer Inc., Seminole
Acquisition Sub Corp. and Xxxxxx-Xxxxxxx, as the same may be amended from
time to time (the 'Merger Agreement'), all shares of Restricted Stock which
are outstanding immediately prior to such Change in Control shall, as of the
consummation of such Change in Control, (a) become fully vested and free of
restrictions and (b) thereupon be converted into a number of fully vested
shares of the ultimate parent entity resulting from such Change in Control
based upon the same exchange ratio pursuant to which shares of Common Stock
are so converted pursuant to the Merger Agreement.
(b) As used in the Plan, the 'Value of the Restricted Stock' shall be the
higher of (a) the highest closing price per share of Common Stock on the
Composite Tape for New York Stock Exchange issues during the 30 day period prior
to the Change in Control of Xxxxxx-Xxxxxxx, or (b) if the Change in Control of
Xxxxxx-Xxxxxxx occurs as a result of a tender or exchange offer or consummation
of a Transaction, then the highest price per share of Common Stock pursuant
thereto, multiplied by the total number of shares of Restricted Stock granted to
such Participant and then outstanding, regardless of whether the restrictions
applicable thereto shall have previously lapsed. Any consideration other than
cash forming a part or all of the consideration for Common Stock to be paid
pursuant to the applicable transaction shall be valued at the valuation placed
thereon by the Board of Directors. Adjustments, if any, shall be made in
accordance with Section 10.1 hereof.
ARTICLE VIII
TERMS AND CONDITIONS OF PERFORMANCE AWARDS
SECTION 8.1. Terms and Conditions. The Committee may grant Performance
Awards, determine the consideration therefor, which may include prior efforts
and accomplishments, and establish the terms and conditions thereof, which may
include provisions based upon periods of time, performance (corporate, group,
individual or otherwise), combinations thereof or such other provisions as the
Committee may determine to be appropriate. Performance Awards may consist of
shares of Common Stock or awards that are valued by reference to shares of
Common Stock (e.g., phantom stock or restricted stock units), cash or such other
measure as the Committee shall determine. Performance Awards may provide for
payment in shares of Common Stock, cash, other property or any combination
thereof as determined by the Committee. Shares of Common Stock issued pursuant
to this Section 8.1 may be issued for no cash consideration or for such minimum
consideration as may be required by applicable law. The Committee shall
determine whether payment shall be made in a lump sum, installments or deferred.
With respect to Performance Awards which are valued by reference to shares of
Common Stock, the Committee shall also determine whether the Participant may be
entitled to receive a payment of, or credit equivalent to, any dividends payable
with respect to such shares of Common Stock and the terms and conditions
applicable thereto. Further, if a payment of cash is to be made on a deferred
basis, the Committee shall establish whether interest shall be credited, the
rate thereof and any other terms and conditions applicable thereto. The
limitations on transfer set forth in Section 4.4 shall be applicable to all
Performance Awards.
11
ARTICLE IX
REGULATORY COMPLIANCE AND LISTING
SECTION 9.1. Regulatory Compliance and Listing. The issuance or delivery of
any Stock Awards and shares of Common Stock pursuant thereto may be postponed by
the Company for such periods as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable listing
requirements of any national securities exchange or any requirements under any
other law or regulation applicable thereto, and the Company shall not be
obligated to issue or deliver any such awards or shares if the issuance or
delivery thereof shall constitute a violation of any provision of any law or of
any regulation of any governmental authority or any national securities
exchange.
ARTICLE X
ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION
SECTION 10.1. Adjustments. In the event of a recapitalization, stock split,
stock dividend, combination or exchange of shares, merger, consolidation, rights
offering, reorganization, liquidation, or the sale, conveyance, lease or other
transfer by Xxxxxx-Xxxxxxx of all or substantially all of its property, or any
other change in the corporate structure or shares of Xxxxxx-Xxxxxxx, equitable
adjustments shall be made to prevent dilution or enlargement of rights (i) in
the number and class of shares authorized to be granted hereunder, (including
adjustment to the share limitation of Section 3.2 hereof), (ii) in the number
and kind of shares available under any outstanding Stock Awards (including
substitution of shares of another corporation), (iii) in the price of any
Option, (iv) in the number of Stock Credits in each Director's Stock Account and
(v) in any other aspect of the Plan as the Committee shall deem appropriate;
provided, however, that in no event may any change be made to an incentive stock
option which would constitute a 'modification' within the meaning of Section
424(h)(3) of the Code. Stock Awards granted under the Plan shall contain such
provisions as are consistent with the foregoing with respect to adjustments to
be made in the number and kind of shares covered thereby and in the Option Price
in the event of any such change.
ARTICLE XI
DIRECTORS' DEFERRED COMPENSATION
SECTION 11.1. Election To Participate.
(a) Each Director may elect to defer payment of all or any portion of his or
her Compensation that is payable during the immediately succeeding Plan Year.
Such election must be made with respect to all Compensation payable in such
succeeding Plan Year by the date established by the Secretary of the Company but
in no event later than December 31 of such preceding Plan Year.
(b) An election to defer any Compensation shall be: (i) in writing, (ii)
delivered to the Secretary, and (iii) irrevocable. A Director may file a new
election each Plan Year applicable to the immediately succeeding Plan Year. If
no election or revocation of a prior election is received by such date as may be
permissible under the preceding paragraph, the election, if any, in effect for
such Plan Year will continue to be effective for the immediately succeeding Plan
Year. If a Director does not elect to defer Compensation payable during a Plan
Year, all such Compensation shall be paid directly to such Director in
accordance with resolutions adopted by the Board from time to time.
SECTION 11.2. Mode of Deferral. A Director who has elected to defer all or a
portion of his or her Compensation as provided in Section 11.1 hereof may
further elect to have such deferred amounts credited to a Cash Account, a Stock
Account, or a combination of both such Accounts. The Secretary shall maintain
such Accounts in the name of the Director. The election referred to in this
Section 11.2 may be made once per year and shall become effective on the January
1st which follows such election; provided, however, that no election to defer
amounts into the Stock Account shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(d) under the Act. Any such election shall
be specified in a writing delivered by the Director to the Secretary and shall
be irrevocable. If a Director fails to elect the Account to which deferral shall
be made or if any such election would result
12
in a transaction which would not qualify as exempt under Rule 16b-3(d) under the
Act, he or she shall be deemed to have elected deferral to the Cash Account. In
addition, a Director may cease deferring amounts into the Stock Account at any
time by written notice delivered to the Secretary and thereafter such amounts
shall be credited to the Cash Account. Compensation deferred to a Cash Account
or Stock Account shall result in Cash Credits or Stock Credits, respectively.
SECTION 11.3. Cash Account. The Cash Account of a Director shall be
credited, as of the day the deferred Compensation otherwise would have been
payable to such Director, with Cash Credits equal to the dollar amount of such
deferred Compensation. The Cash Account shall be adjusted and increased each
year, as if interest was credited thereon, at the rate utilized for adjusting
deferred bonus accounts under the Xxxxxx-Xxxxxxx Company Incentive Compensation
Plan.
SECTION 11.4. Stock Account. The Stock Account of a Director shall be
credited, as of the day the deferred Compensation otherwise would have been
payable to such Director, with Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have been purchased
with the amount of such deferred Compensation at the Closing Price of shares of
Common Stock on the day the deferred Compensation otherwise would have been
payable to such Director. As of the date of any dividend record date for the
Common Stock, the Director's Stock Account shall be credited with additional
Stock Credits equal to the number of shares of Common Stock (including fractions
of a share) that could have been purchased, at the Closing Price of shares of
Common Stock on such date, with the amount which would have been paid as
dividends on that number of shares (including fractions of a share) of Common
Stock which is equal to the number of Stock Credits then attributed to the
Director's Stock Account; provided, however, that in the event that there is not
then in effect an election under Section 11.2 hereof to have any of such
Director's Compensation credited to a Stock Account and, further, that the
Director has elected under Section 11.5(a) hereof to transfer his or her Stock
Account to a Cash Account then the amount which would have been credited to the
Stock Account in accordance with this sentence but for this proviso shall
instead be credited to such Director's Cash Account. In the case of dividends
paid in property other than cash, the amount of the dividend shall be deemed to
be the fair market value of the property at the time of the payment of the
dividend, as determined in good faith by the Committee.
SECTION 11.5. Conversions.
(a) Stock Account to Cash Account. Prior to January 1, 1998, a Director may
elect to convert all or any portion of his or her Stock Account to his or her
Cash Account; provided, however, that no such election shall become effective
unless the transaction qualifies as exempt under Rule 16b-3(f) under the Act.
The amount to be credited to such Director's Cash Account shall be obtained by
multiplying the number of Stock Credits credited to his or her Stock Account as
of the last day of the month in which such election is made by the Closing Price
of shares of Common Stock on such date.
(b) Cash Account to Stock Account. A Director may elect to convert all or
any portion of his or her Cash Account to his or her Stock Account; provided,
however, that no such election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The number of Stock
Credits to be credited to such Director's Stock Account shall be obtained by
dividing the number of Cash Credits credited to his or her Cash Account as of
the last day of the month in which such election is made by the Closing Price of
shares of Common Stock on such date.
(c) An election under this Section 11.5 shall be in a writing delivered to
the Secretary and may be revoked or revised at any time prior to the last day of
the month in which the election is made.
SECTION 11.6. Distribution of Cash Account or Stock Account.
(a) Distributions in respect of a Director's Cash Account and Stock Account
shall become payable in full to such Director, annually, over a period of ten
(10) years, except as otherwise agreed to by the Committee and the Director,
beginning with the first day of the calendar year following the year in which
the individual ceases to be a member of the Board of Directors.
(b) Distributions in respect of a Director's Cash Account shall be made only
in cash. Distributions in respect of a Director's Stock Account shall be made
only in shares of Common Stock.
13
SECTION 11.7. Installment Amount.
(a) The amount of each distribution with respect to a Director's Cash
Account shall be the amount obtained by multiplying the balance in such Account
by a fraction, the numerator of which is one (1) and the denominator of which is
the number of years in which distributions remain to be made (including the
current distribution).
(b) The number of Stock Credits attributable to each distribution shall be
equal to the number obtained by multiplying the current number of Stock Credits
in such Stock Account by a fraction, the numerator of which is one (1) and the
denominator of which is the number of years in which distributions remain to be
made (including the current distribution).
SECTION 11.8. Financial Hardship. Notwithstanding any other provision
hereof, at the written request of a Director or a Director's legal
representative, the Committee, in its sole discretion, upon a finding that
continued deferral will result in financial hardship to the Director, may
authorize (i) the payment of all or a part of a Director's Accounts in a single
installment prior to his or her ceasing to be a Director or (ii) the
acceleration of payment of any multiple installments thereof; provided, however,
that Directors may not receive distributions under this Section 11.8 if such
distribution would result in liability of the Director under Section 16 of the
Act.
SECTION 11.9. Distribution upon Death. Upon the death of a Director, the
Committee shall pay all of such Director's Cash Account and Stock Account in a
single installment to the beneficiary designated by the Director. All such
designations shall be made in writing and delivered to the Secretary. A Director
may from time to time revoke or change any such designation by written notice to
the Secretary. If there is no designation on file with the Secretary at the time
of the Director's death, or if the beneficiary designated therein shall have
predeceased the Director, such distributions shall be made to the executor or
administrator of the Director's estate. Any distribution under this Section 11.9
shall be made as soon as practicable following notification to the Committee of
the Director's death.
SECTION 11.10. Certain Events. Notwithstanding any other provision hereof,
in the event of a Change in Control of Xxxxxx-Xxxxxxx which is outside of the
control of any Reporting Person within the meaning of Rule 16b-3 under the Act,
the balance in the Stock Account of each Director shall be converted to the Cash
Account. For this purpose, the balance in the Stock Account shall be determined
by multiplying the number of Stock Credits by the higher of (i) the highest
Closing Price during the period commencing 30 days prior to such Change in
Control or (ii) if the Change in Control of Xxxxxx-Xxxxxxx occurs as a result of
a tender or exchange offer or consummation of a Transaction, then the highest
price per share of Common Stock pursuant thereto. Any consideration other than
cash forming a part or all of the consideration for Common Stock to be paid
pursuant to the applicable transaction shall be valued at the valuation placed
thereon by the Board of Directors. Adjustments, if any, shall be made in
accordance with Article X hereof. Notwithstanding the preceding provisions of
this Section, in the case of the Change in Control transaction contemplated by
the Agreement and Plan of Merger, dated as of February 6, 2000, among Pfizer
Inc., Seminole Acquisition Sub Corp. and Xxxxxx-Xxxxxxx, as the same may be
amended from time to time (the 'Merger Agreement'), the Stock Credits in the
Stock Account of each Director immediately prior to such Change in Control shall
be converted, as of such Change in Control, into a number of stock credits in
the ultimate parent entity resulting from such Change in Control based upon the
same exchange ratio pursuant to which shares of Common Stock are converted to
shares of such entity pursuant to the Merger Agreement. Within 30 days after a
Change in Control of Xxxxxx-Xxxxxxx, each Director may designate a distribution
schedule which may provide for a lump sum payment or installment payments over a
period of up to 15 years, provided, however, that no payment shall be made for a
period of one year after the Change in Control. In the event that a Director
shall not make a designation in accordance with the preceding sentence, the
balances in the Cash Account and the Stock Account shall be distributed in a
lump sum one year after the Change in Control.
SECTION 11.11. Valuations. Notwithstanding any other provision hereof, in
any instance in which a Director's Stock Account is to be valued by reference to
the Closing Price of shares of Common Stock on a single day, the Committee may
declare such price to be unrepresentative of the market value of such Common
Stock and, in lieu thereof, shall base such valuation on the average of the
Closing Prices
14
of shares of Common Stock on each Business Day during the calendar quarter
ending coincident with or immediately preceding the day which would otherwise
serve as the basis for the valuation.
SECTION 11.12. Funding. The Company's sole obligation to a Director or any
person claiming under or through any Director in respect of the payment of any
balance in an Account shall be solely a contractual obligation in accordance
with the terms of the Plan. No promise hereunder shall be secured by any
specific assets of the Company, nor shall any assets of the Company be
designated as attributable or allocated to the satisfaction of such promises.
SECTION 11.13. Status of Stock Credits. Stock Credits are not, and do not
constitute, shares of Common Stock, and no right as a holder of shares of Common
Stock shall devolve upon a Director by reason of his or her participation in the
Plan.
SECTION 11.14. Non-Trading Date. In the event that the date of the
determination of a Closing Price hereunder shall be a date which shall not be a
date on which the Common Stock is traded on the New York Stock Exchange,
determination of such Closing Price shall be made as of the first date
thereafter on which the Common Stock is so traded.
SECTION 11.15. No Right To Reelection. Nothing in the Plan shall be deemed
to create any obligation on the part of the Board to nominate any Director for
reelection by the Company's stockholders, nor confer upon any Director the right
to remain a member of the Board of Directors.
SECTION 11.16. Predecessor Plans. Upon the Effective Date of the Plan, no
further benefits shall accrue under any Predecessor Plans and account balances
accrued under any Predecessor Plans shall be governed by the provisions of this
Plan, except as provided in Section 11.18 hereof.
SECTION 11.17. Deferred Compensation Accounts. Upon the Effective Date of
the Plan, all Deferred Compensation Accounts shall become subject to the terms
and conditions of this Plan in lieu of the terms and conditions of the
Predecessor Plans, except as provided in Section 11.18 hereof.
SECTION 11.18. Retired Directors. Benefits accrued under Predecessor Plans
which are in pay status on the Effective Date shall continue to be paid in
accordance with the provisions of the Predecessor Plans.
Section 11.19. Federal Securities Law. The Company intends that the
provisions of this Article XI, and all transactions effected in accordance with
this Article XI, shall comply with Rule 16b-3 under the Act. In the event that
any provision of this Article XI is not necessary to so comply or any additional
provision is necessary to obtain or maintain such compliance, the Committee is
authorized to revise the Plan accordingly without obtaining approval of the
stockholders of Xxxxxx-Xxxxxxx. By way of illustration, and not limitation, the
Committee may bifurcate the provisions of this Article XI, and such other
provisions as it shall deem necessary, into a separate plan (which plan shall be
recognized as having received approval of the stockholders of Xxxxxx-Xxxxxxx),
if the Committee shall deem such action necessary to maintain qualification of
Article XI (and transactions thereunder) under Rule 16b-3(d) under the Act and
the qualification of the provisions of the Plan affecting Employees (and
transactions thereunder) under Rule 16b-3 under the Act.
ARTICLE XII
ADMINISTRATION
SECTION 12.1. Administration.
(a) The Plan shall be administered by a committee consisting of not less
than three members of the Board of Directors, who shall be appointed by, and
shall serve at the pleasure of, the Board of Directors. No person who is or,
within one year prior thereto, has been eligible to receive an award under the
Plan or any other plan of the Company which would result in loss of
'disinterested person' status within the meaning of Section 16 of the Act may be
a member of the Committee, and no person may be granted a Stock Award while a
member of the Committee. A majority of the Committee shall constitute a quorum
and the acts of a majority of the members present at any meeting at which a
quorum is present, expressed from time to time by a vote at a meeting (including
a meeting held by
15
telephone conference call or in which one or more members of the Committee
participate by telephone), or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee.
(b) In addition to the Committee's discretionary authority set forth in
other Articles hereof, the Committee has discretionary authority to construe and
interpret the Plan and is authorized to establish such rules and regulations for
the proper administration of the Plan as it may deem advisable and not
inconsistent with the provisions of the Plan. All questions arising under the
Plan or under any rule or regulation with respect to the Plan adopted by the
Committee, whether such questions involve an interpretation of the Plan or
otherwise, shall be decided by the Committee, and its decisions shall be
conclusive and binding in all cases.
(c) The Committee has discretionary authority to determine the Employees to
whom Stock Awards under the Plan are to be granted, the terms and conditions
applicable thereto and the number of shares to be covered by each award. In
selecting the individuals to whom Stock Awards shall be granted, as well as in
determining the terms and conditions applicable thereto and the number of shares
subject to each grant, the Committee shall consider the positions and
responsibilities of the Employees being considered, the nature of the services
and accomplishments of each, the value to the Company of their services, their
present and potential contribution to the success of the Company, the
anticipated number of years of service remaining and such other factors as the
Committee may deem relevant. The Committee may obtain such advice or assistance
as it deems appropriate from persons not serving on the Committee.
SECTION 12.2. Stock Awards Committee. In addition, and not in limitation of
the authority of the Committee, the Stock Awards Committee (as hereinafter
constituted) may grant Stock Awards, in accordance with the provisions of the
Plan, including the establishment of the terms and conditions thereof and the
consideration to the Company therefor, to Employees who, at the time of the
grant, are not Reporting Persons. The Stock Awards Committee, whose members need
not serve on the Board of Directors, shall be appointed by, and shall serve at
the pleasure of, the Committee. A majority of the Stock Awards Committee shall
constitute a quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, expressed from time to time by a vote at a
meeting (including a meeting held by telephone conference call or in which one
or more members of the Stock Awards Committee participate by telephone), or acts
approved in writing by a majority of the Stock Awards Committee, shall be the
acts of the Stock Awards Committee. Notwithstanding the foregoing, the Stock
Awards Committee may not undertake any action which the provisions of Rule
16b-3, promulgated pursuant to the Act, require to be undertaken by
'Non-Employee Directors' (as defined in said Rule) as a condition of the
continued qualification of the Plan (and transactions thereunder) under Rule
16b-3.
ARTICLE XIII
TERMINATION OR AMENDMENT OF THE PLAN
SECTION 13.1. Termination or Amendment.
(a) The Board may at any time terminate the Plan and may from time to time
alter or amend the Plan or any part thereof (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article IX); provided, however, that, unless otherwise required
by law, the rights of a Participant with respect to Stock Awards granted or the
rights of a Director with respect to his or her Accounts prior to such
termination, alteration or amendment may not be impaired without the consent of
such Participant or Director, as the case may be, and, provided further, without
the approval of the Company's stockholders, no alteration or amendment may be
made which would require approval of such stockholders as a condition of
compliance with Rule 16b-3 under the Act. The Company intends that the Plan (and
transactions thereunder) shall comply with the requirements of Rule 16b-3
promulgated pursuant to the Act. Should any provisions hereof not be necessary
in order to comply with the requirements of such Rule or should any additional
provisions
16
be necessary in order to so comply, the Committee may amend the Plan
accordingly, without the necessity of obtaining approval of the stockholders of
Xxxxxx-Xxxxxxx.
(b) The Committee may at any time adopt any amendment to the Plan which
(i)(A) does not increase Plan liabilities by an amount in excess of five million
dollars ($5,000,000) and does not increase Plan expense by an amount in excess
of five hundred thousand dollars ($500,000) or (B) is required by an applicable
law, regulation or ruling, (ii) can be undertaken by the Board of Directors
under the terms of the Plan, (iii) does not involve a termination of the Plan,
(iv) does not affect the limitations contained in this sentence, and (v) does
not affect the composition or compensation of the Committee.
(c) The Committee shall have the power to cancel all Rights theretofore
granted pursuant to the Plan in the event that it shall determine that the
accounting effects of the grant or exercise of Rights under the Plan would not
be in the best interests of the Company.
(d) Any action which may be undertaken by the Committee pursuant to the
terms hereof may be undertaken by the Board, except as provided in Rule 16b-3
promulgated pursuant to the Act.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. No Right To Employment. Nothing in the Plan shall be deemed to
confer upon any Participant the right to remain in the employ of the Company.
SECTION 14.2. Withholding of Taxes.
(a) The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash hereunder,
payment by the Participant or the Director, as the case may be, of any taxes
required by law with respect thereto.
(b) The Committee may permit any such withholding obligation to be satisfied
by reducing the number of shares of Common Stock otherwise deliverable. A
Reporting Person may elect to have a sufficient number of shares of Common Stock
withheld to fulfill such tax obligations (hereinafter a 'Withholding Election')
only if the election complies with the following conditions: (x) the Withholding
Election shall be subject to the disapproval of the Committee and (y) the
Withholding Election is made (i) during the period beginning on the third
business day following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Company and ending on the
twelfth business day following such date, or (ii) during any other period in
which a Withholding Election may be made under the provisions of Rule 16b-3
promulgated pursuant to the Act. Any fraction of a share of Common Stock
required to satisfy such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Participant.
SECTION 14.3. No Assignment of Benefits. No benefit payable under the Plan
shall, except as otherwise specifically provided by law, be subject in any
manner to anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, attach,
sell, transfer, assign, pledge, encumber or charge any such benefit shall be
void, and any such benefit shall not in any manner be liable for or subject to
the debts, contracts, liabilities, engagements or torts of any person who shall
be entitled to such benefit, nor shall it be subject to attachment or legal
process for or against such person. If any person entitled to a benefit
hereunder shall be adjudicated a bankrupt or shall attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge such benefit, or if
any attempt is made to subject any such benefit to the debts, contracts,
liabilities, engagements or torts of any person entitled to such benefit, then
such benefit shall, in the discretion of the Committee, cease and terminate, and
in that event the Committee may cause such benefit, or any part thereof, to be
held or applied for the benefit of such person, his or her spouse, children or
other dependents, or any of them, in such manner and in such proportion as the
Committee shall determine.
SECTION 14.4. Death; Disability; Termination. The Committee shall establish
the provisions which shall govern in the event of the death, disability, or
termination (including layoff) of a Participant or a Director, which provisions
may be different than the provisions otherwise described herein with respect
17
to death, disability, and termination. If, for any reason, the Committee shall
determine that it is not desirable because of the incapacity of the person who
shall be entitled to receive any payments hereunder, to make such payments
directly to such person, the Committee may apply such payment for the benefit of
such person in any way that the Committee shall deem advisable or may make any
such payment to any third person who, in the judgment of the Committee, will
apply such payment for the benefit of the person entitled thereto. In the event
of such payment, the Company, the Board of Directors and the Committee shall be
discharged from all further liability therefor. The employment of an Employee
who becomes disabled shall be deemed terminated for purposes of the Plan as of
the date benefit payments would have commenced under the Xxxxxx-Xxxxxxx Long
Term Disability Benefits Plan had the Participant been enrolled in such plan,
except as otherwise provided herein or under Company policy. Absence on leave
approved by the Company shall not be considered an interruption of employment
for any purpose of the Plan.
SECTION 14.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New York Stock Exchange,
the issue of any shares of stock pursuant to a Stock Award shall be conditioned
upon the shares so to be issued being listed on such Exchange. Xxxxxx-Xxxxxxx
shall make application for listing on such Exchange unlisted shares subject to
Stock Awards, but shall have no obligation to issue such shares unless and until
such shares are so listed, and the right to exercise any Option or Right with
respect to such shares shall be suspended until such listing has been effected.
(b) If at any time counsel to Xxxxxx-Xxxxxxx shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to a Stock Award is or
may in the circumstances be unlawful under the statutes, rules or regulations of
any applicable jurisdiction, Xxxxxx-Xxxxxxx shall have no obligation to make
such sale or delivery, or to make any application or to effect or to maintain
any qualification or registration under the Securities Act of 1933, as amended,
or otherwise with respect to shares of Common Stock or Stock Awards, and the
right to exercise any Option or Right shall be suspended until, in the opinion
of said counsel, such sale or delivery shall be lawful.
(c) Upon termination of any period of suspension under this Section 14.5,
any Stock Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension.
SECTION 14.6. Governing Law. This Plan shall be governed by the law of the
State of New Jersey (regardless of the law that might otherwise govern under
applicable New Jersey principles of conflict of laws).
SECTION 14.7. Construction. Wherever any words are used herein in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
SECTION 14.8. Laws of Foreign Jurisdictions. Without amending the Plan, but
subject to the limitations specified in Article XIII hereof, the Committee may
grant, amend, administer, annul or terminate Stock Awards on such terms and
conditions, which may be different from those specified in the Plan, as it may
deem necessary or desirable to make available tax or other benefits of the laws
of any foreign jurisdiction.
SECTION 14.9. Other Plans. Nothing contained herein shall prevent the
Company from adopting additional compensation plans or arrangements.
SECTION 14.10. Federal Securities Law. Notwithstanding any other provision
of the Plan, no transaction shall be given effect on any date which would, in
the opinion of counsel to the Company, result in liability under Section 16(b)
of the Act.
18
ARTICLE XV
EFFECTIVE DATE; TERM OF PLAN
SECTION 15.1. Effective Date. The Plan shall be submitted to the
stockholders of Xxxxxx-Xxxxxxx for their approval at the Annual Meeting of
Stockholders to be held in 1996. Approval will require the affirmative vote of
the holders of a majority of the shares of Common Stock present, or represented,
and entitled to vote at the meeting. If approved, the Plan shall become
effective January 1, 1997.
SECTION 15.2. Term of Plan. No Stock Awards may be granted hereunder after
April 23, 2007. This Section 15.2 shall not affect any Stock Award granted prior
to such date. Further, the provisions of Article XI hereof (as amended from time
to time) are ongoing and shall continue until terminated by the Board.
XXXXXX-XXXXXXX COMPANY
19
