EXHIBIT 10(a)
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XXXXXX-XXXXXXX COMPANY
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1989 STOCK PLAN
AS AMENDED TO FEBRUARY 6, 2000
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XXXXXX-XXXXXXX COMPANY
1989 STOCK PLAN
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. Purpose. The purpose of the 1989 Stock Plan is to provide
additional incentive to the officers and other employees of the Company (as
hereinafter defined) and to recognize and reward efforts and accomplishments in
order to strengthen the desire of employees to remain with the Company,
stimulate their efforts on behalf of the Company and attract and retain persons
of competence, and, by encouraging ownership of a stock interest in the Company,
to gain for the organization the advantages inherent in employees having a sense
of proprietorship.
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:
Act: The Securities Exchange Act of 1934, as amended.
Board of Directors (or Board): The Board of Directors of Xxxxxx-Xxxxxxx.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan in accordance with
Section 11.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of Xxxxxx-Xxxxxxx.
Company: Xxxxxx-Xxxxxxx and its Subsidiaries.
Employee: Officers and other employees of the Company (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 of
Xxxxxx-Xxxxxxx Company 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 on a date which shall not be a trading date on the New York
Stock Exchange, determination of Fair Market Value shall be made as of the first
date prior theretowhich shall have been a trading date 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 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 1989 Stock Plan.
Reference Option: An Option, other than an incentive stock option, to which
a Right shall relate.
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Reporting Person: A person subject to the reporting requirements of Section
16(a) 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.
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 Award: A grant of Options, Rights, Restricted Stock or Performance
Awards in accordance with the provisions hereof.
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 the exercise of a Right is effective.
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. The aggregate number of shares of Common
Stock which may be issued under the Plan shall not exceed 8,000,000 shares of
Common Stock which may be either authorized and unissued shares or issued shares
reacquired by the Company. Notwithstanding the above limitation, 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 again be available for the purposes of the Plan; 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 again be available under the Plan. In
addition, 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.
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 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.
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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 422A 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 Xxxxxx-Xxxxxxx.
(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 Xxxxxx-Xxxxxxx
a signed copy of a notice of exercise in a form to be supplied by Xxxxxx-Xxxxxxx
and the exercise of an Option or Right shall be effective on the date on which
Xxxxxx-Xxxxxxx 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, 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 Company' 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 Company representing 20% or more of
the combined voting power of Xxxxxx-Xxxxxxx Company's then outstanding
securities, (ii) upon the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Xxxxxx-Xxxxxxx Company's assets or
plan of liquidation which is approved by shareholders of Xxxxxx-Xxxxxxx Company
(a 'Transaction'), or (iii) the composition of the Board of Directors of
Xxxxxx-Xxxxxxx Company (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 Company obtaining actual knowledge of a Change
in Control of Xxxxxx-Xxxxxxx Company, '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 Company on the
Composite Tape for New York Stock Exchange issues during the period commencing
30 days prior to such Change in Control and ending
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immediately prior to such exercise or (ii) if the Change in Control of
Xxxxxx-Xxxxxxx Company occurs as a result of a tender or exchange offer or
approval by stockholders of Xxxxxx-Xxxxxxx Company of a Transaction, then the
highest price per share of Common Stock of Xxxxxx-Xxxxxxx Company pursuant
thereto. Any consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the exchange offer 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.
(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 422A 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 but not less in any case than the Fair Market Value per share
for such stock on the date of the granting of the Option, subject to adjustment
pursuant to Section 10.1 hereof. The date of the granting of an Option under the
Plan shall be the date fixed by the Committee as the date for such Option for
the Employee who is to be the recipient thereof.
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 one year from the date the Option is
granted except that upon the occurrence of a Change in Control of Xxxxxx-Xxxxxxx
Company all Options may be exercised without giving effect to the one-year
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
(provided, however, that the term of an incentive stock option shall be a period
of not more than ten years from the date of the grant of such Option), 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, 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.
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
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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.
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 and 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; 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.
SECTION 5.7. Payment for shares. Payment for shares of Common Stock
purchased 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
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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 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.
The Company intends that Options designated by the Committee as incentive stock
options shall constitute incentive stock options under Section 422A 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,' 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
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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 one year from the date the Right was
granted, except that upon the occurrence of a Change in Control of
Xxxxxx-Xxxxxxx Company, all Rights may be exercised without giving effect to the
one-year 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; provided, however, that Rights which have
been held for less than six months on the date of the occurrence of a Change in
Control by Grantees who at the time of the occurrence of the Change in Control
are Reporting Persons may be exercised only during the thirty (30) day period
beginning six months after the date of grant of the Right, notwithstanding the
termination of the Grantee's employment with the Company, and without giving
effect to the one-year 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, and in Sections 6.5 and 6.6, 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 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 (x) 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,
and (y) the amount payable shall not exceed an amount equal to the number of
shares with respect to which the Right is being exercised multiplied by the Fair
Market Value of a share of Common Stock on the Valuation Date.
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 in which cash may be paid under the provisions of Rule 16b-3 promulgated
pursuant to the Act. In addition, a payment of cash shall be made to a person
subject to the reporting requirements of Section 16(a) of the Act who has held
the Right at least six months from the date of its grant promptly following a
Change in Control of Xxxxxx-Xxxxxxx Company which Change in Control is outside
the control of any person subject to such reporting requirements 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.
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
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for one year after the date of the grant of the Right, 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 are not Reference Options under any such plan) which shall
entitle the holder to receive a payment of cash promptly following a Change in
Control of Xxxxxx-Xxxxxxx Company which Change in Control is outside the control
of any person subject to the reporting requirements of Section 16(a) of the Act
within the meaning of Rule 16b-3 under the Act. Such payment of cash shall be
made to a person subject to the reporting requirements of Section 16(a) of the
Act 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 is being exercised (in such case the method of
determining the Fair Market Value in the second sentence of Section 4.6(a) shall
apply). Limited Rights shall expire on the first to occur of the date of
exercise or expiration of the right of exercise of the Limited Right or of the
related Option. Further, upon exercise of a Limited Right, the related Option
shall be cancelled. The Board of Directors reserves the right to cancel all
outstanding Limited Rights in accordance with Sections 11 and 12 of the
Executive Severance Plan. Except as otherwise provided herein, the provisions of
the Plan relating to Rights shall also apply to Limited Rights.
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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. 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, except that, subject to the provisions of Section 7.3, 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 Company, the
provisions of clause (ii) shall govern the rights and privileges of such
Participant.
(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 Company which Change in Control is outside the
control of any Reporting Person within the meaning of Rule 16b-3
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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 Company, or (b) if the Change in
Control of Xxxxxx-Xxxxxxx Company occurs as a result of a tender or exchange
offer or approval by the stockholders of the Company 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 an exchange offer
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, 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.
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
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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, separation, 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 the
Company, the Committee may make such equitable adjustments to prevent dilution
or enlargement of rights as it may deem appropriate in the number and class of
shares authorized to be granted hereunder, including adjustment to the share
limitation of Section 3.2 hereof, and change the number and kind of shares
available under any outstanding Option and Right (including substitution of
shares of another corporation), and the price of any Option and the Fair Market
Value in such manner as it shall deem equitable; 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 425(h)(3) of the Code. Options
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
ADMINISTRATION
SECTION 11.1. 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 a Stock Award under
the Plan 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 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 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 shall 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 11.2. 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
11
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 'disinterested persons' (as defined in said Rule) as
a condition of the continued qualification of the Plan under Rule 16b-3.
ARTICLE XII
TERMINATION OR AMENDMENT OF THE PLAN
SECTION 12.1. 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 prior
to such termination, alteration or amendment may not be impaired without the
consent of such Participant and, provided further, without the approval of the
Company's stockholders, no alteration or amendment may be made which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
the Plan (except by operation of Article X), or (ii) change the category of
employees eligible to receive Stock Awards under the Plan. The Company intends
that the Plan 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 be
necessary in order to so comply, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the Company's stockholders.
(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 XIII
MISCELLANEOUS
SECTION 13.1. 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 13.2. 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 of any taxes required by law with respect thereto.
12
(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, (ii) six months before the Stock Award
becomes taxable, or (iii) 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 13.3. 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 13.4. 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, which provisions may be
different than the provisions otherwise described herein with respect 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. An Employee's employment 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. Absence on leave approved by the Company shall not be considered an
interruption of employment for any purpose of the Plan.
SECTION 13.5. 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.
13
(c) Upon termination of any period of suspension under this Section 13.5,
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, but no such suspension shall extend any Option Period.
SECTION 13.6. 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 13.7. 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 13.8. Laws of Foreign Jurisdictions. Without amending the Plan, but
subject to the limitations specified in Article XII 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 13.9. Other Plans. Nothing contained herein shall prevent the
Company from adopting additional compensation plans or arrangements.
ARTICLE XIV
EFFECTIVE DATE; EXPIRATION
SECTION 14.1. 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 1989. The Plan shall become effective upon 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.
SECTION 14.2. Expiration. No Stock Awards may be granted hereunder after
April 25, 1994. The expiration of the Plan as herein provided shall not affect
any Stock Award granted prior to such expiration.
XXXXXX-XXXXXXX COMPANY
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