Exhibit
10.2
Caterpillar
Inc.
2006
Long-Term Incentive Plan
(Amended
and Restated through Fifth Amendment)
Section
1.
Establishment,
Objectives and Duration
1.1. Establishment. Subject
to the approval of the stockholders of Caterpillar Inc., a Delaware corporation
(the “Company”), the Company has established the Caterpillar Inc. 2006 Long-Term
Incentive Plan (the “Plan”), as set forth herein. The Plan supersedes
and replaces all prior equity and non-equity long-term incentive compensation
plans or programs maintained by the Company; provided that, any prior plans of
the Company shall remain in effect until all awards granted under such prior
plans have been exercised, forfeited, canceled, expired or otherwise terminated
in accordance with the terms of such grants.
1.2. Purpose. The
Plan is intended to provide certain present and future employees and Directors
cash-based incentives, stock-based incentives and other equity interests in the
Company thereby giving them a stake in the growth and prosperity of the Company
and encouraging the continuance of their services with the Company or its
Subsidiaries.
1.3. Effective
Date. The Plan is effective as of the later of (a) the date the Plan is
adopted by the Board or (b) the date the Company’s stockholders approve the Plan
(the “Effective Date”). The Plan will be deemed to be approved by the
stockholders if it receives the affirmative vote of the holders of a majority of
the shares of stock of the Company present or represented and entitled to vote
at a meeting duly held in accordance with the applicable provisions of the
Certificate of Incorporation or Bylaws of the Company.
1.4. Duration.
The Plan shall remain in effect, subject to the right of the Company’s Board of
Directors to amend or terminate the Plan at any time pursuant to Section 16,
until all Shares subject to the Plan shall have been purchased or granted
according to the Plan’s provisions. However, in no event may an Award
be granted under the Plan on or after the tenth anniversary of the Effective
Date. Upon termination of the Plan, no Awards may be granted but
Awards previously granted shall remain outstanding in accordance with the terms
of the Plan and the applicable Award Document.
Section
2.
Definitions
and Construction
When
a word or phrase appears in the Plan with the initial letter capitalized, and
the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section unless a clearly
different meaning is required by the context. The following words and
phrases shall have the following meanings:
2.1. “Award”
means, individually or collectively, a grant under the Plan of Nonqualified
Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Performance Shares or Performance Units.
2.2. “Award
Document”
means any agreement, contract, or other written instrument that evidences an
Award granted to the Participant under the Plan and sets forth the terms and
provisions applicable to such Award.
2.3. “Award
Gain” means (a)
with respect to a given Option exercise, the product of (X) the excess of the
Fair Market Value of a Share on the date of exercise over the Option Price times
(Y) the number of shares as to which the Option was exercised at that date, and
(b) with respect to any other settlement of an Award granted to the Participant,
the Fair Market Value of the cash or Shares paid or payable to the Participant
(regardless of any elective deferral pursuant to Section 13) less any cash or
the Fair Market Value of any Shares or property (other than an Award that would
have itself then been forfeitable hereunder and excluding any payment of tax
withholding) paid by the Participant to the Company as a condition of or in
connection such settlement.
2.4. “Board”.
means the Board of Directors of the Company.
2.5. “Cause”.
means, except as otherwise provided in an Award Document, a willful engaging in
gross misconduct materially and demonstrably injurious to the
Company. For this purpose, “willful” means an act or omission in bad
faith and without reasonable belief that such act or omission was in or not
opposed to the best interests of the Company.
2.6. “Change
of Control”.
means the occurrence of any of the following events: (a) any person becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 15 percent or more of
the combined voting power of the Company’s then outstanding common stock, unless
the Board by resolution negates the effect of this provision in a particular
circumstance, deeming that resolution to be in the best interests of Company
stockholders; (b) during any period of two consecutive years, there shall cease
to be a majority of the Board comprised of individuals who at the beginning of
such period constituted the Board; (c) the stockholders of the Company approve a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto representing (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) less than fifty percent of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (d) Company stockholders approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of its assets.
2.7. “Code”.
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation thereto.
2.8. “Committee”.
means the Compensation Committee of the Board, appointed to administer the Plan,
as provided in Section 3.
2.9.
“Company”.
means Caterpillar Inc., a Delaware corporation, and any successor to such entity
as provided in Section 18.
2.10.
“Director”.
means any individual who is a member of the Board.
2.11. “Disability”.
means, unless otherwise provided for in an employment, change of control or
similar agreement in effect between the Participant and the Company or a
Subsidiary or in an Award Document, (a) in the case of an Employee, the Employee
qualifying for long-term disability benefits under any long-term disability
program sponsored by the Company or Subsidiary in which the Employee
participates, and (b) in the case of a Director, the inability of the Director
to engage in any substantial gainful business activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death, or which has lasted or can be expected to last for a continuous
period of not less than 12 months, as determined by the Committee, based upon
medical evidence.
2.12.
“Effective
Date”.
means the date specified in Section 1.3.
2.13.
“Employee”.
means any employee of the Company or any Subsidiary.
2.14.
“Exchange
Act”.
means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.
2.15. “Fair
Market Value”.
means, as of any given date, the fair market value of a Share on a particular
date determined by such methods or procedures as may be established from time to
time by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value of a Share as of any date shall be the mean between the
high and low prices at which the Share is traded on the New York Stock Exchange
for that date or, if no prices are reported for that date, the prices on the
next preceding date for which prices were reported. Notwithstanding
the foregoing, unless otherwise determined by the Committee, for purposes of
Section 6.5(d) of the Plan, Fair Market Value means the actual price at which
the Shares used to acquire Shares are sold.
2.16. “Family
Member”
means any (a) child; (b) stepchild; (c) grandchild; (d) parent; (e) stepparent;
(f) grandparent; (g) spouse; (h) former spouse; (i) sibling; (j) niece; (k)
nephew; (l) mother-in-law; (m) father-in-law; (n) son-in-law; (o)
daughter-in-law; (p) brother-in-law; or (q) sister-in-law of the Participant
(including adoptive relationships). Family Member also shall mean any
person sharing in the Participant’s household (other than a tenant or an
employee).
2.17. “Good
Reason”.
means, except as otherwise provided in an Award Document, the occurrence of any
of the following circumstances (unless such circumstances are fully corrected by
the Company before a Participant’s termination of
employment):
(a)
the Company’s assignment of any duties materially inconsistent with the
Participant’s position within the Company, or which have a significant adverse
alteration in the nature or status of the responsibilities of the Participant’s
employment; or
(b) a
material reduction by the Company in the Participant’s annual base salary,
unless such reduction is part of a compensation reduction program affecting all
similarly situated management employees.
2.18. “Incentive
Stock Option”.
or “ISO”
means the right to purchase Shares pursuant terms and conditions that provide
that such right will be treated as an incentive stock option within the meaning
of Code Section 422, as described in Section 6.
2.19. “Long
Service Separation”
means, except as otherwise provided in an Award Document, a termination of
employment with the Company or a Subsidiary after the attainment of age 55 and
the completion of ten or more years of service with the Company and/or its
Subsidiaries. Notwithstanding the foregoing and notwithstanding
anything in an Award Document to the contrary, for purposes of determining
whether a Participant has incurred a Long Service Separation, the last period of
continuous service with Progress Rail Services, Inc. and/or its subsidiaries and
affiliates (“Progress Rail”) prior to May 16, 2006 shall be considered service
with the Company and/or its Subsidiaries, subject to such administrative rules
that the Committee (or its delegate) determines are appropriate and provided
such participant was employed by Progress Rail on May 16,
2006.
2.20. “Named
Executive Officer”.
means a Participant who is one of the group of covered employees as defined in
the regulations promulgated under Code Section 162(m), or any successor
provision or statute.
2.21. “Nonqualified
Stock Option”.
or “NQSO”.
means the right to purchase Shares pursuant to terms and conditions that provide
that such right will not be treated as an Incentive Stock Option, as described
in Section 6.
2.22. “Option”.
means an Incentive Stock Option or a Nonqualified Stock Option, as described in
Section 6.
2.23. “Option
Price”.
means the per share price of a Share available for purchase pursuant to an
Option.
2.24. “Participant”.
means an Employee, prospective Employee, Director, beneficiary or any other
person who has outstanding an Award granted under the Plan, and includes those
former Employees and Directors who have certain post-termination rights under
the terms of an Award granted under the Plan.
2.25. “Performance-Based
Exception”.
means the exception for performance-based compensation from the tax
deductibility limitations of Code Section 162(m).
2.26. “Performance
Period”.
means the time period during which performance goals must be achieved with
respect to an Award, as determined by the Committee.
2.27. “Performance
Share”.
means an Award granted to a Participant, as described in Section
9.
2.28. “Performance
Unit”.
means an Award granted to a Participant, as described in Section
9.
2.29. “Period
of Restriction”.
means the period during which the transfer of Shares of Restricted Stock is
limited in some way, and the Shares are subject to a substantial risk of
forfeiture, as provided in Section 8.
2.30. “Permitted
Transferee”
means any one or more of the following: (a) Family Members; (b) a trust in which
the Participant and/or Family Members have more than fifty percent of the
beneficial interest; (c) a foundation in which the Participant and/or Family
Members control the management of the assets; or (d) any other entity in which
the Participant and/or Family Members own more than fifty percent of the voting
interests.
2.31. “Plan”.
means the Caterpillar Inc. 2006 Long-Term Incentive Plan, as set forth
herein.
2.32. “Restricted
Stock”.
means an Award granted to a Participant pursuant to
Section 8.
2.33. “Section
16 Officer”
means any Employee who is considered an officer of the Company for purposes of
Section 16 of the Exchange Act.
2.34. “Share” or
“Shares”.
means shares of common stock of the Company.
2.35. “Stock
Appreciation Right” or
“SAR”.
means an Award, granted alone or in connection with a related Option, designated
as an SAR, pursuant to the terms of Section 7.
2.36. “Subsidiary”.
means any corporation, partnership, joint venture, affiliate, or other entity in
which the Company is at least a majority-owner of all issued and outstanding
equity interests or has a controlling interest.
2.37. “Tandem
SAR”.
means a SAR that is granted in connection with a related Option pursuant to
Section 7, the exercise of which shall require forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased under
the Option, the Tandem SAR shall similarly be forfeited).
2.38. “Non-Tandem
SAR”.
means a SAR that is granted independently of any Options, as described in
Section
7.
Section
3.
Administration
3.1. Plan
Administration. The
Committee, or any other committee appointed by the Board, shall administer the
Plan. The Committee or other committee appointed to administer the
Plan shall consist of not less than two non-Employee Directors of the Company,
within the meaning of Rule 16b-3 of the Exchange Act and not less than two
outside directors, within the meaning of Code Section 162(m). The
Board may, from time to time, remove members from, or add members to, the
Committee. Members of the Board shall fill any vacancies on the
Committee. Acts of a majority of the Committee at a meeting at which
a quorum is present, or acts reduced to or approved in writing by unanimous
consent of the members of the Committee, shall be valid acts of the
Committee.
3.2. Authority
of the Committee. Except
as limited by law or by the Certificate of Incorporation or Bylaws of the
Company, and subject to the provisions herein, the Committee shall have full
power to select Employees, prospective Employees and Directors who shall
participate in the Plan; determine the sizes and types of Awards; determine the
terms and conditions of Awards in a manner consistent with the Plan; construe
and interpret the Plan and any agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for the Plan’s
administration; and amend the terms and conditions of any outstanding Award to
the extent such terms and conditions are within the sole discretion of the
Committee as provided in the Plan and subject to Section 16. Further,
the Committee shall make all other determinations, which may be necessary or
advisable for the administration of the Plan. As permitted by law,
the Committee may delegate the authority granted to it
herein.
3.3. Electronic
Administration. The Committee may, in its discretion, utilize a system
for complete or partial electronic administration of the Plan and may replace
any written documents described in the Plan with electronic counterparts, as
appropriate.
3.4. Decisions
Binding. All
determinations and decisions made by the Committee pursuant to the provisions of
the Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its stockholders,
Employees, Participants, and their estates and
beneficiaries.
Section
4.
Shares
Subject to the Plan and Maximum Awards
4.1.
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Shares
Available for Awards.
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(a) The
Shares available for Awards may be either authorized and unissued Shares or
Shares held in or acquired for the treasury of the Company. The
aggregate number of Shares that may be issued or used for reference purposes
under the Plan or with respect to which Awards may be granted shall not exceed
twenty million (20,000,000) Shares, subject to adjustment as provided in Section
4.3. In addition, seventeen million six hundred thousand (17,600,000)
Shares authorized but unissued pursuant to the Caterpillar Inc. 1996 Stock
Option and Long-Term Incentive Plan shall be reserved and available for grant
under the Plan. Notwithstanding the foregoing, the aggregate number
of Shares with respect to which ISOs may be granted shall not exceed the number
specified above, and provided further, that up to an aggregate of twenty percent
(20%) of the authorized Shares under the Plan may be issued with respect to
Awards of Restricted Stock and up to an aggregate of twenty percent (20%) of the
authorized Shares under the Plan may be issued with respect to Awards of
Performance Shares.
(b) Upon:
(i) a
payout of a Non-Tandem SAR or Tandem SAR in the form of cash;
(ii)
a cancellation, termination, expiration, forfeiture, or lapse for any reason
(with the exception of the termination of a Tandem SAR upon exercise of the
related Options, or the termination of a related Option upon exercise of the
corresponding Tandem SAR) of any Award; or
(iii) payment
of an Option Price or payout of any Award with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise or issued upon
such payout,
the
number of Shares underlying any such Award that were not issued as a result of
any of the foregoing actions shall again be available for the purposes of Awards
under the Plan. In addition, in the case of any Award granted in
substitution for an award of a company or business acquired by the Company or a
Subsidiary, Shares issued or issuable in connection with such substitute Award
shall not be counted against the number of Shares reserved under the Plan, but
shall be available under the Plan by virtue of the Company’s assumption of the
plan or arrangement of the acquired company or business.
4.2. Individual
Participant Limitations. Unless
and until the Committee determines that an Award to a Named Executive Officer
shall not be designed to comply with the Performance-Based Exception, the
following rules shall apply to grants of such Awards under the
Plan:
(a) Subject
to adjustment as provided in Section 4.3, the maximum aggregate number of Shares
(including Options, SARs, Restricted Stock and Performance Shares to be paid out
in Shares) that may be granted in any one fiscal year to a Participant shall be
800,000 Shares.
(b) Except
as otherwise provided in Section 7.5(b) regarding SAR exercise, the maximum
aggregate cash payout (including Performance Units and Performance Shares paid
out in cash) with respect to Awards granted in any one fiscal year that may be
made to any Participant shall be $5 million.
4.3. Adjustments
in Authorized Shares. In
the event of any change in corporate capitalization, such as a stock split, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company, an adjustment shall be made in the number and class of Shares available
for Awards, the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan and the number of Shares set forth in
Sections 4.1 and 4.2, to prevent dilution or enlargement of
rights. Such adjustment shall be made in a manner determined by the
Committee, in its sole discretion, to be appropriate and equitable; provided,
however, that (a) no such adjustment shall cause an increase in the fair value
of an Award for purposes of Statement of Financial Accounting Standards No. 123
(revised 2004) or any successor thereto; and (b) the number of Shares subject to
any Award shall always be a whole number by rounding any fractional Share (up or
down) to the nearest whole Share.
Section
5.
Eligibility
and Participation
5.1. Eligibility.
Persons eligible to participate in the Plan include all current and future
Employees (including officers), persons who have been offered employment by the
Company or a Subsidiary (provided that such prospective Employee may not receive
any payment or exercise any right relating to an Award until such person begins
employment with the Company or Subsidiary), and Directors, as determined by the
Committee.
5.2. Participation.
Subject to the provisions of the Plan, the Committee shall determine and
designate, from time to time, the Employees, prospective Employees, and
Directors to whom Awards shall be granted, the terms of such Awards, and the
number of Shares subject to such Award.
5.3. Foreign
Participants. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or
custom. Moreover, the Committee may approve such supplements to, or
amendments, restatements, or alternative versions of the Plan as it may consider
necessary or appropriate for such purposes without thereby affecting the terms
of the Plan as in effect for any other purpose; provided, however, that no such
supplements, amendments, restatements, or alternative versions shall increase
the share limitations contained in Section 4 of the Plan.
Section
6.
Stock
Options
(a) Option
Grant. Subject
to the terms and provisions of the Plan, Options may be granted to one or more
Participants in such number, upon such terms and provisions, and at any time and
from time to time, as determined by the Committee, in its sole
discretion. The Committee may grant either Nonqualified Stock Options
or (in the case of Options granted to Employees) Incentive Stock Options, and
shall have complete discretion in determining the number of Options of each
granted to each Participant, subject to the limitations of Section
4. Each Option grant shall be evidenced by a resolution of the
Committee approving the Option grant.
(b) Award
Document.
All
Options shall be evidenced by an Award Document. The Award Document
shall specify the Option Price, the term of the Option, the number of Shares
subject to the Option, and such other provisions as the Committee shall
determine, and which are not inconsistent with the terms and provisions of the
Plan. The Award Document shall also specify whether the Option is to
be treated as an ISO within the meaning of Code Section 422. If such
Option is not designated as an ISO, such Option shall be a NQSO.
6.2. Option
Price.
The Committee shall designate the Option Price for each Share subject to an
Option under the Plan, provided that such Option Price shall not be less than
100% of the Fair Market Value of Shares subject to an Option on the date the
Option is granted, and which Option Price may not be subsequently changed by the
Committee except pursuant to Section 4.3. With respect to a
Participant who owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of the stock of the Company or any
Subsidiary, the Option Price of Shares subject to an ISO shall be at least 110%
of the Fair Market Value of such Shares on the ISO’s grant
date.
6.3. Term
of Options.
Each Option granted to a Participant shall expire at such time as the Committee
shall determine at the time of grant, but in no event shall be exercisable later
than the 10th anniversary of the grant date. Notwithstanding the
foregoing, with respect to ISOs, in the case of a Participant who owns, directly
or indirectly, more than 10% of the total combined voting power of all classes
of the stock of the Company or any Subsidiary, no such ISO shall be exercisable
later
than the fifth anniversary of the grant date.
6.4. Exercise
of Options. Options
granted under this Section 6 shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for each grant or for each Participant, and
shall be set forth in the applicable Award Document. Notwithstanding
the preceding sentence, the Fair Market Value of Shares to which ISOs are
exercisable for the first time by any Participant during any calendar year
(under all plans of the Company and its Subsidiaries) may not exceed
$100,000. Any ISOs that become exercisable in excess of such amount
shall be deemed NQSOs to the extent of such excess. If the Award
Document does not specify the time or times at which the Option shall first
become exercisable, such an Option shall become fully vested and exercisable by
the Participant on the third anniversary of the grant date.
6.5. Payment. Options
granted under this Section 6 shall be exercised by the delivery of a notice of
exercise to the Company (or its designated agent(s)), setting forth the number
of Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Option Price upon exercise of any
Option shall be payable to the Company in full either:
(a) in
cash or its equivalent, or
(b) by
tendering previously acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price, or
(c) by
cashless exercise through delivery of irrevocable instructions to a broker to
promptly deliver to the Company the amount of proceeds from a sale of shares
having a Fair Market Value equal to the purchase price.
6.6. Termination
of Employment or Service as a Director.
The Committee, in its sole discretion, shall set forth in the applicable Award
Document the extent to which a Participant shall have the right to exercise the
Option or Options following termination of his or her employment with the
Company or any Subsidiary or following termination of his or her service as a
Director. Such provisions need not be uniform among all Options
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for such termination, including, but not limited to, termination for Cause or
for Good Reason, or reasons relating to the breach or threatened breach of
restrictive covenants. Subject to Section 15, in the event that
a Participant’s Award Document does not set forth such provisions, the following
provisions shall apply:
(a) Long
Service Separation, Death or Disability.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates by reason of Long Service Separation, death or
Disability, to the extent that the Option is not exercisable, all Shares covered
by his or her Options shall immediately become fully vested and shall remain
exercisable until the earlier of (i) the remainder of the term of the Option, or
(ii) 60 months from the date of such termination. In the case of the
Participant’s death, the Participant’s beneficiary or estate may exercise the
Option.
(b) Termination
for Cause.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates for Cause, all Options granted to such
Participant shall expire immediately and all rights to purchase Shares (vested
or nonvested) under the Options shall cease upon such termination.
(c) Other
Termination.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates for any reason other than Long Service
Separation, death, Disability, or for Cause, all Options shall remain
exercisable until the earlier of (i) the remainder of the term of the Option, or
(ii) 60 days from the date of such termination. In such circumstance,
the Option shall only be exercisable to the extent that it was exercisable as of
such termination date and shall not be exercisable with respect to any
additional Shares. Notwithstanding the foregoing or anything herein
or in an Award Document to the contrary, the Committee, in its sole discretion,
shall have the authority to extend the period during which an Option is
exercisable pursuant to this Section 6.6(c) to a period that is no longer than
the earlier of (A) the remainder of the term of the Option, or (B) 60 months
from the date of the Participant’s termination of employment.
6.7. Restrictions
on Shares. The
Committee may impose such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Section 6 as it may deem advisable,
including, without limitation, restrictions under applicable Federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state or foreign
securities laws applicable to such Shares.
6.8.
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Transferability
of Options.
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(a) Incentive
Stock Options. No
ISO granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all ISOs granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such
Participant.
(b) Nonqualified
Stock Options.
NQSOs may only be transferred in accordance with this Section
6.8(b).
(i) Except
as otherwise provided in paragraph (ii) below or in an Award Document, no NQSO
shall be assignable or transferable by a Participant other than by will, by the
laws of descent and distribution or pursuant to a Domestic Relations Order (as
such term is defined in Section 414(p)(1)(B) of the Code).
(ii) NQSOs
(whether vested or unvested) held by (A) Participants who are Section 16
Officers; (B) Participants who are Directors; or (C) any Participants who
previously held the positions in clauses (A) and (B) may be transferred by gift
or by domestic relations order to one or more Permitted
Transferees. NQSOs (whether vested or unvested) held by all other
Participants and by Permitted Transferees may be transferred by gift or by
domestic relations order only to Permitted Transferees upon the prior written
approval of the Company’s Director of Compensation + Benefits.
6.9 Accleration
of Vesting. Notwithstanding
anything in this Section 6 to the contrary, the Committee, in its sole
discretion, shall have the authority to accelerate the vesting of Options at any
time.
Section
7.
Stock
Appreciation Rights
(a) SAR
Grant. Subject
to the terms and provisions of the Plan, SARs may be granted to Participants in
such number, upon such terms and provisions, and at any time and from time to
time, as determined by the Committee in its sole discretion. The
Committee may grant Non-Tandem SARs, Tandem SARs, or any combination of these
forms of SARs. The Committee shall have complete discretion in
determining the number of SARs granted to each Participant (subject to Section
4) and, consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs. The Committee shall designate, at
the time of grant, the grant price of a Non-Tandem SAR, which grant price shall
not be less than 100% of the Fair Market Value of a Share on the grant date of
the SAR. The grant price of Tandem SARs shall equal the Option Price
of the related Option. Grant prices of SARs shall not subsequently be
changed by the Committee, except pursuant to Section 4.3.
(b) Award
Document. All
SARs shall be evidenced by an Award Document. The Award Document
shall specify the grant price, the term of the SAR, and such other provisions as
the Committee shall determine, and which are not inconsistent with the terms and
provisions of the Plan.
7.2. Term
of SARs.
The term of a SAR granted under the Plan shall be determined by the Committee,
in its sole discretion; provided, however, that unless otherwise designated by
the Committee, such term shall not exceed ten years from the grant
date.
7.3. Exercise
of Tandem SARs. Tandem
SARs may be exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the equivalent portion of the
related Option. A Tandem SAR may be exercised only with respect to
the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of the Plan to the
contrary, with respect to a Tandem SAR granted in connection with an
ISO: (i) the Tandem SAR will expire no later than the expiration of
the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR
may be for no more than 100% of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
7.4. Exercise
of Non-Tandem SARs.
Non-Tandem SARs may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes upon them.
7.5. Payment
of SAR Amount.
(a) Upon
exercise of a SAR, a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(i) The
excess of the Fair Market Value of a Share on the date of exercise over the
grant price; by
(ii) The
number of Shares with respect to which the SAR is exercised.
(b) Unless
otherwise provided in the Award Document, the payment upon SAR exercise may be
in cash, in Shares of equivalent value, or in some combination
thereof. If, and to the extent that the payment upon SAR exercise is
made in cash, such cash payment shall not be subject to the limitation of
Section 4.2(b).
7.6. Termination
of Employment or Service as a Director. The
Committee, in its sole discretion, shall set forth in the applicable Award
Document the extent to which a Participant shall have the right to exercise the
SAR or SARs following termination of his or her employment with the Company or
any Subsidiary or following termination of his or her service as a
Director. Such provisions need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on the reasons for such
termination, including, but not limited to, termination for Cause or for Good
Reason, or reasons relating to the breach or threatened breach of restrictive
covenants. Subject to Section 15, in the event that a Participant’s
Award Document does not set forth such provisions, the following provisions
shall apply:
(a) Long
Service Separation, Death or Disability.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates by reason of Long Service Separation, death or
Disability, to the extent that the SARs are not exercisable, all of his or her
SARs shall immediately become fully vested and shall remain exercisable until
the earlier of (i) the remainder of the term of the SAR, or (ii) 60 months from
the date of such termination. In the case of the Participant’s death,
the Participant’s beneficiary or estate may exercise the SAR.
(b) Termination
for Cause.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates for Cause, all SARs shall expire immediately
and all rights thereunder shall cease upon such termination.
(c) Other
Termination.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director terminates for any reason other than Long Service
Separation, death, Disability, or for Cause, all SARs shall remain exerciseable
until the earlier of (i) the remainder of the term of the SAR, or (ii) 60 days
from the date of such termination. In such circumstance, the SAR
shall only be exercisable to the extent it was exercisable as of such
termination date and shall not be exercisable with respect to any additional
SARs. Notwithstanding the foregoing or anything herein or in an Award
Document to the contrary, the Committee, in its sole discretion, shall have the
authority to extend the period during which a SAR is excercisable pursuant to
this Section 6.6(c) to a period that is no longer than the earlier of (A) the
remainder of the term of the SAR, or (B) 60 months from the date of the
Participant’s termination of employment.
7.7. Transferability
of SARs.
SARs may only be transferred in accordance with this Section
7.7.
(a) Except
as otherwise provided in paragraph (b) below or in an Award Document, no SAR
shall be assignable or transferable by a Participant other than by will, by the
laws of descent and distribution or pursuant to a Domestic Relations Order (as
such term is defined in Section 414(p)(1)(B) of the Code).
(b) SARs
held by (i) Participants who are Section 16 Officers; (ii) Participants who are
Directors; or (iii) any Participants who previously held the positions in
clauses (i) and (ii) may be transferred by gift or by domestic relations order
to one or more Permitted Transferees. SARs held by all other
Participants and by Permitted Transferees may be transferred by gift or by
domestic relations order to Permitted Transferees only upon the prior written
approval of the Company’s Director of Compensation and Benefits.
(c) Notwithstanding
the foregoing, with respect to a Tandem SAR granted in connection with an ISO,
no such Tandem SAR may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution.
7.8 Acceleration
of Vesting. Notwithstanding
anything in this Section 7 to the contrary, the Committee, in its sole
discretion, shall have the authority to accelerate the vesting of SARs at any
time.
Section
8.
Restricted
Stock
8.1.
|
Grant
of Restricted Stock.
|
(a) Grant
of Restricted Stock.
Subject
to the terms and provisions of the Plan, the Committee, at any time and from
time to time, may grant Shares of Restricted Stock to Participants in such
amounts as the Committee shall determine.
(b) Award
Document. All
shares of Restricted Stock shall be evidenced by an Award
Document. The Award Document shall specify the Period or Periods of
Restriction (consistent with the next sentence), the number of Shares of
Restricted Stock granted, and such other provisions as the Committee shall
determine pursuant to Section 8.3 or otherwise, and which shall not be
inconsistent with the terms and provisions of the Plan. Shares of
Restricted Stock not in excess of five percent of the number of shares that may
be issued with respect to Awards of Restricted Stock, as provided in Section
4.1, may have a Period or Periods of Restriction as determined by the Committee
in its sole discretion, and any other shares of Restricted Stock shall have a
Period of Restriction, as determined by the Committee, that shall not lapse in
any respect until on or after the third anniversary of the grant
date. If no Period of Restriction is set forth in the Award Document,
the transfer and any other restrictions shall lapse (i) to the extent of
one-third of the Shares (rounded to the nearest whole) covered by the Restricted
Stock Award on the third anniversary of the grant date, (ii) to the extent of
two-thirds of the Shares (rounded to the nearest whole) covered by the
Restricted Stock Award on the fourth anniversary of the grant date, and (iii) to
the extent of 100% of the Shares covered by the Restricted Stock Award on the
fifth anniversary of the grant date.
8.2. Other
Restrictions. Subject to Section 10 herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including without
limitation, a requirement that Shares will not be issued until the end of the
applicable Period of Restriction, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted Stock, restrictions based
upon the achievement of specific performance goals (Company-wide,
Subsidiary-wide, divisional, and/or individual), time-based restrictions on
vesting, which may or may not be following the attainment of the performance
goals, sales restrictions under applicable shareholder agreements or similar
agreements, and/or restrictions under applicable Federal or state securities
laws. The Company shall retain the certificates representing Shares
of Restricted Stock in the Company’s possession until such time as all
conditions and/or restrictions applicable to such Shares have been
satisfied. Except as otherwise provided in this Section 8 or in any
Award Document, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the Participant
after the last day of the applicable Period of Restriction.
8.3. Voting
Rights.
Unless otherwise designated by the Committee at the time of grant, Participants
to whom Shares of Restricted Stock have been granted hereunder may exercise full
voting rights with respect to those Shares during the Period of
Restriction.
8.4. Dividends
and Other Distributions.
Unless otherwise designated by the Committee at the time of grant, Participants
holding Shares of Restricted Stock granted hereunder shall be credited with
regular cash dividends paid with respect to the underlying Shares while they are
so held during the Period of Restriction. The Committee may apply any
restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock granted to a
Named Executive Officer is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Shares of
Restricted Stock, such that the dividends and/or the Shares of Restricted Stock
maintain eligibility for the Performance-Based Exception. In the
event that any dividend constitutes a derivative security or an equity security
pursuant to the rules under Section 16 of the Exchange Act, such dividend shall
be subject to a vesting period equal to the remaining vesting period of the
Shares of Restricted Stock with respect to which the dividend is
paid.
8.5. Termination
of Employment or Service as a Director. The
Committee, in its sole discretion, shall set forth in the applicable Award
Document the extent to which the Participant shall have the right to receive
unvested Shares of Restricted Stock following termination of the Participant’s
employment with the Company and/or its Subsidiaries or termination of service as
a Director. Such provisions need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions based
on the reasons for termination of employment including; but not limited to,
termination of employment for Cause or for Good Reason, or reasons relating to
the breach or threatened breach of restrictive covenants; provided, however
that, except in the cases of terminations connected with a Change of Control and
terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock that qualify for the Performance-Based Exception and that are
held by Named Executive Officers shall not occur before the time they otherwise
would have, but for the employment termination. Subject to Section
15, in the event that a Participant’s Award Document does not set forth such
termination provisions, the following termination provisions shall
apply:
(a) Death
and Disability.
Unless the Award qualifies for the Performance-Based Exception, if a
Participant’s employment with the Company and/or any Subsidiary or service as a
Director is terminated due to death or Disability, all Shares of Restricted
Stock of such Participant shall immediately become fully vested on the date of
such termination and any restrictions shall lapse.
(b) Other
Termination.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director is terminated for any reason other than death or
Disability all Shares of Restricted Stock that are unvested at the date of
termination shall be forfeited to the Company.
8.6. Acceleration
of Vesting. Notwithstanding anything in this Section 8 to the
contrary, the Committee, in its sole discretion, shall have the authority to
accelerate the vesting of Shares of Restricted Stock at any
time.
8.7. Transferability. Except
as provided in this Section 8, the Shares of Restricted Stock granted herein may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, voluntarily or involuntarily, until the end of the applicable
Period of Restriction established by the Committee and specified in the Award
Document, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and set forth in the Award
Document. All rights with respect to the Restricted Stock granted to
a Participant under the Plan shall be available during his or her lifetime only
to such Participant.
Section
9.
Performance
Units and Performance Shares
9.1.
|
Grant
of Performance Units/Shares.
|
(a) Grant
of Performance Unit/Shares.
Subject
to the terms of the Plan, Performance Units and/or Performance Shares may be
granted to Participants in such amounts and upon such terms, and at any time and
from time to time, as shall be determined by the Committee, which shall not be
inconsistent with the terms and provisions of the Plan and shall be set forth in
an Award Document.
(b) Award
Document.
All Performance Units and Performance Shares shall be evidenced by an
Award Document. The Award Document shall specify the initial value of
the Award, the performance goals and the Performance Period, as the Committee
shall determine, and which are not inconsistent with the terms and provisions of
the Plan.
9.2. Value
of Performance Units/Shares.
Each Performance Unit shall have an initial value (which may be $0) that is
established by the Committee at the time of grant. Each Performance
Share shall have an initial value equal to the Fair Market Value of a Share on
the grant date. The Committee shall set performance goals in its sole
discretion which, depending on the extent to which they are met will determine
the number and/or value of Performance Units and/or Performance Shares that will
be paid out to the Participant. For purposes of this Section 9, the
time period during which the performance goals must be met shall be called a
Performance Period. Performance Shares not in excess of five percent
of the number of shares that may be issued with respect to Awards of Performance
Shares, as provided in Section 4.1, may have a Performance Period as determined
by the Committee in its sole discretion, and any other Performance Shares shall
have a Performance Period, as determined by the Committee, of not less than one
year.
9.3. Earning
of Performance Units/Shares.
Subject to the terms of the Plan, after the applicable Performance Period has
ended, the holder of Performance Units and/or Performance Shares shall be
entitled to receive payout on the number and value of Performance Units and/or
Performance Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved, as established by the Committee.
9.4. Form
and Timing of Payment of Performance Units/Shares.
Except as provided below, payment of earned Performance Units and/or Performance
Shares shall be made in a single lump sum as soon as reasonably practicable
following the close of the applicable Performance Period. Subject to
the terms of the Plan, the Committee, in its sole discretion, may pay earned
Performance Units and/or Performance Shares in the form of cash or in Shares (or
in a combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance Units and/or Performance Shares at the close of
the applicable Performance Period. Such Shares may be granted subject
to any restrictions deemed appropriate by the Committee. At the sole
discretion of the Committee, Participants may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units and/or Performance Shares which have been
earned, but not yet distributed to Participants.
9.5. Termination
of Employment or Service as a Director. The
Committee, in its sole discretion, shall set forth in the applicable Award
Document the extent to which the Participant shall have the right to receive
payment for Performance Units and/or Performance Shares following termination of
the Participant’s employment with the Company and/or its Subsidiaries or
termination of service as a Director. Such provisions need not be
uniform among all Performance Units and/or Performance Shares granted pursuant
to the Plan, and may reflect distinctions based on the reasons for such
termination including; but not limited to, termination for Cause or for Good
Reason, or reasons relating to the breach or threatened breach of restrictive
covenants. Subject to Section 15, in the event that a Participant’s
Award Document does not set forth such termination provisions, the following
termination provisions shall apply:
(a) Long
Service Separation, Death or Disability.
Subject to Section 15, if a Participant’s employment with the Company
and/or any Subsidiary or service as a Director is terminated during a
Performance Period due to Long Service Termination, death or Disability, the
Participant shall receive a prorated payout of the Performance Units and/or
Performance Shares, unless the Committee determines otherwise. The
prorated payout shall be determined by the Committee, shall be based upon the
length of time that the Participant held the Performance Units and/or
Performance Shares during the Performance Period, and shall further be adjusted
based on the achievement of the preestablished performance
goals. Unless the Committee determines otherwise in the event of a
termination due to death, Disability or Long Service Separation, payment of
earned Performance Units and/or Performance Shares shall be made at the same
time as payments are made to Participants who did not terminate employment
during the applicable Performance Period.
(b) Other
Termination.
If a Participant’s employment with the Company and/or any Subsidiary or
service as a Director is terminated during a Performance Period for any reason
other than Long Service Termination, death or Disability all Performance Units
and/or Performance Shares shall be forfeited by the Participant to the
Company.
9.6. Nontransferability.
Except as otherwise provided in a Participant’s Award Document, Performance
Units and/or Performance Shares may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise provided in a
Participant’s Award Document, a Participant’s rights under the Plan shall be
exercisable during the Participant’s lifetime only by the Participant or the
Participant’s legal representative.
9.7. Acceleration
of Vesting. Notwithstanding anything in this Section 9 to the
contrary, the Committee, in its sole discretion, shall have the authority to
accelerate the vesting of Performance Units and/or Performance Shares at any
time.
Section
10.
Performance
Measures
10.1. Performance
Measures. Unless and until the Committee proposes for
stockholder vote and stockholders approve a change in the general performance
measures set forth in this Section 10, the attainment of which may determine the
degree of payout and/or vesting with respect to Awards to Named Executive
Officers that are designed to qualify for the Performance-Based Exception, the
performance goals to be used for purposes of such grants shall be established by
the Committee in writing and stated in terms of the attainment of specified
levels of or percentage changes in any one or more of the following
measurements: (a) revenue; (b) primary or fully-diluted earnings per Share; (c)
earnings before interest, taxes, depreciation, and/or amortization; (d) pretax
income; (d) cash flow from operations; (e) total cash flow; (f) return on
equity; (g) return on invested capital; (h) return on assets; (i) net operating
profits after taxes; (j) economic value added; (k) total stockholder return; (l)
return on sales; or (m) any individual performance objective which is measured
solely in terms of quantifiable targets related to the Company or the Company’s
business; or any combination thereof. In addition, such performance
goals may be based in whole or in part upon the performance of the Company, a
Subsidiary, division and/or other operational unit under one or more of such
measures.
10.2. Performance
Procedures. The degree of payout and/or vesting of such Awards
designed to qualify for the Performance-Based Exception shall be determined
based upon the written certification of the Committee as to the extent to which
the performance goals and any other material terms and conditions precedent to
such payment and/or vesting have been satisfied. The Committee shall
have the sole discretion to adjust the determinations of the degree of
attainment of the preestablished performance goals; provided, however, that the
performance goals applicable to Awards which are designed to qualify for the
Performance-Based Exception, and which are held by Named Executive Officers, may
not be adjusted so as to increase the payment under the Award (the Committee
shall retain the sole discretion to adjust such performance goals upward, or to
otherwise reduce the amount of the payment and/or vesting of the Award relative
to the pre-established performance goals). In the event that
applicable tax and/or securities laws change to permit Committee sole discretion
to alter the governing performance measures without obtaining stockholder
approval of such changes, the Committee shall have sole discretion to make such
changes without obtaining stockholder approval. In addition, in the
event that the Committee determines that it is advisable to grant Awards which
shall not qualify for the Performance-Based Exception, the Committee may make
such grants without satisfying the requirements of Code Section 162(m) and,
thus, which use performance measures other than those specified
above.
Section
11.
Award
Forfeitures
11.1. Forfeiture
of Options and Other Awards.
Each Award granted hereunder shall be subject to the following additional
forfeiture conditions, to which the Participant, by accepting an Award
hereunder, agrees. If any of the events specified in Section 11.2
occurs (a “Forfeiture Event”), all of the following forfeitures will
result:
(a) The
unexercised portion of any Option, whether or not vested, and any other Award
not then settled (except for an Award that has not been settled solely due to an
elective deferral pursuant to Section 13 by the Participant and otherwise is not
forfeitable in the event of any termination of service of the Participant) will
be immediately forfeited and canceled upon the occurrence of the Forfeiture
Event; and
(b) The
Participant will be obligated to repay to the Company, in cash, within five
business days after demand is made therefor by the Company, the total amount of
Award Gain (as defined herein) realized by the Participant upon each exercise of
an Option or settlement of an Award (regardless of any elective deferral
pursuant to Section 13) that occurred on or after (i) the date that is six
months before the occurrence of the Forfeiture Event, if the Forfeiture Event
occurred while the Participant was employed by the Company or a Subsidiary, or
(ii) the date that is six months before the date the Participant’s employment
by, or service as a Director with the Company or a Subsidiary terminated, if the
Forfeiture Event occurred after the Participant ceased to be so
employed.
11.2. Events
Triggering Forfeiture. The
forfeitures specified in Section 11.1 will be triggered upon the occurrence of
any one of the following Forfeiture Events at any time during the Participant’s
employment by or service as a Director with the Company or a Subsidiary or
during the one-year period following termination of such employment or
service:
(a) Non-Solicitation. The
Participant, for his or her own benefit or for the benefit of any other person,
company or entity, directly or indirectly, (i) induces or attempts to induce or
hires or otherwise counsels, induces or attempts to induce or hire or otherwise
counsel, advise, encourage or solicit any person to leave the employment of or
the service for the Company or any Subsidiary, (ii) hires or in any manner
employs or retains the services of any individual employed by or providing
services to the Company or any Subsidiary as of the date of his or her
termination of employment, or employed by or providing services to the Company
or any Subsidiary subsequent to such termination, (iii) solicits, pursues, calls
upon or takes away, any of the customers of the Company or any Subsidiary, (iv)
solicits, pursues, calls upon or takes away, any potential customer of the
Company or any Subsidiary that has been the subject of a bid, offer or proposal
by the Company or any Subsidiary, or of substantial preparation with a view to
making such a bid, proposal or offer, within six months before such
Participant’s termination of employment with the Company or any Subsidiary, or
(v) otherwise interferes with the business or accounts of the Company or any
Subsidiary.
(b) Confidential
Information.
The Participant discloses to any person or entity or makes use of any
“confidential or proprietary information” (as defined below in this subparagraph
(b)) for his or her own purpose or for the benefit of any person or entity,
except as may be necessary in the ordinary course of employment with or other
service to the Company or any Subsidiary. Such “confidential or
proprietary information” of the Company or any Subsidiary, includes, but is not
limited to, the design, development, operation, building or manufacturing of
products manufactured and supplied by the Company and its Subsidiaries, the
identity of the Company’s or any Subsidiary’s customers, the identity of
representatives of customers with whom the Company or any Subsidiary has dealt,
the kinds of services provided by the Company or any Subsidiary to customers and
offered to be performed for potential customers, the manner in which such
services are performed or offered to be performed, the service needs of actual
or prospective customers, pricing information, information concerning the
creation, acquisition or disposition of products and services, customer
maintenance listings, computer software and hardware applications and other
programs, personnel information, information identifying, relating to or
concerning investors in the Company or any Subsidiary, joint venture partners of
the Company or any Subsidiary, business partners of the Company or any
Subsidiary or other entities providing financing to the Company or any
Subsidiary, real estate and leasing opportunities, communications and
telecommunications operations and processes, zoning and licensing matters,
relationships with, or matters involving, landlords and/or property owners, and
other trade secrets.
11.3. Agreement
Does Not Prohibit Competition or Other Participant Activities. Although
the conditions set forth in this Section 11 shall be deemed to be incorporated
into an Award, the Plan does not thereby prohibit the Participant from engaging
in any activity, including but not limited to competition with the Company and
its Subsidiaries. Rather, the non-occurrence of the Forfeiture Events
set forth in Section 11.2 is a condition to the Participant’s right to realize
and retain value from his or her compensatory Awards, and the consequence under
the Plan if the Participant engages in an activity giving rise to any such
Forfeiture Event are the forfeitures specified herein. This provision
shall not preclude the Company and the Participant from entering into other
written agreements concerning the subject matter of Sections 11.1 and 11.2
and, to the extent any terms of this Section 11 are inconsistent with any
express terms of such agreement, this Section 11 shall not be deemed to modify
or amend such terms.
11.4. Committee
Discretion.
The Committee may, in its sole discretion, waive in whole or in part the
Company’s right to forfeiture under this Section 11, but no such waiver shall be
effective unless evidenced by a writing signed by a duly authorized officer of
the Company. In addition, the Committee may impose additional
conditions on Awards, by inclusion of appropriate provisions in the Award
Document. Nothing contained herein shall require the Committee to
enforce the forfeiture provisions of this Section 11. Failure to
enforce these forfeiture provisions against any individual shall not be
construed as a waiver of the Company’s right to forfeiture under this Section
11.
11.5. Clawback
Provision. Notwithstanding
any other provision of the Plan to the contrary, including Section 16.1 which
prohibits material- and adverse changes to any outstanding Award, any
Participant who is an officer of the Company whose negligent, intentional or
gross misconduct contributes to the Company’s having to restate all or a portion
of its financial statements, will be required to forfeit Awards granted under
this Plan and repay the Company the total amount of Award Gain realized by the
Participant upon the exercise of an Option or settlement of an Award, as
determined by the Board of Directors, an authorized committee, or its designee,
pursuant to the Caterpillar Inc. Guidelines on Corporate Governance Issues, as
adopted on February 14, 2007 and any subsequent amendments. Any
Awards granted under this Plan prior to February 14, 2007 are subject to the
provisions of this Section 11.5 only with the written consent of the
Participant.
Section
12.
Beneficiary
Designation
12.1. Beneficiary
Designations. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of his or
her death before he or she receives any or all of such benefit. Each
such designation shall revoke all prior designations by the same Participant,
shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s
lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s
estate.
Section
13.
Deferrals
13.1. Deferrals. The
Committee may permit a Participant to defer such Participant’s receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant upon the exercise of any Option or by virtue of the lapse or waiver
of restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units/Shares. If
any such deferral election is required or permitted, the Committee shall, in its
sole discretion, establish rules and procedures for such payment
deferrals. All such deferrals (and rules and procedures) shall be
consistent with Code Section 409A and any other applicable
law.
Section
14.
Rights
and Obligations of Parties
14.1. No
Guarantee of Employment or Service Rights.
Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Participant’s employment at any time, nor confer upon
any Participant any right to continue in the employ of the Company or any
Subsidiary.
14.2. Temporary
Absence. For
purposes of the Plan, temporary absence from employment because of illness,
vacation, approved leaves of absence, and transfers of employment among the
Company and its Subsidiaries, shall not be considered to terminate employment or
to interrupt continuous employment.
14.3. Participation. No
Employee or Director shall have the right to be selected to receive an Award
under the Plan, or, having been so selected, to be selected to receive a future
Award.
14.4. Right
of Setoff.
The Company or any Subsidiary may, to the extent permitted by applicable law,
deduct from and set off against any amounts the Company or Subsidiary may owe to
the Participant from time to time, including amounts payable in connection with
any Award, owed as wages, fringe benefits, or other compensation owed to the
Participant, such amounts as may be owed by the Participant to the Company,
although the Participant shall remain liable for any part of the Participant’s
payment obligation not satisfied through such deduction and
setoff. By accepting any Award granted hereunder, the Participant
agrees to any deduction or setoff under this Section 14.
14.5. Section
83(b) Election.
No election
under Section 83(b) of the Code (to include in gross income in the year of
transfer the amounts specified in Code Section 83(b)) or under a similar
provision of the laws of a jurisdiction outside the United States may be made,
unless expressly permitted by the terms of the Award Document or by action of
the Committee in writing before the making of such election. In any
case in which a Participant is permitted to make such an election in connection
with an Award, the Participant shall notify the Company of such election within
ten days of filing notice of the election with the Internal Revenue Service or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Code Section 83(b) or other
applicable provision.
14.6. Disqualifying
Disposition Notification.
If any Participant shall make any disposition of Shares delivered pursuant to
the exercise of an Incentive Stock Option under the circumstances described in
Code Section 421(b) (relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition within ten days
thereof.
Section
15.
Change
of Control
15.1. Change
of Control. If a Participant’s employment or service with the
Company and/or any Subsidiary terminates either without Cause or for Good Reason
within the 12 month period following a Change of Control, unless otherwise
specifically prohibited under applicable laws, or by the rules and regulations
of any governing governmental agencies or national securities
exchanges:
(a) Any
and all Options and SARs granted hereunder shall become immediately exercisable,
and shall remain exercisable throughout their entire term;
(b) Any
Period of Restriction and other restrictions imposed on Restricted Stock shall
lapse; and
(c) Unless
otherwise specified in an Award Document, the maximum payout opportunities
attainable under all outstanding Awards of Performance Units and Performance
Shares shall be deemed to have been fully earned for the entire Performance
Period(s) as of the effective date of the Change of Control. The
vesting of all such Awards shall be accelerated as of the effective date of the
Change of Control, and in full settlement of such Awards, there shall be paid
out in cash to Participants within 30 days following the effective date of the
Change of Control the maximum of payout opportunities associated with such
outstanding Awards.
Section
16.
Amendment,
Modification, and Termination
16.1. Amendment,
Modification, and Termination.
The Board may amend, suspend or terminate the Plan or the Committee’s authority
to grant Awards under the Plan without the consent of stockholders or
Participants; provided, however, that any amendment to the Plan shall be
submitted to the Company’s stockholders for approval not later than the earliest
annual meeting for which the record date is after the date of such Board action
if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Shares may then be listed or quoted and the Board may otherwise, in
its sole discretion, determine to submit other amendments to the Plan to
stockholders for approval; and provided further, that, without the written
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any outstanding
Award. The Committee shall have no authority to waive or modify any
other Award term after the Award has been granted to the extent that the waived
or modified term was mandatory under the Plan.
Section
17.
Withholding
17.1. Tax
Withholding.
The Company shall have the power and the right to deduct or withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy Federal,
state, and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the
Plan.
17.2. Share
Withholding.
With respect to withholding required upon the exercise of Options or SARs, upon
the lapse of restrictions on Restricted Stock, or upon any other taxable event
arising as a result of Awards granted hereunder, the withholding requirement
shall be satisfied by the Company withholding Shares having a Fair Market Value
on the date the tax is to be determined equal to the minimum statutory total tax
which would be imposed on the transaction.
Section
18.
Miscellaneous
18.1. Unfunded
Plan.
The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant or obligation to deliver Shares pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Company; provided that
the Committee may authorize the creation of trusts and deposit therein cash,
Shares, other Awards or other property, or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other
arrangements shall be consistent with the “unfunded” status of the Plan unless
the Committee otherwise determines with the consent of each affected
Participant. No such funding shall be established that would cause an
amount to be taxable under Code Section 409A before it is received by a
Participant or cause an amount to be subject to additional tax under such
Section.
18.2. Forfeitures;
Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration. No fractional
Shares shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such fractional Shares or
whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.
18.3. Compliance
with Code Section 162(m).
The Company intends that Options and SARs granted to Named Executive Officers
and other Awards designated as Awards to Named Executive Officers shall
constitute qualified “performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder, unless otherwise determined by the
Committee at the time of allocation of an Award. Accordingly, the
terms of Sections 4.2, 6, 7, 8.5, 8.6, 9 and 10, including the definitions of
Named Executive Officer and other terms used therein, shall be interpreted in a
manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Named
Executive Officer with respect to a fiscal year that has not yet been completed,
the Committee may, in its discretion, extend the terms of such Sections to any
Participant that the Committee deems appropriate. If any provision of
the Plan or any Award Document relating to a Performance Award that is
designated as intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to
confer upon the Committee or any other person sole discretion to increase the
amount of compensation otherwise payable in connection with any such Award upon
attainment of the applicable performance objectives.
18.4. Gender
and Number; Headings.
Except where otherwise indicated by the context, any masculine term used herein
also shall include the feminine; the plural shall include the singular and the
singular shall include the plural. Headings are included for the
convenience of reference only and shall not be used in the interpretation or
construction of any such provision contained in the Plan.
18.5. Severability.
In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
18.6. Successors. All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Company or otherwise.
18.7. Requirements
of Law.
The granting of Awards and the issuance of Shares under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be
required.
18.8. Securities
Law Compliance. With
respect to “insiders,” transactions under the Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. An “insider”
includes any individual who is, on the relevant date, an officer, Director or
more than 10% beneficial owner of any class of the Company’s equity securities
that is registered pursuant to Section 12 of the Exchange Act, all as defined
under Section 16 of the Exchange Act.
18.9. Governing
Law. To
the extent not preempted by Federal law, the Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Illinois without regard to the conflict of law provisions
thereof.
This
Plan Restatement shall be effective December 19,
2008.