CROWN CENTRAL PETROLEUM CORPORATION
1994 LONG-TERM INCENTIVE PLAN
(AS RESTATED ON JUNE 29, 2000)
SECTION 1: ESTABLISHMENT AND PURPOSE
The purpose of the Crown Central Petroleum Corporation 1994 Long-Term Incentive
Plan (the "Plan") is to benefit the Corporation and its Subsidiaries. The Plan
is also intended to benefit the Corporation's stockholders by encouraging high
levels of performance by individuals who are key to the success of the
Corporation and its Subsidiaries and to enable the Corporation and its
Subsidiaries to attract, motivate and retain talented and experienced
individuals essential to the Corporation's success. This is to be accomplished
by providing such employees an opportunity to obtain or increase their
proprietary interest in the Corporation's performance and by providing such
employees with additional incentives to remain with the Corporation and its
Subsidiaries.
SECTION 2: DEFINITIONS
The following terms, as used herein, shall have the meaning specified:
a. "ADMINISTRATIVE COSTS" means total administrative operating
expenses exclusive of refinery, supply and transportation, and
marketing expenses plus total interest expense including
capitalized interest costs net of interest income.
b. "AWARD" means Non-qualified Stock Options and Performance
Vested Restricted Stock granted pursuant to Section 4 hereof.
c. "AWARD AGREEMENT" means an agreement described in Section 6
hereof entered into between the Corporation and a Participant,
setting forth the terms and conditions applicable to the Award
granted to the Participant.
d. "BOARD OF DIRECTORS" means the Board of Directors of the
Corporation as it may be comprised from time to time.
e. "CAUSE" means an act that constitutes cause for termination of
employment under the Corporation or Subsidiary's normal
personnel practices.
f. "CODE" means the Internal Revenue Code of 1986, and any
successor statute, and the regulations promulgated thereunder,
as it or they may be amended from time to time.
g. "COMMITTEE" means the Committee as defined in Section 8 hereof.
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h. "CORPORATION" means Crown Central Petroleum Corporation, and
any successor corporation.
i. "COVERED EMPLOYEE" means a covered employee within the meaning
of Code Section 162(m)(3).
j. "EMPLOYEE" means officers, other key employees and all non-
union salaried employees of the Corporation or a Subsidiary,
but excludes directors who are not also officers or
employees of the Corporation.
k. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and
any successor statute, as it may be amended from time to time.
l. "FAIR MARKET VALUE" means the average of the highest and lowest
sale price of the Stock as reported on the American Stock
Exchange on the relevant date, or if no sale of the Stock is
reported for such date, the next preceding day for which there
is a reported sale.
m. "INSIDER" means any person who is subject to Section 16.
n. "MARKETING CONTRIBUTION" means Crown's marketing income minus
marketing expenses.
o. "NET MARGIN" means the Corporation's Refining Gross Margin
reduced by Total Refining Costs and Administrative Costs and
increased by the Marketing Contribution, as determined by the
Committee under the Corporation's regular accounting practices
on a consistent basis.
p. "NON-QUALIFIED STOCK OPTION" means an option to purchase Stock
that is granted pursuant to Section 4(a) hereof that does not
meet the requirements of Code Section 422, or if meeting those
requirements, is not intended to be an incentive stock option
under Code Section 422.
m. "PARTICIPANT" means any Employee who has been granted an Award
pursuant to this Plan.
n. "REFINING GROSS MARGIN" means the measure of actual gross
margin at the refinery (revenues minus costs of goods)
compared to a model for optimal refining performance.
o. "SECTION 16" means Section 16 of the Exchange Act, and any
successor statutory provision, and the rules promulgated
thereunder, as it or they may be amended from time to time.
p. "STOCK" means shares of Class B Common Stock of the
Corporation, par value $5 per share, or any security of
the Corporation issued in substitution, exchange or lieu
hereof.
u. "SUBSIDIARY" means any corporation in which the Corporation,
directly or indirectly, controls 50% or more of the total
combined voting power of all classes of such corporation's
stock.
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v. "TOTAL REFINING COSTS" means total refinery operating costs.
SECTION 3: ELIGIBILITY
Persons eligible for Awards shall consist of Employees who hold positions of
significant responsibility with the Corporation and/or a Subsidiary or whose
performance or potential contribution, in the judgment of the Committee, will
benefit the future success of the Corporation and/or a Subsidiary.
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SECTION 4: AWARDS
The Committee may grant either of the following types of Awards, singly or in
combination, as the Committee may in its sole discretion determine:
a. NON-QUALIFIED STOCK OPTIONS. A Non-qualified Stock Option is an
option to purchase a specific number of shares of Stock during
such specified time as the Committee may determine, not to
exceed ten (10) years, at a price not less than 100% of the
Fair Market Value of the Stock on the date the option is
granted.
1) The purchase price of the Stock subject to the option
may be paid in cash. At the discretion of the Committee
at the time of exercise or as provided in the Award
Agreement, the purchase price may also be paid by the
tender of Stock (the value of such Stock shall be its
Fair Market Value on the date of exercise), or through
a combination of Stock and cash, or through such other
means as the Committee determines are consistent with
the Plan's purpose and applicable law. No fractional
shares of Stock will be issued or accepted.
2) Without limiting the foregoing, to the extent
permitted by law (including relevant state law),
(A) the Committee may agree to accept as full or
partial payment of the purchase price of Stock issued
upon exercise of options, a promissory note of the
Participant evidencing the Participant's obligation to
make future cash payments to the Corporation, which
promissory notes shall be payable as determined by the
Committee (but in no event later than five (5) years
after the date thereof), shall be secured by a pledge
of the shares of Stock purchased, and shall bear
interest at a rate established by the Committee which
shall be at least equal to the minimum interest rate
required at the time to avoid imputed interest under the
Code, and (B) the Committee may also permit
Participants, at the time of exercise or as provided
in the Award Agreement, simultaneously to exercise
options and sell the shares of Stock thereby acquired,
pursuant to a brokerage or similar arrangement
approved in advance by the Committee, and use the
proceeds from such sale as payment of the purchase
price of such Stock.
b. PERFORMANCE VESTED RESTRICTED STOCK. Performance Vested
Restricted Stock is Stock that is issued to a Participant
and is subject to the attainment of performance goals,
restrictions on transfer or such other restrictions on
incidents of ownership, if any, as the Committee may
determine.
1) The performance goals shall be based on such measure or
measures of performance, which may include, but need not
be limited to, the performance of the Corporation, one
or more Subsidiaries or one or more of their divisions
or units, or any combination of the foregoing, as the
Committee shall determine, and may be applied on an
absolute basis or be relative to industry or other
indices, or any combination thereof. Unless otherwise
provided in an Award, such performance goals may be
adjusted in any manner by the Committee in its
discretion at any time and from time to time if it
determines that such performance goals are not
appropriate under the circumstances. The performance
goals for Covered Employees shall be based on the
Corporation's Net Margin unless prior to the grant
of an Award the Committee determines that another
performance measurement or measurements should be
substituted.
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2) Subject to such restrictions, the Participant as
owner of such shares of Performance Vested Restricted
Stock shall have the rights of the holder thereof,
except that the Committee may provide at the time of
the Award that any dividends or other distributions paid
on such Stock while subject to such restrictions shall
be accumulated or reinvested in Stock and held subject
to the same restrictions as the Performance Vested
Restricted Stock and such other terms and conditions as
the Committee shall determine.
3) A certificate for the shares of Performance Vested
Restricted Stock, which certificate shall be registered
in the name of the Participant, shall bear an
appropriate restrictive legend and shall be subject
to appropriate stop-transfer orders or the certificates
representing shares of Performance Vested Restricted
Stock shall be held in custody by the Corporation
until the restrictions relating thereto otherwise
lapse and the Participant shall deliver to the
Corporation a stock power endorsed in blank
relating to the Performance Vested Restricted Stock.
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SECTION 5: SHARES OF STOCK AVAILABLE UNDER PLAN
a. Subject to the adjustment provisions of Section 9 hereof, the
number of shares of Stock with respect to which Awards may be
granted under the Plan shall not exceed 1,100,000 shares of
Stock; provided that no more than 550,000 of the shares of
Stock available for Awards shall be available for Awards
in the form of Performance Vested Restricted Stock; and
provided further that no single Participant shall receive,
in any one calendar year, Awards (i) in the form of Non-
qualified Stock Options with respect to more than 150,000
shares of Stock and (ii) for more than 50,000 Performance
Vested Restricted Shares, as determined for purposes of Code
Section 162(m). The number of shares shall, if permissible
under Rule 16b-3 of the Exchange Act, include the number of
shares surrendered by a Participant or retained by the
Corporation in payment of applicable withholding taxes
under Section 6(a)(4) hereof.
b. Any unexercised or undistributed portion of any terminated or
forfeited Award shall be available for further Awards in
addition to those available under Section 5(a) hereof to the
extent permitted under Section 16.
c. The Stock which may be issued pursuant to an Award under the
Plan may be authorized but unissued Stock, or Stock that is
acquired, subsequently or in anticipation of the transaction,
in the open market to satisfy the requirements of the Plan.
SECTION 6: AWARD AGREEMENTS
Each Award under the Plan shall be evidenced by an Award Agreement setting
forth the number of shares of Stock subject to the Award and such other terms
and conditions applicable to the Award, as determined by the Committee, not
inconsistent with the terms of the Plan.
a. Award Agreements shall include the following terms:
1) NON-ASSIGNABILITY. A provision that no Award shall be
assignable or transferable except by will or by laws of
descent and distribution and that, during the lifetime
of a Participant, the Award shall be exercised only by
such Participant or by his or her guardian or legal
representative.
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2) TERMINATION OF EMPLOYMENT.
A. A provision describing the treatment of an
Award in the event of the retirement, disability,
death or other termination of a Participant's
employment with the Corporation or a Subsidiary,
including but not limited to terms relating to
the vesting, time for exercise, forfeiture or
cancellation of an Award in such circumstances.
Participants who terminate employment due to
retirement, permanent disability, or death prior
to the satisfaction of applicable conditions and
restrictions associated with their Award(s) may
be entitled to a prorated Awards(s) as and to the
extent determined by the Committee.
B. A provision that for purposes of the Plan, (i) a
transfer of an Employee from the Corporation to a
Subsidiary or affiliate of the Corporation,
whether or not incorporated, or vice versa, or
from one Subsidiary or affiliate of the
Corporation to another, and (ii) a leave of
absence, duly authorized in writing by the
Corporation, shall not be deemed a termination of
employment.
C. A provision describing the effect of an event of
Cause on an Award.
3) RIGHTS AS A STOCKHOLDER. A provision stating that a
Participant shall have no rights as a stockholder with
respect to any Stock covered by an Award of a
Non-qualified Stock Option until the date the
Participant becomes the holder of record. Except as
provided in Section 9 hereof, no adjustment shall be
made for dividends or other rights, unless the Award
Agreement specifically requires such adjustment.
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4) WITHHOLDING. A provision requiring the withholding of
applicable taxes required by law from all amounts
paid in satisfaction of an Award. A Participant may
satisfy the withholding obligation by (A) paying the
amount of any taxes in cash, (B) with the approval of
the Committee at the time applicable taxes are due or
as provided in the Award Agreement, shares of Stock
may be deducted from the payment to satisfy the
obligation in full or in part, or (C) with the
approval of the Committee at the time applicable
withholding taxes are due or as provided in
the Award Agreement, deliver already owned Stock to
satisfy the obligation in full or in part. The amount of
the withholding and the number of shares to be deducted
shall be determined by the Committee with reference to
the Fair Market Value of the Stock when the withholding
is required to be made. Any use of Stock by an Insider
for payment of applicable withholding taxes shall be
subject to the provisions of Rule 16b-3 as to the manner
and timing of the election.
5) EXECUTION. A provision stating that no Award is
enforceable until the Award Agreement or a receipt has
been signed by the Participant and the Corporation or a
Subsidiary. By executing the Award Agreement or receipt,
a Participant shall be deemed to have accepted and
consented to any action taken under the Plan by the
Committee, the Board of Directors or their delegates.
6) HOLDING PERIOD. In the case of an Award to an Insider:
(A) of an equity security, a provision stating (or the
effect of which is to require) that such security must
be held for at least six (6) months (or such longer
period as the Committee in its discretion specifies)
from the date of acquisition; or (B) of a derivative
security with a fixed exercise price within the
meaning of Section 16, a provision stating (or the
effect of which is to require) that at least six (6)
months (or such longer period as the Committee in its
discretion specifies) must elapse from the date of
acquisition of the derivative security to the
date of disposition of the derivative security
(other than upon exercise or conversion) or its
underlying equity security.
b. Award Agreements may include the following terms:
1) REPLACEMENT AND SUBSTITUTION. Any provisions (A)
permitting the surrender of outstanding Awards or
securities held by the Participant in order to exercise
or realize rights under other Awards, or in exchange for
the grant of new Awards under similar or different terms
or (B) requiring holders of Awards to surrender
outstanding Awards as a condition precedent to the grant
of new Awards under the Plan.
2) OTHER TERMS. Such other terms as the Committee may
determine are necessary and appropriate to effect an
Award to the Participant, including, but not limited to,
the term of the Award, vesting provisions, any
requirements for continued employment with the
Corporation or a Subsidiary, any other restrictions or
conditions (including performance goals) on the Award
and the method by which restrictions or conditions
lapse, the effect on the Award of a change in control
of the Corporation, the price, amount or value of
Awards, and the terms, if any, pursuant to which a
Participant may elect to defer the receipt of cash or
Stock under an Award.
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SECTION 7: AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, suspend or discontinue the Plan,
in whole or in part. The Committee may at any time alter or amend any or all
Award Agreements under the Plan to the extent permitted by law, but no such
alteration or amendment shall impair the rights of any holder of an Award
without the holder's consent, except to preserve the Plan's qualification as a
safe harbor plan under Section 16. However, no such action may, without
approval of the stockholders of the Corporation, be effective with respect
to (A) any Insider if such approval is required by Section 16, or (B) any
Covered Employee if such approval is required by Code Section 162(m)(4)(C).
SECTION 8: ADMINISTRATION
a. The Plan and all Awards granted pursuant thereto shall be
administered by a Committee of the Board of Directors, which
Committee shall consist of not less than three (3) members of
such Board of Directors and shall be constituted so as to
permit the Plan to comply with the administration requirements
of Rule 16b-3(c)(2)(i) and (ii) of the Exchange Act and Code
Section 162(m)(4)(C). The members of the Committee shall be
designated by the Board of Directors. Unless the Board provides
otherwise, the Committee shall be the Executive Compensation
and Bonus Committee of the Board of Directors. A majority of
the members of the Committee shall constitute a quorum. The
vote of a majority of a quorum shall constitute action by the
Committee.
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b. The Committee shall have the power to interpret and administer
the Plan. All questions of interpretation with respect to the
Plan, the number of shares of Stock or other security or rights
granted and the terms of any Award Agreements, including the
timing, pricing, and amounts of Awards, shall be determined by
the Committee, and its determination shall be final and
conclusive upon all parties in interest. The Committee's
determinations under the Plan need not be uniform and may be
made by it selectively among Employees who receive, or are
eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
c. In the event of any conflict between an Award Agreement and
this Plan, the terms of this Plan shall govern.
d. It is the intent of the Corporation that this Plan and Awards
hereunder satisfy, and be interpreted in a manner that
satisfies, (i) in the case of Participants who are or may be
Insiders, the applicable requirements of Rule 16b-3 of the
Exchange Act, so that such persons will be entitled to the
benefits of Rule 16b-3, or other exemptive rules under Section
16, and will not be subjected to avoidable liability
thereunder; (ii) with respect to Non-qualified Stock Options
in the case of Participants who are or may be Covered
Employees, the applicable requirements of Code Section
162(m) so that the tax deduction for the Corporation or a
Subsidiary for remuneration in respect of this Plan for
services performed by such Covered Employees with respect to
such Non-qualified Stock Options, is not disallowed in whole
or in part by the operation of such Code Section, and (iii)
with respect to Performance Vested Restricted Stock in the case
of Participants who are or may be Covered Employees, the
applicable requirements of Code Section 162(m) to the extent
designated by the Committee at the time of an Award. If any
provision of this Plan or of any Award would otherwise
frustrate or conflict with the intent expressed in this
Section 8(d), that provision to the extent possible shall
be interpreted and deemed amended so as to avoid such
conflict. To the extent of any remaining irreconcilable
conflict with such intent, such provision shall be
deemed void as applicable to Insiders and/or Covered
Employees, as applicable.
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e. The Committee may delegate to the officers or employees of the
Corporation and its Subsidiaries the authority to execute and
deliver such instruments and documents, to do all such acts and
things, and to take all such other steps deemed necessary,
advisable or convenient for the effective administration of the
Plan in accordance with its terms and purpose, except that the
Committee may not delegate any discretionary authority with
respect to substantive decisions or functions regarding the
Plan or Awards thereunder as these relate to Insiders or
Covered Employees, including, but not limited to, decisions
regarding the timing, eligibility, pricing, amount or other
material terms of such Awards.
SECTION 9: ADJUSTMENT PROVISIONS
a. In the event of any change in the outstanding shares of Stock
by reason of a stock dividend or split, recapitalization,
merger or consolidation (whether or not the Corporation is a
surviving corporation), reorganization, combination or exchange
of shares or other similar corporate changes or an
extraordinary dividend payback in cash or property, the number
of shares of Stock (or other securities) then remaining
subject to this Plan, and the maximum number of shares that
may be issued to any single participant pursuant to this Plan,
including those that are then covered by outstanding Awards,
shall (i) in the event of an increase in the number of
outstanding shares, be proportionately increased and the
price for each share then covered by an outstanding Award
shall be proportionately reduced, and (ii) in the event
of a reduction in the number of outstanding shares, be
proportionately reduced and the price for each share then
covered by an outstanding Award shall be proportionately
increased.
b. The Committee shall make any further adjustments as it deems
necessary to ensure equitable treatment of any holder of an
Award as the result of any transaction affecting the
securities subject to the Plan not described in (a), or as
is required or authorized under the terms of any applicable
Award Agreement.
c. The existence of the Plan and the Awards granted hereunder
shall not affect or restrict in any way the right or power
of the Board of Directors or the shareholders of the
Corporation to make or authorize any adjustment,
recapitalization, reorganization or other capital structure
of its business, any merger or consolidation of the
Corporation, any issue of bonds, debentures, preferred
or prior preference stock ahead of or affecting the
Stock or the rights thereof, the dissolution or
liquidation of the Corporation or any sale or transfer
of all or any part of its assets or business, or any
other corporate act or proceeding.
SECTION 10: CHANGE OF CONTROL
a. In the event of a change in control of the Corporation, in
addition to any action required or authorized by the terms of
an Award Agreement, the Committee may, in its sole discretion
unless otherwise provided in an Award Agreement, take any of
the following actions as a result, or in anticipation, of
any such event:
1) accelerate time periods for purposes of vesting in, or
realizing gain from, any outstanding Award made pursuant
to this Plan;
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2) offer to purchase any outstanding Award made pursuant to
this Plan from the holder for its equivalent cash value,
as determined by the Committee, as of the date of the
change of control; or
3) make adjustments or modifications to outstanding Awards
as the Committee deems appropriate to maintain and
protect the rights and interests of Participants
following such change of control.
Any such action approved by the Committee shall be conclusive
and binding on the Corporation and all Participants.
b. For purposes of this Section, a change of control shall mean the
following:
1) A tender offer or exchange offer is made whereby the
effect of such offer is to take over and control the
affairs of the Corporation, and such offer is
consummated for the ownership of securities of the
Corporation representing twenty percent (20%) or more
of the combined voting power of the Corporation's then
outstanding voting securities.
2) The Corporation is merged or consolidated with another
corporation and, as a result of such merger or
consolidation, less than seventy-five percent (75%) of
the combined voting power of the surviving or resulting
corporation shall then be owned in the aggregate by the
former stock holders of the Corporation.
3) The Corporation transfers substantially all of its
assets to another corporation or entity that is not a
wholly owned subsidiary of the Corporation.
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4) Any person (as such term is used in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act) other than a person
included within the definition of Rosenberg Shareholder
in Section II.6, Stock Not Subject to the Control Share
Act, of the Corporation's Bylaws (or any group
controlled by or consisting of persons included within
the definition of Rosenberg Shareholder) is or becomes
the beneficial owner, directly or indirectly, of
securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of
the Corporation's then outstanding securities.
5) As the result of a tender offer, merger, consolidation,
sale of assets, or contested election, or any
combination of such transactions, the persons who were
members of the Board of Directors of the Corporation
immediately before the transaction, cease to constitute
at least a majority thereof."
SECTION 11: UNFUNDED PLAN
The Plan shall be unfunded. No provision of the Plan or any Award Agreement
will require the Corporation or its Subsidiaries, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor will the Corporation or its Subsidiaries maintain
separate bank accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such purposes.
Participants will have no rights under the Plan other than as unsecured general
creditors of the Corporation and its Subsidiaries, except that insofar as they
may have become entitled to payment of additional compensation by performance
of services, they will have the same rights as other employees under generally
applicable law.
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SECTION 12: LIMITS OF LIABILITY
a. Any liability of the Corporation or a Subsidiary to any
Participant with respect to an Award shall be based solely upon
contractual obligations created by the Plan and the Award
Agreement.
b. Neither the Corporation nor a Subsidiary, nor any member of the
Board of Directors or of the Committee, nor any other person
participating in any determination of any question under the
Plan, or in the interpretation, administration or application
of the Plan, shall have any liability to any party for any
action taken or not taken in good faith under the Plan.
SECTION 13: RIGHTS OF EMPLOYEES
a. Status as an eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to such
eligible Employee or to eligible Employees generally.
b. Nothing contained in this Plan or in any Award Agreement (or in
any other documents related to this Plan or to any Award or
Award Agreement) shall confer upon any Employee or Participant
any right to continue in the employ or other service of the
Corporation or a Subsidiary or constitute any contract or limit
in any way the right of the Corporation or a Subsidiary to
change such person's compensation or other benefits or to
terminate the employment or other service of such person with
or without cause.
SECTION 14: TERM
The Plan shall be adopted by the Board of Directors effective as of January 1,
1994, subject to approval by the Corporation's stockholders. The Committee may
grant Awards prior to stockholder approval, provided, however, that Awards
granted prior to such stockholder approval are automatically canceled if
stockholder approval is not obtained at or prior to the period ending twelve
months after the date the Plan is adopted. Notwithstanding anything to the
contrary herein, no Award may be exercisable prior to the date stockholder
approval is obtained. The Plan shall remain in effect until all Awards under
the Plan have been exercised or terminated under the terms of the Plan and
applicable Award Agreements, provided that Awards under the Plan may only be
granted within ten years from the effective date of the Plan.
SECTION 15: REQUIREMENTS OF AND GOVERNING LAW
a. The Plan, the Award Agreements and all actions taken hereunder
or thereunder shall be governed by, and construed in accordance
with, the laws of the state of Maryland without regard to the
conflict of law principles thereof.
b. Notwithstanding anything contained herein or in any Award
Agreement to the contrary, the Corporation shall not be
required to sell or issue shares of Stock hereunder if the
issuance thereof would constitute a violation by the
Participant or the Corporation of any provisions of any law
or regulation of any governmental authority or any national
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securities exchange; and as a condition of any sale or issuance
the Corporation may require such agreements or undertakings, if
any, as the Corporation may deem necessary or advisable to
assure compliance with any such law or regulation.
