<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HERCULES INCORPORATED
A DELAWARE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 51-0023450
HERCULES PLAZA
1313 NORTH MARKET STREET
WILMINGTON, DELAWARE 19894-0001
TELEPHONE: 302-594-5000
HERCULES INCORPORATED LONG TERM INCENTIVE COMPENSATION PLAN
ISRAEL J. FLOYD
SECRETARY
HERCULES INCORPORATED
HERCULES PLAZA
1313 NORTH MARKET STREET
WILMINGTON, DELAWARE 19894-0001
TELEPHONE: 302-594-5000
(AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALES TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
ALL OR PART OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR A CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(2)
<S> <C> <C> <C> <C>
HERCULES INCORPORATED
COMMON STOCK
$25/48 STATED VALUE 8,000,000 SHARES $ 47.81 $ 382,480,000 $ 115,903
</TABLE>
(1) INCLUDES, PURSUANT TO RULE 416, AN INDETERMINATE AMOUNT OF ADDITIONAL
SHARES OF COMMON STOCK THAT MAY BE ISSUED IF THE ANTIDILUTION PROVISIONS OF
THE PLAN BECOME OPERATIVE.
(2) ESTIMATED SOLELY FOR THE PURPOSE OF DETERMINING THE REGISTRATION FEE, AND
COMPUTED, PURSUANT TO RULE 457(h), UPON THE BASIS OF THE AVERAGE OF THE
HIGH AND LOW PRICES PAID FOR A SHARE OF HERCULES INCORPORATED COMMON STOCK
ON OCTOBER 21, 1997, AS IS REPORTED ON THE NEW YORK STOCK EXCHANGE -
COMPOSITE TRANSACTIONS TAPE.
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
are incorporated herein by reference:
(1) Hercules' Annual Report on Form 10-K for the fiscal year ended
December 31, 1996; and
(2) Hercules' Quarterly Report on Form 10-Q for the quarterly periods
ended March 31, 1997, and June 30, 1997; and
(3) Hercules' Current Report on Form 8-K dated August 1, 1997.
All documents filed by Hercules pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
of the securities offered hereby have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock offered pursuant to this Registration
Statement will be passed upon for Hercules by its Vice President and General
Counsel, Richard G. Dahlen. As of June 30, 1997, Mr. Dahlen owned beneficially
an aggregate of 12,222 shares of restricted stock under the Hercules
Incorporated Long Term Incentive Compensation Plan ("LTICP"); 102 shares of
Hercules common stock under the Hercules Incorporated Savings and Investment
Plan, and the right to acquire within 60 days hereof 8,400 shares under options
held pursuant to the LTICP.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the provisions of the Restated Certificate of Incorporation, each
person who is or was a director or officer of Hercules shall be indemnified by
Hercules as of right to the full extent permitted or authorized by the Delaware
General Corporation Law.
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Under such law, to the extent that such a person is successful on the
merits or otherwise in defense of any action, suit or proceeding brought against
him by reason of the fact that he is a director or officer of Hercules, he shall
be indemnified against expenses (including attorneys' fees) reasonably incurred
in connection with such action.
If unsuccessful in defense of a third-party civil suit or a criminal suit,
or if such a suit is settled, such a person shall be indemnified under such law
against both (1) expenses (including attorneys' fees) and (2) judgments, fines
and amounts paid in settlement if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of Hercules,
and with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of
Hercules, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of Hercules,
except that if such person is adjudged to be liable in such a suit for
negligence or misconduct in the performance of his duty to Hercules, he cannot
be made whole even for expenses unless the court determines that he is fairly
and reasonably entitled to indemnity for such expenses.
In addition, Hercules has entered into separate indemnification agreements
with each of its directors and with certain of its executive officers pursuant
to which Hercules has agreed to indemnify, and advance expenses to, each of its
directors and executive officers to the full extent provided by applicable law
and the Company's By-Laws as currently in effect. More specifically, the
agreements provide that directors and officers will be promptly indemnified
against expenses (including judgments, fines, penalties and amounts paid in
settlement) incurred in connection with their service to, or status with, the
Company or any other corporation, employee benefit plan or other entity with
whom such person is serving at the express written request of the Company. The
agreements also set forth the procedures for determining entitlement to
indemnification, the manner of the advancement of expenses, remedies of the
indemnity and certain other matters of a similar nature.
Limitation of Liability. Under provisions of the Hercules Incorporated
Restated Certificate of Incorporation (the "Restated Certificate of
Incorporation"), a director of Hercules shall have no personal liability to the
Registrant or its stockholders for monetary damages for breach of his fiduciary
duty of care as a director to the full extent permitted by the Delaware General
Corporation Law, as it may be amended from time to time.
Insurance. Hercules also maintains insurance policies pursuant to which
directors and officers are insured against certain liabilities, including
certain liabilities arising under the Securities Act of 1933 (the "Securities
Act"), which might be incurred by them in such capacities and against which they
cannot be indemnified by the Registrant.
The foregoing summaries are necessarily subject to the complete text of
Section 145 of the Delaware General Corporation Law that provides for
indemnification of directors and officers in certain circumstances and to the
Restated Certificate of Incorporation, which is included in Hercules current
Page 3
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report on Form 8-K dated May 27, 1987, and incorporated herein by reference, and
are qualified in their entirety by reference thereto.
ITEM 8. EXHIBITS
A complete listing of exhibits required is given in the Exhibit Index that
precedes the exhibits filed with this Registration Statement.
ITEM 9. UNDERTAKINGS
A. Hercules hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement.
Provided, however, that paragraphs A (1) (i) and A (1) (ii) do
not apply if this Registration Statement is on Form S-3 or
Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by Hercules pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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<PAGE> 5
B. In addition, Hercules hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Hercules'
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. Finally, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Hercules pursuant to the foregoing provisions, or otherwise, Hercules has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Hercules of expenses incurred or
paid by a director, officer or controlling person of Hercules in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
Hercules will, unless in the opinion of its counsel the matter has been settled
by the controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Page 5
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Hercules
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington, State of Delaware, on this 15th day of
October, 1997.
HERCULES INCORPORATED
By: /s/ R. Keith Elliott
-------------------------------
R. Keith Elliott
Director, Chairman of the Board
and Chief Executive Officer
Page 6
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Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement regarding the Hercules Incorporated Long Term Incentive Compensation
Plan has been signed by the following persons in the capacities indicated on the
date indicted below.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ R. KEITH ELLIOTT Principal Executive Officer and 10/15/97
- --------------------------- Director (Chairman of the Board
R. Keith Elliott and Chief Executive Officer)
/s/ GEORGE MACKENZIE Principal Financial Officer 10/9/97
- --------------------------- (Senior Vice President
George MacKenzie and Chief Financial Officer)
/s/ VIKRAM JOG Principal Accounting Officer 10/9/97
- --------------------------- (Vice President and Controller)
Vikram Jog
/s/ VINCENT J. CORBO Director 10/13/97
- ---------------------------
Vincent J. Corbo
/s/ RICHARD M. FAIRBANKS, III Director 10/23/97
- ---------------------------
Richard M. Fairbanks, III
/s/ EDITH E. HOLIDAY Director 10/23/97
- ---------------------------
Edith E. Holiday
/s/ ROBERT G. JAHN Director 10/23/97
- ---------------------------
Robert G. Jahn
/s/ GAYNOR N. KELLEY Director 10/23/97
- ---------------------------
Gaynor N. Kelley
/s/ RALPH L. MACDONALD, JR. Director 10/23/97
- ---------------------------
Ralph L. MacDonald, Jr.
/s/ H.EUGENE MCBRAYER Director 10/23/97
- ---------------------------
H. Eugene McBrayer
/s/ PETER MCCAUSLAND Director 10/23/97
- ---------------------------
Peter McCausland
/s/ PAULA A. SNEED Director 10/23/97
- ---------------------------
Paula A. Sneed
</TABLE>
Page 7
<PAGE> 8
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBITS
- ------ --------
4 The Hercules Incorporated Long Term Incentive Compensation Plan
5 Opinion of Counsel
23.1 Consent of Independent Accountants
23.2 Consent of Counsel for Registrant
(included as part of Exhibit 5)
Page 8
<PAGE> 1
EXHIBIT 4
HERCULES INCORPORATED
LONG TERM INCENTIVE COMPENSATION PLAN
[HERCULES LOGO]
Hercules Incorporated
Hercules Plaza
Wilmington, DE 19894-0001
January 1, 1996
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I ........................................................ 1
PURPOSE .................................................... 1
ARTICLE II ....................................................... 1
DEFINITIONS AND CONSTRUCTION ......................... 1
Section 2.1 Definitions .............................. 1
(1) Accelerated Date .......................... 1
(2) Act........................................ 1
(3) APD Election .............................. 1
(4) Attributable Shares ....................... 1
(5) Award...................................... 1
(6) Award Commitment .......................... 1
(7) Award Items................................ 2
(8) Base Salary................................ 2
(9) Beneficiary................................ 2
(10) Board...................................... 2
(11) Bonus...................................... 2
(12) Cash Value Award or CVA.................... 2
(13) CEO........................................ 2
(14) Change in Control.......................... 2
(15) Code....................................... 2
(16) Committee ................................. 2
(17) Common Stock............................... 2
(18) Company ................................... 2
(19) Date of Grant ............................. 2
(20) Designated Retirement Date ................ 3
(21) Disability ................................ 3
(22) Fair Market Value ......................... 3
(23) Grantee ................................... 3
(24) Grantor ................................... 3
(25) Hercules Incorporated Deferred Compensation
Plan ...................................... 3
(26) Hercules Incorporated Non-Qualified Savings
Plan ...................................... 3
(27) Hercules Pension Plan ..................... 3
(28) Hercules Pension Restoration Plan ......... 3
(29) Incentive Stock Option or ISO ............. 3
(30) Management Incentive Compensation Plan .... 3
(31) Maximum Award ............................. 4
(32) Minimum Award ............................. 4
(33) Nonqualified Option ....................... 4
(34) Nonreporting Person ....................... 4
(35) Normal Retirement Date .................... 4
(36) Normal Vesting Date ....................... 4
(37) Option or Stock Option .................... 4
(38) Optionee .................................. 4
(39) Option Period ............................. 4
(40) Option Price .............................. 4
i
<PAGE> 3
(41) Other Market-Based Awards ................. 4
(42) Other Performance-Based Awards ............ 4
(43) Participating Subsidiary .................. 4
(44) PASO Period ............................... 4
(45) Payout Schedule ........................... 4
(46) Performance Accelerated Stock Option or
"PASO" .................................... 4
(47) Performance Goal .......................... 5
(48) Performance Period ........................ 5
(49) Performance Share ......................... 5
(50) Performance Share Award ................... 5
(51) Performance Share Fair Market Value ....... 5
(52) Phantom Unit .............................. 5
(53) Phantom Unit Award ........................ 5
(54) Phantom Unit Fair Market Value ............ 5
(55) Reduction in Force ........................ 5
(56) Related Entity ............................ 5
(57) Reporting Person .......................... 5
(58) Restricted Stock .......................... 5
(59) Restricted Stock Award .................... 5
(60) Restricted Stock Unit...................... 5
(61) Restricted Stock Unit Award................ 6
(62) Restricted Period ......................... 6
(63) Restriction Range ......................... 6
(64) Retirement ................................ 6
(65) Rule 16b-3 ................................ 6
(66) SAR ....................................... 6
(67) SAR Fair Market Value ..................... 6
(68) Stock Appreciation Right................... 6
(69) Stock Appreciation Right Award............. 6
(70) Stock Option Award......................... 6
(71) Subsidiary ................................ 6
(72) Substitution Awards ....................... 6
(73) Suspension Period ......................... 6
(74) Target Award .............................. 6
Section 2.2 Construction ................................... 6
ARTICLE III ...................................................... 7
STOCK AVAILABLE FOR AWARDS ................................. 7
Section 3.1 Common Stock ................................... 7
Section 3.2 Number of Shares Deliverable ................... 7
Section 3.3 Reusable Shares ................................ 7
Section 3.4 Shares Not Charged Against Available Shares .... 7
ARTICLE IV ....................................................... 8
AWARDS AND AWARD AGREEMENTS ................................ 8
Section 4.1 General......................................... 8
Section 4.2 Eligibility .................................... 8
Section 4.3 Terms and Conditions; Award Commitments ........ 8
4.3.1 Terms And Conditions............................ 8
4.3.2 Award Commitments............................... 9
ii
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ARTICLE V ........................................................ 9
OPTIONS AND STOCK APPRECIATION RIGHTS....................... 9
Section 5.1 Award of Options............................... 9
5.1.1 Grants......................................... 9
5.1.2 Types of Options .............................. 9
5.1.3 Substantial Stockholder ....................... 9
5.1.4 Maximum Award ................................. 9
Section 5.2 Option Price .................................. 9
Section 5.3 Option Periods ................................ 9
Section 5.4 Exercise of Options ........................... 10
5.4.1 Exercisability . .............................. 10
5.4.2 Certain Limitations. .......................... 10
5.4.3 Method of Exercise............................. 10
Section 5.5 Time and Method ............................... 10
5.5.1 Form of Payment................................ 10
5.5.2 Time of Payment ............................... 10
5.5.3 Methods for Tendering Shares .................. 10
5.5.4 ISO Limitation ................................ 10
Section 5.6 Delivery of Shares ............................ 10
Section 5.7 Stockholder Rights ............................ 11
Section 5.8 Incentive Stock Options ....................... 11
5.8.1 Individual Limitation ......................... 11
5.8.2 Code Qualification............................. 11
5.8.3 Notice of Disposition ......................... 11
Section 5.9 Stock Appreciation Rights Awards............... 11
5.9.1 Grants......................................... 11
5.9.2 SAR Exercise................................... 11
5.9.3 Value of SAR Payment .......................... 12
5.9.4 Time and Method of Payment .................... 12
5.9.5 Effect of SAR and Option Exercises............. 12
5.9.6 Nature of SARs ................................ 13
Section 5.10 Performance Accelerated Stock Options Awards .. 13
5.10.1 Grants ........................................ 13
5.10.2 Accelerated Date .............................. 13
5.10.3 PASO Period ................................... 13
5.10.4 Exercisability ................................ 13
5.10.5 Corporate or Business Goals ................... 13
5.10.6 PASOs Treated Like Options .................... 13
ARTICLE VI ....................................................... 14
PERFORMANCE SHARE AWARDS ................................... 14
Section 6.1 Grants ........................................ 14
Section 6.2 Performance Period ............................ 14
Section 6.3 Performance Goals ............................. 14
Section 6.4 Payout Schedule ............................... 14
Section 6.5 Issuance of Stock and Stock Certificates ...... 14
6.5.1 Issuance....................................... 14
6.5.2 Custody and Legends ........................... 15
Section 6.6 Restrictions and Forfeitures................... 15
Section 6.7 Stockholder Rights............................. 15
iii
<PAGE> 5
Section 6.8 Delivery of Shares and Cash Payments........... 15
6.8.1 Determination of Performance Results and
Award Settlement............................... 15
6.8.2 Delivery of Shares and Payment of Cash ........ 16
6.8.3 Revisions for Significant Events .............. 17
6.8.4 Conditions Precedent........................... 17
6.8.5 Performance Share Fair Market Value ........... 17
ARTICLE VII ...................................................... 17
RESTRICTED STOCK AWARDS .................................... 17
Section 7.1 Grants ........................................ 17
Section 7.2 Restricted Period ............................. 18
Section 7.3 Restrictions and Forfeiture ................... 18
Section 7.4 Issuance of Stock and Stock Certificate ....... 18
7.4.1 Issuance ...................................... 18
7.4.2 Custody and Legends............................ 18
Section 7.5 Stockholder Rights ............................ 19
Section 7.6 Delivery of Shares ............................ 19
ARTICLE VIII ..................................................... 19
PHANTOM UNIT AWARDS......................................... 19
Section 8.1 Grants ........................................ 19
Section 8.2 Vesting of Awards ............................. 19
Section 8.3 Value of Phantom Units Payments ............... 20
Section 8.4 Time and Method of Payment .................... 20
Section 8.5 Forfeiture of Phantom Units ................... 20
Section 8.6 Nature of Phantom Units ....................... 20
ARTICLE IX ....................................................... 21
CASH VALUE AWARDS .......................................... 21
Section 9.1 Grants ........................................ 21
Section 9.2 Performance Period ............................ 21
Section 9.3 Performance Goals ............................. 21
Section 9.4 Payout Schedule ............................... 21
Section 9.5 Form Of Payout................................. 21
Section 9.6 Calculation Of Payout ......................... 21
ARTICLE X ........................................................ 22
OTHER AWARDS ............................................... 22
Section 10.1 Other Market-Based Awards ..................... 22
Section 10.2 Other Performance-Based Awards ................ 22
Section 10.3 Terms of Other Awards ......................... 22
Section 10.4 Stock Option Dividend Equivalents.............. 23
10.4.1 Grants ........................................ 23
10.4.2 Interest ...................................... 23
10.4.3 Forfeiture..................................... 23
iv
<PAGE> 6
ARTICLE XI ....................................................... 23
SUBSTITUTION AWARDS......................................... 23
Section 11.1 Substitution of Performance Shares ........... 23
Section 11.2 Substitution of Restricted Stock ............. 23
Section 11.3 Substitution Procedures ...................... 23
Section 11.4 Substitutions in Contemplation of Retirement . 23
ARTICLE XII ...................................................... 24
TERMINATION OF EMPLOYMENT .................................. 24
Section 12.1 Retirement ................................... 24
12.1.1 Stock Options and SARs ....................... 24
12.1.2 Performance Share, Restricted Stock, Phantom
Unit, and Cash Value Awards .................. 24
12.1.3 Performance Accelerated Stock Options ........ 24
12.1.4 Restricted Stock Unit......................... 24
Section 12.2 Reduction in Force ........................... 25
12.2.1 Stock Options and SARs ....................... 25
12.2.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards ................................. 25
12.2.3 Performance Accelerated Stock Options......... 25
Section 12.3 Transfers to Certain Related Entities......... 25
12.3.1 Stock Options and SARs ....................... 25
12.3.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards ................................. 25
12.3.3 Performance Accelerated Stock Options......... 26
Section 12.4 Disability or Death........................... 26
12.4.1 Stock Options and SARs ....................... 26
12.4.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards ................................. 26
Section 12.4 Disability or Death........................... 26
Section 12.5 Resignation .................................. 26
12.5.1 Stock Options, SARs and Performance
Accelerated Stock Options .................... 26
12.5.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards ................................. 26
Section 12.6 Decrease in Company Ownership ................ 27
12.6.1 Stock Options and SARs ....................... 27
12.6.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards ................................. 27
12.6.3 Performance Accelerated Stock Options ........ 27
Section 12.7 Termination of Employment for Other Reasons .. 27
12.7.1 Stock Options, SARs and Performance
Accelerated Stock Options .................... 27
12.7.2 Performance Share, Restricted Stock,
Restricted Stock Unit, Phantom Unit and Cash
Value Awards.................................. 27
Section 12.8 Termination Date.............................. 28
Section 12.9 Reporting Person Limitation .................. 28
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ARTICLE XIII ..................................................... 28
EXCHANGE AWARDS; ABOVE TARGET MICP AWARDS................... 28
Section 13.1 Salary/Bonus Reductions....................... 28
13.1.1 Restricted Stock ............................. 28
13.1.2 Options....................................... 28
Section 13.2 Deferred Accounts ............................ 29
13.2.1 Deferred Compensation Plan Accounts .......... 29
13.2.2 Non-Qualified Savings Plan Accounts .......... 29
Section 13.3 Termination of Employment .................... 29
13.3.1 Death, Disability and Reduction in Force ..... 29
13.3.2 Retirement.................................... 30
13.3.3 Resignation or Termination for Cause ......... 30
Section 13.4 Avoidance of Pension Diminution .............. 30
13.4.1 Governing Provisions ......................... 30
13.4.2 Exchange Awards .............................. 31
13.4.3 Designated Retirement Date ................... 31
Section 13.5 Irrevocability ............................... 31
Section 13.6 Equivalency .................................. 31
Section 13.7 MICP Awards .................................. 32
Section 13.8 Definition ................................... 32
ARTICLE XIV ...................................................... 32
CERTAIN TERMS APPLICABLE TO ALL AWARDS ..................... 32
Section 14.1 Withholding Taxes ............................ 32
Section 14.2 Adjustments to Reflect Capital Changes........ 33
14.2.1 Recapitalization ............................. 33
14.2.2 Sale or Reorganization ....................... 33
14.2.3 Options to Purchase Stock of Acquired
Companies .................................... 33
Section 14.3 Failure to Comply With Terms and Conditions .. 33
Section 14.4 Forfeiture Upon Occurrence of Certain Events . 34
Section 14.5 Regulatory Approvals and Listing ............. 34
Section 14.6 Restrictions Upon Resale of Stock ............ 34
Section 14.7 Reporting Person Limitation .................. 34
ARTICLE XV ....................................................... 35
DISPUTES ................................................... 35
ARTICLE XVI ...................................................... 35
ADMINISTRATION OF THE PLAN ................................. 35
Section 16.1 Committee .................................... 35
Section 16.2 Committee Actions ............................ 35
Section 16.3 No Liability of Committee Members ............ 36
ARTICLE XVII ..................................................... 36
EFFECTIVE DATE, TERM OF THE PLAN AND STOCKHOLDER APPROVAL .. 36
ARTICLE XVIII .................................................... 36
CHANGE IN CORPORATE CONTROL ................................ 36
Section 18.1 Options ...................................... 36
Section 18.2 SARs ......................................... 36
Section 18.3 All Other Awards ............................. 37
Section 18.4 Definitions .................................. 37
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ARTICLE XIX .............................................. 37
AMENDMENT AND TERMINATION .................................. 37
Section 19.1 Amendment .................................... 37
Section 19.2 Suspension or Termination .................... 37
ARTICLE XX .............................................. 38
MISCELLANEOUS .............................................. 38
Section 20.1 Deferral Election ............................ 38
Section 20.2 Designation of Beneficiary ................... 38
Section 20.3 No Right to an Award or to Continued
Employment ................................... 38
Section 20.4 Discretion of the Committee and the CEO ...... 38
Section 20.5 Indemnification and Exculpation .............. 39
20.5.1 Indemnification .............................. 39
20.5.2 Exculpation .................................. 39
Section 20.6 Unfunded Plan................................. 39
Section 20.7 Inalienability of Rights and Interests ....... 39
Section 20.8 Awards Not Includable for Benefit Purposes ... 40
Section 20.9 No Issuance of Fractional Shares ............. 40
Section 20.10 Modification for Overseas Grantees .......... 40
Section 20.11 Leaves of Absence ........................... 40
Section 20.12 Communications .............................. 40
20.12.1 Communications by the Committee ............. 40
20.12.2 Communications by the Participants and Others 40
Section 20.13 Parties in Interest ......................... 40
Section 20.14 Severability ................................ 41
Section 20.15 Compliance with Laws ........................ 41
Section 20.16 No Strict Construction ...................... 41
Section 20.17 Modification ................................ 41
Section 20.18 Governing Law ............................... 41
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HERCULES INCORPORATED
LONG TERM INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The Hercules Incorporated Long Term Incentive Compensation Plan, the terms
of which are herein set forth (as the same is now in effect or as hereafter
amended from time to time, the "Plan"), is intended to advance the interests of
Hercules Incorporated, a Delaware corporation (the "Company"), and its
stockholders by providing a means by which the Company and its participating
subsidiaries and affiliates shall be able to motivate selected key employees
(including officers and directors who are employees) to direct their efforts to
those activities that will contribute materially to the Company's success. The
Plan is also intended to serve the best interests of the stockholders by linking
remunerative benefits paid to employees who have substantial responsibility for
the successful operation, administration and management of the Company and/or
its participating subsidiaries and affiliates with the enhancement of
stockholder value while such key employees increase their proprietary interest
in the Company. Finally, the Plan is intended to enable the Company to attract
and retain in its employ highly qualified persons for the successful conduct of
its business.
The Plan became effective as of April 1, 1991, and was amended and
restated as of June 30, 1993, and is hereby further amended and restated.
Notwithstanding anything to the contrary, the said amendment and restated Plan
shall not terminate or adversely affect any Awards granted prior hereto.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
Section 2.1 Definitions
The following words and phrases when used in the Plan with an initial
capital letter, unless their context clearly indicates to the contrary, shall
have the respective meanings set forth below in this Section 2.1:
(1) Accelerated Date. As defined in Subsection 5.10.2.
(2) Act. The Securities Exchange Act of 1934, as now in effect
or as hereafter amended from time to time. References to any section or
subsection of the Act are to such section or subsection as the same may
from time to time be amended or renumbered and/or any comparable or
succeeding provisions of any legislation that amends, supplements or
replaces such section or subsection.
(3) APD Election. As defined in Subsection 13.4.2
(4) Attributable Shares. As defined in Subsection 9.6.
(5) Award. A grant of Award Items in accordance with the
provisions of the Plan. A grant of a particular Award Item may sometimes
be referred to as follows: "Stock Option Award" for a grant of Stock
Options; "Stock Appreciation Right Award" for Stock Appreciation Rights;
"PASO Award" for Performance Accelerated Stock Options; "CVA Award" for
Cash Value Awards; "Performance Shares Award" for Performance Shares;
"Restricted Stock Award" for Restricted Stock; and "Phantom Unit Award"
for Phantom Units.
(6) Award Commitment. The written commitment delivered by the
Company to the Grantee evidencing an Award and setting forth such terms
and conditions of the Award as may be deemed
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appropriate by the Committee. The Award Commitment shall be in a form
approved by the Committee, and shall be deemed amended from time to time
to include such additional terms and conditions as the Committee may
specify after the execution in the exercise of its powers under the Plan.
(7) Award Items. Individually and collectively, as the case
may be, the items awarded to any Grantee in accordance with the provisions
of the Plan in the form of Options, Stock Appreciation Rights, Performance
Accelerated Stock Options, Cash Value Awards, Performance Shares,
Restricted Stock, Phantom Units or other award, or any combination of the
foregoing.
(8) Base Salary. The regular salary paid to an employee. Base
salary shall not include bonuses or other forms of compensation which are
not considered regular earnings by the Committee.
(9) Beneficiary. Any individual, estate or trust who or which
by designation of the Grantee pursuant to Section 20.2 or operation of law
succeeds to the rights and obligations of the Grantee under the Plan and
Award Commitment upon the Grantee's death.
(10) Board. The Board of Directors of the Company.
(11) Bonus. An amount payable pursuant to the Management
Incentive Compensation Plan or any other short term incentive compensation
plan approved by the Committee.
(12) Cash Value Award or CVA. A grant in accordance with the
provisions of the Plan in the form of a designated cash value payable in
cash, Common Stock or Restricted Stock, or a combination thereof, all as
determined by the Grantor at the Payout Date.
(13) CEO. The Chief Executive Officer of the Company.
(14) Change in Control. The occurrence of an event defined in
Section 18.4, which event is of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under the
Act as in effect on the date hereof or, if Item 6(e) is no longer in
effect, any regulations issued by the Securities and Exchange Commission
pursuant to the Act which serves similar purposes.
(15) Code. The Internal Revenue Code of 1986, as now in effect
or as hereafter amended from time to time, and as construed and
interpreted by valid regulations issued by the United States Internal
Revenue Service thereunder. References to any section or subsection of the
Code are to such section or subsection as the same may from time to time
be amended or renumbered and/or any comparable or succeeding provisions of
any legislation that amends, supplements or replaces such section or
subsection.
(16) Committee. The Compensation Committee of the Board or
such other committee as may be designated by the Board to administer the
Plan.
(17) Common Stock. Voting common stock authorized for issuance
by the Company and issued and outstanding.
(18) Company. Hercules Incorporated and its successors and
assigns.
(19) Date of Grant. The date designated by the Grantor as the
date as of which the Grantor grants an Award, which shall not be earlier
than the date on which the Grantor approves the granting of such Award.
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(20) Designated Retirement Date. As defined in Section 13.4.3.
(21) Disability. A physical or mental impairment sufficient to
make the individual eligible for benefits under the Long-Term Disability
Plan of Hercules Incorporated or under a disability plan of one of the
Participating Subsidiaries (whether or not a participant in such
disability plan), so long as for Incentive Stock Options such impairment
also constitutes a disability within the meaning of Section 22(e)(3) of
the Code.
(22) Fair Market Value. Unless otherwise indicated in the
provisions of the Plan, as of any date the closing price for one share of
Common Stock as reported on the Composite Tape for New York Stock Exchange
Listed Companies and published in the Eastern Edition of The Wall Street
Journal, or, if there is no trading on the date in question, the closing
price of the Common Stock, as so reported and published, on the next
preceding date on which there was trading in Common Stock.
(23) Grantee. An employee of the Company or any Participating
Subsidiary to whom an Award is granted. At the time of award, such
employee (including any director or officer who is also an employee) must
be in the regular full-time employment of the Company or any Participating
Subsidiary, without limitation as to length of service.
(24) Grantor. The Committee or the CEO, as the case may be,
who grants an Award. The Committee shall (i) grant Awards to Reporting
Persons and (ii) establish the maximum aggregate amount of particular
Award Items to be granted to Nonreporting Persons as a group and (iii)
establish the guidelines and oversight under which, pursuant to
authorities granted by the Committee, the CEO may grant Awards to
Nonreporting Persons. Notwithstanding anything to the contrary, the CEO is
not intended to be nor shall be construed as a member of the Committee. In
making awards to Nonreporting Persons, the CEO is acting as a delegee of
the Committee and is at all times accountable to the Committee and
authorized to act only in accordance with the provisions of the Plan and
the guidelines and direction provided by the Committee from time to time.
(25) Hercules Incorporated Deferred Compensation Plan. The
Hercules Incorporated Deferred Compensation Plan as the same is now in
effect or as hereafter amended from time to time.
(26) Hercules Incorporated Non-Qualified Savings Plan. The
Hercules Incorporated Non-Qualified Savings Plan (a portion of the
Hercules Incorporated Deferred Compensation Plan) as the same is now in
effect or as hereafter amended from time to time.
(27) Hercules Pension Plan. The Hercules Pension Plan as the
same is now in effect or as hereafter amended from time to time.
(28) Hercules Pension Restoration Plan. The Hercules Employee
Pension Restoration Plan as the same is now in effect or as hereafter
amended from time to time.
(29) Incentive Stock Option or ISO. An Option granted pursuant
to Section 5.1 which is intended to meet, and structured with a view to
satisfying, the requirements of Section 422 of the Code and is designated
by the Committee as an Incentive Stock Option. The Award of an Incentive
Stock Option shall contain such provisions as are necessary to comply with
such Section 422.
(30) Management Incentive Compensation Plan. The Hercules
Incorporated Annual Management Incentive Compensation Plan as the same is
now in effect or as hereafter amended from time to time.
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(31) Maximum Award. The number or amount of Performance
Accelerated Stock Options, Cash Value Awards, or Performance Shares, as
the case may be, which vest when the maximum performance in the relevant
Performance Range is achieved.
(32) Minimum Award. The number or amount of Performance
Accelerated Stock Options, Cash Value Awards, or Performance Shares, as
the case may be, which vest when the minimum performance in the relevant
Performance Range is achieved.
(33) Nonqualified Option. An Option granted pursuant to
Section 5.1 which does not qualify as, and is not designated by the
Committee as, an Incentive Stock Option and is designated as a
Nonqualified Option.
(34) Nonreporting Person. A Grantee who is not subject to
Section 16 of the Act.
(35) Normal Retirement Date. Age 65.
(36) Normal Vesting Date. As defined in Subsection 5.10.1.
(37) Option or Stock Option. A right granted pursuant to
Article V that for a specified period of time entitles the holder thereof
to purchase full shares of Common Stock at a stated price. At the
discretion of the Committee, an Option may be an Incentive Stock Option or
a Nonqualified Stock Option.
(38) Optionee. A Grantee to whom an Option or Stock
Appreciation Right or Performance Accelerated Stock Option, as the case
may be, is granted pursuant to Article V.
(39) Option Period. As defined in Section 5.3.
(40) Option Price. The per share price at which shares of
Common Stock may be purchased upon exercise of a particular Option or
Performance Accelerated Stock Option.
(41) Other Market-Based Awards. Awards granted in accordance
with Section 9.1.
(42) Other Performance-Based Awards. Awards granted in
accordance with Section 9.2.
(43) Participating Subsidiary. Any Subsidiary (existing from
time to time) designated by the Board as a Participating Subsidiary;
provided, however, for Incentive Stock Options only, "Participating
Subsidiary" means any such Subsidiary which at the time such Option is
granted qualifies as a "Subsidiary" of the Company under Section 424(b) of
the Code.
(44) PASO Period. As defined in Subsection 5.10.3.
(45) Payout Schedule. The distribution scheme for applicable
Award Items for a given Plan Year upon performance of varying goals, all
as established by either the Committee with respect to the Company, or by
the CEO (or his designee or designees) with respect to a given subsidiary,
business unit, corporate staff group or individual.
(46) Performance Accelerated Stock Option or "PASO". Stock
Option with a normal vesting date established by the Committee; provided,
however, that under certain circumstances such vesting date may be
accelerated by the Committee to an earlier date if the Committee
determines that the applicable Performance Goal has been met.
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(47) Performance Goal. The level of performance established by
the Grantor, which must be achieved in order to earn or vest the
applicable Minimum Award, Target Award, Maximum Award or intermediate
level of Award Items.
(48) Performance Period. The period of time selected by the
Committee during which the achievement of Performance Goals is measured
for purposes of determining the extent to which an applicable Award Item
has been earned or will vest.
(49) Performance Share. A contingent right to receive, when
certain performance criteria have been attained, without payment to the
Company, the amounts of Common Stock and cash determined under Article VI.
Such rights are subject to forfeiture or reduction if the applicable
Performance Goals are not met within the applicable Performance Period.
(50) Performance Share Award. A Performance Share Award under
Article VI, settlement of which is contingent upon attainment during a
Performance Period of Performance Goals.
(51) Performance Share Fair Market Value. As defined in
Subsection 6.8.5.
(52) Phantom Unit. A right to receive, without payment to the
Company, an amount of cash equal to the value of a share of Common Stock
as of a future date, plus dividend equivalents and interest payments
provided for in Article VIII. A "unit" of phantom units does not represent
or entitle the recipient to any equity securities of the Company, but
instead involves the creation of an unfunded account for the recipient,
the value of which is measured by reference to the value of Common Stock.
(53) Phantom Unit Award. An Award of Phantom Units under
Article VIII, subject to such forfeiture provisions as are set forth in
the Award Commitment.
(54) Phantom Unit Fair Market Value. As defined in Section
8.3.
(55) Reduction in Force. Termination of employment by the
Company or a Participating Subsidiary in such a manner that the employee
so terminated is eligible to receive benefits under the Company or a
Participating Subsidiary dismissal salary plan.
(56) Related Entity. A corporation, partnership, joint venture
or other entity not more than 50% but at least 20% of whose outstanding
voting stock or voting power for the election of directors is beneficially
owned directly or indirectly by the Company.
(57) Reporting Person. A Grantee who is subject to Section 16
of the Act.
(58) Restricted Stock. Shares of Common Stock issued, without
payment to the Company, pursuant to a Restricted Stock Award granted under
Article VII. For a specific period of time such shares are subject to a
substantial risk of forfeiture and to such restrictions against sale,
transfer or other disposition, as determined by the Committee at the time
of grant.
(59) Restricted Stock Award. An Award of Restricted Stock
under Article VII.
(60) Restricted Stock Unit. A right to receive, without
payment to the Company, a number of shares of Common Stock as of a future
date, plus dividend equivalents and interest payments provided for in
Article VIII. A unit of a Restricted Stock Unit does not represent or
entitle the recipient to any equity securities of the Company until such
future date. In the interim, the unit represents an unfunded account for
the recipient, the value which is measured by reference to the value of
Common Stock.
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(61) Restricted Stock Unit Award. An award of Restricted Stock
Units under Article VIII, subject to such forfeiture provisions as are set
forth in the Award Commitment.
(62) Restricted Period. As defined in Section 7.2.
(63) Restriction Range. As defined in Section 7.2.
(64) Retirement. Termination of employment at Normal
Retirement Date or with consent of the Company with immediate eligibility
for retirement benefits under a retirement or pension plan maintained by
the Company, a Participating Subsidiary or Related Entity.
(65) Rule 16b-3. Rule 16b-3 of the General Rules and
Regulations under the Act, or any law, rule, regulation or other provision
that may hereafter replace such Rule.
(66) SAR. A Stock Appreciation Right, as defined below.
(67) SAR Fair Market Value. As defined in Subsection 5.9.3.
(68) Stock Appreciation Right. A right granted pursuant to
Article V pursuant to which the holder of a related Option, upon exercise
of the Stock Appreciation Right and in lieu of exercising the related
Option, is entitled to surrender the related Option, or any applicable
portion thereof, to the extent unexercised, and to receive an amount equal
to the appreciation in market value of a fixed number of shares of Common
Stock from the Date of Grant. Stock Appreciation Rights may be payable in
shares of Common Stock or cash, or a combination of both. Under the Plan,
Stock Appreciation Rights are granted in tandem with Options.
(69) Stock Appreciation Right Award. An Award of Stock
Appreciation Rights under Article V.
(70) Stock Option Award. An Award of Options under Article VI.
(71) Subsidiary. Any corporation, partnership, joint venture
or other entity in which the Company owns, directly or indirectly through
one or more intermediaries, at least 50% of the outstanding voting stock
or voting power for the election of directors or equivalent governing
body. In the case of Incentive Stock Options, Subsidiary shall mean any
corporation that qualifies as a "subsidiary corporation" of the Company
under Section 424(f) of the Code.
(72) Substitution Awards. As defined in Section 11.
(73) Suspension Period. As defined in Article XIII.
(74) Target Award. The number or amount of Performance
Accelerated Stock Options, Cash Value Awards or Performance Shares, as the
case may be, which vest when the target performance in the relevant
Performance Range is achieved.
Section 2.2 Construction
Whenever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply. Headings of sections and
subsections of this Plan are inserted for convenience of reference, are not a
part of this
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Plan, and are not to be considered in the construction hereof. The words
"hereof," "herein," "hereunder" and other similar compounds of the word "here"
shall mean and refer to the entire Plan, and not to any particular provision or
section. The words "includes", "including" and other similar compounds of the
word "include" shall mean and refer to including without limitation. All
references herein to specific Articles, Sections or Subsections shall mean
Articles, Sections or Subsections of this document unless otherwise qualified.
ARTICLE III
STOCK AVAILABLE FOR AWARDS
Section 3.1 Common Stock
Only Common Stock may be delivered under this Plan, such shares to be made
available from authorized but unissued shares or from shares reacquired by the
Company, including shares purchased in the open market.
Section 3.2 Number of Shares Deliverable
Subject to adjustments as provided in Section 14.2: (i) during the period
April 1, 1991, through April 30, 1995, the maximum aggregate number of shares
for all Award Items (other than Options) shall be 4,400,000 (which is less than
the original 6,000,000 shares authorized under the Plan for Award Items (other
than Options) for the period April 1, 1991 through March 31, 1996); (ii) during
the period April 1, 1991 through April 30, 1994, the maximum aggregate number of
shares for which Options may be granted shall be 3,600,000 (which is less than
the original 7,200,000 shares authorized under the Plan for Options during the
period April 1, 1991 through March 31, 1996); and (iii) during the period May 1,
1995, through April 30, 1998, the maximum aggregate number of shares for all
Award Items (other than Options) shall be 1,600,000 (which is less than the
original 4,200,000 shares authorized under the Plan during the period April 1,
1996 through March 31, 2000); and (iv) during the period May 1, 1994 through
April 30, 1998, the maximum aggregate number of shares for which Options may be
granted shall be 5,200,000 (which is more than the original 4,800,000 shares
authorized for Options under the Plan from April 1, 1996 through March 31,
2000).
Section 3.3 Reusable Shares
In the event that shares of Common Stock underlying an Award are returned
to the Company for any reason (including forfeited or unexercised items) other
than the surrender of Options upon the exercise of a Stock Appreciation Rights,
the shares so affected shall be available for use under this Plan to the same
Grantee or other Grantee by way of any type or form of Option or Award
authorized under the Plan; provided, however, that shares received by the
Company upon the exercise of an ISO and shares subject to an ISO surrendered
upon exercise of a SAR shall not be available for the subsequent award of ISOs
under this Plan, and that shares received by the Company upon the return
(whether due to forfeiture or otherwise) of Restricted Stock or Performance
Shares shall not be available for a subsequent Award under this Plan.
Section 3.4 Shares Not Charged Against Available Shares
Shares of Common Stock issued in payment of Stock Appreciation Rights
shall not be charged against the number of shares of Common Stock available for
subsequent Awards. Shares of Common Stock substituted in accordance with Article
XI for shares previously awarded under this Plan or the Hercules Incorporated
Restricted Stock Plan of 1986 shall be counted against the authorized aggregate
number of shares which may be issued under the Plan.
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ARTICLE IV
AWARDS AND AWARD COMMITMENTS
Section 4.1 General
4.1.1 Subject to the provisions of this Plan, the Committee may (i)
determine and designate at any time and from time to time those Reporting
Persons to whom Awards are to be granted; (ii) determine the time or times when
Awards shall be granted; (iii) determine the form or forms of Awards to be
granted to any Reporting Person or to Nonreporting Persons, as a group; (iv)
determine the number of Award Items subject to each Award to be granted to any
Reporting Person; (v) determine the maximum aggregate number of shares of Award
Items subject to Awards to be granted to Nonreporting Persons, as a group; (vi)
determine the terms and conditions of each Award; (vii) determine the number of
shares of Restricted Stock a Reporting Person may acquire by exchange pursuant
to Section 13.1 and the time or times of such acquisition; and (viii) determine
the number of Options a Reporting or Nonreporting Person may acquire by exchange
pursuant to Section 13.1 and the time or times of acquisition.
4.1.2 The CEO shall, subject to the provisions of the Plan, (i) determine
and designate at any time and from time to time those Nonreporting Persons to
whom Awards are to be granted; (ii) determine the form or forms of Award to be
granted any Nonreporting Person and (iii) determine the number of Award Items
subject to each Award to be granted to any Nonreporting Person. Awards may be
granted singly, in combination or in tandem and may be made in combination or in
tandem with or in replacement of, or as alternatives to awards or grants under
any other employee plan maintained by the Company or its present or future
Participating Subsidiaries. Unless this Plan is extended, no Awards shall be
granted or exchanges effected under the Plan after April 30, 1998, but any
then-current restrictions applicable to any Awards theretofore granted or
exchanges theretofore effected shall extend beyond that date in accordance with
their provisions and any shares of Common Stock used in payment of Cash Value
Awards and/or Performance Shares originally granted before April 30, 1998, may
be delivered after April 30, 1998, in accordance with the provisions of the
applicable Award. Notwithstanding the later delivery of such shares of Common
Stock, the number of such shares shall be credited against the maximum aggregate
number in effect under Section 3.2 at the date of such original grant.
Section 4.2 Eligibility
The persons who shall be eligible to receive Awards granted pursuant to
this Plan shall be such employees (including directors and officers who are also
employees) of the Company or any of the Participating Subsidiaries as the
relevant Grantor shall select from time to time from among those who contribute
or may be expected to contribute to the successful performance of the Company or
any Participating Subsidiary. Employees eligible for Phantom Unit Awards shall
include, in addition to employees of the Company or any of the Participating
Subsidiaries, any employees of any other Subsidiary or Related Entity.
Section 4.3 Terms and Conditions; Award Commitments
4.3.1 Terms And Conditions. Each Award granted pursuant to this Plan shall
be subject to all of the terms, conditions and restrictions provided in this
Plan and such other terms, conditions and restrictions, if any, as may be
specified by the Committee with respect to the Award in question at the time of
the making of the Award or as may be specified thereafter by the Committee in
the exercise of its powers under the Plan. Without limiting the foregoing, it is
understood that the Committee may, at any time and from time to time after the
granting of an Award hereunder, specify such additional terms, conditions and
restrictions with respect to such Award as may be deemed necessary or
appropriate to ensure compliance with any and all applicable laws, including,
but not limited to, terms and conditions for compliance with Federal and state
securities laws and methods of withholding or providing for the payment of
required taxes. The terms, conditions and restrictions with respect to any
Award, Grantee or Award Commitment need not be identical with the terms,
conditions and restrictions with respect to any other Award, Grantee or Award
Commitment.
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4.3.2 Award Commitments. Each Award granted pursuant to the Plan shall be
subject to all the terms, conditions and restrictions provided in the Plan and
such other terms, conditions and restrictions, if any, as may be specified by
the Committee with respect to the Award in question at the time of the making of
the Award or as may be specified thereafter by the Committee in the exercise of
its powers under the Plan. Each Award granted pursuant to the Plan shall be
evidenced by an Award Commitment and shall comply with, and be subject to, the
provisions of the Plan. The Award Commitment shall not be a precondition to the
granting of Awards; however, no person shall have any rights under any Award
granted under the Plan unless and until the Company shall have executed and
delivered an Award Commitment to the Grantee to whom such Award shall have been
granted. An executed original of the Award Commitment shall be provided to both
the Company and the Grantee.
ARTICLE V
OPTIONS AND STOCK APPRECIATION RIGHTS
Section 5.1 Award of Options
5.1.1 Grants. From time to time and upon the recommendation of the CEO,
the Committee may grant Stock Option Awards in such number as it may determine
to such Reporting Persons as the Committee may select. From time to time, the
CEO may grant Stock Option Awards in such number as he may determine to such
Nonreporting Persons as he may select; provided, however, each and all such
grants shall be subject to any maximum aggregate amount of Options established
by the Committee for grants under the Plan for Nonreporting Persons as a group.
The Committee shall determine the number of shares of Common Stock to which each
Option relates; provided, however, such number of shares of Common Stock shall
automatically be reduced on a share for share basis to the extent that shares
are issued pursuant to the exercise of the Option or shares subject to the
Option are the basis for the exercise of the related Stock Appreciation Right.
5.1.2 Types of Options. Options granted pursuant to the Plan may be either
in the form of Incentive Stock Options or in the form of Nonqualified Options.
Incentive Stock Options and Nonqualified Options shall be granted separately
hereunder. The Committee shall determine whether and to what extent Options
granted under the Plan shall be Incentive Stock Options or Nonqualified Options
and the Option shall be so designated.
5.1.3 Substantial Stockholder. No Option shall be granted hereunder to any
person who, at the time such Option is to be granted, owns stock of the Company
or of any of its Subsidiaries possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any such Subsidiary.
For purposes of the preceding sentence, the attribution rules of stock ownership
set forth in Section 424(d) of the Code shall apply.
5.1.4 Maximum Award To An Individual. During the period from May 1, 1994,
through April 30, 1998, no person shall be granted or receive more than
1,500,000 Options and/or Performance Accelerated Stock Options in the aggregate.
Section 5.2 Option Price
The Option Price of Common Stock covered by each Option shall be
determined by the Committee but shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the Date of Grant.
Section 5.3 Option Periods
The Committee shall determine the term of each Option. Subject to earlier
termination as provided in Articles XI, XII and XIII, the term shall not exceed
ten (10) years from the Date of Grant.
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Section 5.4 Exercise of Options
5.4.1 Exercisability. Subject to Subsection 5.4.2 and Articles XII and
XIII, each Option shall be exercisable at any time or times during the Option
Period and in such amount or amounts as the Committee may prescribe and specify
in the applicable Award Commitment (subject further in the case of Incentive
Stock Options, to such restrictions as may be imposed from time to time by the
Code).
5.4.2 Certain Limitations. The Committee may provide that an Option may
not be exercised in whole or in part for any period or periods of time, from
zero to nine and one-half (9.5) years as specified in the Award Commitment.
Except as provided in Article XII, an Option may be exercised only during the
continuance of the Grantee's employment with the Company or any of its
Subsidiaries. Options granted to a Reporting Person shall not be exercisable
until at least six (6) months have elapsed from the Date of Grant of the Option.
No Option may be exercised after the expiration of the applicable Option Period.
No Option may be exercised for a fractional share.
5.4.3 Method of Exercise. A Grantee may exercise an Option, in whole or
from time to time in part, by giving written notice of exercise to the Company.
The notice of exercise shall be on a form approved by the Committee and shall
state the number of shares with respect to which the Option is being exercised.
Such notice must be received by the office of the Company designated in the
Award Commitment on or before the expiration date of the Option.
Section 5.5 Time and Method of Payment
5.5.1 Form of Payment. The Optionee shall pay the Option Price in cash or,
with the Committee's permission and according to such rules as they may
prescribe, by delivering shares of Common Stock already owned by the Optionee
for at least six months prior to the date of exercise and having a Fair Market
Value on the date of exercise equal to the Option Price, or a combination of
cash and shares. The Committee may also permit payment in accordance with a
cashless exercise program under which, if so instructed by the Optionee, shares
of Common Stock may be issued directly to the Optionee's broker or dealer upon
receipt of the purchase price in cash from the broker or dealer.
5.5.2 Time of Payment. The Optionee shall pay the Option Price not later
than ten (10) days after the date of a statement from the Company following
exercise setting forth the Option Price, Fair Market Value of Common Stock on
the exercise date, the number of shares of Common Stock that may be delivered in
payment of the Option Price (if applicable) and the amount of withholding tax
due, if any. If the Optionee fails to pay the Option Price within the ten (10)
day period, the Committee shall have the right to take whatever action it deems
appropriate, including voiding the Option exercise.
5.5.3 Methods for Tendering Shares. The Committee shall determine
acceptable methods for tendering shares of Common Stock as payment upon exercise
of an Option and may impose such limitations and restrictions on the use of
shares of Common stock to exercise an Option as it deems appropriate.
5.5.4 ISO Limitation. Common Stock acquired by the Grantee which is
identified as having been obtained through an Incentive Stock Option under the
Plan and still subject to Incentive Stock Option holding requirements as defined
in the Code, may not be tendered in payment of the Option Price.
Section 5.6 Delivery of Shares
No shares of Common Stock shall be delivered pursuant to the exercise, in
whole or in part, of any Option, unless and until (i) payment in full of the
Option Price therefor is received by the Company and (ii) compliance with all
applicable requirements and conditions of this Plan, the Award Commitment and
such rules and regulations as may be established by the Committee that are
preconditions to delivery, including, but not limited to, the requirements and
conditions of Section 14.5. Promptly after exercise of the Option, payment in
full of the Option Price and compliance
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with the conditions described in the preceding sentence, the Company shall
effect the issuance to the Optionee of such number of shares of Common Stock as
are subject to the Option exercise.
Section 5.7 Stockholder Rights
An Optionee shall have none of the rights or privileges of a stockholder
with respect to any shares of Common Stock covered by an Option unless and until
the Optionee has given written notice of exercise of the Option, has paid in
full the Option Price for such shares of Common Stock and has otherwise complied
with this Plan, the Award Commitment and such rules and regulations as may be
established by the Committee, and the shares are issued to him. No adjustment
shall be made for dividends in cash or property or other distributions or rights
with respect to any such shares of Common Stock for which the record date is
prior to the date on which the Optionee or a transferee of the Option shall have
become the holder of record of any such shares covered by the Option.
Notwithstanding anything to the contrary, an Option may include dividend
equivalents as described in Section 10.4.
Section 5.8 Incentive Stock Options
5.8.1 Individual Limitation. No Grantee may be granted an ISO under this
Plan (or any other plans of the Company or any Participating Subsidiary) which
would result in Common Stock with an aggregate Fair Market Value (measured as of
the Date of Grant) of more than $100,000 first becoming exercisable in any one
calendar year, or which would entitle such Grantee to purchase a number of
shares greater than the maximum number permitted by Section 422(d)(1) of the
Code as in effect on the Date of Grant.
5.8.2 Code Qualification. Whenever possible, each provision in the Plan
and in every Option granted under this Plan which is designated by the Committee
as an ISO shall be interpreted in such a manner as to entitle the Option to the
tax treatment afforded by Section 422 of the Code. If any provision of the Plan
or any Option designated by the Committee as an ISO shall be held not to comply
with requirements necessary to entitle such Option to such tax treatment, then
(i) such provision shall be deemed to have contained from the outset such
language as shall be necessary to entitle such Option to the tax treatment
afforded under Section 422 of the Code, and (ii) all other provisions of this
Plan and the Award Commitment shall remain in full force and effect. If any
Award Commitment covering an Option designated by the Committee to be an ISO
under the Plan shall not explicitly include any terms required to entitle such
ISO to the tax treatment afforded by Section 422 of the Code, all such terms
shall be deemed implicit in the designation of such Option and such Option shall
be deemed to have been granted subject to all such terms.
5.8.3 Notice of Disposition. An Optionee shall give prompt notice to the
Company of any disposition of shares of Common Stock acquired upon exercise of
an ISO if such disposition occurs within either two (2) years after grant or one
year after receipt of such shares by such Optionee. Such Optionee shall also
comply with any applicable withholding requirements.
Section 5.9 Stock Appreciation Rights Awards
5.9.1 Grants. The Committee may grant SARs at the same time as Optionees
are awarded Options under the Plan. Each SAR shall be in tandem with and relate
to a specific Option under the Plan and shall specify that the number of Option
Shares subject to the SAR shall be equal to the number of shares of Common Stock
that the Optionee is entitled to receive pursuant to the related Option.
5.9.2 SAR Exercise. A SAR may be exercised, in whole or in part, within
the period specified for the exercise of the Option in the related Option grant
only upon surrender of the related Option (or portion thereof) by the Optionee.
Each SAR shall be exercisable at such time or times, on the conditions and to
the extent, but only to the extent, that the related Option is exercisable,
provided that no such SAR (except in the case of death or physical or mental
incapacity) shall be exercisable prior to the expiration of six (6) months
following the Date of Grant and, provided further, that any SAR granted
hereunder may provide, at the election of the Committee, that the SAR may be
exercised only at
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a time when the Optionee to whom the SAR has been granted is subject to the
provisions of Section 16(b) of the Act. Each SAR and all rights and obligations
thereunder shall terminate and may no longer be exercised upon the termination
or exercise of the related Option. An Optionee may exercise a SAR by giving
written notice of exercise to the Company stating the number of shares of Common
Stock subject to exercisable Options with respect to which the SARs are being
exercised. The date upon which such written notice is received by the Company
shall be the exercise date for the SARs.
An Option and SAR covering the same share of Common Stock may not be
exercised simultaneously.
5.9.3 Value of SAR Payment. If an Optionee exercises a SAR, he shall
receive an amount equal to the product of (i) the amount by which the SAR Fair
Market Value on the exercise date of one share of Common Stock exceeds the
Option Price of the related Option, times (ii) the number of shares covered by
the Option, or portion thereof, which is surrendered. For purposes of this
Article V, "SAR Fair Market Value" of a SAR or share of Common Stock on any date
shall be the average of the daily closing prices of a share of Common Stock for
five (5) consecutive business days immediately preceding the day in question as
reported on the Composite Tape for New York Stock Exchange Listed Companies and
published in the Eastern Edition of The Wall Street Journal, subject to the
provisions of Section 5.9.4.
5.9.4 Time and Method of Payment.
5.9.4.1 Any payment which may become due from the Company by reason of an
Optionee's exercise of a SAR may be paid to the Optionee all in cash, all in
shares of Common Stock or partly in shares and partly in cash, as determined by
the Committee. The Committee shall determine the timing of any payment made.
5.9.4.2 If paid in cash, the amount thereof shall be the amount of
appreciation determined under Subsection 5.9.3. The payments to be made, in
whole or in part, in cash upon the exercise of SARs by any Reporting Person
shall be made in accordance with the provisions relating to the exercise of SARs
of Rule 16b-3 of the General Rules and Regulations under the Act, as in effect
at the time of such exercise, or any law, rule, regulation or other provision
that may hereafter replace such Rule.
5.9.4.3 In the event that all or a portion of the payment is made in
shares of Common Stock, the number of shares of Common Stock received shall be
determined by dividing the amount of the appreciation determined under
Subsection 5.9.3 by the SAR Fair Market Value of a share of Common Stock on the
exercise date of the SAR. Cash will be paid in lieu of any fractional share of
Common Stock or, if the Committee should so determine, the number of shares of
Common Stock will be rounded downward to the next whole share of Common Stock.
All shares shall be valued at their SAR Fair Market Value as of the date of such
exercise; provided, however, that with respect to exercises of SARs by an
employee who is subject to the provisions of Section 16(b) of the Act during any
period commencing on the third business day following the date of release for
publication of the quarterly or annual summary statements of the Company's sales
and earnings and ending on the twelfth business day following such date (a
"window period"), the Committee may prescribe, by rule of general application,
such other measure of fair market value per share as the Committee may, in its
discretion, determine, but not in excess of the highest sale price of the Common
Stock reported on the Composite Tape for New York Stock Exchange Listed
Companies and published in the Eastern Edition of The Wall Street Journal during
such window period. Notwithstanding the foregoing, the fair market value (or SAR
Fair Market Value, if applicable) of SARs that relate to an ISO, shall not be in
excess of the maximum amount that would be permissible under Section 422 of the
Code without disqualifying such option as an ISO under such Section 422.
5.9.5 Effect of SAR and Option Exercises. Upon exercise of a SAR, the
number of shares of Common Stock subject to exercise under the related Option
shall automatically be reduced by the number of shares of Common Stock
represented by the Option or portion thereof surrendered, as provided in
Subsection 5.1.1. Shares of Common Stock subject to Options or portions thereof
surrendered upon the exercise of SARs shall not be available for subsequent
awards under the Plan. The exercise of any number of Options shall result in an
equivalent reduction in the number of shares of Common Stock covered by the
related SAR and such shares may not again be subject to a SAR under this Plan.
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5.9.6 Nature of SARs. SARs shall be used solely as a device for the
measurement and determination of the amount to be paid to Grantees as provided
in the Plan. SARs shall not constitute or be treated as property or as a trust
fund of any kind. All amounts at any time attributable to the SARs shall be and
remain the sole property of the Company and all Grantees' rights hereunder are
limited to the rights to receive cash and shares of Common Stock as provided in
the Plan.
Section 5.10 Performance Accelerated Stock Options Awards
5.10.1 Grants. From time to time and upon the recommendation of the CEO,
the Committee may grant PASOs in such number as it may determine to such
Reporting Persons as the Committee may select. From time to time, the CEO may
grant PASOs in such number as he may determine to such Nonreporting Persons as
he may select; provided, however, each and all such grants shall be subject to
Subsection 5.1.4 and any maximum aggregate amount of PASOs established by the
Committee for grants under the Plan for Nonreporting Persons as a group. The
Committee shall determine the number of PASOs to be awarded; provided, however,
such number of PASOs shall automatically be reduced on a share for share basis
to the extent that shares are issued pursuant to the exercise of the PASO.
Subject to Subsection 5.10.2, each PASO shall specify a normal vesting date
("Normal Vesting Date") (which shall be less than the PASO Period).
5.10.2 Accelerated Date. The date or event designated by the Grantor
(which shall be earlier than the Normal Vesting Date) at which the vesting of
some or all PASOs shall occur if the Grantor determines that the applicable
Performance Goals have been met.
5.10.3 PASO Period. The Committee shall determine the term of each PASO.
Subject to earlier termination as provided in Article XII, the term shall not
exceed ten (10) years.
5.10.4 Exercisability. Subject to Subsection 5.10.2 and Article XII each
PASO shall be exercisable at any time or times during the PASO Period and in
such amount or amounts as the Committee may prescribe and specify in the
applicable Award Committment.
5.10.5 Corporate or Business Goals. From time to time, the Grantor shall
determine Performance Goals to be used for, among other things, purposes of
determining the Accelerated Date. If the Grantor shall determine minimum target
and/or maximum performance goals and (i) if the minimum performance goal is not
reached, then the Normal Vesting Date of the affected PASOs shall not be
accelerated, and the Grantor may either determine new goals on the PASOs or
allow the PASOs to vest at the Normal Vesting Date; (ii) if the minimum
performance goal is reached but the target performance goal is not reached, then
the Grantor may accelerate the Normal Vesting Date to an Accelerated Date for
part of the affected PASOs (as specified in the applicable Award Commitment),
and for the remainder of the PASOs, the Grantor may determine new goals or allow
the PASOs to vest at the Normal Vesting Date; (iii) if the performance goal is
reached and the maximum performance goal is not reached, then the Grantor may
accelerate the Normal Vesting Date to an Accelerated Date for part of the
affected PASOs, and for the remainder of the PASOs, the Grantor may determine
new goals or allow the PASOs to vest at the Normal Vesting Date; and (iv) if the
maximum performance goal is reached, then the Normal Vesting Date for all
affected PASOs shall be accelerated to the Accelerated Date.
5.10.6 PASOs Treated Like Options. Except as otherwise provided in the
Plan, PASOs shall be treated identical to Options; provided, however, that if
there is a conflict between a provision specifically covering PASOs and one
generally covering Options, then the specific provision shall control as to
PASOs.
ARTICLE VI
PERFORMANCE SHARE AWARDS
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Section 6.1 Grants
From time to time and upon the recommendation of the CEO, the Committee
may grant Performance Share Awards in such number as it may determine to such
Reporting Persons as the Committee may select. From time to time, the CEO may
grant in such number as he may determine Performance Share Awards to such
Nonreporting Persons as he may select; provided, however, each and all such
grants shall be subject to any maximum aggregate number of Performance Shares
established by the Committee for grants under the Plan for Nonreporting Persons
as a group.
Section 6.2 Performance Period
At the time of a Performance Share Award grant, the Committee shall
establish a Performance Period of not less than one year nor more than five (5)
years, commencing the Date of Grant of the Award.
Section 6.3 Performance Goals
At the time of each grant, the Committee shall establish for all
Performance Share Awards the Performance Goals for the Company and any
Participating Subsidiary, while the CEO (or his designee or designees) shall
establish for each individual Performance Share Award the business unit,
corporate staff group and individual Performance Goals (other than his own which
will be the same as the Performance Goals for the Company), if any. All of the
designated Performance Goals must be met as a precondition to any distribution
or payment being made with respect to the Performance Share Award following the
end of the Performance Period. Except as provided in Article XII, these
Performance Goals (although their measurement, including adjustments, if any, as
permitted under Subsection 6.8.3, will not occur until after the expiration of
the applicable Performance Period) must be met during the continuance of the
Grantee's employment with the Company or any Participating Subsidiary, prior to
the expiration of the applicable Performance Period and prior to the lapse of
restrictions and delivery of any shares of Common Stock and/or the making of any
payment with respect to the Performance Share Award. Performance Goals may vary
among Grantees and among Awards to a Grantee. Performance Goals shall be based
upon such performance criteria or combination of factors as the Grantor may deem
appropriate, including, but not limited to, specified levels of earnings per
share, return on investment, return on stockholders' equity and such other goals
related to the Company's performance as are deemed appropriate by the Committee.
Section 6.4 Payout Schedule
In tandem with the establishment of the Performance Goals, the Grantor
shall establish a Payout Schedule for that Performance Period for each
Performance Share Award. Each Payout Schedule shall establish for each
Performance Period minimum, target, maximum and intermediate performance and
distribution levels for determining the shares of Common Stock deliverable
and/or cash payable, if any, upon settlement of the Performance Share Award at
the conclusion of the Performance Period.
Section 6.5 Issuance of Stock and Stock Certificates
6.5.1 Issuance. As soon as possible after the Date of Grant of a
Performance Share Award, the Company shall cause to be issued to the Grantee
such number of shares of Common Stock as prescribed by the applicable Payout
Schedule for attainment of target level of performance, that is, the Target
Award. Concurrently, the Company shall cause to be issued a stock certificate or
certificates, registered in the name of the Grantee and dated the Date of Grant,
evidencing such shares. Each such issuance (of shares and of a stock certificate
or certificates) shall be subject throughout the Performance Period to the
terms, conditions and restrictions (including forfeiture and restrictions
against transfer provisions of Section 6.6) contained in this Plan and/or the
Award Commitment entered into between the registered owner of such shares and
the Company, except as otherwise provided in this Plan. Although not a
precondition to the granting of a Performance Share Award, each such issuance
shall be subject to forfeiture to the Company as of the date of issuance if an
Award Commitment and a stock power endorsed by the Grantee in blank with respect
to the shares
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of Common Stock covered by the Performance Share Award under this Article VI are
not duly executed by the Grantee and timely returned to the Company.
6.5.2 Custody and Legends. Each certificate for shares of Common Stock
issued in respect of the Performance Share Award awarded under Subsection 6.5.1
shall be held in custody by the Company for the Grantee's account until the
expiration or termination of the applicable Performance Period (except as
provided in Article XII) and the satisfaction of any and all other conditions of
the Award Commitment applicable to Performance Shares covered by the Performance
Share Award. Such certificate shall be imprinted with a legend to indicate that
the transferability thereof and the shares of stock represented thereby are
subject to the terms, conditions and restrictions (including forfeiture and
restrictions against transfer) contained in this Plan and/or an Award Commitment
entered into between the registered owner of such shares and the Company, a copy
of which Plan and Award Commitment is on file in the office of the Company's
Corporate Secretary. Such legend shall not be removed from any stock certificate
evidencing Performance Shares until the lapse or release of the restrictions as
described in Section 6.8. Each certificate also shall be subject to appropriate
stop-transfer orders.
Section 6.6 Restrictions and Forfeitures
The shares of Common Stock issued to a Grantee pursuant to Section 6.5
shall be subject to the following restrictions until the expiration or
termination of the Performance Period established pursuant to Section 6.2: (i) a
Grantee shall not be entitled to delivery of a certificate evidencing the shares
of Common Stock covered by the Performance Share Award until the expiration or
termination of the Performance Period; (ii) none of such shares of Common Stock
may be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of during the Performance Period and until the satisfaction of any and all other
conditions; and (iii) all such Common Stock shall be forfeited and returned to
the Company and all rights of the Grantee with respect to such Common Stock
(including, but not limited to, those specified in Section 6.7) shall terminate
without further obligation on the part of the Company unless (x) the Grantee has
remained a regular full time employee of the Company or any Participating
Subsidiary until the expiration or termination of the Performance Period (except
as provided in Article XII) and (y) the satisfaction of any and all other
conditions of the Award Commitment applicable to such Common Stock covered by
the Performance Share Award is completed. Upon the forfeiture of any shares of
Common Stock, ownership of such forfeited shares shall be transferred to the
Company without further acts by the Grantee.
Section 6.7 Stockholder Rights
Following registration in the Grantee's name, and subject to execution of
the documents provided for in Section 6.5, during the Performance Period the
Grantee shall have the entire beneficial interest in, and all rights and
privileges of a stockholder as to, such shares of Common Stock awarded to him
with respect to the target level performance, including, but not limited to, the
right to vote and receive dividends, subject to the restrictions and forfeiture
risks set forth in Section 6.6. Any shares of Common Stock distributed as a
dividend or otherwise with respect to any shares issued under a Performance
Share Award as to which the restrictions have not yet lapsed shall be subject to
the same restrictions as such shares.
Section 6.8 Delivery of Shares and Cash Payments
6.8.1 Determination of Performance Results and Award Settlement. As soon
as practicable after the Performance Period expires or otherwise terminates with
respect to each Performance Share Award, the Committee shall determine whether
and the extent to which any corporate Performance Goals were achieved during the
Performance Period; and the Grantor shall determine whether and the extent to
which applicable business unit, corporate staff and individual Performance
Goals, if any, were achieved during the Performance Period. Following such
determinations, a calculation shall be made of the number of shares of Common
Stock whose restrictions shall lapse and shall be deliverable and the cash
payable, if any, upon settlement of the Performance Share Award. The computation
shall be
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made by application of the Payout Schedule to the degree of actual performance
achieved against Performance Goals (determined as provided in the preceding
sentence).
6.8.2 Delivery of Shares and Payment of Cash
6.8.2.1 In the event the minimum level of performance established by the
Payout Schedule is not achieved, the entire Performance Share Award is
forfeited, including, without limitation, the shares of Common Stock held in
custody pursuant to Section 6.5.
6.8.2.2 Should the minimum level of performance established by the Payout
Schedule be achieved, the Grantee shall have earned (subject to adjustments as
provided by Subsection 6.8.3) the applicable Minimum Award and in settlement
thereof the Section 6.6 restrictions on that number of shares of Common Stock
held in custody pursuant to Section 6.5 equal to the share number specified by
the Payout Schedule for performance at the minimum level shall lapse and as
promptly as administratively feasible thereafter, the Company shall deliver to
the Grantee a stock certificate or certificates for the number of shares of
Common Stock earned. Upon such delivery, shares remaining in custody (which are
the difference between the applicable Minimum Award and the applicable Target
Award) shall be forfeited and ownership transferred to the Company without
further acts by the Grantee.
6.8.2.3 In the event the target level of the Payout Schedule is achieved,
the Grantee shall have earned (subject to adjustments as provided by Subsection
6.8.3) the applicable Target Award and in settlement thereof the Section 6.6
restrictions on all of the shares held in custody pursuant to Section 6.5 shall
lapse and as soon as administratively feasible thereafter the Company shall
deliver to the Grantee a stock certificate or certificates for the number of
shares of Common Stock earned.
6.8.2.4 For performance at a level between the minimum performance level
of the Payout Schedule and the target level of the Payout Schedule the Section
6.6 restrictions on that number of shares of Common Stock held in custody
pursuant to Section 6.5 equal to the share number specified by the Payout
Schedule for performance at the applicable intermediate level shall lapse and as
promptly as administratively feasible thereafter, the Company shall deliver to
the Grantee a stock certificate or certificates for the number of shares of
Common Stock earned. Upon such delivery, shares remaining in custody (which are
the difference between the number of shares prescribed for the level of
performance achieved and the Target Award) shall be forfeited and ownership
transferred to the Company without further acts by the Grantee.
6.8.2.5 Should the maximum level of performance established by the Payout
Schedule be attained or exceeded, the Grantee shall have earned (subject to
adjustments as provided by Subsection 6.8.3) the applicable Maximum Award and in
settlement thereof (i) the restrictions on that number of shares of Common Stock
held in custody pursuant to Section 6.5 equal to the share number specified by
the Payout Schedule for performance at the target level shall lapse and as
promptly as administratively feasible thereafter the Company shall deliver to
the Grantee a stock certificate or certificates for the number of shares of
Common Stock earned at the target level, and (ii) the share differential between
the number of shares specified by the Payout Schedule for performance at the
target level and the number of shares specified in the Payout Schedule for
performance at the maximum level of performance shall be paid in cash, shares of
Common Stock or a combination thereof, as determined by the Committee. Such
share differential shall have a value which is the product of the number of
shares constituting the share differential times the Performance Share Fair
Market Value on the vesting date.
6.8.2.6 For performance between the target level and the maximum level of
performance specified in the Payout Schedule (i) the Section 6.6 restrictions on
that number of shares of Common Stock held in custody pursuant to Section 6.5
equal to the share number specified by the Payout Schedule for performance at
the target level shall lapse and as promptly as administratively feasible
thereafter, the Company shall deliver to the Grantee a stock certificate or
certificates for the number of shares of Common Stock earned at the target
level, and (ii) the share differential between the share number specified by the
Payout Schedule for performance at the target level and the share number
specified by
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the Payout Schedule for performance at the applicable intermediate level shall
be paid in cash, shares of Common Stock or a combination thereof, as determined
by the Committee. Such share differential shall have a value which is the
product of the number of shares constituting the share differential times the
Performance Share Fair Market Value on the vesting date.
6.8.2.7 Cash payments normally will be made as soon as practicable
following the end of the Performance Period. All shares delivered to a Grantee
pursuant to this Subsection 6.8.2 shall be without the legend described in
Subsection 6.5.2 and shall be free of all restrictions and forfeitures, except
as otherwise provided by Article XII or imposed by law. No payment will be
required from the Grantee upon the delivery of any shares of Common Stock,
except that the amount necessary to satisfy applicable Federal, state or local
tax requirements shall be paid by the Grantee in accordance with the
requirements of Section 14.1.
6.8.3 Revisions for Significant Events. When circumstances occur
(including, but not limited to, unusual or nonrecurring events, changes in tax
laws or accounting principles or practices) that cause any Performance Goal,
Payout Schedule and/or level of performance or distribution specified in a
Payout Schedule to be inappropriate in the judgment of the party initially
responsible for establishing the Performance Goal, Payout Schedule and/or
performance or distribution level, such party may make such changes as said
party deems equitable in recognition of any unforeseen events or changes in
circumstances or changed business or economic conditions.
6.8.4 Conditions Precedent. Incentives shall be paid to the Grantee only
upon compliance by the Grantee with all obligations of such Grantee under the
Plan and/or the Award Commitment with respect to such Performance Share Awards,
including the requirement that, except as provided in Article XII, the
Performance Goals (although their measurement, including adjustments, if any,
required by the Committee or the CEO, as provided herein, will not occur until
after the expiration of the applicable Performance Period) must be met during
the continuance of the Grantee's employment with the Company or any of the
Participating Subsidiaries, prior to the expiration of the applicable
Performance Period and prior to the lapse of restrictions and delivery of any
shares of Common Stock and/or the making of any payment with respect to the
Performance Share Award.
6.8.5 Performance Share Fair Market Value. As used in this Article VI,
"Performance Share Fair Market Value" of a Performance Share Unit or a share of
Common Stock on any date shall be the average of the daily closing prices for a
share of Common Stock for the five (5) consecutive trading days immediately
preceding the day in question as reported on the Composite Tape for New York
Stock Exchange Listed Companies and published in the Eastern Edition of The Wall
Street Journal.
ARTICLE VII
RESTRICTED STOCK AWARDS
Section 7.1 Grants
From time to time and upon the recommendation of the CEO, the Committee
may grant Restricted Stock Awards in such number as it may determine to such
Reporting Persons as the Committee may select. From time to time, the CEO may
grant in such number as he may determine Restricted Stock Awards to such
Nonreporting Persons as he may select; provided, however, each and all such
grants shall be subject to any maximum aggregate number of shares of Restricted
Stock established by the Committee for grants under the Plan for Nonreporting
Persons as a group.
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Section 7.2 Restricted Period
At the time of a Restricted Stock Award grant, the Committee shall
establish (for all Restricted Stock shares which are then being awarded to a
Participant or, if it is the intent that the total of such shares shall be
divided into separate parts, for each part of such total) a Restricted Period of
not less than one year or more than five (5) years (the "Restriction Range"),
commencing with the Date of Grant of the Award. Different Restricted Periods may
be fixed within the Restriction Range for different parts of the shares of
Restricted Stock which are being awarded to a Grantee.
Section 7.3 Restrictions and Forfeiture
The shares of Restricted Stock covered by the Restricted Stock Award
granted to a Grantee pursuant to Section 7.1 shall be subject to the following
restrictions until the expiration or termination of the Restricted Period
established pursuant to Section 7.2: (i) a Grantee shall not be entitled to
delivery of a certificate evidencing the shares of Restricted Stock covered by
the Restricted Stock Award until the expiration or termination of the Restricted
Period and the satisfaction of any and all other conditions specified in the
Award Commitment applicable to such Restricted Stock shares; (ii) none of the
shares of Restricted Stock may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restriction Period and until the
satisfaction of any and all other conditions specified in the Award Commitment
applicable to such Restricted Stock; and (iii) all of the shares of Restricted
Stock shall be forfeited and returned to the Company and all rights of the
Grantee with respect to such Restricted Stock shares (including, but not limited
to, those specified in Section 7.5) shall terminate without further obligation
on the part of the Company unless (x) the Grantee has remained a regular full
time employee of the Company or any Participating Subsidiary until the
expiration or termination of the Restricted Period or Periods and (y) the
satisfaction of any and all other conditions of the Award Commitment applicable
to such Restricted Stock shares. Upon the forfeiture of any shares of Restricted
Stock, such forfeited shares shall be transferred to the Company without further
acts by the Grantee.
Section 7.4 Issuance of Stock and Stock Certificate
7.4.1 Issuance. As soon as practicable after the Date of Grant of a
Restricted Stock Award, the Company shall cause to be issued to the Grantee such
number of shares of Common Stock as constitutes the Restricted Stock shares
awarded under the Restricted Stock Award. Concurrently, the Company shall cause
to be issued a stock certificate or certificates, registered in the name of the
Grantee and dated as of the Date of Grant, evidencing such shares. Each such
issuance (of shares and of a stock certificate or certificates) shall be subject
throughout the Performance Period to the terms, conditions and restrictions
(including forfeiture and restrictions against transfer provisions of Section
7.3) contained in this Plan and/or the Award Commitment entered into between the
registered owner of such shares and the Company, except as otherwise provided in
this Plan. Although not a precondition to the granting of a Performance Share
Award, each such issuance shall be subject to forfeiture to the Company as of
the Date of Grant if an Award Commitment and a stock power endorsed by the
Grantee in blank with respect to the shares of Restricted Stock covered by the
Award under this Article VII are not duly exercised by the Grantee and timely
returned to the Company.
7.4.2 Custody and Legends. Each certificate for shares of Common Stock
issued in respect of the Restricted Stock Award granted under Section 7.1 shall
be held in custody by the Company for the Grantee's account until the expiration
or termination of the applicable Restricted Period (except as provided in
Article XII) and the satisfaction of any and all other conditions of the Award
Commitment applicable to such shares of Restricted Stock covered by the
Restricted Stock Award. Such certificate shall be imprinted with a legend to
indicate that the transferability thereof and the shares of Common Stock
represented thereby are subject to the terms, conditions and restrictions
(including forfeiture and restrictions against transfer) contained in this Plan
and/or an Award Commitment entered into between the registered owner of such
shares and the Company, a copy of which Plan and Award Commitment is on file in
the office of the Company's Corporate Secretary. Such legend shall not be
removed from any stock certificate evidencing such Restricted Stock shares until
the lapse or release of the restrictions as described in Section 7.3. Each
certificate also shall be subject to appropriate stop-transfer orders.
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Section 7.5 Stockholder Rights
Following registration in the Grantee's name and subject to execution of
the documents provided for in Section 7.4, during the Restricted Period the
Grantee shall have the entire beneficial interest in, and all rights and
privileges of a stockholder as to, such shares of Common Stock covered by the
Restricted Stock Award, including, but not limited to, the right to vote such
shares and the right to receive dividends, subject to the restrictions and
forfeitures set forth in Section 7.3. Any shares of Common Stock distributed as
a dividend or otherwise with respect to any shares of Restricted Stock as to
which the restrictions have not yet lapsed shall be subject to the same
restrictions as such Restricted Stock shares.
Section 7.6 Delivery of Shares
Upon the expiration (without a forfeiture) or earlier termination of the
Restriction Period and the satisfaction of or release from any other conditions
by the Grantee under the Plan and/or the Award Commitment with respect to such
shares of Restricted Stock, or at such earlier time as provided under the
provisions of Article XII and/or Article XIII, all of such shares shall be
released from all restrictions and forfeiture provisions under Section 7.3, any
similar restrictions and forfeiture provisions under the Award Commitment
applicable to such shares and all other restrictions and forfeiture provisions
of this Plan or such Award Commitment. As promptly as administratively feasible
thereafter the Company shall deliver or cause to be delivered to such Grantee a
stock certificate or certificates for the appropriate number of shares of Common
Stock, free of such restrictions and forfeitures, except as otherwise provided
by Article XIV or imposed by law. No payment will be required from the Grantee
upon the delivery of any shares of Restricted Stock, except that amount
necessary to satisfy applicable Federal, state or local tax requirements shall
be paid by the Grantee in accordance with the requirements of Section 14.1.
ARTICLE VIII
PHANTOM UNIT AWARDS
Section 8.1 Grants
From time to time and upon the recommendation of the CEO, the Committee
may grant Phantom Unit Awards in such number as it may determine to such
Reporting Persons as the Committee may select. From time to time, the CEO may
grant Phantom Unit Awards in such number as he may determine to such
Nonreporting Persons as he may select; provided, however, each and all such
grants shall be subject to any maximum aggregate number of Phantom Units
established by the Committee for grants under the Plan for Nonreporting Persons
as a group.
Notwithstanding the above paragraph, the Committee may at its discretion
grant Phantom Units payable in one share of Hercules Common Stock for each unit
at the time of vesting pursuant to Section 8.2. In these cases, such Phantom
Units are referred to as Restricted Stock Units and during the period that such
Restricted Stock Units are awarded, shall be subject to all the provisions of
Section 8.2 except, however, such payment shall be made in shares of Hercules
Common Stock as contrasted to cash as provided above.
Section 8.2 Vesting of Awards
The amounts credited with respect to each Phantom Unit shall become vested
on the date or dates determined and set forth in the applicable Award Commitment
at the time of grant unless vested sooner as described in Article XII of the
Plan. The vesting period shall be determined by the Committee, but in no case
shall such period be less than one year or more than five (5) years. Vesting
shall be subject to the terms, conditions and provisions hereinafter with
respect to forfeiture and termination of Awards or early vesting or forfeiture
of Awards in accordance with the provisions of Article XII.
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Section 8.3 Value of Phantom Units Payments
The amount payable with respect to each vested Phantom Unit Award shall be
the sum of (1) the dividends and interest credited to such account and (2) an
amount determined by multiplying the number of Phantom Units posted to such
account by the Phantom Unit Fair Market Value on the date of vesting. For the
purpose of determining such amount the Company shall establish and maintain a
separate memorandum account for each Grantee granted a Phantom Unit Award
pursuant to Section 8.1. As of the Date of Grant of each grant of a Phantom Unit
Award the Company shall credit to the account of each Grantee who has been
granted a Phantom Unit Award such number of Phantom Units as is specified in the
Award. From the Date of Grant until the date that payments under the Plan
commence the account of each Grantee shall be credited quarterly with an amount
determined by multiplying the amount of Phantom Units credited to each account
by the per share dividend paid quarterly by the Company on its Common Stock. In
addition, each account (representing dividends and credited interest) shall be
credited quarterly with an amount determined by multiplying the account balance
at the close of each quarter by an amount representing one-fourth of the average
per annum rate of interest established by Morgan Guaranty Trust Company (or by
such other major New York commercial bank as the Committee shall designate) in
New York from time to time during such quarter as its prime lending rate. As
used in this Article VIII, "Phantom Unit Fair Market Value" of a Phantom Unit or
a share of Common Stock on any date shall be the average of the daily closing
prices for a share of Common Stock for the five (5) consecutive trading days
immediately preceding the day in question as reported on the Composite Tape for
New York Stock Exchange Listed Companies and published in the Eastern Edition of
The Wall Street Journal.
Section 8.4 Time and Method of Payment
Any payment which may become due from the Company upon the vesting of a
Phantom Unit shall be paid to the Grantee in cash. The date or dates upon which
amounts determined pursuant to Section 8.3 shall be paid to the Grantee shall be
determined by the Committee prior to the Date of Grant and set forth in the
applicable Award Commitment or in accord with such rules and regulations as may
be adopted by the Committee.
Section 8.5 Forfeiture of Phantom Units
Except as otherwise provided in Article XII, all of the Phantom Units
credited to a Grantee's account (including all dividend equivalents and interest
credited thereto) shall be forfeited and all rights of the Grantee with respect
to such Phantom Units (including any dividend equivalents and interest related
thereto) shall terminate without further obligation on the part of the Company
unless and until (i) the Grantee has remained a regular full time employee of
the Company or any Participating Subsidiary until vesting as described in
Section 8.2 and (ii) the satisfaction of any other conditions specified in the
Plan and/or Award Commitment applicable to such Phantom Units, except as may
otherwise be determined by the Committee.
Section 8.6 Nature of Phantom Units
Phantom Units shall be used solely as a device for the measurement and
determination of the amount to be paid to Grantees as provided in the Plan.
Phantom Units shall not constitute or be treated as property or as a trust fund
of any kind. All amounts at any time attributable to the Phantom Units shall be
and remain the sole property of the Company and all Grantees' rights hereunder
are limited to the rights to receive cash and shares of Common Stock as provided
in the Plan.
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ARTICLE IX
CASH VALUE AWARDS
Section 9.1 Grants
From time to time and upon the recommendation of the CEO, the Committee
may grant Cash Value Awards in such number as it may determine to such Reporting
Persons as the Committee may select. From time to time, the CEO may grant Cash
Value Awards in such number as he may determine to such Nonreporting Persons as
he may select; provided, however, each and all such grants shall be subject to
any maximum dollar value established by the Committee for grants under the Plan
for Nonreporting Persons as a group.
Section 9.2 Performance Period
At the time of a Cash Value Award grant, the Committee shall establish a
Performance Period of not less than one year nor more than five (5) years,
commencing on the Date of Grant of the Award.
Section 9.3 Performance Goals
At the time of each grant, the Committee shall establish for all Cash
Value Awards the Performance Goals for the Company and any Participating
Subsidiary, while the CEO (or his designee or designees) shall establish for
each individual Cash Value Award the business unit, corporate staff group and
individual Performance Goals (other than his own which will be the same as the
Performance Goals for the Company), if any. All of the designated Performance
Goals must be met as a precondition to any distribution or payment being made
with respect to the Cash Value Award following the end of the Performance
Period. Except as provided in Article XII, these Performance Goals (although
their measurement, including adjustments, if any, will not occur until after the
expiration of the applicable Performance Period) must be met during the
continuance of the Grantee's employment with the Company or any Participating
Subsidiary, prior to the expiration of the applicable Performance Period and
prior to the making of any payment with respect to the Cash Value Award.
Performance Goals may vary among Grantees and among Awards to a Grantee.
Performance Goals shall be based upon such performance criteria or combination
of factors as the Grantor may deem appropriate, including, but not limited to,
specified levels of earnings per share, return on investment, return on
stockholders' equity and such other goals related to the Company's performance
as are deemed appropriate by the Committee.
Section 9.4 Payout Schedule
In tandem with the establishment of the Performance Goals, the Grantor
shall establish a Payout Schedule for that Performance Period for each Cash
Value Award. Each Payout Schedule shall establish for each Performance Period
minimum, target, maximum and intermediate performance and distribution levels
for determining the payout of the Common Stock, if any, of the Cash Value Award
at the conclusion of the Performance Period.
Section 9.5 Form Of Payout
Payment of a Cash Value Award shall be made in cash, Common Stock,
Restricted Stock or any combination thereof as determined by the Grantor at the
time of the Payout. Restricted Stock shall be governed by Articles VII and XII;
provided, however, that Restricted Stock granted at less than Fair Market Value
shall also be governed by Section 9.6 and the Attributable Shares (defined
below) shall be governed by Section 13.3.
Section 9.6 Calculation Of Payout
As soon as practicable after the Performance Period expires with respect
to the Cash Value Award, the Grantor shall determine whether and the extent to
which any Performance Goals were achieved during the Performance Period. The
Grantor may also determine the amount and form of the Payout. If the Payout is
to be paid in Restricted Stock, then
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the number of shares calculated by the Grantor may be determined by using either
100% or 85% (as determined by the Committee) of the Fair Market Value on the
date of issue. If the Grantor uses 85% of the Fair Market Value, then those
shares attributable to the discount (i.e., 100% minus 85%) (the "Attributable
Shares") shall be subject to the forfeiture provisions under Section 13.3; and
otherwise, the Restricted Stock shall be subject to forfeiture under Article
XII.
ARTICLE X
OTHER AWARDS
Section 10.1 Other Market-Based Awards
The Grantor may grant other Market-Based Awards, provided that the
purchase price or base price for the equity securities of the Company shall in
no event be less than 100% of the Fair Market Value of such security on the Date
of Grant. Such Other Market-Based Awards shall be in a form determined by the
Committee, and the Committee shall have complete authority to determine the
terms, conditions and restrictions of the awards, not inconsistent with the
terms of the Plan. The Committee, upon recommendation of the CEO, shall
determine the time or times at which such Other Market-Based Awards shall be
made. Any such Other Market-Based Award shall be confirmed by an Award
Commitment executed by the Company and the Grantee, which Agreement shall
contain such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of the Plan with respect to such Award.
Section 10.2 Other Performance-Based Awards
The Grantor may grant Other Performance-Based Awards. Such Other
Performance-Based Awards shall be in a form determined by the Committee, and the
Committee shall have complete authority to determine the terms, conditions and
restrictions of the awards, not inconsistent with the terms of the Plan. The
Committee, upon recommendation of the CEO, shall determine the time or times at
which such Other Performance-Based Awards shall be made. Any such Other
Performance-Based Award shall be confirmed by an Award Commitment executed by
the Company and the Grantee, which Agreement shall contain such provisions as
the Committee determines to be necessary or appropriate to carry out the intent
of the Plan with respect to such Award.
Section 10.3 Terms of Other Awards
In addition to the terms and conditions specified in the Award Commitment,
awards made pursuant to this Article X shall be subject to the following:
(a) Any shares of Common Stock subject to Awards made under this
Article X may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later,
the date on which any applicable restriction or performance period lapses;
and
(b) If specified by the Committee in the Award Commitment, the
recipient of an Award under this Article X shall be entitled to receive,
currently or on a deferred basis, interest or dividends or dividend
equivalents with respect to the Common Stock covered by the Award; and
(c) The Award Commitment with respect to any Award shall contain
provisions dealing with the disposition of such Award in the event of a
termination of employment prior to the exercise, realization or payment of
such Award, whether such termination occurs because of retirement,
disability, death or other reason, with such provisions to take account of
the specific nature and purpose of the Award.
Section 10.4 Stock Option Dividend Equivalents.
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10.4.1 Grants. The Grantor may provide that a Grantee to whom an Option
has been granted which is exercisable in whole or in part at a future time for
shares of Common Stock (referred to in this subsection as "Share" or "Shares")
shall be entitled to receive an amount per Share equal in value to the cash
dividends, if any, paid per Share on issued and outstanding Shares, as of the
dividend record dates occurring during the period between the Date of Grant and
the time each such Share is delivered pursuant to exercise of such Stock Option
or the related Stock Appreciation Right. Such amounts (herein called "Dividend
Equivalents") shall be paid in cash at the time of the delivery of such Shares.
10.4.2 Interest. The Grantor may authorize payment of interest on Dividend
Equivalents. The interest will be payable in cash at the same time the related
Dividend Equivalents are paid.
10.4.3 Forfeiture. To the extent the Stock Options to which Dividend
Equivalents and interest are related shall be forfeited all accrued Dividend
Equivalents and interest thereon shall also be forfeited.
ARTICLE XI
SUBSTITUTION AWARDS
Section 11.1 Substitution of Performance Shares
Upon the request of the Grantee, the Committee may grant Restricted Stock
Awards in substitution for such numbers of shares of Common Stock of equal value
held in custody pursuant to Section 6.5 whose restrictions shall lapse upon
expiration or other termination of a Performance Period. The number of
Performance Shares available for substitution shall be determined by the method
described in Section 11.3. Such Substitution Awards shall be subject to such
Restricted Periods and other terms, conditions and restrictions as the Committee
may from time to time determine. No substitution shall be permitted after
termination of employment, regardless of the reason for termination. Once
substitution has been approved by the Committee, no payment will be made with
respect to an original Award.
Section 11.2 Substitution of Restricted Stock
Upon request of the Grantee, the Committee may grant Restricted Stock
Awards in substitution for shares of Restricted Stock previously awarded either
under this Plan or under the Hercules Incorporated Restricted Stock Plan of
1986. Such Awards shall be subject to such Restricted Periods and other terms,
conditions and restrictions as the Committee may from time to time determine. No
substitution shall be permitted after termination of employment, regardless of
the reason for termination.
Section 11.3 Substitution Procedures
Any request of a Grantee pursuant to Section 11.1 or 11.2 shall be filed
in writing with the Committee in accordance with such rules and regulations,
including any deadline for the making of such request, as the Committee may
provide. No substitution shall be permitted past any termination of employment
described in Article XII or past the occurrence of any of the events specified
in clauses (i), (ii) and (iii) of Section 14.4.
Section 11.4 Substitutions in Contemplation of Retirement
Prior to the expiration of the Performance Period or Restricted Period
applicable to any Performance Shares or Restricted Stock Awards granted to a
Grantee prior to January 1, 1995, such Grantee may, with the consent of the
Committee, surrender all or a portion of his Award in substitution for Phantom
Unit Awards subject to the terms and conditions of Article VIII, and provided
that: (i) such surrender shall be treated as a forfeiture under the Plan; (ii)
such substitution shall be made for retirement planning purposes; (iii) such
substitution shall be made prior to December 31
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of the year preceding the Grantee's Normal Retirement Date but not more than one
year prior to the Grantee's Normal Retirement Date; or, in cases where
Retirement with consent occurs prior to the Grantee's Normal Retirement Date,
not less than sixty (60) nor more than three hundred and sixty (360) days before
an announced Retirement approved by the Company; and (iv) any Phantom Units
shall be substituted as of the expiration date of the applicable Performance
Period in an amount consistent with the number of shares calculated for each
Award being substituted.
ARTICLE XII
TERMINATION OF EMPLOYMENT
12.1 Retirement
12.1.1 Stock Options and SARs. If prior to the expiration of the Option
Period a Grantee who has been given an Option or SAR under the Plan shall cease
to be employed by the Company, any Participating Subsidiary or Related Entity
because of his Retirement, (i) in the case of Nonqualified Options (except
PASOs) and their related SARs, each Option and SAR shall become immediately
exercisable and shall remain exercisable for a period of five (5) years from the
date of cessation of employment (with respect to options granted prior to May 1,
1994, the period shall be three (3) years from the date of cessation of
employment), but not beyond the end of the Option Period, and (ii) in the case
of ISOs and their related SARs, each Option and SAR shall, at such time as it
becomes exercisable under the Award Commitment covering such Option, remain
exercisable for a period of three (3) months from the cessation of employment,
but not beyond the end of the Option Period.
12.1.2 Performance Share, Restricted Stock, Phantom Unit, and Cash Value
Awards. If prior to the expiration of the Performance or Restricted Period a
Grantee who has been given a Performance Share, Restricted Stock, Phantom Unit
or Cash Value Award under the Plan shall cease to be employed by the Company,
any Participating Subsidiary or Related Entity because of his Retirement, (i)
that Grantee shall be entitled to Performance Shares or Cash Value at the end of
the Performance Period based upon the extent to which the Performance Goals were
satisfied at the end of such period (provided, however, the Committee may
provide for an earlier payment in settlement of such Performance Shares in such
amount and under such terms and conditions as the Committee deems appropriate or
desirable); and (ii) all remaining restrictions with respect to such Grantee's
Restricted Stock and Phantom Unit Awards shall lapse as of the date of
termination.
12.1.3 Performance Accelerated Stock Options. If prior to the expiration
of the PASO Period a Grantee who has been given a PASO Award under the Plan
shall cease to be employed by the Company, any Participating Subsidiary or
Related Entity because of his Retirement, that Grantee shall be entitled to
PASOs as follows: If the PASOs are exercisable on the date of Retirement, then
the PASOs will remain exercisable until the earlier of five (5) years or the end
of the PASO period; if the PASOs are not yet exercisable, then they shall become
exercisable at the earlier of (i) such time as the PASOs become exercisable
through acceleration due to performance, or (ii) four and one-half (4.5) years
after Retirement regardless of performance, or (iii) the end of nine and
one-half (9.5) years from the award date. Once the PASOs become exercisable,
they shall remain exercisable until the earlier of five (5) years after
Retirement or the end of the PASO period, provided, however, the Grantor may
provide for acceleration of the vesting date and/or an earlier settlement of
such PASOs under such terms and conditions as the Grantor deems appropriate or
desirable.
12.1.4 Restricted Stock Unit. If prior to the expiration of the
restriction period for a Restricted Stock Unit, a grantee who has been granted a
Restricted Stock Unit under the Plan, shall cease to be employed by the Company,
any participating subsidiary or related entity because of his retirement, that
grantee at his election no less than 60 days prior to his designated retirement
date, be entitled to defer the payout of such Restricted Stock Units to a future
designated date and on such date all remaining restrictions with respect to such
grantee's Restricted Stock shall lapse as of such designated date and shares
shall be distributed to such grantee plus accrued dividend equivalents, plus
interest thereon, or if no such
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election is filed, all remaining restrictions with respect to such grantee's
Restricted Stock shall lapse on the date of termination and such shares shall be
distributed along with accrued dividend equivalents, plus interest thereon.
Section 12.2 Reduction in Force
12.2.1 Stock Options and SARs. If prior to the expiration of the Option
Period a Grantee who has been given a Option or SAR under the Plan shall cease
to be employed by the Company or any Participating Subsidiary because of a
Reduction in Force, (i) in the case of Nonqualified Options (except PASOs) and
their related SARs, each Option and SAR shall become immediately exercisable and
shall remain exercisable for a period of one year from the date of cessation of
employment, but not beyond the end of the Option Period, and (ii) in the case of
an ISO, each Option and SAR shall, at such time as it becomes exercisable under
the Award Commitment covering such Option, remain exercisable for a period of
three (3) months from the cessation of employment, but not beyond the end of the
Option Period.
12.2.2 Performance Share, Restricted Stock, Restricted Stock Unit, Phantom
Unit and Cash Value Awards. If prior to the expiration of the Performance or
Restricted Period a Grantee who has been given a Performance Share, Restricted
Stock, Phantom Unit or Cash Value Award under the Plan shall cease to be
employed by the Company or any Participating Subsidiary because of a Reduction
in Force, (i) that Grantee shall be entitled to a Minimum Award of Performance
Shares or Cash Value at the end of the Performance Period prorated for the
portion of the Performance Period during which the Grantee was employed by the
Company, any Participating Subsidiary (provided, however, the Committee may
provide for an earlier payment in settlement of such Performance Shares or Cash
Value in such amount and under such terms and conditions as the Committee deems
appropriate or desirable); and (ii) all remaining restrictions with respect to
such Grantee's Restricted Stock and Phantom Unit Awards shall lapse, in an
amount prorated for the amount of time such Awards have remained under
restriction, as of the date of termination.
12.2.3 Performance Accelerated Stock Options. If prior to the expiration
of the PASO Period a Grantee who has been given a PASO Award under the Plan
shall cease to be employed by the Company or any Participating Subsidiary
because of a Reduction in Force, the Grantor shall determine the timing, terms
and conditions of the exercise of the Award as the Grantor deems appropriate or
desirable except that no PASO may be exercised beyond the end of the PASO
Period.
Section 12.3 Transfers to Certain Related Entities
12.3.1 Stock Options and SARs. If prior to the expiration of the Option
Period a Grantee who has been given a Option or SAR under the Plan shall cease
to be employed by the Company or any Participating Subsidiary because of a
transfer to a Related Entity, (i) in the case of Nonqualified Options (except
PASOs) and their related SARs, each Option and SAR shall become immediately
exercisable and shall remain exercisable for a period of three (3) years from
the date of cessation of employment, but not beyond the end of the Option
Period, and (ii) in the case of an ISO, each Option and SAR shall, at such time
as it becomes exercisable under the Award Commitment covering such Option,
remain exercisable for a period of three (3) months from the cessation of
employment, but not beyond the end of the Option Period.
12.3.2 Performance Share, Restricted Stock, Restricted Stock Unit, Phantom
Unit and Cash Value Awards. If prior to the expiration of the Performance or
Restricted Period a Grantee who has been given a Performance Share, Restricted
Stock, Phantom Unit or Cash Value Award under the Plan shall cease to be
employed by the Company or any Participating Subsidiary because of a transfer to
a Related Entity, then all restrictions with respect to such Performance Shares,
Restricted Stock or Phantom Units shall remain in effect until the end of the
Performance or Restricted Period; provided, however, the Grantor may provide as
the case may be for an earlier payment in settlement of such Performance Shares,
Restricted Stock or Phantom Units and for payment of Cash Value Awards, all in
such amount and under such terms and conditions as the Grantor deems appropriate
or desirable.
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12.3.3 Performance Accelerated Stock Options. If prior to the expiration
of the PASO Period a Grantee who has been given a PASO Award under the Plan
shall cease to be employed by the Company or any Participating Subsidiary
because of a transfer to a Related Entity, the Grantor shall determine the
timing, terms and conditions of the exercise of the Award as the Grantor deems
appropriate or desirable except that no PASO may be exercised beyond the end of
the PASO Period.
Section 12.4 Disability or Death
12.4.1 Stock Options and SARs. If prior to the end of the Option Period a
Grantee who has been granted a Option shall cease to be employed by the Company,
any Participating Subsidiary or Related Entity by reason of death or Disability,
(i) in the case of Nonqualified Options (excluding PASOs) and their related
SARs, each Option and SAR shall become immediately exercisable and shall remain
exercisable for a period of one year from the date of cessation of employment,
but not beyond the end of the Option Period, and (ii) in the case of an ISO,
each Option and SAR shall, at such time as it becomes exercisable under the
Award Commitment covering such Option, remain exercisable for a period of one
year from the cessation of employment, but not beyond the end of the Option
Period.
12.4.2 Performance Share, Restricted Stock, Restricted Stock Unit, Phantom
Unit and Cash Value Awards. If prior to the expiration of the Performance or
Restricted Period a Grantee who has been given a Performance Share, Restricted
Stock, Phantom Unit and Cash Value Award under the Plan shall cease to be
employed by the Company, any Participating Subsidiary or Related Entity by
reason of death or Disability, (i) that Grantee shall be entitled to Performance
Shares or Cash Value (paid in cash) at the Target Award level on the date of
termination; and (ii) all remaining restrictions with respect to such Grantee's
Restricted Stock and Phantom Unit Awards shall lapse as of the date of
termination.
12.4.3 Performance Accelerated Stock Options. If prior to the expiration
of the PASO Period, a Grantee who has been given a PASO Award under the Plan
shall cease to be employed by the Company, any Participating Subsidiary or
Related Entity because of Disability or Death, then such Grantee (or the
Beneficiary of such Grantee) shall be entitled to PASOs as follows: if the PASOs
are exercisable on the date of such Disability or Death, then the PASOs will
remain exercisable until the earlier of one (1) year or the end of the PASO
Period; if the PASOs are not yet exercisable, then they shall become exercisable
at the earlier of (i) such time as the PASOs become exercisable through
acceleration due to performance, or (ii) six (6) months after such Disability or
Death, or (iii) nine and one-half (9.5) years from the award date. Once the
PASOs become exercisable, they shall remain exercisable until the earlier of one
(1) year after or the end of the PASO Period.
Section 12.5 Resignation
12.5.1 Stock Options, SARs and Performance Accelerated Stock Options. If
the Grantee shall voluntarily resign before eligibility for Retirement (except
for Retirement with approval of the Company), the Options (including PASOs) and
SARs granted in tandem shall be canceled coincident with the effective date of
the termination of employment.
12.5.2 Performance Share, Restricted Stock, Restricted Stock Unit, Phantom
Unit and Cash Value Awards. If prior to the expiration of the Performance or
Restricted Period a Grantee who has been given a Performance Share, Restricted
Stock, Phantom Unit or Cash Value Award under the Plan shall voluntarily resign
(except for Retirement with approval of the Company), then all Performance
Share, Restricted Stock, Phantom Unit and Cash Value Awards theretofore awarded
to such Grantee as to which there still remains an unexpired portion of the
Performance or Restricted Period or the vesting period shall, upon such
termination of employment, be forfeited by such Grantee to the Company, without
the payment of any consideration by the Company. Thereafter, neither the Grantee
nor any heirs, assigns or personal representatives of such Grantee shall have
any further rights or interest in such Performance Share, Restricted Stock,
Phantom Unit or Cash Value Awards, and the Grantee's name shall thereupon be
deleted from the list
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of the Company's stockholders with respect to such Performance Shares,
Restricted Stock, Phantom Units or Cash Value Award. Notwithstanding any other
provisions of this Subsection 12.5.2, the value of any vested and deferred
Phantom Units shall be paid to the Grantee as soon as practicable.
Section 12.6 Decrease in Company Ownership
12.6.1 Stock Options and SARs. If prior to the expiration of the Option
Period a Grantee who has been given an Option or SAR under the Plan shall cease
to be employed by any Participating Subsidiary because of a decrease in the
Company's ownership interest in a Participating Subsidiary to below 50% but at
or above 20%, (i) in the case of Nonqualified Options (except PASOs) and their
related SARs, each Option and SAR shall become immediately exercisable and shall
remain exercisable for a period of three (3) years from the date of cessation of
employment, but not beyond the end of the Option Period, and (ii) in the case of
an ISO, each Option and SAR shall, at such time as it becomes exercisable under
the Award Commitment covering such Option, remain exercisable for a period of
three (3) months from the cessation of employment, but not beyond the end of the
Option Period.
12.6.2 Performance Share, Restricted Stock, Restricted Stock Unit, Phantom
Unit and Cash Value Awards. If prior to the expiration of the Performance or
Restricted Period a Grantee who has been given a Performance Share, Restricted
Stock, Phantom Unit or Cash Value Award under the Plan shall cease to be
employed by any Participating Subsidiary because of a decrease in the Company's
ownership interest in a Participating Subsidiary to below 50% but at or above
20%, then all restrictions with respect to such Performance Shares, Restricted
Stock or Phantom Units shall remain in effect until the end of the Performance
Period or Restricted Period; provided, however, the Committee may provide, as
the case may be, for an earlier payment in settlement of such Performance
Shares, Restricted Stock or Phantom Units and for payment of Cash Value Awards,
all in such amount and under such terms and conditions as the Committee deems
appropriate or desirable or make any other adjustment deemed appropriate due to
the decrease in Company ownership.
12.6.3 Performance Accelerated Stock Options. If prior to the expiration
of the PASO Period a Grantee who has been given a PASO Award under the Plan
shall cease to be employed by the Company or any Participating Subsidiary
because of a decrease in company ownership, the Grantor shall determine the
timing, terms and conditions of the exercise of the Award as the Grantor deems
appropriate or desirable except that no PASO may be exercised beyond the end of
the PASO Period.
Section 12.7 Termination of Employment for Other Reasons
12.7.1 Stock Options, SARs and Performance Accelerated Stock Options. If
the Grantee's employment terminates for any reason other than specified in
Sections 12.1, 12.2, 12.3, 12.4, 12.5 or 12.6, each Option, SAR and PASO shall
terminate; provided, however, the Grantor may provide for acceleration of the
vesting date and/or an earlier settlement of such PASOs in such amount and under
such terms and conditions as the Grantor deems appropriate or desirable.
12.7.2 Performance Share, Restricted Stock, Restricted Stock Unit,
Restricted Stock Unit, Phantom Unit and Cash Value Awards. If prior to the
expiration of the Performance or Restricted Period a Grantee who has been given
a Performance Share, Restricted Stock, Phantom Unit or Cash Value Award under
the Plan shall cease to be employed by the Company, any Participating Subsidiary
or Related Entity because of any reason other than specified in Sections 12.1,
12.2, 12.3, 12.4, 12.5 or 12.6, then all Performance Share, Restricted Stock,
Phantom Unit and Cash Value Awards theretofore awarded to such Grantee as to
which there still remains an unexpired portion of the Performance or Restricted
Period shall, upon such termination of employment, be forfeited by such Grantee
to the Company, without the payment of any consideration by the Company;
provided, however, the Grantor may provide for settlement of a Cash Value Award
in such amount, at such time and under such terms and conditions as the Grantor
deems appropriate or desirable. Thereafter, neither the Grantee nor any heirs,
assigns or personal representatives of such Grantee shall have any further
rights or interest in such Performance Share, Restricted Stock, Phantom Unit or
Cash Value
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Awards, and the Grantee's name shall thereupon be deleted from the list of the
Company's stockholders with respect to such Performance Shares or Restricted
Stock. Notwithstanding any other provisions of this Subsection 12.7.2, the value
of any vested and deferred Phantom Units shall be paid to the Grantee as soon as
practicable.
Section 12.8 Termination Date
Termination of employment of a Grantee for any of the reasons enumerated
in this Article XII shall, for purposes of the Plan, be deemed to have occurred
as of the date which is recorded in the ordinary course in the Company books and
records in accordance with the then-prevailing procedures and practices of the
Company.
Section 12.9 Reporting Person Limitation
Notwithstanding any other provision of this Article XII, a Grantee who
ceases to be a Reporting Person through retirement or any other termination of
employment shall not be entitled to exercise a SAR.
ARTICLE XIII
EXCHANGE AWARDS; ABOVE TARGET MICP AWARDS
Section 13.1 Salary/Bonus Reductions
13.1.1 Restricted Stock. A Grantee (including those described in Section
13.8) may elect to reduce and defer his or her current or future Base Salary
and/or earned Bonus and, thereafter, exchange such deferred amounts for
Restricted Stock. Such elections shall direct deferrals and exchanges on a
one-time (annual) basis or, in the alternative in the case of Base Salary, on an
ongoing basis covering a period not exceeding five (5) years. Should a Grantee
elect a one-time (annual) exchange, the deferred amounts shall be credited to
his or her deferred compensation account under this Plan and, thereafter, on the
third (3rd) business day following the public announcement of the Company's
annual earnings, the deferred amounts shall be exchanged for that number of
shares of Restricted Stock that equals the number of whole shares determined by
dividing the deferred amount forgone by 85% of the Fair Market Value of one
share of Common Stock on the date of the exchange. Should a Grantee elect an
exchange of Base Salary on an ongoing basis for a period of one year or less,
the number of shares of Restricted Stock he or she shall acquire through such
exchanges, which shall be effected on the third (3rd) business day following the
public announcement of the Company's annual earnings, shall be determined by
dividing the total projected deferred amounts forgone for the designated period
by 85% of the Fair Market Value of one share of Common Stock on the date of the
exchange. When the elected period extends beyond one year, the number of shares
of Restricted Stock acquired through such exchanges, which shall be effected on
the third (3rd) business day following the public announcement of the Company's
annual earnings, shall equal that number of whole shares of Restricted Stock
determined by dividing the discounted present value of the total projected
deferred amounts forgone for the designated period (using the appropriate
Treasury Bill rates for the applicable period) by 85% of the Fair Market Value
of one share of Common Stock on the date of the exchange. Restricted Stock
acquired pursuant to exchanges under this Subsection 13.1.1 shall have a
Restricted Period of not less than three (3) years (such Restricted Period to be
extended up to five (5) years to coincide with a deferral election that extends
beyond three (3) years), as determined by the Committee, and shall be subject to
all of the terms, conditions and provisions of Article VII, except as may
otherwise be determined by the Committee prior to their acquisition.
13.1.2 Options. A Grantee may elect to reduce and defer his or her current
or future Base Salary and/or earned Bonus and, thereafter, exchange such
deferred amounts for Nonqualified Options. Such elections shall direct deferrals
and exchanges on a one-time (annual) basis or, in the alternative in the case of
Base Salary, on an ongoing basis covering a period not exceeding five (5) years.
Should a Grantee elect a one-time (annual) exchange, the deferred amounts shall
be credited to his or her deferred compensation account under this Plan and,
thereafter, on the third (3rd) business day following the public announcement of
the Company's annual earnings, the deferred amounts shall be exchanged for that
number of Options as is determined by the Committee, in its discretion, to be
the equivalent in value
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of that number of whole shares of Restricted Stock determined by dividing the
deferred amount forgone by 85% of the Fair Market Value of one share of the
Common Stock on the date of the exchange. Should a Grantee elect an exchange of
Base Salary on an ongoing basis for a period of one year or less, the number of
Options he or she shall acquire through such exchanges is that number of Options
as is determined by the Committee, in its discretion, to be the equivalent in
value of that number of whole shares of Restricted Stock determined by dividing
the total projected deferred amount forgone for the designated period by 85% of
the Fair Market Value of one share of Common Stock on the date of the exchange.
When the elected period extends beyond one year, the Options acquired through
such exchanges, which shall be effected on the third (3rd) business day
following the public announcement of the Company's annual earnings, shall be
that number of Options determined by the Committee, in its discretion, to be the
equivalent in value of that number of whole shares of Restricted Stock
determined by dividing the discounted present value of the total projected
deferred amounts forgone for the designated period (using the appropriate
Treasury Bill rates for the applicable period) by 85% of the Fair Market Value
of one share of the Common Stock on the date of the exchange. Options acquired
pursuant to this Subsection 13.1.2 shall be exercisable according to the
following three (3)-year schedule (unless the Grantee's employment with the
Company or a Participating Subsidiary is terminated, in which case the
provisions of Section 13.3 or Article XII, as apposite, shall govern):
40% of the Options will be exercisable beginning one year after the
exchange, a second 40% of the Options will be exercisable beginning two
(2) years after the exchange, and the final 20% of the Options will be
exercisable beginning three (3) years after the exchange;
and shall be subject to all of the terms, conditions and provisions of Article V
(as modified as to exercisability by this Subsection 13.1.2), except as may
otherwise be determined by the Committee prior to their acquisition.
Section 13.2 Deferred Accounts
13.2.1 Deferred Compensation Plan Accounts. Subject to the Company's
approval, amounts accrued under the Hercules Incorporated Deferred Compensation
Plan (other than under the Hercules Incorporated Non-qualified Savings Plan
portion thereof) may, upon the Grantee's request for a one-time (annual)
exchange, be surrendered in exchange for Restricted Stock and/or Nonqualified
Options. The number of shares of Restricted Stock and Options acquired in this
manner shall be determined in the same manner as is specified in Subsections
13.1.1 and 13.1.2, respectively, and all Restricted Stock and Options so
acquired shall be subject to all of the terms, conditions and provisions of
Subsections 13.1.1 and 13.1.2, respectively. Exchanges under this Subsection
13.2.1 shall be effected the third (3rd) business day after the first public
announcement of the Company's annual earnings.
13.2.2 Non-Qualified Savings Plan Accounts. Subject to the Company's
approval, amounts accrued under the Hercules Incorporated Non-Qualified Savings
Plan portion of the Hercules Deferred Compensation Plan may, upon the Grantee's
request for a one-time (annual) exchange, be surrendered in exchange for
Restricted Stock and/or Nonqualified Options. The number of shares of Restricted
Stock and Options acquired in this manner shall be determined in the same manner
as is specified in Subsections 13.1.1 and 13.1.2, respectively, except that the
computation in each case shall be based on 100% of the Fair Market Value of one
share of Common Stock rather than the 85% of the Fair Market Value specified in
Subsections 13.1.1 and 13.1.2. All Restricted Stock and Options so acquired
shall be subject to all of the terms, conditions and provisions of Subsections
13.1.1 and 13.1.2, respectively. Exchanges under this Subsection 13.2.2 shall be
effected the third (3rd) business day after the first public announcement of the
Company's annual earnings.
Section 13.3 Termination of Employment
13.3.1 Death, Disability and Reduction in Force. Notwithstanding any
provisions of Sections 12.2 and 12.4 to the contrary:
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(a) If prior to the expiration of an applicable Restricted Period a
Grantee who has received Restricted Stock pursuant to Subsections 13.1.1,
13.2.1 and/or 13.2.2 shall cease to be employed by the Company by reason
of Death, Disability, Reduction in Force or Retirement directly
attributable to a Reduction in Force, all restrictions and forfeiture
provisions under this Plan with respect to the Restricted Stock exchanged
pursuant to this Article XIII shall lapse as of the date of termination of
employment and delivery of such shares shall be governed by the provisions
of Section 7.6.
(b) If prior to the expiration of an applicable Option Period a
Grantee who has received Options pursuant to Subsections 13.1.2, 13.2.1
and/or 13.2.2 shall cease to be employed by the Company by reason of
Death, Disability, Reduction in Force or Retirement directly attributable
to a Reduction in Force, the Option Period shall be adjusted to the lesser
of the remaining Option Period or one year from the date of employment
termination.
13.3.2 Retirement. Notwithstanding any provisions of Section 12.1 to the
contrary:
(a) In the event of Retirement (not directly attributable to a
Reduction in Force) by a Grantee who has received Restricted Stock
pursuant to Subsections 13.1.1, 13.2.1 and/or 13.2.2 prior to the
expiration of an applicable Restricted Period, that number of shares of
Restricted Stock equal to the amount attributable to the 15% discount made
available under this Article XIII, and prorated for the length of time
remaining in the Restricted Period, shall be forfeited and returned to the
Company.
(b) If prior to the expiration of an applicable Option Period a
Grantee who has received Options pursuant to Subsections 13.1.2, 13.2.1
and/or 13.2.2 shall cease to be employed by the Company by reason of his
or her Retirement (not directly related to a Reduction in Force), the
Option Period shall be adjusted to the lesser of the remaining Option
Period or three (3) years from the date of termination. In the event of
Retirement (not directly attributable to a Reduction in Force) by a
Grantee who has received Options pursuant to Subsections 13.1.2, 13.2.1
and/or 13.2.2, a number of Options equal to the amount attributable to the
15% discount and prorated for the length of time remaining in the period
during which Options may not be exercised shall be forfeited.
13.3.3 Resignation or Termination for Cause. Notwithstanding any
provisions of Sections 12.5 and 12.7 to the contrary:
(a) In the event a Grantee who has received Restricted Shares
pursuant to Subsections 13.1.1, 13.2.1 and/or 13.2.2 voluntarily resigns
(except for retirement with approval of the Company) or terminates
employment for reasons other than any of those specified in Sections 12.1,
12.2, 12.3, 12.4 and 12.6 prior to the expiration of an applicable
Restricted Period, all shares of Restricted Stock shall be forfeited and
returned to the Company and such Grantee shall receive a payment equal to
the lower of the Fair Market Value of the Restricted Shares forfeited or
the original amount exchanged.
(b) In the event a Grantee who has received Options pursuant to
Subsections 13.1.2, 13.2.1 and/or 13.2.2 voluntarily resigns (except for
retirement with approval of the Company) or terminates employment for
reasons other than any of those specified in Sections 12.1, 12.2, 12.3,
12.4 and 12.6 prior to the expiration of the applicable Option Period, all
Options shall be forfeited and returned to the Company and such Grantee
shall receive a payment equal to the lower of a value (as determined by
the Committee) of the Options forfeited or the original amount exchanged.
Section 13.4 Avoidance of Pension Diminution
13.4.1 Governing Provisions. Grantees electing Base Salary and/or Bonus
reductions under Section 13.1 may suffer a permanent diminution of their
qualified pension entitlement under the Hercules Pension Plan. To offset
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this diminution in part,exchange awards in respect of pensions otherwise payable
as nonqualified pensions (as measured from the date of the APD Election defined
next below) may be requested within five (5) years of anticipated retirement.
Subject to the Committee's approval of such a request, all such exchanges shall
be effected in accordance with the provisions of this Section 13.4.
13.4.2 Exchange Awards. A Grantee who is within five (5) years (but not
less than one year) of his or her anticipated retirement date may elect ("APD
Election") to exchange the present value (as of the date of the APD Election) of
his or her projected benefits payable as of the Designated Retirement Date (as
defined below) under the Hercules Pension Restoration Plan (utilizing the method
and assumptions used to convert a pension to a partial cash payment under the
Hercules Pension Plan) for Restricted Stock issuable under Subsection 13.1.1
and/or Options granted under Subsection 13.1.2. Restricted Stock and/or Options
received in such an exchange shall be in substitution of any pension
entitlements under the Hercules Pension Restoration Plan, the rights to such
entitlements being forfeited and canceled in consideration of such exchange.
13.4.3 Designated Retirement Date. As a part of his or her APD Election, a
Grantee shall designate a retirement date ("Designated Retirement Date"). In the
event of any termination of employment prior to the Designated Retirement Date,
the following will apply:
(a) If the Grantee elected Restricted Stock, that number of
Restricted Stock shares shall be forfeited as has a value (on the date of
his or her APD Election) equivalent to the present value determined for
purposes of Subsection 13.4.2 minus the present value (as of the APD
Election date) of the amount due under the Hercules Pension Restoration
Plan as of the date of actual retirement, utilizing the method and
assumptions used to convert a pension to a partial cash payment under the
Hercules Pension Plan. Further, in the event that the Grantee's actual
retirement date occurs within three (3) years of the APD Election, the
Grantee shall forfeit that number of Restricted Stock shares (adjusted by
the preceding sentence) attributable to the 15% discount made available
under Subsection 13.1.1 and prorated for the length of time remaining in
the three (3)- year period commencing with the date of the APD Election.
(b) If the Grantee elected Nonqualified Options, that number of
Options shall be forfeited as the Committee in its discretion shall
determine has a value (on the date of his or her APD Election) equivalent
to the present value determined for purposes of Subsection 13.4.2 minus
the present value (as of the date of his or her APD Election) of the
amount due under the Hercules Pension Restoration Plan as of the date of
actual retirement, utilizing the method and assumptions used to convert a
pension to a partial cash payment under the Hercules Pension Plan.
Further, in the event that the Grantee's actual retirement date occurs
within three (3) years of the APD Election, the Grantee shall forfeit that
number of Options as the Committee in its discretion shall determine has a
value equal to that number of Restricted Stock shares (adjusted by the
preceding sentence) attributable to the 15% discount made available under
Subsection 13.1.2 and prorated for the length of time remaining in the
period commencing with the date of the APD Election.
(c) Notwithstanding (a) and (b) next above, in the event of the
Grantee's death, Disability or termination of employment with the consent
of the Company, the Committee may, in its discretion, waive any
forfeitures otherwise applicable under this Subsection 13.4.3.
Section 13.5 Irrevocability
Any election under Sections 13.1, 13.2 or 13.4 shall be irrevocable.
Section 13.6 Equivalency
Notwithstanding any provision in this Article XIII to the contrary, all
elections under this Article XIII that involve an exchange of future
compensation or pension benefit entitlement shall in each instance be equalized
(that is,
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recalculated using actual numbers) at the expiration of the period elected or
termination of employment and forfeiture shall be applied, if appropriate.
Section 13.7 MICP Awards
Any payout under the Management Incentive Compensation Plan for
performance above the target level Performance Goals for any Performance Period
shall be in that number of whole shares of Restricted Stock obtained by dividing
the dollar value of the payout by 85% of the Fair Market Value of one share of
Common Stock on the date of such award. Restricted Stock acquired pursuant to
this Section 13.7 shall be subject to all of the terms, conditions and
provisions of Article VII and Article XIII, except as may otherwise be
determined by the Committee prior to the Date of Award.
Section 13.8 Definition
For purposes of this Article XIII, the term "Grantee" includes all
employees of the Company or any Participating Subsidiary who are designated by
the CEO to be eligible for purposes of this Article XIII.
ARTICLE XIV
CERTAIN TERMS APPLICABLE TO ALL AWARDS
Section 14.1 Withholding Taxes
The Company shall withhold (or secure payment from the Grantee in lieu of
withholding) the amount of any withholding or other tax required by law to be
withheld or paid by the Company with respect to any amount payable and/or shares
issuable under such Grantee's Award, or with respect to any income recognized
upon a disqualifying disposition of shares received pursuant to the exercise of
an ISO, and the Company may defer payment or issuance of the cash or stock upon
exercise or vesting of an Award unless indemnified to its satisfaction against
any liability for any such tax. The amount of such withholding or tax payment
shall be determined by the Committee and shall be payable by the Grantee at the
time of delivery or when payment is made [except as otherwise payable under
Section 14.1(c)] in accordance with the following rules:
(a) With respect to Awards payable in cash, the Company will
withhold an amount sufficient to satisfy applicable Federal, state and
local tax withholding requirements and remit the net award to the Grantee;
(b) With respect to Awards payable in stock, the Company will notify
the Grantee of the amount due from such Grantee to satisfy the tax
withholding requirements with respect to the stock. The Grantee shall pay
the amount due to satisfy the tax withholding requirements in cash;
provided, however, that the Grantee may elect to meet the tax withholding
requirement by requesting the Company, in writing, to withhold from such
Award and sell through a brokerage firm the appropriate number of shares
of Common Stock, rounded up to the next whole number, which would result
in proceeds equal to the tax withholding requirement. Any election by a
Grantee to have shares withheld under this Section 14.1 shall be subject
to such terms and conditions as the Committee may specify, which may
include that the election shall be irrevocable and in the case of a
Reporting Person, the election to have shares withheld under this Section
14.1 must be made either (i) not less than six (6) months prior to the
date that the tax is to be withheld by the Company, or (ii) during the
period beginning on the third business day following the date of the
release for publication of the Company's quarterly or annual summary
statements of earnings and ending on the twelfth business day following
such date. If the cash required (whether paid directly or indirectly
through the sale of stock election described above) is not received by the
Company within sixty (60) days of notification by the Company of the tax
withholding due, the Committee shall have the right to take whatever
action it deems appropriate, including voiding the Award. The Company
shall not deliver or pay the Award (net of the tax withholding) until the
tax withholding obligation is satisfied. At the
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time that all other restrictions lapse (other than being subject to
Section 16 of the Act) a Reporting Person shall make the election
described in Subsection (c) below.
(c) If permitted under applicable Federal income tax laws, a Grantee
may elect to include in gross income for Federal income tax purposes in
the year in which a stock Award is made, an amount equal to the Fair
Market Value of the Award on the Date of Grant. If the Grantee makes such
an election, the Grantee shall promptly notify the Company in writing and
shall provide the Company with a copy of the executed election form as
filed with the Internal Revenue Service by no later than thirty (30) days
from the Date of the Grant. Promptly following such notification, the
Grantee shall pay directly to the Company, or make arrangements
satisfactory to the Committee, the cash amount determined by the Company
to be sufficient to satisfy applicable Federal, state or local withholding
tax requirements. If the Grantee shall fail to make such payments, the
Company and its Subsidiaries shall, to the extent permissible by law, have
the right to deduct from any payment of any kind otherwise due to the
Grantee any Federal, state or local taxes of any kind required by law to
be withheld with respect to such Restricted Stock.
Section 14.2 Adjustments to Reflect Capital Changes
14.2.1 Recapitalization. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or the Awards
granted under the Plan, such adjustments shall be made in the number and kind of
shares subject to outstanding Awards, the Option Price for such shares and the
number and kind of shares available for Awards subsequently granted under the
Plan as may be determined appropriate by the Committee.
14.2.2 Sale or Reorganization. After any reorganization, merger or
consolidation in which the Company is the surviving corporation, each Grantee
shall, at no additional cost, be entitled upon any exercise of an Option or
receipt of other Award to receive (subject to any required action by
stockholders), in lieu of the number of shares of Common Stock receivable or
exercisable pursuant to such Award, the number and class of shares of stock or
other securities to which such Grantee would have been entitled pursuant to the
terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Grantee had been the holder of
record of a number of shares of stock equal to the number of shares receivable
or exercisable pursuant to such Award. Comparable rights shall accrue to each
Grantee in the event of successive reorganizations, mergers or consolidations of
the character described above.
14.2.3 Options to Purchase Stock of Acquired Companies. After any
reorganization, merger or consolidation in which the Company or a Subsidiary
shall be a surviving corporation, the Committee may grant substituted options
under the provisions of the Plan, pursuant to Section 424 of the Code, replacing
old options granted under a plan of another party to the reorganization, merger
or consolidation whose stock subject to the old options that may no longer be
issued following such merger or consolidation. The foregoing adjustments and
manner of application of the foregoing provisions shall be determined by the
Committee in its sole discretion. Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject to any
Options.
Section 14.3 Failure to Comply With Terms and Conditions
Notwithstanding any other provision of the Plan, no payment or delivery
with respect to any Award shall be made, and all rights of the Grantee who
receives such Award (or his designated Beneficiary or legal representative) to
such payment or delivery under the Plan shall be forfeited, at the discretion of
the Committee, if, prior to the time of such payment or delivery, the Grantee
breaches a restriction or any of the terms, restrictions and/or conditions of
the Plan and/or the Award Commitment.
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Section 14.4 Forfeiture Upon Occurrence of Certain Events
Notwithstanding any other provision of the Plan, no payment of any Award
shall be made and all rights of the Grantee who received such Award (or his
designated Beneficiary or legal representative) to the payment thereof under the
Plan shall be forfeited if, prior to the time of such payment, the Grantee (i)
without the Company's consent, shall be employed by a competitor of, or shall be
engaged in any activity in competition with, the Company or a Subsidiary; (ii)
divulges without the consent of the Company any secret or confidential
information belonging to the Company or a Subsidiary; or (iii) has been
dishonest or fraudulent in any matter affecting the Company or a Subsidiary or
has committed any act which, in the sole judgment of the Committee, has been
substantially detrimental to the interests of the Company or a Subsidiary. The
Company shall give a Grantee written notice of the occurrence of any such event
prior to making any such forfeiture. The determination of the Committee as to
the occurrence of any of the events specified in clauses (i), (ii), and (iii) of
this Section 14.4 shall be conclusive and binding upon all persons for all
purposes. Any Award shall be subject to forfeiture for the reasons provided in
this Section 14.4 in such manner as shall be provided by the Committee.
Section 14.5 Regulatory Approvals and Listing
The Company shall not be required to issue any certificate or certificates
for shares of Common Stock under the Plan prior to (i) obtaining any approval
from any governmental agency which the Company shall, in its discretion,
determine to be necessary or advisable, (ii) the admission of such shares to
listing on any national securities exchange on which the Company's Common Stock
may be listed, and (iii) the completion of any registration or other
qualification of such shares of Common Stock under any state or Federal law or
ruling or regulations of any governmental body which the Company shall, in its
discretion, determine to be necessary or advisable.
Section 14.6 Restrictions Upon Resale of Stock
If the shares of Common Stock that have been issued to a Grantee pursuant
to the terms of the Plan are not registered under the Securities Act of 1933, as
amended ("Securities Act"), pursuant to an effective registration statement,
such Grantee, if the Committee shall deem it advisable, may be required to
represent and agree in writing (i) that any such shares acquired by such Grantee
pursuant to the Plan will not be sold except pursuant to an effective
registration statement under the Securities Act, or pursuant to an exemption
from registration under said Act and, (ii) that such Grantee is acquiring such
shares for his own account and not with a view to the distribution thereof.
Section 14.7 Reporting Person Limitation
Notwithstanding any other provision of the Plan, to the extent required to
qualify for the exemption provided by Rule 16b-3 under the Act, and any
successor provision, (1) any Common Stock or other equity security offered under
the Plan to a Reporting Person may not be sold for at least six (6) months after
the earlier of acquisition of the security or the date of grant of the
derivative security, if any, pursuant to which the Common Stock or other equity
security was acquired; and (2) any Option, SAR or other similar right related to
an equity security, issued under the Plan to a Reporting Person shall not be
transferable other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order and shall be exercisable during
the Grantee's lifetime only by the Grantee or the Grantee's guardian or legal
representative.
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ARTICLE XV
DISPUTES
If the employment of a Grantee with the Company or any Participating
Subsidiary shall terminate prior to the expiration of the Performance or
Restriction Period applicable to any Performance Share, Restricted Stock or
Phantom Unit Award awarded to such Grantee and there exists a dispute between
such Grantee and the Company or the Committee as to the satisfaction of the
conditions to the release of such shares or units under the Plan or the terms
and conditions of the Performance Share, Restricted Stock or Phantom Unit Award,
the Performance Share, Restricted Stock or Phantom Unit Awards as to which such
dispute shall exist shall remain subject to the restrictions of the Plan until
the resolution of such dispute, regardless of any intervening expiration of the
Performance or Restriction Period originally applicable to such shares, except
that any dividends which may be declared and which may be payable to the
participant as of a date during the period from termination of such Grantee's
employment to the resolution of such dispute (the "Suspension Period") shall
(i) to the extent to which such dividends would have been payable to
such Grantee on such Performance Share, Restricted Stock or Phantom Unit
Award, be held by the Company as part of its general funds and shall be
paid to or for the account of such Grantee only upon, and in the event of,
a resolution of such dispute in a manner favorable to such Grantee and
then only with respect to such Performance Share, Restricted Stock or
Phantom Unit Award as to which such resolution shall be so favorable, and
(ii) in the event the dispute is resolved in a manner unfavorable to
the Grantee, be canceled as dividends payable upon Performance Share,
Restricted Stock or Phantom Unit Award as to which such resolution shall
be so unfavorable.
In addition, to the extent that resolution of any such dispute shall be
unfavorable to the Grantee, the Performance Shares, Restricted or Phantom Unit
Award as to which such dispute shall have existed shall be forfeited in
accordance with the provisions of Article XII or Section 14.4.
ARTICLE XVI
ADMINISTRATION OF THE PLAN
Section 16.1 Committee
The Plan shall be administered by or under the direction of the Committee.
No person shall be eligible or continue to serve as a member of the Committee
unless such person is a director of the Company and is a "disinterested person"
within the meaning of Rule 16b-3, and no person shall be, or shall have been,
eligible to receive an Award under the Plan to acquire stock, stock options,
stock appreciation rights, performance shares or restricted stock of the Company
or any Participating Subsidiary at any time within the one (1) year immediately
preceding the member's appointment to the Committee.
Section 16.2 Committee Actions
Except for matters required by the terms of this Plan to be decided by the
CEO or his designee or designees, the Committee shall have full power and
authority to interpret and construe the Plan, to prescribe, amend and rescind
rules, regulations, policies and practices, to impose such conditions and
restrictions on Awards as it deems appropriate and to make all other
determinations necessary or desirable in connection with the administration of,
or the performance of its responsibilities under, this Plan. Subject to the
limitations of provisions of Section 20.4, each decision, determination,
interpretation or other action of the Committee made or taken pursuant to grants
of authority under the Plan shall be final and shall be conclusive and binding
on all persons for all purposes. The Committee's decisions,
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determinations and interpretations (including without limitations, the terms and
provisions of such awards and the agreements evidencing same) need not be
uniform and may be made selectively among Grantees who receive, or are eligible
to receive, awards under the Plan, whether or not such Grantees are similarly
situated. The Committee may, to the extent that any such action will not prevent
the Plan from complying with Rule 16b-3, delegate any of its powers and
authority under the Plan as it deems appropriate to designated officers or
employees of the Company.
Section 16.3 No Liability of Committee Members
As and to the extent provided by Section 20.5, no past, present or future
member of the Committee shall be personally liable by reason of any contract or
other instrument executed by him or on his behalf in his capacity as a member of
the Committee, nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee.
ARTICLE XVII
EFFECTIVE DATE, TERM OF THE PLAN AND STOCKHOLDER APPROVAL
The Plan became effective as of April 1, 1991, and was amended and
restated as of June 30, 1993, and is hereby further amended and restated. The
termination date of the Plan shall be April 30, 1998. No Award shall be granted
under the Plan after such termination date. The Plan will continue in effect for
existing Awards as long as any such Awards are outstanding.
ARTICLE XVIII
CHANGE IN CORPORATE CONTROL
Section 18.1 Options And PASOs
In the event of a Change in Control, (1) all Options and PASOs outstanding
on the date of such Change in Control shall become immediately and fully
exercisable, and (2) a Grantee who is an elected officer or director of the
Company will be permitted to surrender for cancellation within sixty (60) days
after such Change in Control any Option or PASO or portion thereof to the extent
not yet exercised (or with respect to an Option or PASO or portion thereof
granted less than six (6) months prior to the date of the Change in Control,
within sixty (60) days after the expiration of a six (6)-month period following
the Date of Grant) and to receive a cash payment in an amount equal to the
excess, if any, of (a) in the case of a Nonqualified Stock Option or PASO, the
adjusted Fair Market Value of the Common Stock subject to the Option or PASO or
a portion thereof surrendered or (b) in the case of an ISO, the Fair Market
Value of the Common Stock subject to the Option or PASO or portion thereof
surrendered over the Option Price. The provisions of this Section 18.1 shall be
applicable to Nonqualified Stock Options, PASOs or ISOs. The provisions of this
Section 18.1 shall not be applicable to any Options granted to a Grantee if any
Change in Control results from such Grantee's beneficial ownership (within the
meaning of Rule 13d(3) under the Act) of Common Stock or Company voting
securities.
Section 18.2 SARs
In the event of a Change in Control, all SARs shall become immediately and
fully exercisable but not before any related ISO is exercisable. Upon any
exercise of a SAR (other than a SAR granted in tandem with a related ISO) or any
portion thereof during the 60-day period following the Change in Control, (or
with respect to a SAR granted to an officer or director of the Company less than
six (6) months prior to the date of the Change in Control, within sixty (60)
days after the expiration of a six (6) month period following the Date of Grant)
the amount payable shall be determined by reference to the SAR Fair Market Value
of the Common Stock and shall be paid in cash. SARs granted in connection with
ISOs will be payable as determined by reference to the Fair Market Value of the
Common Stock on the date of such exercise
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and shall be paid in cash. The provisions of this Section 18.2 shall not be
applicable to any SARs granted to a Grantee if any Change in Control results
from such Grantee's beneficial ownership (within the meaning of Rule 13d(3)
under the Act) of Common Stock or Company voting securities.
Section 18.3 All Other Awards
In the event of a Change of Control, all Performance Share Awards,
Restricted Stock Awards, Phantom Unit Awards, Cash Value Awards, Other
Market-Based Awards (if any) and Other Performance-Based Awards (if any) shall
immediately vest and become fully payable within thirty (30) days after a Change
in Control to all Grantees who have been granted an Award. In the case of
Performance Share Awards and Cash Value Awards, all Awards shall vest at the
Maximum Award.
Section 18.4 Definitions
A Change in Control of the Company shall occur when there is an
unsolicited Change in Control of the Company that is not initiated by the
Company, and is of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, as in
effect on the effective date of the Plan; provided, however, that no Change in
Control shall be deemed to have occurred unless and until a "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Act) together with all
"affiliates" and "associates" of such person (as such terms respectively, are
defined in Rule 12b-2 of the General Rules and Regulations under the Act) is or
becomes a beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities.
ARTICLE XIX
AMENDMENT AND TERMINATION
Section 19.1 Amendment
The Board reserves the right at any time or times to modify, alter or
amend, in whole or in part, any or all of the provisions of the Plan to any
extent and in any manner that it may deem advisable, and no consent or approval
by the stockholders of the Company or by any other person, committee or entity
of any kind shall be required to make any modification, alteration or amendment;
provided, however, that the Board shall not, without the requisite affirmative
approval of the stockholders of the Company, make any modification, alteration
or amendment which (i) except as provided in Section 3, increases the maximum
number of shares of Common Stock available for Awards under this Plan, (ii)
decreases the Option Price to less than 100% of the Fair Market Value on the
Date of Grant of an Option, (iii) extends the period during which Awards may be
granted under the Plan beyond April 30, 1998, (iv) changes the employee (or
class of employees) eligible to receive Awards under the Plan, (v) materially
increase the benefits accruing to a Grantee under the Plan, or (vi) requires
stockholders' approval under Rule 16b-3 or the Code, unless such compliance is
no longer desired, or under any other applicable law. No modification,
alteration or amendment of the Plan may, without the consent of the Grantee
(Beneficiaries in case of his death) to whom any Award shall theretofore have
been granted under the Plan adversely affect any right of such Grantee under
such Award, except in accordance with the provisions of the Plan and/or any
Award Commitment applicable to any such Award. Subject to the provisions of this
Section 19.1, any modification, alteration or amendment of any provisions of the
Plan may be made retroactively.
Section 19.2 Suspension or Termination
The Board reserves the right at any time to suspend or terminate, in whole
or in part, any or all of the provisions of the Plan for any reason and without
the consent of or approval by the stockholders of the Company, any Grantee or
Beneficiary or any other person, committee or entity of any kind; provided,
however, that no such suspension or
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termination shall affect any right or obligation with respect to any Award
theretofore made except as herein otherwise provided.
ARTICLE XX
MISCELLANEOUS
Section 20.1 Deferral Election
At the discretion of the Committee payment of Phantom Units or any other
cash award, or any portion thereof, may be deferred by a Grantee until such time
as the Committee may establish. All such deferrals shall be accomplished by the
delivery of a written, irrevocable election by the Grantee at such times prior
to the time payment would otherwise be made as the Committee shall determine.
All deferrals shall be made in accordance with such rules and regulations
established by the Committee to ensure that such deferrals comply with all
applicable requirements of the Code and its regulations. Deferred payments shall
be paid in a lump sum or installments, as determined by the Committee. The
Committee also may credit interest at such rates to be determined by the
Committee.
Section 20.2 Designation of Beneficiary
Each Grantee shall file with the Company a written designation of one or
more persons as the Beneficiary who shall be entitled to receive the Award, if
any, payable under the Plan upon his death. A Grantee may from time to time
revoke or change his Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation with the Company. The last such
designation received by the Company shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Company prior to the Grantee's death, and in no event shall it
be effective as of a date prior to such receipt. If no such Beneficiary
designation is in effect at the time of a Grantee's death, or if no designated
Beneficiary survives the Grantee or if such designation conflicts with law, the
Grantee's estate shall be entitled to receive the Award, if any, payable under
the Plan upon his death. If the Committee is in doubt as to the right of any
person to receive such Award, the Company may retain such Award, without
liability for any interest thereon, until the Committee determines the rights
thereto, or the Company may pay such Award into any court of appropriate
jurisdiction and such payment shall be a complete discharge of the liability of
the Company therefor.
Section 20.3 No Right to an Award or to Continued Employment
No Grantee or other person shall have any claim or right to be granted an
Award under the Plan. Neither the action of the Company in establishing this
Plan, nor any provisions hereof, nor any action taken by the Company, any
Participating Subsidiary, the Committee or the CEO (or his designee or
designees) pursuant to such provisions shall be construed as creating in any
employee or class of employees any right with respect to continuation of
employment by the Company or any of the Participating Subsidiaries, and they
shall not be deemed to interfere in any way with the Company's or any
Participating Subsidiary's right to employ, discipline, discharge, terminate,
lay off or retire any Grantee with or without cause, to discipline any Employee,
or to otherwise affect the Company's right to make employment decisions with
respect to any Grantee.
Section 20.4 Discretion of the Committee and the CEO
Whenever the terms of the Plan provide for or permit a decision to be made
or an action to be taken by a Grantor, such decision may be made or such action
taken in the sole and absolute discretion of such Grantor and shall be final,
conclusive and binding on all persons for all purposes; provided, however, that
the Board may review any decision or action of the Grantor and if the Board
determines that any Award or other decision or act of the Grantor is inequitable
or contrary to the provisions of this Plan, it may reverse or modify such Award,
decision or act. As provided
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in Section 16.2 in the case of the Grantor's determinations under the Plan,
including, without limitation the determination of the person to receive awards
and the amount of such awards, need not be uniform and may be made by him
selectively among persons who receive, or are eligible to receive, awards under
this Plan, whether or not such persons are similarly retired.
Section 20.5 Indemnification and Exculpation
20.5.1 Indemnification. Each person who is or shall have been a member of
the Committee and each director, officer or employee of the Company or any
Participating Subsidiary to whom any duty or power related to the administration
or interpretation of this Plan may be delegated, shall be indemnified and held
harmless by the Company against and from any and all loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit or proceeding to which he may be
or become a party or in which he may be or became involved by reason of any
action taken or failure to act under this Plan and against and from any and all
amounts paid by him in settlement thereof (with the Company's written approval)
or paid by him in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment in favor of the Company based upon a finding of
his bad faith; subject, however, to the condition that upon the institution of
any claim, action, suit or proceeding against him, he shall in writing give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other right to which such person
may be entitled under the Company's Restated Certificate of Incorporation, as a
matter of law or otherwise, or any power that the Company may have to indemnify
him or hold him harmless.
20.5.2 Exculpation. Each member of the Committee, and each director,
officer and employee of the Company or of any Participating Subsidiary shall be
fully justified in relying or acting upon in good faith any information
furnished in connection with the administration of this Plan by any appropriate
person or persons other than himself. In no event shall any person who is or
shall have been a member of the Committee, or a director, officer or employee of
the Company or any Participating Subsidiary be liable for any determination made
or other action taken or any omission to act in reliance upon such report or
information, for any action (including the furnishing of information) taken or
any failure to act, if in good faith.
Section 20.6 Unfunded Plan
This Plan is intended to constitute an unfunded, long-term incentive
compensation plan for certain selected employees. No special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts, except as expressly set forth in the Plan with respect
to Restricted Stock or Performance Shares held in custody accounts. The Company
may, but shall not be obligated to, acquire shares of its Common Stock from time
to time in anticipation of its obligations under the Plan, but no Grantee shall
have any right in or against any shares of stock so acquired. All such stock
shall constitute general assets of the Company and may be disposed of by the
Company at such time and for such purposes at it may deem appropriate. No
obligation or liability of the Company to any Grantee with respect to any right
to receive a distribution or payment under the Plan shall be deemed to be
secured by any pledge or other encumbrance on any property of the Company.
Section 20.7 Inalienability of Rights and Interests
The rights and interests of a Grantee under this Plan are personal to the
Grantee and to any person or persons who may become entitled to distribution or
payments under the Plan by reason of death of the Grantee, and the rights and
interests of the Grantee or any such person (including, without limitation, any
Award distributable or payable under the Plan) shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit or interest shall be any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of any Grantees. If any Grantee
shall attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge any of his rights or interests under the Plan, (including without
limitation, any Award payable under the Plan) then the Committee may hold or
apply such benefit or any part thereof to or for the benefit of such Grantee or
his Beneficiary, his spouse, children, blood relatives or other dependents, or
any of them, in such manner and in such proportions as the Committee may
consider proper.
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Section 20.8 Awards Not Includable for Benefit Purposes
Payments received by a Grantee pursuant to the provisions of the Plan
shall not be included in the determination of benefits under any pension, group
insurance or other benefit plan applicable to the Grantee which are maintained
by the Company or any of its Subsidiaries, except as may be determined by the
Board.
Section 20.9 No Issuance of Fractional Shares
The Company shall not be required to deliver any fractional share of
Common Stock but, as determined by the Committee, may pay in lieu thereof,
except as otherwise provided in this Plan, the Fair Market Value (determined as
of the date of payment the restrictions terminate) of such fractional share to
the Grantee or the Grantee's beneficiary, as the case may be.
Section 20.10 Modification for Overseas Grantees
Notwithstanding any provision to the contrary, the Committee may
incorporate such provisions, or make such modifications or amendments in Award
Commitments of Grantees who reside or are employed outside of the United States
of America, or who are citizens of a country other than the United States of
America, as the Committee deems necessary or appropriate to accomplish the
purposes of the Plan with respect to such Grantee in light of differences in
applicable law, tax policies or customs, and to ascertain compliance with all
applicable laws.
Section 20.11 Leaves of Absence
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any leave of
absence taken by the recipient of any Award. Without limiting the generality of
the foregoing, the Committee shall be entitled to determine (a) whether or not
any such leave of absence shall constitute a termination of employment within
the meaning of the Plan and, (b) the impact, if any, of any such leave of
absence on awards under the Plan theretofore made to any recipient who takes
such leave of absence.
Section 20.12 Communications
20.12.1 Communications by the Committee. All notices, statements, reports
and other communications made, delivered or transmitted to a Grantee,
Beneficiary or other person under this Plan shall be deemed to have been duly
given, made or transmitted when delivered to, or when mailed by first-class
mail, postage prepaid and addressed to, such Grantee, Beneficiary or other
person at his address last appearing on the records of the Committee.
20.12.2 Communications by the Participants and Others. All elections,
designations, requests, notices, instructions and other communications made,
delivered or transmitted by the Company, a Participating Subsidiary, Grantee,
Beneficiary or other person to the Committee required or permitted under this
Plan shall be in such form as is prescribed from time to time by each such
Committee, shall be mailed by first-class mail or delivered to such location as
shall be specified by each such Committee, and shall be deemed to have been
given and delivered only upon actual receipt thereof by such Committee at such
location.
Section 20.13 Parties in Interest
The provisions of the Plan and the terms and conditions of any Award
shall, in accordance with their terms, be binding upon, and inure to the benefit
of, all successors of each Grantee, including, without limitation, such
Grantee's estate and the executors, administrators, or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Grantee. The obligations of the Company under the Plan shall
be binding upon the Company and its successors and assigns.
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Section 20.14 Severability
Whenever possible, each provision in the Plan and every Award at any time
granted under the Plan shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan or any Award at
any time granted under the Plan shall be held to be prohibited by or invalid
under applicable law, then (a) such provision shall be deemed amended to
accomplish the objectives of the provision as originally written to the fullest
extent permitted by law, and (b) all other provisions of the Plan and every
other Award at any time granted under the Plan shall remain in full force and
effect.
Section 20.15 Compliance with Laws
The Plan and the grant of Awards shall be subject to all applicable
Federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. It is intended that the Plan
be applied and administered in compliance with Rule 16b-3. If any provision of
the Plan would be in violation of Rule 16b-3 if applied as written, such
provision shall not have effect as written and shall be given effect so as to
comply with Rule 16b-3, as determined by the Committee. The Board is authorized
to amend the Plan and to make any such modifications to Award Commitments to
comply with Rule 16b-3, and to make any such other amendments or modifications
as it deems necessary or appropriate to better accomplish the purposes of the
Plan in light of any amendments made to Rule 16b-3.
Section 20.16 No Strict Construction
No rule of strict construction shall be implied against the Company, the
Committee, the CEO or any other person in the interpretation of any of the terms
of the Plan, any Award granted under the Plan or any rule or procedure
established by the Committee.
Section 20.17 Modification
This document contains all of the provisions of the Plan and no provisions
may be waived, modified or otherwise altered except in a writing adopted by the
Board.
Section 20.18 Governing Law
All questions pertaining to validity, construction and administration of
the Plan and the rights of all persons hereunder shall be determined with
reference to, and the provisions of the Plan shall be governed by and shall be
construed in conformity with, the internal laws of the State of Delaware.
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Exhibit 5 OPINION OF COUNSEL
October 22, 1997
Board of Directors
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, DE 19894-0001
Gentlemen:
I am Vice President and General Counsel of Hercules Incorporated
("Hercules"), a Delaware corporation, and I am familiar with the proceedings
taken and proposed to be taken by Hercules in connection with the issuance and
sale by the Company of up to 8,000,000 of its common shares (the "Common
Shares"), pursuant to the Hercules Incorporated Long Term Incentive Compensation
Plan (the "Plan").
I have examined or caused to be examined, among other things, the
Registration Statement on Form S-8 (the "Registration Statement") as proposed to
be filed with the Securities and Exchange Commission for the registration of the
same of such Common Shares under the Securities Act of 1933, as amended, and
such records and documents as I have deemed necessary in order to express the
opinions hereinafter set forth.
Based upon the foregoing, I am of the opinion that Hercules is a duly
incorporated and legally existing corporation under the laws of the State of
Delaware. I am also of the opinion, based upon the foregoing and assuming
compliance with applicable federal and state securities laws, that the Common
Shares, when issued in the manner contemplated by the Registration Statement and
the Plan, will be duly authorized, validly issued, and nonassessable.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Richard G. Dahlen
Vice President and
General Counsel
<PAGE> 1
Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Hercules Incorporated covering the Hercules Incorporated Long Term
Incentive Compensation Plan on Form S-8 (Registration No. 333- ) of our
report dated February 7, 1997, on our audits of the consolidated financial
statements of Hercules Incorporated and subsidiary companies (the "Company") as
of December 31, 1996 and 1995, and for each of the three years ended December
31, 1996 which report is included in the Company's most recent Annual Report on
Form 10-K.
Coopers & Lybrand
2400 Eleven Penn Center
Philadelphia, PA 19103
October 22, 1997
