SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[(Amendment No. ___)]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TOSCO CORPORATION
(Name of Registrant as Specified in Its Charter)
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_______________________________________________________
(2) Aggregate number of securities to which transaction
applies:_______________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0 11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):_______________________________________________
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_________________________________________
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(4) Date Filed:_____________________________________________________
<PAGE>
TOSCO CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
--------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Tosco Corporation ("Tosco") will be held at The Westin Hotel, 1 First Stamford
Place, Stamford, Connecticut, on May 18, 2000, at 10:00 o'clock in the morning
for the following purposes:
I. To elect ten (10) Directors of Tosco.
II. To approve Tosco's 2000 Stock Incentive Plan.
III. To ratify and approve the appointment of PricewaterhouseCoopers
LLP as independent accountants of Tosco for the fiscal year ending December 31,
2000.
IV. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Stockholders of record at the close of business on March 31, 2000
shall be entitled to vote at and be present at the meeting.
By order of the Board of Directors,
Wilkes McClave III
SECRETARY
Dated: April 7, 2000
Stamford, Connecticut
<PAGE>
TOSCO CORPORATION
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of Tosco
Corporation, a Nevada corporation ("Tosco"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 18, 2000 at 10:00 a.m. at
The Westin Hotel, 1 First Stamford Place, Stamford, Connecticut, or any
adjournment of the Annual Meeting, at which stockholders of record at the close
of business on March 31, 2000 shall be entitled to vote. The cost of
solicitation of proxies will be borne by Tosco. Tosco may use the services of
its Directors, officers, stockholders of record and others to solicit proxies,
personally or by mail or telephone. Arrangements may also be made with brokerage
houses and other custodians, nominees, fiduciaries and stockholders of record to
forward solicitation material to the beneficial owners of the stock held of
record by such persons. Tosco may reimburse such solicitors for reasonable
out-of-pocket expenses incurred by them in soliciting, but no compensation will
be paid for their services. Tosco has retained The Altman Group, Inc. to assist
in the solicitation of proxies for a fee estimated at $10,000 plus out-of-pocket
expenses. Any Proxy granted as a result of this solicitation may be revoked at
any time before its exercise by granting a subsequently dated Proxy, by
attending the Annual Meeting and voting in person or by mailing a notice of
revocation to Tosco Corporation, 72 Cummings Point Road, Stamford, Connecticut
06902, Attention: Secretary.
The date of this Proxy Statement is the approximate date on which this
Proxy Statement and accompanying Proxy were first sent or given to stockholders.
The principal executive offices of Tosco are located at 72 Cummings
Point Road, Stamford, Connecticut 06902.
On March 31, 2000, Tosco had outstanding and entitled to vote with
respect to all matters to be acted upon at the Annual Meeting 144,492,497 shares
of Common Stock, par value $.75 per share ("Common Stock"). Each holder of
Common Stock will be entitled to one vote for each share of Common Stock held by
such holder. The presence of holders representing a majority of the outstanding
shares will constitute a quorum at the meeting. Abstentions are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions and broker non-votes are not counted in determining the
votes cast with respect to any of the matters submitted to a vote of
stockholders.
It is expected that the following business will be considered at the
Annual Meeting and action taken thereon:
I. ELECTION OF DIRECTORS
It is proposed to elect ten (10) Directors at the Annual Meeting to
hold office until the 2001 Annual Meeting of Stockholders and until their
successors are duly elected and qualify. It is intended that the accompanying
form of Proxy will be voted for the nominees set forth below, each of whom is
presently a Director of Tosco. To be elected as a Director, each nominee must
receive the affirmative vote of the holders of a plurality of the stock of Tosco
voted for Directors. If some unexpected occurrence should make necessary, in the
Board of Directors' judgment, the substitution of some other person or persons
for any of the nominees, shares will be voted for such other person or persons
as the Board of Directors may select. The Board of Directors is not aware that
any nominee will be unable or unwilling to serve as a Director. The following
table sets forth certain information with respect to each of the nominees.
NOMINEES FOR ELECTION
SERVED AS A PRINCIPAL OCCUPATION
NAME AGE DIRECTOR SINCE AND POSITIONS HELD
Jefferson F. Allen 54 1990 President of Tosco since May
1997 and Chief Financial
Officer since June 1990;
Executive Vice President
from June 1990 to May 1997;
Treasurer of Tosco from June
1990 to October 1995;
various positions, including
Chairman and CEO, with
Comfed Bancorp, Inc. and
related entities from
November 1988 to June 1990.
Patrick Monteiro de Barros 55 1995 Director of Petrogal,
Petroleos de Portugal, SA
since July 1995; Chairman
and Chief Executive Officer
of Argus Resources Ltd. (UK)
since 1988 and Chairman of
Fundacao Monteiro de Barros
and Protea Holdings Inc.
since 1980.
Wayne A. Budd 58 1997 Group President, Bell
Atlantic or Senior Vice
President, NYNEX since April
1996; Senior Partner,
Goodwin, Procter & Hoar,
Attorneys, from February
1993 to April 1996;
Commissioner, United States
Sentencing Commission,
October 1994 to May 1997;
Associate Attorney General
of the United States from
March 1992 to January 1993;
United States Attorney for
the District of
Massachusetts from April
1989 to March 1992.
Houston I. Flournoy 70 1978 Retired Executive; Special
Assistant to the President
for Governmental Affairs,
University of Southern
California (USC), from 1976
to 1999 and Professor of
Public Administration, USC,
from 1976 to 1993.
Edmund A. Hajim 63 1991 Chairman and Chief Executive
Officer of ING Furman Selz
Asset Management since July
1998; Co-Chairman of ING
Barings, Americas Region,
from 1997 to 1998; Chairman
and Chief Executive Officer
of Furman Selz LLC from 1983
to 1997; Managing Director
and member of the Board of
Directors of Lehman Brothers
Kuhn Loeb prior to 1983.
Charles J. Luellen 70 1992 Retired Executive; President
and Chief Operating Officer
of Ashland Inc. from March
1986 to January 1992.
Eija Malmivirta 59 1997 Chairman and principal owner
of Merei Energy Consulting
Oy Ltd., Helsinki, Finland,
a consulting company with
expertise in the oil
industry, oil trading and
risk management, since
October 1996; for more than
27 years prior thereto, Mrs.
Malmivirta was employed by
Neste Oy, a Finnish oil
refining and marketing
company, with her last
position as Executive Vice
President.
Mark R. Mulvoy 58 1996 Retired Executive; Editor,
Sports Illustrated magazine
from 1992 to 1996; various
positions with Sports
Illustrated for more than
five years prior thereto.
Kathryn L. Munro 51 2000 Chairman and CEO of Bridge
West LLC, a technology
investment company since
1999; former Chief Executive
Officer, Southwest Banking
Group, Bank of America 1994
to 1998.
Thomas D. O'Malley 58 1988 Chairman of the Board and
Chief Executive Officer of
Tosco since January 1990;
President of Tosco from 1993
to May 1997 and from October
1989 to May 1990.
Mr. de Barros is a director of Espirito Santo Financial Group. Mr.
Budd is a director of John Hancock Financial Services. Mr. Flournoy is a
director of Fremont General Corporation. Mr. Hajim is a director of NFO
Worldwide, Inc. Mrs. Malmivirta is a director of Kemira Oyi, Helsinki. Mr.
Mulvoy is a director of Adams Golf Co. Ms. Munro is a director of Flow
International, Inc., Sun Community Bancorp, Central Newspapers Inc. and Arizona
Public Service.
Tosco's Board of Directors has a Committee on Audit, Ethics and
Conflicts of Interest (the "Audit Committee"), consisting of Messrs. Budd,
Flournoy, Ingrassia, Luellen and Mulvoy, a Compensation Committee consisting of
Messrs. Flournoy, Hajim and Luellen, an Executive Committee consisting of
Messrs. Allen, Ingrassia, and O'Malley, a Business Affairs Committee consisting
of Messrs. de Barros, Ingrassia, Luellen and Mrs. Malmivirta, a Government &
Regulatory Affairs Committee consisting of Messrs. Budd, Flournoy, Mulvoy and
Allen, an International Affairs Committee consisting of Messrs. de Barros and
Ingrassia and Mrs. Malmivirta and a Nominating Committee consisting of Messrs.
de Barros, Hajim and Ingrassia. The Audit Committee's functions include
recommending to the Board of Directors the engaging and discharging of the
independent accountants, reviewing with the independent accountants the plan and
results of the audit engagement, reviewing the scope and results of Tosco's
procedures for internal auditing, reviewing the independence of the accountants
and reviewing the adequacy of Tosco's system of internal accounting controls.
The Compensation Committee is responsible for reviewing and setting the
compensation of Tosco's management, and considering, recommending and
administering its cash incentive and long-term stock incentive plans. The
Nominating Committee's functions include reviewing potential nominees for the
Board of Directors and recommending the annual slate of nominees for election to
the Board of Directors.
During 1999, there were nine meetings of the Board of Directors, five
meetings of the Audit Committee, four meetings of the Compensation Committee and
one meeting of the Nominating Committee. During 1999, each of the Directors then
in office attended in excess of 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings of all
committees on which he served.
STOCK OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth the number of shares of Common Stock of
Tosco beneficially owned by each Director, by each of the five most highly
compensated executive officers and by all executive officers and Directors as a
group at March 1, 2000, and the percentage of the outstanding shares of Common
Stock so owned by each Director, executive officer, and such group.
Amount and nature
of beneficial
Name ownership Percent of Class
Jefferson F. Allen 718,933(1) *
Patrick M. de Barros 722,720(2) *
Wayne A. Budd 73,174(3) *
Houston I. Flournoy 2,653(4) *
Edmund A. Hajim 75,074(5) *
Joseph P. Ingrassia 75,074(6) *
Robert J. Lavinia 447,500(7) *
Charles J. Luellen 76,074(8) *
Eija Malmivirta 73,983(9) *
Wilkes McClave 398,499(10) *
Mark R. Mulvoy 73,502(11) *
Kathryn L. Munro --
Thomas D. O'Malley 3,688,697(12) 2.54%
Dwight L. Wiggins 430,000(13) *
All executive officers and
Directors (21 persons,
including those listed above) 7,883,143(14) 5.31%
- -------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Consists of 63,030 shares of Common Stock, options to purchase 464,238
shares of Common Stock under the 1989 Stock Incentive Plan (the "1989
Plan"), and options to purchase 191,665 shares of Common Stock under the
1992 Stock Incentive Plan (the "1992 Plan").
(2) Consists of 650,720 shares of Common Stock of which 649,662 are owned by
a Trust of which Mr. de Barros is a beneficiary, and options to purchase
56,001 and 15,999 shares of Common Stock under the 1989 Plan and the
1992 Plan, respectively.
(3) Consists of 100 shares of Common Stock, options to purchase 72,000
shares of Common Stock under the 1992 Plan and 1,074 Common Stock units
under the Directors Stock Plan.
(4) Consists of 1,579 shares of Common Stock and 1,074 Common Stock units
under the Directors Stock Plan.
(5) Consists of 2,000 shares of Common Stock, options to purchase 72,000
shares of Common Stock under the 1989 Plan and 1,074 Common Stock units
under the Directors Stock Plan.
(6) Consists of 2,000 shares of Common Stock, options to purchase 72,000
shares of Common Stock under the 1989 Plan and 1,074 Common Stock units
under the Directors Stock Plan.
(7) Consists of 5,000 shares of Common Stock, and options to purchase 75,000
and 367,500 shares of Common Stock under the 1989 Plan and the 1992
Plan, respectively.
(8) Consists of 3,000 shares of Common Stock, options to purchase 72,000
shares of Common Stock under the 1989 Plan and 1,074 Common Stock units
under the Directors Stock Plan.
(9) Consists of options to purchase 72,000 shares of Common Stock under the
1992 Plan and 1,983 Common Stock units under the Directors Stock Plan.
(10) Consists of 48,844 shares of Common Stock and options to purchase
150,000 and 199,655 shares of Common Stock under the 1989 Plan and 1992
Plan, respectively.
(11) Consists of 1,502 shares of Common Stock and options to purchase 72,000
shares of Common Stock under the 1992 Plan.
(12) Consists of 2,295,545 shares of Common Stock, options to purchase
569,238 and 281,669 shares of Common Stock under the 1989 Plan and the
1992 Plan, respectively, and 25,597 shares of Common Stock owned by Mr.
O'Malley's wife. In addition, the shares listed in the table include
221,595 shares held by Argus Energy Corporation and 295,053 shares held
by Argus Investments, Inc., of which Mr. O'Malley is the sole
shareholder. Mr. O'Malley disclaims beneficial ownership of the 25,597
shares of Common Stock owned by his wife.
(13) Consists of 66,597 shares of Common Stock and options to purchase 44,238
and 319,165 shares of Common Stock under the 1989 Plan and the 1992
Plan, respectively.
(14) Consists of 3,760,670 shares of Common Stock and options to purchase
1,691,715, 2,240,905 and 182,500 shares of Common Stock under the 1989
Plan, the 1992 Plan and the 1998 Plan, respectively, and 7,353 Common
Stock units under the Directors Stock Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Tosco's
Directors, executive officers and holders of more than 10% of Tosco's Common
Stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of Tosco. Tosco believes that during the fiscal year ended December
31, 1999, its officers, directors and holders of more than 10% of Tosco's Common
Stock complied with all Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The summary Compensation Table shows certain compensation information
for Thomas D. O'Malley, the Chief Executive Officer of Tosco, and for the four
other most highly compensated executive officers of Tosco for the year ended
December 31, 1999. The information includes the dollar amount of salaries,
bonuses and other compensation for these officers as well as the number of stock
options granted.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
----------------------------------------------- ----------------------------------------
AWARDS PAYOUTS
Other ------------ --------
Annual Restricted All Other
Compen- Stock Options LTIP Compen-
Name and Salary Bonus sation Award(s) /SARs Payouts sation
Principal Position Year ($) ($) ($) ($) (#) (4) ($) ($)
- ------------------ ---- ------- --------- ------- ---------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. O'Malley 1999 650,000 5,717,379 0 11,235,938 58,034(1)
Chairman and CEO 1998 650,000 4,413,155 0 62,950(2)
1997 650,000 4,903,505 0 66,574(3)
Jefferson F. Allen 1999 450,000 2,968,639 0 5,867,656 105,302(1)
President and Chief 1998 450,000 2,291,445 0 107,782(2)
Financial Officer 1997 429,170 2,546,050 0 111,032(3)
Robert J. Lavinia 1999 425,000 2,803,715 0 3,682,891 14,204(1)
Executive Vice President 1998 425,000 2,164,143 0 14,316(2)
1997 425,000 2,404,603 0 12,564(3)
Dwight L. Wiggins 1999 425,000 2,803,715 0 3,433,203 12,329(1)
Executive Vice President 1998 425,000 2,164,143 0 13,311(2)
1997 425,000 2,404,603 0 13,404(3)
Wilkes McClave 1999 375,000 1,979,093 0 3,816,049 38,780(1)
Senior Vice President and 1998 375,000 1,527,630 0 43,732(2)
General Counsel 1997 375,000 1,697,367 0 44,999(3)
- --------------
1 All other compensation consists of the following: (a) contributions
pursuant to Tosco's Capital Accumulation Plan for Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins in the amounts of $ 20,400, $
12,800, $ 20,400, $ 20,400 and $ 9,600, respectively, (b) the value of
certain premiums paid by Tosco under a split dollar life arrangement for
Messrs. Allen, McClave and O'Malley in the amounts of $83,154, $ 16,611
and $ 33,313, respectively, and (c) group term life insurance benefits
of $ 1,748, $ 1,404, $ 1,769, $ 4,321 and $ 2,729 for Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins, respectively.
2 All other compensation consists of the following: (a) contributions
pursuant to Tosco's Capital Accumulation Plan for Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins in the amounts of $20,800,
$11,967, $20,800, $20,800 and $9,667, respectively, (b) the value of
certain premiums paid by Tosco under a split dollar life arrangement for
Messrs. Allen, McClave and O'Malley in the amounts of $84,534, $20,867
and $36,541, respectively, and (c) group term life insurance benefits of
$2,448, $2,349, $2,065, $5,609 and $3,644 for Messrs. Allen, Lavinia,
McClave, O'Malley and Wiggins, respectively.
3 All other compensation consists of the following: (a) contributions
pursuant to Tosco's Capital Accumulation Plan for Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins in the amounts of $20,400,
$10,400, $20,400, $20,400 and $9,600, respectively, (b) the value of
certain premiums paid by Tosco under a split dollar life arrangement for
Messrs. Allen, McClave and O'Malley in the amounts of $88,328, $22,727
and $40,774, respectively, and (c) group term life insurance benefits of
$2,304, $2,164, $1,872, $5,400 and $3,804 for Messrs. Allen, Lavinia,
McClave, O'Malley and Wiggins, respectively.
4. The Long Term Incentive Plan ("LTIP") payouts reflected above were
received on January 4, 1999 based on the performance goal achieved to
that date ($36.375 per share). See "Long Term Incentive Plan."
</TABLE>
AGREEMENTS WITH OFFICERS AND DIRECTORS
Tosco has severance agreements (the "Agreements") with Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins, which provide that if an executive's
employment is terminated by Tosco without cause, or upon a change of control of
Tosco (followed by termination of employment), or is terminated by the executive
for good reason, as all such terms are defined in the Agreements and as set
forth below, then the executive shall be entitled to a lump sum severance
payment and all of the terminated executive's options or restricted shares, if
any, which are not then vested shall vest immediately and all such restrictions
shall lapse. The lump sum severance payments for Messrs. Allen, McClave and
O'Malley is 36 months of base salary at the time of termination and for Messrs.
Lavinia and Wiggins is 24 months of base salary at the time of termination;
provided, however, upon a change in control, the severance payments shall be
based on salary plus bonus. At March 1, 2000, and based upon salary levels
currently in effect, in the event Tosco had caused their employments to be
terminated, Messrs. Allen, Lavinia, McClave, O'Malley, and Wiggins would have
been entitled pursuant to the Agreements to receive a lump sum of $1,350,000,
$850,000, $1,125,000, $1,950,000 and $850,000, respectively; if such
terminations had resulted from a change in control, they would have been
entitled to receive approximately an additional $7,890,000, $4,968,000,
$5,261,000, $15,195,000 and $4,968,000, respectively; in each case together with
the accelerated vesting of their options. The Agreements have a one-year term,
but will be automatically renewed for successive one-year terms unless Tosco
notifies the executive at least six months prior to any renewal date. Such
notification by Tosco shall entitle the executive to terminate his employment
for Good Reason and shall be deemed to be a termination without Cause if the
executive's employment terminates before the end of the Agreement. As used in
the Agreements, the following terms generally have the following meanings: Cause
means material and intentional failure to perform his duties, fraud,
misappropriation of property or intentional damage to Tosco's property; Good
Reason includes a reduction in base annual compensation or the method of
calculation of variable elements or a significant reduction in the nature of
employment; and Change in Control means a person or group of persons becomes the
beneficial owner of more than 50% of Tosco's Common Stock, stockholders approve
a merger of Tosco into another entity or a change in the composition of a
majority of the members of the Board of Directors.
In 1999, each Director who was not also an officer of Tosco was paid
an annual fee of $40,000 per year (or pro rata portion thereof for period of
service as a Director) plus $1,500 for each Board of Directors meeting attended
and $1,500 for each committee meeting attended, provided such committee meeting
was not held on the same day as a Board of Directors meeting. At least $10,000
of the fee must be paid in Common Stock or Common Stock units under a tax
deferred plan. Pursuant to the Directors Stock Plan, directors may elect at
least 30 days prior to each calendar quarter to receive more than $10,000 of
their director's fees in shares of Common Stock or Common Stock units under a
tax deferred plan.
In 1991, Tosco created the Directors' Charitable Award Program (the
"Program"), which allows each Director to recommend a donation to educational
institutions and/or charitable organizations designated by them. The Program is
funded by joint life insurance policies of which Tosco is the sole owner and
beneficiary, with each policy insuring the lives of two eligible Directors.
Tosco pays all premiums due and at the time of the death of the second of the
two Directors, receives a tax-free death benefit of approximately $2 million,
thereby recovering the costs of the Program. Tosco will make charitable
contributions in the name of each Director, within ten years following the first
Director's death, to the institution(s) designated by the Director. The
Directors may recommend one organization to receive a donation of $1 million, or
two or more organizations to receive $1 million in the aggregate.
After five years of service as a Director, Tosco Directors who are not
employees are eligible to participate in a retirement plan. The plan generally
provides that upon the later of age 65 or retirement, an annual retirement
benefit equal to annual retainer fees in effect at the time of retirement will
be paid. One year of retirement payments for each year of Board service, up to a
maximum of 20 years, is provided. Upon the Director's death, remaining payments
will continue to the spouse during the period of his/her life, subject to the
maximum set forth above. A Director may elect to receive such retirement
benefits as an actuarially equivalent lump sum.
In 1996, Tosco adopted a mandatory retirement policy for Directors.
The policy requires Directors to retire upon the completion of the annual term
of office during which the Director's seventy-fifth birthday occurs.
LONG TERM INCENTIVE PLAN
In 1996, Tosco adopted the 1996 Long Term Incentive Plan ("LTIP")
which replaced the granting of incentive awards under the 1992 Plan to
participants in the LTIP. Under the LTIP, the Compensation Committee may grant
performance units to participants, the payment of which is contingent on the
meeting of performance goals during a performance period (which may not exceed 5
years) established by the Committee. The performance goals are based on the
difference between the price of Tosco's Common Stock at the time of grant of a
unit and the price of the stock at various dates above a target level. Under
certain circumstances specified in the LTIP, the total amount of all payments
made to any participant in any calendar year may not exceed 400% of such
participant's total annual compensation for the year of the award. Purposes of
the LTIP include providing a strong incentive to participants to improve the
performance of Tosco's Common Stock and requiring such participants' continued
employment over several years in order to receive the full benefit of any award
level achieved. Generally, if a participant voluntarily terminates employment
with Tosco or retires prior to age 65 prior to the scheduled payment date of an
award, all unpaid amounts will be forfeited. Upon a change in control, amounts
will be paid in cash, with Tosco's obligations to be continued by the successor.
When a performance goal is achieved during any period, a participant shall be
deemed vested ("Deemed Vested Amount") in an amount equal to the performance
level multiplied by the number of performance units a participant has. The
payment of such amounts is subject to the satisfaction of certain contingencies
and such amounts will change if different performance levels are achieved. The
Company accrues such amounts on a ratable basis over the required service
period.
LONG TERM INCENTIVE PLAN AWARDS
NUMBER OF SHARES, PERFORMANCE OR OTHER PERIOD
NAME UNITS OR OTHER RIGHTS (#) UNTIL MATURATION OR PAYOUT
- --------------------------------------------------------------------------------
Thomas D. O'Malley 1,350,000 (1)
200,000 (2)
Jefferson F. Allen 705,000 (1)
125,000 (2)
Robert J. Lavinia 442,500 (1)
115,000 (2)
Dwight L. Wiggins 412,500 (1)
115,000 (2)
Wilkes McClave 458,499 (1)
100,000 (2)
- ---------------
(1) On January 4, 2000 based on the performance goal achieved to that date
($36.3750 per share), Messrs. Allen, Lavinia, McClave, O'Malley and
Wiggins received $2,933,828, $1,841,445, $1,908,024, $5,617,969 and
$1,716,602, respectively, and will be entitled to receive payments of
the same amount, plus additional (if any), Deemed Vested Amount on
January 1, 2001.
(2) Payment dates and amounts are as follows: 50% of Deemed Vested Amount on
July 1, 2000, 50% of remaining, plus additional (if any), Deemed Vested
amount on July 1, 2001, 50% of remaining, plus additional (if any),
Deemed Vested Amount on July 1, 2002, and 100% of remaining, plus
additional (if any), Deemed Vested Amount on July 1, 2003. At December
31, 1999 based on the performance goal achieved to that date ($28.1833
per share), Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins will
be entitled to receive on July 1, 2000 $382,550, $351,946, $306,040,
$612,080 and $351,946, respectively.
PENSION PLANS
The following table shows the estimated annual benefits payable to
participants upon retirement under the Tosco Pension Plan (the "Pension Plan").
The covered compensation consists of the salary, but not the bonus, reported in
the Summary Compensation Table. Of Tosco's five highest paid executives, Messrs.
Lavinia and Wiggins are participants in the Pension Plan.
<PAGE>
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
----------------------YEARS OF SERVICE AT AGE 65-----------------------------
3-YEAR
AVG. COMP.
10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$300,000 $28,150 $46,029 $63,097 $81,785 $99,309 $116,626
350,000 28,150 46,029 63,097 81,785 99,309 116,626
400,000 28,150 46,029 63,097 81,785 99,309 116,626
450,000 28,150 46,029 63,097 81,785 99,309 116,626
500,000 28,150 46,029 63,097 81,785 99,309 116,626
550,000 28,150 46,029 63,097 81,785 99,309 116,626
600,000 28,150 46,029 63,097 81,785 99,309 116,626
</TABLE>
Benefits shown in the table are single life annuities payable at age
65. Pension benefits, which are integrated with Social Security benefits, will
be reduced for amounts payable under prior Tosco pension plans or predecessor
employer plans. Messrs. Lavinia and Wiggins have 7 and 35 years of credited
service under the Pension Plan.
In 1990, Tosco adopted a Senior Executive Retirement Plan ("SERP") to
provide retirement benefits to selected senior executives and their
beneficiaries. Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins are
eligible for benefits under the SERP. The table that follows shows the estimated
annual benefits payable under the SERP.
SERP TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------------------------
FINAL 10 15 20 25 30 35
3-YEAR
AVG. COMP.
<S> <C> <C> <C> <C> <C> <C>
$300,000 $135,000 $180,000 $180,000 $180,000 $180,000 $180,000
350,000 157,500 210,000 210,000 210,000 210,000 210,000
400,000 180,000 240,000 240,000 240,000 240,000 240,000
450,000 202,500 270,000 270,000 270,000 270,000 270,000
500,000 225,000 300,000 300,000 300,000 300,000 300,000
550,000 247,500 330,000 330,000 330,000 330,000 330,000
600,000 270,000 360,000 360,000 360,000 360,000 360,000
650,000 292,500 390,000 390,000 390,000 390,000 390,000
700,000 315,000 420,000 420,000 420,000 420,000 420,000
750,000 318,600 424,800 424,800 424,800 424,800 424,800
</TABLE>
Benefits shown are life annuities payable at age 65 and are based on a
percentage of eligible compensation. SERP benefits are reduced by the amount of
benefits payable under the Tosco Pension Plan, or, if applicable, certain
predecessor employer plans. Eligible compensation is the average of base pay
plus incentive compensation (limited to an aggregate maximum of $708,000 as
increased by the Consumer Price Index commencing December 31, 1999) during the
highest three-consecutive calendar years of employment after January 1, 1990.
Normal retirement age is 65 with early retirement benefits (reduced by 1% for
each year preceding age 65) commencing at age 55 and three years of service.
There is no reduction if age plus years of service equal or exceed 75 at date of
retirement.
Messrs. Allen, McClave and O'Malley have ten years of credited service
while Messrs. Lavinia and Wiggins each have six years and seven months of
credited service under the SERP as of December 31, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since 1987, Tosco has entered into indemnity agreements (the
"Indemnity Agreements") with its Directors and certain of its officers
(collectively, the "Indemnitees") which provide for Tosco to indemnify the
Indemnitees against expenses incurred by the Indemnitees in any proceedings
which may be maintained against them by reason of any action or omission to act
by any Indemnitee in his capacity as a Director, officer, employee, agent or
fiduciary of Tosco. Tosco's obligations are subject to certain limitations,
including the limitation that no payment will be made which is prohibited by
applicable law. The Indemnity Agreements provide for the advancement of expenses
incurred by Indemnitees in advance of the final disposition of any proceedings
and require Tosco to establish a trust (the "Trust") for the benefit of the
Indemnitees. In the event of a Change in Control (as defined in the Indemnity
Agreements), Tosco will, from time to time upon written request of an
Indemnitee, fund the Trust in an amount sufficient to satisfy any and all
expenses reasonably anticipated to be incurred in connection with any
proceedings. Change in Control is defined to include the following events: (a)
Tosco would be required to report a change in control under the Securities
Exchange Act of 1934; (b) any person becomes the beneficial owner of 20% or more
of the voting power of Tosco's outstanding stock without the approval of Tosco's
Board of Directors; (c) Tosco is a party to a merger, consolidation or sale of
assets; (d) certain changes in the composition of Tosco's Board of Directors; or
(e) a person who owns 9.5% or more of the voting power of Tosco's stock
increases his beneficial ownership by 5% or more.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, which consists of Messrs.
Flournoy, Hajim and Luellen, have entered into the Indemnity Agreements
discussed under "Certain Relationships and Related Transactions". The Indemnity
Agreements provide for Tosco to indemnify the Indemnitees against expenses
incurred by the Indemnitees in any proceedings which may be maintained against
them by reason of any action or omission to act by any Indemnitee in his
capacity as a Director, officer, employee, agent or fiduciary of Tosco. Tosco's
obligations are subject to certain limitations, including the limitation that no
payment will be made which is prohibited by applicable law. The Indemnity
Agreements provide for the advancement of expenses incurred by Indemnitees in
advance of the final disposition of any proceedings and require Tosco to
establish the Trust for the benefit of the Indemnitees. In the event of a Change
in Control (as defined in the Indemnity Agreements), Tosco will, from time to
time upon written request of any Indemnitee, fund the Trust in an amount
sufficient to satisfy any and all expenses reasonably anticipated to be incurred
in connection with any proceedings.
OPTION GRANTS IN 1999
The LTIP is intended to replace the granting of additional options to
the five officers listed in the Summary Compensation Table, and, therefore,
during 1999, no options were granted to such officers.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION/SAR VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED ----------------------------------------------------------------------
NAME ON EXERCISE VALUE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. O'Malley 189,093 $3,294,602 1,150,907 $ 19,959,435
Jefferson F. Allen 49,097 632,343 655,903 11,329,319
Robert J. Lavinia ----- 442,500 7,427,027
Dwight L. Wiggins 49,097 604,726 363,403 6,053,725
Wilkes McClave 8,053 67,108 349,656 5,782,991
(1) An individual, upon exercise of an option, does not receive cash equal to the amount contained in the Value Realized
column of this table. Instead, the amounts contained in the Value Realized column reflect the increase in the price
of Tosco Common Stock from the option grant date to the option exercise date. No cash is realized until the shares received
upon exercise of an option are sold.
</TABLE>
<PAGE>
TOSCO PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for Tosco, the Standard & Poor's ("S&P") 500 Composite Stock Price Index
and an index of peer companies selected by Tosco. The graph assumes that the
value of the investment in Tosco's Common Stock and each index was $100 at
December 31, 1994 and that all dividends were reinvested.
Peer Group includes Ashland Inc., Crown Central Petroleum Corp.,
Ultramar Diamond Shamrock Corp., Sunoco Inc., Tesoro Petroleum Corp., and Valero
Energy Corp. Assumes $100 invested on December 31, 1994 in Tosco common stock,
an index of stock in Peer Group companies (weighted by market capitalization)
and the S&P 500 Index. Assumes reinvested dividends. Fiscal year ends December
31.
COMPARISON OF FIVE YEAR TOTAL RETURN
TOSCO, INDUSTRY PEER GROUP AND S&P 500 INDEX
1994 1995 1996 1997 1998 1999
TOSCO CORP $100.0 133.5 280.4 405.0 279.7 297.1
S&P 500 INDEX $100.0 137.6 169.5 226.1 291.8 353.0
PEER GROUP $100.0 103.2 119.9 157.5 132.5 104.1
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which consists entirely of Directors who
are not employees of Tosco, reviews and approves all remuneration arrangements
for Tosco's executive officers, Directors and certain other employees, and
reviews and approves compensation plans in which officers and employees are
eligible to participate. The Committee met four times during 1999. Tosco's
philosophy for compensating executive officers is that a substantial portion of
the executive's compensation should be incentive based and determined by Tosco's
and the executive's performance. The policy is designed to attract, reward,
motivate and retain key executives who are capable of achieving Tosco's
objectives in a highly competitive industry.
Tosco's executive compensation program consists of the following key
elements: salary based on the Committee's assessment of the individual's level
of responsibility, performance, and contributions to Tosco; an annual bonus that
is directly related to the performance of Tosco as a whole or specific business
units; and grants of stock options or performance units under the LTIP designed
to motivate individuals to enhance the long-term value of Tosco's stock. The
Committee does not allocate a fixed percentage of compensation to each of these
three elements, nor does the Committee use specific qualitative or quantitative
measures or factors in assessing individual performance, except with respect to
the award of bonuses as described below.
The salaries of key executives and the incentive plans in which they
participate are reviewed by the Compensation Committee in light of the
Committee's assessment of individual performance, contribution to Tosco and
level of responsibility. The Committee generally assigns equal weight to each of
these factors. The Committee believes Mr. O'Malley's salary reflects his
experience and personal contributions to Tosco's performance. The base salaries
of the four other most highly compensated executive officers reflect their
individual job performance and contribution to Tosco.
During 1999 Tosco's executive officers participated in the Tosco
Corporate Incentive Plan (the "Tosco Corporate Plan"). Their bonuses are
determined in accordance with a formula and factors set by the Committee prior
to the beginning of the year. The plan provides that no bonuses are payable
unless the interest on Tosco's Mortgage Bonds is paid when due. The Tosco
Corporate Plan provides for the payment of a bonus dependent on the per share
(common shares plus common share equivalents) pre-tax operating earnings
("OPEPS") of Tosco. For 1999 no bonus was payable under the Tosco Corporate Plan
unless OPEPS exceeded $.66. For each $.33 (and, on a pro-rata basis, for each
fraction thereof) of OPEPS over the first $.50, the executive received a
percentage of annual base salary as a bonus. The hurdle rate was determined by
the Committee in early 1996 for a three year period in light of Tosco's budget
and anticipated performance to provide a sustained incentive to management.
Annual bonus under the Tosco Corporate Plan is computed in accordance with a
formula, the variables of which are the amount of OPEPS, if any, in excess of
the hurdle rate and the individual's percentage participation factor. The
percentages for executive officers who participate in the Tosco Corporate Plan
range from 25% to 100% of their base salary. The percentage for each executive
officer is based on the Committee's assessment of the officer's performance,
contribution to Tosco and level of responsibility. Messrs. Allen, Lavinia,
McClave, O'Malley and Wiggins were participants in the Tosco Corporate Plan and
the percentage applicable to each of them was 75, 75, 60, 100 and 75,
respectively.
Tosco has several stock option plans which are designed to link the
interests of executive officers with Tosco's shareholders and provide such
executives with an equity interest in Tosco. The options are designed to enhance
shareholder values by benefiting executives only if other shareholders of Tosco
also benefit. The purpose of the plans is to encourage executives and others to
acquire larger stock ownership and proprietary interest in Tosco and thereby
stimulate the active interest of such persons in the development and financial
success of Tosco. All options granted in 1999 were granted at the fair market
value of Tosco Common Stock on the date of grant and become exercisable over
five years commencing one year from the date of grant, and only if the holder is
still employed by Tosco (with certain exceptions for severance agreements). The
number of options that the Compensation Committee grants to executive officers
is based on individual performance and level of responsibility. The Committee
generally assigns equal weight to these two factors. In addition, the Committee
also considers the number of options previously granted to and the total number
of options held by such officers. Since stock options are tied to the future
performance of Tosco's Common Stock, they will provide value only if the price
of Tosco Common Stock exceeds the exercise price of the options. There is no
relationship between the future performance of Tosco and the number of stock
options granted.
Certain of Tosco's executive officers also participate in the Long
Term Incentive Plan commencing in 1996. The LTIP is designed to provide a strong
incentive to participants to improve the performance of Tosco's Common Stock and
to require such participants' continued employment over several years in order
to receive the full benefit of any award level achieved. Participants become
entitled to receive certain amounts if the stock price of Tosco increases above
escalating target levels, subject to their employment by Tosco and performance
over a multi-year period. Generally, if a participant voluntarily terminates
employment with Tosco or retires prior to age 65 prior to the scheduled payment
date of an award, all unpaid amounts will be forfeited. It is intended that
participation in the LTIP replaces additional awards under Tosco's stock option
plans, and, therefore, LTIP participants did not receive any stock options in
1999.
In 1993, the tax laws were amended to limit the deduction a publicly
held company is allowed for compensation paid to the chief executive officer and
to the four other most highly compensated executive officers. Generally, amounts
paid in excess of $1 million, other than performance-based compensation, may not
be deducted. Several criteria are imposed by the tax law in order for amounts
paid under a plan to be treated as performance based compensation for tax
purposes, including that the plan relating to such compensation must be approved
by a company's stockholders. The Tosco Corporate Plan was previously approved by
the shareholders and meets all other criteria. The LTIP does not meet all such
criteria.
Mr. O'Malley's compensation for 1999 was based on the same performance
and other criteria as summarized in the preceding paragraphs relative to all
executive officers.
COMPENSATION COMMITTEE
Houston I. Flournoy
Edmund A. Hajim
Charles J. Luellen
II. PROPOSAL TO ADOPT THE 2000 STOCK INCENTIVE PLAN
At a meeting held on March 16, 2000, the Board of Directors adopted,
subject to the approval of stockholders, the 2000 Stock Incentive Plan (the
"2000 Plan"), pursuant to which 2,000,000 shares of Common Stock, $.75 par
value, may be issued as, or may be the subject of, Incentive Awards (as defined
in the 2000 Plan). A copy of the 2000 Plan is annexed hereto as Exhibit A and
the following summary of certain pertinent provisions of the 2000 Plan is
qualified in its entirety by reference to the 2000 Plan.
The principal purpose of the 2000 Plan is to encourage Tosco's
non-employee directors and valued employees and consultants to acquire a larger
stock ownership and proprietary interest in Tosco, and thereby stimulate the
active interest of such person in the development and financial success of
Tosco.
ELIGIBILITY. Employees eligible to participate in the 2000 Plan are
designated from time to time by the Compensation Committee. The 2000 Plan would
also permit participation by Directors of Tosco who are not employees of Tosco
or any subsidiary of Tosco. For purposes of the 2000 Plan, the Compensation
Committee must consist of two or more directors of Tosco who are "Non-Employee
Directors" (as defined in Rule 16b-3 under Section 16 of the Securities Exchange
Act of 1934) and "outside directors" (as defined in Section 162(m) of the
Internal Revenue Code).
SHARES OF COMMON STOCK SUBJECT TO THE 2000 PLAN. Subject to certain
exceptions set forth in the 2000 Plan, the aggregate number of shares of Common
Stock that may be issued as, or that may be the subject of, Incentive Awards
shall not exceed 2,000,000 and the maximum number of shares of Common Stock that
may be the subject of stock options and stock appreciation rights granted to any
individual during any calendar year shall not exceed 300,000. The shares to be
delivered under the 2000 Plan will be made available, at the discretion of the
Board of Directors or the Compensation Committee, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
which have been or may be reacquired by Tosco, including shares purchased in the
open market.
The following is a summary of certain general provisions of the 2000
Plan.
TYPES OF INCENTIVE AWARD. The Compensation Committee may grant awards
under the 2000 Plan in the form of stock options, restricted stock awards and/or
stock appreciation rights. Stock options may be granted as "incentive stock
options" (as defined under Section 422 of the Internal Revenue Code), or as
nonqualified stock options.
TERMS AND CONDITIONS OF STOCK OPTIONS. Any stock options granted under
the 2000 Plan will not be granted at less than Fair Market Value on the date of
grant. The purchase price of Common Stock issuable upon the exercise of
nonqualified stock options (the "exercise price") will be determined by the
Compensation Committee based on various factors, including the achievement of
preestablished performance objectives by the recipient of the option, but will
not be less than the Fair Market Value of Common Stock on the date of grant. The
exercise price under incentive stock options may not be less than the Fair
Market Value of Common Stock on the date of grant. Stock options may be
exercised as determined by the Compensation Committee but in no event after ten
years from the date of grant. The 2000 Plan further provides that the aggregate
Fair Market Value (determined at the time the option is granted) of the Common
Stock with respect to which incentive stock options are exercisable for the
first time by a participant during any calendar year (under all stock plans of
Tosco and its subsidiaries) shall not exceed $100,000; to the extent that such
limitation is exceeded, such stock options shall be treated as non-qualified
stock options. The exercise of a stock option will result in the cancellation of
the stock appreciation right for which it relates with respect to the same
number of shares of Common Stock as to which the stock option was exercised.
Tosco has agreed not to reprice any stock options granted under the 2000 Plan.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. A "stock
appreciation right" is the right to receive an amount equal to the excess of the
Fair Market Value of a share of Common Stock on the date of exercise over the
Fair Market Value of a share of Common Stock on the date of grant (in the case
of a stock appreciation right granted independently of any stock option), or the
exercise price of the related stock option (in the case of a stock appreciation
right granted in connection with a stock option).
A stock appreciation right may be granted independently of any stock
option or in connection with a stock option (either at the time of grant or at
any time during the term of the stock option). A stock appreciation right
granted in connection with a stock option shall be exercisable or transferable
only to the extent that the related stock option is exercisable or transferable.
The exercise of a stock appreciation right will result in the
cancellation of the stock option to which it relates with respect to the same
number of shares of Common Stock as to which the stock appreciation right was
exercised. A stock appreciation right granted independently of any stock option
shall be exercisable as determined by the Compensation Committee, but in no
event after ten years from the date of grant. The Compensation Committee may
limit the amount payable upon exercise of a stock appreciation right. Any such
limitation shall be determined as of the date of grant and noted on the
instrument evidencing the stock appreciation right granted.
At the discretion of the Compensation Committee, payment of the amount
payable upon exercise of a stock appreciation right may be made solely in whole
shares of Common Stock valued at the Fair Market Value on the date of exercise
of the stock appreciation right, or solely in cash, or in a combination of cash
and shares.
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. A "restricted stock
award" is the grant of shares of Common Stock or the grant of the right to
purchase Common Stock at a price determined by the Compensation Committee. Such
Common Stock, when and if issued, shall be subject to transfer restrictions
determined by the Compensation Committee in its sole discretion, and subject to
substantial risk of forfeiture unless and until specific conditions established
by the Compensation Committee at the time of grant are met. Such conditions may
be based on continuing service or achievement of preestablished performance
objectives, or both. Unless the holder of a restricted stock award ceases to be
an employee of Tosco, the transfer restrictions imposed upon restricted stock
awards will lapse in accordance with a schedule or other conditions as are
determined by the Compensation Committee. Such holder will have the right to
vote the shares of Common Stock received as restricted stock awards.
ADJUSTMENT. In the event of a stock dividend, conversion, exchange,
reclassification or substitution with respect to the Common Stock, an
appropriate and proportionate adjustment will be made in the price, number
and/or kind of security that is the subject of an outstanding Incentive Award,
without changing the aggregate purchase price or value of such Incentive Awards.
In other events involving a change in Tosco's corporate structure or outstanding
shares of Common Stock (including recapitalizations, mergers and
reorganizations), the Compensation Committee shall make such equitable
adjustments to Incentive Awards as may be necessary to prevent dilution or
enlargement of the rights of the holders thereof.
ACCELERATION. Stock options and stock appreciation rights become
immediately exercisable in full upon (but prior to the expiration of the term of
the options or rights) the holder's disability or death, upon such special
circumstance or event as in the opinion of the Compensation Committee merits
special consideration, or upon a Change in Control (as defined in the 2000 Plan)
while the holder is employed by Tosco or a subsidiary. Restricted stock awards
become fully vested upon the holder's death or disability, upon such special
circumstance or event as in the opinion of the Compensation Committee merits
special consideration, or upon a Change in Control (as defined in the 2000 Plan)
while the holder is employed by Tosco or a subsidiary.
AMENDMENT AND TERMINATION OF THE 2000 PLAN. The Compensation Committee
may amend, suspend or terminate the 2000 Plan at any time, provided that no such
amendment shall, without the approval of the stockholders of Tosco, (i) change
the class of persons eligible to receive Incentive Awards under the 2000 Plan,
or (ii) increase the number of shares of Common Stock subject to the 2000 Plan
or that may be the subject of stock options and stock appreciation rights
granted to any individual. The Compensation Committee may not, without the
consent of the holder of an Incentive Award, modify the terms and conditions of
such Incentive Award in a manner which would adversely affect the rights of such
holder.
MARKET VALUE OF COMMON STOCK. On March 30, 2000, the closing price of
the Common Stock on the New York Stock Exchange was $31.4375 per share.
OPTIONS GRANTED. No options have been granted under the 2000 Plan.
TAX TREATMENT. An individual will not recognize any income upon the
grant or exercise of an incentive stock option. If an individual disposes of
shares of Common Stock acquired upon the exercise of an incentive stock option
more than two years after the date the option was granted and more than one year
after the date the option was exercised, the individual will realize capital
gain in an amount equal to the excess, if any, of his selling price over the
option exercise price, and Tosco will not be entitled to a tax deduction.
Depending on the holding period of the shares, such capital gain may be
long-term gain or, with respect to transactions after December 31, 2000,
qualified 5-year gain. If the individual disposes of the shares of Common Stock
before the one-year, two-year requirements are met, any gain realized will be
taxable as follows: (i) as ordinary income to the extent of the difference
between the option exercise price and the lesser of the fair market value of the
shares on the date the option was exercised or the amount realized on such
disposition, and (ii) as capital gain to the extent of any excess, which gains
shall be treated as long-term or short-term capital gain, depending on how long
the shares were held. Tosco may claim a deduction for the amount taxable to the
individual as ordinary income. The difference between the fair market value of
the Common Stock at the time of exercise and the option exercise price generally
will constitute an item of adjustment for purposes of determining alternative
minimum taxable income and may, in the year an incentive stock option is
exercised, be subject to the alternative minimum tax.
If the individual uses shares of Common Stock to pay the option
exercise price, (a) the individual's holding period for newly issued shares
equal in number to the surrendered shares (the "Exchanged Shares") shall include
the period during which the surrendered shares were held, (b) the individual's
basis in such Exchanged Shares will be equal to his basis in the surrendered
shares, and (c) no gain or loss will be recognized by the employee on the
exchange of the surrendered shares for the Exchanged Shares. However, if the
individual tenders shares acquired pursuant to the exercise of an incentive
stock option prior to the expiration of the one-year, two-year requirements,
such tender will constitute a disposition of such shares, and will give rise to
a taxable exchange.
The grant of a nonqualified stock option does not result in taxable
income to the recipient. An individual normally will recognize ordinary income
when the nonqualified stock option is exercised on the difference between the
then fair market value of the shares acquired pursuant to the exercise of the
option and the option exercise price. Section 83 of the Internal Revenue Code
generally provides that, if an individual is subject to Section 16(b) of the
Exchange Act, he will not recognize income upon the exercise of a nonqualified
stock option until he may sell such shares for a profit without being subject to
suit under Section 16(b). At such time the individual would be subject to tax on
the difference between the then fair market value of the shares and the exercise
price. Alternatively, an individual who would not otherwise be subject to tax at
the time of exercise may file an election with the Internal Revenue Service,
within 30 days of exercise, to be taxed at the time of exercise on the
difference between the then fair market value of the shares and the exercise
price. Any subsequent appreciation in the value of shares will be taxed when the
shares are sold, as either long-term, short-term or qualified 5-year capital
gain. Tosco will not be entitled to an income tax deduction with respect to the
grant of a stock option or the sale of stock acquired pursuant thereto. Tosco
will be permitted a deduction equal to the amount of ordinary income the
recipient is required to recognize as a result of the exercise of a nonqualified
stock option when such income is recognized by the individual. If any individual
uses shares of Common Stock which he owns to pay for the exercise of a
nonqualified stock option, (a) the individual's holding period for newly issued
shares of Common Stock equal in number to the surrendered shares (the "Exchanged
Shares") shall include the period during which the surrendered shares were held,
(b) the individual's basis in such Exchanged Shares will be the same as his
basis in the surrendered shares, (c) no gain or loss will be realized by the
individual on the exchange of the surrendered shares for the Exchanged Shares,
and (d) the individual will be subject to ordinary income tax on the fair market
value of the shares he receives over and above the Exchanged Shares.
When an individual exercises a stock appreciation right he will
recognize ordinary income in an amount equal to the fair market value of the
stock and cash received. This amount is tax deductible to Tosco. Section 83 of
the Internal Revenue Code generally provides that, if an individual is subject
to Section 16(b) of the Exchange Act, the date of recognition and determination
of ordinary income attributable to shares received upon the exercise of a stock
appreciation right is delayed until he may sell such shares for a profit without
being subject to suit under Section 16(b); however, an individual who would not
otherwise be subject to tax at the time of exercise of the stock appreciation
right may elect to be taxed as of the date of exercise.
An individual who receives restricted shares pursuant to the 2000 Plan
will be subject to ordinary income tax at the time the restrictions lapse
(including any restrictions imposed by Section 16(b) of the Exchange Act) on the
difference between the then fair market value of the shares and the price he
paid for them. Alternatively, the individual may file an election with the
Internal Revenue Service, within 30 days of the date the shares are transferred
to him, to be taxed, at ordinary income rates, at the time of transfer on the
difference between the then fair market value of the shares and the price he
paid for them. Once the shares have been subject to ordinary income tax, any
subsequent appreciation in the value of the shares will be taxed only when the
shares are sold, as either long-term, short-term or qualified 5-year capital
gain. Tosco will be permitted a tax deduction when and to the extent any
ordinary income is recognized by the individual.
In addition to the Federal income tax consequences discussed above,
Section 280G of the Internal Revenue Code provides that if an officer,
stockholder or highly compensated individual receives a payment which is in the
nature of compensation and which is contingent upon a change in control of the
employer and such payment equals or exceeds three times his or her "base salary"
(as hereinafter defined), then any amount received in excess of base salary
shall be considered an "excess parachute payment." An individual's "base salary"
is equal to his or her average annual compensation over the five-year period (or
period of employment, if shorter) ending with the close of the individual's
taxable year immediately preceding the taxable year in which the change in
control occurs. If the taxpayer establishes, by clear and convincing evidence,
that an amount received is reasonable compensation for past or future services,
all or a portion of such amount may be deemed not to be an excess parachute
payment. If any payments made under the 2000 Plan in connection with a change in
control of the Company constitute excess parachute payments with respect to any
employee, then in addition to any income tax which would otherwise be owed on
such payment, the individual will be subject to an excise tax equal to 20% of
such excess parachute payment, and Tosco will not be entitled to any tax
deduction to which it otherwise would have been entitled with respect to such
excess parachute payment.
Section 280G provides that payments made pursuant to a contract
entered into within one year of the change in control are presumed to be
parachute payments unless the individual establishes, by clear and convincing
evidence, that such contract was not entered into in contemplation of a change
in control. In addition, the General Explanation of the Tax Reform Act of 1984
prepared by the Staff of the Joint Committee on Taxation indicates that the
grant of an Incentive Award within one year of the change in control or the
acceleration of an Incentive Award because of a change in control may be
considered a parachute payment, in an amount equal to the value of the Incentive
Award or the value of the accelerated portion of the Incentive Award, as the
case may be. Pursuant to proposed regulations issued by the Treasury Department
under Section 280G, the acceleration of a nonqualified stock option or stock
appreciation right or the vesting of restricted shares because of a change in
control is considered a parachute payment in an amount equal to the value of the
acceleration or vesting. Even if the grant of an Incentive Award within one year
of the change in control or the acceleration of vesting of an Incentive Award is
not a parachute payment for purposes of Section 280G, the exercise of a stock
option or stock appreciation right granted within one year of the change in
control or the exercise of the accelerated portion of a stock option or stock
appreciation right may result in a parachute payment, in an amount equal to the
excess of the fair market value of the shares received upon exercise of the
stock option over the exercise price (or the cash or fair market value of shares
received upon the exercise of stock appreciation rights). Payments received for
the cancellation of an Incentive Award because of a change in control may also
result in parachute payments.
Under Section 162(m) of the Internal Revenue Code, publicly held
companies generally may not deduct compensation for certain employees to the
extent such compensation exceeds $1 million with respect to an individual
employee for the taxable year. The $1 million limitation would apply to Tosco's
Chief Executive Officer and the four most highly compensated officers other than
the Chief Executive Officer. Compensation which is performance-based (as defined
in Section 162(m) and regulations thereunder), however, is not counted as
subject to the deductibility limitations of Section 162(m). Income pursuant to
stock options and stock appreciation rights having an exercise price or base
value equal to the Fair Market Value of the Common Stock on the date of grant,
granted under the 2000 Plan, are intended to permit the full deduction by Tosco,
by qualifying such amounts as performance-based compensation and, therefore,
exempt from the limitations of Section 162(m). Income pursuant to restricted
stock awards would be subject to the deductibility limitations of Section
162(m).
EFFECTIVE DATE AND DURATION OF THE 2000 PLAN. The 2000 Plan is subject
to approval by the holders of a majority of the shares of stock of Tosco that
vote on the subject at a meeting of stockholders of Tosco duly convened and held
prior to March 17, 2001. In the event the 2000 Plan is not approved by
stockholders of Tosco by such date, the 2000 Plan shall be void and of no
further force and effect. No Incentive Awards may be made under the 2000 Plan on
or after March 16, 2010.
VOTE REQUIRED
Under the Internal Revenue Code, the affirmative vote of the holders
of a majority of the shares of stock of Tosco voting on the subject at the
Annual Meeting is required to approve the adoption of the 2000 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AUTHORIZATION AND
APPROVAL OF PROPOSAL II.
III. APPOINTMENT OF AUDITORS
The Board of Directors of Tosco, upon recommendation of the Audit
Committee, has selected PricewaterhouseCoopers LLP as the independent
accountants of Tosco for 2000. PricewaterhouseCoopers LLP has acted in such
capacity since 1977. Stockholders are requested to ratify and approve such
appointment. A representative of PricewaterhouseCoopers LLP is expected to be
present at the meeting with the opportunity to make a statement if he or she so
desires and to respond to appropriate questions.
OTHER MATTERS
At February 16, 2000, to the knowledge of Tosco, from Statements on
Schedule 13G provided to Tosco, beneficial owners of more than 5% of any class
of the outstanding voting securities of Tosco were as follows:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP* OF CLASS
- -------------- ------------------------------------ ---------- --------
<S> <C> <C> <C>
Common Stock FMR Corp. 19,224,461 13.3%
82 Devonshire Street shares (1)
Boston, Massachusetts 02109
Common Stock Putnam Investments, Inc. 8,187,042 5.7%
One Post Office Square shares (2)
Boston, Massachusetts 02109
Common Stock J.P. Morgan & Co., Incorporated 7,572,328 5.2%
60 Wall Street shares (3)
New York, New York 10260
- ---------------------
* The beneficial owner of such shares reports that it has sole voting and
investment power with respect to such securities, except where otherwise
indicated.
(1) According to a Statement on Schedule 13G filed with the Commission in
February 2000, wholly-owned subsidiaries or affiliates of FMR Corp.
("Fidelity Funds"), including a registered investment advisor, own these
shares. FMR does not have the power to vote or direct the voting of
shares owned by the Fidelity Funds, which power resides with Fidelity
Funds' Board of Trustees.
(2) According to a Statement on Schedule 13G filed with the Commission in
February 2000, these securities are owned by subsidiaries of Putnam
Investments, Inc. which are registered investment advisors.
(3) According to an Amendment No. 3 to a Statement on Schedule 13G filed
with the Commission in February 2000, these securities are owned by
subsidiaries of J.P. Morgan & Co., Incorporated which are registered
investment advisors.
</TABLE>
MISCELLANEOUS
Proposals of stockholders intended to be presented at Tosco's 2001
Annual Meeting of Stockholders must be received by Tosco on or prior to December
9, 2000, to be eligible for inclusion in Tosco's Proxy Statement and form of
Proxy to be used in connection with the 2001 Annual Meeting.
The By-Laws of Tosco currently provide that nominations for the
election of Directors may be made by a shareholder entitled to vote for the
election of Directors provided that (a) such shareholder delivers written notice
by first class mail to the Secretary of Tosco not less than 14 days nor more
than 50 days prior to any meeting of the shareholders called for the election of
Directors (if less than 21 days' notice of the meeting is given to shareholders,
the shareholder's written notice may be delivered to the Secretary of Tosco not
later than the close of the seventh day following the day on which notice of the
meeting was mailed to shareholders); and (b) such written notice contains
background information as to each nominee, including (i) the name, age, business
address and, if known, residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each nominee, (iii) the
number of shares of stock of Tosco beneficially owned by each nominee, and (iv)
any information with respect to each nominee's affiliation with a competitor of
Tosco.
Registered stockholders attending the meeting may be asked for
identification. If you are a beneficial owner of Tosco stock held by a bank or
broker ("in street name"), you will need proof of ownership to be admitted to
the meeting. A recent brokerage statement or letter from the broker or bank
indicating you are an owner as of the record date are examples of proof of
ownership.
At the date of this Proxy Statement, the only business which the Board
of Directors intends to present or knows that others will present at the meeting
is that hereinabove set forth. If any other matter or matters are properly
brought before the meeting, or any adjournment thereof, it is the intention of
the persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their judgment.
Wilkes McClave III
SECRETARY
Dated: April 7, 2000
<PAGE>
TOSCO CORPORATION
2000 STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the 2000 Stock Incentive Plan of Tosco Corporation is
to promote the interests of the Company and its stockholders by strengthening
the Company's ability to attract and retain competent employees, to make service
on the Board of Directors of Tosco Corporation more attractive to non-employee
directors of Tosco Corporation and to provide a means to encourage stock
ownership and proprietary interest in the Company by officers, non-employee
directors and valued employees and consultants upon whose judgment, initiative,
and efforts the financial success and growth of the Company largely depend.
2. DEFINITIONS
(a) "Act" means the Securities Exchange Act of 1934, as from time to
time amended.
(b) "Board" means the Board of Directors of Tosco Corporation.
(c) "Committee" means the Committee of the Board responsible for
matters related to the Plan. The Committee shall be composed of two or more
directors of the Company, each of whom shall be a "Non-Employee Director" within
the meaning of Rule 16b-3 under the Act and an "outside director" within the
meaning of Section 162(m) of the Internal Revenue Code.
(d) "Common Stock" means the common stock, $.75 par value per share,
of Tosco Corporation.
(e) "Company" means Tosco Corporation and its wholly-owned
subsidiaries.
(f) "Employee" means a full-time or part-time employee of the Company
or a consultant to the Company.
(g) "Fair Market Value" means the average of the high and low prices
of Common Stock as quoted on the Composite Tape on the date as of which fair
market value is to be determined or, if there is no trading of Common Stock on
such date, the average of the high and low prices of Common Stock on the next
preceding date on which there was trading in such shares.
(h) "Incentive Award" means a Stock Option, Restricted Stock Award, or
Stock Appreciation Right granted under the Plan.
(i) "Incentive Stock Option" means an option as defined under Section
422 of the Internal Revenue Code of 1986, as amended, and regulations
thereunder.
(j) "Non-employee Director" means a member of the Board who is not an
Employee.
(k) "Nonqualified Stock Option" means a Stock Option other than an
Incentive Stock Option.
(l) "Participant" means (i) a Non-employee Director or (ii) an
Employee, in each case as determined by the Committee to be eligible to receive
an Incentive Award under the Plan.
(m) "Plan" means the 2000 Stock Incentive Plan as set forth herein,
which may be amended from time to time.
(n) "Restricted Stock Award" means a grant of Common Stock or the
right to purchase Common Stock at a price determined by the Committee. Such
Common Stock, when and if issued, shall be subject to transfer restrictions and
subject to substantial risk of forfeiture unless and until specific conditions
are met. Such conditions may be based on continuing service with the Company or
achievement of preestablished performance objectives, or both. "Restricted
Stock" means the Common Stock issued as the result of a Restricted Stock Award.
(o) "Stock Appreciation Right" means the right to receive an amount
equal to the excess of the Fair Market Value of a share of Common Stock (as
determined on the date of exercise) over the Fair Market Value or the exercise
price of the related Stock Option, as the case may be, on the date the Stock
Appreciation Right was granted.
(p) "Stock Option" means an option to acquire shares of Common Stock
and includes a Nonqualified Stock Option or Incentive Stock Option.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 3(c) and Section 9 of the
Plan, the aggregate number of shares of Common Stock that may be issued or
transferred, and as to which Stock Appreciation Rights may be exercised,
pursuant to Incentive Awards under the Plan will not exceed 2,000,000. The
maximum number of shares which may be the subject of Incentive Awards granted
during any calendar year to any individual shall not exceed 300,000.
(b) The shares to be delivered under the Plan will be made available,
at the discretion of the Board or the Committee, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including shares purchased on the open market.
(c) If the Common Stock that would be issued or transferred upon
exercise of any Incentive Award is not issued or transferred and ceases to be
issuable or transferable for any reason, such Incentive Award will no longer be
charged against the limitation provided for in Section 3(a) and may again be
made subject to Incentive Awards; provided, however, that shares as to which a
Stock Option has been surrendered in connection with the exercise of a related
Stock Appreciation Right will not again be available for the grant of any
further Incentive Awards. Notwithstanding the preceding, with respect to any
Stock Option and/or any Stock Appreciation Rights granted to any individual who
is a "covered employee" within the meaning of Section 162(m) of the Internal
Revenue Code that is cancelled, the number of shares subject to such Stock
Option and/or Stock Appreciation Rights shall continue to count against the
maximum number of shares which may be the subject of Stock Options and Stock
Appreciation Rights granted to such individual.
(d) The Committee may not make any adjustment in the exercise price of
any Incentive Award previously granted, but may amend the terms of Nonqualified
Stock Options or Stock Appreciation Rights. Such amendment may result in terms
and conditions (including number of shares covered, vesting schedule or exercise
period) that differ from the terms and conditions of the original Nonqualified
Stock Option or Stock Appreciation Right. The Committee may not, however,
without the consent of such Participant, adversely affect the rights of any
Participant in previously granted Incentive Awards. If such action is effected
by amendment, the effective date of such amendment shall be as determined by the
Committee.
4. ADMINISTRATION OF THE PLAN
(a) The Plan will be administered by the Committee, which has and may
exercise such powers and authority of the Board as may be necessary or
appropriate to carry out its functions as described in the Plan. The Committee
has authority to interpret the Plan, to determine the terms and provisions of
the respective Incentive Award agreements and to make all other determinations
necessary or advisable for Plan administration. The Committee has authority to
prescribe, amend, and rescind rules and regulations relating to the Plan. All
Committee interpretations, determinations, and actions shall be final,
conclusive, and binding on all parties.
(b) Incentive Awards shall be evidenced by a written instrument and
may include any terms and conditions consistent with the Plan, as the Committee
may require.
(c) No member of the Board or the Committee will be liable for any
action or determination made by the Board or the Committee with respect to the
Plan or any Incentive Award under it, except for matters involving intentional
misconduct, fraud, or a knowing violation of law.
5. ELIGIBILITY
(a) Participants are eligible to receive Incentive Awards under the
Plan.
(b) Incentive Stock Options shall be granted and exercised only in
accordance with applicable provisions of the Internal Revenue Code of 1986 and
regulations promulgated thereunder, as the same may be amended from time to
time; provided, however, notwithstanding anything contained in this Plan to the
contrary, an Incentive Stock Option shall not be granted to any Participant who
is not, as of the date of grant, an "employee" of the Company, within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, whether
or not he is a member of the Board.
6. TERMS AND CONDITIONS OF STOCK OPTIONS
(a) At the time a Stock Option is granted, the Committee may, in its
sole discretion, designate whether such Stock Option is to be treated as an
Incentive Stock Option or a Nonqualified Stock Option. Stock Options with
respect to which no designation is made by the Committee shall be deemed to be
Incentive Stock Options to the extent that the $100,000 limitation described in
subsection (d) below is met. The purchase price of Common Stock under each
Nonqualified Stock Option will be determined by the Committee and will be at
least equal to the Fair Market Value of the Common Stock on the date of grant
and may be based on achieving preestablished performance objectives. The
purchase price of an Incentive Stock Option will be at least equal to the Fair
Market Value of the Common Stock on the date of grant.
(b) Stock Options may be exercised as determined by the Committee but
in no event after ten years and one day from the date of grant in the case of
Nonqualified Stock Options, and ten years from the date of grant in the case of
Incentive Stock Options.
(c) Upon the exercise of a Stock Option, the purchase price will be
payable in full in cash or its equivalent acceptable to the Company. At the
discretion of the Committee, the purchase price may be paid by assigning and
delivering to the Company shares of Common Stock or a combination of cash and
such shares equal in value to the exercise price; provided, however, that the
holder of the Stock Option may not so assign and deliver any shares of Common
Stock acquired pursuant to the exercise of a Stock Option or Stock Appreciation
Right under this Plan or any other stock plan of the Company unless the holder
has beneficially owned such shares of Common Stock for at least six months, nor
may the holder so assign and deliver any shares of Restricted Stock with respect
to which all restrictions and conditions have not lapsed or been satisfied. Any
shares so assigned and delivered to the Company in payment or partial payment of
the purchase price will be valued at their Fair Market Value on the exercise
date.
(d) Notwithstanding any other provision of the Plan to the contrary,
to the extent that the aggregate Fair Market Value (determined at the time an
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year (under all stock plans of the Company) exceeds
$100,000, such Stock Options shall be treated as Nonqualified Stock Options.
This subsection (d) shall be applied by taking Stock Options into account in the
order in which they are granted.
(e) No fractional shares will be issued pursuant to the exercise of a
Stock Option nor will any cash payment be made in lieu of fractional shares.
(f) The exercise of a Stock Option shall result in the cancellation of
the Stock Appreciation Right to which it relates with respect to the same number
of shares of Common Stock as to which the Stock Option was exercised.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
(a) A Stock Appreciation Right may be granted separately or in
connection with a Stock Option (either at the time of grant or at any time
during the term of the Stock Option).
(b) The exercise of a Stock Appreciation Right shall result in the
cancellation of the Stock Option to which it relates with respect to the same
number of shares of Common Stock as to which the Stock Appreciation Right was
exercised.
(c) A Stock Appreciation Right granted in connection with a Stock
Option shall be exercisable or transferable only to the extent that such related
Stock Option is exercisable or transferable.
(d) Upon the exercise of a Stock Appreciation Right related to a Stock
Option, the holder will be entitled to receive payment of an amount determined
by multiplying:
(i) The difference obtained by subtracting the purchase price of
a share of Common Stock specified in the related Stock Option from the Fair
Market Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right, by
(ii) The number of shares as to which such Stock Appreciation
Right is exercised.
(e) A Stock Appreciation Right granted without relationship to a Stock
Option shall be exercisable as determined by the Committee, but in no event
after ten years from the date of grant.
(f) A Stock Appreciation Right granted without relationship to a Stock
Option will entitle the holder, upon exercise of the Stock Appreciation Right,
to receive payment of an amount determined by multiplying:
(i) The difference obtained by subtracting the Fair Market Value
of a share of Common Stock on the date the Stock Appreciation Right was granted
fr om the Fair Market Value of a share of Common Stock on the date of exercise
of such Stock Appreciation Right, by
(ii) The number of shares as to which such Stock Appreciation
Right is exercised.
(g) Notwithstanding subsections (d) and (f) above, the Committee may
limit the amount payable upon exercise of a Stock Appreciation Right. Any such
limitation shall be determined as of the date of grant and noted on the
instrument evidencing the Stock Appreciation Right granted.
(h) At the discretion of the Committee, payment of the amount
determined under subsections (d) and (f) above may be made solely in whole
shares of Common Stock valued at their Fair Market Value on the date of exercise
of the Stock Appreciation Right, or solely in cash, or in a combination of cash
and shares. If the Committee decides to make full payment in shares of Common
Stock and the amount payable results in a fractional share, payment for the
fractional share shall be made in cash.
8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
(a) All shares of Restricted Stock granted or purchased by a
Participant pursuant to the Plan shall be subject to the following conditions:
(i) The shares may not be sold, transferred, or otherwise
alienated or hypothecated until the restrictions are removed or expire.
(ii) Each certificate representing Restricted Stock shall bear a
legend making appropriate reference to the restrictions imposed.
(iii) The Committee may impose such other conditions as it may
deem advisable on any shares granted to or purchased by a Participant pursuant
to a Restricted Stock Award, including, without limitation, restrictions under
the Securities Act of 1933, as amended, and the Act, under the requirements of
any stock exchange upon which such shares or shares of the same class are then
listed, and under any Blue Sky or other securities law applicable to such
shares.
(b) The restrictions imposed under subparagraph (a) above upon
Restricted Stock will lapse in accordance with a schedule or other conditions as
determined by the Committee, subject to the provisions of Section 12(e).
(c) Prior to the expiration or lapse of all of the restrictions and
conditions imposed upon Restricted Stock at the time of its grant or purchase,
the holder of Restricted Stock will have the right to vote such shares of
Restricted Stock, but shall not have any other rights of a stockholder with
respect thereto, including, without limitation, the right to receive dividends
and distributions with respect thereto; provided, however, that such holder
shall be entitled to receive distributions or adjustments made pursuant to
Section 9(a) hereof.
9. ADJUSTMENT PROVISION
(a) If there shall be declared and paid a stock dividend upon the
Common Stock or if the Common Stock shall be split up, converted, exchanged,
reclassified, or in any way substituted for, an appropriate and proportionate
adjustment will be made in (i) the maximum number and kind of shares provided in
Section 3(a), (ii) the number and kind of shares or other securities subject to
the then outstanding Incentive Awards, and (iii) the price for each share or
other unit or any security that is the subject of an outstanding Incentive
Award, without changing the aggregate purchase price or value of such
outstanding Incentive Awards. In the event of a spin off of a substantial
portion of the Company's assets, adjustment shall be made with respect to
outstanding Incentive Awards so as to be equitable to the holder of each award
and the stockholders of the Company.
(b) All or any part of any remaining unexercised or unvested Incentive
Awards granted to any person may, after approval of the Plan by the stockholders
of the Company as provided in Section 13, be exercised, and shall become vested,
if, while the holder is employed by the Company or a Subsidiary, there occurs
(i) a Change in Control. For purposes of this Plan, a "Change in Control" shall
be deemed to have occurred if (x) any "person" or group of "persons" (as the
term "person" is used in Sections 13(d) and 14(d) of the Act) ("Person"),
acquires (or has acquired during the twelve-month period ending on the date of
the most recent acquisition by such Person) direct or indirect beneficial
ownership of securities of the Company representing 30% or more of the combined
voting power of the then outstanding securities of the Company or (y) a Person
acquires, other than by a spin off, (or has acquired during the twelve-month
period ending on the date of the most recent acquisition by such Person) assets
from the Company that have a total fair market value equal to or more than 30%
of the total fair market value of all of the assets of the Company immediately
prior to such acquisition; provided, however, that if any transaction or event
or series of transactions or events resulting in a Change in Control is approved
by a majority of the members of the Board of Directors holding office prior to
the transaction or event or series of transactions or events, then the
transaction or event or series of transactions or events shall not be deemed to
be a Change in Control. Notwithstanding the foregoing, for purposes of
subsection (x), a Change in Control will not be deemed to have occurred if the
power to control (directly or indirectly) the management and policies of the
Company is not transferred from a Person to another Person; and, for purposes of
subsection (y), a Change in Control will not be deemed to occur if the assets of
the Company are transferred: (i) to a shareholder in exchange for his stock,
(ii) to an entity in which the Company has (directly or indirectly) 50%
ownership, or (iii) to a Person that has (directly or indirectly) at least 50%
ownership of the Company with respect to its stock outstanding, or to any entity
in which such Person possesses (directly or indirectly) 50% ownership; or (ii)
upon dissolution or liquidation of the Company or upon a reorganization, merger,
or consolidation of the Company with one or more corporations as a result of
which the Company is not the surviving corporation, or upon the sale of all, or
substantially all, the property of the Company.
(c) Adjustments under this Section 9 will be made by the Committee,
whose determination as to what adjustments will be made and the extent thereof
will be final, binding, and conclusive. No fractional interest will be issued
under the Plan on account of any such adjustments.
10. GENERAL PROVISIONS
(a) Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue as an Employee of
the Company or as a member of the Board or affect the right of the Company to
terminate the services or directorship of any Participant at any time with or
without cause.
(b) No shares of Common Stock will be issued or transferred pursuant
to an Incentive Award unless and until all then applicable requirements imposed
by federal and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock exchanges upon which
the Common Stock may be listed, have been fully met. As a condition precedent to
the issuance of shares pursuant to the grant or exercise of an Incentive Award,
the Company may require the Participant to take any reasonable action to meet
such requirements.
(c) No Participant and no beneficiary or other person claiming under
or through such Participant will have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
Incentive Award except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant.
(d) The Company may make such provisions it deems appropriate to
provide for withholding any taxes the Company determines it is required to
withhold in connection with any Incentive Award.
(e) No Incentive Award and no right under the Plan, contingent or
otherwise, will be assignable or subject to any encumbrance, pledge, or charge
of any nature except as specified herein. An Incentive Award shall not be
transferable otherwise than by will or the laws of descent and distribution or
as provided in this Section 10. Notwithstanding the preceding, the Committee
may, in its discretion, authorize a transfer of any Incentive Award, other than
an Incentive Stock Option, by the initial holder to (i) the spouse, children,
step children, grandchildren or other family members of the initial holder
("Family Members"), (ii) a trust or trusts for the exclusive benefit of such
Family Members, (iii) a corporation or partnership in which such Family Members
and the initial holder are the only shareholders or partners, or (iv) such other
persons or entities which the Committee may permit, subject in each case to such
terms and conditions as the Committee shall approve; provided, however, that
subsequent transfers of such Incentive Awards shall be prohibited except by will
or the laws of descent and distribution. Following any transfer of such an
Incentive Award, such Incentive Award shall continue to be subject to the same
terms and conditions of the Incentive Award and of the Plan. An Option which is
intended to be an Incentive Stock Option shall not be transferable otherwise
than by will or the laws of descent and distribution and shall be exercisable
during the holder's lifetime only by the holder thereof.
(f) Notwithstanding any other provision of the Plan to the contrary,
no Incentive Award may be exercised and no Restricted Stock may be sold,
transferred, or otherwise alienated or hypothecated prior to the approval of the
Plan by the stockholders of the Company as provided in Section 13.
11. TEN PERCENT STOCKHOLDERS
Notwithstanding any other provision of this Plan to the contrary, no
Stock Option which is intended to qualify as an Incentive Stock Option may be
granted under this Plan to any employee who, at the time the Stock Option is
granted, owns shares possessing more than 10 percent of the total combined
voting power or value of all classes of stock of the Company, unless the
exercise price under such Stock Option is at least 110% of the Fair Market Value
of a share on the date such Stock Option is granted and the duration of such
Stock Option is no more than five years.
12. AMENDMENT AND TERMINATION
(a) At its discretion, the Committee shall have the power to amend,
suspend or terminate the Plan at any time. No such amendment will, without
approval of the shareholders of the Company, except as provided in Section 9 of
the Plan:
(i) Change the class of persons eligible to receive Incentive
Awards under the Plan; or
(ii) Increase the number of shares of Common Stock subject to the
Plan or which may be the subject of Incentive Awards granted to any individual
during any calendar year.
(b) Except as otherwise provided by Section 3(d), the Committee may
not, without the consent of a Participant, modify the terms and conditions of an
Incentive Award.
(c) No amendment, suspension, or termination of the Plan will, without
the consent of the Participant, alter, terminate, impair, or adversely affect
any right or obligation under any Incentive Award previously granted under the
Plan.
(d) Except as set forth in Subsection (e) below, an Incentive Award
held by a Participant will expire immediately if the Participant is no longer an
Employee or, if the Participant was a Non-employee Director, he no longer is a
Non-employee Director, unless the Committee determines otherwise, except as
follows:
(i) If the Participant ceases to be an Employee or a Non-employee
Director other than for cause, of which the Company will be the sole judge, or
the Participant's death or permanent and total disability, the Incentive Awards,
other than Incentive Stock Options, will expire one year thereafter unless by
their terms they expire sooner; Incentive Stock Options will expire three months
thereafter unless by their terms they expire sooner. During the applicable
period, Incentive Awards may be exercised in accordance with their terms, but
only to the extent exercisable on the date the Participant is no longer an
Employee or a Non-employee Director.
(ii) If the Participant dies or becomes permanently and totally
disabled while serving as an Employee or as a Non-employee Director, the
Participant's Incentive Awards will become fully exercisable and will expire one
year after the date of death or permanent and total disability unless by their
terms they expire sooner. If the Participant dies or becomes permanently and
totally disabled within the three months referred to in subparagraph (i) above,
the Incentive Awards will, in the case of the Participant's retirement, expire
upon the later of one year after retirement or one year after the date of death,
or, in all other cases, three months after the date of death or permanent and
total disability, unless by their terms they expire sooner.
(e) If a holder of Restricted Stock is no longer an Employee or a
Non-employee Director, unless the Committee determines otherwise, all such
Restricted Stock subject to restrictions at the time his service with the
Company terminates (and any distributions and/or adjustments received with
respect thereto) will be returned to the Company and any consideration received
therefor from the Participant shall be returned to such Participant.
(f) With respect to an Incentive Award, the Committee may, at its sole
discretion, determine that any Participant who is on leave of absence for any
reason will be considered as still in the employ of the Company, provided that
rights to such Incentive Award during a leave of absence will be limited to the
extent to which such right was earned or vested at the commencement of such
leave of absence.
13. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN
The Plan is subject to approval by the holders of a majority of the
shares of stock of the Company which are represented in person or by proxy and
entitled to vote on the subject at a meeting of stockholders of the Company duly
convened and held prior to March 17, 2001. In the event the Plan is not approved
by stockholders of the Company prior to March 17, 2001, the Plan shall be void
and of no further force or effect. No Incentive Awards may be made under the
Plan after March 16, 2010.
<PAGE>
TOSCO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking any proxy heretofore given, hereby appoints
Thomas D. O'Malley, Jefferson F. Allen and Wilkes McClave III, or any of them,
proxies of the undersigned, with full power of substitution, with respect to all
of the shares of stock of TOSCO CORPORATION ("Tosco") which the undersigned is
entitled to vote at Tosco's Annual Meeting of Stockholders to be held on
Thursday, May 18, 2000, and at any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL I AND FOR PROPOSALS II AND III.
I. ELECTION OF DIRECTORS: To elect the ten (10) nominees for Director
listed below for a term of one year.
FOR ALL NOMINEES LISED BELOW [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the to vote for all nominees
contrary below) listed below
Jefferson F. Allen, Patrick M. deBarros, Wayne A. Budd, Houston I.
Flournoy, Edmund A. Hajim, Charles J. Luellen, Eija Malmivirta, Mark R. Mulvoy,
Kathryn L. Munro, Thomas D. O'Malley.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
II. TO APPROVE TOSCO'S 2000 STOCK INCENTIVE PLAN AS DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT.
III. PROPOSAL TO RATIFY AND APPROVE THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF TOSCO FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL II.
IV. IN THEIR DISCRETION, UPON ANY OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Receipt of the Notice of Annual Meeting and of the Proxy Statement and Annual
Report to Stockholders of Tosco is hereby acknowledged.
Dated ____________________, 2000
_________________________)L.S.)
(Signature of Stockholder)
_________________________)L.S.)
(Signature of Stockholder)
___________________________________
Your signature should
appear the same as your
name appears hereon. If
signing as attorney,
executor, administrator,
trustee or guardian, please
indicate the capacity in
which signing. When signing
as joint tenants, all
parties to the joint
tenancy must sign. When the
proxy is given by a
corporation, it should be
signed by an authorized
officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
