WALGREEN
CO.
LONG-TERM
PERFORMANCE INCENTIVE PLAN
(Effective
January 10, 2007)
WALGREEN
CO.
LONG-TERM
PERFORMANCE INCENTIVE PLAN
(Effective
January 10, 2007)
TABLE
OF CONTENTS
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Page
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Section
1.
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History
and Purpose
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1
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Section
2.
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Definitions
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1
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Section
3.
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Administration
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2
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Section
4.
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Term
of Plan/Common Stock Subject to Plan
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3
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Section
5.
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Eligibility
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3
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Section
6.
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Restricted
Shares and Restricted Share Units
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3
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Section
7.
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Performance
Units and Performance Share Units
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5
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Section
8.
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Performance-Based
Award Provisions
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6
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Section
9.
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Non-Transferability
of Awards
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6
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Section
10.
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Changes
in Capitalization and Related Matters
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6
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Section
11.
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Change
of Control Provisions
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7
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Section
12.
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Amendment,
Suspension and Termination
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8
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Section
13.
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Miscellaneous
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8
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WALGREEN
CO.
LONG-TERM
PERFORMANCE INCENTIVE PLAN
(Effective
January 10, 2007)
1.
History
and Purpose.
The
purpose of the Walgreen Co. Long-Term Performance Incentive Plan (the "Plan")
is
to further and promote the interests of Walgreen Co., its Subsidiaries and
its
shareholders by enabling the Company and its Subsidiaries to attract, retain
and
motivate key employees or those who will become key employees, and to align
the
interests of those individuals and the Company's shareholders. To do this,
the
Plan offers performance-based incentive awards and equity-based opportunities
providing such key employees with a proprietary interest in maximizing the
growth, profitability and overall success of the Company and its Subsidiaries.
The Plan is a continuation and expansion of the Walgreen Co. Restricted
Performance Share Plan (the "Prior Plan"), which was established by the Company
as of September 1, 1980, and has been subsequently amended from time to
time.
2.
Definitions.
Unless
the context clearly indicates otherwise, for purposes of the Plan, the following
terms shall have the following meanings:
2.1
"Award"
means an
award or grant made to a Participant under Sections 6 and/or 7 of the
Plan.
2.2
"Award
Agreement"
means
the agreement executed by a Participant pursuant to Sections 3.2 and 13.7 of
the
Plan in connection with the granting of an Award.
2.3
"Board"
means
the Board of Directors of the Company, as constituted from time to
time.
2.4
"Code"
means
the Internal Revenue Code of 1986, as in effect and as amended from time to
time, or any successor statute thereto, together with any rules, regulations
and
interpretations promulgated thereunder or with respect thereto.
2.5
"Committee"
means
the committee of the Board designated to administer the Plan, as described
in
Section 3 of the Plan.
2.6
"Common
Stock"
means
the Common Stock, par value $.078125 per share, of the Company or any security
of the Company issued by the Company in substitution or exchange
therefor.
2.7
"Company"
means
Walgreen Co., an Illinois corporation, or any successor thereto.
2.8
"Disability"
means
disability as determined by the Committee in accordance with standards and
procedures similar to those under the applicable Company long-term disability
plan, if any. At any time that the Company does not maintain an applicable
long-term disability plan, "Disability" shall mean any physical or mental
disability which is determined to be total and permanent by a physician selected
or relied upon in good faith by the Company.
2.9
"Exchange
Act"
means
the
Securities Exchange Act of 1934, as in effect and as amended from time to time,
or any successor statute thereto, together with any rules, regulations and
interpretations promulgated thereunder or with respect thereto.
2.10
"Fair
Market Value"
means,
with respect to any date, the closing price on the New York Stock
Exchange--Composite Transactions Tape on the last preceding date on which sales
of shares were reported.
2.11
"Participant"
means
any individual who is selected from time to time under Section 5 to receive
an
Award under the Plan.
2.12
"Performance
Units"
means
the units granted under Section 7 of the Plan and the relevant Award
Agreement.
2.13
"
Performance
Share Units"
means
the share units granted under Section 7 of the Plan and the relevant Award
Agreement.
2.14
"Plan"
means
this Walgreen Co. Long-Term Performance Incentive Plan, as set forth herein
and
as in effect and as amended from time to time (together with any rules and
regulations promulgated by the Committee with respect thereto).
2.15
"Restricted
Shares"
means
an
Award of restricted shares of Common Stock granted pursuant to the provisions
of
Section 6 of the Plan and the relevant Award Agreement.
2.16
"
Restricted
Share Units"
means an
Award of restricted share units granted pursuant to the provisions of Section
6
of the Plan and the relevant Award Agreement.
2.17
"Retirement"
means
the
voluntary retirement in good standing by the Participant from active employment
with the Company and its Subsidiaries on or after the attainment of age 55,
subject to the approval of the Committee.
2.18
"Subsidiary(ies)"
means
any
corporation (other than the Company) in an unbroken chain of corporations,
including and beginning with the Company, if each of such corporations, other
than the last corporation in the unbroken chain, owns, directly or indirectly,
more than fifty percent (50%) of the voting stock in one of the other
corporations in such chain.
3.
Administration.
3.1
The
Committee.
The
Plan
shall be administered by the Compensation Committee of the Board of
Directors.
3.2
Plan
Administration and Plan Rules.
The
Committee is authorized to construe and interpret the Plan and to promulgate,
amend and rescind rules and regulations relating to the implementation,
administration and maintenance of the Plan. Subject to the terms and conditions
of the Plan, the Committee shall make all determinations necessary or advisable
for the implementation, administration and maintenance of the Plan including,
without limitation, (a) selecting the Plan's Participants, (b) making Awards
in
such amounts and form as the Committee shall determine, (c) imposing such
restrictions, terms and conditions upon such Awards as the Committee shall
deem
appropriate, and (d) correcting any technical defect(s) or technical
omission(s), or reconciling any technical inconsistency(ies), in the Plan and/or
any Award Agreement. The Committee may designate persons other than members
of
the Committee to carry out the day-to-day ministerial administration of the
Plan
under such conditions and limitations as it may prescribe, except that the
Committee shall not delegate its authority with regard to the selection for
participation in the Plan and/or the granting of any Awards to Participants
who
are subject to Section 16 of the Exchange Act. The Committee may, in its sole
discretion, delegate its authority to one or more senior executive officers
for
the purpose of making Awards to Participants who are not subject to Section
16
of the Exchange Act. The Committee's determinations under the Plan need not
be
uniform and may be made selectively among Participants, whether or not such
Participants are similarly situated. Any determination, decision or action
of
the Committee in connection with the construction, interpretation,
administration, implementation or maintenance of the Plan shall be final,
conclusive and binding upon all Participants and any person(s) claiming under
or
through any Participants. The Company shall effect the granting of Awards under
the Plan, in accordance with the determinations made by the Committee, by
execution of written agreements and/or other instruments in such form as is
approved by the Committee.
3.3
Liability
Limitation.
Neither
the Board nor the Committee, nor any member of either, shall be liable for
any
act, omission, interpretation, construction or determination made in good faith
in connection with the Plan (or any Award Agreement), and the members of the
Board and the Committee shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including,
without limitation, attorneys' fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors and officers
liability insurance coverage which may be in effect from time to
time.
4.
Term
of Plan/Common Stock Subject to Plan.
4.1
Term
of the Plan.
The
Plan
is effective as of January 10, 2007, upon approval of the Company’s
shareholders. The Plan shall continue in effect until terminated, modified
or
amended in accordance with Section 12 of the Plan.
4.2
Common
Stock.
The
maximum number of shares of Common Stock in respect of which Awards may be
granted or paid out under the Plan, subject to adjustment as provided in this
Section, as well as Section 4.3 and Section 10.2 of the Plan, shall not exceed
the total of 10,000,000 shares. Common Stock which may be issued under the
Plan
may be either authorized and unissued shares or issued shares which have been
reacquired by the Company (in the open-market or in private transactions) and
which are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan.
4.3
Computation
of Available Shares.
For
the
purpose of computing the total number of shares of Common Stock available for
Awards under the Plan, there shall be counted against the limitations set forth
in Section 4.2 of the Plan (subject to the remainder of this Section and Section
10.2) the number of shares of Common Stock issued under grants of Restricted
Shares pursuant to Section 6 of the Plan and the maximum number of shares of
Common Stock issued under payments of Restricted Share Units pursuant to Section
6 of the Plan and Performance Units and Performance Share Units pursuant to
Section 7 of the Plan, in each case determined as of the date on which such
Awards are granted, or issued, as applicable. If any Awards expire unexercised
or are forfeited, surrendered, cancelled, terminated or settled in cash in
lieu
of Common Stock, the shares of Common Stock which were theretofore subject
(or
potentially subject) to such Awards shall again be available for Awards under
the Plan to the extent of such expiration, forfeiture, surrender, cancellation,
termination or settlement of such Awards. In addition, any shares of Common
Stock exchanged or otherwise used by a Participant as full or partial payment
for an Award (including any shares withheld or deducted for tax withholding
purposes), and any shares covered by an Award which is settled in cash shall
be
added to the shares available for Awards under the Plan.
5.
Eligibility.
Individuals
eligible for Awards under the Plan shall consist of key employees and officers,
or those who will become key employees or officers, of the Company and/or its
Subsidiaries whose performance or contribution, in the sole discretion of the
Committee, benefits or will benefit the Company or any Subsidiary.
6.
Restricted
Shares and Restricted Share Units.
6.1
Terms
and Conditions.
Grants
of Restricted Shares and Restricted Share Units shall be subject to the terms
and conditions set forth in this Section 6 and any additional terms and
conditions, not inconsistent with the express terms and provisions of the Plan,
as the Committee shall set forth in the relevant Award Agreement. Restricted
Shares and Restricted Share Units may be granted alone or in addition to any
other Awards under the Plan. Restricted Share Units shall be similar to
Restricted Shares, except that no shares will be actually granted on the date
of
the Award. Subject to the terms of the Plan, the Committee shall determine
the
number of Restricted Shares and Restricted Share Units to be granted to a
Participant, and the Committee may provide or impose different terms and
conditions on any particular Restricted Share or Restricted Share Units grant
made to any Participant. With respect to each Participant receiving an Award
of
Restricted Shares, a stock certificate (or certificates) shall be issued or
held
in book entry form. If issued, such stock certificate(s) shall be registered
in
the name of such Participant, shall be accompanied by a stock power duly
executed by such Participant, and shall bear, among other required legends,
the
following legend:
"The
transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including, without limitation,
forfeiture events) contained in the Walgreen Co. Long-Term Performance Incentive
Plan and an Award Agreement entered into between the registered owner hereof
and
Walgreen Co. Copies of such Plan and Award Agreement are on file in the office
of the Secretary of Walgreen Co., 200 Wilmot Road, Deerfield, IL 60015. Walgreen
Co. will furnish to the recordholder of the certificate, without charge and
upon
written request at its principal place of business, a copy of such Plan and
Award Agreement. Walgreen Co. reserves the right to refuse to record the
transfer of this certificate until all such restrictions are satisfied, all
such
terms are complied with and all such conditions are satisfied."
Such
stock certificate(s) evidencing such shares shall, in the sole discretion of
the
Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.
6.2
Restricted
Share Grants.
A grant
of Restricted Shares is an Award of shares of Common Stock granted to a
Participant, subject to such restrictions, terms and conditions as the Committee
deems appropriate, including, without limitation, (a) restrictions on the sale,
assignment, transfer, hypothecation or other disposition of such shares, (b)
the
requirement that the Participant deposit such shares with the Company while
such
shares are subject to such restrictions, and (c) the requirement that such
shares be forfeited upon termination of employment for specified reasons within
a specified period of time or for other reasons (including, without limitation,
the failure to achieve designated performance goals). A grant of Restricted
Share Units shall contain similar restrictions, terms and conditions, to the
extent appropriate.
6.3
Restriction
Period.
In
accordance with Sections 6.1 and 6.2 of the Plan and unless otherwise determined
by the Committee (in its sole discretion) at any time and from time to time,
Restricted Shares and Restricted Share Units shall only become unrestricted
and
vested in the Participant in accordance with such vesting schedule relating
to
such Restricted Shares and Restricted Share Units, if any, as the Committee
may
establish in the relevant Award Agreement (the "Restriction Period"). During
the
Restriction Period, such stock shall be and remain unvested and a Participant
may not sell, assign, transfer, pledge, encumber or otherwise dispose of or
hypothecate such Award. Upon satisfaction of the vesting schedule and any other
applicable restrictions, terms and conditions, the Participant shall be entitled
to receive payment of the Restricted Shares and Restricted Share Units or a
portion thereof, as the case may be, as provided in Section 6.4 of the Plan.
As
determined by the Committee, the Award Agreement shall set forth any provisions
regarding accelerated vesting of an Award upon termination of employment for
Retirement, Disability, death or other special circumstances.
6.4
Payment
of Restricted Share and Restricted Share Unit Grants.
After
the satisfaction and/or lapse of the restrictions, terms and conditions
established by the Committee in respect of a grant of Restricted Shares, a
stock
certificate, without the legend set forth in Section 6.1 of the Plan, for the
number of shares of Common Stock which are no longer subject (or deemed subject)
to such restrictions, terms and conditions shall, as soon as practicable
thereafter, be delivered to the Participant. After the satisfaction and/or
lapse
of the restrictions, terms and conditions established by the Committee in
respect of a grant of Restricted Share Units, the earned Restricted Share Units
may be paid in cash, shares of Common Stock (per the procedures spelled out
above) or any combination thereof, as determined by the Committee.
6.5
Shareholder
Rights.
A
Participant shall have, with respect to the shares of Common Stock underlying
a
grant of Restricted Shares (but not under Restricted Share Units), all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and shall be subject to the same restrictions
and
other terms and conditions that apply to the unvested Restricted Shares in
respect of which such stock dividends are issued.
6.6
Dividend
Equivalents.
Restricted Share Units may, in the sole discretion of the Committee and if
provided for in the relevant Award Agreement, earn dividend equivalents. In
respect of any such Restricted Share Units which are outstanding on a dividend
record date for Common Stock, the Participant shall be credited with an amount
equal to the amount of cash or stock dividends that would have been paid on
the
shares of Common Stock covered by such Restricted Share Units had such covered
shares been issued and outstanding on such dividend record date. The Committee
shall establish such rules and procedures governing the crediting of such
dividend equivalents, including, without limitation, the amount, the timing,
form of payment and payment contingencies and/or restrictions of such dividend
equivalents, as it deems appropriate or necessary.
7.
Performance
Units and Performance Share Units.
7.1
Terms
and Conditions.
Performance Units and Performance Share Units shall be subject to the terms
and
conditions set forth in this Section 7 and any additional terms and conditions,
not inconsistent with the express provisions of the Plan, as the Committee
shall
set forth in the relevant Award Agreement.
7.2
Performance
Unit Grants.
A
Performance Unit is an Award of units (with each unit representing such monetary
amount or value as is designated by the Committee in the Award Agreement)
granted to a Participant, subject to such terms and conditions as the Committee
deems appropriate, including, without limitation, the requirement that the
Participant forfeit such units (or a portion thereof) in the event certain
performance criteria or other conditions are not met within a designated period
of time. A Performance Share Unit is a Performance Unit (with each unit
representing one or more shares of Common Stock).
7.3
Grants.
Performance Units and Performance Share Units may be granted alone or in
addition to any other Awards under the Plan. Subject to the terms of the Plan,
the Committee shall determine the number of Performance Units and Performance
Share Units to be granted to a Participant, and the Committee may impose
different terms and conditions on any particular Performance Units and
Performance Share Units granted to any Participant. Subject to any restrictions
that may apply to performance-based awards under Section 8 and Code Section
162(m) referenced therein, the Committee may issue pro-rated Performance Unit
and Performance Share Unit grants and/or adjust previously granted Awards on
a
pro-rated basis for Participants who become eligible under the Plan during
a
Performance Period or whose eligibility level changes during a Performance
Period.
7.4
Performance
Goals and Performance Periods.
A
Participant receiving a grant of Performance Units and Performance Share Units
shall only earn into and be entitled to payment in respect of such Award if
the
Company and/or the Participant achieves certain performance goals (the
"Performance Goals") during and in respect of a designated performance period
(the "Performance Period"). The Performance Goals and the Performance Period
shall be established by the Committee, in its sole discretion. The Committee
shall establish Performance Goals for each Performance Period prior to, or
as
soon as practicable after, the commencement of such Performance Period. The
Committee shall also establish a schedule or schedules for Performance Units
and
Performance Share Units setting forth the portion of the Award which will be
earned or forfeited based on the degree of achievement, or lack thereof, of
the
Performance Goals at the end of the relevant Performance Period. In setting
Performance Goals, the Committee may use such performance measures as it deems
appropriate, subject to the limitations contained in Section 8.1 of the Plan
with respect to performance-based Awards. Such performance measures shall be
defined as to their respective components and meaning by the Committee (in
its
sole discretion). Subject to the limitations contained in Section 8.1 of the
Plan with respect to performance-based Awards, during any Performance Period,
the Committee shall have the authority to adjust the Performance Goals and/or
the Performance Period in such manner as the Committee, in its sole discretion,
deems appropriate at any time and from time to time. At the discretion of the
Committee, Participants holding Performance Share Units may be entitled to
receive dividend equivalents with respect to the dividends declared, subject
to
any restrictions determined by the Committee.
7.5
Payment
of Units.
With
respect to each Performance Unit and Performance Share Unit, the Participant
shall, if the applicable Performance Goals have been achieved, or partially
achieved, as determined by the Committee in its sole discretion, by the Company
and/or the Participant during the relevant Performance Period, be entitled
to
receive payment in an amount equal to the designated value of each Performance
Unit and Performance Share Unit times the number of such units so earned.
Payment in settlement of earned Performance Units and Performance Share Unit
shall be made as soon as practicable following the conclusion of the respective
Performance Period in cash, in unrestricted Common Stock, in Restricted Shares,
in Restricted Share Units, in restricted cash, or in any combination thereof,
as
the Committee in its sole discretion, shall determine and provide in the
relevant Award Agreement. As determined by the Committee, the Award Agreement
shall set forth any provisions regarding the extent of payment or non-payment
of
an Award in the event the Participant does not remain employed for the entire
Performance Period, including any special provisions covering termination of
employment for Retirement, Disability, death or other special
circumstances.
8.
Performance-Based
Award Provisions.
8.1
Performance-Based
Awards.
Performance Units, Performance Share Units, Restricted Shares, and Restricted
Share Units subject to performance criteria that are intended to be "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code
shall be paid solely on account of the attainment of one or more
pre-established, objective performance goals within the meaning of Section
162(m) and the regulations thereunder. For any Award that is intended to be
qualified performance-based compensation, the performance goals shall be the
attainment of pre-established levels of (or pre-established changes or
improvements in) any of net sales, net income, market price per share, earnings
per share, return on equity, return on invested capital, cash flow, discounted
cash flow, cumulative cash flow, operating profit, gross or pre-tax profits,
post-tax profits, gross or net margins, consolidated net income, unit sales
volume, economic value added, costs, improvements in financial ratings,
regulatory compliance, achievement of balance sheet or income statement
objectives, market or category share, total return to shareholders equity
(including both the market value of the Company’s stock and dividends thereon)
and the extent to which strategic and business goals are met. The payout of
any
such Award to a Covered Employee may be reduced, but not increased, based on
the
degree of attainment of other performance criteria or otherwise at the
discretion of the Committee. For purposes of the Plan, "Covered Employee" has
the same meaning as set forth in Section 162(m) of the Code.
8.2
Maximum
Yearly Awards.
The
maximum annual Common Stock amount in this Section 8.2 is subject to adjustment
under Section 10.2 and is subject to the Plan maximum under Sections 4.2 and
4.3. The maximum amount payable in respect of Performance Units, Performance
Share Units, Restricted Shares, and Restricted Stock Units in any fiscal year
may not exceed 250,000 shares of Common Stock (or the then equivalent Fair
Market Value thereof) in the case of any individual Participant.
9.
Non-transferability
of Awards.
Unless
otherwise provided in the Award Agreement, no Award under the Plan or any Award
Agreement, and no rights or interests herein or therein, shall or may be
assigned, transferred, sold, exchanged, encumbered, pledged, or otherwise
hypothecated or disposed of by a Participant or any beneficiary(ies) of any
Participant, except by testamentary disposition by the Participant or the laws
of intestate succession. No such interest shall be subject to execution,
attachment or similar legal process, including, without limitation, seizure
for
the payment of the Participant's debts, judgments, alimony, or separate
maintenance.
10.
Changes
in Capitalization and Related Matters.
10.1
No
Corporate Action Restriction.
The
existence of the Plan, any Award Agreement and/or the Awards granted hereunder
shall not limit, affect or restrict in any way the right or power of the Board
or the shareholders of the Company to make or authorize (a) any adjustment,
recapitalization, reorganization or other change in the Company's or any
Subsidiary's capital structure or its business, (b) any merger, consolidation
or
change in the ownership of the Company or any Subsidiary, (c) any issue of
bonds, debentures, capital, preferred or prior preference stocks ahead of or
affecting the Company's or any Subsidiary's capital stock or the rights thereof,
(d) any dissolution or liquidation of the Company or any Subsidiary, (e) any
sale or transfer of all or any part of the Company's or any Subsidiary's assets
or business, or (f) any other corporate act or proceeding by the Company or
any
Subsidiary. No Participant, beneficiary or any other person shall have any
claim
against any member of the Board or the Committee, the Company or any Subsidiary,
or any employees, officers, shareholders or agents of the Company or any
Subsidiary, as a result of any such action.
10.2
Recapitalization
Adjustments.
In
the
event of any change (increase or decrease) in the outstanding shares of the
Company by reason of a stock dividend, recapitalization, merger, consolidation,
stock split, split up, spin off, combination or exchange of shares,
reorganization, liquidation, or other change in corporate capitalization, the
aggregate number and class of shares available under the Plan, the number and
class of shares subject to any outstanding Award under the Plan, the share
limit
set forth in Section 8.2 of the Plan, and the aggregate number and class of
shares that may be issued pursuant to any other provision of the Plan that
is
expressed in terms of a specified number of shares or that may be issued
pursuant to any grant hereunder shall be appropriately and proportionately
adjusted by the Committee to prevent dilution or enlargement of rights and
preserve the value of outstanding awards; provided that fractional Shares shall
be rounded to the nearest whole Share. The Committee’s determination shall be
final and conclusive.
11.
Change
of Control Provisions.
11.1
Impact
of Event.
Notwithstanding any other provision of the Plan to the contrary, in the event
of
a Change in Control:
(i)
The
restrictions and deferral limitations applicable to any Restricted Shares and
Restricted Share Units shall lapse, and such Restricted Shares and Restricted
Share Units shall become free of all restrictions and become fully vested and
transferable;
(ii)
All
Performance Units and Performance Share Units shall be considered to be earned
and payable at target values, and any other restrictions shall lapse and such
Performance Units and Performance Share Units shall be settled in cash (with
the
value being determined by the Committee, in its sole discretion) as promptly
as
is practicable; and
(iii)
The
Committee may also make additional adjustments and/or settlements of outstanding
Awards as it deems appropriate and consistent with the Plan's
purposes
.
11.2
Definition
of Change in Control.
For
purposes of the Plan, a "Change in Control" shall mean the happening of any
of
the following events:
(i)
An
acquisition after the date hereof by any individual, entity or group (within
the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (a) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (b) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition by virtue
of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company or approved by the Incumbent
Board
(as defined below), (2) any acquisition by the Company, (3) any acquisition
by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by the Company, (4) any acquisition by an
underwriter temporarily holding Company securities pursuant to an offering
of
such securities, or (5) any acquisition pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (iii) of this Section 11.2;
or
(ii)
A
change
in the composition of the Board such that the individuals who, as of the
effective date of the Plan, constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided,
however,
for
purposes of this Section, that any individual who becomes a member of the Board
subsequent to the effective date of the Plan, whose election, or nomination
for
election by the Company's shareholders, was approved by a vote of at least
a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso),
either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without written
objection to such nomination shall be considered as though such individual
were
a member of the Incumbent Board; but,
provided
further,
that any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so considered
as a
member of the Incumbent Board; or
(iii)
Consummation
of a reorganization, merger or consolidation (or similar transaction), a sale
or
other disposition of all or substantially all of the assets of the Company,
or
the acquisition of assets or stock of another entity ("Corporate Transaction");
in each case, unless immediately following such Corporate Transaction (1) all
or
substantially all of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of, respectively, the
outstanding shares of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result
of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially
the
same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (other than the Company,
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Corporate Transaction) will beneficially own, directly
or
indirectly, 20% or more of, respectively, the outstanding shares of common
stock
of the corporation resulting from such Corporate Transaction or the combined
voting power of the outstanding voting securities of such corporation entitled
to vote generally in the election of directors, except to the extent that such
ownership existed prior to the Corporate Transaction, and (3) individuals who
were members of the Incumbent Board at the time of the Board's approval of
the
execution of the initial agreement providing for such Corporate Transaction
will
constitute at least a majority of the members of the board of directors of
the
corporation resulting from such Corporate Transaction; or
(iv)
The
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
12.
Amendment,
Suspension and Termination.
The
Board
may suspend or terminate the Plan (or any portion thereof) at any time and
may
amend the Plan at any time and from time to time in such respects as the Board
may deem advisable to ensure that any and all Awards conform to or otherwise
reflect any change in applicable laws or regulations, or to permit the Company
or the Participants to benefit from any change in applicable laws or
regulations, or in any other respect the Board may deem to be in the best
interests of the Company or any Subsidiary. No such amendment, suspension or
termination shall (a) subject to Section 13.6, materially adversely affect
the
rights of any Participant under any outstanding Performance Units, Performance
Share Units, Restricted Share or Restricted Share Unit grants, without the
consent of such Participant, or (b) except as contemplated by Section 11,
increase the number of shares available for Awards pursuant to Section 4.2
without shareholder approval. In addition, the Company will obtain shareholder
approval of any modification of the Plan or Awards to the extent required by
applicable laws or regulations or the regulations of any stock exchange or
similar organization governing the listing of Common Stock.
13.
Miscellaneous.
13.1
Tax
Withholding.
The
Company shall have the right to deduct from any payment or settlement under
the
Plan, including, without limitation, the delivery, transfer or vesting of any
Common Stock or Restricted Shares, any federal, state, local or other taxes
of
any kind which the Committee, in its sole discretion, deems necessary to be
withheld to comply with the Code and/or any other applicable law, rule or
regulation. Shares of Common Stock may be used to satisfy any such tax
withholding. Such Common Stock shall be valued based on the Fair Market Value
of
such stock as of the date the tax withholding is required to be made, such
date
to be determined by the Committee. In addition, the Company shall have the
right
to require payment from a Participant to cover any applicable withholding or
other employment taxes due upon any payment or settlement under the
Plan.
13.2
No
Right to Employment.
Neither
the adoption of the Plan, the granting of any Award, nor the execution of any
Award Agreement, shall confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or any Subsidiary, as the
case may be, nor shall it interfere in any way with the right, if any, of the
Company or any Subsidiary to terminate the employment of any employee at any
time for any reason.
13.3
Unfunded
Plan.
The Plan
shall be unfunded and the Company shall not be required to segregate any assets
in connection with any Awards under the Plan. Any liability of the Company
to
any person with respect to any Award under the Plan or any Award Agreement
shall
be based solely upon the contractual obligations that may be created as a result
of the Plan or any such Award Agreement. No such obligation of the Company
shall
be deemed to be secured by any pledge of, encumbrance on, or other interest
in,
any property or asset of the Company or any Subsidiary. Nothing contained in
the
Plan or any Award Agreement shall be construed as creating in respect of any
Participant (or beneficiary thereof or any other person) any equity or other
interest of any kind in any assets of the Company or any Subsidiary or creating
a trust of any kind or a fiduciary relationship of any kind between the Company,
any Subsidiary and/or any such Participant, any beneficiary thereof or any
other
person.
13.4
Payments
to a Trust.
The
Committee is authorized to cause to be established a trust agreement or several
trust agreements or similar arrangements from which the Committee may make
payments of amounts due or to become due to any Participants under the
Plan.
13.5
Other
Company Benefit and Compensation Programs.
Payments
and other benefits received by a Participant under an Award made pursuant to
the
Plan shall not be deemed a part of a Participant's compensation for purposes
of
the determination of benefits under any other employee welfare or benefit plans
or arrangements, if any, provided by the Company or any Subsidiary unless
expressly provided in such other plans or arrangements, or except where the
Committee expressly determines in writing that inclusion of an Award or portion
of an Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion
of
competitive annual base salary or other cash compensation. Awards under the
Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or
its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.
13.6
Listing,
Registration and Other Legal Compliance.
No
Awards or shares of the Common Stock shall be required to be issued or granted
under the Plan unless legal counsel for the Company shall be satisfied that
such
issuance or grant will be in compliance with all applicable securities laws
and
regulations and any other applicable laws or regulations. The Committee may
require, as a condition of any payment or share issuance, that certain
agreements, undertakings, representations, certificates, and/or information,
as
the Committee may deem necessary or advisable, be executed or provided to the
Company to assure compliance with all such applicable laws or regulations.
Certificates for shares of the Restricted Shares and/or Common Stock delivered
under the Plan may be subject to such stock-transfer orders and such other
restrictions as the Committee may deem advisable under the rules, regulations,
or other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any applicable laws.
In
addition, if, at any time specified herein (or in any Award Agreement or
otherwise) for (a) the making of any Award, or the making of any determination,
(b) the issuance or other distribution of Restricted Shares and/or Common Stock,
or (c) the payment of amounts to or through a Participant with respect to any
Award, any law, rule, regulation or other requirement of any governmental
authority or agency shall require either the Company, any Subsidiary or any
Participant (or any estate, designated beneficiary or other legal representative
thereof) to take any action in connection with any such determination, any
such
shares to be issued or distributed, any such payment, or the making of any
such
determination, as the case may be, shall be deferred until such required action
is taken. With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 promulgated under the Exchange Act. In addition, the
Company or Committee may, at the time of grant or thereafter, impose additional
or different conditions or take other actions with respect to Awards made to
Participants in countries outside of the United States of America, to the extent
required or made advisable by applicable laws and regulations.
13.7
Award
Agreements.
Each
Participant receiving an Award under the Plan may enter into an Award Agreement
with the Company in a form specified by the Committee. Each such Participant
shall then agree to the restrictions, terms and conditions of the Award set
forth therein and in the Plan.
13.8
Designation
of Beneficiary.
Each
Participant to whom an Award has been made under the Plan may designate a
beneficiary or beneficiaries to receive any payment which under the terms of
the
Plan and the relevant Award Agreement may become payable on or after the
Participant's death. At any time, and from time to time, any such designation
may be changed or cancelled by the Participant without the consent of any such
beneficiary. Any such designation, change or cancellation must be on a form
provided for that purpose by the Committee and shall not be effective until
received by the Committee. If no beneficiary has been designated by a deceased
Participant, or if the designated beneficiaries have predeceased the
Participant, the beneficiary shall be the Participant's estate. If the
Participant designates more than one beneficiary, any payments under the Plan
to
such beneficiaries shall be made in equal shares unless the Participant has
expressly designated otherwise, in which case the payments shall be made in
the
shares designated by the Participant.
13.9
Leaves
of Absence/Transfers.
The
Committee shall have the power to promulgate rules and regulations and to make
determinations, as it deems appropriate, under the Plan in respect of any leave
of absence from the Company or any Subsidiary granted to a Participant. Without
limiting the generality of the foregoing, the Committee may determine whether
any such leave of absence shall be treated as if the Participant has terminated
employment with the Company or any such Subsidiary. If a Participant transfers
within the Company, or to or from any Subsidiary, such Participant shall not
be
deemed to have terminated employment as a result of such transfers.
13.10
Governing
Law.
The Plan
and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Illinois, without reference to the
principles of conflict of laws thereof. Any titles and headings herein are
for
reference purposes only, and shall in no way limit, define or otherwise affect
the meaning, construction or interpretation of any provisions of the
Plan.
