EXHIBIT 10.01
2009 Praxair, Inc.
Long Term Incentive Plan
Effective April 28, 2009
Amended April 27, 2010
Contents
|
|
|
|
|
Article 1. Establishment, Purpose, and Duration
|
|
2
|
|
Article 2. Definitions
|
|
2
|
|
Article 3. Administration
|
|
8
|
|
Article 4. Shares Subject to this Plan and Maximum Awards
|
|
9
|
|
Article 5. Eligibility and Participation
|
|
11
|
|
Article 6. Stock Options
|
|
11
|
|
Article 7. Stock Appreciation Rights
|
|
13
|
|
Article 8. Restricted Stock Grants
|
|
14
|
|
Article 9. Performance Units
|
|
16
|
|
Article 10. Other Stock-Based Awards
|
|
18
|
|
Article 11. Transferability of Awards
|
|
19
|
|
Article 12. Performance Measures
|
|
19
|
|
Article 13. Dividend Equivalents
|
|
21
|
|
Article 14. Beneficiary Designation
|
|
21
|
|
Article 15. Rights of Participants
|
|
21
|
|
Article 16. Change in Control
|
|
22
|
|
Article 17. Amendment, Modification, Suspension, and Termination
|
|
23
|
|
Article 18. Withholding
|
|
24
|
|
Article 19. Successors
|
|
24
|
|
Article 20. General Provisions
|
|
24
|
2009 Praxair, Inc.
Long Term Incentive Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment
. Praxair, Inc., a Delaware corporation (hereinafter referred to as the “Company”), establishes an
incentive compensation plan to be known as the 2009 Praxair, Inc. Long Term Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.
This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (“SARs”),
Restricted Stock, Restricted Stock Units, Performance Units, and Other Stock-Based Awards.
This Plan was adopted by the Board
on February 24, 2009, became effective upon shareholder approval on April 28, 2009 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof. This Plan was also amended by the Board on
April 27, 2010 in order to add Directors as a class of eligible Participants, subject to shareholder approval.
1.2
Purpose of this Plan
. The purpose of this Plan is to provide a means whereby Employees develop personal involvement in the financial success of the Company, and to encourage them to devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its shareholders. A further purpose of this Plan is to provide a means through which the Company may attract and retain able Employees and to provide a means whereby those individuals can acquire
and maintain stock ownership, thereby strengthening their concern for the welfare of the Company. This Plan also provides a means of compensating Directors in the form of equity as a complement to other elements of the Directors’ overall
compensation program and to align their interests with those of the Company’s shareholders.
1.3 Duration of this
Plan
. Unless sooner terminated as provided herein, this Plan shall terminate February 24, 2019. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their
applicable terms and conditions and this Plan’s terms and conditions.
Article 2. Definitions
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial
letter of the word shall be capitalized.
|
|
2.1
|
“Award”
means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted
Stock, Restricted Stock Units, Performance Units, or Other Stock-Based Awards, in each case subject to the terms of this Plan.
|
2
|
|
2.2
|
“Award Agreement”
means either (a) a written agreement entered into by the Company and a Participant setting forth the terms and provisions
applicable to an Award granted under this Plan, or (b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee
may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
|
|
|
2.3
|
“Beneficial Owner”
or
“Beneficial Ownership”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
|
|
|
2.4
|
“Board”
means the Board of Directors of the Company.
|
|
|
2.5
|
“Change in Control”
means the occurrence of any one of the following events with respect to the Company:
|
|
|
(a)
|
individuals who, on January 1, 2009, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to January 1, 2009, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote
or by approval of the Company proxy statement in which such person is named as a nominee for director, without objection to such nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a director of
the Company initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed an
Incumbent Director;
|
|
|
(b)
|
any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the
“Praxair Voting Securities”); provided, however, that the event described in this Subsection 2.5(b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any of its
subsidiaries; (B) by any employee benefit plan sponsored or maintained by the Company or any of its subsidiaries; (C) by any underwriter temporarily holding securities pursuant to an offering of such securities; or (D) pursuant to a
Non-Qualifying Transaction (as defined in Subsection 2.5(c));
|
3
|
|
(c)
|
the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that
requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than
50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has Beneficial
Ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Praxair Voting Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, shares into which such Praxair Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of
such Praxair Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the Beneficial Owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board’s approval of
the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”); or
|
|
|
(d)
|
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale or disposition of all or substantially all of the
Company’s assets.
|
Notwithstanding the foregoing, to the extent an Award is subject to Code
Section 409A, the Committee shall have the discretion to define Change in Control for such Award in a manner which complies with such Code Section.
|
|
2.6
|
“Code”
means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall
be deemed to include references to any applicable regulations thereunder and any successor or similar provision.
|
|
|
2.7
|
“Committee”
means, with respect to Awards granted to (a) Employees, the Compensation and Management Development Committee of the
Board, and (b) Directors, the Governance and Nominating Committee of the Board, and in each case any other committee designated by the Board to administer this Plan with respect to
|
4
|
|
Employee or Director Awards. The Committee shall consist of not less than two directors. However, if a member of the Committee is not an “outside director” within the meaning of Code
Section 162(m) or is not a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, the Committee may from time to time delegate some or all of its functions under the Plan to a committee or subcommittee
composed of members that meet the relevant requirements. The term “Committee” includes any such committee or subcommittee, to the extent of the Compensation and Management Development Committee’s delegation, or the Governance and
Nominating Committee’s delegation, as the case may be. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee, other than any
actions required to be carried out by a committee of at least two “outside directors” or “non-employee directors”.
|
|
|
2.8
|
“Company”
means Praxair, Inc., a Delaware corporation, and any successor thereto as provided in Article 19 herein.
|
|
|
2.9
|
“Covered Employee”
means any Employee who is or may become a “Covered Employee,” as defined in Code Section 162(m), and who is
designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (a) ninety (90) days after the beginning of the Performance Period, or (b) the period prior to the date twenty-five percent
(25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.
|
|
|
2.10
|
“Director”
means any director of the Company who is not an Employee.
|
|
|
2.11
|
“Effective Date”
has the meaning set forth in Section 1.1.
|
|
|
2.12
|
“Employee”
means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or its Subsidiaries on
the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company or its Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting,
or temporary agency or any other entity other than the Company or its Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the
Company or its Subsidiary during such period.
|
|
|
2.13
|
“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
|
|
|
2.14
|
“Fair Market Value”
or
“FMV”
means, in respect of any date on or as of which a determination thereof is being or to be made, the
closing market price of a Share reported on the New York Stock Exchange Composite Transactions tape on such date, or, if no Shares were traded on such date, on the next preceding day on which sales of Shares were reported on the New York Stock
Exchange Composite Transactions tape.
|
5
|
|
2.15
|
“Grant Date”
means the date an Award is granted to a Participant pursuant to the Plan.
|
|
|
2.16
|
“Grant Price”
means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon
exercise of the SAR.
|
|
|
2.17
|
“Incentive Stock Option”
or
“ISO”
means an Option to purchase Shares granted under Article 6 to an Employee that is designated as an
Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.
|
|
|
2.18
|
“Insider”
shall mean an individual who is, on the relevant date, an executive officer of the Company or a more than ten percent
(10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.
|
|
|
2.19
|
“Market Price”
means, in respect of any date on or as of which a determination thereof is being or to be made, the average of the high and low prices
of a Share reported on the New York Stock Exchange Composite Transactions tape on such date, or, if no Shares were traded on such date, on the next preceding day on which sales of Shares were reported on the New York Stock Exchange Composite
Transactions tape.
|
|
|
2.20
|
“Nonqualified Stock Option”
or
“NQSO”
means an Option that is not intended to meet the requirements of Code Section 422, or
that otherwise does not meet such requirements.
|
|
|
2.21
|
“Option”
means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.
|
|
|
2.22
|
“Option Price”
means the price at which a Share may be purchased by a Participant pursuant to an Option.
|
|
|
2.23
|
“Other Stock-Based Award”
means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article
10.
|
|
|
2.24
|
“Participant”
means any Employee or a Director to whom an Award is granted.
|
|
|
2.25
|
“Performance-Based Compensation”
means compensation under an Award that is intended to satisfy the requirements of Code
Section 162(m) for certain performance-based
|
6
|
|
compensation paid to Covered Employees. Any Award granted hereunder that is intended to be Performance-Based Compensation within the meaning of Code Section 162(m) shall be subject to the
terms and provisions of this Plan and not the Praxair, Inc. Plan for Determining Performance-Based Awards Under Section 162(m).
|
|
|
2.26
|
“Performance Goal”
means, with respect to any applicable Award to an Employee, the one or more targets, goals or levels of attainment required to be
achieved in terms of the specified Performance Measures during the specified Performance Period, as set forth in the related Award Agreement.
|
|
|
2.27
|
“Performance Measures”
means: (a) with respect to any Award to an Employee intended to qualify as Performance-Based Compensation, any one or more
of the measures described in Article 12 on which the Performance Goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation; and (b) with respect
to any other Award, such performance measures as determined by the Committee in its sole discretion and set forth in the applicable Award Agreement for purposes of determining the applicable Performance Goal.
|
|
|
2.28
|
“Performance Period”
means the period of time during which the Performance Goals must be met in order to determine the degree of payout and/or vesting
with respect to an Award granted to an Employee.
|
|
|
2.29
|
“Performance Unit”
means an Award to an Employee under Article 9 herein and subject to the terms of this Plan, denominated in Units, the value of which
at the time it is payable is determined as a function of the extent to which corresponding Performance Goal(s) has been achieved during the applicable Performance Period.
|
|
|
2.30
|
“Plan”
means this 2009 Praxair, Inc. Long Term Incentive Plan.
|
|
|
2.31
|
“Restricted Stock
” means Shares issued pursuant to a Restricted Stock Grant under Article 8 so long as the Shares remain subject to the restrictions
and conditions specified in the Award Agreement pursuant to which such Restricted Stock Grant is made.
|
|
|
2.32
|
“Restricted Stock Grant”
means an Award of Restricted Stock or Restricted Stock Units made pursuant to the provisions of Article 8.
|
|
|
2.33
|
“Restricted Stock Unit”
means a Unit issued pursuant to a Restricted Stock Grant under Article 8 so long as the Units remain subject to the
restrictions and conditions specified in the Award Agreement.
|
|
|
2.34
|
“Restriction Period”
means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the
passage of time, the achievement of Performance Goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.
|
7
|
|
2.35
|
“Share”
means a share of common stock of the Company, $0.01 par value per share or any security issued by the Company in substitution or exchange
therefor or in lieu thereof.
|
|
|
2.36
|
“Share Equivalent”
means a Unit (or fraction thereof, if authorized by the Committee) substantially equivalent to a hypothetical Share, credited to the
Participant and having a value at any time equal to the FMV of a Share (or fraction thereof) at such time.
|
|
|
2.37
|
“Stock Appreciation Right”
or “
SAR
” means an Award, designated as a SAR, pursuant to the terms of Article 7 herein.
|
|
|
2.38
|
“Subsidiary”
means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a
proprietary interest of fifty percent (50%) or greater by reason of stock ownership or otherwise; provided, however, that (a) for purposes of determining whether any Employee can be a Participant with respect to any Award of Incentive
Stock Option, the term “Subsidiary” has the meaning given to such term in Code Section 424, as interpreted by the regulations thereunder and applicable law; and (b) for purposes of determining whether any individual may be a
Participant with respect to any Award of Options or SARs that are intended to be exempt from Code Section 409A, the term “Subsidiary” means any corporation or other entity to which the Company is an “eligible issuer of service
recipient stock” within the meaning of Code Section 409A.
|
|
|
2.39
|
“Unit”
means a bookkeeping entry used by the Company to record and account for the grant or settlement of an Award until such time as the Award is
paid, canceled, forfeited or terminated, as the case may be, which, except as otherwise specified by the Committee, shall be equal to one Share Equivalent.
|
Article 3. Administration
3.1 General
. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of
this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and directors shall be entitled to rely upon the advice,
opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.
3.2 Authority of the Committee
. The Committee shall have full and exclusive discretionary power to interpret the terms and the
intent of this Plan and any Award Agreement
8
or other agreement or document ancillary to, or in connection with, this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for
administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Participants, establishing all Award terms and conditions, including the terms and conditions set forth in Award
Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Award Agreement, and,
subject to Article 17, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company and/or its
Subsidiaries operate.
3.3 Delegation
.
The Committee may delegate to one or more of its members or to one or
more officers of the Company, and/or its Subsidiaries or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid
may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize the Chief Executive Officer of the Company (the
“CEO”) or any other officer of the Company, to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards and (b) determine the size of any such Awards; provided,
however, (i) the Committee shall not delegate such responsibilities for any Awards to be granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets forth the total number of Awards the CEO or
officer may grant; and (iii) the CEO or officer, as applicable, shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.
Article 4. Shares Subject to this Plan and Maximum Awards
4.1 Number of Shares Available for Awards
. Subject to adjustment as provided in Section 4.4, the maximum number of Shares
which may be issued pursuant to Awards under this Plan on or after the Effective Date shall be 12,000,000 Shares (the “Share Authorization”). The Shares available for issuance under this Plan may be authorized and unissued Shares or
treasury Shares. The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be 12,000,000 Shares. The maximum number of Shares of the Share Authorization that may be issued under this Plan
pursuant to Awards other than Options or SARs shall be 4,000,000 Shares.
4.2 Share Usage
.
Shares subject to an
Award that expires according to its terms or is forfeited, terminated, canceled or surrendered, in each case, without having been exercised or settled, or can be paid only in cash, will be available again for grant under the Plan, without reducing
the number of Shares that are available for Awards under the Plan. In no event shall (a) any Shares subject to an Option that is cancelled upon the exercise of a tandem SAR; (b) any Shares subject to an Award that are surrendered in
payment of the exercise price of an Option or
9
in payment of the taxes associated with an Award; or (c) any Shares subject to a SAR that are not issued in connection with the stock settlement of the SAR upon exercise thereof become
available for grant under the Plan pursuant to this Section.
4.3 Annual Award Limits
.
Unless and until the
Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”), as
adjusted pursuant to Sections 4.4, shall apply to grants of such Awards to Employees under this Plan:
|
|
(a)
|
Options
: The maximum aggregate number of Shares subject to Options granted in any one calendar year to any one Participant shall be 1,000,000.
|
|
|
(b)
|
SARs
: The maximum number of Shares subject to SARs granted in any one calendar year to any one Participant shall be 1,000,000.
|
|
|
(c)
|
Restricted Stock or Restricted Stock Units
: The maximum aggregate Restricted Stock Grant in any one calendar year to any one Participant shall be 300,000
Shares, or equal to the Fair Market Value of 300,000 Shares, determined as of the date of vesting or payout, as applicable.
|
|
|
(d)
|
Performance Units
: The maximum aggregate Award of Performance Units that a Participant may receive in any one calendar year shall be 300,000 Shares, or equal to
the Fair Market Value of 300,000 Shares, determined as of the date of vesting or payout, as applicable.
|
|
|
(e)
|
Other Stock-Based Awards
: The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.1 in any one calendar year to any one
Participant shall be 300,000 Shares.
|
4.4 Adjustments in Authorized Shares
. In the event of any corporate
event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock
dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding
Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall
substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to
outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.
10
To further reflect any of the foregoing events, transactions or adjustments, the Committee,
in its sole discretion, may also make adjustments in the terms of any Awards under this Plan and may modify any other terms of outstanding Awards, including modifications of Performance Goals and changes in the length of Performance Periods, as it
deems necessary or appropriate.
The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.
Subject to the provisions of Article 17 and notwithstanding anything else herein to the contrary, without affecting the number of Shares
reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as
it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44), subject to compliance with the rules under Code Sections
422 and 424, as and where applicable.
Article 5. Eligibility and Participation
Only Employees and Directors shall be eligible to participate in this Plan. Subject to the provisions of this Plan, the designated
Committee may, from time to time, select those Employees or Directors to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award; provided, however,
that no Award made to a Director shall be subject to or conditioned upon the attainment of any Performance Goal.
Article 6. Stock Options
6.1 Grant of Options
. Subject to the terms and provisions of this Plan, Options may be granted to Participants in
such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Options may be granted in addition to, or in tandem with or independent of, SARs or any other Awards under
the Plan.
6.2 Award Agreement
. Each Option grant shall be evidenced by an Award Agreement that shall specify the
Option Price, the term of the Option, the number of Shares to which the Option pertains, the conditions, including any Performance Goals, upon which an Option shall become vested and exercisable, and such other terms and conditions as the Committee
shall determine which are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.
6.3 Option Price
. The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole
discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to 100% of the FMV of the Shares as determined on the Grant Date.
11
6.4 Term of Options
. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the day before the tenth
(10
th
) anniversary of its Grant Date.
6.5 Exercise of Options
. Options granted under this Article 6 shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. Except upon a Change in Control and in certain limited situations (including, but
not limited to, the death or disability of the Participant): (a) Awards of Options subject solely to the continued service of the Participant shall become exercisable no earlier than three (3) years after the Grant Date provided that such
Option may partially vest after no less than one year following such Grant Date; and (b) any other Award of Options shall become exercisable no earlier than one (1) year after the Grant Date.
6.6 Payment
. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an
agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.
A condition of the issuance of the Shares as to which an Option shall
be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously
acquired Shares having an aggregate Market Price at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six
(6) months (or such other period, if any, as the Committee may permit) prior to their tender to satisfy the Option Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open
market); (c) by having the Company withhold Shares that otherwise would be delivered to the exerciser pursuant to the exercise of the Option having a value equaling the aggregate Option Price due; (d) by a cashless (broker-assisted)
exercise; (e) by a combination of (a), (b), (c) and/or (d); or (f) any other method approved or accepted by the Committee in its sole discretion.
Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment
(including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).
Unless otherwise determined by the Committee, all payments under all of the methods
indicated above shall be paid in United States dollars.
6.7 Restrictions on Share Transferability
. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this
12
Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment or Service as a Director
. Each Participant’s Award Agreement shall set forth the extent to
which the Participant shall have the right to exercise the Option following termination of, as the case may be, (a) an Employee’s employment or provision of services to the Company and/or its Subsidiaries or (b) a Director’s
service as a director of the Company . Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to
this Article 6, and may reflect distinctions based on the reasons for termination.
6.9 Notification of
Disqualifying Disposition
. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition within ten (10) days thereof.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs
. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any
time and from time to time as shall be determined by the Committee, in its sole discretion. Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant
and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs. SARs may be granted under the Plan alone, in tandem with, in addition to or independent of, Options or any other Awards under the
Plan.
7.2 SAR Agreement
. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant
Price, the term of the SAR, the number of Shares to which the SAR pertains, the conditions, including any Performance Goals, upon which the SAR shall become vested and exercisable, and such other terms and conditions as the Committee shall determine
which are not inconsistent with the terms of this Plan.
7.3 Term of SAR
. The term of a SAR granted
under this Plan shall be determined by the Committee, in its sole discretion, and specified in the SAR Award Agreement; provided, however, no SAR shall be exercisable later than the tenth
(10
th
) anniversary of its Grant Date.
7.4 Grant Price
. The Grant Price for each Award of a SAR shall be determined by the Committee and shall be specified in the Award
Agreement; provided, however, the Grant Price must be at least equal to 100% of the FMV of the Shares as determined on the Grant Date.
13
7.5 Exercise of SARs
. SARs granted under this Article 7 shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. Except upon a Change in Control and in certain
limited situations (including, but not limited to, the death or disability of the Participant): (a) Awards of SARs subject solely to the continued service of the Participant shall become exercisable no earlier than three (3) years after
the Grant Date provided that such SAR may partially vest after no less than one year following such Grant Date; and (b) any other Award of SARs shall become exercisable no earlier than one (1) year after the Grant Date. The Committee may
provide that a SAR shall be automatically exercised on one or more specified dates.
7.6 Settlement of SARs
. Upon the
exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
|
|
(a)
|
The excess of the FMV of a Share on the date of exercise over the Grant Price; by
|
|
|
(b)
|
The number of Shares with respect to which the SAR is exercised.
|
At the discretion of the Committee, the payment upon exercise of a SAR may be in cash, Shares, or any combination thereof, or in any
other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
7.7 Termination of Employment or Service as a Director
. Each Award Agreement shall set forth the extent to which the Participant
shall have the right to exercise the SAR following termination of, as the case may be, (a) an Employee’s employment with the Company and/or its Subsidiaries, or (b) a Director’s service as a director of the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on
the reasons for termination.
7.8 Other Restrictions
. The Committee shall impose such other conditions and/or
restrictions on any Shares received upon exercise of a SAR granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received
upon exercise of a SAR for a specified period of time.
Article 8. Restricted Stock Grants
8.1 Grant of Restricted Stock or Restricted Stock Units
. Subject to the terms and provisions of this Plan, the Committee, at any
time and from time to time, may grant Restricted Stock Grants to Participants in such amounts as the Committee shall determine. A Restricted Stock Grant is the issue of Shares or Units in the name of a Participant subject to such terms and
14
conditions as the Committee shall deem appropriate, including, without limitation, restrictions on the sale, assignment, transfer or other disposition of such Shares or Units and the requirement
that the Participant forfeit such Shares or Units back to the Company (a) upon termination of employment of an Employee or termination of service as a Director for specified reasons within a specified period of time; (b) if any specified
Performance Goals are not achieved during a specified Performance Period; or (c) if such other conditions as the Committee may specify are not satisfied.
8.2 Restricted Stock or Restricted Stock Unit Agreement
. Each Restricted Stock Grant shall be evidenced by an Award Agreement that
shall specify the Restriction Period(s), the number of Shares of Restricted Stock and/or Restricted Stock Units granted, the conditions and restrictions imposed upon the Restricted Stock Grant, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of this Plan.
8.3 Restriction Period
. Each Restricted Stock Grant
shall provide that in order for a Participant to receive unrestricted Shares or payment in settlement of a Restricted Stock Unit, the Participant must remain an Employee or a Director, as the case may be, for a period of time specified by the
Committee in the Award Agreement. The Committee may also establish one or more Performance Goals that are required to be achieved during one or more Performance Periods within the Restriction Period as a condition to the lapse of restrictions of
Awards to Employees. Except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant): (a) Except as provided in Subsection 8.3(c), Awards of Restricted Stock and/or
Restricted Stock Units subject solely to the continued service of the Participant shall have a Restriction Period of not less than three (3) years from the Grant Date; (b) Awards to Employees of Restricted Stock and/or Restricted Stock
Units subject to the achievement of one or more Performance Goals shall have a minimum Restriction Period of one (1) year; and (c) Awards of Restricted Stock and/or Restricted Stock Units subject solely to the continued service of a
Director shall have such Restriction Period as the Committee shall determine, provided, however, that the aggregate number of Shares subject to Restricted Stock or Restricted Stock Unit Awards granted to Directors under this Subsection 8.3(c) with a
vesting period of less than three years shall not exceed five percent (5%) of the Share Authorization under Section 4.1 of this Plan, as may be adjusted from time to time pursuant to the provisions of this Plan. The Committee may provide
for the pro rata lapse of restrictions in installments during the Restriction Period.
8.4 Restrictions
. The following
restrictions and conditions shall apply to each Restricted Stock Grant during the Restriction Period: (a) the Participant may not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of or realize on the Shares or Units
subject to the Restricted Stock Grant; and (b) the Shares issued as Restricted Stock or the Restricted Stock Units shall be forfeited to the Company if the Participant for any reason ceases to be an Employee or a Director, as the case may be,
prior to the end of the Restriction Period, except due to circumstances specified in the related Award Agreement or otherwise approved by the Committee. Unless otherwise directed by the Committee, (i) all certificates representing Shares of
Restricted Stock will be held in custody by the Company until all restrictions thereon have lapsed, together with a stock power or powers executed by the Participant in whose name such
15
certificates are registered, endorsed in blank and covering such Shares, or (ii) all uncertificated Shares of Restricted Stock will be held at the Company’s transfer agent in book entry
form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock. The Committee may, in its sole discretion, include such other restrictions and conditions as it may deem appropriate.
The Committee may, in its sole discretion, impose such other conditions and/or restrictions on any Restricted Stock Grant awarded
pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, and/or restrictions under applicable laws
or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.
8.5 Payment
. Upon expiration of the Restriction Period and if all conditions have been satisfied and any applicable
Performance Goals attained, the Shares of Restricted Stock will be made available to the Participant or the Restricted Stock Units will be vested in the account of the Participant, free of all restrictions; provided, that the Committee may, in its
discretion, require (a) the further deferral of any Restricted Stock Grant beyond the initially specified Restriction Period; (b) that the Restricted Stock or Restricted Stock Units be retained by the Company; and (c) that the
Participant receive a cash payment in lieu of unrestricted Shares or Units.
8.6 Rights as a Shareholder
. Unless
otherwise determined by the Committee and set forth in a Participant’s Award Agreement, the Participant shall have, with respect to shares of Restricted Stock, all of the rights of a shareholder of the Company, including the right to vote the
shares and receive any dividends paid thereon. Any such dividends shall be reinvested on the dividend payment date in additional Shares of Restricted Stock under the Restricted Stock Grant and shall be subject to the restrictions and other terms and
conditions set forth therein. A Participant shall not have, with respect to Restricted Stock Units, any voting or other rights of a shareholder of the Company; provided, however, that if determined by the Committee and set forth in the
Participant’s Award Agreement, the Participant shall have the right to receive Dividend Equivalents in accordance with the provisions of Article 13.
8.7 Section 83(b) Election
. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned
upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant
shall be required to file promptly a copy of such election with the Company.
Article 9. Performance Units
9.1 Grant of Performance Units
. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time,
may grant Performance Units to Employees in
16
such amounts and upon such terms as the Committee shall determine. Each Performance Unit shall represent the prospective contingent right to receive payment based upon Company and/or Subsidiary
performance over a specified Performance Period. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant and need not be equivalent to the value of a Share Equivalent. At the time of grant,
the Committee, in its sole discretion, shall establish the Performance Period, Performance Measures, Performance Goals and such other terms and conditions applicable to such Award. The number of Shares and/or the amount of cash or other
consideration earned in settlement of a Performance Unit shall be determined at the end of the Performance Period.
9.2
Earning of Performance Units
. Each Performance Unit Award Agreement shall provide that in order for an Employee to receive a payment in settlement of the Award, the Company must achieve certain Performance Goals over a designated Performance
Period, with attainment of one or more Performance Goals determined using one or more specific Performance Measures. The Performance Goals and the Performance Period shall be established by the Committee in its sole discretion; provided, however
that except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant), the Performance Period must have a minimum duration of one (1) year. The Committee shall
establish one or more Performance Measures for each Performance Period for determining the portion of the Performance Unit Award which will be earned or forfeited based on the extent to which the Performance Goals are achieved or exceeded. Such
Performance Goals may include minimum, maximum and target levels of performance, with the size of the payment payable in settlement of the Performance Unit Award based on the level attained.
9.3 Form of Performance Unit Award
.
Performance Unit Awards shall be made on such terms and conditions not inconsistent
with the Plan, and in such form or forms, as the Committee may from time to time approve. Performance Units may be awarded alone, in addition to, or independent of other Awards under the Plan. Subject to the terms of the Plan, the Committee shall,
in its discretion, determine the number of Units subject to each Performance Unit Award made to an Employee and may impose different terms and conditions on any particular Performance Unit Award made to any Employee. The Performance Goals,
Performance Period or Periods, Performance Measures and other terms and conditions applicable to any Performance Unit Award shall be set forth in the relevant Award Agreement.
9.4 Termination of Employment
. Each Performance Unit Award Agreement shall set forth the extent to which an Employee shall have
the right to retain Performance Units following termination of the Employee’s employment with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award
Agreement entered into with each Employee, need not be uniform among all Awards of Performance Units, and may reflect distinctions based on the reasons for termination. Notwithstanding the foregoing, to the extent a Performance Unit is intended to
be Performance-Based Compensation, the termination provisions in the Award Agreement shall comply with the requirements of Code Section 162(m) (including any regulations, rulings, notices and procedures thereunder).
17
9.5 Payment of Performance Units
. Subject to the terms of this Plan and the
applicable Award Agreement, after the later of the date the applicable Performance Period has ended or the date on which any other terms and conditions applicable to such Performance Unit Award have been satisfied, the holder of Performance Units
shall be entitled to receive payout of the value and number of Performance Units earned by the Employee over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.
Subject to Section 12.3 below, such payment shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance
Units in the form of Shares, cash, any combination thereof, or any other form as designated by the Committee in its sole discretion, equal to the value of the earned Performance Units at the close of the applicable Performance Period, or at such
other time as specified in the Award Agreement. Any Shares paid in settlement of such Performance Units may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the applicable Award Agreement.
Article 10. Other Stock-Based Awards
10.1 Other Stock-Based Awards
. The Committee may grant other types of equity-based or equity-related Awards not otherwise described
by the terms of this Plan (including, subject to the limitations below, the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the
transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States. Notwithstanding any provision in this Plan to the contrary, Awards of unrestricted Shares shall only be made in lieu of salary and/or cash bonuses/variable compensation paid to Employees or cash fees paid to Directors.
10.2 Value of Other Stock-Based Awards
. Each Other Stock-Based Award shall be expressed in terms of Shares or Units,
as determined by the Committee. The Committee may, in its discretion, establish Performance Goals with respect to any Other Stock-Based Awards. If the Committee exercises its discretion to establish Performance Goals, the number and/or value of
Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Goals are met.
10.4 Payment of Other Stock-Based Awards
. Payment, if any, with respect to an Other Stock-Based Award shall be made in accordance
with the terms of the Award, in cash or Shares as the Committee determines.
10.5 Termination of Employment or Service as a
Director
. The Committee shall determine the extent to which the Participant shall have the right to receive Other Stock-Based Awards following termination of, as the case may be, (a) an Employee’s employment with the Company and/or its
Subsidiaries, or (b) a Director’s service as a director of the Company. Such
18
provisions shall be determined in the sole discretion of the Committee, such provisions shall be included in the applicable Award Agreement, but need not be uniform among all Other Stock-Based
Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Article 11. Transferability of
Awards
No Award under the Plan, and no right or interest therein, shall be (a) assignable, alienable or transferable
by a Participant, except by will or the laws of descent and distribution, or (b) subject to any obligation, or the lien or claims of any creditor, of any Participant, or (c) subject to any lien, encumbrance or claim of any party made in
respect of or through any Participant, however arising. During the lifetime of a Participant, Options and SARs are exercisable only by, Shares issued upon the exercise of Options and SARs or in settlement of other Awards will be issued only to, and
other payments in settlement of any Award will be payable only to, the Participant or his or her legal representative. A Participant may designate a beneficiary or beneficiaries in accordance with Article 14. Notwithstanding the foregoing, the
Committee may, in its sole discretion and on and subject to such terms and conditions as it shall deem appropriate, which terms and conditions shall be set forth in the related Award Agreement: (i) authorize a Participant to transfer all or a
portion of any Nonqualified Stock Option or SAR, as the case may be, granted to such Participant; provided, that in no event shall any transfer be made to any person or persons other than such Participant’s spouse, children or grandchildren, or
a trust or partnership for the exclusive benefit of one or more such persons, which transfer must be made as a gift and without any consideration; and (ii) provide for the transferability of a particular grant or Award pursuant to a domestic
relations order. All other transfers and any retransfer by any permitted transferee are prohibited and any such purported transfer shall be null and void. Each Nonqualified Stock Option or SAR which becomes the subject of a permitted transfer (and
the Participant to whom it was granted by the Company) shall continue to be subject to the same terms and conditions as were in effect immediately prior to such permitted transfer. The Participant shall remain responsible to the Company for the
payment of all withholding taxes incurred as a result of any exercise of such Option or SAR. In no event shall any permitted transfer of an Option, SAR or other grant or Award create any right in any party in respect of any Option, SAR or other
grant or Award, other than the rights of the qualified transferee in respect of such Option, SAR or other Award specified in the related Award Agreement.
Article 12. Performance Measures
12.1 Performance Measures
. The Performance Goals upon which the payment or vesting of an Award to a Covered Employee that is
intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:
|
|
(a)
|
Net earnings or net income (before or after taxes);
|
|
|
(b)
|
Earnings per share (basic or diluted);
|
19
|
|
(f)
|
Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);
|
|
|
(g)
|
Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);
|
|
|
(h)
|
Earnings before or after taxes, interest, depreciation, and/or amortization;
|
|
|
(i)
|
Gross or operating margins;
|
|
|
(k)
|
Share price (including, but not limited to, growth measures and total shareholder return);
|
|
|
(n)
|
Operating efficiency;
|
|
|
(p)
|
Working capital targets;
|
|
|
(q)
|
Economic value added or EVA (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and
|
|
|
(r)
|
Objective safety measures.
|
Any
Performance Measure(s) may be used to measure the performance of the Company and/or its Subsidiary as a whole or any business unit of the Company and/or its Subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the
above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Share price as a Performance
Measure as compared to various stock market indices. The Committee also has the authority to provide in an Award Agreement for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Measures
specified in this Article 12.
12.2 Evaluation of Performance
. The Committee may provide at the time of any such
Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs and impairments; (b) gain/loss on sale of assets; (c) litigation or claim
judgments or settlements (including insurance proceeds); (d) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (e) any reorganization and restructuring programs;
(f) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual
report to shareholders and/or other public filings for the applicable year; (g) acquisitions or divestitures; (h) foreign exchange gains and losses; and (i) the effect of any materially adverse and unforeseen market conditions beyond
the control of the Company and its Subsidiaries, Employees, officers and directors. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to be Performance-Based Compensation, they shall be prescribed in a
form that meets the requirements of Code Section 162(m) for deductibility.
20
12.3 Adjustment of Performance-Based Compensation
. Awards that are intended to
qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.
12.4 Committee Discretion
. In the event that the Committee determines that it is advisable to grant Awards that shall not qualify
as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.
Article 13. Dividend Equivalents
Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares or Share
Equivalents that are subject to any Award (other than Options and SARs), to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests, settled or expires, as
determined by the Committee (“Dividend Equivalents”). Except as otherwise provided in the Plan or the applicable Award Agreement, such Dividend Equivalents shall be converted to cash or additional Shares or Share Equivalents by such
formula, at such time and subject to such limitations as may be determined by the Committee; provided, however, that in no event shall any Dividend Equivalents become payable earlier than the date on which the underlying Award becomes vested and
payable.
Article 14. Beneficiary Designation
Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Plan is to be paid in case of the Participant’s death before receiving any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant and will be
effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s
death shall be paid to or exercised by the Participant’s executor, administrator, or legal representative.
Article 15. Rights of
Participants
15.1 Employment
. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way
the right of the Company and/or its Subsidiaries, to terminate any Employee’s employment at any time or for any reason not prohibited by law, nor confer upon any Employee any right to continue his employment, or upon any Director a right to
continue to serve as a Director, for any specified period of time.
21
Neither an Award nor any benefits arising under this Plan shall constitute an employment
contract with the Company and/or its Subsidiaries for an Employee or a contract for service as a director with the Company for a Director and, accordingly, subject to Article 17, this Plan and the benefits hereunder may be terminated at any time in
the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company and/or its Subsidiaries.
15.2 Participation
. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.
15.3 Rights as a Shareholder
. Except as otherwise provided herein,
a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.
Article 16. Change in Control
16.1 Change in Control of the Company
. Notwithstanding any other provision of this Plan to the contrary, the provisions of this
Article 16 shall apply in the event of a Change in Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award Agreement.
Upon a Change in Control, except to the extent that another Award meeting the requirements of Section 16.2 (a “Replacement
Award”) is provided to the Participant to replace such Award (the “Replaced Award”), all then-outstanding Options and SARs shall immediately become fully vested and exercisable, and all other then-outstanding Awards subject solely to
the satisfaction of a service obligation by a Participant to the Company and/or its Subsidiary shall vest in full and be free of restrictions related to the vesting of such Awards. The treatment of any other Awards shall be as determined by the
Committee in connection with the grant thereof, as reflected in the applicable Award Agreement.
Except to the extent that a
Replacement Award is provided to the Participant, the Committee may, in its sole discretion, determine that any or all outstanding Awards granted under the Plan, whether or not exercisable, will be canceled and terminated and that in connection with
such cancellation and termination the holder of such Award may receive for each Share subject to such Awards a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash
payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a Share in connection with such transaction and the purchase price per share, if any, under the Award multiplied by the number
of Shares subject to such Award; provided that if such product is zero or less or to the extent that the Award is not then exercisable, the Award will be canceled and terminated without payment therefor.
16.2 Replacement Awards
. An Award shall meet the conditions of this Section 16.2 (and hence qualify as a Replacement Award)
if: (a) it has a value at least equal to the value of the Replaced Award as determined by the Committee in its sole discretion; (b) it relates to publicly traded equity securities of the Company or its successor in the Change in Control or
another
22
entity that is affiliated with the Company or its successor following the Change in Control; and (c) its other terms and conditions are not less favorable to the Participant than the terms
and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the
Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 16.2 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control,
in its sole discretion.
16.3 Termination of Employment or Service as a Director
. Upon a termination of employment of
an Employee or termination of service as a Director occurring in connection with or during the period of two (2) years immediately after such Change in Control, other than for cause, (a) all Replacement Awards held by the Participant shall
become fully vested and (if applicable) exercisable and free of restrictions, and (b) all Options and SARs held by the Participant immediately before the termination of employment that the Participant held as of the date of the Change in
Control or that constitute Replacement Awards shall remain exercisable for not less than one (1) year following such termination or until the expiration of the stated term of such Option or SAR, whichever period is shorter; provided, that if
the applicable Award Agreement provides for a longer period of exercisability, that provision shall control.
Article 17. Amendment,
Modification, Suspension, and Termination
17.1 Amendment, Modification, Suspension, and Termination
. Subject to
Section 17.2, the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part without approval of the Company’s shareholders, unless such
approval is necessary to comply with applicable laws, including the Exchange Act and the Code, or the rules and regulations of any securities exchange on which the Shares are listed. In no event may the Board amend the Plan without the prior
approval of the Company’s shareholders to (a) increase the maximum number of Shares which may be issued pursuant to the Plan; (b) increase any limitation set forth in the Plan on the number of Shares which may be issued, or the
aggregate value of Awards which may be made, in respect of any type of Award to any single Participant during any specified period; (c) except as provided in Section 4.4, lower the Option Price of a previously granted Option or the Grant
Price of a previously granted SAR, whether by repricing, replacing, or regranting through cancellation; (d) change the class of individuals eligible to participate in the Plan; (e) reduce the minimum Option Price or the minimum SAR Grant
Price as set forth in Sections 6.3 and 7.4; or (f) reduce the minimum vesting period, Restriction Period or Performance Period requirements applicable to Awards under the Plan.
17.2 Awards Previously Granted
. Notwithstanding any other provision of this Plan to the contrary (other than Section 17.3),
no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such
Award.
23
17.3 Amendment to Conform to Law
. Notwithstanding any other provision of this Plan to
the contrary, the Board may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans
of this or similar nature and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 17.3 to any Award granted under the
Plan without further consideration or action.
Article 18. Withholding
All Awards under the Plan will be made subject to any applicable withholding for taxes of any kind. The Company shall have the right to
deduct from any amount payable under the Plan, including delivery of Shares to be made under the Plan, all federal, state, city, local or foreign taxes of any kind required by law to be withheld with respect to such payment and to take such other
actions as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. If Shares are used to satisfy withholding taxes, such shares shall be valued based on the Market Value thereof on the date when the
withholding for taxes is required to be made and shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on the Company. The Company shall have the right to
require a Participant to pay cash to satisfy withholding taxes as a condition to the payment of any amount (whether in cash or Shares) under the Plan.
Article 19. Successors
All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
Article 20. General Provisions
20.1 Forfeiture Events
. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits
with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may
include, but shall not be limited to, any Participant’s fraud resulting in the restatement of the Company’s published earnings, termination of an Employee’s employment or a Director’s service as a director for cause, termination
of the Participant’s provision of services to the Company and/or its Subsidiary, violation of material Company and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Subsidiaries.
24
20.2 Legend
. The certificates for Shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer of such Shares.
20.3 Gender and Number
. Except where
otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
20.4 Severability
. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
20.5 Requirements of Law
. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
20.6 Delivery of Title
. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this
Plan prior to:
|
|
(a)
|
Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
|
|
|
(b)
|
Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.
|
20.7 Inability to Obtain Authority
. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
20.8 Investment Representations
. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to
represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
20.9 Employees or Directors Based Outside of the United States
. Notwithstanding any provision of this Plan to the contrary, in
order to comply with the laws in other countries in which the Company and/or its Subsidiaries operate or have Employees or in which Directors may reside, the Committee, in its sole discretion, shall have the power and authority to:
|
|
(a)
|
Determine which Subsidiaries shall be covered by this Plan;
|
|
|
(b)
|
Determine which Employees or Directors outside the United States are eligible to participate in this Plan;
|
25
|
|
(c)
|
Modify the terms and conditions of any Award granted to Employees or Directors outside the United States to comply with applicable foreign laws;
|
|
|
(d)
|
Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and
modifications to Plan terms and procedures established under this Section 20.9 by the Committee shall be attached to this Plan document as appendices; and
|
|
|
(e)
|
Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or
approvals.
|
Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be
granted, that would violate applicable law.
20.10 Uncertificated Shares
. To the extent that this Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
20.11 Unfunded Plan
. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company,
and/or its Subsidiaries may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company and/or its Subsidiaries under this Plan, such
right shall be no greater than the right of an unsecured general creditor of the Company or a Subsidiary, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company or a Subsidiary, as the case may be
and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.
20.12 No Fractional Shares
. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee
shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
20.13 Deferrals
. To the extent permitted by Code Section 409A, the Committee may, whether at the time of grant or at any time
thereafter prior to payment or settlement, require a Participant to defer, or permit (subject to such conditions as the Committee may from time to time establish) a Participant to elect to defer, receipt of all or any portion of any payment of cash
or Shares that would otherwise be due to such Participant in payment or settlement of any Award under the Plan. If any such deferral is required by the Committee (or is elected by the Participant with the permission of the Committee), the Committee
shall establish rules and procedures for
26
payment of such deferrals. The Committee may provide for the payment or crediting of interest, at such rate or rates as it shall in its discretion deem appropriate, on such deferred amounts
credited in cash and the payment or crediting of Dividend Equivalents in respect of deferred amounts credited in Share Equivalents or Restricted Stock Units. Deferred amounts may be paid in a lump sum or in installments in the manner and to the
extent permitted, and in accordance with rules and procedures established, by the Committee. This Section shall not apply to any grant of Options or SARs that are intended to be exempt from Code Section 409A.
20.14 Nonexclusivity of this Plan
. The adoption of this Plan shall not be construed as creating any limitations on the power of
the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant or Participants.
20.15 No Constraint on Corporate Action.
Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect
the Company’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part
of its business or assets; or (b) limit the right or power of the Company or a Subsidiary to take any action which such entity deems to be necessary or appropriate.
20.16 Governing Law
. The Plan and each Award Agreement shall be governed by the laws of the State of Connecticut, excluding any
conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this
Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Connecticut, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.
27
EXHIBIT 10.02
Praxair, Inc.
Severance Compensation Agreement
[DATE]
NAME
ADDRESS
Dear [NAME]:
The Board of Directors (the “Board”) of Praxair, Inc. (“Praxair”) recognizes that the possibility of a Change in
Control of Praxair exists, and the uncertainty and questions which it may raise among management may result in the departure or distraction of management personnel to the detriment of Praxair or its majority-owned subsidiaries (hereinafter to be
referred to collectively as the “Company”).
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from a possible
Change in Control of Praxair.
In order to induce you to remain in the employ of the Company and in consideration of both your
continued service to the Company and your execution of a Nondisclosure, Nonsolicitation and Noncompetition agreement in the form provide to you by Praxair, Praxair agrees that you shall receive the severance benefits set forth in this Severance
Compensation Agreement (“Agreement”) in the event your employment with the Company is terminated subsequent to a Change in Control under the circumstances described below in Subsection 2a. This Agreement amends and supersedes in all
respects, all prior Severance Compensation Agreements previously entered into between you and the Company.
1.
Definitions
.
a. “
Change in Control
” means the occurrence of any one of the following events with respect to Praxair:
|
|
(i)
|
individuals who, on January 1, 201_, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to January 1, 201_, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote
or by approval of the Praxair proxy statement in which such person is named as a nominee for director, without objection to such nomination) shall be an Incumbent Director;
provided
,
however
, that no individual elected or nominated as
a director of Praxair initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be
deemed an Incumbent Director;
|
|
|
(ii)
|
any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Praxair representing 20% or more of the combined voting power of
Praxair’s then outstanding securities eligible to vote for the election of the Board (the “Praxair Voting Securities”);
provided
,
however
, that the event described in this Subsection 1a(ii) shall not be deemed to be a
Change in Control by virtue of any of the following acquisitions: (A) by Praxair or any of its subsidiaries, (B) by any employee benefit plan sponsored or maintained by Praxair or any of its subsidiaries, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction (as defined in Subsection 1a(iii));
|
|
|
(iii)
|
the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving Praxair or any of its
subsidiaries that requires the approval of Praxair’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:
(A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Praxair Voting Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, shares into which such Praxair Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of
such Praxair Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the beneficial
|
2
|
|
owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of
the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a
“Non-Qualifying Transaction”); or
|
|
|
(iv)
|
the stockholders of Praxair approve a plan of complete liquidation or dissolution of Praxair or a sale or disposition of all or substantially all of Praxair’s
assets.
|
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 20% of the Praxair Voting Securities as a result of the acquisition of Praxair Voting Securities by Praxair which reduces the number of Praxair Voting Securities outstanding;
provided
,
that
if after such acquisition by Praxair such person becomes the beneficial owner of additional Praxair Voting Securities that increases the percentage of outstanding Praxair Voting Securities beneficially owned by such person, a Change in
Control shall then occur.
b. “
Code
” shall mean the Internal Revenue Code of 1986, as amended.
c. “
Date of Termination
” shall mean
|
|
(i)
|
in case your employment is terminated for Total Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period),
|
|
|
(ii)
|
in case your employment is terminated due to your death, your date of death;
|
|
|
(iii)
|
in case your employment is Terminated for Cause, the date on which the Board adopts the resolution described in Subsection l of Section 1 of this Agreement
|
|
|
(iv)
|
in all other cases, the date specified in the Notice of Termination (which shall not be less than thirty (30) nor more than forty-five (45) days,
respectively, from the date such Notice of Termination is given).
|
d. “
Good Reason for
Resignation
” shall mean, without your express written consent, any of the following:
|
|
(i)
|
a change in your status or position with the Company which in your reasonable judgment does not represent a promotion from your status or position
immediately prior to the Change in Control, or the assignment to
|
3
|
|
you of any duties or responsibilities or diminution of duties or responsibilities which in your reasonable judgment are inconsistent with your status or position with the Company in effect
immediately prior to the Change in Control, it being understood that any of the foregoing in connection with termination of your employment due to your death or Total Disability or your Termination for Cause shall not constitute Good Reason for
Resignation;
|
|
|
(ii)
|
a reduction by the Company in the annual rate of your base salary as in effect immediately prior to the date of the Change in Control or as the same may be increased
from time to time thereafter, unless such reduction is part of a policy, program or arrangement that is applicable on a nondiscriminatory basis to you and other similarly situated executives employed by the Company or its successors;
|
|
|
(iii)
|
the Company relocates your principal office to a location where the distance between your primary residence and your new principal office is more than 50 miles greater
than the distance between your primary residence and your principal office location as of the date immediately prior to the Change in Control;
|
|
|
(iv)
|
the failure by the Company to continue in effect compensation or benefit plans in which you participate, which in the aggregate provide you compensation opportunities
and benefits at least substantially equivalent to those prior to the Change in Control, but excluding any reduction in compensation opportunities and/or benefits that is part of a policy, program or arrangement that is applicable on a
nondiscriminatory basis to you and other similarly situated executives employed by the Company or its successors;
|
|
|
(v)
|
the failure of the Company to obtain a satisfactory agreement from any Successor (as defined in Subsection 4a hereof) to assume and agree to perform this Agreement, as
contemplated in Subsection 4a hereof;
|
|
|
(vi)
|
any purported termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements hereof; for purposes of this
Agreement, no such purported termination shall be effective for any purpose except to constitute a Good Reason for Resignation.
|
Notwithstanding the foregoing, Good Reason for Resignation shall not exist unless you provide the Company with a Notice of
Termination not later than 60 days after the occurrence of the event giving rise to your Good Reason for Resignation and the Company fails to remedy such condition to your reasonable satisfaction within 30 days of such notice.
e. “
Incentive Compensation
” means any compensation, variable compensation, incentive compensation, bonus
or award paid or payable under an Incentive Compensation Plan.
4
f. “
Incentive Compensation Plan
” shall mean any plan,
program or arrangement for the payment of variable compensation, bonus, benefits or awards maintained by the Company, in which awards are paid in cash including, but not limited to, the 2002 Praxair, Inc. Variable Compensation Plan, or any successor
plan thereto, in which you are eligible to participate.
g. “
Notice of Termination
” shall mean
a written notice as provided in Section 9 hereof.
h. “
Pension Plan
” shall mean the
Praxair Pension Plan, as it may be amended prior to a Change in Control.
i. “
Pension Program
”
shall mean the Pension Plan plus any excess or supplemental pension plans maintained by the Company.
j.
“
Account-Based Participant
” shall mean a participant in the Pension Plan accruing an Account-Based benefit under the Pension Plan.
k. “
Traditional-Design Participant
” shall mean a participant in the Pension Plan accruing a benefit under
the Pension Plan other than an Account-Based benefit.
l. “
Termination for Cause
” shall mean
termination of your employment upon your willfully engaging in conduct demonstrably and materially injurious to the Company, monetarily or otherwise, provided that there shall have been delivered to you a copy of a resolution duly adopted by the
unanimous affirmative vote of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of the conduct set forth and specifying the particulars thereof in detail.
For purposes of this Subsection, no act, or failure to act, on your part shall be deemed “willful” unless done,
or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done by you in good faith and in the best interests of the Company.
m. “
Total Disability
” shall mean that based on objective medical evidence, as the result of an illness or
injury, you cannot perform the essential functions of your regular job for a period of six months or more, with or without an accommodation; and you are under the “regular and appropriate care” of a physician. “Regular and Appropriate
Care” means that you are being treated by a physician as often as is medically required, and are receiving care that conforms to generally accepted medical standards for treating the sickness or injury; is consistent with the stated severity of
the medical condition to effectively treat this illness or injury; and is provided by a physician whose specialty or experience is the most appropriate for the disability according to generally accepted medical practices.
5
n. “
Variable Compensation Year
” means a calendar or fiscal
plan year of any Incentive Compensation Plan.
2.
Compensation Upon Termination
. Following a Change in Control, you
shall be entitled to the following benefits:
a.
Termination Benefits
. If, during the term of this
Agreement (as defined in Section 3), your employment by the Company is terminated subsequent to a Change in Control and under circumstances that would qualify as a “separation from service” under Code Section 409A, (a) by
the Company other than a Termination for Cause, or (b) by you with Good Reason for Resignation, then you shall be entitled to the benefits provided below, without regard to any contrary provision of any plan:
|
|
(i)
|
Accrued Salary
. The Company shall pay you within the timeframe required under applicable law, your full base salary and vacation pay accrued through your Date of
Termination at the rate in effect at the time the Notice of Termination is given (or at the rate in effect immediately prior to the Change in Control, if such amounts was higher).
|
|
|
(ii)
|
Accrued Incentive Compensation
. The Company shall pay you, not later than thirty (30) days following your Date of Termination, the amount of your accrued
Incentive Compensation, determined as the sum of:
|
(a) if your Date of Termination is after the end of a
Variable Compensation Year, but before Incentive Compensation for said Variable Compensation Year has been paid, the Company shall pay you as Incentive Compensation for that Variable Compensation Year an amount equal to your actual Incentive
Compensation payment for such Variable Compensation Year, determined using both your and the Company’s actual performance for such Variable Compensation Year, but in no event shall your individual performance factor for purposes of such
determination, if applicable, be less than 1.0; plus
(b) if your Date of Termination is other than the first day of a
Variable Compensation Year, the Company shall pay you, as Incentive Compensation for the Variable Compensation Year in which your Date of Termination occurs, an amount equal to your target Incentive Compensation payment for such Variable
Compensation Year (or if higher, your target Incentive Compensation payment for the year in which the Change in Control occurred), multiplied by a fraction, the numerator of which is the total number of days which have elapsed in the current
Variable Compensation Year to your Date of Termination, and the denominator of which is three hundred sixty-five (365).
If
there is more than one Incentive Compensation Plan, your accrued Incentive Compensation under each Plan shall be determined individually.
|
|
(iii)
|
Insurance Coverage
. The Company shall arrange to provide you (and your dependents, if applicable) with life, accident and health insurance
benefits
|
6
|
|
substantially equivalent to those which you are receiving or entitled to receive immediately prior to the Change in Control. Such insurance benefits shall be provided to you for the longer of
(x) twenty four (24) months after your Date of Termination, or (y) the period during which such insurance benefits would have been provided to you, as a terminated employee, under the applicable life insurance, medical, health and
accident plans of the Company in effect immediately prior to the Change in Control. Benefits provided pursuant to this Subsection for the first twenty four (24) months after your Date of Termination shall be provided at no cost to you and any
benefits provided after such twenty four (24) month period shall be provided to you on the same financial terms and conditions as provided for under the respective plans.
|
Should it be determined that any of the medical benefits to be provided to you under this Subsection 2a(iii) could be included in your
gross income for federal, state or local tax purposes, then the following shall apply:
(a) If you are at least age 48 with at
least eight (8) years of service with the Company on your Date of Termination, then you shall participate in the Company’s retiree medical benefit plans as if you retired from the Company on your Date of Termination with eligibility for
such plans, except that the Company shall provide such medical coverage at no cost to you for two (2) years following your Date of Termination and thereafter, you shall participate therein on the same terms as other retired employees (to the
extent these benefits are provided by the Company’s self-insured plan, any reimbursements for claims incurred shall be made as soon as practicable, but in no event can they be made later than the end of the calendar year following the calendar
year in which the claim was incurred);
(b) If you are not at least age 48 or do not have at least eight (8) years of
service upon your Date of Termination, you will no longer continue to participate in the Company’s medical benefit plans, except for COBRA, and (i) if you elect to receive COBRA benefits, the Company shall provide you with such benefits at
no cost to you for the first eighteen (18) months following your loss of medical coverage, and thereafter, (ii) the Company shall, for the subsequent six (6) months, purchase for you, at its cost, a policy of medical insurance
providing benefits substantially similar to the benefits you would have received under the Company’s medical benefit plans.
|
|
(iv)
|
Retirement Benefits
.
|
|
|
A.
|
If you are a Traditional-Design Participant, the provisions of this Subsection 2a(iv)A shall apply to you.
|
The Company shall pay you, at the time you are entitled to be paid a retirement pension under the Pension Program, a retirement
7
pension equal to the greater of (x) an amount computed in accordance with the terms of the Pension Program in effect immediately prior to the Change in Control and as if those terms were in
effect on your Date of Termination, or (y) an amount computed in accordance with the terms of the Pension Program in effect immediately prior to your Date of Termination, in either case less the amount of retirement pension actually to be paid
to you under the Pension Program. In computing the amounts of your retirement pension under clauses (x) and (y) of this Subsection, two (2) years shall be added to your actual age and to your actual Company service credit under the
Pension Program so that your retirement pension under clauses (x) and (y) will be the amount it would have been if you had been two (2) years older than you actually were, and had two (2) years more Company service credit than
you actually had, on your Date of Termination.
If for any reason, the benefits under this Subsection cannot be paid under the
tax-qualified portion of the Pension Program, the Company shall pay such benefits to you in a lump sum, not later than thirty (30) days after your Date of Termination, calculated under such one of the following options as would produce the
highest lump sum payment: (a) calculated under the same factors (interest rate and mortality) as lump sum payments were made under the Company’s Supplemental Retirement Income Plans and Equalization Benefit Plan in effect immediately prior
to a Change in Control; (b) calculated under the same factors (interest rate and mortality) as total lump sum payments are made under the Company’s Supplemental Retirement Income Plans and Equalization Benefit Plan, or other similar plans,
as in effect on your Date of Termination; or (c) calculated under the same factors (interest rate and mortality) as lump sum payments would have been calculated under the Company’s Supplemental Retirement Income Plans and Equalization
Benefit Plan on your Date of Termination, if such factors were determined using the same methodology as such plans used prior to the Change in Control.
|
|
B.
|
If you are an Account-Based Participant the provisions of this Subsection 2a(iv)B shall apply to you.
|
To provide benefits to you which are equivalent to the benefits you would have received under the Pension Program for
the two (2) years following your Date of Termination, the Company shall pay you an amount equal to four percent (4%) of your Compensation (as defined in the Pension Plan but without regard to the limitations of Code Section 401(a)(17)
and including amounts deferred by you under any Praxair compensation deferral program) paid for the year prior to the Change in Control or the year prior to your Date of Termination, whichever is greater, multiplied by two (2). Such amount shall be
paid to you not later than the thirtieth (30
th
) day
following your Date of Termination.
8
|
|
(v)
|
Severance Payment
. The Company shall pay as severance pay to you, not later than the thirtieth
(30
th
) day following your Date of Termination, a lump
sum severance payment (the “Severance Payment”) equal to two (2) times the sum of the following:
|
(a) the greater of your annual base compensation which was payable to you by the Company immediately prior to your Date of Termination
and your annual base compensation which was payable to you by the Company immediately prior to a Change in Control, whether or not such annual base compensation was includible in your gross income for federal income tax purposes; plus
(b) the amount of your target Incentive Compensation payment for the Variable Compensation Year in which the Change in Control occurs, or
if higher, your target Incentive Compensation payment for the Variable Compensation Year in which your Date of Termination occurs.
(a) For
purposes of this Subsection 2a(vi), the following terms shall have the following meanings:
|
|
(I)
|
Payment
shall mean any payment or distribution (or acceleration of benefits) by the Company to or for your benefit (whether paid or payable or distributed or
distributable (or accelerated) pursuant to the terms of this Agreement or otherwise). In addition, Payment shall mean the amount of income deemed to be received by you as a result of the acceleration of the exercisability of any of your options to
purchase stock of the Company or the acceleration of the lapse of any restrictions on performance stock or restricted stock of the Company held by you or the acceleration of any payment from any deferral plan of the Company.
|
|
|
(II)
|
Excise Tax
shall mean the excise tax imposed by Section 4999 of the Code.
|
(b) In the event it shall be determined that the amount of any Payments payable to you would constitute an “excess parachute
payment,” within the meaning of Section 280G of the Code, subject to the Excise Tax, then the amount of the Payments payable to you under this Agreement shall be reduced (a “Reduction”) to the extent necessary so that no portion
of such Payments payable to you is subject to the Excise Tax, but only if the effect of such Reduction would be to place you in a better after-tax economic position than you would have been in had no such Reduction been effected. In the event a
Reduction is required, the payments to be reduced
9
will be determined in a manner which has the least economic cost to you and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when payment would have been
made to you until the Reduction is achieved.
(c) All determinations required to be made under this Subsection 2a(vi),
including whether and when an Excise Tax or a Reduction is required and the amount of such Excise Tax or Reduction and the assumptions to be utilized in arriving at such determination, shall be made by the public accounting or actuarial consulting
firm that is retained by the Company (the “Firm”) which shall provide detailed supporting calculations both to the Company and to you within fifteen (15) business days of the receipt of notice from you that there has been a Payment,
or such earlier time as is requested by the Company (collectively, the “Determination”). In no event may the Firm retained by the Company be serving as accountant, auditor or consultant for the individual, entity or group affecting the
Change in Control. All fees and expenses of the Firm shall be borne solely by the Company. If the Firm determines that no Excise Tax is payable by you, you may request the Firm to furnish you with a written opinion that failure to report the Excise
Tax on your applicable federal income tax return would not result in the imposition of a negligence or similar penalty. The Determination by the Firm shall be binding upon the Company and you.
|
|
(vii)
|
No Duty to Mitigate
. You shall not be required to mitigate the amount of any payment provided for in this Section 2 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit hereunder be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after your Date of Termination, provided, however, should you
become reemployed in a job which (a) offers medical plan benefits which are equal to or greater than the medical plan benefits provided to you under Subsection 2a(iii), and (b) such medical plan benefits are offered to you at no cost, you
shall no longer be eligible to receive medical plan benefits under this Agreement.
|
|
|
(viii)
|
Six Month Delay
. Notwithstanding any provision of this Agreement to the contrary, and only to the extent necessary to comply with Section 409A of the Code,
if, as of your Date of Termination, you are considered a Specified Employee (as such term is defined in Section 409A of the Code) the payments due you which are described in Subsections 2a(ii), 2a(iii), 2a(iv), and 2a(v) shall not be paid until
the expiration of the six month period immediately following your Date of Termination (the “Delay Period”) and, at the conclusion of such Delay Period, any amounts that would have been payable during such Delay Period under these
Subsections but for this Subsection 2a(viii), shall be paid in a single sum.
|
b.
Payments
While Disabled
. During any period prior to your Date of Termination and during the term of this Agreement (as defined in Section 3) that you are unable to
10
perform your full-time duties with the Company, whether as a result of your Total Disability or as a result of a physical or mental disability that is not total or is not permanent and therefore
is not a Total Disability, you shall continue to receive your base salary at the rate in effect at the commencement of any such period (reduced by the amount of any short term disability or salary continuation benefits payable on account of your
disability under any Company plan, program or arrangement), together with all other compensation and benefits that are payable or provided under the Company’s benefit plans, including its disability plans. After your Date of Termination, your
benefits shall be determined in accordance with the Company’s Pension Program, insurance and other applicable programs. The compensation and benefits, other than salary, payable or provided pursuant to this Subsection 2b shall be the greater of
(x) the amounts computed under the Pension Program, disability benefit plans, insurance and other applicable programs in effect immediately prior to the Change in Control and (y) the amounts computed under the Pension Program, disability
benefit plans, insurance and other applicable programs in effect at the time the compensation and benefits are paid.
c.
Payments if Terminated for Cause or by You Without Good Reason for Resignation
. If, during the term of this
Agreement (as defined in Section 3), your employment by the Company shall be Terminated for Cause or by you other than with Good Reason for Resignation, the Company shall pay you within the timeframe required under applicable law, your full
base salary and accrued vacation pay through your Date of Termination, at the rate in effect at the time Notice of Termination is given. Thereafter the Company shall have no further obligation to you under this Agreement. Any other benefits due to
you and/or beneficiaries shall be determined in accordance with the Company’s Pension Program and other applicable retirement, benefit and insurance programs, then in effect.
d.
After Death
. If, during the term of this Agreement (as defined in Section 3), your employment by the
Company is terminated by reason of your death, the Company shall pay to your estate within the timeframe required under applicable law, your full base salary and accrued vacation pay through your Date of Termination, at the rate then in effect. Any
other benefits due to you, your estate and/or beneficiaries shall be determined in accordance with the Company’s Pension Program and other applicable retirement, benefit and insurance programs, then in effect.
e.
Payments Conditioned Upon Release
. In addition to all other requirements set forth in this
Agreement, as a condition of receiving the termination benefits described in Subsections 2a and 2b (other than the payment of accrued salary under Subsection 2a(i)) you must first sign a general release in the form attached hereto as Exhibit A (or
such other mutually acceptable form), which shall be provided to you no later than two (2) days after your Date of Termination and must be executed by you, become effective and not be revoked by you by the twenty-eighth
(28
th
) day following the date you receive such
general release. If such release does not become effective within that timeframe or you revoke such release or otherwise repudiate it or breach its terms at any time, all termination benefits payable under Subsections 2a (other than accrued salary
under Subsection 2a(i)) and 2b shall be suspended and you shall immediately repay to the Company any such termination benefits that were previously paid to you or on your behalf. Such suspended/repaid termination benefits shall only be paid if they
are found to be payable by a final decision of a court. In the absence of such a finding, the suspended/repaid termination benefits shall be forfeited.
11
3.
Term of Agreement
. This Agreement shall become effective as of [INSERT],
201
, if, and only if, you have executed and returned to Praxair the Nondisclosure, Nonsolicitation and Noncompetition agreement previously provided to you, and shall thereafter continue in effect through December 31,
201
; provided, however, that commencing on January 1, 201
and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or you shall have given notice that it or you do not wish to extend this Agreement. Notwithstanding any such notice by the Company or you not to extend this Agreement, if a Change in Control shall
have occurred:
(a) during the original or extended term of this Agreement or,
(b) after this Agreement has been terminated, but within twelve months after such notice to terminate the Agreement is
given by the Company,
the attempted termination of the Agreement shall be deemed ineffective and this Agreement shall continue in effect. In
any event, the term of this Agreement shall expire on the second (2nd) anniversary of the date of the Change in Control. Notwithstanding any provision in this Agreement to the contrary, this Agreement shall terminate immediately if your
employment is terminated by you or the Company prior to a Change in Control, or if your position is changed prior to a Change in Control so that you are no longer an officer of the Company entitled by virtue of your position to have this Agreement
and, in either case, the provisions of subsection (b) of this Section 3 shall not be applicable.
4.
Successors;
Binding Agreement
.
a.
Successors of the Company
. The Company will require any Successor to all or
substantially all of the business and/or assets of the Company to expressly assume and agree, by an agreement in form and substance reasonably satisfactory to you, to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assent at least five business days prior to the time a person becomes a Successor (or where the Company does not have at least five business
days advance notice that a person may become a Successor, within three business days after having notice that such person may become or has become a Successor) shall constitute Good Reason for Resignation by you and, if a Change in Control has
occurred or thereafter occurs, shall entitle you immediately to the benefits provided in Subsection 2a hereof upon delivery by you of a Notice of Termination which the Company, by executing this Agreement, hereby assents to. For purposes of this
Agreement, “Successor” shall mean any person that purchases all or substantially all of the assets of the Company or the Surviving Corporation (and Parent Corporation, if applicable) or obtains or succeeds to, or has the practical ability
to control (either immediately or with the passage of time), the Company’s business directly, by merger or consolidation, or indirectly, by purchase of voting securities of the Company or by acquisition of rights to vote voting securities of
the Company or otherwise, including but not limited to any person or group that acquires the beneficial ownership or voting rights described in Subsection 1a(ii).
12
b.
Your Successor
. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. If you should die following your Date of Termination while any amount would still be payable to you hereunder
if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.
5.
Relationship to Other Agreements
. To the extent that any provision of any other agreement between the Company and you shall
limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be
deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
6.
Nature of Payments
. All payments to you under this Agreement shall be considered either payments in consideration of your
continued service to the Company or severance payments in consideration of your past service to the Company.
7.
Validity
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
8.
Counterparts
. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
9.
Notice
. Any purported termination of your employment
by the Company or by you following a Change in Control shall be communicated to the other party by a Notice of Termination. A Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. For the purpose of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of Praxair or to such other address as either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
10.
Fees and Expenses
. Praxair shall pay
all reasonable legal fees and related expenses incurred by you as a result of your termination following a Change in Control or by you in seeking to obtain or enforce any right or benefit provided by this Agreement (including all reasonable fees and
expenses, if any, incurred in contesting or disputing any such termination or incurred by you in seeking advice in connection therewith); provided that such fees are incurred
13
no later than the end of the second calendar year after the year of your Date of Termination. Any such payments will be made as soon as practicable but in no event can they be made later than the
end of the calendar year following the calendar year in which the fee or expense was incurred.
11.
Survival
. The
respective obligations of, and benefits afforded to, the Company and you as provided in Sections 2, 4, 5, 6, 10 and 11 of this Agreement shall survive termination of this Agreement.
12.
Miscellaneous
. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.
13.
Governing Law
. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of
the State of Connecticut.
14.
Amendment
. No amendment to this Agreement shall be effective unless in writing and
signed by both you and the Company.
15.
Duplicate Payments
. If the national laws of any country require any payments
to you by the Company or any of its subsidiaries or affiliates as a result of your termination due to a Change in Control, the amount of any such payment shall be deducted from any payment due to you under this Agreement. It is expressly stated as
the Company’s intent under this Agreement that the amount you receive from the Company as a result of your termination due to a Change in Control shall be limited to the amount calculated as provided in this Agreement. This Section does not
limit your ability, without offsetting reductions to the Company’s payment obligation, to receive government payments for which you may be eligible as a result of the termination of your employment.
16.
Tax Withholding
. The Company shall withhold from all amounts payable under this Agreement any federal, state, local or other
taxes that the Company, in its sole discretion, determines to be appropriate under applicable law.
If this letter sets forth
our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.
|
|
|
|
|
Sincerely,
|
|
|
|
PRAXAIR, INC.
|
|
|
|
|
By:
|
|
|
|
|
|
[NAME]
|
|
Title:
|
|
[TITLE]
|
14
Agreed to this
day
of
, 201
15
EXHIBIT A
GENERAL RELEASE
1. In consideration of the promises and termination benefits payable pursuant to the Praxair, Inc. Severance Compensation Agreement between me and
Praxair, Inc., and dated as of [INSERT], 201
, I, [INSERT NAME], for myself and on behalf of my heirs, assigns, successors, executors and administrators, hereby fully and irrevocably release and discharge Praxair, Inc., its
predecessors, successors, parents, affiliates, divisions and subsidiaries and, in their capacities as such, all of their present, past, and future directors, officers, employees, representatives, attorneys, insurers, reinsurers, agents and assigns
(collectively, “Praxair”), from any and all manner of claims, complaints, causes of action, grievances, liabilities, obligations, promises, damages, agreements, rights, debts and expenses (including attorney’s fees and costs), of
every kind, either at law or in equity, whether known or unknown, suspected or unsuspected, relating to my employment or separation from employment with Praxair, arising at any time up to and including the date of the execution of this General
Release. This includes any claims under any federal, state, local or municipal law, regulation or decision, including, but not limited to, claims arising under Title VII of the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment
Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act, any applicable Executive Order Programs, the Fair Labor Standards Act, or their state or local counterparts, as well as any common law claims, including but not
limited to claims for discrimination, retaliation, wrongful discharge, breach of contract, infliction of emotional distress, defamation, negligent hiring and/or supervision, or any allegation or claim arising under any policies, practices or
procedures of Praxair, or any public policy. It is expressly agreed and understood that this release is a GENERAL RELEASE.
2. I acknowledge
that:
|
|
(a)
|
I have read this document, and I understand its legal and binding effect. I am acting voluntarily and of my own free will in executing this release.
|
|
|
(b)
|
The consideration for this release is in addition to anything of value to which I already am entitled.
|
|
|
(c)
|
I have had the opportunity to seek and have consulted with legal counsel prior to signing this release.
|
|
|
(d)
|
I have been given at least 21 days to consider the terms of this release before signing it. In the event that I sign this release before the expiration of the 21-day
period, I acknowledge that I have freely chosen to waive the 21-day period.
|
3. I understand that if I sign this release, I can
change my mind and revoke it within seven days after signing it by sending a written revocation notice by overnight and certified mail to:
|
|
|
|
|
|
|
|
|
Praxair, Inc.
Vice President
Human Resources
39 Old Ridgebury Rd.
Danbury, CT 06810
|
|
|
16
EXHIBIT A
I have read and understand the General Release set forth above and agree to be bound by its terms.
17