Mattel, Inc. 2003 Long-Term Incentive Plan
Purpose and Effective Date
1.1 Purpose. The Mattel, Inc. 2003 Long-Term Incentive Plan (the “Plan”) is intended to motivate and retain key executives of Mattel, Inc. who regularly and directly make or influence decisions that affect the medium and long-term success of Mattel, Inc. (the “Company”). The Plan is designed with the intent that Awards paid hereunder to Covered Employees are generally deductible without limit under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and interpretations promulgated thereunder.
1.2 Effective Date. Subject to Article VII, the effective date of the Plan shall be January 1, 2003 (the “Effective Date”).
The following terms shall be defined as set forth below.
2.1 Affiliate. “Affiliate” shall mean a corporation or other entity controlled by, controlling or under common control with the Company.
2.2 Award. “Award” shall mean an opportunity to earn one or more payouts with respect to a Performance Period pursuant to the Plan.
2.3 Board. “Board” shall mean the Board of Directors of the Company.
2.4 Business Criteria. “Business Criteria” shall have the meaning set forth in Section 3.2.
2.5 Cause. Unless otherwise provided by the Committee in the terms and conditions of a particular Award, a participant’s employment shall be considered to have been terminated by the Company for “Cause” if (a) the termination is for “Cause” pursuant to any Individual Agreement to which the Participant is a party that is then in effect, or (b) if there is no such Individual Agreement or if it does not define Cause, termination of the Participant’s employment by the Company or any of its Affiliates or Subsidiaries because of (i) the Participant’s commission or conviction of a felony under federal law or the law of the state in which such action occurred, (ii) the Participant’s dishonesty in the course of fulfilling the Participant’s employment duties, (iii) the Participant’s willful and deliberate failure to perform his or her employment duties in any material respect, or (iv) in the case of a termination prior to a Change in Control, such other events as shall be determined by the Committee. The Committee shall, unless otherwise provided in an Individual Agreement with the Participant, have the sole discretion to determine whether “Cause” exists, and its determination shall be final.
2.6 Change in Control. “Change in Control” shall mean the occurrence of any of the following:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company, including the shares of common stock of the Company issuable upon an exchange of Softkey Exchangeable Shares that are not owned by the Company or any corporation controlled by the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company or any corporation controlled by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (4) any acquisition by a Person of 20% of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities as a result of an acquisition of common stock of the Company by the Company or of Softkey Exchangeable Shares by Softkey which, by reducing the number of shares of common stock of the Company or Softkey Exchangeable Shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities; provided, however, that if a Person shall become the beneficial owner of 20% or more of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities by reason of a share acquisitions by the Company or by Softkey as described above and shall, after such share acquisitions by the Company or Softkey, become the beneficial owner of any additional shares of common stock of the Company, then such acquisition shall constitute a Change in Control or (5) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this section; provided, further, however, that for purposes of this subsection (a), any Investing Person (as such term is defined in the Rights Agreement) shall be deemed not to be a beneficial owner of any Investment Shares (as such term is defined in the Rights Agreement) and the holder of the Mattel Special Voting Preferred Share (as such term is defined in the Rights Agreement) shall be deemed not to be a beneficial owner of such Mattel Special Voting Preferred Share; or
(b) Individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding share of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
2.7 CIC Date. “CIC Date” shall have the meaning set forth in Article VIII.
2.8 Code. “Code” shall have the meaning set forth in Section 1.1.
2.9 Committee. “Committee” shall have the meaning set forth in Section 5.1.
2.10 Common Stock. “Common Stock” shall mean common stock, par value $1.00 per share, of the Company.
2.11 Company. “Company” shall have the meaning set forth in Section 1.1.
2.12 Covered Employee. “Covered Employee” shall mean (a) any “covered employee” of the Company within the meaning set forth in Section 162(m)(3) of the Code and the regulations and rulings promulgated thereunder and (b) any other employee designated as a “Covered Employee” by the Committee.
2.13 Disability. “Disability” shall mean, unless otherwise provided by the Committee, (a) “Disability” as defined in any Individual Agreement to which the Participant is a party, or (b) if there is no such Individual Agreement or it does not define “Disability,” permanent and total disability as determined under the Company’s Long-Term Disability Plan applicable to the Participant.
2.14 Fair Market Value. “Fair Market Value” shall mean, unless a different method or value is determined by the Committee, the closing price of the Common Stock as reported on the New York Stock Exchange Composite Tape for that day, or if the New York Stock Exchange is closed on that day, the preceding day on which the New York Stock Exchange was open.
2.15 Good Reason. The termination of a Participant’s employment by the Participant shall be considered to be for “Good Reason” if it is a termination for “Good Reason” pursuant to an Individual Agreement to which the Participant is a party that is then in effect. If a Participant does not have an Individual Agreement, or if it does not define “Good Reason,” no termination of that Participant’s employment shall be considered to be for “Good Reason.”
2.16 Individual Agreement. “Individual Agreement” shall mean an employment, consulting or similar agreement between a Participant and the Company or one of its subsidiaries or affiliates.
2.17 NOPAT. “NOPAT” shall have the meaning set forth in Section 3.2.
2.18 Outside Director. “Outside Director” shall have the meaning set forth in the regulations and rulings promulgated under Section 162(m) of the Code.
2.19 Participant. “Participant” shall mean a key executive of the Company or any of its Subsidiaries or Affiliates who has been selected by the Committee pursuant to Section 3.1(a) to be a Participant in the Plan.
2.20 Performance Objectives. “Performance Objectives” shall have the meaning set forth in Section 3.1(c).
2.21 Performance Period. “Performance Period” shall have the meaning set forth in Section 3.1.
2.22 Performance Subperiod. “Performance Subperiod” shall have the meaning set forth in Section 3.5.
2.23 Plan. “Plan” shall have the meaning set forth in Section 1.1.
2.24 Rights Agreement. “Rights Agreement” shall mean the Rights Agreement, dated as of February 7, 1992, as amended by an amendment dated as of May 13, 1999 and an amendment dated as of November 4, 1999 by and between the Company and BankBoston N.A., a national banking association, formerly, The First National Bank of Boston, and not giving effect to any amendments subsequent to November 4, 1999.
2.25 Softkey. “Softkey” shall mean Softkey
Software Products Inc., an
2.26 Softkey Exchangeable Shares. “Softkey Exchangeable Shares” shall mean the Exchangeable Shares (as such term is defined in the Rights Agreement) in the capital stock of Softkey.
2.27 Subsidiary. “Subsidiary” shall mean any corporation, partnership, joint venture or other entity during any period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.
Eligibility, Performance Objectives and Maximum Limits on Awards
3.1 Eligible Employees. Each individual who is a key executive of the Company, its Affiliates and Subsidiaries shall be eligible to be selected to participate in the Plan. From time to time, the Committee shall determine which such executives shall be Participants in the Plan. The Committee may elect to establish additional standards for purposes of determining eligibility to participate in, and benefits to be provided to, Participants for each period for which Awards may be granted under the Plan (each, a “Performance Period”).
3.2 Performance Objectives.
(a) Pre-established Performance Objective. A Participant shall be eligible to earn an Award under the Plan based upon the attainment of pre-established performance objectives (each, a “Performance Objective”) over a Performance Period. Performance Objectives shall be established by the Committee in writing not later than 90 days after the commencement of the Performance Period to
which such Performance Objective relates, provided that the outcome is substantially uncertain at the time the Committee actually establishes the Performance Objectives; and provided, further, however, that in no event shall a Performance Objective be established after 25 percent of the period of service (as scheduled in good faith at the time the Performance Objective is established) has elapsed. An Award shall not be considered to have been established for a Participant for a particular Performance Period, and that Performance Period shall not be considered to be pending for that Participant, until the relevant Performance Objectives, the potential amounts of the Award, and the other terms and conditions of the Award have been established by the Committee and communicated to the Participant.
(b) Performance Objectives/Business Criteria. Performance Objectives shall be based on one or more of the following business criteria (the “Business Criteria”) with respect to the Company or the Company’s worldwide operations, regional operations, country specific operations and/or subsidiaries, business units, affiliates, corporations, divisions or employees and/or brands, groups of brands or specific brands: net operating profit after taxes (“NOPAT”); NOPAT less a capital charge; return on capital employed; revenue; earnings per share; earnings per share before or after funding for some or all of the Company’s incentive programs; operating profit; operating profit less a charge on one or more of the following items: working capital, inventory or receivables; net income; return on equity; cash flow return on investment; return on invested capital or assets; fair market value of stock; and achievement of strategic initiatives.
(c) Objective Compensation Formula. A Performance Objective shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to a Participant if the Performance Objective is attained, subject to Section 3.3 below. A formula or standard shall be considered objective if a third party having knowledge of the relevant performance results could calculate the amount to be paid to the Participant. In addition, the formula or standard must specify the individual Participants or class of Participants to which it applies. Performance Objectives may take into account or call for disregarding the effect of unforeseen, nonrecurring or extraordinary events or accounting changes, restructuring charges and other specific items, provided, that such actions do not cause the Performance Objectives to cease to comply with the foregoing.
3.3 Negative Discretion. The extent, if any, to which an Award will be payable will be based upon the degree of achievement of the Performance Objectives over the Performance Period; provided, however, that the Committee may, in its sole discretion, reduce the amount which would otherwise be payable with respect to an Award (under which circumstances the Participant will have no right to receive the amount of such reduction even if the Performance Objectives are met).
3.4 Maximum Bonus. The maximum amount payable to any Participant under the Plan with respect to any Award shall not exceed (a) $4,000,000 times (b) the number of years and fractions thereof in the applicable Performance Period.
3.5 Interim Payments. The Committee may provide, at the time it establishes Awards for a particular Performance Period, for interim payments of all or any portion of such Awards, based upon achievement of Performance Objectives during a portion of the overall Performance Period (such portion, a “Performance Subperiod”). In no event shall the total amount of interim and final payments with respect to any such Award exceed the maximum amount provided in Section 3.4.
Settlement of Awards
4.1 Determination of Amounts Payable. As soon as reasonably practicable after the end of each Performance Period and each Performance Subperiod, the Committee shall certify the extent to which the applicable Performance Objectives have been met, and determine the amounts, if any, payable pursuant to each Award or portion of an Award, as applicable, granted with respect to that Performance Period or Performance Subperiod, as applicable, in accordance with Article III and the terms of such Awards.
4.2 Settlement of Awards. Subject to Section 6.9, each Award or portion of an Award, as applicable, shall be settled as soon as practical after the determination of the amount payable pursuant to such Award or portion of an Award, as applicable, by delivery to the Participant of either (a) a cash payment of the amount payable, or (b) if the Committee so determines, in its sole discretion, unrestricted or restricted shares of Common Stock granted under a stockholder-approved plan of the Company having a Fair Market Value, determined as of the most recent practicable date before such delivery, equal to the amount payable pursuant to such Award or portion of an Award, as applicable (such date of delivery, the “Payment Date”); provided, that any determination to settle an Award, in whole or in part, with restricted shares of Common Stock must be made by the Committee at the time it establishes the terms and conditions of the Award.
4.3 Termination of Employment. In the event that a Participant’s employment with the Company, its Affiliates and Subsidiaries terminates for any reason prior to the Payment Date for an Award, the Award shall be forfeited by the Participant unless otherwise provided under the terms of the Award or otherwise determined by the Committee; provided, however, that if the Participant is a Covered Employee, in no event shall any amount be payable pursuant to such Award unless either (a) the Performance Objectives are satisfied or (b) the termination of employment is due to death or Disability, a termination by the Company, its Affiliates or Subsidiaries without Cause, or a termination by the Participant for Good Reason. A Participant employed by an Affiliate or Subsidiary of the Company shall be deemed to have terminated employment if the Subsidiary or Affiliate ceases to be an Affiliate or Subsidiary, as the case may be, and the Participant is not immediately thereafter an employee of the Company or another Subsidiary or Affiliate.
5.1 Committee. Authority to administer the Plan shall be vested in the Compensation/Options Committee of the Board of Directors of the Company or any successor or other committee designated by the Board to administer the Plan (the “Committee”). Only Outside Directors may be members of the Committee, and the Committee must have at least three members.
5.2 Administrative Powers. The Committee shall have all powers necessary and appropriate to administer and interpret the Plan. In addition to any powers and authority conferred on the Committee elsewhere in the Plan or by law, subject to the terms of the Plan the Committee shall have the following powers and authority:
(a) To select the eligible individuals to whom Awards may from time to time be granted;
(b) To determine whether and to what extent an Award is to be granted hereunder;
(c) To modify, amend or adjust the terms and conditions of any Award, at any time or from time to time, including but not limited to Performance Objectives; provided, however, that the Committee may not adjust upwards the amount payable with respect to an Award or waive or alter the Performance Objectives associated therewith;
(d) To determine the terms and conditions of any Award granted hereunder, any vesting condition, restriction or limitation, based on such factors as the Committee shall determine;
(e) To determine whether Awards will be settled in cash or Common Stock; and
(f) To perform or cause to be performed such further acts as it may deem necessary or appropriate in the administration of the Plan.
The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable, to interpret the terms and provisions of the Plan and any Award granted under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.
5.3 Delegation. The Committee may act only by a majority of its members then in office. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may (a) allocate all or any portion of its responsibilities and powers to any one or more of its members and (b) delegate all or any part of its responsibilities and powers to any person or persons selected by it, provided that no such delegation may be made that would cause an Award to a Covered Employee not to be deductible under, or to cease to be deductible under, Section 162(m) of the Code. Any such allocation or delegation may be revoked by the Committee at any time.
5.4 Determinations Final and Binding. Any determination made by the Committee with respect to any Award shall be made in the sole discretion of the Committee at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company, its stockholders, Subsidiaries, Affiliates and the Participants.
5.5 Board Action. Any authority granted to the Committee may also be exercised by the full Board, except to the extent that the grant or exercise of such authority would cause an Award to a Covered Employee not to be deductible under, or to cease to be deductible under, Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
6.1 Amendment and Termination. The Company may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would (a) impair the rights of a Participant under any Award theretofore granted without the Participant’s consent, except such an amendment made to comply with applicable law, stock exchange rules or accounting rules or (b) cause an Award to a Covered Employee not to be deductible under, or to cease to be deductible under, Section 162(m) of the Code. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or stock exchange rules.
6.2 No Enlargement of Employee Rights. Nothing contained in the Plan shall be deemed to give a Participant the right to be retained in the employ of the Company, its Affiliates or Subsidiaries or to interfere with the right of the Company, its Affiliates or Subsidiaries to discharge any Participant at any time.
6.3 Governing Law. All
legal questions pertaining to the Plan shall be determined in accordance with
the laws of the State of
6.4 Funded Status. It is presently intended that the Plan constitute an “unfunded” plan for incentive compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock or make payments; provided, however, that unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.
6.5 No Limit of Other Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.
6.6 Tax Withholding. The Company may withhold, or cause to be withheld, all required federal, state, local and/or foreign taxes of any kind from all payments under the Plan. When an Award is settled in shares of Common Stock granted under another plan, as permitted by Section 4.2, this required tax withholding may be accomplished in any manner permitted by that other plan.
6.7 Governing Law. The
Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
6.8 Nontransferability. Awards under the Plan are not transferable except by will or by laws of descent and distribution.
6.9 Deferral of Awards. Participants may elect to further defer receipt of cash or Common Stock in settlement of Awards under the Company’s Deferred Compensation Plan, or its successor, for a specified period or until a specified event, subject in each case to the Committee’s approval and to such terms as are determined by the Committee. Unless otherwise determined by the Committee, such election must generally be made prior to commencement of the Performance Period for the Award in question.
6.10 Foreign Employees. In
the event an Award is granted to a Participant who is employed or providing
services outside the
No Awards shall be settled, in whole or in part, under the Plan unless and until the stockholders of the Company shall have approved the Plan. So long as the Plan shall not have been previously terminated by the Company, to the extent that the Company determines that Awards granted after the 2008 stockholder meeting to Covered Employees shall continue to be intended to satisfy the “qualified performance-based compensation” requirements of Section 162(m) of the Code, the Plan and the material terms of its performance goals shall be resubmitted for approval by the stockholders of the Company no later than the 2008 stockholder meeting, and every fifth year thereafter.
Change in Control
In the event of a Change in Control, notwithstanding any other provision of the Plan, each Participant who is employed by the Company, any of its Affiliates or Subsidiaries or any of their successor as of the date of such Change in Control (the “CIC Date”) shall be paid within 30 days after the CIC Date (a) a cash payment in full settlement of any Award that is earned but unpaid as of the CIC Date, unless the Participant has previously elected to defer the settlement of such Award, of and (b) for each Performance Period that commenced prior to the CIC Date that has not been completed as of the CIC Date, a cash payment in full settlement of such Participant’s Award for such Performance Period, equal to the greater of (i) the amount that would have been payable with respect to such Award assuming satisfaction of the Performance Objectives at target level or (ii) the amount that would have been payable with respect to such Award based on actual performance measured through the CIC Date; provided, that if there is more than one such Performance Period, such payment shall only be made with respect to the earliest-commencing Performance Period. For any other Performance Period that has commenced prior to, but has not been completed as of, the CIC Date, each Participant shall receive a cash payment in full settlement of such Participant’s Award equal to the product of (A) the greater of (1) the amount that would have been payable with respect to such Award assuming satisfaction of the Performance Objectives at target level or (2) the amount that would have been payable with respect to such Award based on actual performance measured through the CIC Date and (B) a fraction, the numerator of which is the total number of days in the applicable Performance Period through the CIC Date and the denominator of which is the number of days in the applicable Performance Period. In the case of a Participant who is a party to any Individual Agreement under which the Participant is or may become entitled to payments with respect to the same Performance Period(s) described above, the Company or its successor may make the right of such Participant to receive the payment set forth above conditioned upon the execution by such Participant of a waiver of the right to receive such payments under the Individual Agreement to the extent they would duplicate such payment. For all purposes of determining the amounts to be paid under this Article VIII, in no event shall the Committee be permitted to exercise the rights set forth in Section 3.3 hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed effective as of March 20, 2003.
/s/ ALAN KAYE
Senior Vice President, Human Resources
EX-99.1 2 dex991.htm AMENDMENT NO. 1 TO MATTEL, INC. 2003 LONG-TERM INCENTIVE PLAN
AMENDMENT NO. 1 TO
MATTEL, INC. 2003 LONG-TERM INCENTIVE PLAN
The Mattel, Inc. 2003 Long-Term Incentive Plan (the “Plan”) is hereby amended, effective as of January 1, 2005, as set forth below. Capitalized terms used and not defined in this Amendment No. 1 shall have the meanings given to them in the Plan.
1. A new Article IX is added to the Plan, as set forth below.
Cancellation, Reduction and Recapture
9.1 Purposes. The Plan is intended to align the Participants’ long-term interests with the long-term interests of the Company and its Affiliates and Subsidiaries. If a Participant engages in certain activities discussed below, either during employment with the Company and its Affiliates and Subsidiaries or after such employment terminates for any reason, the Participant is acting contrary to the long-term interests of the Company and its Affiliates and Subsidiaries. Accordingly, the Company may (1) cancel any or all of an Award on or before the date of payment or settlement (“Cancellation”), (2) reduce or eliminate the payout to which a Participant would otherwise be entitled pursuant to an Award (to the extent not previously paid or settled) (“Reduction”), or (3) after an Award has been paid or settled, recapture any cash amounts or Common Stock (whether restricted or unrestricted) paid or delivered to the Participant in settlement of the Award, or any proceeds from the Participant’s sale of any such Common Stock (such recapture being referred to as a “Recapture” and such cash amounts, Common Stock and proceeds being referred to collectively as the “Proceeds” of the Award), as more fully described below.
9.2 Intellectual Property; Confidentiality. Each Participant shall comply with any agreement or undertaking regarding inventions, intellectual property rights, and/or proprietary or confidential information or material that the Participant signed or otherwise agreed to in favor of the Company or any of its Affiliates or Subsidiaries.
9.3 Activities Against the Company’s Interest. The Company believes that if a Participant engages in any of following activities in, or directed into, any State, possession or territory of the United States of America or any country in which the Company or any of its Affiliates or Subsidiaries operates, sells products or does business, then the Participant is acting contrary to the long-term interests of the Company and its Subsidiaries and Affiliates: (1) rendering services to or otherwise directly or indirectly engaging in or assisting, any organization or business that is or is working to become competitive with the Company and/or any of its Affiliates and Subsidiaries; or (2) soliciting any non-administrative employee of the Company and/or any of its Affiliates and Subsidiaries to
terminate employment with the Company or its Affiliate or Subsidiary, as applicable, or to perform services for any organization or business that is or is working to become competitive with the Company and/or any of its Affiliates or Subsidiaries. The activities described in this Section 9.3 are collectively referred to as “Activities Against the Company’s Interest.”
9.4 Enforcement. If the Company determines, in its sole and absolute discretion, that
(a) a Participant has violated any of the requirements set forth in Section 9.2 above or
(b) at any time during his or her employment with the Company or any of its Subsidiaries or Affiliates or within three years after termination of such employment, a Participant has engaged in any Activities Against the Company’s Interest
(the date on which such violation or activity first occurred being referred to as the “Trigger Date”), then the Company may, in its sole and absolute discretion, impose a Cancellation, Reduction and/or Recapture of any of the Participant’s Awards or the Proceeds thereof that had not yet been paid or settled as of the Trigger Date and/or a Recapture of any or all of the Proceeds of any or all of the Participant’s Awards that were paid or settled on or before the Trigger Date, provided that such payment or settlement did not occur more than 12 months before the Trigger Date. Within ten days after receiving notice from the Company that Recapture is being imposed on any Award(s), a Participant shall deliver to the Company the Proceeds of such Award(s). It shall not be a basis for Cancellation, Reduction or Recapture if after a Participant’s employment with the Company and its Affiliates and Subsidiaries, the Participant purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii) such investment does not represent more than a five percent equity interest in the organization or business.
9.5 Certification of Compliance. Upon delivery of cash or Common Stock pursuant to an Award, a Participant shall, if requested by the Company, certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan and shall state the name and address of the Participant’s then-current employer or any entity for which the Participant performs business services and the Participant’s title, and shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.
9.6 Company Discretion. Notwithstanding the foregoing provisions, the Company has sole and absolute discretion not to require Cancellation, Reduction and Recapture, and its determination not to require Cancellation, Reduction or Recapture with respect to any particular Award or any particular act by a particular Participant shall not in any way reduce or eliminate the Company’s authority to require Cancellation, Reduction or Recapture with respect to any other Participant, Award or act.
9.7 No Prohibition of Competition. Nothing in this Article IX shall be construed to impose obligations on Participants to refrain from engaging in lawful competition with the Company after the termination of employment.
9.8 Exercise of Company Authority. All administrative and discretionary authority given to the Company under this Article IX shall be exercised by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee) as the Committee may designate from time to time pursuant to its authority under Sections 3.3, 5.2 and 5.3 of the Plan.
9.9 Enforceability and Validity. Notwithstanding any provision of this Article IX, if any provision of this Article IX is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Article IX is illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law.
9.10 Effect of Change in Control. Notwithstanding the foregoing, this Article IX shall not be applicable to a Participant from and after a termination of the Participant’s employment by the Company and its Affiliates and Subsidiaries within the 18-month period after a Change in Control.
9.11 Effectiveness of Article IX. The provisions set forth in this Article IX shall apply only with respect to Awards for Performance Periods and Performance Subperiods beginning on or after January 1, 2005.
IN WITNESS WHEREOF, the Company has caused this Amendment to the Plan to be executed, effective as of January 1, 2005.
/s/ Alan Kaye
Senior Vice President,
March 16, 2005