EXHIBIT 10.10
THE LONG TERM INCENTIVE PROGRAM
OF
MANUFACTURERS HANOVER CORPORATION
AND SUBSIDIARIES
SECTION 1 - PURPOSE AND TERM OF PLAN
The Long Term Incentive Program is designed, through grants of awards and
deferred compensation, to attract and retain the services of selected key
officers who are in a position to make a material contribution to the
successful operation of the business of Manufacturers Hanover Corporation or
one or more of its subsidiaries. Long term incentive compensation awards under
the Plan shall be made to selected Participants in the form of one or more of:
Restricted Stock, Restricted Stock Units, stock options (including incentive
stock options and performance stock options) and Stock Appreciation Rights. The
Plan became effective January 19, 1982, and no awards may be made under the
Plan subsequent to January 18, 1992.
SECTION 2 - DEFINITIONS
For the purpose of this Plan, the following terms shall have the following
meanings:
(a) "Board of Directors" means the Board of Directors of the Corporation.
(b) "Committee" means the Compensation Committee of the Board of
Directors or such other committee as may be designated by the Board of
Directors.
(c) "Common Stock" means the common stock of the Corporation.
(d) "Corporation" means Manufacturers Hanover Corporation.
(e) "Corporation's Stock Price Index" means, with respect to any Stock
Performance Period, the numerical result of (i) dividing the Fair Market Value
of the Corporation's Common Stock on the last day of the Stock Performance
Period by the Fair Market Value of such Common Stock on the first day of the
Stock Performance Period (the 'quotient') and (ii) subtracting one (1.0) from
such quotient."
(f) "Disability" means a physical or mental impairment sufficient to make
the individual eligible for benefits under the Long Term Disability Plan of
Manufacturers Hanover Trust Company, so long as such impairment also
constitutes a disability within the meaning of Section 105(d)(4) of the
Internal Revenue Code of 1954.
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(g) "Fair Market Value" on a specified day means, with respect to the
common stock of the Corporation (or, as the case may be, a member of the Peer
Group), the closing price on that day as reported on the New York Stock
Exchange -- Composite Tape, or if no sale of the common stock shall have
occurred on the Exchange that day, on the next preceding day on which there was
such a sale. If such common stock is not traded on the New York Stock Exchange,
the fair market value shall be such amount as shall be reasonably determined by
the Committee.
(h) "Option Period" means the period from the grant of an option to its
expiration, as described in Section 6.3.
(i) "Optionee" means a Participant who has been granted an option under
the Plan.
(j) "Participant" means a key officer of the Corporation or of a
Subsidiary who has been selected by the Committee to receive an award under the
Plan.
(k) "Peer Group" means a group of institutions, as selected by the
Committee. The Committee shall have complete discretion to select appropriate
institutions to be included in the Peer Group and to add institutions to or
delete institutions from the Peer Group from time to time.
(l) "Peer Group Stock Price Index" means, with respect to any Stock
Performance Period, the numerical result of (i) dividing the average Fair
Market Value of the common stock of all members of the Peer Group on the last
day of the Stock Performance Period by the average Fair Market Value of the
common stock of all members of the Peer Group on the first day of the Stock
Performance Period (the 'quotient') and (ii) subtracting one (1.0) from such
quotient.
(m) "Performance Period" means, with respect to any financial measure of
the Corporation relating to a performance stock option, a period of years, as
determined by the Committee, which shall commence with the first day of the
calendar quarter following the calendar quarter in which the grant of the
option occurs.
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(n) "Performance Program" means, collectively, the decisions of the
Committee regarding the designation of the Peer Group, Return on Equity and
T-Bill Rate and any other designations or decisions made by the Committee in
accordance with the Plan which will determine the price at, and the extent to,
which a Performance Stock option award may be exercised. The Performance
Program with respect to any Performance Stock option shall be set within three
months of the date of grant.
(o) "Plan" means the Long Term Incentive Program of Manufacturers Hanover
Corporation and Subsidiaries.
(p) "Plan Year" means the calendar year.
(q) "Restricted Period" means the period of up to fourteen (14) years
selected by the Committee pursuant to Section 4.2 or 5.1.
(r) "Restricted Stock" means Common Stock which has been awarded to a
Participant subject to the restrictions referred to in Section 4.2, so long as
such restrictions are in effect.
(s) "Restricted Stock Unit" means the right to receive a payment on or
about the last day of a Restricted Period in the form of cash or stock, as
further described in Section 5.
(t) "Retirement" means normal or early retirement under the terms of a
pension plan of the Corporation or a Subsidiary or voluntary termination of
employment; provided, however, that in either case, the Corporation must have
given its prior consent to treat the individual's termination of employment as
a retirement.
(u) "Return on Equity" means, with respect to any Performance Period, the
annual rate of return on equity of the Corporation (or such other financial
measure, with respect to the Corporation, as the Committee shall deem
appropriate) or of a designated segment of the Corporation or any of its
Subsidiaries, as calculated by the Committee."
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(v) "Stock Appreciation Right" means, with respect to a share of Common
Stock, the right to receive in the form of Common Stock and/or cash, as
determined by the Committee, an amount equal to the excess of the Fair Market
Value of the share of Common Stock on the day the right is exercised over the
price at which the Participant could exercise an option to purchase the share.
(w) "Stock Performance Period" means, with respect to any performance
stock option, a period of years, as determined by the Committee which shall
commence on the day the options is granted.
(x) "Subsidiary" means any corporation or other legal entity, domestic or
foreign, more than 50% of the voting power of which is owned or controlled,
directly or indirectly, by the Corporation.
(y) "T-Bill Rate" means, with respect to any Performance Period, the
annual rate of return on capital invested in U.S. treasury bills on the first
day of the Performance Period, which capital and earnings thereon are
continuously reinvested upon maturity of such bills in new U.S. treasury bills
until the last day of the Performance Period.
SECTION 3 - GENERAL PROVISIONS
3.1 The Committee shall from time to time designate those persons to be
granted awards under the Plan during each Plan Year, the type of awards
granted, the number of shares, units, options or rights, as the case may be,
which shall be granted to each such person, the Restricted Period or Option
Period with respect to the awards, and any other conditions relating to the
awards as it may deem appropriate, consistent with the provisions of the Plan.
Participants shall be selected from among the key officers of the Corporation
and its Subsidiaries who are in a position to have a material impact on the
results of the operations of the Corporation and its Subsidiaries in future
years. Participants may be designated at any time during a Plan Year, and it
shall not be necessary that all Participants be designated at the same meeting
of the Committee.
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3.2 (a) Shares of Common Stock which may be issued under the Plan may be
either authorized and unissued shares of Common Stock or authorized and issued
shares of Common Stock held in the Corporation's Treasury. Subject to Section
9.7, the number of shares of Common Stock with respect to which awards may be
granted under the Plan in any Plan Year shall be one-half of one percent (0.5%)
of the total shares of Common Stock outstanding on the last day of the
preceding Plan Year (including treasury shares); provided, however, that the
number of shares of Common Stock which may be issued during the term of the
Plan under options and Stock Appreciation Rights shall not exceed 1,000,000.
For this purpose, in addition to the number of shares of Common Stock with
respect to which awards are actually made under the Plan, there shall be deemed
to be awarded the number of shares of Common Stock equal to the number of
Restricted Stock Units awarded under the Plan.
(b) Notwithstanding Section 3.2(a), to the extent that the number of
shares of Common Stock with respect to which awards may be granted under the
Plan in any Plan Year exceeds the number of shares of Common Stock with respect
to which awards were granted under the Plan during the Plan Year, such excess
shall be available for grant under the Plan in succeeding Plan Years.
(c) Any shares of Common Stock returned to the Corporation as the result
of the forfeiture of Restricted Stock, and any shares of Common Stock with
respect to which the Restricted Stock Units shall be forfeited or options shall
expire or terminate (other than by reason of the exercise of Stock Appreciation
Rights) shall again be available for grant under the Plan.
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SECTION 4 - RESTRICTED STOCK
4.1 An award of Restricted Stock shall entitle a Participant to receive,
on the date or dates designated by the Committee, the number of shares of
Common Stock selected by the Committee. Restricted Stock awards shall be
expressly subject to the terms and conditions described in this Section 4.
4.2 During the Restricted Period selected by the Committee, shares of
Restricted Stock awarded to the Participant may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter provided.
Except for such restrictions, the Participant, as owner of such shares, shall
have all the rights of a stockholder, including (but not limited to) the right
to receive all dividends paid on such shares (subject to the provisions of
Sections 9.7 and 9.9) and the right to vote such shares.
4.3 If a Participant ceases to be an employee of the Corporation or its
Subsidiaries during the Restricted Period for any reason other than death,
Disability or Retirement, all shares of Restricted Stock theretofore awarded to
him which are still subject to the restrictions imposed by Section 4.2 shall
upon such termination of employment be forfeited and returned to the
Corporation.
4.4 If a Participant ceases to be an employee of the Corporation or its
Subsidiaries during the Restricted Period by reason of death, Disability or
Retirement, shares of Restricted Stock shall become free of the restrictions in
Section 4.2 to the extent determined by the Committee and the Corporation will
deliver to him or his beneficiary, as the case may be, within 60 days, such
shares of Common Stock pursuant to Section 4.7. Shares of Common Stock which do
not become free of restrictions shall be forfeited and returned to the
Corporation.
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4.5 Each Participant awarded shares of Restricted Stock shall enter into
an Agreement with the Corporation in a form specified by the Committee,
agreeing to the terms and conditions of the award and such other matters as the
Committee shall in its sole discretion determine.
4.6 Each certificate issued in respect of shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Participant,
shall be deposited by him with the Corporation together with a stock power
endorsed in blank and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in Section 4 of the Long Term Incentive Program of
Manufacturers Hanover Corporation and Subsidiaries and an Agreement entered
into between the registered owner and Manufacturers Hanover Corporation. A copy
of such Plan and Agreement is on file in the office of the Secretary of
Manufacturers Hanover Corporation, 350 Park Avenue, New York, 10022".
4.7 When the restrictions imposed by Section 4.2 or other similar
restrictions expire or have otherwise been satisfied with respect to one or
more shares of Restricted Stock, the Corporation shall deliver to the
Participant (or his legal representative, beneficiary or heir) one share of
Common Stock, without the legend referred to in Section 4.6, for each such
share of Restricted Stock deposited with it by the Participant pursuant to
Section 4.6. At that time, the Agreement referred to in Section 4.5, as it
relates to such shares, shall be terminated.
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SECTION 5 - RESTRICTED STOCK UNITS
5.1 Each Restricted Stock Unit awarded to a Participant shall, subject to
the remaining provisions of this Section 5, and such other conditions as the
Committee shall prescribe, entitle the Participant to receive, on or about the
last day of the Restricted Period designated by the Committee, a payment in the
form, as determined by the Participant prior to the last day of the Restricted
Period, of (i) one share of Common Stock or (ii) cash in an amount equal to the
Fair Market Value of a share of Common Stock on the last day of the Restricted
Period.
5.2 During the Restricted Period of Restricted Stock Units awarded to a
Participant, the Participant shall receive in cash, at the time that dividends
are distributed to shareholders with respect to Common Stock, the amount which
the Participant would have received as a dividend had the Participant held the
number of shares of Common Stock equal to the number of Restricted Stock Units
credited to the Participant (hereinafter referred to as "dividend
equivalents"); provided, however, that a Participant may irrevocably elect
within 30 days after the commencement of the Restricted Period or prior to the
beginning of any Plan Year to defer receipt of dividend equivalents otherwise
payable during that Plan Year and/or any subsequent Plan Years to the end of
the Restricted Period, or, if earlier, the termination of his employment with
the Corporation or its Subsidiaries. An election to defer may be revoked with
respect to dividend equivalents payable in any succeeding Plan Year prior to
the beginning of that Plan Year. Amounts so deferred shall be credited with
interest as a rate determined periodically by the Committee. No interest shall
be payable, however, with respect to any dividend equivalents which relate to
Restricted Stock Units which are forfeited pursuant to Section 5.3 below.
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5.3 If a Participant ceases to be an employee of the Corporation or its
Subsidiaries during the Restricted Period for any reason other than death,
Disability or Retirement, all Restricted Stock Units theretofore awarded to him
shall upon such termination of employment be forfeited and shall cease to be
credited to him and he shall receive any dividend equivalents deferred pursuant
to Section 5.2, without interest thereon.
5.4 If a Participant ceases to be an employee of the Corporation or its
Subsidiaries during the Restricted Period by reason of death, Disability or
Retirement, then his Restricted Stock Units shall become free of such
restrictions to the extent determined by the Committee, and the Corporation
within 60 days thereafter will pay him or his beneficiary, as the case may be,
with respect to each such Unit, one share of Common Stock or an amount of cash
equal to the Fair Market Value of a share of Common Stock on the date the event
described in this Section 5.4 occurred. Restricted Stock Units which do not
become free of restrictions shall be forfeited. In either event the Participant
shall receive any dividend equivalents deferred pursuant to Section 5.2, plus
interest thereon.
SECTION 6 - STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
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6.1 The Committee may grant incentive stock options, non-qualified stock
options (including performance stock options having the features described in
Section 6.2(b) and Section 6.3) and/or Stock Appreciation Rights to eligible
individuals, subject to the terms and conditions set forth in this Section 6.
The grant of an option shall be evidenced by a written option agreement executed
by the Corporation and the Optionee, which may contain such additional terms and
conditions as the Committee may from time to time prescribe.
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6.2 a) The option price per share with respect to each option shall
(except as provided under paragraph (b) of Section 6.2) not be less than 100
per cent of the Fair Market Value of a share of Common Stock on the day the
option is granted.
b) The option price per share with respect to each performance stock
option initially shall be 100 percent of the Fair Market Value of a share of
Common Stock on the day the option is granted (the 'Initial Price'), and shall
be adjusted thereafter as follows: if the Corporation's Stock Price Index minus
the Peer Group Stock Price Index for the applicable Stock Performance Period
(the 'index differential') is greater than zero, the Initial Price reduced by
the product of the index differential and the Initial Price shall be the option
price (the 'Final Price'). The Final Price shall not, however, be less than
fifty percent (50%) of the Initial Price. The Final Price shall equal the
Initial Price if the Corporation's Stock Price Index or the index differential
is zero or less. In lieu of the foregoing reduction in price, the Committee may
provide that an option be exercisable at the Initial Price and that the
Optionee receive, at the time of exercise, in cash, the excess of the Initial
Price over the Final Price.
6.3 Options granted under this Plan shall expire no later than the day
preceding the fifteenth (15th) anniversary of the date the option was granted;
provided that no incentive stock option shall be exercisable after the
expiration of ten (10) years from the date such option is granted. The period
of time from the date of grant of an option to its expiration date shall be
known as the "Option Period". No option shall become exercisable within one
year after the date of grant; the Committee may prescribe the date or dates
thereafter upon which all or a portion of the option becomes exercisable. On
the date a performance stock option first becomes exercisable, the portion (if
any) of such option which shall become exercisable will be determined by the
Committee in accordance with the Performance Program.
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6.4 At the time of exercising any option in whole or in part, the
Optionee or other person exercising the option shall pay the Corporation in the
form of cash and/or Common Stock (including Restricted Stock) or other property
acceptable to the Corporation the full option price of the shares so purchased.
The shares shall thereupon be promptly delivered. No optionee or his legal
representatives, legatees or distributees, as the case may be, will be deemed to
be a holder of any shares pursuant to exercise of an option until the date of
issuance of a stock certificate to him for such shares. The proceeds of the sale
of stock subject to options are to be added to the general funds of the
Corporation and used for its general corporate purposes.
6.5 If, prior to the end of the Option Period, the Optionee shall cease to
be employed by the Corporation or its Subsidiaries (otherwise than by reason of
the death, Disability or Retirement of the Optionee), each option shall remain
exercisable for a period of three (3) months from the date of cessation of
employment (but not later than the end of the Option Period) to the extent it
was exercisable at the time of cessation of employment, and thereafter all such
options shall terminate. If, prior to the end of the Option Period, the Optionee
shall cease to be employed by reason of Retirement, each option shall remain
exercisable for a period of five years from the date of Retirement (but not
later than the end of the Option Period) to the extent that it was exercisable
at the time of Retirement, and thereafter all such options shall terminate. If,
prior to the end of the Option Period, the Optionee shall cease to be employed
by the Corporation or its Subsidiaries by reason of death or Disability each
option shall remain exercisable for a period of one year form the date of
cessation of employment (but not later than the end of the Option Period) to the
extent that it was exercisable at the time of cessation of employment, and
thereafter all such options shall terminate. Notwithstanding the provisions of
this paragraph, if the Optionee is discharged for cause (which shall be defined
as participation in conduct during employment consisting of fraud, felony,
willful misconduct or commission of any act which causes or may reasonably be
expected to cause substantial damage to the Corporation or a Subsidiary) each
option to the extent not previously exercised shall terminate at once.
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6.6 The Committee may grant Stock Appreciation Rights to selected
Participants. Stock Appreciation Rights shall be issued in tandem with options
so that exercise of a Stock Appreciation Right will have the effect of
terminating the option or portion thereof to which it relates, and exercise of
an option or portion thereof to which a Stock Appreciation Right relates will
similarly have the effect of terminating the Stock Appreciation Right. Stock
Appreciation Rights shall be exercisable in the same installments and shall be
subject to the same terms and conditions as the options to which they relate,
as well as such other terms and conditions which the Committee shall deem
appropriate.
6.7 The aggregate Fair Market Value (determined as of the date the option
is granted) of the Common Stock for which any employee may be granted incentive
stock options in any calendar year ending prior to January 1, 1987 under this or
any other stock option plan maintained by the Corporation and/or its
Subsidiaries shall not exceed (a) $100,000 plus (b) the "carryover amount" for
that calendar year. The "carryover amount" with respect to a calendar year shall
equal (a) one-half of the sum of the excess, for each of the preceding three
calendar years (excluding years prior to 1981) of $100,000 over the Fair Market
Value (determined as of the time the option is granted) of the Common Stock for
which the meployee was granted incentive stock options under this or any other
stock option plan maintained by the Corporation and/or its Subsidiaries, minus
(b) the amount of any such excess used as a carryover amount in the grant of
incentive stock options in any preceding calendar year. For purposes of this
paragraph, the amount of options granted in any calendar year shall be treated
as first using up the $100,000 limitation for that year and any additional
grants shall be treated as using up unused carryover amounts in the order of the
calendar years in which the carryover amounts arose.
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6.8 The aggregate Fair Market Value (determined as of the date the option
is granted) of the Common Stock for which any employee may be granted, after
December 31, 1986, incentive stock options which are exercisable for the first
time by such employee during any one calendar year under this or any other
stock option plan maintained by the Corporation and/or its Subsidiaries shall
not exceed $100,000.
SECTION 7 - ADMINISTRATION
7.1 The Plan shall be administered by the Committee, which shall be
composed of such members (not less than three) of the Board of Directors as
shall be appointed from time to time by the Board. No person who is an officer
of the Corporation or any of its Subsidiaries shall be appointed a member of
the Committee. Any member of the Committee may resign at any time. The Board of
Directors may remove any member of the Committee at any time and may fill any
vacancy in the Committee.
7.2 Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the key officers who shall be Participants and to
determine the amount of, of method of determining, the awards to be made to
each such Participant.
7.3 The Committee's interpretation of the Plan or of any award granted
pursuant thereto shall be final and binding on all Participants.
7.4 The Committee shall have the authority to establish, adopt or revise
such rules or regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan, including, but not limited to,
the determination of the criteria and methods under which the exercise price
and other terms relating to performance stock options shall be determined.
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SECTION 8 - AMENDMENT OR TERMINATION
8.1 The Board of Directors may amend any provision of the Plan or any
agreement thereunder at any time; provided, however, that without the approval
of shareholders no amendment may be made that would (i) increase the maximum
number of shares to be issued under the Plan; (ii) extend the term during which
options may be granted under the Plan; (iii) reduce the option price per share
to less than the Fair Market Value of the Common Stock on the date the option
was granted. The Board of Directors shall also have the right to terminate the
Plan at any time. If the Plan is terminated, deferred compensation shall
nevertheless be paid out in accordance with the provisions of the Plan as in
effect prior to its termination, including the provisions relating to the
authority of the Committee to administer and interpret the Plan. Except with
the consent of the Participant, no amendment, suspension or termination shall
impair the rights of any Participant in any Common Stock, units, options or
rights awarded to such participant under the Plan.
8.2 The Committee may in any Plan Year refrain from designating any
Participants or may refrain from making any awards, but such action shall not
be deemed a termination of the Plan. No Participant or officer shall have any
claim or right to be granted awards under the Plan.
SECTION 9 - MISCELLANEOUS
9.1 The fact that a key officer has been designated as a participant
shall not confer on him any right to be retained in the employ of the
Corporation or one or more of its Subsidiaries, or to be designated as a
Participant in any subsequent Plan Year.
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9.2 No award under this Plan shall be taken into account in determining a
Participant's compensation for the purposes of any group life insurance or
other employee benefit or pension plan of the Corporation or a Subsidiary,
including the Retirement Plan of Manufacturers Hanover Trust Company and
Certain Affiliated Companies and the Savings Incentive Plan of Manufacturers
Hanover Corporation.
9.3 This Plan shall not be deemed an exclusive method of providing
incentive compensation for the officers and employees of the Corporation and
its Subsidiaries, nor shall it preclude the Board of Directors from authorizing
or approving other forms of incentive compensation.
9.4 All expenses and costs in connection with the operation of the Plan
shall be borne by the Corporation.
9.5 Options, rights and units granted or awarded pursuant to this Plan
shall not be transferable by the Participant other than by will or the laws of
descent and distribution, and options and rights granted thereunder shall be
exercisable, during a Participant's lifetime, only by him.
9.6 A Participant may appoint a beneficiary (on a form supplied by the
Committee) to receive Restricted Stock Unit payments and exercise options
and/or rights in the event of his death, and may change his beneficiary at any
time prior to his date of death.
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9.7 In the event of any change in the outstanding shares of Common Stock
by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change, the maximum aggregate number and class of shares in which awards may be
granted under the Plan, the number of Restricted Stock units outstanding and
the number of shares subject to outstanding options and Stock Appreciation
Rights and the Corporation's Stock Price Index with respect to any Stock
Performance Period, shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received by a Participant with respect to shares of Restricted Stock will be
subject to the same restrictions and shall be deposited with the Corporation.
9.8 In the event of any change in the outstanding shares of the common
stock of any member of the Peer Group merger, consolidation, combination or
exchange of shares or other similar corporate change, the Peer Group Stock
Price Index with respect to any affected Stock Performance Period may be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
9.9 If the Corporation shall be consolidated or merged with another
corporation, each Participant who has received shares of Restricted Stock that
are still subject to restrictions imposed by Section 4.2 may be required to
deposit with the successor corporation the stock, securities or other property
that he is entitled to receive by reason of his ownership of the shares of
Restricted Stock, and such stock, securities or other property shall become
subject to the restrictions imposed by Section 4.2 and shall bear an appropriate
legend similar in form and substance to the legend set forth in Section 4.6.
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9.10 The Corporation shall be entitled to withhold from awards paid under
the Plan the amount of taxes the Corporation deems necessary to satisfy any
applicable Federal, state and local income tax withholding obligations arising
from the payment of the award or to make other appropriate arrangements with
Participants to satisfy such obligations.