HSY » Topics » TERMS AND CONDITIONS OF THE [GRANT YEAR] NONQUALIFIED STOCK OPTION GRANT UNDER THE KEY EMPLOYEE INCENTIVE PLAN
This excerpt taken from the HSY 8-K filed Feb 18, 2005.
TERMS AND CONDITIONS
OF THE [GRANT YEAR]
NONQUALIFIED STOCK OPTION GRANT
KEY EMPLOYEE INCENTIVE PLAN
The Optionee, by accepting the option to purchase shares of the
Corporations Common Stock (the Options) granted to him/her on
[option grant date], (the Grant Date), accepts and agrees to
these terms and conditions and the terms and conditions of the Key Employee
Incentive Plan (the Plan), which Plan is incorporated herein by
The Options shall not be exercisable until vested. The Options shall be
exercisable during the period [first anniversary of option grant date]
through [the date immediately preceding the 10th anniversary of
the option grant date] (the Exercise Period), subject to the
vesting schedule described in the next sentence and the provisions regarding
termination set forth in paragraphs 3 and 4 below and in the Plan. Of the total
Options granted to the Optionee on the Grant Date (Total Grant),
twenty-five percent (25%) of the Total Grant will become vested on the first
anniversary of the Grant Date; an additional twenty-five percent (25%) of the
Total Grant will become vested on the second anniversary of the Grant Date; an
additional twenty-five percent (25%) of the Total Grant will become vested on
the third anniversary of the Grant Date; and an additional twenty-five percent
(25%) of the Total Grant will become vested on the fourth anniversary of the
Grant Date. During the Exercise Period, vested Options may be exercised in whole
or in part and on one or more than one occasion. The purchase price of any
shares as to which the Options shall be exercised shall be paid in full at the
time of such exercise.
In the event Optionees employment with the Corporation is terminated for
any reason other than the occurrence of an event described in paragraph 4 below,
or a Corporate Event or Change in Control as described
in this paragraph 3, whether voluntarily or involuntarily, the Options shall
terminate immediately upon termination of Optionees employment and may not
be exercised after such termination of employment.
Optionees employment with the Corporation is terminated solely due to a
Corporate Event, Optionee shall have the right to exercise vested Options on
or prior to the 90th day following the Optionees termination of
employment or, if such 90th day is not a New York Stock Exchange trading day,
the first day after such 90th day that is a New York Stock Exchange trading day
(Corporate Event Exercise Deadline). Optionee shall have the right to exercise
any Options that vest on or prior to the Corporate Event Exercise Deadline at the time or
after such Options vest but on or before the Corporate Event Exercise Deadline. In no
event, however, may Options be exercised after [the date immediately preceding the
10th anniversary of the option grant date], the date the Options expire.
For purposes of this grant, a Corporate Event shall mean a corporate action, such as the
sale of a subsidiary or business unit, a corporate restructuring, or other material,
non-recurring event which results in the displacement or elimination of a significant
number of jobs and which is required to be disclosed as a separate matter in the
Corporations financial statements.
the occurrence of a Change in Control (as that term is defined in the Plan), the Options
shall become fully vested and exercisable notwithstanding the vesting schedule set forth
in paragraph 2 above. If Optionees employment is terminated by the Corporation
within two (2) years following the Change in Control for any reason other than for Cause
(as that term is defined in the Plan) or if Optionees employment is terminated by
the Optionee within such two year period for Good Reason (as that term is defined in the
Plan), Optionee shall have one (1) year from the date of termination of employment to
exercise his/her Options. In no event, however, may Options be exercised after [the
date immediately preceding the 10th anniversary of the option grant date],
the date the Options expire.
If Optionee retires after the Grant Date and during the calendar year in which
the Grant Date occurs, the Total Grant will be reduced on a pro-rata basis to
reflect Optionees period of employment during the calendar year in which
the Grant Date occurs (the Adjusted Grant). The Adjusted Grant shall
equal the Total Grant multiplied by a fraction the numerator of which equals the
number of calendar months during such year preceding the month during which
Optionees retirement date occurs and the denominator of which equals 12;
provided, however, that any fractional share resulting from such calculation
shall be eliminated by rounding the Adjusted Grant down to the nearest whole
foregoing provisions of this paragraph 4 notwithstanding, if a Change in Control occurs
following the Grant Date, and Optionee retires after the occurrence of the Change in
Control but prior to the first day of the twelfth (12th) calendar month
following the month during which the Grant Date occurs, the Total Grant shall not be
reduced as aforesaid, but rather the Total Grant of Options shall be deemed to have become
fully vested and exercisable upon the occurrence of the Change in Control.
the event Optionee retires, dies or becomes totally disabled, subject to the vesting
provisions of paragraph 2 and paragraph 3, if a Change in Control shall have occurred, and
the possible adjustment of the Total Grant to an Adjusted Grant as provided in this
paragraph 4, Optionee (or his/her estate in the case of death) shall have five (5) years
from the date of retirement, death, or disability to exercise his/her Options, provided
such five (5) year period cannot extend beyond [the date immediately preceding the
10th anniversary of the option grant date].
The Options shall be exercisable through Charles Schwab & Co.
(Schwab), the broker selected by the Corporation to provide services
for stock options, or by such other method as shall be established by the
Corporation from time to time. For information about Schwabs services and
how to exercise stock options, call 1-800-654-2593 or go online to Schwab Equity
Award Center at http://equityawardcenter.schwab.com for assistance.
The Compensation and Executive Organization Committee of the Board of Directors
(the Committee), or any successor committee performing similar
functions, may from time to time impose certain limitations or restrictions on
the exercise of the Options by employees who are subject to employee minimum
stockholding requirements established by the Committee. Such limitations,
restrictions and minimum stockholding requirements are subject to change at the
discretion of the Committee.
Except to the extent that the Plan permits exercise in limited circumstances by
persons other than the Optionee, the Options may not be assigned, transferred,
pledged or hypothecated in any way whether by operation of law or otherwise, and
shall not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Options
contrary to the provisions hereof or of the Plan, and the levy of any execution,
attachment or similar process upon the Options, shall be null and void and
without effect and shall cause the Options to terminate.
By accepting the Options granted herewith, Optionee acknowledges and agrees,
subject to paragraph 12 below, that the Options are granted under and governed
by the terms and conditions set forth in this document and in the Plan. Any
dispute or disagreement which shall arise under, as a result of, or in any way
relate to the interpretation, construction or administration of the Plan or the
Options granted thereunder shall be determined in all cases and for all purposes
by the Committee, or any successor committee, and any such determination shall
be final, binding and conclusive for all purposes.
In selling the Corporations Common Stock (the Shares) upon
Optionees exercise of his/her Options, the Corporation is fulfilling in
full its contractual obligation to Optionee by making such transfer, and the
Corporation shall have no further obligations or duties with respect thereto and
is discharged and released from the same. The Corporation makes no
representations to Optionee regarding the market price of the Shares or the
information which is available to Optionee regarding the Shares of the
The Optionee may be restricted by the Corporation in its sole judgment from
exercising any of the Options to the extent necessary to comply with insider
trading or other provisions of federal or state securities laws.
The grant of Options and all terms and conditions related thereto, including
those of the Plan, shall be governed by the laws of the Commonwealth of
Pennsylvania. The Plan shall control in the event there is a conflict between
the Plan and these terms and conditions.
The terms and conditions set forth in this document shall not, unless expressly
stated otherwise, modify or supersede the terms and conditions of any other plan
or agreement applicable to employee benefit plans of the Corporation.