Exhibit 99.1
EMPLOYMENT
AGREEMENT
between
3M COMPANY
and
GEORGE W. BUCKLEY
i
ii
iii
iv
v
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (the
“Agreement”) dated December 6, 2005 (the
“Agreement Date”) is between 3M Company, a corporation
incorporated under the laws of Delaware, with its corporate
headquarters in St. Paul, Minnesota (the “Company”),
and George W. Buckley (“Executive”).
WHEREAS, the Company desires to
employ Executive to serve as its President, Chief Executive Officer
and Chairman of its Board, upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of
the premises and the mutual agreements contained herein, the
Company and Executive hereby agree as follows:
ARTICLE I.
DEFINITIONS
The terms set forth below have the
following meanings (such meanings to be applicable to both the
singular and plural forms, except where otherwise expressly
indicated):
1.1
“ Accrued Annual Bonus ” means the amount of any
Annual Bonus earned but not yet paid with respect to the Fiscal
Year ended prior to the Date of Termination.
1.2
“ Accrued Base Salary ” means the amount of
Executive’s Base Salary which is accrued but not yet paid as
of the Date of Termination.
1.3
“ Actual Company Pension Benefits ” means a
single life annuity amount commencing at age 60 (or if later, the
Executive’s Date of Termination) and payable in monthly
installments to Executive for his life which is the Actuarial
Equivalent of the amounts that the Executive has actually received,
or is entitled to receive, from the Company’s Pension
Plans.
1.4
“ Actual Prior Employer Pension Benefits ” means
a single life annuity amount commencing at age 60 (or if later, the
Executive’s Date of Termination) and payable in monthly
installments to Executive for his life which is the Actuarial
Equivalent of the amounts that the Executive has actually received,
or is entitled to receive, from the Prior Employer’s Pension
Plans.
1.5
“ Actuarial Equivalent ” of any amount shall be
determined in accordance with generally accepted actuarial
principles using an interest rate equal to the annual rate of
interest on 30-year Treasury Securities for the month prior to the
first payment to Executive as specified by the Commissioner of the
Internal Revenue Service and mortality determined under Section
417(e)(3)(A)(ii)(I) of the Code or if such interest rate and
mortality assumptions are no longer published, interest rate and
mortality assumptions determined in a manner as similar as
practicable to the manner by which such interest rate and mortality
assumptions were determined immediately prior to the cessation of
publication of such assumptions.
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1.6
“ Affiliate ” means any Person directly or
indirectly controlling, controlled by, or under direct or indirect
common control with, Company. For the purposes of this definition,
the term “control” when used with respect to any Person
means the power to direct or cause the direction of management or
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or
otherwise.
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.7
“ Agreement ” — see the recitals to this
Agreement.
1.8
“ Agreement Date ” — means the date
specified in the recitals to this Agreement.
1.9
“ Anniversary Date ” — means any
anniversary of the Commencement Date.
1.10
“ Annual Bonus ” — see Section
4.2(a).
1.11
“ Annualized Total Compensation ” means, as of
any date, the sum of Executive’s Base Salary as of such date
and the Target Annual Bonus applicable to the year that includes
such date.
1.12
“ Base Salary ” — see Section
4.1.
1.13
“ Beneficiary ” — see Section
10.5.
1.14
“ Board ” means the Company’s Board of
Directors.
1.15
“ Cause ” means any of the following:
(a)
Executive’s commission of:
(i)
a felony, or
(ii)
a misdemeanor
excluding a petty misdemeanor (as defined in Minnesota or a
comparable misdemeanor under the laws of another state) involving
fraud, dishonesty or moral turpitude, other than Limited Vicarious
Liability or a routine traffic violation,
provided,
however, that notwithstanding the foregoing, if Executive shall not
both (1) be indicted or otherwise charged with the above described
felony or misdemeanor within 12 months following Executive’s
Termination for Cause (an “Indictment”) and (2)
be convicted of, or plead guilty or nolo contendere to such
crime or another crime described above based on the same operative
facts (collectively a “Crime”) (a
“Conviction”), such termination shall be a Termination
Without Cause as of the Date of the Termination. In the event
that the Executive has been terminated ostensibly for Cause as
described in the preceding sentence, the vesting of unvested
Options (and the exercise period for vested Options) and the
vesting of unvested Initial RSUs, unvested Make-Whole Restricted
Stock Units, unvested Initial
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Performance Units
and unvested Subsequent Performance Units (collectively, for this
purpose, the unvested Initial RSUs, unvested Make-Whole Restricted
Stock Units, unvested Initial Performance Units and unvested
Subsequent Performance Units are referred to as the “Unit
Awards”) shall be suspended until either (X) the lapse of
such 12-month period without Indictment or (Y) if there is a timely
Indictment, the end of the criminal proceeding relating to such
Indictment. If there is both a timely Indictment and a
Conviction, then such suspended unvested Options and unvested Unit
Awards shall be forfeited. If such termination becomes a
Termination Without Cause, above, Options shall vest and be
exercisable in accordance with Sections 5.3(c) and 5.4 and unvested
Unit Awards shall vest in accordance with Sections 5.3(d), 5.6(b),
5.7 and 5.8(a), and either (i) all Options shall remain exercisable
until two years after the date on which (X) or (Y) above shall
occur, regardless of whether such two year period extends
beyond the Option Term or (ii) the Company shall provide Executive
with the economic equivalent in a lump sum in cash of that
described in clause (i). In addition, if such termination
becomes a Termination Without Cause, the Company shall pay to
Executive the compensation and benefits (or value thereof) in
accordance with Section 8.3, together with interest thereon (as
determined under Section 8.5(a)) from the Date of Termination to
the date of payment.
(b)
Executive’s material breach of this Agreement, provided that
such breach is not cured within 10 days after delivery to Executive
of a notice from the Board requesting cure,
(c)
the willful or intentional material misconduct by Executive in the
performance of his duties under this Agreement,
(d)
the willful or intentional failure by Executive to materially
comply (to the best of his ability) with a specific, written
direction of the Board that is consistent with normal business
practice and not inconsistent with this Agreement and
Executive’s responsibilities hereunder, provided that a
failure shall be considered willful if Executive fails to cure to
the best of Executive’s ability any such failure to
materially comply with such written direction of the Board within
10 days after delivery to Executive of a notice from the Board
specifying any such failure; and further provided that any such
failure shall not be deemed willful or intentional if based on
Executive’s good faith belief, as expressed by written notice
to the Board given within 10 days after such failure, that the
implementation of such direction of the Board would be unlawful or
unethical and such notice is accompanied by the opinion of
nationally recognized corporate counsel that such implementation
would be unlawful or unethical,
(e)
the Executive’s material violation of the Company’s
conflict of interest policy,
(f)
the Executive’s material violation of any Company policy that
would be grounds for immediate dismissal of any Company senior
executive, or
(g)
a judgment, determination or order of any court, administrative
agency or other tribunal that has the effect of prohibiting the
Executive from performing his job duties or holding his job titles
specified under this Agreement.
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For purposes of the preceding
sentence, “Limited Vicarious Liability” shall mean any
liability which is (i) based on acts of the Company for which
Executive is responsible solely as a result of his office(s) with
the Company and (ii) provided that (x) he was not directly involved
in such acts and either had no prior knowledge of such intended
actions or promptly acted reasonably and in good faith to attempt
to prevent the acts causing such liability or (y) he did not have a
reasonable basis to believe that a law was being violated by such
acts.
For purposes of clause (b) and (c)
above, Cause shall not include any one or more of the
following:
(i)
bad judgment,
(ii)
negligence,
(iii)
any act or omission that Executive believed in good faith to have
been in or not opposed to the interest of the Company (without
intent of Executive to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled), or
(iv)
any act or omission of which any member of the Board who is not a
party to such act or omission has had actual knowledge for at least
six months.
1.16
“ Change of Control ” means any of the following
events:
(a)
any person (as such term is used in Rule 13d-5 under the Exchange
Act) or group (as such term is defined in Sections 3(a)(9) and
13(d)(3) of the Exchange Act), other than a Subsidiary or any
employee benefit plan (or any related trust) of Company or a
Subsidiary, becomes the beneficial owner of 20% or more of the
Common Shares or of securities of Company that are entitled to vote
generally in the election of directors of Company (“Voting
Securities”) representing 20% or more of the combined voting
power of all Voting Securities of Company;
(b)
individuals who, as of the Agreement Date, constitute the Board
(the “Incumbent Directors”) cease for any reason to
constitute at least 50% of the members of the Board; provided that
any individual who becomes a director after the Agreement Date
whose election or nomination for election by Company’s
shareholders was approved by a majority of the members of the
Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with
an actual or threatened “election contest” relating to
the election of the directors of Company (as such terms are used in
Rule 14a-11 under the Exchange Act), “tender offer” (as
such term is used in Section 14(d) of the Exchange Act) or a
proposed Merger (as defined below which if consummated would be a
Change of Control)) shall be deemed to be members of the Incumbent
Board;
(c)
consummation by the Company of either of the following:
(i)
a merger, reorganization, consolidation or similar transaction (any
of the foregoing, a “Merger”) as a result of which the
individuals and entities who
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were the
respective beneficial owners of Common Shares and Voting Securities
of Company immediately before such Merger are not expected to
beneficially own, immediately after such Merger, directly or
indirectly, more than 50% of, respectively, the common stock and
the combined voting power of the Voting Securities of the
corporation resulting from such Merger in substantially the same
proportions as immediately before such Merger, or
(ii)
a plan or agreement for the sale or other disposition of all or
substantially all of the assets of Company, other than such a sale
or disposition to an entity which is, directly or indirectly more
than 50% owned by the Company or an entity of which the individuals
and entities who were the respective beneficial owners of Common
Shares and Voting Securities of Company immediately before such
sale or other disposition beneficially owned immediately after such
sale or other disposition directly or indirectly more than 50% of,
respectively, the common stock and the combined voting power of the
Voting Securities of the corporation to which such sale or other
disposition was made; or
(d)
approval by the stockholders of the Company of a plan of
liquidation of the Company.
Notwithstanding the foregoing, there
shall not be a Change of Control if, in advance of such event,
Executive agrees in writing that such event shall not constitute a
Change of Control.
1.17
“ Code ” means the Internal Revenue Code of
1986, as amended from time to time.
1.18
“ Commencement Date ” means December 6,
2005.
1.19
“ Committee ” means the Compensation Committee
of the Board.
1.20
“ Common Shares ” means the common shares, par
value $0.01 per share, of Company.
1.21
“ Company ” — see the recitals to this
Agreement.
1.22
“ Competitor ” — see Section
9.1(b).
1.23
“ Confidential Information ” — see Section
9.1(d).
1.24
“ Date of Termination ” means the effective date
of a Termination of Employment for any reason, including death or
Disability, whether by the Company or by Executive.
1.25
“ Disability ” means a mental or physical
condition which, in the good faith opinion of the Board, renders
Executive, with reasonable accommodation, unable or incompetent to
carry out the material job responsibilities which Executive held or
the material duties to which Executive was assigned at the time the
disability was incurred, which has existed for at least three
months and which in the opinion of a physician mutually agreed upon
by Company and Executive (provided that neither party shall
unreasonably withhold such agreement) is expected to be permanent
or to last for an indefinite duration or a duration in excess of
six months.
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1.26
“ Employment Period ” — see Section
3.1.
1.27
“ Exchange Act ” means the United States
Securities Exchange Act of 1934.
1.28
“ Executive ” — see the recitals to this
Agreement.
1.29
“ Expiration Date ” — see Section
3.1.
1.30
“ Expiration Notice ” — see Section
3.1.
1.31
“ Fair Market Value ” of a Common Share means,
as of any date, the average of the high and low prices of such
security on such date reported on the New York Stock Exchange
Composite Transactions, rounded upwards to the nearest $0.05, or if
not so reported for the specified date, the immediately preceding
date for which the average is reported.
1.32
“ Fiscal Year ” means the calendar year period
ending each December 31.
1.33
“ Good Reason ” means the occurrence of any one
of the following events unless Executive specifically agrees in
writing that such event shall not be Good Reason:
(a)
any material breach of the Agreement by the Company,
including:
(i)
the material failure of the Company to comply with the provisions
of Articles II, III, IV, V, VI or VII of this
Agreement;
(ii)
any material adverse change in the status, responsibilities or
perquisites of Executive;
(iii)
any failure to nominate and elect Executive as Chief Executive
Officer of the Company and as Chairman of the Company’s
Board;
(iv)
causing or requiring Executive to report to anyone other than the
Board;
(v)
assignment of duties materially inconsistent with his positions and
duties described in this Agreement; or
(vi)
the Company giving an Expiration Notice pursuant to Section
3.1;
provided, however, that no act or
omission described in this Subsection 1.33(a) shall constitute Good
Reason unless Executive gives Company written notice of such act or
omission 30 days prior to the Date of Termination set forth by
Executive in such notice and the Company fails to cure, to the best
of its ability (and for such purpose the “Company”
shall include the Board and the Company’s shareholders and an
act of a majority or super majority of either such body shall not
in itself be regarded as acting to the best of such body’s
ability), such act or omission within the 30-day period (except
that Executive shall not be required to provide such notice in case
of intentional acts or omissions by the Company),
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(b)
the failure of the Company to assign this Agreement to a successor
to the Company or failure of a successor to the Company to
explicitly assume and agree to be bound by the
Agreement,
(c)
the requiring of Executive to be principally based at any office or
location more than 30 miles from the current corporate offices of
the Company in St. Paul, Minnesota, or
(d)
upon and following a Change of Control, (i) the failure of the
Company to nominate and elect Executive as the Chief Executive
Officer and Chairman of the Board of the Company with reporting
responsibility to the Board in the case of a Change of Control
under Section 1.16(a) or 1.16(b), and (ii) the failure of the
top-tier parent entity, be it the Company or an other entity, to
nominate and elect the Executive as the most senior executive
officer reporting to the board of directors and as the chairman of
such board of directors of such top-tier parent entity (A) be it
the Company or other entity in the case of a Change of Control
under Section 1.16(c)(i) or (B) be it the acquiring entity in the
case of a Change of Control under Section 1.16(c)(ii).
1.34
“ including ” means including without
limitation.
1.35
“ Incumbent Directors ” — see Section
1.16(b).
1.36
“ Initial Option ” — see Section
5.1.
1.37
“ Initial Performance Units ” — see
Section 5.5.
1.38
“ Limited Vicarious Liability ” — see
Section 1.15.
1.39
“ Make Whole Grant ” — see Section
5.8.
1.40
“ Maximum Annual Bonus ” — see Section
4.2(b).
1.41
“ Maximum Annual Goals ” — see Section
4.2(b).
1.42
“ Merger ” — see Section
1.16(c).
1.43
“ Notice of Consideration ” — see Section
8.1(b).
1.44
“ Option ” means an option to purchase Common
Shares.
1.45
“ Option Term ” — see Section
5.3(b).
1.46
“ Other Accrued Benefit ” means any right to
benefits or payments not expressly provided herein under the terms
of the governing policy or program which has irrevocably accrued as
of the Date of Termination.
1.47
“ Pension Plan ” means a defined benefit plan
which is either a qualified retirement plan under Code Section
401(a) or a nonqualified retirement plan or arrangement.
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1.48
“ Person ” means any individual, sole
proprietorship, limited liability company, partnership, joint
venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or
government instrumentality, division, agency, body or
department.
1.49
“ Prior Employer ” means Brunswick
Corporation.
1.50
“ Pro Rata Annual Bonus ” means an amount
payable in cash equal to the product of (a) the amount of the
Annual Bonus to which Executive would have been entitled if he had
been employed by the Company on the last day of the Fiscal Year
that includes the Date of Termination, multiplied by (b) a fraction
of which the numerator is the number of days which have elapsed in
such Fiscal Year through the Date of Termination and the
denominator is 365.
1.51
“ Severance Multiple ” means, if Executive
receives a Severance Payment under Section 8.3, the number by which
Executive’s Annualized Total Compensation is multiplied under
Section 8.3(c).
1.52
“ Severance Payment ” means the payment of a
multiple of Executive’s Annualized Total Compensation
pursuant to Section 8.3(c).
1.53
“ Severance Period ” means the number of years
equal to the Severance Multiple.
1.54
“ Stock Ownership Program ” — see Section
5.1.
1.55
“ Subsequent Options ” — see Section
5.2.
1.56
“ Subsequent Performance Units ” — see
Section 5.7.
1.57
“ Subsidiary ” means, with respect to any
Person, (a) any corporation of which more than 50% of the
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by such Person, and (b) any
partnership in which such Person has a direct or indirect interest
(whether in the form of voting or participation in profits or
capital contribution) of more than 50%.
1.58
“ Supplemental Retirement Benefit ” — see
Section 7.1.
1.59
“ Target Annual Bonus ” — see Section
4.2(b).
1.60
“ Target Annual Goals ” — see Section
4.2(b).
1.61
“ Taxes ” means the incremental United States
federal, state and local income, excise, employment and other taxes
(including interest and penalties) payable by Executive with
respect to any applicable item of income.
1.62
“ Tax Gross-Up Payment ” means an amount payable
to Executive such that after payment of Taxes on such amount there
remains a balance sufficient to pay the Taxes being
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reimbursed. The preceding
sentence to the contrary notwithstanding, if the sum of the
effective marginal rates of Taxes applicable to any Tax Gross-Up
Payment would exceed 80% prior to the application of the preceding
sentence, the amount of the Tax Gross-Up Payment shall be
determined by applying a rate of Taxes equal to 80% for purposes of
computing the Tax Gross-Up Payment.
1.63
“ Termination For Good Reason ” means a
Termination of Employment by Executive for a Good Reason, whether
during or after the Employment Period.
1.64
“ Termination of Employment ” means a
termination by the Company or by Executive of Executive’s
employment by the Company.
1.65
“ Termination Without Cause ” means a
Termination of Employment by Company for any reason other than
Cause or Executive’s death or Disability, whether during or
after the Employment Period.
1.66
“ 2006 Option ” — see Section
5.2.
1.67
“ Voting Securities ” — see Section
1.16(a).
1.68
“ Withholding Taxes ” means any federal, state,
provincial, local or foreign withholding taxes and other deductions
required to be paid in accordance with applicable law by reason of
compensation received pursuant to this Agreement.
1.69
“ Year of Service ” shall mean the 12-month
period beginning on the Commencement Date and each 12-month period
beginning on each Anniversary Date thereafter in which Executive
remains continuously employed by the Company.
ARTICLE II.
DUTIES
2.1
Duties . The Company shall employ Executive during the
Employment Period as its President and Chief Executive
Officer. Executive shall also be nominated for election as a
director of the Company at the earliest opportunity, and upon such
election the Board shall elect Executive to serve as its Chairman
effective December 6, 2005. During the Employment Period,
excluding any periods of disability, vacation, or sick leave to
which Executive is entitled, Executive shall perform the duties
properly assigned to him hereunder, shall devote substantially all
of his business time, attention and effort to the affairs of the
Company and shall use his reasonable best efforts to promote the
interests of the Company.
2.2
Other Activities . Executive may serve on corporate,
civic or charitable boards or committees, deliver lectures, fulfill
speaking engagements or teach at educational institutions, or
manage personal investments, provided that such activities do not
individually or in the aggregate materially interfere with the
performance of Executive’s duties under this
Agreement.
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ARTICLE III.
EMPLOYMENT PERIOD
3.1
Employment Period . Subject to the termination
provisions hereinafter provided, the term of Executive’s
employment under this Agreement (the “Employment
Period”) shall begin on the Commencement Date and end on the
Anniversary Date which is three years after such date.
Notwithstanding the preceding sentence, commencing on the first
Anniversary Date the Employment Period shall be extended each day
by one day to create a new two year term until, at any time at or
after the first Anniversary Date, the Company or the Executive
delivers a written notice (an “Expiration Notice”) to
the other party that the Agreement shall expire on a date specified
in the Expiration Notice (the “Expiration Date”) that
is not less than 24 months after the date the Expiration Notice is
delivered by one party to the other party; provided, however, that
notwithstanding the foregoing, the Employment Period shall not be
extended except by written agreement of the parties beyond the date
on which Executive attains age sixty-five (65). The
employment of Executive by the Company shall not be terminated
other than in accordance with Article VIII.
ARTICLE IV.
COMPENSATION
4.1
Salary . The Company shall pay Executive in accordance
with the normal payroll practices of the Company (but not less
frequently than monthly) an annual salary at a rate of $1,600,000
per year (“Base Salary”) beginning on the Commencement
Date. During the Employment Period, the Base Salary shall be
reviewed at least annually and may be increased from time to time
as shall be determined by the Committee, after consultation with
Executive. Any increase in Base Salary shall not limit or
reduce any other obligation of the Company to Executive under this
Agreement. Base Salary shall not be reduced at any time
without the express written consent of Executive.
4.2
Annual Bonus .
(a)
The Company shall pay to Executive an annual bonus (“Annual
Bonus”) for each Fiscal Year which begins during the
Employment Period. Executive shall be eligible for an Annual
Bonus ranging from zero to the Maximum Annual Bonus. Except
as noted below, the Annual Bonus shall be paid and otherwise
subject to the terms of the Company’s Executive Profit
Sharing Plan, as may be amended, and any successor to such
plan.
(b)
If Executive achieves his target performance goals (the
“Target Annual Goals”), as determined by the Committee
on an annual basis after consulting with Executive, such Annual
Bonus shall be designed to realize a target amount (the
“Target Annual Bonus”) of not less than the greater of
(i) $2,600,000 and (ii) 150% of Base Salary. If Executive
achieves his maximum performance goals (the “Maximum Annual
Goals”) as determined by the Committee on an annual basis
after consulting with Executive, such Annual Bonus shall be
designed to not exceed 150% (or such greater
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amount as may be
determined by the Board in its sole discretion) of the Target
Annual Bonus (the “Maximum Annual Bonus”). Such
performance goals shall be set by the Committee within 90 days
after the first day of the applicable Fiscal Year. The actual
amount of any Annual Bonus may fluctuate with the Company’s
performance.
(c)
The Company shall pay the Annual Bonus in a payment of cash, Common
Shares (including restricted shares), or a combination thereof
determined by the Committee at such times and in such manner as is
consistent with the treatment of other senior executives of the
Company and with the provisions of the Company’s Executive
Profit Sharing Plan or its successor plan.
(d)
Notwithstanding the above provisions of this Section 4.2, the
minimum Annual Bonus for the 2006 Fiscal Year shall be $2,600,000,
and shall be paid in cash.
ARTICLE V.
STOCK GRANTS AND PERFORMANCE UNITS GRANTS
5.1
Initial Grants . On the Commencement Date, the Company
shall grant to Executive, an Option to purchase 250,000 Common
Shares (the “Initial Option”), subject to the terms of
the Company’s 2005 Management Stock Ownership Program
(“Stock Ownership Program”) and 50,000 Restricted Stock
Units (the “Initial RSUs”). The Initial RSUs
shall accumulate dividend equivalents as provided for under the
Stock Ownership Program and be reinvested in additional restricted
stock units that shall vest and be paid on the same basis as the
Initial RSUs.
5.2
Subsequent Option Grants . On such date in 2006 that
the Committee grants options to other senior executives of the
Company, the Committee shall grant Executive an Option (“2006
Option”) to purchase such number of Common Shares as shall
result in the 2006 Option having a Black-Scholes value of
$6,000,000 as of the date of grant, subject to the terms and
conditions of the Stock Ownership Program. The Committee
shall in its discretion consider Executive for possible future
annual or other grants of Options (“Subsequent
Options”) for Fiscal Year 2007 and each Fiscal Year
thereafter during the Employment Period, as determined by the
Committee in its discretion based on Executive’s performance
and consistent with the treatment of other senior executives of the
Company. Such Subsequent Options shall be subject to the
terms of the Stock Ownership Program or applicable successor
program.
5.3
Terms and Conditions of Options and Initial RSUs
.
(a)
The exercise price of each Initial Option and 2006 Option,
respectively, shall be the Fair Market Value of a Common Share as
of the Commencement Date (in the case of the Initial Option) and as
of the date of grant (in the case of the 2006 Option).
(b)
Each Initial Option and 2006 Option (i) shall have a term (the
“Option Term”) equal to 10 years commencing on its
grant date, and (ii) shall not be transferable by Executive during
his lifetime, except as permitted by the Stock Ownership
Program.
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