Exhibit 10.6
[Month, Year]
Award
STOCK OPTION
AGREEMENT
Under the
SUNOCO, INC. LONG-TERM
PERFORMANCE ENHANCEMENT PLAN II
This Stock Option Agreement (the
“Agreement”) entered into as of
(the “Agreement Date”), by and between Sunoco, Inc.
(“Sunoco”) and
, who is an employee of Sunoco or one of its Affiliates (the
“Participant”);
W I T N E S
S E T H :
WHEREAS, in order to make certain
awards to key employees and directors of Sunoco and its Affiliates,
Sunoco maintains the Sunoco, Inc. Long-Term Performance Enhancement
Plan II (the “Plan”), approved by shareholders at
Sunoco’s 2001 Annual Meeting; and
WHEREAS, the Plan is administered by
a Committee (the “Committee”) appointed by
Sunoco’s Board of Directors and consisting of at least two
(2) members of such Board, each of whom meets the applicable
requirements of Section 16 of the Securities Exchange Act of
1934, as amended, and Section 162(m) of the Internal Revenue
Code; and
WHEREAS, the Board and/or Committee
has determined to make an award of an option to purchase shares of
common stock of Sunoco to the Participant pursuant to the terms and
conditions of the Plan; and
WHEREAS, the Participant has
determined to accept such award;
NOW, THEREFORE, Sunoco and the
Participant each intending to be legally bound hereby, agree as
follows:
ARTICLE I
OPTION TO PURCHASE COMMON
STOCK
|
1.1
|
Identifying
Provisions. For purposes
of this Agreement, the following terms shall have the following
respective meanings:
|
|
|
|
|
|
(a) Participant
|
|
: _____________________________________________
|
|
|
|
|
(b) Date of Grant
|
|
: _____________________________________________
|
|
|
|
|
(c) Shares Subject To Option
|
|
: _____________________________________________
|
|
|
|
|
(d) Option Price (per share)
|
|
: _____________________________________________
|
|
|
|
|
(e) Earliest Exercise Date
|
|
: _____________________________________________
|
Any initially capitalized terms and
phrases used in this Agreement but not otherwise defined herein,
shall have the respective meanings ascribed to them in the
Plan.
1
|
1.2
|
Award of
Stock Option. Subject to
the terms and conditions of the Plan and this Agreement, the
Participant is hereby granted an option (the “Stock
Option”) to purchase up to the number of Shares Subject To
Option of Sunoco’s common stock (the “Common
Stock”), at the Option Price set forth herein at
Section 1.1. The Stock Option is not intended to be, and shall
not be treated as, an “incentive stock option” as such
term is defined under Section 422 of the Internal Revenue Code
of 1986, as amended.
|
|
1.3
|
Exercisability. The Stock Option shall become exercisable in
whole or in part with respect to all of the shares of Common Stock
subject thereto on the two-year anniversary of the Date of Grant;
provided, however, that, upon the occurrence of any Change
in Control, the Stock Option shall become immediately and fully
exercisable, notwithstanding any provision to the contrary in this
Agreement or in the Plan, and without regard to any period of time
then elapsed from the Date of Grant.
|
|
1.4
|
Term. The Stock Option shall not be exercisable,
either in whole or in part, on or after the Expiration Date. Unless
fully exercised by the Expiration Date, the Stock Option shall
automatically be canceled to the extent not yet exercised. The
Expiration Date shall be the earliest to occur of:
|
|
|
(a)
|
, which is the ten-year anniversary
of the Date of Grant; or
|
|
|
(b)
|
the sixty-month
anniversary of the date of termination of the Participant’s
employment, if such termination occurs by reason of:
|
|
|
(1)
|
retirement or
permanent disability (as each is determined by the Committee);
or
|
|
|
(c)
|
(1) the
90-calendar day anniversary of the date of termination of the
Participant’s employment, if the termination of employment
occurs prior to a Change in Control for following the two-year
anniversary of a Change in Control, and (2) the one-year
anniversary of the date of termination of the Participant’s
employment, if the termination of employment occurs with two years
after a Change in Control, other than in the case of a termination
of employment for Just Cause, as defined in the Plan.
|
Notwithstanding anything herein to
the contrary, however, the Stock Option will be canceled
immediately where the Participant’s employment has been
terminated at any time for Just Cause.
|
1.5
|
Method of
Exercising Stock Option.
|
|
|
(a)
|
The Stock
Option may be exercised from time to time in whole or in part, by
written notice delivered to and received by Sunoco prior to the
Expiration Date, so long as the Participant is in compliance with
the Company’s insider trading policy and the pre-clearance
process. This notice must:
|
|
|
(1)
|
be signed by
the Participant;
|
|
|
(2)
|
state the
Participant’s election to exercise the Stock
Option;
|
|
|
(3)
|
specify the
number of whole shares of Common Stock with respect to which the
Stock Option is being exercised;
|
2
|
|
(4)
|
be accompanied
by a check payable to Sunoco, in the amount of the full Option
Price for the number of shares purchased. Alternatively, the
Participant may pay all or a portion of the Option Price
by:
|
|
|
(i)
|
delivering to
Sunoco shares of previously owned Common Stock having an aggregate
Fair Market Value (valued as of the date of exercise) equal to the
amount of cash that would otherwise be required, in which event,
the stock certificates evidencing the shares so to be used shall
accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to
Sunoco; provided, however, that before they may be used as
payment of the Option Price, shares of Common Stock issued
under:
|
|
|
(b)
|
the Sunoco,
Inc. Long-Term Performance Enhancement Plan,
|
must have been held by the
Participant at least six (6) months.
|
|
(ii)
|
by authorizing
a third party to sell a sufficient portion of the shares of Common
Stock acquired upon exercise of the Stock Option and remit to
Sunoco a sufficient portion of the sale proceeds to pay the entire
Option Price and tax withholding resulting from such
exercise.
|
|
|
(b)
|
As soon as
practicable after Sunoco receives such notice and payment, and
following receipt from the Participant of payment for any taxes
which Sunoco is required by law to withhold by reason of such
exercise, Sunoco will deliver to the Participant either:
|
|
|
(1)
|
a certificate
or certificates for the shares of Stock so purchased; or
|
|
|
(2)
|
other evidence
of the appropriate registration of such shares on Sunoco’s
books and records.
|
|
|
(c)
|
Notwithstanding
the foregoing, and at the discretion of the Committee, any
Participant subject to minimum stock ownership guidelines (as
established from time to time by the Committee or Sunoco), but
failing to meet the applicable ownership requirement within the
prescribed time period may, upon exercise of the Stock Option,
receive shares of Common Stock subject to the following
restrictions which shall remain in place until compliance with the
ownership guidelines are attained:
|
|
|
(1)
|
The number of
shares subject to the restrictions shall be equal to the total
number of shares received in the exercise of the Stock Option,
minus the sum of:
|
|
|
(i)
|
to the extent
that shares received upon the exercise of the Stock Option are used
to pay the Stock Option Price, the number of shares which have a
Fair Market Value on the date of the Stock Option exercise equal to
the total amount paid for all the shares received in the Stock
Option exercise; and
|
|
|
(ii)
|
to the extent
that shares received upon exercise of the Stock Option are used to
pay taxes and brokerage fees, the number of shares which have a
Fair Market Value on the date of the Stock Option exercise equal to
the applicable federal, state, and local withholding tax on the
total Stock Option exercise and any brokerage commission or
interest charges, if applicable to the exercise.
|
3
|
|
(2)
|
Other than
transfers to family members or trusts that are permitted in
accordance with the applicable stock ownership guidelines, and that
will not result in a reduction in the level of ownership
attributable to the Participant under such guidelines, the
Participant shall be prohibited from effecting the sale, exchange,
transfer, pledge, hypothecation, gift or other disposition of such
shares of Common Stock until the earlier of:
|
|
|
(i)
|
attainment of
compliance with the applicable stock ownership
guidelines;
|
|
|
(ii)
|
the
Participant’s death, retirement, or permanent disability (as
determined by the Committee);
|
|
|
(iii)
|
occurrence of
the Participant’s Employment Termination Date, as defined in
the Plan, for any reason other than Just Cause.
|
Notwithstanding the foregoing, six
(6) months after the exercise of the Stock Option, such shares
of Common Stock may be used as payment of the Option Price of
shares issued upon the exercise of other Stock Options. However,
the shares will be issued as restricted shares.
|
|
(3)
|
The
restrictions will apply to any new, additional or different
securities the Participant may become entitled to receive with
respect to the shares by virtue of a stock split or stock dividend
or any other change in the corporate or capital structure of
Sunoco.
|
|
|
(d)
|
Until the
restrictions described in Section 1.5(c) above lapse, the
shares will be held in book-entry form and appropriate notation of
these restrictions will be maintained in the records of
Sunoco’s transfer agent and registrar. Any share certificate
representing such shares will bear a conspicuous legend evidencing
these restrictions, and Sunoco may require the Participant to
deposit the share certificate with Sunoco or its agent, endorsed in
blank or accompanied by a duly executed irrevocable stock power or
other instrument of transfer.
|
|
1.6
|
Termination
of Employment.
|
|
|
(a)
|
Retirement, Permanent Disability, or
Dea
|
|
