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STOCK OPTION AGREEMENT Under the SUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

Option Agreement

STOCK OPTION AGREEMENT Under the 

SUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II | Document Parties: SUNOCO INC You are currently viewing:
This Option Agreement involves

SUNOCO INC

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Title: STOCK OPTION AGREEMENT Under the SUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II
Governing Law: Pennsylvania     Date: 8/7/2008
Industry: Oil and Gas Operations     Sector: Energy

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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

 

 

(2)

death; 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:

 

 

(a)

the Plan, and/or

 

 

(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


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