Exhibit 10.2
CAROLINA GROUP
2002 STOCK OPTION PLAN
(as amended through April 10,
2007)
1.1
Purpose . The Carolina Group 2002 Stock Option
Plan (the “Plan”) has been established by Loews
Corporation (the “Company”) to (i) attract and retain
persons eligible to participate in the Plan, (ii) motivate
Participants, by means of appropriate incentives, to achieve
long-term goals of the Carolina Group, and reward Participants for
achievement of those goals, and (iii) provide incentive
compensation opportunities that are competitive with those of other
similar companies, and thereby promote the financial interest of
Lorillard, Inc. and its subsidiaries and any companies attributed
to the Carolina Group in the future.
1.2
Operation and Administration . The operation
and administration of the Plan shall be subject to the provisions
of Section 4 (relating to operation and administration).
Capitalized terms in the Plan shall be defined as set forth in the
Plan (including the definition provisions of Section 7 of the
Plan).
2.1
Option Grant . The Committee may grant Options
in accordance with this Section 2.
2.2
Definitions . The grant of an
“Option” permits the Participant to purchase shares of
Stock at an Exercise Price established by the Committee. Any Option
granted under the Plan may be either an incentive stock option (an
“ISO”) or a non-qualified option (an
“NQO”), as determined in the discretion of the
Committee. An “ISO” is an Option that is intended to be
an “incentive stock option” described in section 422(b)
of the Code and does in fact satisfy the requirements of that
section. An “NQO” is an Option that is not intended to
be an “incentive stock option” as that term is
described in section 422(b) of the Code, or that fails to satisfy
the requirements of that section.
2.3
Exercise Price . The “Exercise
Price” of each Option granted under this Section 2 shall
be established by the Committee or shall be determined by a method
established by the Committee at the time the Option is granted;
except that the Exercise Price shall not be less than 100% of the
Fair Market Value of a share of Stock on the date of grant (or, if
greater, the par value of a share of Stock). In no event may any
Option granted under this Plan be amended, other than pursuant to
Section 4.2(e), to decrease the Exercise Price thereof, be
cancelled in conjunction with the grant of any new Option with a
lower Exercise Price, or otherwise be subject to any action that
would be treated, for accounting purposes, as a
“repricing” of such Option, unless such amendment,
cancellation, or action is approved by the Company’s
shareholders.
2.4
Vesting and Exercise . An Option shall be
exercisable in accordance with such terms and conditions and during
such periods as may be established by the Committee.
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(a)
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Unless
otherwise provided by the Committee at the time of grant or
thereafter, each Option shall vest and become exercisable in four
equal annual installments beginning on the first anniversary of the
date of grant, and shall thereafter remain exercisable during the
Option Term.
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(b)
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Unless
otherwise provided by the Committee at the time of grant or
thereafter, the Option Term of each Option shall end on the
earliest of (1) the date on which such Option has been exercised in
full, (2) the date on which the Participant experiences a
Termination for Cause or a voluntary Termination, (3) the one-year
anniversary of the date on which the Participant experiences a
Termination due to death or Disability, (4) the three-year
anniversary of the date on which the Participant experiences a
Termination due to such person’s Retirement, and (5) the 90th
day after the Participant experiences a Termination for any other
reason; provided , that in no event may the Option Term
exceed ten (10) years from the date of grant of the Option. Except
as otherwise determined by the Committee at the time of grant or
thereafter, upon the occurrence of a Termination of a Participant
for any reason, the Option Term of all outstanding Options held by
the Participant that are unvested as of the date of such
Termination shall thereupon end and such unvested Options shall be
forfeited immediately; provided , however , that the
Committee may, in its sole discretion, accelerate the vesting of
any Option and/or extend the exercise period of any Option (but not
beyond the ten-year anniversary of the grant date).
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(c)
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An Option may
be exercised and the underlying shares purchased in accordance with
this Section 2 at any time after the Option with respect to those
shares vests and before the expiration of the Option Term. To
exercise an Option, the Participant shall give written notice to
the Company stating the number of shares with respect to which the
Option is being exercised.
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(d)
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The full
Exercise Price for shares of Stock purchased upon the exercise of
any Option shall be paid at the time of such exercise (except that,
in the case of an exercise arrangement approved by the Committee
and described in the last sentence of this paragraph (d), payment
may be made as soon as practicable after the exercise). The
Exercise Price shall be payable by check, or such other instrument
as the Committee may accept. The Committee may permit a Participant
to elect to pay the Exercise Price upon the exercise of an Option
by irrevocably authorizing a third party to sell shares of Stock
(or a sufficient portion of the shares) acquired upon exercise of
the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise. In the case of any ISO
such permission must be provided for at the time of grant and set
forth in an Award Certificate. In addition, if approved by the
Committee, payment, in full or in part, may also be made in the
form of unrestricted Mature Shares, based on the Fair Market Value
of the Mature Shares on the date the Option is exercised;
provided , however , that, in the case of an ISO the
right to make a payment in such Mature Shares may be authorized
only at the time the Option is granted.
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Section
3. Stock Appreciation Rights
3.1
Types and Nature of Stock Appreciation Rights
. A “Stock Appreciation Right” is the right
to receive an amount equal in value to the excess, if any, on the
date of exercise, of the Fair Market Value of a share of Stock over
the Exercise Price of the Stock Appreciation Right. Stock
Appreciation Rights may be “Tandem SARs,” which are
granted in conjunction with an Option, or “Free-Standing
SARs,” which are not granted in conjunction with an Option.
Upon the exercise of a Stock Appreciation Right, the Participant
shall be entitled to receive an amount equal to the product of (i)
the excess of the Fair Market Value of one share of Stock over the
Exercise Price of the applicable Stock Appreciation Right,
multiplied by (ii) the number of shares of Stock in respect of
which the Stock Appreciation Right has been exercised. Such amount
shall be paid in cash, Stock, or a combination thereof (with the
amount of such cash being determined based upon the Fair Market
Value of the Stock on the date of exercise). As determined by the
Committee, the applicable Award Certificate shall specify whether
such payment is to be made in cash or Stock or both, or shall
reserve to the Committee or the Participant the right to make that
determination prior to or upon the exercise of the Stock
Appreciation Right.
3.2
Tandem SARs . A Tandem SAR may be granted on
the grant date of the related Option or, in the case of a related
NQO, at any time after the grant date thereof while the related NQO
remains outstanding. A Tandem SAR shall be exercisable only at such
time or times and to the extent that the related Option is
exercisable in accordance with the provisions of Section 2, and
shall at all times have the same Exercise Price as the related
Option. A Tandem SAR shall terminate or be forfeited upon the
exercise or forfeiture of the related Option, and the related
Option shall terminate or be forfeited upon the exercise or
forfeiture of the Tandem SAR.
3.3
Exercise Price . The “Exercise
Price” per share of Stock subject to a Free-Standing SAR
shall be determined by the Committee and set forth in the
applicable Award Certificate, and shall not be less than 100% of
the Fair Market Value of a share of Stock on the applicable grant
date. In no event may any Free-Standing SAR granted under this Plan
be amended, other than pursuant to Section 4.2(e), to decrease the
Exercise Price thereof, be cancelled in conjunction with the grant
of any new Option or Free-Standing SAR with a lower Exercise Price,
or otherwise be subject to any action that would be treated, for
accounting purposes, as a “repricing” of such
Free-Standing SAR, unless such amendment, cancellation, or action
is approved by the Company’s shareholders.
3.4
Term . Unless otherwise provided by the
Committee at the time of grant or thereafter, the Term of each
Free-Standing SAR shall end on the earliest of (1) the date on
which such Free-Standing SAR has been exercised in full, (2) the
date on which the Participant experiences a Termination for Cause
or a voluntary Termination, (3) the one-year anniversary of the
date on which the Participant experiences a Termination due to
death or Disability, (4) the three-year anniversary of the date on
which the Participant experiences a Termination due to such
person’s Retirement, and (5) the 90th day after the
Participant experiences a Termination for any other reason;
provided, that in no event may the Term exceed ten (10) years from
the date of grant of the Free-Standing SAR. Except as otherwise
determined by the Committee at the time of grant, upon the
occurrence of a Termination of a Participant for any reason, the
Term of all outstanding Free-Standing SARs held by the Participant
that are unvested as of the date of such Termination shall
thereupon end and such unvested Free-Standing SARs shall be
forfeited immediately provided, however, that the Committee may, in
its sole discretion, accelerate the vesting of any Stock
Appreciation Right and/or extend the exercise period of any Stock
Appreciation Right (but not beyond the ten-year anniversary of the
grant date).
3.5
Vesting and Exercise . Except as otherwise
provided herein, Free-Standing SARs shall vest and be exercisable
at such time or times and subject to such terms and conditions
as
shall be
determined by the Committee and set forth in the applicable Award
Certificate.
Section
4. Operation and Administration
4.1
Effective Date . The Plan shall be effective as
of January 31, 2002 (the “Effective Date”). The Plan
shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Options or Stock
Appreciation Rights under it are outstanding.
4.2
Shares Subject to Plan . The shares of Stock
for which Options and Stock Appreciation Rights may be granted
under the Plan shall be subject to the following:
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(a)
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The shares of
Stock with respect to which Options and Stock Appreciation Rights
may be granted under the Plan shall be shares currently authorized
but unissued or currently held or subsequently acquired by the
Company as treasury shares, including shares purchased in the open
market or in private transactions.
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(b)
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Subject to the
following provisions of this subsection 4.2, the maximum number of
shares of Stock that may be delivered to Participants and their
beneficiaries under the Plan shall be 1,500,000 shares of
Stock.
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(c)
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To the extent
any shares of Stock covered by an Option are not delivered to a
Participant or beneficiary because the Option is forfeited or
canceled, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.
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(d)
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Subject to
paragraph 4.2(e), the maximum number of shares that may be covered
by Options, and/or Stock Appreciation Rights granted to any one
individual during any one calendar year period shall be 200,000
shares.
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(e)
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In the event of
a corporate transaction involving the Stock and/or the Company
(including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination or exchange
of shares), the Committee shall make adjustments to preserve the
benefits or potential benefits of the Plan and outstanding Options
and/or Stock Appreciation Rights. Action by the Committee may
include: (i) adjustment of the number and kind of shares which may
be delivered under the Plan; (ii) adjustment of the number and kind
of shares referred to in Sections 4.2 (b) and (d); (iii) adjustment
of the number and kind of shares subject to outstanding Options and
Stock Appreciation Rights; (iv) adjustment of the Exercise Price of
outstanding Options and Stock Appreciation Rights; (v) settlement
in cash or Stock in an amount equal to the excess of the value of
the Stock subject to such Option and Stock Appreciation Rights over
the aggregate Exercise Price (as determined by the Committee) of
such Options and Stock Appreciation Rights; and (vi) any other
adjustments that the Committee determines to be equitable. The
Committee shall make all such adjustments, and its determination as
to what adjustments shall be made, and the extent thereof, shall be
final.
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4.3
General Restrictions . Delivery of shares of
Stock or other amounts under the Plan shall be subject to the
following:
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(a)
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Notwithstanding
any other provision of the Plan, the Company shall have no
liability to de
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