CORNING INCORPORATED INCENTIVE STOCK RIGHT AGREEMENT (Time-Based Incentive Stock Right) (Terms and Conditions)
EXHIBIT 10.67
Corporate Performance Plan For 2011
CORNING INCORPORATED
INCENTIVE STOCK RIGHT AGREEMENT
(Time-Based Incentive Stock Right)
(Terms and Conditions)
This Incentive Stock Right Agreement (Agreement) dated between Corning Incorporated (Corning or the Corporation) and the employee named below is subject in all respects to Cornings 2005 Employee Equity Participation Program as amended, a copy of which may be obtained from the Corporations Secretary at One Riverfront Plaza, Corning, New York 14831.
1. | Awards of Rights. Corning hereby awards to the below-named employee (the Employee) the number of Incentive Stock Rights (the Incentive Stock Rights) indicated below. |
Employee | Employee Number | Number of Incentive Stock Rights | ||
Each Incentive Stock Right shall entitle the Employee to receive from Corning one share of Cornings common stock, par value $.50 per share (Common Stock); provided that the Employee satisfies both service based vesting requirements set forth in Sections 3 and 4. Such shares, if any, shall be paid to the Employee at the time set forth in Section 5.
2. | Non-Transferability. The Incentive Stock Rights may not be sold, assigned, transferred, pledged or otherwise encumbered by or on behalf of or for the benefit of the Employee. |
3. | First Service Based Vesting Requirement. Incentive Stock Rights are subject to two service based vesting requirements, with the first one applicable in 2011: |
(a) | Under the first vesting requirement, the Employee shall earn a number of Incentive Stock Rights based upon the number of months he/she is employed by the Corporation in the 2011 fiscal year (First Service Period). |
(b) | If during the First Service Period the Employees employment relationship with the Corporation is terminated for any reason (other than a termination as described in Section 4(b)(i) or 4(f) below, both of which result in all Incentive Stock Rights being forfeited), the number of Incentive Stock Rights that the Employee earns shall be calculated as the number of Employees Incentive Stock Rights reduced by a ratio the numerator of which is 12 minus the number of full calendar months the Employee was actively employed during 2011 and the denominator of which is 12. The number of Incentive Stock Rights that have not been earned in the First Service Period under the first vesting requirement shall be forfeited. |
(c) | An Employee shall not vest in his/her right to receive an Incentive Stock Right that has been earned in the First Service Period unless the Employee also satisfies the second service based vesting requirements set forth in Section 4. |
4. | Second Service Based Vesting Requirement. Subject to the exceptions set forth below, the Employee must remain in continuous employment with Corning until February 14, 2014, to satisfy the second service based vesting requirement. If the Employees employment with Corning terminates before February 14, 2014, any earned Incentive Stock Rights, as described in Section 3 above, as of the date of the Employees employment terminates shall be treated as follows: |
(a) | Retirement at or After Age 55 If the Employee terminates employment on account of normal or early retirement on or after age 55 after the First Service Period, then the second service based vesting requirement shall be satisfied with respect to the earned Incentive Stock Rights. If the Employee terminates employment on account of normal or early retirement at or after age 55 during the First Service Period, then the service based vesting requirements shall be satisfied with respect to the number of Incentive Stock Rights prorated in accordance with Section 3(b) above. |
(b) | Involuntary Termination (not for cause) If the Employees employment is involuntarily terminated and it is not for cause: |
(i) | during the First Service Period, then all of the Incentive Stock Rights shall be forfeited; or |
(ii) | after the First Service Period, then the second service based vesting requirement shall be satisfied as of the Employees termination date for the prorated number of earned Incentive Stock Rights, calculated as the total number of earned Incentive Stock Rights multiplied by a ratio with the numerator equal to the number of full calendar months from the start of the First Service Period through the Employees termination date, and the denominator of which is 37. |
For purposes of this Agreement, for cause shall mean the Employees:
| conviction of a felony or conviction of a misdemeanor involving moral turpitude (from which no further appeals have been or can be taken); |
| a material breach of Cornings Code of Conduct; |
| gross abdication of his duties as an employee of the Corporation (other than due to the Employees illness or personal family problems), which conduct remains uncured by the Employee for a period of at least 30 days following written notice thereof to the Employee by the Corporation, in each case as determined in good faith by the Corporation; or |
| misappropriation of Cornings assets, personal dishonesty or business conduct which causes material or potentially material financial or reputational harm for the Corporation. For purposes of this Section 4(b), no act or failure to act on the Employees part shall be deemed to be a termination for cause if done, or omitted to be done, in good faith, and with the reasonable belief that the action or omission was in the best interests of the Corporation. |
(c) | Death If the Employee dies while employed after the First Service Period, then the second service based vesting requirement shall be satisfied with respect to the earned Incentive Stock Rights. If Employees death occurs during the First Service Period, then the service based vesting requirements shall be satisfied with respect to the number of Incentive Stock Rights prorated in accordance with Section 3(b) above. |
(d) | Disability If the Employees employment is terminated after the First Service Period as a result of a total and permanent disability (as that term is defined in the Corporations long-term disability plan(s)), then the second service based vesting requirement shall be satisfied with respect to the earned Incentive Stock Rights. If the Employees total and permanent disability occurs during the First Service Period, then the service based vesting requirements shall be satisfied with respect to the number of Incentive Stock Rights prorated in accordance with Section 3(b) above. |
(e) | Divestiture, etc. If the Employees employment is terminated due to a reduction in force, divestiture or discontinuance of certain of the Corporations operations after the First Service Period, then the second service based vesting requirement shall be satisfied with respect to the earned Incentive Stock Rights. If the Employees termination of employment under this subsection occurs during the First Service Period, then the service based vesting requirements shall be satisfied with respect to the number of Incentive Stock Rights prorated in accordance with Section 3(b) above. |
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(f) | Voluntary Termination, Termination for Cause, Dereliction of Duties or Harmful Acts If the Employee voluntarily leaves the employ of the Corporation, or if the Employees employment shall be terminated for cause, or if the Employee causes the Corporation to suffer financial harm or damage to its reputation through (i) dishonesty, (ii) material violation of the Corporations standards of ethics or conduct, or (iii) material deviation from the duties owed the Corporation by the Employee, all of the Incentive Stock Rights shall be forfeited as of the Employees termination date. |
(g) | Change of Control In the event of a change of control of Corning Incorporated, the provisions of Sections 3 and 4 shall not be applicable and all nonforfeited Incentive Stock Rights shall be earned and fully vest. |
For purposes of this Agreement, the term change of control shall mean an event that is a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and that also falls within one of the following circumstances:
(i) | an offerer (other than Corning) purchases shares of Corning Common Stock pursuant to a tender or exchange offer for such shares; |
(ii) | any person (as such term is used in Sections 13(d) and 14(d) (2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of Corning securities representing 50% or more of the combined voting power of Cornings then outstanding securities; |
(iii) | the membership of Cornings Board of Directors changes as the result of a contested election or elections, such that a majority of the individuals who are Directors at any particular time were initially placed on the Board of Directors as a result of such a contested election or elections occurring within the previous two years; or |
(iv) | the consummation of a merger in which the Corporation is not the surviving corporation, consolidation, sale or disposition of all or substantially all of Cornings assets or a plan of partial or complete liquidation approved by the Corporations shareholders. |
5. | Time of Payment. Earned Incentive Stock Rights that have vested shall be paid as of the earliest of the following dates: |
(a) | Death or Separation from Service after December 31, 2011 If the Employee dies or separates from service (within the meaning of Section 409A of the Code) from Corning after December 31, 2011, the Employees Incentive Stock Rights that are earned and vested as of the date of the Employees death or separation from service shall be paid/distributed as net shares of Common Stock (net of tax withholdings) within 60 days after the date the Employee dies or separates from service. |
(b) | Death or Separation from Service on or before December 31, 2011 If the Employee dies or separates from service (within the meaning of Section 409A of the Code) from Corning on or before December 31, 2011, the Employees earned Incentive Stock Rights that are vested as of the date of the Employees death or separation from service shall be paid/distributed as net shares of Common Stock (net of tax withholdings) within 60 days after January 1, 2012. |
(c) | February 14, 2014 If the Employee does not separate from service (within the meaning of Section 409A of the Code) from Corning before February 14, 2014, the Employees earned Incentive Stock Rights that are vested as of February 14, 2014 shall be paid/distributed as net shares of Common Stock (net of tax withholdings) within 60 days after February 14, 2014. |
(d) | Change of Control In the event of a Change of Control, the Employees Incentive Stock Rights that are vested as of the date of the Change of Control shall be paid/distributed as net shares of Common Stock (net of tax withholdings) as of or within 30 days following the date of the Change of Control. |
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(e) | Special Distributions to Pay Social Security, Medicare Taxes In the event that earned Incentive Stock Rights become subject to Social Security and/or Medicare taxes prior to a distribution event described in Sections 5(a)-(d) above (i.e., because the payment of the Incentive Stock Rights is no longer subject to a substantial risk of forfeiture) a partial distribution of the Incentive Stock Rights will be made to pay the Federal Insurance Contributions Act (FICA) tax imposed under Code sections 3101, 3121(a), and 3121(v)(2) on the Employees earned Incentive Stock Rights (the FICA Amount). Additionally, a partial distribution of the Incentive Stock Rights will be made to pay the income tax at source on wages imposed under section 3401 or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA Amount, and to pay the additional income tax at source on wages attributable to the pyramiding section 3401 wages and taxes. However, the total payment under this provision must not exceed the aggregate of the FICA Amount, and the income tax withholding related to such FICA Amount. Any subsequent amount that is paid under this Agreement will be reduced by the amount paid under this Section 5(e). |
Notwithstanding the foregoing, if an amount becomes payable under the above rules due to the Employee incurring a separation from service within the meaning of Section 409A of the Code (for this purpose, payments on account of death are not considered payments made on account of separation from service), and the Employee is a specified employee (within the meaning of Section 409A of the Code) as of the date of separation from service, the Employees earned Incentive Stock Rights that are vested as of the date of the Employees separation from service shall be paid/distributed as net shares of Common Stock (net of tax withholdings) on or after the first day of the seventh month after the Employees separation from service and before the 15th day of the seventh month following the date the Employee separates from service.
All Incentive Stock Rights that have not vested as of the date any Incentive Stock Right is paid shall be forfeited; provided that any distributions under Section 5(e) shall not result in the forfeiture of any unpaid Incentive Stock Rights.
6. | Form of Payment. At the time specified in Section 5, Corning shall deliver to the Employee a certificate or certificates, or at the election of the Corporation make an appropriate book-entry, for the number of shares of Common Stock equal to the number of earned Incentive Stock Rights that are vested (net of tax withholdings). An Employee shall have no further rights with regard to the Incentive Stock Rights once the underlying shares of Common Stock have been delivered. The number of shares of Common Stock which Corning must deliver pursuant to this Agreement shall be reduced by the value of all taxes which the Corporation is required by law to withhold by reason of such delivery. |
7. | Voting and Dividend Rights. Because the Incentive Stock Rights do not constitute shares of Common Stock (but rather just the right to receive shares in the future upon satisfaction of the specified service based vesting conditions), the grant or vesting of Incentive Stock Rights shall not provide the Employee with any shareholder rights (such as voting or dividend rights) until the Incentive Stock Rights are converted to shares of Common Stock. |
8. | Dividend Equivalents. The Employees earned and vested Incentive Stock Rights shall be credited with dividend equivalents in a manner that is consistent with the manner in which dividends are paid on shares of Common Stock. Dividend equivalents shall be paid in cash at the same time that the Incentive Stock Rights are paid in Section 5. The Corporation shall establish rules and administrative processes that apply to dividend equivalents that shall be binding on the Employee. No dividend equivalents shall be paid on Incentive Stock Rights that have been forfeited or paid. |
9. | Transfers. If the Employee is transferred from Corning to a subsidiary (being a 50% or greater owned entity), or vice versa or from one subsidiary to another, the Employees employment shall not be deemed to have terminated. |
10. | Section 409A and Unfunded Plan. This Agreement is intended to comply with the requirements of Section 409A of the Code and shall be interpreted and administered in accordance with that intent. If any provision of the agreement would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. This Agreement is an unfunded deferred compensation plan. |
11. | Modification/Interpretation. Any modification of the terms of this Agreement must be approved, and any dispute, disagreement or matter of interpretation which shall arise under this Agreement shall be finally determined by the Committee in its absolute discretion. |
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IN WITNESS WHEREOF, this Agreement has been duly executed by Corning and the Employee.
CORNING INCORPORATED | EMPLOYEE | |||||||||
By: | /s/ John P. MacMahon | By: | ||||||||
John P. MacMahon | ||||||||||
Senior Vice President, | ||||||||||
Compensation & Benefits | Address: | |||||||||
Corning Incorporated | ||||||||||
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