{"id":38184,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/1992-incentive-compensation-and-stock-option-plan-philip-morris.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"1992-incentive-compensation-and-stock-option-plan-philip-morris","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/1992-incentive-compensation-and-stock-option-plan-philip-morris.html","title":{"rendered":"1992 Incentive Compensation and Stock Option Plan &#8211; Philip Morris Cos. Inc."},"content":{"rendered":"<pre>\n                                THE PHILIP MORRIS\n                           1992 INCENTIVE COMPENSATION\n                              AND STOCK OPTION PLAN\n\nSECTION 1. Purpose; Definitions.\n\nThe purpose of the Plan is to give the Company a significant advantage in\nattracting, retaining and motivating key employees and to provide the Company\nwith the ability to provide incentives more directly linked to the profitability\nof the Company's businesses and increases in stockholder value.\n\nFor purposes of the Plan, the following terms are defined as set forth below:\n\n      a. 'Annual Incentive Award' means an award made by the Committee pursuant\nto Section 4.\n\n      b. 'Annual Incentive Award Reserve' means the reserve established for any\nfiscal year of the Company pursuant to Section 4.\n\n      c. 'Board' means the Board of Directors of the Company.\n\n      d. 'Code' means the Internal Revenue Code of 1986, as amended from time to\ntime, and any successor thereto.\n\n      e. 'Commission' means the Securities and Exchange Commission or any\nsuccessor agency.\n\n      f. 'Committee' means the Committee referred to in Section 2.\n\n      g. 'Company' means Philip Morris Companies Inc., a corporation organized\nunder the laws of the Commonwealth of Virginia, or any successor corporation.\n\n      h. 'Disability' means permanent and total disability as determined under\nprocedures established by the Committee for purposes of the Plan.\n\n      i. 'Disinterested Person' means a member of the Board who qualifies as a\ndisinterested person as defined in Rule 16b-3.\n\n      j. 'Exercise Period' means the 60-day period from and after a Change in\nControl (as defined in Section 10(b)).\n\n      k. 'Exchange Act' means the Securities Exchange Act of 1934, as amended\nfrom time to time, and any successor thereto.\n\n      l. 'Fair Market Value' means, as of any given date, the mean between the\nhighest and lowest reported sales prices of the Stock on the New York Stock\nExchange or, if no such sale of Stock occurs on the New York Stock Exchange on\nsuch date, the fair market value of the Stock as determined by the Committee in\ngood faith.\n\n      m. 'Incentive Stock Option' means any Stock Option intended to be and\ndesignated as an 'incentive stock option' within the meaning of Section 422 of\nthe Code.\n\n      n. 'Long Term Performance Award' means an award made by the Committee\npursuant to Section 5.\n\n      o. 'Non-Qualified Stock Option' means any Stock Option that is not an\nIncentive Stock Option.\n\n      p. 'Performance Period' means the two-year or greater period during which\na Long Term Performance Award can be earned as determined by the Committee\npursuant to Section 5(a).\n\n      q. 'Plan' means The Philip Morris 1992 Incentive Compensation and Stock\nOption Plan, as set forth herein and as hereinafter amended from time to time.\n\n      r. 'Pretax Earnings' means, for any fiscal year of the Company, the amount\nreported as earnings from continuing operations before income taxes in the\nCompany's consolidated statements of earnings included in its audited\nconsolidated financial statements for such fiscal year (adjusted to exclude the\neffects of any unusual or non-recurring items that would not arise in the normal\ncourse of business, as determined by the Board).\n\n      s. 'Restricted Stock' means an award made by the Committee pursuant to\nSection 9.\n\n      t. 'Restriction Period' means the period set by the Committee pursuant to\nSection 9(c)(i) during which the recipient of a Restricted Stock Award may not\nsell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock.\n\n      u. 'Retirement' means retirement from active employment under a pension\nplan of the Company, any subsidiary or affiliate or under an employment contract\nwith any of them or termination of employment at or after age 55 under\ncircumstances which the Committee, in its sole discretion, deems equivalent to\nretirement.\n\n      v. 'Rule 16b-3' means Rule 16b-3, as promulgated by the Commission under\nSection 16(b) of the Exchange Act, as amended from time to time.\n\n      w. 'Spread Value' means with respect to a share of Stock subject to a\nStock Option an amount equal to the excess of the Fair Market Value over the\noption price.\n\n      x. 'Stock' means the Common Stock, $1 par value, of the Company.\n\n      y. 'Stock Appreciation Right' means a right granted by the Committee\npursuant to Section 8.\n\n\n                                        2\n\n      z. 'Stock Option' means an option granted by the Committee pursuant to\nSection 7.\n\nIn addition, the terms 'Business Combination', 'Change in Control', 'Change in\nControl Price', 'Incumbent Board', 'Outstanding Company Stock', 'Outstanding\nCompany Voting Securities', and 'Person' have the meanings set forth in Section\n10.\n\nSECTION 2. Administration.\n\nThe Plan shall be administered by the Compensation Committee of the Board or\nsuch other committee of the Board, composed of not less than two Disinterested\nPersons, who shall be appointed by the Board and who shall serve at the pleasure\nof the Board. If at any time no Committee shall be in office, the functions of\nthe Committee specified in the Plan shall be exercised by those members of the\nBoard who qualify as Disinterested Persons.\n\nThe Committee shall have plenary authority to grant to employees, pursuant to\nthe terms of the Plan, Annual Incentive Awards, Long Term Performance Awards,\nStock Options, Stock Appreciation Rights and Restricted Stock. In particular,\nthe Committee shall have the authority, subject to the terms of the Plan:\n\n      (a) to select the employees to whom Annual Incentive Awards, Long Term\nPerformance Awards, Stock Options, Stock Appreciation Rights and Restricted\nStock may from time to time be granted;\n\n      (b) to determine whether and to what extent Annual Incentive Awards, Long\nTerm Performance Awards, Incentive Stock Options, Non-Qualified Stock Options,\nStock Appreciation Rights and Restricted Stock or any combination are to be\ngranted hereunder;\n\n      (c) to determine and adjust the performance goals and measurements\napplicable to Long Term Performance Awards granted pursuant to the Plan;\n\n      (d) to determine the extent to which Long Term Performance Awards have\nbeen earned and by whom;\n\n      (e) to determine to what extent and under what circumstances amounts\nearned with respect to a Long Term Performance Award shall be deferred;\n\n      (f) to determine the number of shares to be covered by each award of Stock\nOptions, Stock Appreciation Rights and Restricted Stock;\n\n      (g) to determine the terms and conditions of any Stock Options granted\npursuant to the Plan, including, but not limited to, the option price (subject\nto Section 7(a)), any restriction or limitation and any vesting acceleration or\nforfeiture waiver regarding any Stock Option, based on such factors as the\nCommittee shall determine;\n\n      (h) to determine under what circumstances a Stock Option may be settled in\ncash pursuant to the first paragraph of Section 7(k); and\n\n\n                                        3\n\n      (i) to determine the terms and conditions of vesting of Restricted Stock\nawards.\n\nThe Committee shall have the authority to adopt, alter and repeal such\nadministrative rules, guidelines, practices, and procedures governing the Plan\nas it shall, from time to time, deem advisable, to interpret the terms and\nprovisions of the Plan and any award issued under the Plan (and any agreement\nrelating thereto) and to otherwise supervise the administration of the Plan. The\nCommittee may also adopt sub-plans, consistent with the Plan, to conform to\napplicable state or foreign securities or tax laws.\n\nThe Committee may act only by a majority of its members then in office, except\nthat the members thereof may delegate to the Chief Executive Officer of the\nCompany or such other officer as may be designated by the Committee, the\nauthority to make decisions pursuant to Sections 1(u), 7(c), (f), (g), (h) and\n(i) and 9(c)(i) and (iv), the authority, subject to guidelines prescribed by the\nCommittee and approved by the Board, to grant Stock Options and Stock\nAppreciation Rights to employees who are not then subject to the provisions of\nSection 16 of the Exchange Act and to determine the number of shares to be\ncovered by any such Stock Option and the terms and conditions thereof in\naccordance with the provisions of clause (g) of this Section 2 and may authorize\nany one or more of their number or any officer of the Company to execute and\ndeliver documents on behalf of the Committee, provided that no such delegation\nmay be made that would cause grants, awards or other transactions under the Plan\nto cease to be exempt from Section 16(b) of the Exchange Act.\n\nAny determination made by the Committee or pursuant to delegated authority in\naccordance with the provisions of the Plan with respect to any award shall be\nmade in the sole discretion of the Committee or such delegate at the time of the\ngrant of the award or, unless in contravention of any express term of the Plan,\nat any time thereafter. All decisions made by the Committee or any appropriately\ndesignated officer pursuant to the provisions of the Plan shall be final and\nbinding on all persons, including the Company and Plan participants.\n\nSECTION 3. Eligibility.\n\nEmployees of the Company, its subsidiaries and affiliates who are responsible\nfor or contribute to the management, growth and profitability of the business of\nthe Company, its subsidiaries or affiliates are eligible to be granted awards\nunder the Plan.\n\nSECTION 4. Annual Incentive Awards.\n\n      (a) Establishment of Annual Incentive Award Reserve. The Board may at any\ntime and from time to time, in respect of each fiscal year of the Company,\nestablish an Annual Incentive Award Reserve which shall not exceed four percent\nof Pretax Earnings for such fiscal year; provided, however, that the Annual\nIncentive Award Reserve established for any fiscal year shall not exceed 16% of\nthe aggregate amount of cash dividends declared on the Stock during said fiscal\nyear; provided, however, that in the event of the acquisition by the Company of\na significant subsidiary (as such term is defined in Regulation S-X under the\nExchange Act), the foregoing percentage shall be increased with respect to the\nfiscal year in which such acquisition was consummated and all subsequent years\nby 4%. Such increase shall apply with respect to each such acquisition.\n\n\n                                        4\n\nAs soon as practicable after the end of each fiscal year of the Company, the\nindependent auditors who audited the Company's books and accounts for such\nfiscal year shall report to the Board the maximum amount that can be credited to\nthe Annual Incentive Award Reserve for such fiscal year under the provisions of\nthe Plan, after giving effect to any determination made by the Board pursuant to\nthe provisions of the Plan with respect thereto. Such report shall be final,\nbinding and conclusive upon the Company and all other persons. Amounts credited\nto the Annual Incentive Award Reserve with respect to any fiscal year which are\nnot made the subject of Annual Incentive Awards by the Committee shall not be\ncarried over to any other fiscal year.\n\n      (b) Selection of Recipients and Amounts of Awards. The Committee shall\nselect the employees to whom Annual Incentive Awards shall be made and the\namount thereof; provided, however, that no employee may receive an Annual\nIncentive Award which would exceed 125% of his or her highest annual base salary\nrate during the fiscal year for which the Annual Incentive Award is granted.\nAnnual Incentive Awards may be awarded alone or in addition to other awards\ngranted under the Plan.\n\n      (c) Payment of Awards. All Annual Incentive Awards shall be expressed in\nU.S. currency and paid in cash by the Company or the subsidiary or affiliate\nthat employs the recipient of the award as soon as practicable after the close\nof the fiscal year for which awarded or at such earlier time as the Committee\nshall determine.\n\nSECTION 5. Long Term Performance Awards.\n\n      (a) Awards and Administration. Long Term Performance Awards may be awarded\neither alone or in addition to other awards granted under the Plan. The\nCommittee shall determine the nature, length, and starting date of the\nPerformance Period for each Long Term Performance Award, which, subject to\nSection 10, shall be at least two years, and shall determine the performance\nobjectives to be used in valuing Long Term Performance Awards and determining\nthe extent to which such Long Term Performance Awards have been earned.\nPerformance objectives may vary from participant to participant and between\ngroups of participants and shall be based upon such Company, business unit or\nindividual performance factors or criteria as the Committee may deem\nappropriate, including, but not limited to, earnings per share or return on\nequity. Performance Periods may overlap and participants may participate\nsimultaneously with respect to Long Term Performance Awards that are subject to\ndifferent Performance Periods and different performance factors and criteria.\nLong Term Performance Awards shall be confirmed by, and be subject to the terms\nof, a Long Term Performance Award Agreement. The terms of such awards need not\nbe the same with respect to each participant.\n\nOn or before the beginning of each Performance Period, the Committee shall\ndetermine for each Long Term Performance Award subject to such Performance\nPeriod the range of dollar values to be paid to the participant at the end of\nthe Performance Period if and to the extent that the relevant measures of\nperformance for such Long Term Performance Award are met. Such dollar values may\nbe fixed or may vary in accordance with such performance or other criteria as\nmay be determined by the Committee.\n\n      (b) Maximum Aggregate Amount Payable for Any Performance Period. The\naggregate amount of Long Term Performance Awards payable with respect to any\nPerformance Period (determined without regard to any interest credited with\nrespect to deferred awards) shall not exceed (y) the sum of the maximum\naggregate amount\n\n\n                                        5\n\nthat could have been credited to the Annual Incentive Award Reserve in respect\nof each fiscal year of the applicable Performance Period less (z) the sum of all\nAnnual Incentive Awards earned with respect to each fiscal year of the\nPerformance Period and the amount of Long Term Performance Awards earned with\nrespect to any such fiscal year because of an overlapping Performance Period.\n\n      (c) Adjustment of Awards. The Committee may adjust the performance goals\nand measurements applicable to Long Term Performance Awards to take into account\nchanges in law and accounting and tax rules and to make such adjustments as the\nCommittee deems necessary or appropriate to reflect the impact of the inclusion\nor exclusion of extraordinary or unusual items, events or circumstances in order\nto avoid windfalls or unintended disadvantages.\n\n      (d) Termination of Employment. Subject to Section 9 and unless otherwise\nprovided in the applicable Long Term Performance Award Agreement, if a\nparticipant terminates employment during a Performance Period because of death,\nDisability or Retirement, such participant shall be entitled to a payment with\nrespect to each outstanding Long Term Performance Award at the end of the\napplicable Performance Period:\n\n            i) based, to the extent relevant under the terms of the Long Term\n      Performance Award, upon the participant's performance for the portion of\n      such Performance Period ending on the date of termination and the\n      performance of the Company or any applicable business unit for the entire\n      Performance Period, and\n\n            ii) prorated for the portion of the Performance Period during which\n      the participant was employed by the Company, a subsidiary or affiliate,\n\nall as determined by the Committee. The Committee may provide for an earlier\npayment in settlement of such award in such amount and under such terms and\nconditions as the Committee deems appropriate.\n\nSubject to Section 10 and except as otherwise provided in the applicable Long\nTerm Performance Award Agreement, if a participant terminates employment during\na Performance Period for any other reason, then such participant shall not be\nentitled to any payment with respect to a Long Term Performance Award awarded\nfor such Performance Period, unless the Committee shall otherwise determine.\n\n      (e) Form of Payment. The earned portion of a Long Term Performance Award\nshall be paid in cash currently or on a deferred basis with such interest as may\nbe determined by the Committee.\n\nSECTION 6. Stock Subject to Plan.\n\nThe total number of shares of Stock reserved and available for distribution\npursuant to Stock Options, Stock Appreciation Rights and (subject to Section\n9(a)) Restricted Stock awarded under the Plan shall be 37,000,000 shares.\n\n\n                                        6\n\nSubject to Section 8(b)(iv), if any Stock Option or Stock Appreciation Right\nterminates without a payment being made to the participant in the form of Stock,\nthe shares subject to such Stock Option or Stock Appreciation Right shall again\nbe available for distribution in connection with awards under the Plan.\n\nIn the event of any merger, reorganization, consolidation, recapitalization,\nstock dividend, stock split or other change in corporate structure affecting the\nStock, such substitution or adjustments shall be made in the aggregate number\nand kind of shares reserved for issuance under the Plan, in the number, kind and\noption price of shares subject to outstanding Stock Options and any related\nStock Appreciation Rights and in the number and kind of shares of Restricted\nStock outstanding or available for awards as may be determined to be appropriate\nby the Board, in its sole discretion; provided, however, that the number of\nshares subject to any award shall always be a whole number.\n\nSECTION 7. Stock Options.\n\nStock Options may be granted alone or in addition to other awards granted under\nthe Plan and may be of two types: Incentive Stock Options and Non-Qualified\nStock Options (in each case with or without Stock Appreciation Rights). Any\nStock Option granted under the Plan shall be in such form as the Committee may\nfrom time to time approve.\n\nThe Committee shall have the authority to grant any optionee Incentive Stock\nOptions, Non-Qualified Stock Options or both types of Stock Options. Incentive\nStock Options may be granted only to employees of the Company and its\nsubsidiaries (within the meaning of Section 424(f) of the Code). To the extent\nthat any Stock Option does not qualify as an Incentive Stock Option, it shall\nconstitute a separate Non-Qualified Stock Option.\n\nStock Options shall be evidenced by option agreements, the terms and provisions\nof which may differ. An option agreement shall indicate on its face whether it\nis an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a\nStock Option shall occur on the date the Committee by resolution, or a duly\nauthorized officer, selects an employee as a participant in any grant of Stock\nOptions, determines the number of shares to be subject to the Stock Option\ngranted to such employee and specifies the terms and provisions of the Stock\nOption. The Company shall notify a participant of a grant of a Stock Option, and\na written option certificate shall be duly executed and delivered by the\nCompany.\n\nAnything in the Plan to the contrary notwithstanding, no term of the Plan\nrelating to Incentive Stock Options shall be interpreted, amended or altered nor\nshall any discretion or authority granted under the Plan be exercised so as to\ndisqualify the Plan under Section 422 of the Code or, without the consent of the\noptionee affected, to disqualify any Incentive Stock Option under such Section\n422.\n\nStock Options granted under the Plan shall be subject to the following terms and\nconditions and shall contain such additional terms and conditions as the\nCommittee shall deem desirable:\n\n      (a) Option Price. The option price per share of Stock purchasable under a\nStock Option shall be equal to the Fair Market Value of the Stock at the date of\ngrant or such higher price as shall be determined by the\n\n\n                                        7\n\nCommittee at grant; provided, however, that, in connection with the issuance of\na Stock Option in a transaction to which Section 424(a) of the Code applies, the\noption price may be determined pursuant to said Section 424(a).\n\n      (b) Option Term. The term of each Stock Option shall be fixed by the\nCommittee, but no Stock Option shall be exercisable more than ten years after\nthe date the Stock Option is granted.\n\n      (c) Exercisability. Stock Options shall be exercisable at such time or\ntimes and subject to such terms and conditions as shall be determined by the\nCommittee; provided, however, that, except as provided in Sections 7(f), (g),\n(h) and (i) and 10 or, unless otherwise determined by the Committee, no Stock\nOption shall be exercisable prior to the first anniversary date of the granting\nof the Stock Option. The Committee may waive, reduce or eliminate provisions\nthat Stock Options are exercisable only in installments and provisions that\nStock Options are not exercisable for a specified period of time, in whole or in\npart, based on such factors as the Committee may determine.\n\n      (d) Method of Exercise. Subject to the provisions of this Section 7, Stock\nOptions may be exercised, in whole or in part, at any time during the option\nterm by giving written notice of exercise to the Company specifying the number\nof shares to be purchased. Such notice shall be accompanied by payment in full\nof the purchase price by certified or bank check or such other instrument as the\nCompany may accept. As determined by the Committee, payment in full or in part\nmay also be made in the form of unrestricted Stock already owned by the optionee\nbased on the Fair Market Value on the date the Stock Option is exercised;\nprovided, however, that such unrestricted Stock shall not have been acquired\nwithin the preceding six months upon the exercise of a Stock Option or any stock\noption or stock unit or similar award granted under the Plan or any other plan\nmaintained at any time by the Company or any subsidiary.\n\nNo shares of Stock shall be issued until full payment therefor has been made. An\noptionee shall have all of the rights of a stockholder of the Company, including\nthe right to vote the shares and the right to receive dividends, with respect to\nshares subject to the Stock Option when the optionee has given written notice of\nexercise, has paid in full for such shares and, if requested, has given the\nrepresentation described in Section 12(a).\n\n      (e) Non-transferability of Options. No Stock Option shall be transferable\nby the optionee other than by will or by the laws of descent and distribution or\n(in the case of a Non-Qualified Stock Option) pursuant to a 'qualified domestic\nrelations order' (as defined by the Code or Title I of the Employee Retirement\nIncome Security Act of 1974, as amended, or the rules thereunder), and all Stock\nOptions shall be exercisable, during the optionee's lifetime, only by the\noptionee, by the guardian or legal representative of the optionee or (in the\ncase of a NonQualified Stock Option) its alternate payee pursuant to such\nqualified domestic relations order, it being understood that the terms 'holder'\nand 'optionee' include the guardian and legal representative of the optionee\nnamed in the option agreement and any person to whom an option is transferred by\nwill, the laws of descent and distribution or (in the case of a Non-Qualified\nStock Option) such qualified domestic relations order.\n\n      (f) Termination by Death. If an optionee's employment terminates by reason\nof death, any Stock Option held by such optionee may thereafter be exercised, to\nthe extent then exercisable or on such accelerated basis\n\n\n                                        8\n\nas the Committee may determine, for such period as the Committee may specify at\ngrant from the date of such death or until the expiration of the stated term of\nsuch Stock Option, whichever period is the shorter.\n\n      (g) Termination by Reason of Disability. If an optionee's employment\nterminates by reason of Disability, any Stock Option held by such optionee may\nthereafter be exercised by the optionee, to the extent it was exercisable at the\ntime of termination or on such accelerated basis as the Committee may determine,\nfor such period as the Committee may specify at grant from the date of such\ntermination of employment or until the expiration of the stated term of such\nStock Option, whichever period is the shorter; provided, however, that, if the\noptionee dies within such period, any unexercised Stock Option held by such\noptionee shall, notwithstanding the expiration of such period, continue to be\nexercisable to the extent to which it was exercisable at the time of death for a\nperiod of twelve months from the date of such death or until the expiration of\nthe stated term of such Stock Option, whichever period is the shorter. In the\nevent of termination of employment by reason of Disability, if an Incentive\nStock Option is exercised after the expiration of the exercise periods that\napply for purposes of Section 422 of the Code, such Stock Option will thereafter\nbe treated as a Non-Qualified Stock Option.\n\n      (h) Termination by Reason of Retirement. If an optionee's employment\nterminates by reason of Retirement, any Stock Option held by such optionee may\nthereafter be exercised by the optionee, to the extent it was exercisable at the\ntime of such Retirement or on such accelerated basis as the Committee may\ndetermine, for such period as the Committee may specify at grant from the date\nof such termination of employment or until the expiration of the stated term of\nsuch Stock Option, whichever period is the shorter; provided, however, that, if\nthe optionee dies within such period, any unexercised Stock Option held by such\noptionee shall, notwithstanding the expiration of such period, continue to be\nexercisable to the extent to which it was exercisable at the time of death for a\nperiod of twelve months from the date of such death or until the expiration of\nthe stated term of such Stock Option, whichever period is the shorter. In the\nevent of termination of employment by reason of Retirement, if an Incentive\nStock Option is exercised after the expiration of the exercise periods that\napply for purposes of Section 422 of the Code, such Stock Option will thereafter\nbe treated as a Non-Qualified Stock Option.\n\n      (i) Other Termination. Unless otherwise determined by the Committee, if an\noptionee's employment terminates for any reason other than death, Disability or\nRetirement, the Stock Option shall thereupon terminate, except that such Stock\nOption, to the extent then exercisable or on such accelerated basis as the\nCommittee may determine, may be exercised for the lesser of one year from\ntermination of employment or the balance of such Stock Option's term; provided,\nhowever, that if the optionee dies within such one-year period, any unexercised\nStock Option held by such optionee shall, notwithstanding the expiration of such\none-year period, continue to be exercisable to the extent to which it was\nexercisable at the time of death for a period of twelve months from the date of\nsuch death or until the expiration of the stated term of such Stock Option,\nwhichever period is the shorter. In the event of termination of employment, if\nan Incentive Stock Option is exercised after the expiration of the exercise\nperiods that apply for purposes of Section 422 of the Code, such Stock Option\nwill thereafter be treated as a NonQualified Stock Option.\n\n      (j) Incentive Stock Options. The Committee is authorized to provide at the\ntime of grant, that, to the extent permitted under Section 422 of the Code, if a\nparticipant's employment with the Company and its subsidiaries is terminated and\nthe portion of any Incentive Stock Option that is otherwise exercisable during\nthe post-termination\n\n\n                                        9\n\nperiod specified under Sections 7(f), (g), (h) or (i), applied without regard to\nthis Section 7(j), is greater than the portion of such option that is\nexercisable as an 'incentive stock option' during such post-termination period\nunder Section 422, such post-termination period shall automatically be extended\n(but not beyond the original option term) to the extent necessary to permit the\noptionee to exercise such Incentive Stock Option (either as an Incentive Stock\nOption or, if exercised after the expiration periods that apply for the purposes\nof Section 422, as a Non-Qualified Stock Option).\n\n      (k) Cashing Out of Option; Settlement of Spread Value in Stock. On receipt\nof written notice of exercise, the Committee may elect to cash out all or a\nportion of the shares of Stock for which a Stock Option is being exercised by\npaying the optionee an amount, in cash or Stock, equal to the Spread Value of\nsuch shares on the effective date of such cash out.\n\nNotwithstanding any other provision of this Plan, upon a Change in Control,\nunless the Committee shall determine otherwise at grant, an optionee shall have\nthe right, by giving notice to the Company within the Exercise Period, to elect\nto surrender all or part of the Stock Option to the Company and to receive in\ncash, within 30 days of such notice, an amount equal to the amount by which the\n'Change in Control Price' on the date of such notice shall exceed the exercise\nprice under the Stock Option multiplied by the number of shares of Stock as to\nwhich the right granted under this Section 7(k) shall have been exercised.\n\nSECTION 8. Stock Appreciation Rights.\n\n      (a) Grant and Exercise. Stock Appreciation Rights may be granted only in\nconjunction with all or part of any Stock Option granted under the Plan. In the\ncase of a Non-Qualified Stock Option, such rights may be granted either at or\nafter the time of grant. In the case of an Incentive Stock Option, such rights\nmay be granted only at the time of grant.\n\nA Stock Appreciation Right or applicable portion thereof granted with respect to\na given Stock Option shall terminate and no longer be exercisable upon the\ntermination or exercise of the related Stock Option, except that, unless\notherwise determined by the Committee at the time of grant, a Stock Appreciation\nRight granted with respect to less than the full number of shares, covered by a\nrelated Stock Option shall not be reduced until the number of shares covered by\nan exercise or termination of the related Stock Option exceeds the number of\nshares not covered by the Stock Appreciation Right.\n\nA Stock Appreciation Right may be exercised by an optionee in accordance with\nSection 8(b) by surrendering the applicable portion of the related Stock Option\nin accordance with procedures established by the Committee. Upon such exercise\nand surrender, the optionee shall be entitled to receive an amount determined in\nthe manner prescribed in Section 8(b). Stock Options which have been so\nsurrendered shall no longer be exercisable to the extent the related Stock\nAppreciation Rights have been exercised.\n\n      (b) Terms and Conditions. Stock Appreciation Rights shall be subject to\nsuch terms and conditions as shall be determined by the Committee, including the\nfollowing:\n\n\n                                       10\n\n            i) Stock Appreciation Rights shall be exercisable only at such time\n      or times and to the extent that the Stock Options to which they relate are\n      exercisable in accordance with the provisions of Section 7 and this\n      Section 8.\n\n            ii) Upon the exercise of a Stock Appreciation Right, an optionee\n      shall be entitled to receive an amount in cash, shares of Stock or both\n      equal in value to the excess of the Fair Market Value of one share of\n      Stock over the option price per share specified in the related Stock\n      Option multiplied by the number of shares in respect of which the Stock\n      Appreciation Right shall have been exercised, with the Committee having\n      the right to determine the form of payment.\n\n            iii) Stock Appreciation Rights shall be transferable only when and\n      to the extent that the underlying Stock Option would be transferable under\n      Section 7(e) and only to the transferee of the underlying Stock Option.\n\n            iv) Upon the exercise of a Stock Appreciation Right, the Stock\n      Option or part thereof to which such Stock Appreciation Right is related\n      shall be deemed to have been exercised for the purpose of the limitation\n      set forth in Section 6 on the number of shares of Stock to be issued under\n      the Plan but only to the extent of the number of shares issued under the\n      Stock Appreciation Right at the time of exercise.\n\n            v) The Committee may provide, at the time of grant, that a Stock\n      Appreciation Right can be exercised only in the event of a Change in\n      Control, subject to such terms and conditions as the Committee may specify\n      at grant.\n\nSECTION 9. Restricted Stock.\n\n      (a) Administration. Not in excess of 9,000,000 shares (subject to\nadjustment pursuant to Section 6) of Restricted Stock may be issued either alone\nor in addition to other awards granted under the Plan. The Committee shall\ndetermine the employees to whom and the time or times at which grants of\nRestricted Stock will be made, the number of shares to be awarded, the time or\ntimes within which such awards may be subject to forfeiture and any other terms\nand conditions of the awards, in addition to those contained in Section 9(c).\n\nThe Committee may condition the grant of Restricted Stock upon the attainment of\nspecified performance goals or such other factors or criteria as the Committee\nshall determine.\n\nThe provisions of Restricted Stock awards need not be the same with respect to\neach recipient.\n\n      (b) Awards and Certificates. Shares of Restricted Stock may be evidenced\nin such manner as the Committee may deem appropriate, including book-entry\nregistration or issuance of a stock certificate or certificates. Any certificate\nissued in respect of shares of Restricted Stock shall be registered in the name\nof the participant and shall bear an appropriate legend referring to the terms,\nconditions, and restrictions applicable to such award, substantially in the\nfollowing form:\n\n\n                                       11\n\n      The transferability of this certificate and the shares of stock\n      represented hereby are subject to the terms and conditions (including\n      forfeiture) of The Philip Morris 1992 Incentive Compensation and Stock\n      Option Plan and a Restricted Stock Agreement. Copies of such Plan and\n      Agreement are on file at the offices of Philip Morris Companies Inc., 120\n      Park Avenue, New York, New York 10017.\n\nThe Committee may require that the certificates evidencing such shares be held\nin custody by the Company until the restrictions thereon shall have lapsed and\nthat, as a condition of any Restricted Stock award, the participant shall have\ndelivered a stock power, endorsed in blank, relating to the Stock covered by\nsuch award.\n\n      (c) Terms and Conditions. Shares of Restricted Stock shall be subject to\nthe following terms and conditions:\n\n            i) During a period set by the Committee (the 'Restriction Period'),\n      commencing with the date of such award, the participant shall not be\n      permitted to sell, assign, transfer, pledge or otherwise encumber shares\n      of Restricted Stock. The Committee may provide for the lapse of such\n      restrictions in installments and may accelerate or waive such\n      restrictions, in whole or in part, based on service, performance and such\n      other factors or criteria as the Committee may determine.\n\n            ii) Except as otherwise provided in the applicable Restricted Stock\n      Agreement and Section 9(c)(i), the participant shall have, with respect to\n      the shares of Restricted Stock, all of the rights of a stockholder of the\n      Company, including the right to vote the shares and the right to receive\n      any cash dividends. Dividends payable in Stock shall be paid in the form\n      of Restricted Stock.\n\n            iii) Except as otherwise provided in the applicable Restricted Stock\n      Agreement and Sections 9(c)(i) and (iv), upon termination of a\n      participant's employment for any reason during the Restriction Period, all\n      shares still subject to restriction shall be forfeited by the participant.\n\n            iv) In the event of hardship or other special circumstances of a\n      participant whose employment is terminated for any reason, the Committee\n      may waive in whole or in part any or all remaining restrictions with\n      respect to such participant's shares of Restricted Stock.\n\n            v) If and when the Restriction Period expires without a prior\n      forfeiture of the Restricted Stock subject to such Restriction Period,\n      unlegended certificates for such shares shall be delivered to the\n      participant.\n\n            vi) Each award shall be confirmed by, and be subject to the terms\n      of, a Restricted Stock Agreement.\n\n\n                                       12\n\nSECTION 10. Change in Control Provisions.\n\n      (a) Impact of Event. Notwithstanding any other provision of the Plan to\nthe contrary, in the event of a Change in Control:\n\n            i) Any Stock Options and Stock Appreciation Rights outstanding as of\n      the date such Change in Control occurs and not then exercisable shall\n      become fully exercisable.\n\n            ii) The restrictions applicable to any Restricted Stock shall lapse,\n      and such Restricted Stock shall become free of all restrictions and fully\n      vested to the full extent of the original grant.\n\n            iii) Subject to the provisions of Section 7(k), the value of all\n      outstanding Stock Options, Stock Appreciation Rights and Restricted Stock\n      which, in the case of holders who are then subject to the provisions of\n      Section 16 of the Exchange Act, shall have been granted at least six\n      months before the date of cash-out occurring pursuant to this Section\n      10(a)(iii), shall, unless otherwise determined by the Committee at or\n      after grant, be cashed out on the basis of the 'Change in Control Price',\n      as defined in Section 10(c), as of the date such Change in Control occurs\n      or such other date as the Committee may determine prior to the Change in\n      Control.\n\n            iv) Any Long Term Performance Awards relating to Performance Periods\n      prior to the Performance Period in which the Change in Control occurs\n      which have been earned but not paid shall become immediately payable in\n      cash. In addition, subject to the provisions of Section 5(b), each\n      participant who has been awarded a Long Term Performance Award, shall be\n      deemed to have earned a pro rata Long Term Performance Award equal to the\n      product of (y) such participant's maximum award opportunity for such\n      Performance Period, and (z) a fraction, the numerator of which is the\n      number of full or partial months which have elapsed since the beginning of\n      such Performance Period to the date on which the Change in Control occurs,\n      and the denominator of which is the total number of months in such Period\n      or, in the case of a completed Performance Period, equal to the maximum\n      award opportunity.\n\n      (b) Definition of Change in Control. A 'Change in Control' means the\nhappening of any of the following events:\n\n            i) The acquisition by any individual, entity or group (within the\n      meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a 'Person'))\n      of beneficial ownership (within the meaning of Rule 13d-3 promulgated\n      under the Exchange Act) of 20% or more of either (A) the then outstanding\n      shares of Stock (the 'Outstanding Company Common Stock') or (B) the\n      combined voting power of the then outstanding voting securities of the\n      Company entitled to vote generally in the election of directors (the\n      'Outstanding Company Voting Securities'); provided, however, that the\n      following acquisitions shall not constitute a Change in Control: (1) any\n      acquisition directly from the Company, (2) any acquisition by the Company,\n      (3) any acquisition by any employee benefit plan (or related trust)\n      sponsored or maintained by the Company or any corporation controlled by\n      the Company or (4) any acquisition by any corporation pursuant to a\n      transaction described in clauses (A), (B) and (C) of paragraph (iii) of\n      this Section 10(b); or\n\n\n                                       13\n\n            ii) Individuals who, as of the effective date of the Plan,\n      constitute the Board (the 'Incumbent Board') cease for any reason to\n      constitute at least a majority of the Board; provided, however, that any\n      individual becoming a director subsequent to such effective date whose\n      election, or nomination for election by the stockholders of the Company,\n      was approved by a vote of at least a majority of the directors then\n      comprising the Incumbent Board shall be considered as though such\n      individual were a member of the Incumbent Board, but excluding, for this\n      purpose, any such individual whose initial assumption of office occurs as\n      a result of an actual or threatened election contest with respect to the\n      election or removal of directors or other actual or threatened\n      solicitation of proxies or consents by or on behalf of a Person other than\n      the Board; or\n\n            iii) Approval by the stockholders of the Company of a\n      reorganization, merger, share exchange or consolidation (a 'Business\n      Combination'), unless, in each case following such Business Combination,\n      (A) all or substantially all of the individuals and entities who were the\n      beneficial owners, respectively, of the Outstanding Company Common Stock\n      and Outstanding Company Voting Securities immediately prior to such\n      Business Combination beneficially own, directly or indirectly, more than\n      80% of, respectively, the then outstanding shares of common stock and the\n      combined voting power of the then outstanding voting securities entitled\n      to vote generally in the election of directors, as the case may be, of the\n      corporation resulting from such Business Combination (including, without\n      limitation, a corporation which as a result of such transaction owns the\n      Company through one or more subsidiaries) in substantially the same\n      proportions as their ownership, immediately prior to such Business\n      Combination of the Outstanding Company Common Stock and Outstanding\n      Company Voting Securities, as the case may be, (B) no Person (excluding\n      any employee benefit plan (or related trust) of the Company or such\n      corporation resulting from such Business Combination) beneficially owns,\n      directly or indirectly, 20% or more of, respectively, the then outstanding\n      shares of common stock of the corporation resulting from such Business\n      Combination or the combined voting power of the then outstanding voting\n      securities of such corporation except to the extent that such Person owned\n      20% or more of the Outstanding Company Common Stock or Outstanding Company\n      Voting Securities prior to the Business Combination and (C) at least a\n      majority of the members of the board of directors of the corporation\n      resulting from such Business Combination were members of the Incumbent\n      Board at the time of the execution of the initial agreement, or of the\n      action of the Board, providing for such Business Combination; or\n\n            iv) Approval by the stockholders of the Company of (A) a complete\n      liquidation or dissolution of the Company or (B) the sale or other\n      disposition of all or substantially all of the assets of the Company,\n      other than to a corporation with respect to which following such sale or\n      other disposition (1) more than 80% of, respectively, the then outstanding\n      shares of common stock of such corporation and the combined voting power\n      of the then outstanding voting securities of such corporation entitled to\n      vote generally in the election of directors is then beneficially owned,\n      directly or indirectly, by all or substantially all of the individuals and\n      entities who were the beneficial owners, respectively, of the Outstanding\n      Company Common Stock and Outstanding Company Voting Securities immediately\n      prior to such sale or other disposition in substantially the same\n      proportion as their ownership, immediately prior to such sale or other\n      disposition, of the Outstanding Company Common Stock and Outstanding\n      Company Voting Securities, as the case may be, (2) less than 20% of,\n      respectively, the then outstanding shares of common stock of such\n      corporation and the combined voting power of the then outstanding voting\n      securities of such corporation\n\n                                       14\n\n      entitled to vote generally in the election of directors is then\n      beneficially owned, directly or indirectly, by any Person (excluding any\n      employee benefit plan (or related trust) of the Company or such\n      corporation), except to the extent that such Person owned 20% or more of\n      the Outstanding Company Common Stock or Outstanding Company Voting\n      Securities prior to the sale or disposition and (3) at least a majority of\n      the members of the board of directors of such corporation were members of\n      the Incumbent Board at the time of the execution of the initial agreement,\n      or of the action of the Board, providing for such sale or other\n      disposition of assets of the Company or were elected, appointed or\n      nominated by the Board.\n\n      (c) Change in Control Price. 'Change in Control Price' means the highest\nprice per share paid in any transaction reported on the New York Stock Exchange\nComposite Index or paid or offered in any bona fide transaction related to a\npotential or actual change in control of the Company at any time during the\npreceding 60-day period as determined by the Committee, except that, in the case\nof Incentive Stock Options, such price shall be based only on transactions\nreported for the date on which such Incentive Stock Options are cashed out.\n\nSECTION 11.  Amendments and Termination.\n\nThe Board may amend, alter, or discontinue the Plan, but no amendment,\nalteration or discontinuation shall be made which would impair the rights of an\noptionee under a Stock Option or a recipient of a Long Term Performance Award,\nStock Appreciation Right or Restricted Stock Award theretofore granted without\nthe optionee's or recipient's consent or which, without the approval of the\nCompany's stockholders, would:\n\n      (a) materially increase the benefits accruing to participants under the\nPlan;\n\n      (b) except as expressly provided in the Plan, increase the total number of\nshares of Stock which may be issued under the Plan;\n\n      (c) modify the requirements as to eligibility for participation in the\nPlan;\n\n      (d) except as expressly provided in the Plan, decrease the option price of\nany Stock Option to less than the Fair Market Value on the date of grant;\n\n      (e) extend the maximum option period under Section 7(b).\n\nThe Committee may amend the terms of any Stock Option, Stock Appreciation Right,\nRestricted Stock Agreement or other award theretofore granted, prospectively or\nretroactively, but no such amendment shall impair the rights of any holder\nwithout the holder's consent.\n\nSubject to the above provisions, the Board shall have authority to amend the\nPlan to take into account changes in law and tax and accounting rules, as well\nas other developments.\n\n\n                                       15\n\nSECTION 12. Unfunded Status of Plan.\n\nIt is presently intended that the Plan constitute an 'unfunded' plan for\nincentive and deferred compensation, including specifically the Annual Incentive\nAward Reserve. The Committee may authorize the creation of trusts or other\narrangements to meet the obligations created under the Plan to deliver Stock or\nmake payments; provided, however, that, unless the Committee otherwise\ndetermines, the existence of such trusts or other arrangements is consistent\nwith the 'unfunded' status of the Plan.\n\nSECTION 13. General Provisions.\n\n      (a) The Committee may require each person purchasing shares pursuant to a\nStock Option to represent to and agree with the Company in writing that the\noptionee or participant is acquiring the shares without a view to the\ndistribution thereof. The certificates for such shares may include any legend\nwhich the Committee deems appropriate to reflect any restrictions on transfer.\n\nAll certificates for shares of Stock or other securities delivered under the\nPlan shall be subject to such stock transfer orders and other restrictions as\nthe Committee may deem advisable under the rules, regulations and other\nrequirements of the Commission, any stock exchange upon which the Stock is then\nlisted and any applicable Federal, state or foreign securities law, and the\nCommittee may cause a legend or legends to be put on any such certificates to\nmake appropriate reference to such restrictions.\n\n      (b) Nothing contained in this Plan shall prevent the Company, a subsidiary\nor affiliate from adopting other or additional compensation arrangements for its\nemployees.\n\n      (c) The adoption of the Plan shall not confer upon any employee any right\nto continued employment nor shall it interfere in any way with the right of the\nCompany, a subsidiary or affiliate to terminate the employment of any employee\nat any time.\n\n      (d) No later than the date as of which an amount first becomes includible\nin the gross income of the participant for Federal income tax purposes with\nrespect to any award under the Plan, the participant shall pay to the Company,\nor make arrangements satisfactory to the Company regarding the payment of, any\nFederal, state, local or foreign taxes of any kind required by law to be\nwithheld with respect to such amount. Unless otherwise determined by the\nCommittee, withholding obligations arising from the award or vesting of\nRestricted Stock or the exercise of Stock Options may be settled with\nunrestricted Stock, including Stock that is part of, or is received upon\nexercise of, the award that gives rise to the withholding requirement. The\nobligations of the Company under the Plan shall be conditional on such payment\nor arrangements, and the Company, its subsidiaries and affiliates shall, to the\nextent permitted by law, have the right to deduct any such taxes from any\npayment otherwise due to the participant. The Committee may establish such\nprocedures as it deems appropriate, including the making of irrevocable\nelections, for the settling of withholding obligations with Stock.\n\n      (e) At the time of grant, the Committee may provide in connection with any\ngrant made under this Plan that the shares of Stock received as a result of such\ngrant shall be subject to a right of first refusal pursuant to which the\nparticipant shall be required to offer to the Company any shares that the\nparticipant wishes to sell at the then\n\n\n                                       16\n\nFair Market Value of the Stock, subject to such other terms and conditions as\nthe Committee may specify at the time of grant.\n\n      (f) The reinvestment of dividends in additional Restricted Stock at the\ntime of any dividend payment shall only be permissible if sufficient shares of\nStock are available under Section 6 for such reinvestment (taking into account\nthen outstanding Stock Options, Stock Appreciation Rights and other Plan\nawards).\n\n      (g) The Committee may establish such procedures as it deems appropriate\nfor a participant to designate a beneficiary to whom any amounts payable in the\nevent of the participant's death are to be paid.\n\n      (h) The Plan and all awards made and actions taken thereunder shall be\ngoverned by and construed in accordance with the laws of the Commonwealth of\nVirginia.\n\nSECTION 14. Effective Date of Plan.\n\nThe Plan shall be effective on May 1, 1992.\n\nSECTION 15. Term of Plan.\n\nNo Stock Option or Stock Appreciation Right shall be granted or award of\nRestricted Stock made on or after the fifth anniversary of the effective date of\nthe Plan, but any such awards granted prior to such fifth anniversary may extend\nbeyond that date. There shall be no time limitation with respect to the granting\nof Annual Incentive Awards or Long Term Performance Awards.\n\n\n                                       17\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8510],"corporate_contracts_industries":[9424],"corporate_contracts_types":[9539,9546],"class_list":["post-38184","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-philip-morris-cos-inc","corporate_contracts_industries-food__diversified","corporate_contracts_types-compensation","corporate_contracts_types-compensation__incentive"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38184"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38184"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38184"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}