Offer Letter

Special Executive Severance Plan

Executive Involuntary Severance Plan

 

 

 

OFFER LETTER WITH LYNN LAVERTY ELSENHANS, DATED JULY 15, 2008

Exhibit 10.2

July 15, 2008

Ms. Lynn Laverty Elsenhans

[Address]

Dear Lynn:

Contained herein are the specifics of an offer to you to join Sunoco, Inc. as its Chief Executive Officer and President and to be elected to its Board of Directors effective August 8, 2008. You are required to complete a physical examination and substance screening as soon as possible prior to your start date or within a reasonable time thereafter. Your examination and screening will be coordinated by Sunoco’s Medical Director once we have received your written acceptance of this offer.

Compensation

For 2008, your annual rate of pay, your salary, will be $1,240,000 and your target bonus under the annual Executive Incentive Plan (“EIP”) will be 120% of your salary or $1,488,000, for total annualized targeted cash compensation of $2,728,000. The actual annual bonus earned can range from 0% to 200% of target depending on how well the company performs. Since 2008 will be a partial year, any 2008 salary will be that earned based on the portion of the year you actually serve, and your EIP amount also will be pro rated based on the portion of the year you actually serve. The performance metrics for the 2008 EIP include After Tax Operating Income and Return on Capital Employed as compared to the proxy peer companies and Health, Environmental and Safety performance. These performance metrics were established by the Compensation Committee for 2008 and are subject to change in future years at the discretion of the Committee.


July 15, 2008

Page 2

You will receive a one-time grant of restricted share units equal in value to $5,000,000 at the date of grant, which will be August 29, 2008. The number of share units awarded will be determined on the date of grant, by dividing the targeted value by the closing common stock share price on the grant date, subject to rounding down to the nearest whole number of share units. The share units will vest in equal one-third installments, subject to rounding to whole share units, on the third, fourth and fifth anniversaries, respectively, of the grant date. The distributions will be made to you in the form of net common shares after taxes within 30 days after the vesting date. Dividend equivalents accrued up through the vesting date on each installment will be paid in cash net of required taxes. A voluntary termination by you or termination by the company for any reason, other than pursuant to a change in control, will result in the forfeiture of any remaining unvested share units. All long-term incentive awards granted to our executive officers are made under the company’s Long-Term Performance Enhancement Plan II (“LTPEP II”), and you will receive a separate award document related to this sign-on equity award at the grant date.

At the December 2008 Compensation Committee meeting, you will receive equity grants equal in value to $6,270,000. The grants will be equally split in value between stock options, calculated under the valuation method used by the company’s compensation consultant, and performance Common Stock Units (“CSUs”) using the closing common stock share price at the time of grant to value the number of CSUs. The performance CSUs have historically measured the company’s performance over the three calendar years following the grant date. The CSU performance metrics are reviewed during the fall Compensation Committee meetings and have generally been approved at the December meeting. For the most recent CSUs granted in December 2007, the performance measures are Total Shareholder Return and Earnings per Share Growth measured against the proxy peer companies. Please note that the performance metrics and mix are reviewed annually by the Compensation Committee, and are subject to change in future years at the discretion of the Committee. The December equity awards will be made under LTPEP II, and you will receive separate award documents.

Election to the Board of Directors

The Sunoco Board of Directors will elect you to serve on the Board effective August 8, 2008. The Board will take future action to elect you as Chair of the Board, effective January 1, 2009, as long as you are Sunoco’s Chief Executive Officer at that time.


July 15, 2008

Page 3

Stock Ownership Guidelines

Sunoco executives are subject to stock ownership guidelines that are expected to be met within 5 years. The ownership guidelines, expressed as a multiple of base salary, vary by job level. For the Chief Executive Officer, the guideline is currently six times the annual salary. Restricted share units and CSUs do not count toward these share ownership guidelines until fully vested, and stock options do not count toward these guidelines until exercised, and, in each case, the underlying shares received.

Relocation

Sunoco’s relocation policy will be made available to you that includes a home purchase option, temporary living arrangements and reimbursement for all reasonable and customary home purchase costs, moving, storage and other incidental relocation expenses.

Perquisites

Sunoco has eliminated perquisites that do not serve a business purpose. The CEO has only one perquisite — reasonable, limited personal use of the corporate aircraft for safety/security reasons, including the ability to have a spouse and/or family member accompany the CEO on business or personal trips. In accordance with company policy, you will not be grossed up for travel on the company aircraft that has a non-business, personal use. This perquisite is subject to the annual review of perquisites conducted by the Compensation Committee.

Vacation

You will be entitled to 25 days of paid vacation annually. In addition, you will also be allocated two paid floating holidays each year. These floating holidays are in addition to the normal company designated holidays. Since 2008 will be a partial year, your vacation will be pro rated and you will therefore be entitled to 11 paid vacation days for the balance of 2008.

Benefits

Sunoco provides a full range of benefits for most of its salaried employees including comprehensive health plans, disability, life insurance, savings and pension plans. The disability plan requires a mandatory employee contribution of 0.5% of base salary for the first 10 years of employment.


July 15, 2008

Page 4

You will be entitled to and encouraged to have a thorough annual physical examination performed at no cost to you. Memberships in certain, limited clubs used strictly for business purposes will be paid for by the company. Sunoco has a policy of supporting its executives who serve on non-profit organizations through matching contributions subject to certain limitations.

You will participate in the company’s non-qualified Supplemental Retirement Pension Plan (“SERP”) as well as its qualified cash balance pension plan. The SERP provides for a mid-career 2.25% accrual rate for each year multiplied by your final average pay as defined in the plan. The SERP benefit is reduced by amounts accrued under any other Sunoco pension plans. The Sunoco savings plan, SunCap, matches your contributions up to 5% of your salary. Eligibility for the company match commences after one year of service. Matching amounts in excess of statutory limits will be provided in the company’s non-qualified Savings Restoration Plan.

Every executive, including the CEO, is an employee at will. You will be eligible to participate in The Sunoco, Inc. Executive Involuntary Severance Plan, which provides severance payments in the event of an involuntary termination other than for cause, and The Sunoco, Inc. Special Executive Severance Plan, which provides severance benefits to an executive whose employment is involuntarily terminated or who resigns for good reason in connection with or following a change in control.

Sunoco currently provides former employees with post employment medical benefits. To be eligible for subsidized medical benefits under the current plan, you must be at least age 55 years of age and have a minimum of 10 years of service. To participate in the plan without a subsidy, you must be at least age 55 and have a minimum of 5 years of service.

More complete descriptions of Sunoco’s plans including the Summary Plan Descriptions and plan documents are available to you. The Board and/or the company does reserve the right to make changes to its employee policies, procedures and plans at any time.


July 15, 2008

Page 5

Please review this offer letter. If you elect to accept our offer, please sign and return to us a counterpart signature page. This offer letter will be effective if signed in counterparts, and delivery of a signature page by facsimile is effective to bind the parties to this offer letter. The effective date of this letter is the date hereof.

We are pleased to make this offer to you and look forward to hearing from you, and to your joining Sunoco.

Sincerely,

 

 

 

/s/    Ursula O. Fairbairn

Ursula O. Fairbairn

Chair, Sunoco, Inc. Compensation Committee of the Board of Directors

 

 

 

/s/    Rolf D. Naku

Rolf D. Naku

Sunoco, Inc. Senior Vice President, Human Resources and Public Affairs

I accept this offer to be Chief Executive Officer and President of Sunoco, Inc.

 

 

 

/s/    Lynn L. Elsenhans

Signature

 

BACK TO TOP

 

Exhibit 10.9

SUNOCO, INC.

SPECIAL EXECUTIVE SEVERANCE PLAN

(Amended and Restated as of December 1, 2010 )

 

 

 

 

  

  


ARTICLE I

DEFINITIONS

Section 1.1 “Accounting Firm” shall have the meaning provided herein at Section 4.7(b).

Section 1.2 “Annual Compensation” shall mean a Participant’s annual base salary as in effect immediately prior to the Change in Control, or, if greater, immediately prior to the Employment Termination Date, plus the greater of (x) the Participant’s annual guideline (target) bonus as in effect immediately before the Change in Control or, if higher, the Employment Termination Date, or (y) the average annual bonus awarded to the Participant with respect to the three years ending before the Change in Control or, if higher, with respect to the three years ending before the Employment Termination Date.

Section 1.3 “Affiliate” shall mean any entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Sunoco, Inc.

Section 1.4 “Benefit” or “Benefits” shall mean any or all of the benefits that a Participant is entitled to receive pursuant to Article IV of the Plan.

Section 1.5 “Benefit Extension Period” shall mean:

(a) for a Participant in Grade 18 or above, three years; and

(b) for each other Participant, two years.

Section 1.6 “Board of Directors” shall mean the Board of Directors of Sunoco, Inc.

Section 1.7 “Business Combination” shall have the meaning provided herein at Section 1.8(c).

Section 1.8 “Change in Control” shall mean the occurrence of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares of common stock of Sunoco, Inc. (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities of Sunoco, Inc. entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 1.8(a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from Sunoco, Inc., (B) any acquisition by Sunoco, Inc., (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Sunoco, Inc. or any company controlled by, controlling or under common control with Sunoco, Inc., or (D) any acquisition by any entity pursuant to a transaction that complies with Sections 1.8(c)(1), (c)(2) and (c)(3) of this definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the shareholders of Sunoco, Inc., was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving Sunoco, Inc. or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of Sunoco, Inc., or the acquisition of assets or stock of another entity by Sunoco, Inc. or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns Sunoco, Inc. or all or substantially all of the assets of Sunoco, Inc., either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Sunoco, Inc. or such corporation resulting from such Business Combination or any of their respective subsidiaries) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined

 

  

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voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for such Business Combination; or

(d) Approval by the shareholders of Sunoco, Inc. of a complete liquidation or dissolution of Sunoco, Inc.

Section 1.9 “Chief Executive Officer” shall mean the individual serving as the Chief Executive Officer of Sunoco, Inc. as of the date of reference.

Section 1.10 “Code” shall mean the Internal Revenue Code of 1986, as amended.

Section 1.11 “Committee” shall mean the administrative committee designated pursuant to Article VI of the Plan to administer the Plan in accordance with its terms.

Section 1.12 “Company” shall mean Sunoco, Inc., and any Affiliate.

Section 1.13 “Company Service” shall mean, for purposes of determining Benefits available to any Participant in this Plan, the total aggregate recorded length of such Participant’s service with Sunoco, Inc. or any Affiliate (while it is an Affiliate).

Company Service shall commence with the Participant’s initial date of employment with the Company, and shall end with such Participant’s death, retirement, or termination for any reason. Company Service also shall include:

(a) all periods of approved leave of absence (civil, family, medical, military, or Olympic); provided, however, that the Participant returns to work within the prescribed time following the leave;

(b) any break in service of thirty (30) days or less; and

(c) any service credited under applicable Company policies with respect to the length of a Participant’s employment by any non-affiliated entity that subsequently becomes an Affiliate or part of the operations of the Company.

Section 1.14 “Disability” shall mean any illness, injury or incapacity of such duration and type as to render a Participant eligible to receive long-term disability benefits under the applicable broad-based long-term disability program of the Company.

Section 1.15 “Compensation Committee” shall mean the compensation committee of the Board of Directors.

Section 1.16 “Employment Termination Date” shall mean the date on which a Participant separates from service as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations issued thereunder.

Section 1.17 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

Section 1.18 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Section 1.19 “Excise Tax” shall have the meaning provided herein at Section 4.7(f).

Section 1.20 “Executive Resource Employee” shall mean any individual employed by the Company who is a Grade 14 or above.

Section 1.21 “Gross-Up Payment” shall have the meaning provided herein at Section 4.7(a).

Section 1.22 “Incumbent Board” shall have the meaning provided herein at Section 1.8(b).

Section 1.23 “Involuntary Plan” shall mean the Sunoco, Inc. Executive Involuntary Severance Plan.

Section 1.24 “Just Cause” shall mean:

(a) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness or following notice of employment termination by the Participant pursuant to Section 1.32(b) or (c)), after a written demand for substantial performance is delivered to the Participant by the Board of Directors or the Chief Executive Officer that specifically identifies the manner in which the Board of Directors or the Chief Executive Officer believes that the Participant has not substantially performed the Participant’s duties, or

(b) the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.

 

  

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For purposes of this Section 1.24, no act, or failure to act, on the part of the Participant shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company. The cessation of employment of the Participant shall not be deemed to be for Just Cause unless and until there shall have been delivered to the Participant a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors (excluding the Participant, if the Participant is a member of the Board of Directors) at a meeting of the Board of Directors (after reasonable notice is provided to the Participant and the Participant is given an opportunity, together with counsel for the Participant, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, the Participant is guilty of the conduct described in Section 1.24(a) or 1.24(b), and specifying the particulars thereof in detail.

Section 1.25 “Outstanding Company Common Stock” shall have the meaning provided herein at Section 1.8(a).

Section 1.26 “Outstanding Company Voting Stock” shall have the meaning provided herein at Section 1.8(a).

Section 1.27 “Parachute Value” shall have the meaning provided herein at Section 4.7(f).

Section 1.28 “Participant” shall mean:

(a) any employee who is an Executive Resource Employee on December 1, 2010; and

(b) any employee who is an Executive Resource Employee after December 1, 2010 who is designated as a Participant after that date by the Chief Executive Officer, and in the case of a new chief executive officer, designated as a Participant by the Compensation Committee, who is employed by the Company on or before the occurrence of any Change in Control. In addition, for purposes of Sections 4.6 and 4.7 of this Plan, each such former Executive Resource Employee shall be a Participant, as applicable.

Section 1.29 “Payment” shall have the meaning provided herein at Section 4.7(f)

Section 1.30 “Person” shall have the meaning provided herein at Section 1.8(a).

Section 1.31 “Plan” shall mean the Sunoco, Inc. Special Executive Severance Plan, as set forth herein, and as the same may from time to time be amended.

Section 1.32 “Qualifying Termination” of the employment of a Participant shall mean any of the following:

(a) a termination of employment by the Company within two (2) years after a Change in Control, other than for Just Cause, death or Disability;

(b) a termination of employment by the Participant within two (2) years after a Change in Control for one or more of the following reasons:

(1) the assignment to such Participant of any duties inconsistent in a way adverse to such Participant, with such Participant’s positions, duties, responsibilities and status with the Company immediately prior to the Change in Control, or a reduction in the duties and responsibilities held by the Participant immediately prior to the Change in Control; or a change in the Participant’s reporting responsibilities, title or offices as in effect immediately prior to the Change in Control that is adverse to the Participant; in each case except in connection with such Participant’s termination of employment by the Company for Just Cause; or

(2) with respect to any Participant who is a member of the Board of Directors immediately prior to the Change in Control, any failure of the shareholders of Sunoco, Inc. to elect or reelect, or of Sunoco, Inc. to appoint or reappoint, the Participant as a member of the Board of Directors;

(3) a reduction by the Company in either the Participant’s annual base salary or guideline (target) bonus as in effect immediately prior to the Change in Control; the failure of the Company to provide the Participant with employee benefits and incentive compensation opportunities that (i) are not less favorable than those provided to other executives who occupy the same grade level at the Company as the Participant, or if the Company’s grade levels are no longer applicable, to a similar peer group of the executives of the Company, and (ii) provide the Participant with benefits that are at least as favorable, measured separately for (A) incentive compensation opportunities, (B) savings and retirement benefits, (C) welfare benefits, and (D) fringe benefits and vacation, as the most favorable of each such category of benefit in effect for the Participant at any time during the 120-day period immediately preceding the Change in Control; or

(4) The Company requires the Participant to be based anywhere other than the Participant’s present work location or a location within thirty-five (35) miles from the present location; or the Company requires

 

  

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the Participant to travel on Company business to an extent substantially more burdensome than such Participant’s travel obligations during the period of twelve (12) consecutive months immediately preceding the Change in Control;

provided, however, that in the case of any such termination of employment by the Participant under this subparagraph (b), such termination shall not be deemed to be a Qualifying Termination unless the termination occurs within 120 days after the occurrence of the event or events constituting the reason for the termination; or

(c) before a Change in Control, a termination of employment by the Company (other than a termination for Just Cause) or a termination of employment by the Participant for one of the reasons set forth in (b) above, if the affected Participant can demonstrate that such termination or circumstance in (b) above leading to the termination:

(1) was at the request of a third party with which the Company had entered into negotiations or an agreement with regard to a Change in Control; or

(2) otherwise occurred in connection with a Change in Control.

Any good faith determination made by the Participant that the Participant has experienced a Qualifying Termination pursuant to Section 1.32(b) shall be conclusive. A Participant’s mental or physical incapacity following the occurrence of an event described above in (b) above shall not affect the Participant’s ability to have a Qualifying Termination. As used in this Section 1.32, a “termination of employment” means a separation from service as defined in Code Section 409A and the regulations issued thereunder.

Section 1.33 “Retirement Plan” shall have the meaning provided herein at Section 4.1(c).

Section 1.34 “SERP” shall have the meaning provided herein at Section 4.1(c).

Section 1.35 “Sunoco, Inc.” shall mean Sunoco, Inc., a Pennsylvania corporation, and any successor thereto by merger, consolidation, liquidation or purchase of assets or stock or similar transaction.

Section 1.36 “Underpayment” shall have the meaning provided herein at Section 4.7(b).

ARTICLE II

BACKGROUND, PURPOSE AND TERM OF PLAN

Section 2.1 Background. Sunoco, Inc. maintains this Plan for the purpose of providing severance allowances to Participants whose employment is terminated in connection with or following a Change in Control. The Plan has been amended and restated as of September 6, 2001, February 6, 2003, November 1, 2007 and December 1, 2010. The Plan, as amended and restated herein, shall be effective as of December 1, 2010.

Section 2.2 Purpose of the Plan. The Plan, as set forth herein, has been adopted by the Board of Directors, or a committee thereof, delegated such responsibility, acting in its sole discretion, in recognition that the possibility of a major transaction or a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company. The Board of Directors has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of Participants, as key members of Company’s management, to their assigned duties without distraction. The Plan is not intended to be included in the definitions of “employee pension benefit plan” and “pension plan” set forth under Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Rather, this Plan is intended to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, § 2510.3-2(b).

Section 2.3 Term of the Plan. The Plan will continue until such time as the Board of Directors, or a committee thereof, delegated such responsibility, acting in its sole discretion, elects to modify, supersede or terminate it; provided, however, that no such action taken after a Change in Control, or before, but in connection with, a Change in Control, may terminate or reduce the benefits or prospective benefits of any individual who is a Participant on the date of the action without the express written consent of the Participant.

ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

Section 3.1 General Requirements. Participants shall be designated in accordance with Section 1.28. Except with respect to the benefits and payments under Sections 4.7 and 4.8, in order to receive a Benefit under this Plan, a Participant’s employment must have been terminated as a result of a Qualifying Termination.

 

  

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Section 3.2 Qualifying Termination. The Committee shall determine whether any termination of a Participant is a Qualifying Termination. The Participant shall follow the procedures described in Article IX for presenting his or her claim for Benefits under this Plan.

ARTICLE IV

BENEFITS

Section 4.1 Amount of Immediate Cash Benefit; Qualifying Termination. In the event of a termination of employment that would qualify the Participant for Benefits that is a Qualifying Termination, the cash amount to be paid to a Participant eligible to receive Benefits under Section 3.1 hereof shall be paid as provided in Section 5.1 hereof and shall equal the sum of the following:

(a) An amount equal to the Participant’s earned vacation (as determined under the Company’s applicable vacation policy as in effect at the time of the Change in Control) through his or her Employment Termination Date;

(b)(1) for a Participant in Grade 18 or above, Annual Compensation multiplied by three (3);

(2) for each other Participant, Annual Compensation multiplied by two (2);

(c) An amount equal to the excess of (x) the actuarial equivalent of the benefit under the Sunoco, Inc. Retirement Plan or any successor defined benefit pension plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable to the Participant than those in effect under the Retirement Plan immediately prior to the Change in Control) and any excess or supplemental retirement plan, including, without limitation, the Sunoco, Inc. Executive Retirement Plan and the Sunoco, Inc. Pension Restoration Plan, in which the Participant participates (collectively, the “SERP”) that the Participant would receive if the Participant’s employment continued throughout his/her Benefit Extension Period, assuming for this purpose that all accrued benefits are fully vested and assuming that the Participant’s compensation in each year of his/her Benefit Extension Period is the Annual Compensation, over (y) the actuarial equivalent of the Participant’s actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Employment Termination Date (including any additional benefit to which the Participant is entitled under the Retirement Plan or the SERP in connection with the Change in Control).

Section 4.2 Executive Severance Benefits. In the event that Benefits are paid under Section 4.1, the Participant shall continue to be entitled, through the end of his/her Benefit Extension Period, to those employee benefits, based upon the amount of coverage or benefits provided at the Change in Control, listed below:

(a) Death benefits in an amount equal to one (1) times the Participant’s annual base salary at the Employment Termination Date (provided, however, that any supplemental coverages elected under the Sunoco, Inc. Death Benefits Plan (or any similar plan of any of the following: a subsidiary or affiliate which has adopted this Plan; a corporation succeeding to the business of Sunoco, Inc.; and/or any subsidiary or affiliate, by merger, consolidation or liquidation or purchase of assets or stock or similar transaction) will be discontinued under the terms of such plan or plans); and

(b) Medical plan benefits (including dental coverage), with COBRA continuation eligibility beginning as of the end of the Benefit Extension Period, except as provided hereinbelow at Section 4.3.

In each case, when contributions are required of all Executive Resource Employees at the time of the Participant’s Employment Termination Date, or thereafter, if required of all other active Executive Resource Employees, the Participant shall continue to be responsible for making the required contributions during the Benefit Extension Period in order to be eligible for the coverage. The Participant also shall be entitled to reasonable outplacement services during the Benefit Extension Period, at no cost to the Participant (but only to the extent such services are provided no later than the end of the second calendar year following the year of the Participant’s Employment Termination Date and are paid for directly by the Company no later than the end of the third calendar year following the year of the Participant’s Employment Termination Date), from an experienced third-party vendor selected by the Committee and consistent with vendors used in connection with the Sunoco, Inc. Involuntary Termination Plan immediately before the Change in Control.

Section 4.3 Special Medical Benefit. In the event Benefits are paid to the Participant under Section 4.1:

(a) A Participant who was employed by the Company on January 1, 2008, and who was fifty (50) or more years of age on January 1, 2008, with a minimum of ten (10) years of Company Service on the Employment Termination Date, shall have medical (but not dental) benefits available under the same terms and conditions as other employees not yet eligible for Medicare coverage who retire under the terms of a Company retirement plan.

(b) Participant who (i) was fifty (50) or more years of age on the Employment Termination Date, and (ii) was not employed by the Company on January 1, 2008, or was not fifty (50) or more years of age on January 1, 2008, or has fewer than ten (10) years of Company Service on the Employment Termination Date, shall be eligible to receive

 

  

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Company medical plan benefits (excluding dental coverage) following the Benefit Extension Period, at a cost to any such Participant that is equal to the full premium cost of such coverage.

Subject to modification or termination of such medical benefits as generally provided to other employees not yet eligible for Medicare coverage who retire under the terms of the Company’s retirement plan(s), such benefits shall continue until such time as the Participant becomes first eligible for Medicare, or the Participant voluntarily cancels coverage, whichever is earlier.

Section 4.4 Retirement and Savings Plans. This Plan shall not govern and shall in no way affect the Participant’s interest in, or entitlement to benefits under, any of the Company’s “qualified” or supplemental retirement plans, and, except to the extent specifically provided in Section 4.1(c), payments received under any such plans shall not affect a Participant’s right to any Benefit hereunder.

Section 4.5 Relationship to Involuntary Plan. If a Participant becomes entitled to receive severance benefits under this Plan, Participant shall not be entitled to any benefits under the Involuntary Plan.

Section 4.6 Effect on Other Benefits. There shall not be drawn from the continued provision by the Company of any of the aforementioned Benefits any implication of continued employment or of continued right to accrual of retirement benefits under the Company’s qualified or supplemental retirement plans, nor shall a terminated employee, except as otherwise provided under the terms of the Plan, accrue vacation days, paid holidays, paid sick days or other similar benefits normally associated with employment for any part of the Benefit Extension Period during which benefits are payable under this Plan. A Participant shall have no duty to mitigate with respect to Benefits under this Plan by seeking or accepting alternative employment. Further, the amount of any payment or benefit provided for in this Plan shall not be reduced by any compensation earned by the Participant as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Participant to the Company, or otherwise.

Section 4.7 Parachute Payments. The following provisions apply to a Participant who was a Participant on or before November 25, 2008.

(a) Anything in this Plan to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Participant shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Participant of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to Section 409A of the Code, the Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 4.7(a), if it shall be determined that any Participant is entitled to a Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Participant and the amounts payable under this Plan shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order: (i) Section 4.1(b) and 4.1(c). For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amount payable under this Plan would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Plan shall be reduced pursuant to this Section 4.7(a). Sunoco, Inc.’s obligation to make Gross-Up Payments under this Section 4.7 shall not be conditioned upon the Participant’s termination of employment.

(b) Subject to the provisions of Section 4.7(c), all determinations required to be made under this Section 4.7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young LLP or such other nationally recognized certified public accounting firm as may be designated by the Participant (the “Accounting Firm”) which shall provide detailed supporting calculations both to Sunoco, Inc. and the Participant within 15 business days of the receipt of notice from the Participant that there has been a Payment, or such earlier time as is requested by Sunoco, Inc. All fees and expenses of the Accounting Firm shall be borne solely by Sunoco, Inc. Any determination by the Accounting Firm shall be binding upon Sunoco, Inc. and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by Sunoco, Inc. should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that Sunoco, Inc. exhausts its remedies pursuant to Section 4.7(c) and the Participant thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Sunoco, Inc. to or for the benefit of the Participant.

 

  

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(c) The Participant shall notify Sunoco, Inc. in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by Sunoco, Inc. of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Participant is informed in writing of such claim and shall apprise Sunoco, Inc. of the nature of such claim and the date on which such claim is requested to be paid. The Participant shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to Sunoco, Inc. (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Sunoco, Inc. notifies the Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall:

(i) give Sunoco, Inc. any information reasonably requested by Sunoco, Inc. relating to such claim,

(ii) take such action in connection with contesting such claim as Sunoco, Inc. shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Sunoco, Inc.,

(iii) cooperate with Sunoco, Inc. in good faith in order effectively to contest such claim, and

(iv) permit Sunoco, Inc. to participate in any proceedings relating to such claim;

provided, however, that Sunoco, Inc. shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 4.7(c), Sunoco, Inc. shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority on behalf of the Participant and direct the Participant to sue for a refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Sunoco, Inc. shall determine; provided, however, that if Sunoco, Inc. pays such claim and directs the Participant to sue for a refund, Sunoco, Inc. shall indemnify and hold the Participant harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Participant with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Sunoco, Inc.’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Participant of a Gross-Up Payment or payment by Sunoco, Inc. of an amount on any Participant’s behalf pursuant to Section 4.7(c), the Participant becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Participant shall (subject to Sunoco, Inc.’s complying with the requirements of Section 4.7(c) to the extent applicable) promptly pay to Sunoco, Inc. the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by Sunoco, Inc. of an amount on any Participant’s behalf pursuant to Section 4.7(c), a determination is made that the Participant shall not be entitled to any refund with respect to such claim and Sunoco, Inc. does not notify the Participant in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of any Gross-Up Payment required to be paid.

(e) Any Gross-Up Payment, as determined pursuant to this Section 4.7, shall be paid by Sunoco, Inc. to a Participant within five days of the receipt of the Accounting Firm’s determination; provided that, the Gross-Up Payment shall in all events be paid no later than the end of a Participant’s taxable year next following the Participant’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 4.7(c) that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of this Section 4.7, Sunoco, Inc. may withhold and pay over to the Internal Revenue Service or any other applicable taxing authority for the benefit of the Participant all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and the Participant hereby consents to such withholding.

(f) Definitions. The following terms shall have the following meanings for purposes of this Section 4.7.

 

  

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(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Participant, whether paid or payable pursuant to this Plan or otherwise.

(iv) The “Safe Harbor Amount” means 2.99 times the Participant’s “base amount,” within the meaning of Section 280G(b)(3) of the Code. (v) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

Section 4.8 Legal Fees and Expenses. The Company also shall pay to the Participant (or the Participant’s representative) all legal fees and expenses incurred by or with respect to the Participant during his lifetime or within ten (ten) years after his death:

(a) in disputing in good faith any issue relating to the termination of the Participant’s employment in connection with a Change in Control as a result of a Qualifying Termination entitling the Participant to Benefits under this Plan (including a termination of employment if the Participant alleges in good faith that such termination will be or is a Qualifying Termination pursuant to Section 1.31(c)); or

(b) in seeking in good faith to obtain or enforce any benefit or right provided by this Plan (or the payment of any Benefits through any trust established to fund Benefits under this Plan).

Such payments shall be made as such fees and expenses are incurred by the Participant (or the Participant’s representative), but in no event later than five (5) business days after delivery of the Participant’s (or Participant’s representative’s) written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. Notwithstanding the forgoing sentence, all such payments shall be made on or before the close of the calendar year following the calendar year in which the expense was incurred. The amount of expenses eligible for reimbursement under this provision in one calendar year may not affect the amount of expenses eligible for reimbursement under this provision in any other calendar year. The Participant (or Participant’s representative) shall reimburse the Company for such fees and expenses at such time as a court of competent jurisdiction, or another independent third party having similar authority, determines that the Participant’s claim was frivolously brought without reasonable expectation of success on the merits thereof.

ARTICLE V

METHOD AND DURATION OF BENEFIT PAYMENTS

Section 5.1 Method of Payment. Subject to the last sentence of Section 5.1, the cash Benefits to which a Participant is entitled, as determined pursuant to Article IV hereof, shall be paid in a lump sum. Payment shall be made by mailing to the last address provided by the Participant to the Company. In general, subject to the last sentence of this Section 5.1, payment shall be made within fifteen (15) days after the Participant’s Employment Termination Date but in no event later than thirty (30) days thereafter; provided, however, that payment of any Benefits under any provision of the Plan that are deferred compensation for purposes of Code Section 409A to any Participant who is a specified employee (specified employees being those Participants who are Executive Resource Employees, pursuant to the election of an alternative method specified in Treasury Regulation Sections 1.409A-1(i)(5) and 1.409A-1(i)(8)) (a “Specified Employee”) shall be paid in a lump sum on the later of the date such payments are due or the date six months after the Participant’s Employee Termination Date. In the event the Company should fail to pay when due the amounts described in Article IV (determined without regard to the payment delay to Specified Employees required by Code Section 409A), the Participant shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely amounts from the due date (determined without regard to the payment delay to Specified Employees required by Code Section 409A) to the date of payment at a rate equal to the prime rate of Citibank, N.A. as in effect from time to time after such due date. Notwithstanding anything to the contrary contained in this Plan, if (x) a Participant also participates in the Involuntary Plan and (y) (1) the Change in Control does not constitute a “change in the ownership of the corporation,” a “change in effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A(a)(2)(A)(v) of the Code, or (2) the Qualifying Termination occurs prior to a Change in Control, then payment of the cash Benefits provided under Section 4.1(b) of the Plan shall be made in equal monthly

 

  

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installments in accordance with Section 5.1 of the Involuntary Plan and during a number of months equal to the number of months that would apply to such Participant based on Section 1.16(b) of the Involuntary Plan.

Section 5.2 Payments to Beneficiary(ies). Each Participant shall designate a beneficiary(ies) to receive any Benefits due hereunder in the event of the Participant’s death prior to the receipt of all such Benefits. Such beneficiary designation shall be made in the manner, and at the time, prescribed by the Company in its sole discretion. In the absence of an effective beneficiary designation hereunder, the Participant’s estate shall be deemed to be his or her designated beneficiary.

ARTICLE VI

ADMINISTRATION

Section 6.1 Appointment of the Committee. The Committee shall consist of three (3) or more persons appointed by the Compensation Committee. Committee members may be, but need not be, employees of Sunoco, Inc. Following a Change in Control, the individuals most recently so appointed to serve as members of the Committee before the Change in Control, or successors whom they approve, shall continue to serve as the Committee.

Section 6.2 Tenure of the Committee. Before a Change in Control, Committee members shall serve at the pleasure of the Compensation Committee and may be discharged, with or without cause, by the Compensation Committee. Committee members may resign at any time on ten (10) days’ written notice.

Section 6.3 Authority and Duties. It shall be the duty of the Committee, on the basis of information supplied to it by the Company, to determine the eligibility of each Participant for Benefits under the Plan, to determine the amount of Benefit to which each such Participant may be entitled, and to determine the manner and time of payment of the Benefit consistent with the provisions hereof. In addition, the exercise of discretion by the Committee need not be uniformly applied to similarly situated Participants. The Company shall make such payments as are certified to it by the Committee to be due to Participants. The Committee shall have the full power and authority to construe, interpret and administer the Plan, to correct deficiencies therein, and to supply omissions. Except as provided in Section 9.2, all decisions, actions and interpretations of the Committee shall be final, binding and conclusive upon the parties.

Section 6.4 Action by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business at a meeting of the Committee. Any action of the Committee may be taken upon the affirmative vote of a majority of the members of the Committee at a meeting, or at the direction of the chairperson, without a meeting by mail, telegraph, telephone or electronic communication device; provided that all of the members of the Committee are informed of their right to vote on the matter before the Committee and of the outcome of the vote thereon.

Section 6.5 Officers of the Committee. The Compensation Committee shall designate one of the members of the Committee to serve as chairperson thereof. The Compensation Committee shall also designate a person to serve as Secretary of the Committee, which person may be, but need not be, a member of the Committee.

Section 6.6 Compensation of the Committee. Members of the Committee shall receive no compensation for their services as such. However, all reasonable expenses of the Committee shall be paid or reimbursed by the Company upon proper documentation. The Company shall indemnify members of the Committee against personal liability for actions taken in good faith in the discharge of their respective duties as members of the Committee and shall provide coverage to them under the Company’s Liability Insurance program(s).

Section 6.7 Records, Reporting and Disclosure. The Committee shall keep all individual and group records relating to Participants and former Participants and all other records necessary for the proper operation of the Plan. Such records shall be made available to the Company and to each Participant for examination during business hours except that a Participant shall examine only such records as pertain exclusively to the examining Participant and to the Plan. The Committee shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA, the Internal Revenue Code, and every other relevant statute, each as amended, and all regulations thereunder (except that the Company, as payor of the Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts which may be similarly reportable).

Section 6.8 Actions of the Chief Executive Officer. Whenever a determination is required of the Chief Executive Officer under the Plan, such determination shall be made solely at the discretion of the Chief Executive Officer. In addition, the exercise of discretion by the Chief Executive Officer need not be uniformly applied to similarly situated Participants and shall be final and binding on each Participant or beneficiary(ies) to whom the determination is directed.

Section 6.9 Bonding. The Committee shall arrange any bonding that may be required by law, but no amount in excess of the amount required by law (if any) shall be required by the Plan.

 

  

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ARTICLE VII

AMENDMENT AND TERMINATION

Section 7.1 Amendment, Suspension and Termination. The Company, acting through the Board of Directors, retains the right, at any time and from time to time, to amend, suspend or terminate the Plan in whole or in part, for any reason, and without either the consent of or the prior notification to any Participant. Notwithstanding the foregoing, no such action that is taken after a Change in Control or before, but in connection with, a Change in Control, may terminate or reduce the benefits or prospective benefits of any Participant on the date of such action without the express written consent of the Participant. No amendment, suspension or termination shall give the Company the right to recover any amount paid to a Participant prior to the date of such action or to cause the cessation and discontinuance of payments of Benefits to any person or persons under the Plan already receiving Benefits. The Board of Directors shall have the right to delegate its authority and powers hereunder, or any portion thereof, to any committee of the Board of Directors, and shall have the right to rescind any such delegation in whole or in part.

ARTICLE VIII

DUTIES OF THE COMPANY

Section 8.1 Records. The Company shall supply to the Committee all records and information necessary to the performance of the Committee’s duties.

Section 8.2 Payment. The Company shall make payments from its general assets to Participants and shall provide the Benefits described in Article IV hereof in accordance with the terms of the Plan, as directed by the Committee.

ARTICLE IX

CLAIMS PROCEDURES

Section 9.1 Application for Benefits. Benefits shall be paid by the Company following an event that qualifies the Participant for Benefits. In the event a Participant believes himself/herself eligible for Benefits under this Plan and Benefit payments have not been initiated by the Company, the Participant may apply for such Benefits by requesting payment of Benefits in writing from the Committee.

Section 9.2 Appeals of Denied Claims for Benefits. In the event that any claim for benefits is denied in whole or in part, the Participant (or beneficiary, if applicable) whose claim has been so denied shall be notified of such denial in writing by the Committee, within thirty (30) days following submission by the Participant (or beneficiary, if applicable) of such claim to the Committee. The notice advising of the denial shall specify the reason or reasons for denial, make specific reference to pertinent Plan provisions, describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed), and shall advise the Participant of the procedure for the appeal of such denial. All appeals shall be made by the following procedure:

(a) The Participant whose claim has been denied shall file with the Committee a notice of desire to appeal the denial. Such notice shall be filed within sixty (60) days of notification by the Committee of the claim denial, shall be made in writing, and shall set forth all of the facts upon which the appeal is based. Appeals not timely filed shall be barred.

(b) The Committee shall, within thirty (30) days of receipt of the Participant’s notice of appeal, establish a hearing date on which the Participant may make an oral presentation to the Committee in support of his/her appeal. The Participant shall be given not less than ten (10) days’ notice of the date set for the hearing.

(c) The Committee shall consider the merits of the claimant’s written and oral presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Committee shall deem relevant. If the claimant elects not to make an oral presentation, such election shall not be deemed adverse to his/her interest, and the Committee shall proceed as set forth below as though an oral presentation of the contents of the claimant’s written presentation had been made.

(d) The Committee shall render a determination upon the appealed claim, within sixty (60) days of the hearing date, which determination shall be accompanied by a written statement as to the reasons therefor.

ARTICLE X

MISCELLANEOUS

Section 10.1 Nonalienation of Benefits. None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment, trustee’s process, or any other legal or equitable process available to any

 

  

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creditor of such Participant. No Participant shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he/she may expect to receive, contingently or otherwise, under this Plan.

Section 10.2 No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Participant, or any person whosoever, the right to be retained in the service of the Company, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been adopted.

Section 10.3 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

Section 10.4 Successors, Heirs, Assigns, and Personal Representatives. This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant, present and future.

Section 10.5 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

Section 10.6 Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, the singular shall include the plural, and vice-versa.

Section 10.7 Unfunded Plan. The Plan shall not be funded. A Participant’s right to receive payment of Benefits hereunder shall be no greater than the right of any unsecured creditor of the Company. The Company may, but shall not be required to, set aside or earmark an amount necessary to provide the Benefits specified herein (including the establishment of trusts). In any event, no Participant shall have any right to, or interest in, any assets of the Company which may be applied by the Company to the payment of Benefits except as may be provided pursuant to the terms of any trust established by the Company to provide Benefits.

Section 10.8 Payments to Incompetent Persons, Etc. Any Benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Committee and all other parties with respect thereto.

Section 10.9 Lost Payees. A Benefit shall be deemed forfeited if the Committee is unable to locate a Participant to whom a Benefit is due. Such Benefit shall be reinstated if application is made by the Participant for the forfeited Benefit while this Plan is in operation.

Section 10.10 Controlling Law. This Plan shall be construed and enforced according to the laws of the Commonwealth of Pennsylvania to the extent not preempted by federal law.

Section 10.11 Successor Employer. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In such event, the term “Company” shall mean the Company and any successor or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan.

Section 10.12 In-Kind Benefits and Reimbursements. Notwithstanding anything to the contrary in this Plan, all reimbursements and in-kind benefits provided under this Plan shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Participant’s lifetime (or during a shorter period of time specified in this Plan); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, except, if such benefits consist of the reimbursement of expenses referred to in Section 105(b) of the Code, a maximum, if provided under the terms of the plan providing such medical benefit, may be imposed on the amount of such reimbursements over some or all of the period in which such benefit is to be provided to the Participant as described in Treasury Regulation Section 1.409A-3(i)(iv)(B); (c) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, provided that the Participant shall have submitted an invoice for such fees and expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; and (d) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

  

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BACK TO TOP

 

 

Exhibit 10.10

 

 

 

SUNOCO, INC.

EXECUTIVE INVOLUNTARY SEVERANCE PLAN

(Amended and Restated effective December 1, 2010)

 

 

 

 


ARTICLE I

DEFINITIONS

Section 1.1 “Benefit” or “Benefits” shall mean any or all of the benefits that a Participant is entitled to receive pursuant to Article IV of the Plan.

Section 1.2 “Board of Directors” shall mean the Board of Directors of Sunoco, Inc. or any successor thereto.

Section 1.3 “Chief Executive Officer” shall mean the individual serving as the Chief Executive Officer of Sunoco, Inc. as of the date of reference.

Section 1.4 “Committee” shall mean the administrative committee designated pursuant to Article VI of the Plan to administer the Plan in accordance with its terms.

Section 1.5 “Company” shall mean Sunoco, Inc., a Pennsylvania corporation. The term “Company” shall include any successor to Sunoco, Inc., any subsidiary or affiliate which has adopted the Plan, or a corporation succeeding to the business of Sunoco, Inc., or any subsidiary or affiliate, by merger, consolidation or liquidation or purchase of assets or stock or similar transaction.

Section 1.6 “Company Service” shall mean, for purposes of determining Benefits available to any Participant in this Plan, the total aggregate recorded length of such Participant’s service with: Sunoco, Inc.; any subsidiary or affiliate of Sunoco, Inc. (whether by merger, consolidation or liquidation or purchase of assets or stock or similar transaction) which has adopted the Plan; and/or any corporation succeeding to the business of Sunoco, Inc.

Company Service shall commence with the Participant’s initial date of employment with the Company, and shall end with such Participant’s death, retirement, or termination for any reason. Company Service also shall include:

(a) all periods of approved leave of absence (civil, family, medical, military, or Olympic); provided, however, that the Participant returns to work within the prescribed time following the leave;

(b) any break in service of thirty (30) days or less; and

(c) any service credited under applicable Company policies with respect to the length of a Participant’s employment by any non-affiliated entity that is subsequently acquired by, and becomes a part of, the Company’s operations.

Section 1.7 “Compensation Committee” shall mean the Compensation Committee of the Board of Directors.

Section 1.8 “Disability” shall mean any illness, injury or incapacity of such duration and type as to render a Participant eligible to receive long-term disability benefits under the applicable broad-based long-term disability program of the Company.

Section 1.9 “Employment Termination Date” shall mean the date on which a Participant separates from service as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations issued thereunder.

Section 1.10 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

  

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Section 1.11 “Executive Resource Employee” shall mean any individual employed by the Company who is a Grade 14 or above.

Section 1.12 “Just Cause” shall mean, as determined by the Committee:

(a) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Board of Directors or the Chief Executive Officer that specifically identifies the manner in which the Board of Directors or the Chief Executive Officer believes that the Participant has not substantially performed the Participant’s duties,

(b) indictment of the Participant for a felony in connection with the Participant’s employment duties or responsibilities to the Company that is not quashed within six (6) months;

(c) conviction of Participant of a felony;

(d) willful conduct by the Participant in connection with the Participant’s employment duties or responsibilities to the Company that is gross misconduct (including, but not limited to, dishonest or fraudulent acts) and places the Company at risk of material injury; or

(e) the Participant’s failure to comply with a policy of the Company that places the Company at risk of material injury.

For purposes of this Section 1.12, no act, or failure to act, on the part of the Participant shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company. In addition, for purposes of this Section 1.12, “injury” shall include, but not be limited to, financial injury and injury to the reputation of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company.

Section 1.13 “Participant” shall mean:

(a) any employee who is an Executive Resource Employee on December 1, 2010; provided, however, that any such Executive Resource Employee who has an employment contract with the Company that provides severance benefits shall not be eligible to participate in the Plan while such contract is in effect except to the extent specifically provided in the contract; and

(b) any employee who is an Executive Resource Employee after December 1, 2010, who is designated as a Participant after that date by the Chief Executive Officer, and in the case of a new chief executive officer, who is designated as a Participant by the Compensation Committee.

Section 1.14 “Plan” shall mean the Sunoco, Inc. Executive Involuntary Severance Plan, as set forth herein, and as the same may from time to time be amended.

Section 1.15 “Plan Year” shall mean each fiscal year of the Company during which this Plan is in effect.

Section 1.16 “Salary Continuation Period” shall mean:

(a) six (6) weeks, in the case of a Participant who either has not executed the release described in Section 3.3 hereof, or who has revoked such a previously executed release; or

(b) in the case of a Participant that has executed and not revoked the release described in Section 3.3 hereof:

(1) one-hundred-four (104) weeks for the Company’s Chief Executive Officer, Chief Operating Officer, and any executive vice president;

(2) seventy-eight (78) weeks for each other Participant in Grade 17 or above; and

(3) fifty-two (52) weeks for each other Participant.

Section 1.17 “Weekly Compensation” shall mean the sum of each of the following items divided by 52:

(a) a Participant’s annual base salary; and

(b) the applicable guideline (target) annual bonus amount in effect on his or her Employment Termination Date.

 

  

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ARTICLE II

BACKGROUND, PURPOSE AND TERM OF PLAN

Section 2.1 Background. The Company maintains this Plan for the purpose of providing severance allowances to all Participants whose employment is terminated for reasons other than fault of their own. The Plan shall be effective as of December 7, 2000.

Section 2.2 Purpose of the Plan. In recognition of their past service to the Company, this Plan is intended to alleviate, in part or in full, financial hardships which may be experienced by certain of those employees of the Company whose employment is terminated. In essence, benefits under the Plan are intended to be additional compensation for past services or the continuation of the specified fringe benefits for a transitional period. The amount or kind of benefit to be provided is to be based on the position of the Participant, the Participant’s compensation and the fringe benefit programs applicable to him or her, at his or her Employment Termination Date. The Plan is not intended to be included in the definitions of “employee pension benefit plan” and “pension plan” as set forth under Section 3(2) of ERISA. Rather, this Plan is intended to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, § 2510.3-2(b).

Section 2.3 Term of the Plan. The Plan will continue until such time as the Board of Directors, or a committee thereof, delegated such responsibility, acting in its sole discretion, elects to modify, supersede or terminate it in accordance with the further provisions hereof.

ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

Section 3.1 General Eligibility Requirement. In order to receive a Benefit under this Plan, a Participant’s employment must have been terminated by the Company other than for Just Cause, death or Disability; provided, however, that any Participant who is receiving benefits under the Sunoco, Inc. Special Executive Severance Plan shall not also be eligible to receive any Benefit under this Plan.

Section 3.2 Employment by Successor. Notwithstanding anything herein to the contrary, no Benefits shall be due hereunder in connection with the sale or other disposition by the Company of the capital stock or assets of any business unit, division, subsidiary, or other affiliate, if the Participant receives an offer of employment from the purchaser or other acquiror at a combined annual salary and guideline bonus at least equal to the annual salary and guideline bonus for his or her position with the Company immediately prior to such sale or other disposition.

Section 3.3 Release. Unless the Participant executes a full waiver and release of claims in a form satisfactory to the Company, and notwithstanding anything herein to the contrary as provided in Section 5.2, the Benefits provided hereunder in connection with a termination of employment shall be provided only for the Salary Continuation Period set forth in Section 1.16(a) of this Plan, and the special medical benefit described in Section 4.4 of this Plan shall not be provided. In no event shall the release described in this Section 3.3 impair the ability of a Participant who executes such a release to pursue any rights the Participant may have with respect to benefits pursuant to the Sunoco, Inc. Special Executive Severance Plan.

ARTICLE IV

BENEFIT

Section 4.1 Amount of Immediate Cash Benefit. The immediate cash amount to be paid to a Participant eligible to receive Benefits under Section 3.1 hereof shall be paid in a lump sum and shall equal the Participant’s earned vacation (as determined under the Company’s applicable vacation policy as in effect on the Employment Termination Date) through the end of his or her Employment Termination Date.

Section 4.2 Salary Continuation. A Participant who is eligible to receive Benefits under Section 3.1 shall continue to be entitled, through the end of his/her Salary Continuation Period to his/her Weekly Compensation as in effect on the Employment Termination Date.

Section 4.3 Executive Benefits. A Participant who is eligible to receive Benefits under Section 3.1 shall continue to be entitled, through the end of his/her Salary Continuation Period to those employee benefits listed below:

(a) death benefits in an amount equal to one (1) times the Participant’s annual base salary at the Employment Termination Date (provided, however, that any supplemental coverages elected under the Sunoco, Inc. Death Benefits Plan (or any similar plan of any of the following: a subsidiary or affiliate which has adopted this Plan; a corporation succeeding to the business of Sunoco, Inc.; and/or any subsidiary or affiliate, by merger, consolidation or

 

  

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liquidation or any purchase of assets or stock or similar transaction) will be discontinued under the terms of such plan or plans); and

(b) medical plan benefits (excluding dental coverage), including COBRA continuation coverage beginning as of the start of the Salary Continuation Period and running concurrently therewith.

In each case, when contributions are required of all other active Executive Resource Employees at the time of the Participant’s Employment Termination Date, or thereafter, if required of other Executive Resource Employees, the Participant shall continue to be responsible for making the required contributions during the Salary Continuation Period in order to be eligible for the coverage. The Participant also shall be entitled to reasonable outplacement services as deemed appropriate by the Committee (but only to the extent such services are provided no later than the end of the second calendar year following the year of the Participant’s Employment Termination Date and are paid for directly by the Company no later than the end of the third calendar year following the year of the Participant’s Employment Termination Date).

Section 4.4 Special Medical Benefit. Participants who have executed and not revoked the release described in Section 3.3 hereof, who were employed by the Company on or before January 1, 2008, and who were fifty (50) or more years of age on January 1, 2008, with a minimum of ten (10) years of Company Service on the Employment Termination Date, shall have medical (but not dental) benefits available under the same terms and conditions as other employees not yet eligible for Medicare coverage who retire under the terms of a Company retirement plan. Participants who have executed and not revoked the release described in Section 3.3 hereof, and who (a) are fifty (50) or more years of age on the Employment Termination Date, and (b) were not employed by the Company on January 1, 2008, or were not fifty (50) or more years of age on January 1, 2008, or have fewer than ten (10) years of Company Service on the Employment Termination Date, shall be eligible for the medical benefits described in the preceding sentence, at a cost to any such Participant that is equal to the full premium cost of such coverage. Subject to modification or termination of such medical benefits as generally provided to other employees not yet eligible for Medicare coverage who retire under the terms of a Company retirement plan, such benefits may continue until such time as the Participant becomes first eligible for Medicare, or the Participant voluntarily cancels coverage, whichever is earliest.

Section 4.5 Retirement Plans. This Plan shall not govern and shall in no way affect the Participant’s interest in, or entitlement to benefits under, any of the Company’s qualified or supplemental retirement plans and any payments received under any such plan shall not affect a Participant’s right to any Benefit hereunder.

Section 4.6 Minimum Benefit. Notwithstanding the provisions of Sections 4.2, 4.3 and 4.4 hereof, the Benefits available under this Plan shall not be less than those determined in accordance with the provisions of the Sunoco, Inc. Involuntary Termination Plan. If the Participant determines that the benefits under the Sunoco, Inc. Involuntary Termination Plan are more valuable to the Participant than the comparable Benefits set forth in this Plan, then the provisions used to calculate the Benefits available to the Participant under this Plan shall not apply, and the Benefits available to the Participant under this Plan shall be calculated using only the applicable provisions of the Sunoco, Inc. Involuntary Termination Plan. In all events, the timing of payment of benefits shall be determined in accordance with the terms of this Plan.

Section 4.7 Effect on Other Benefits. There shall not be drawn from the continued provision by the Company of any of the aforementioned Benefits any implication of continued employment or of continued right to accrual of retirement benefits under the Company’s qualified or supplemental retirement plans, nor shall a Participant accrue vacation days, paid holidays, paid sick days or other similar benefits normally associated with employment for any part of the Salary Continuation Period during which benefits are payable under this Plan.

 

  

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ARTICLE V

METHOD AND DURATION OF BENEFIT PAYMENTS

Section 5.1 Method of Payment. (a) The cash Benefits to which a Participant is entitled, as determined pursuant to Article IV hereof, shall be paid monthly except as otherwise provided in this Article V, and the Salary Continuation Period shall begin the first day of the month following the month in which the Employment Termination Date occurs. Pursuant to Treasury Regulation Section 1.409A-2(b)(2)(iii), for purposes of Treasury Regulation 1.409A-1(b)(4) and all other provisions of the regulations promulgated under Code Section 409A, the Participant’s right to the series of monthly payments hereunder at all times shall be treated as a right to a series of separate payments. Payment shall be made by mailing to the last address provided by the Participant to the Company, or by direct deposit into a bank account designated by the Participant in writing to the Company.

(b) Payment of any cash Benefits (that are deferred compensation for purposes of Code Section 409A) to any Participant who is a specified employee (specified employees being those Participants who are Executive Resource Employees, pursuant to the election of an alternative method specified in Treasury Regulation Sections 1.409A-1(i)(5) and 1.409A-1(i)(8)) shall be made as follows. Cash Benefits that are scheduled to be paid for the period which begins on such Participant’s Employment Termination Date and ends on the date six months from such Participant’s Employment Termination Date, shall not be paid as scheduled, but shall be accumulated and paid in a lump sum on the date six months after the Participant’s Employment Termination Date. Simple interest will be paid on cash Benefits delayed hereunder from the date such payments would have been made to the Participant but for this subsection (b), to the date of actual payment, at the interest rate equal to the prime rate of Citibank, N.A. as in effect from time to time after such due date.

Section 5.2 Conditions to Entitlement to Benefit. In order to be eligible to receive full Benefits hereunder (other than Benefits pursuant to Section 1.16(a) or Section 4.1), a Participant shall make himself/herself available to the Company and cooperate in any reasonable manner (so as not to unreasonably interfere with subsequent employment) in providing assistance to the Company after his or her Employment Termination Date in conducting any matters which are pending at such time, and, as provided in Section 3.3, shall execute a release and discharge of the Company from any and all claims, demands or causes of action other than as to amounts or benefits due to the Participant under any plan, program or contract provided by, or entered into with, the Company. Such release and discharge shall be in such form as is prescribed by the Committee and shall be executed and delivered no later than the fiftieth (50th) day following the Employment Termination Date. In the event that a Participant does not so execute and deliver such release, or in the event that the Participant revokes such release, the Company shall cease payment of any Benefits (other than Benefits pursuant to Section 1.16(a) or Section 4.1) and the Participant shall repay any Benefits (other than Benefits pursuant to Section 1.16(a) or Section 4.1) previously provided to him or her. In addition, no Benefits due hereunder shall be paid to a Participant who is required by Company guidelines to execute an agreement governing the assignment of patents or the disclosure of confidential information unless an executed copy of such agreement is on file with the Company.

Section 5.3 Payments to Beneficiary(ies). Each Participant shall designate a beneficiary(ies) to receive any Benefits due hereunder in the event of the Participant’s death prior to the receipt of all such Benefits. Such beneficiary designation shall be made in the manner, and at the time, prescribed by the Committee in its sole discretion. In the absence of an effective beneficiary designation hereunder, the Participant’s estate shall be deemed to be his or her designated beneficiary.

ARTICLE VI

ADMINISTRATION

Section 6.1 Appointment of the Committee. The Committee shall consist of three (3) or more persons appointed by the Compensation Committee. Committee members may be, but need not be, employees of the Company.

Section 6.2 Tenure of the Committee. Committee members shall serve at the pleasure of the Compensation Committee and may be discharged, with or without Cause, by the Compensation Committee. Committee members may resign at any time on ten (10) days’ written notice.

Section 6.3 Authority and Duties. It shall be the duty of the Committee to determine the eligibility of each Participant for Benefits under the Plan, to determine the amount of Benefit to which each such Participant may be entitled, and to determine the manner and time of payment of the Benefit consistent with the provisions hereof. The Company shall make such payments as are certified to it by the Committee to be due to Participants. The Committee shall have the full power and authority to construe, interpret and administer the Plan, to correct deficiencies therein, to supply omissions and to

 

  

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make factual determinations. All decisions, actions and interpretations of the Committee shall be final, binding and conclusive upon the parties.

Section 6.4 Action by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business at a meeting of the Committee. Any action of the Committee may be taken upon the affirmative vote of a majority of the members of the Committee at a meeting, or at the direction of the Chairperson, without a meeting by mail, telegraph, telephone or electronic communication device; provided that all of the members of the Committee are informed of their right to vote on the matter before the Committee and of the outcome of the vote thereon.

Section 6.5 Officers of the Committee. The Compensation Committee shall designate one of the members of the Committee to serve as Chairperson thereof. The Compensation Committee shall also designate a person to serve as Secretary of the Committee, which person may be, but need not be, a member of the Committee.

Section 6.6 Compensation of the Committee. Members of the Committee shall receive no compensation for their services as such. However, all reasonable expenses of the Committee shall be paid or reimbursed by the Company upon proper documentation. The Company shall indemnify members of the Committee against personal liability for actions taken in good faith in the discharge of their respective duties as members of the Committee and shall provide coverage to them under the Company’s liability insurance program(s).

Section 6.7 Records, Reporting and Disclosure. The Committee shall keep all individual and group records relating to Participants and former Participants and all other records necessary for the proper operation of the Plan. Such records shall be made available to the Company and to each Participant for examination during business hours except that a Participant shall examine only such records as pertain exclusively to the examining Participant and to the Plan. The Committee shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA, the Internal Revenue Code, and every other relevant statute, each as amended, and all regulations thereunder (except that the Company, as payor of the Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts which may be similarly reportable).

Section 6.8 Actions of the Chief Executive Officer or the Board of Directors. Whenever a determination is required of the Chief Executive Officer or the Board of Directors under the Plan, such determination shall be made solely at the discretion of the Chief Executive Officer or the Board of Directors, as applicable.

Section 6.9 Bonding. The Committee shall arrange any bonding that may be required by law, but no amount in excess of the amount required by law (if any) shall be required by the Plan.

ARTICLE VII

AMENDMENT AND TERMINATION

Section 7.1 Amendment, Suspension and Termination. The Company, acting by or pursuant to a resolution of the Board of Directors, or a committee thereof delegated such responsibility, retains the right, at any time and from time to time, to amend, suspend or terminate the Plan in whole or in part, for any reason, and without either the consent of or the prior notification to any Participant. No such amendment shall give the Company the right to recover any amount paid to a Participant prior to the date of such amendment or to cause the cessation and discontinuance of payments of Benefits to any person or persons under the Plan already receiving Benefits. No action to amend or modify the Plan that is taken after a Change in Control (as such term is defined in the Special Executive Severance Plan of the Company) or before, but in connection with, a Change in Control, may terminate or reduce the rights of an Employee as of the date of such action with respect to the Special Executive Severance Plan or Section 3.3.

ARTICLE VIII

DUTIES OF THE COMPANY

Section 8.1 Records. The Company shall supply to the Committee all records and information necessary to the performance of the Committee’s duties.

Section 8.2 Payment. The Company shall make payments from its general assets to Participants, and shall provide the Benefits described in Article IV hereof in accordance with the terms of this Plan, as directed by the Committee.

 

  

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ARTICLE IX

CLAIMS PROCEDURES

Section 9.1 Application for Benefits. Benefits shall be paid by the Company following a termination of employment that qualifies the Participant for Benefits. In the event a Participant believes himself/herself eligible for Benefits under this Plan and Benefit payments have not been initiated by the Company, the Participant may apply for such Benefits by requesting payment of Benefits in writing from the Company.

Section 9.2 Appeals of Denied Claims for Benefits. In the event that any claim for benefits is denied in whole or in part, the Participant (or beneficiary, if applicable) whose claim has been so denied shall be notified of such denial in writing by the Committee, within ninety (90) days following submission by the Participant (or beneficiary, if applicable) of such claim to the Committee (unless the Committee determines that special circumstances require an extension of time for processing the claim, in which case (i) the Committee shall notify in writing the Participant of the extension, the reasons therefor and the expected determination date and (ii) such extension shall not exceed the amount permitted by applicable law or regulation). The notice advising of the denial shall specify the reason or reasons for denial, make specific reference to pertinent Plan provisions, describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed), and shall advise the Participant of the procedure for the appeal of such denial. All appeals shall be made by the following procedure:

(a) The Participant whose claim has been denied shall file with the Committee a notice of desire to appeal the denial. Such notice shall be filed within sixty (60) days of notification by the Committee of the claim denial, shall be made in writing, and shall set forth all of the facts upon which the appeal is based. Appeals not timely filed shall be barred.

(b) The Committee shall consider the merits of the claimant’s written presentation, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Committee shall deem relevant.

(c) The Committee shall render a determination upon the appealed claim, within sixty (60) days of the Committee’s receipt of the Participant’s notice of appeal (unless the Committee determines that special circumstances require an extension of time for processing the claim, in which case (i) the Committee shall notify in writing the Participant of the extension, the reasons therefore and the expected determination date and (ii) such extension shall not exceed the amount permitted by applicable law or regulation), which determination shall be accompanied by a written statement as to the reasons therefor. The determination so rendered shall be binding upon all parties and shall not be overturned unless such determination was an abuse of discretion and/or violated the highest applicable legal standard.

ARTICLE X

MISCELLANEOUS

Section 10.1 Nonalienation of Benefits. None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment, trustee’s process, or any other legal or equitable process available to any creditor of such Participant. No Participant shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he/she may expect to receive, contingently or otherwise, under this Plan.

Section 10.2 No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Participant, or any person whosoever, the right to be retained in the service of the Company, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been adopted.

Section 10.3 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

Section 10.4 Successors, Heirs, Assigns, and Personal Representatives. This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant, present and future. Unless the Chief Executive Officer directs otherwise, the Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, or a division thereof, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to

 

  

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perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place.

Section 10.5 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

Section 10.6 Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, the singular shall include the plural, and vice-versa.

Section 10.7 Unfunded Plan. The Plan shall not be funded. The Company may, but shall not be required to, set aside or earmark an amount necessary to provide the Benefits specified herein (including the establishment of trusts). In any event, no Participant shall have any right to, or interest in, any assets of the Company which may be applied by the Company to the payment of Benefits.

Section 10.8 Payments to Incompetent Persons, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Committee and all other parties with respect thereto.

Section 10.9 Lost Payees. A Benefit shall be deemed forfeited if the Committee is unable to locate a Participant to whom a Benefit is due. Such Benefit shall be reinstated if application is made by the Participant for the forfeited Benefit while this Plan is in operation.

Section 10.10 Controlling Law. This Plan shall be construed and enforced according to the laws of the Commonwealth of Pennsylvania to the extent not preempted by Federal law.

Section 10.11 In-Kind Benefits and Reimbursements. Notwithstanding anything to the contrary in this Plan, all reimbursements and in-kind benefits provided under this Plan shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Participant’s lifetime (or during a shorter period of time specified in this Plan); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, except, if such benefits consist of the reimbursement of expenses referred to in Section 105(b) of the Code, a maximum, if provided under the terms of the plan providing such medical benefit, may be imposed on the amount of such reimbursements over some or all of the period in which such benefit is to be provided to the Participant as described in Treasury Regulation Section 1.409A-3(i)(iv)(B); (c) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, provided that the Participant shall have submitted an invoice for such fees and expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; and (d) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

  

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