Exhibit 10(iv) to the Annual Report
on Form 10-K of W.W. Grainger, Inc.
for the year ended December 31, 2002
GRAINGER(R)
---------------
2001 LONG TERM STOCK INCENTIVE PLAN
AS AMENDED MARCH 5, 2003
---------------
W.W. Grainger, Inc.
100 Grainger Parkway
Lake Forest, Illinois 60045-5201
(847) 535-1000
W.W. GRAINGER, INC.
2001 LONG TERM STOCK INCENTIVE PLAN
Section 1. Objective.
The objective of the 2001 Long Term Stock Incentive Plan (the "Plan") is to
attract and retain highly qualified executives and other employees, to advance
the interests of the Company by giving Employees a stake in the Company's future
growth and success, and to strengthen the alignment of interests between
Employees and the Company's shareholders through the ownership of shares of the
Company's Common Stock.
Section 2. Definitions.
2.1. General Definitions. The following words and phrases, when used
herein, shall have the following meanings:
(a) "Act" - The Securities Exchange Act of 1934, as amended.
(b) "Award" - The grant of any Option, Stock Appreciation
Right, Share of Restricted Stock, Share of Phantom Stock,
Share of Stock, Other Stock-Based Award, or any combination
thereof.
(c) "Board" - The Board of Directors of the Company.
(d) "Change in Control" - Any one or more of the following
events:
(i) approval by the shareholders of the Company of:
(A) any merger, reorganization or
consolidation of the Company or any
Subsidiary with or into any corporation or
other Person if Persons who were the
beneficial owners (as such term is used in
Rule 13d-3 under the Act) of Common Stock
and securities of the Company entitled to
vote generally in the election of directors
("Voting Securities") immediately before
such merger, reorganization or consolidation
are not, immediately thereafter, the
beneficial owners, directly or indirectly,
of at least 60% of the then-outstanding
common shares and the combined voting power
of the then-outstanding Voting Securities
("Voting Power") of the corporation or other
Person surviving or resulting from such
merger, reorganization or consolidation (or
the parent corporation thereof) in
substantially the same respective
proportions as their beneficial ownership,
immediately before the consummation of such
merger, reorganization or
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consolidation, of the then-outstanding
Common Stock and Voting Power of the
Company;
(B) the sale or other disposition of all or
substantially all of the consolidated assets
of the Company, other than a sale or other
disposition by the Company of all or
substantially all of its consolidated assets
to an entity of which at least 60% of the
common shares and the Voting Power
outstanding immediately after such sale or
other disposition are then beneficially
owned (as such term is used in Rule 13d-3
under the Act) by shareholders of the
Company in substantially the same respective
proportions as their beneficial ownership of
Common Stock and Voting Power of the Company
immediately before the consummation of such
sale or other disposition; or
(C) a liquidation or dissolution of the
Company;
provided, however, that if the consummation of an
event described in this paragraph (i) (a
"Transaction") is subject to an Other Party Approval
Requirement (as defined below), the approval of such
Transaction by the shareholders of the Company shall
not be deemed a Change in Control until the first
date on which such Other Party Approval Requirement
has been satisfied. For this purpose, "Other Party
Approval Requirement" means a requirement expressly
set forth in a Transaction Agreement (as defined
below) between the Company and another Person to the
effect that such Person shall obtain the approval of
one or more elements of the Transaction by the
stockholders, members, partners, or other holders of
equity interests of such Person (or of a parent of
such Person) prior to the consummation of such
Transaction in order to comply with the mandatory
provisions of (x) the law of the jurisdiction of the
incorporation or organization of such Person (or its
parent) or (y) the articles of incorporation or other
charter or organizational documents of such Person
(or its parent) that are applicable to such
Transaction. For this purpose, "Transaction
Agreement" means a written agreement that sets forth
the terms and conditions of the Transaction;
(ii) the following individuals cease for any reason
to constitute a majority of the directors of the
Company then serving: individuals who, on the
Effective Date, constitute the Board and any
subsequently appointed or elected director of the
Company (other than a director whose initial
assumption of office is in connection with an actual
or threatened election contest, including a consent
solicitation, relating to the election or removal of
one or more
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directors of the Company) whose appointment or
election by the Board or nomination for election by
the Company's shareholders was approved or
recommended by a vote of at least two-thirds of the
Company's directors then in office whose appointment,
election or nomination for election was previously so
approved or recommended or who were directors on the
Effective Date; or
(iii) the acquisition or holding by any person,
entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Act, other than by any
Exempt Person (as such term is defined below), the
Company, any Subsidiary, any employee benefit plan of
the Company or a Subsidiary) of beneficial ownership
(within the meaning of Rule 13d-3 under the Act) of
20% or more of either the Company's then-outstanding
Common Stock or Voting Power; provided that:
(A) no such person, entity or group shall be
deemed to own beneficially any securities
held by the Company or a Subsidiary or any
employee benefit plan (or any related trust)
of the Company or a Subsidiary;
(B) no Change in Control shall be deemed to
have occurred solely by reason of any such
acquisition if both (x) after giving effect
to such acquisition, such person, entity or
group has beneficial ownership of less than
30% of the then-outstanding Common Stock and
Voting Power of the Company and (y) prior to
such acquisition, at least two-thirds of the
directors described in (and not excluded
from) paragraph (ii) of this definition vote
to adopt a resolution of the Board to the
specific effect that such acquisition shall
not be deemed a Change in Control; and
(C) no Change in Control shall be deemed to
have occurred solely by reason of any such
acquisition or holding in connection with
any merger, reorganization or consolidation
of the Company or any Subsidiary which is
not a Change in Control within the meaning
of paragraph (i)(A) above.
Notwithstanding the occurrence of any of the events specified
in paragraphs (i), (ii) or (iii) of this definition, no Change
in Control shall occur with respect to any Participant if (x)
the event which otherwise would be a Change in Control (or the
transaction which resulted in such event) was initiated by
such Participant, or was discussed by him with any third
party, without the approval of the Board with respect to such
Participant's initiation or discussion, as applicable, or (y)
such Participant is, by written agreement, a participant on
his own behalf in a transaction in which the
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persons (or their affiliates) with whom such Participant has
the written agreement cause the Change in Control to occur
and, pursuant to the written agreement, such Participant has
an equity interest (or a right to acquire such equity
interest) in the resulting entity.
(e) "Code" - The Internal Revenue Code of 1986, as amended,
including the regulations thereunder, as amended from time to
time.
(f) "Committee" - The Compensation Committee of the Board or
such other Committee of the Board appointed by the Board to
administer the Plan. No Employee may serve as a member of the
Committee. If the Committee does not exist or cannot function
for any reason, the Board may take any action under the Plan
that would otherwise be the responsibility of the Committee.
(g) "Common Stock" - The shares of common stock of the
Company, and any shares into which such shares are converted,
changed or reclassified.
(h) "Company" - W.W. Grainger, Inc., an Illinois corporation.
(i) "Disability" or "Disabled" - A Participant's inability to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can
be expected to result in death or that has lasted for a
continuous period of not less than twelve (12) months.
(j) "Effective Date" - The date the Plan is approved by the
Company's shareholders.
(k) "Employee" - Any person designated as an employee of the
Company or a Subsidiary on the payroll records thereof. An
Employee shall not include any individual during any period he
or she is classified or treated by the Company or a Subsidiary
as an independent contractor, a consultant, or any employee of
an employment, consulting, or temporary agency or any other
entity other than the Company or a Subsidiary, without regard
to whether such individual is subsequently determined to have
been, or is subsequently retroactively reclassified as, a
common-law employee of the Company or a Subsidiary during such
period.
(l) "Exempt Person" - Any one or more of the following:
(i) any descendant of W.W. Grainger (deceased) or any
spouse, widow or widower of any such descendant (any
such descendants, spouses, widows and widowers
collectively defined as the "Grainger Family
Members");
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(ii) any descendant of E.O. Slavik (deceased) or any
spouse, widow or widower of any such descendant (any
such descendants, spouses, widows and widowers
collectively defined as the "Slavik Family Members"
and with the Grainger Family Members collectively
defined as the "Family Members");
(iii) any trust which is in existence on the
Effective Date and which has been established by one
or more Grainger Family Members, any estate of a
Grainger Family Member who died on or before the
Effective Date, and The Grainger Foundation (such
trusts, estates and named entity collectively defined
as the "Grainger Family Entities");
(iv) any trust which is in existence on the Effective
Date and which has been established by one or more
Slavik Family Members, any estate of a Slavik Family
Member who died on or before the Effective Date, Mark
IV Capital, Inc., and Mountain Capital Corporation
(such trusts, estates and named entities collectively
defined as the "Slavik Family Entities" and with the
Grainger Family Entities collectively defined as the
"Existing Family Entities");
(v) any estate of a Family Member who dies after the
Effective Date or any trust established after the
Effective Date by one or more Family Members or
Existing Family Entities; provided that one or more
Family Members, Existing Family Entities or
charitable organizations which qualify as exempt
organizations under Section 501(c) of the Code
("Charitable Organizations"), collectively, are the
beneficiaries of at least 50% of the actuarially
determined beneficial interests in such estate or
trust;
(vi) any Charitable Organization which is established
by one or more Family Members or Existing Family
Entities (a "Family Charitable Organization");
(vii) any corporation of which a majority of the
voting power and a majority of the equity interest is
held, directly or indirectly, by or for the benefit
of one or more Family Members, Existing Family
Entities, estates or trusts described in clause (v)
above, or Family Charitable Organizations; or
(viii) any partnership or other entity or arrangement
of which a majority of the voting interest and a
majority of the economic interest is held, directly
or indirectly, by or for the benefit of one or more
Family Members, Existing Family Entities, estates or
trusts described in clause (v) above, or Family
Charitable Organizations.
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(m) "Fair Market Value" - The closing price of a share of
Common Stock as reported in the Composite Tape for New York
Stock Exchange listed stocks or any other national stock
exchange or national market system on which the Common Stock
is then traded, on the last day on which a trade occurred
preceding the relevant date, or as otherwise determined by the
Committee.
(n) "Option" - The right to purchase a specified number of
shares of Common Stock at a stated price for a specified
period of time. For purposes of the Plan, the option is a
non-qualified stock option.
(o) "Other Stock-Based Award" - An award under Section 10 that
is valued in whole or in part by reference to, or is otherwise
based on, the Common Stock.
(p) "Participant" - Any Employee designated by the Committee
to participate in the Plan.
(q) "Person" - Any individual, corporation, partnership,
limited liability company, sole proprietorship, trust or other
entity.
(r) "Period of Restriction" - The period during which Shares
of Restricted Stock or Phantom Stock rights are subject to
forfeiture or restrictions on transfer pursuant to Section 8
of the Plan.
(s) "Phantom Stock" - A right to receive payment from the
Company in cash, stock, or any combination thereof, in an
amount determined by the Fair Market Value of the Common
Stock.
(t) "Restricted Stock" - Shares granted to a Participant which
are subject to restrictions on transferability pursuant to
Section 8 of the Plan.
(u) "Shares" - Shares of Common Stock.
(v) "Stock" - An Award of Shares granted under Section 9 of
the Plan.
(w) "Stock Appreciation Right" or "SAR" - The right to receive
a payment from the Company in cash, Common Stock, or any
combination thereof, equal to the excess of the Fair Market
Value of a share of Common Stock on the date of exercise over
a specified price fixed by the Committee, but subject to such
maximum amounts as the Committee may impose.
(x) "Subsidiary" - Any corporation, partnership, joint
venture, limited liability company, or other entity in which
the Company or any successor to the Company directly or
indirectly owns securities representing a majority of the
aggregate voting power or profits interest.
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2.2. Other Definitions. In addition to the above definitions, certain
words and phrases used in the Plan or any certificate, notice or
agreement evidencing an Award may be defined elsewhere in the Plan or
in such certificate, notice or agreement.
Section 3. Shares Subject to the Plan.
3.1. Number of Shares Available for Awards. Subject to the provisions
of Section 3.3, the number of Shares deliverable under the Plan may not
exceed 6,000,000 Shares, provided, however, that the number of Shares
of Stock and Shares of Restricted Stock delivered under the Plan other
than with respect to grants of Options or SARs may not exceed 10% of
the total. Notwithstanding the foregoing, the total number of Shares
with respect to which Options or Stock Appreciation Rights may be
granted to any Participant shall not exceed 600,000 Shares
(proportionately adjusted pursuant to Section 3.3) in any calendar
year.
3.2 Re-usage. If an Option or SAR expires or is terminated,
surrendered, or canceled without having been fully exercised, if
Restricted Stock is forfeited or cancelled, if Phantom Stock is
forfeited or cancelled, if Shares otherwise deliverable upon (i)
exercise of Options, (ii) exercise of SARs, (iii) vesting of Restricted
Stock, or (iv) settlement of Phantom Stock, are not delivered by reason
of payments of the Option exercise price pursuant to Section 6.5(b)
hereunder or withholdings of Shares in satisfaction of tax obligations
under Section 15.4 hereunder, or if any other grant results in any
Shares not being delivered, the Shares covered by such Option, SAR,
grant of Restricted Stock, grant of Phantom Stock or other grant, as
the case may be, shall again be available for Awards under the Plan.
3.3 Adjustments. Subject to Section 5.3, in the event of any change in
the outstanding Common Stock by reason of a stock split, stock
dividend, combination, reclassification or exchange of Shares,
recapitalization, merger, consolidation or other similar event, the
number of SARs and the number of Shares available for Options, grants
of Restricted Stock, grants of Phantom Stock, and Other Stock-Based
Awards and the number of Shares subject to outstanding Options, SARs,
grants of Restricted Stock, grants of Phantom Stock, and Other
Stock-Based Awards, and the price thereof, and the Fair Market Value,
as applicable, shall be appropriately adjusted by the Committee in its
sole discretion and any such adjustment shall be binding and conclusive
on all parties. Any fractional Shares resulting from any such
adjustment shall be disregarded.
Section 4. Eligibility and Participation.
The Committee may grant an Award only to an Employee who is actively employed by
the Company or any Subsidiary on the date the Award is made. The granting of
Awards
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under the terms of this Plan is made at the discretion of the Committee and does
not entitle a Participant to receive future Awards. The adoption of this Plan
shall not be deemed to give any Employee any right to be granted an Award,
except to the extent as may be determined by the Committee.
Section 5. Administration.
5.1. Committee. The Plan and all Awards granted pursuant hereto shall
be administered by the Committee, which has sole and absolute
discretion with respect to all decisions and determinations pertaining
thereto. The members of the Committee shall be appointed by and shall
serve at the pleasure of the Board, which may from time to time change
the Committee's membership.
5.2. Authority. The Committee shall have the sole and complete
authority to:
(a) determine the individuals to whom Awards are granted, the
type and amounts of awards to be granted and the time of all
such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Award granted;
(c) interpret and construe the Plan and all Awards and any
certificates, notices or agreements relating thereto;
(d) prescribe, amend and rescind rules, guidelines and
regulations relating to the Plan;
(e) determine the content and form of all certificates,
notices and agreements relating to Awards;
(f) determine all questions relating to Awards under the Plan;
(g) maintain accounts, records and ledgers relating to Awards;
(h) maintain records concerning its decisions and proceedings;
(i) employ agents, attorneys, accountants or other persons for
such purposes as the Committee considers necessary or
desirable; and
(j) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and to carry
out the objectives of the Plan.
5.3. Additional Terms. The Committee may: (i) modify or restrict
exercise procedures and any other Plan procedures; (ii) establish local
country plans as subplans to this Plan, each of which may be attached
as an Appendix hereto and to the extent that the Committee determines
that the restrictions imposed by the
8
Plan preclude the achievement of the material purposes of the Awards in
jurisdictions outside the United States under such a subplan, the
Committee will have the authority and discretion to modify those
restrictions as the Committee determines to be necessary or appropriate
to conform to applicable requirements or practices of jurisdictions
outside the United States; (iii) take any action, before or after an
Award is made, which it deems advisable to obtain or comply with any
necessary local government regulatory exemptions or approvals; provided
that the Committee may not take any action hereunder which would
violate any securities law or any governing statute; and (iv) in the
event of an extraordinary dividend or other distribution, merger,
reorganization, consolidation, combination, sale of assets, split up,
exchange, or spin off, or other extraordinary corporate transaction,
the Committee may, in such manner and to such extent (if any) as it
deems appropriate and equitable make provision for a cash payment or
for the substitution or exchange of any or all outstanding Awards of
the cash, securities or property deliverable to the holder of any or
all outstanding Awards based upon the distribution or consideration
payable to holders of Common Stock upon or in respect of such event.
5.4. Delegation. The Committee may delegate to appropriate senior
officers of the Company, or such other persons or committees as it
deems appropriate, its duties under the Plan pursuant to such
conditions and limitations as the Committee may establish.
5.5. Determinations. All determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of
the Plan shall be final, binding, and conclusive for all purposes and
upon all persons. Neither the Committee nor the Board, nor any member
of the Committee or the Board or anyone acting at the direction of the
Committee or the Board, shall be liable for any action or determination
made hereunder in good faith.
Section 6. Stock Options.
6.1. Type of Option. It is intended that only non-qualified stock
options may be granted by the Committee under this Section 6 of the
Plan.
6.2. Grant of Option. An Option may be granted to Participants at such
time or times as shall be determined by the Committee. Each Option
shall be evidenced by a certificate, notice or agreement that shall
specify the exercise price, the duration of the Option, the number of
Shares to which the Option applies, and such other terms and conditions
not inconsistent with the Plan as the Committee shall determine.
6.3. Option Price. The per-share Option price shall be at least 100% of
the Fair Market Value at the time the Option is granted.
9
6.4. Exercise of Options. Options awarded under the Plan shall be
exercisable at such times and shall be subject to such restrictions and
conditions, including the performance of a minimum period of service
after the grant, as the Committee may impose, which need not be uniform
for all Participants; provided, however, that no Option shall be
exercisable for more than ten (10) years after the date on which it is
granted.
6.5. Payment. The Committee shall determine the procedures governing
the exercise of Options, and shall require that the per-share option
price be paid in full at the time of exercise. The per-share option
price shall be payable in full either: (a) in cash or its equivalent
(acceptable cash equivalents shall be determined by the Committee); (b)
unless otherwise determined by the Committee, by tendering previously
acquired shares of Common Stock having an aggregate Fair Market Value
at the time of exercise equal to the total option exercise price
(provided that the shares of Common Stock which are tendered must have
been held by the Participant for at least six (6) months prior to their
tender); (c) unless otherwise determined by the Committee, pursuant to
a "cashless exercise" procedure, as permitted under United States
Federal Reserve Board's Regulation T, subject to securities law
restrictions; (d) by a combination of (a), (b) and (c); or (e) by any
other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
6.6. Rights as a Shareholder. Until the exercise of an Option and the
delivery of the Shares in respect thereof, a Participant shall have no
rights as a Shareholder with respect to the Shares covered by such
Option.
Section 7. Stock Appreciation Rights.
7.1. Grant of Stock Appreciation Rights. Stock Appreciation Rights may
be granted to Participants at such time or times as shall be determined
by the Committee and shall be subject to such terms and conditions as
the Committee may decide. A grant of an SAR shall be made pursuant to a
certificate, notice or agreement containing such provisions not
inconsistent with the Plan as the Committee shall approve.
7.2. Exercise of SARs. SARs may be exercised at such times and subject
to such conditions, including the performance of a minimum period of
service, as the Committee shall impose. SARs that are granted in tandem
with an Option may only be exercised upon the surrender of the right to
exercise an equivalent number of Shares under the related Option and
may be exercised only with respect to the Shares for which the related
Option is then exercisable. Notwithstanding any other provision of the
Plan, the Committee may impose conditions on the exercise of an SAR,
including, without limitation, the right of the Committee to limit the
time of exercise to specified periods.
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7.3. Payment of SAR Amount. Upon exercise of an SAR, the Participant
shall be entitled to receive payment of an amount determined by
multiplying:
(a) any increase in the Fair Market Value of a Share at the
date of exercise over the Fair Market Value of a Share at the
date of grant, by
(b) the number of Shares with respect to which the SAR is
exercised;
provided, however, that at the time of grant, the Committee may
establish, in its sole discretion, a maximum amount per Share which
will be payable upon exercise of an SAR.
7.4. Method of Payment. Subject to the discretion of the Committee,
which may be exercised at the time of grant, the time of payment, or
any other time, payment of an SAR may be made in cash, Shares or any
combination thereof.
Section 8. Restricted Stock or Phantom Stock.
8.1. Grant of Restricted Stock or Phantom Stock. The Committee may
grant Shares of Restricted Stock or Phantom Stock rights to such
Participants at such times and in such amounts, and subject to such
other terms and conditions not inconsistent with the Plan as it shall
determine. Each grant of Restricted Stock or Phantom Stock rights shall
be evidenced by a certificate, notice or agreement setting forth the
terms of such Award.
8.2. Restrictions on Transferability. Restricted Stock or Phantom Stock
rights may not be sold, transferred, pledged, assigned, or otherwise
alienated until such time, or until the satisfaction of such conditions
as shall be determined by the Committee (including without limitation,
the satisfaction of performance goals, the occurrence of such events as
shall be determined by the Committee, or pursuant to a determination
under Section 15.1). At the end of the Period of Restriction applicable
to any Restricted Stock, such Shares will be transferred to the
Participant free of all restrictions. At the end of the restriction
period applicable to Phantom Stock, payment shall be made in the manner
set forth in the applicable award agreement.
8.3. Rights as a Shareholder. Unless otherwise determined by the
Committee at the time of grant, Participants holding Restricted Stock
granted hereunder may exercise full voting rights and other rights as a
Shareholder with respect to those Shares during the Period of
Restriction. Holders of Phantom Stock rights shall not be deemed
Shareholders and, except to the extent provided in accordance with the
Plan, shall have no rights related to any Shares.
8.4. Dividends and Other Distributions. Unless otherwise determined by
the Committee at the time of grant, Participants holding Restricted
Stock shall be entitled to receive all dividends and other
distributions paid with respect to those
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Shares, provided that if any such dividends or distributions are paid
in shares of stock, such shares shall be subject to the same forfeiture
restrictions and restrictions on transferability as apply to the
Restricted Stock with respect to which they were paid. Unless otherwise
determined by the Committee at the time of grant, Participants holding
shares of Phantom Stock shall be entitled to receive cash payments
equal to any cash dividends and other distributions paid with respect
to a corresponding number of Shares; provided, however, that if any
such dividends or distributions are paid in Shares, the Fair Market
Value of such Shares shall be converted into shares of Phantom Stock
which shall be subject to the same forfeiture restrictions and
restrictions on transferability as apply to the shares of Phantom Stock
with respect to which they are paid.
8.5. Payment of Phantom Stock Rights. The Committee may, at the time of
grant, provide for other methods of payment in respect of Phantom Stock
rights in cash, Shares, partially in cash and partially in Shares, or
in any other manner not inconsistent with this Plan.
Section 9. Awards of Stock.
Subject to the provisions of the Plan, Shares of Stock may be awarded to
Participants in such number, upon such terms, and at such time or times as the
Committee shall determine in its discretion. Each grant of Stock may be
evidenced by a certificate, notice or agreement setting forth the terms of such
Award.
Section 10. Other Stock-Based Awards and Other Benefits.
10.1. Other Stock-Based Awards. The Committee shall have the right to
grant Other Stock-Based Awards which may include, without limitation,
the grant of Shares based on certain conditions, the payment of cash
based on the performance of the Common Stock, and the payment of Shares
in lieu of cash under other Company incentive or bonus programs.
Payment under or settlement of any such Awards shall be made in such
manner and at such times as the Committee may determine.
10.2. Other Benefits. The Committee shall have the right to provide
types of Awards under the Plan in addition to those specifically listed
utilizing shares of stock or cash, or a combination thereof, if the
Committee believes that such Awards would further the purposes for
which the Plan was established. Payment under or settlement of any such
Awards shall be made in such manner and at such times as the Committee
may determine.
10.3. Substitution or Assumption of Awards. The Committee, from time to
time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such
other company or otherwise, by either (a) granting an Award under the
Plan in substitution of such other company's award, or (b) assuming
such award as if it had been granted under
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the Plan if the terms of such assumed award could be applied to an
Award granted under the Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed award would
have been eligible to be granted an Award under the Plan if the other
company had applied the rules of the Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged, except that the
exercise price and the number and nature of Shares issuable upon
exercise of any such option will be adjusted pursuant to Section 424(a)
of the Code, notwithstanding other provisions of the Plan. In the event
the Company elects to grant a new Award rather than assuming an
existing option, such new Award may be granted with a similarly
adjusted exercise price.
Section 11. Amendment, Modification, and Termination of Plan.
Subject to the terms of the Plan, the Board at any time may terminate or suspend
the Plan, and from time to time may amend or modify the Plan, except that no
amendment or modification by the Board without shareholder approval shall
increase the number of Shares available for delivery under the Plan, decrease
the minimum per-share Option or SAR price or permit Employees to serve on the
Committee. No amendment, modification, or termination of the Plan shall in any
manner adversely affect any Award theretofore granted under the Plan to a
Participant without the consent of such Participant.
Section 12. Termination of Employment.
12.1. Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of retirement, any Option
or SAR granted to such Participant which is then outstanding may be
exercised at any time prior to the expiration of the term of the Option
or SAR or within six (6) years following the Participant's termination
of employment, whichever period is shorter, and any Restricted Stock,
Phantom Stock rights, or other Award then outstanding for which any
restriction has not lapsed prior to the effective date of retirement
shall be forfeited.
12.2. Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the
event a Participant's employment is terminated by reason of death or
Disability, any Option or SAR granted to such Participant which is then
outstanding may be exercised by the Participant, the Participant's
designated beneficiary, the Participant's legal representative or other
person entitled thereto, at any time prior to the expiration date of
the term of the Option or SAR or within six (6) years following the
Participant's termination of employment, whichever period is shorter,
and any Restricted Stock, Phantom Stock rights, or other Award then
outstanding shall become nonforfeitable and shall become transferable
or payable, as the case may be, as though any restriction had expired.
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12.3. Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee, whether at the time of grant or
thereafter, in the event the employment of the Participant shall
terminate for any reason other than misconduct or one described in
Section 12.1 or 12.2, any Option or SAR granted to such Participant
which is then outstanding may be exercised by the Participant at any
time prior to the expiration date of the term of the Option or SAR or
within three (3) months following the Participant's termination of
employment, whichever period is shorter; any Restricted Stock, Phantom
Stock rights, or other Award then outstanding for which any restriction
has not lapsed prior to the date of termination of employment shall be
forfeited upon termination of employment. If the employment of a
Participant is terminated by the Company or a Subsidiary by reason of
the Participant's misconduct, any outstanding Option or SAR shall
terminate and cease to be exercisable on the date of the Participant's
termination of employment; any Restricted Stock, Phantom Stock rights,
or other Award then outstanding for which any restriction has not
lapsed prior to the date of termination of employment shall be
forfeited upon termination of employment. As used herein, "misconduct"
means that the Participant has engaged, or intends to engage, in
competition with the Company or a Subsidiary, has induced any customer
of the Company or a Subsidiary to breach any contract with the Company
or a Subsidiary, has made any unauthorized disclosure of any of the
trade secrets or confidential information of the Company or a
Subsidiary, has committed an act of embezzlement, fraud, or theft with
respect to the property of the Company or a Subsidiary, or has
deliberately disregarded the rules of the Company or a Subsidiary in
such a manner as to cause any loss, damage, or injury to, or otherwise
endanger the property, reputation, or employees of the Company or a
Subsidiary. The Committee shall determine whether a Participant's
employment is terminated by reason of misconduct.
12.4. Accrual of Right at Date of Termination. The Participant shall
have the right to exercise an Option or SAR as indicated in Section
12.3 only to the extent the Participant's right to exercise such Option
or SAR had accrued at the date of termination of employment pursuant to
the terms of the Award and had not previously been exercised.
Section 13. Change in Control.
Except as otherwise provided at the time of grant in the certificate, notice or
agreement relating to a particular Award, if a Change in Control occurs, then:
(i) the Participant's Restricted Stock, Phantom Stock, or Other
Stock-Based Awards that were forfeitable shall, unless otherwise
determined by the Committee, become nonforfeitable and, to the extent
applicable, shall be converted into Shares; and
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(ii) any unexercised Option or SAR, whether or not exercisable on the
date of such Change in Control, shall thereupon be fully exercisable
and may be exercised, in whole or in part.
Section 14. Effect of Disposition of Facility or Operating Unit.
In the event that the Company or any of its Subsidiaries closes or disposes of
the facility at which a Participant is located or the Company or any of its
Subsidiaries diminish or eliminate ownership interests in any operating unit of
the Company or any of its Subsidiaries so that such operating unit ceases to be
majority owned by the Company or any of its Subsidiaries, then, with respect to
Awards held by Participants who subsequent to such event will not be employees
of the Company or any of its Subsidiaries, the Committee may (i) accelerate the
exercisability of Awards to the extent not yet otherwise exercisable or remove
any restrictions applicable to any Awards and (ii) extend the period during
which Awards will be exercisable to a date subsequent to the date when such
Awards would otherwise have expired by reason of the termination of such
Participant's employment with the Company or any of its Subsidiaries (but in no
event to a date later than the expiration date of the Awards or the fifth
anniversary of the transaction in which such facility closes or operating unit
ceases). If the Committee takes no special action with respect to any
disposition of a facility or an operating unit, then any cessation of employment
resulting from such disposition will be treated as an ordinary cessation of
employment as described in Section 12.
Section 15. Miscellaneous Provisions.
15.1. Non-transferability of Awards. Unless otherwise determined by the
Committee, whether at the time of grant or thereafter, and except as
provided in Sections 12.2 and 15.2, no Award granted under the Plan
shall be assignable, transferable, or payable to or exercisable by
anyone other than the Participant to whom it was granted.
15.2. Beneficiary Designation. Unless otherwise determined by the
Committee, whether at the time of grant or thereafter, each Participant
may from time to time name any beneficiary or beneficiaries (who may be
named contingently or successively) to whom any benefit under the Plan
is to be paid in the event of such Participant's death before he or she
receives any or all of such benefit. Each such designation shall revoke
all prior designations by such Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's
lifetime.
15.3. No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or a
Subsidiary to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employment of
the Company or a
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Subsidiary. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to receive any future Awards.
15.4. Tax Withholding. The Company shall have the authority to
withhold, or require a Participant to remit to the Company an amount
sufficient to satisfy federal, state, and local withholding tax
requirements on any Award under the Plan, and the Company may defer
payment of cash or issuance of Shares until such requirements are
satisfied. Unless otherwise determined by the Committee, a Participant
may elect, subject to such conditions as the Committee may require, to
have Shares otherwise deliverable under the Plan withheld by the
Company and having a Fair Market Value sufficient to satisfy all or
part of such requirements or, if so determined by the Committee, the
Participant's estimated total federal, state, and local tax obligation
associated with the transaction.
15.5. Governing Law. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Code
or Act, shall be governed by the law of the State of Illinois and
construed in accordance therewith.
15.6. Effectiveness of Plan. The Plan shall become effective upon its
approval by the shareholders of the Company; provided, however, that no
Award requiring the delivery of Shares shall be exercised or paid out
unless at the time of such exercise or payout (i) such Shares are
covered by a currently effective registration statement filed under the
Securities Act of 1933, as amended, if one is then required, or in the
sole opinion of the Company and its counsel such issuance of Shares is
otherwise exempt from the registration requirements of such act, and
(ii) such Shares are listed on any securities exchange upon which the
Common Stock of the Company is listed.
15.7. Unfunded Plan. Insofar as the Plan provides for Awards of cash,
Shares, rights or a combination thereof, the Plan shall be unfunded.
The Company may maintain bookkeeping accounts with respect to
Participants who are entitled to Awards under the Plan, but such
accounts shall be used merely for bookkeeping convenience. The Company
shall not be required to segregate any assets that may at any time be
represented by interests in Awards nor shall the Plan be construed as
providing for any such segregation. None of the Committee, the Company
or Board shall be deemed to be a trustee of any cash, Shares or rights
to Awards granted under the Plan. Any liability of the Company to any
Participant with respect to an Award or any rights thereunder shall be
based solely upon any contractual obligations that may be created by
the Plan and any Agreement, and no obligation of the Company under the
Plan shall be deemed to be secured by any pledge or other encumbrance
on any property of the Company.
15.8. Deferrals. The Committee may permit a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares
that would
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otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to
Restricted Stock or Phantom Stock, or the satisfaction of any
requirements or goals with respect to Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals
and the manner in which such deferral shall be accomplished.
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