Exhibit 10(5)
THE MEAD CORPORATION
1996 STOCK OPTION PLAN
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Section 1. Purposes.
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The purposes of The Mead Corporation 1996 Stock Option Plan
(the "Plan") are (i) to provide incentives to officers, other key
employees and non-employee directors of the Company upon whose judgment,
initiative and efforts the long-term growth and success of the Company
is largely dependent; (ii) to assist the Company in attracting and re-
taining key employees and non-employee directors of proven ability; and
(iii) to increase the identity of interests of such key employees and
non-employee directors with those of the Company's shareholders by
providing such employees and directors with options to acquire Shares of
the Company.
Section 2. Definitions.
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For purposes of the Plan:
(a) "Acquisition Transaction" means a transaction of the
type described in Section 9(b)(ii).
(b) "Affiliate" means a person controlling, controlled by
or under common control with the Company.
(c) "Board of Directors" or "Board" means the Board of
Directors of the Company.
(d) "Change in Composition of the Board" means an event of
the type described in Section 9(b)(iv).
(e) "Change in Control" means a transaction of the type
described in Section 9(b)(iii).
(f) "Committee" means the committee referred to in Section 4.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Company" means The Mead Corporation, an Ohio
corporation; when used in the Plan with reference to employment,
"Company" shall include any Subsidiary of the Company.
(i) "Fair Market Value" means the average of the highest
sale price and the lowest sale price of a Share on the date the value of
a Share is to be determined, as reported on the New York Stock Exchange
- - Composite Transactions Tape or, if no sale is reported for such date,
then on the next preceding date for which a sale is reported.
(j) "Incentive Stock Option" means an option granted under
the Plan which qualifies as an incentive stock option under Section 422
of the Code.
(k) "Initial Director" means a person who is a Non-Employee
Director at the date of requisite approval of this Plan by the share-
holders of the Company.
(l) "Limited Right" means a right granted under Section 9
of the Plan.
(m) "Non-Employee Director" means a member of the Board who
is not also an employee of the Company.
(n) "Nonqualified Option" means an option granted under the
Plan which does not qualify as an incentive stock option under Section
422 of the Code.
(o) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
(p) "Reload Option" means a Nonqualified Option granted
under Section 6(d) of the Plan.
(q) "Share" or "Shares" means shares of common stock,
without par value, of the Company.
(r) "Subsequent Director" means a person who becomes a Non-
Employee Director subsequent to the date of requisite approval of this
Plan by the shareholders of the Company.
(s) "Subsidiary" means any corporation, partnership or
other person or entity at least 10% of the voting or equity interest of
which is owned or controlled, directly or indirectly, by the Company.
(t) "Tender Offer" means a tender offer or a request or
invitation for tenders or an exchange offer subject to regulation under
Section 14(d) of the 1934 Act and the rules and regulations thereunder,
as the same may be amended, modified or superseded from time to time.
(u) "Tax Date" means the date as of which the amount of the
withholding tax payment with respect to the exercise of a Nonqualified
Option is calculated.
Section 3. Shares Subject to the Plan.
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(a) Number of Shares. Subject to adjustment as provided in Section
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11, the maximum number of Shares that may be issued and/or delivered
under the Plan upon the exercise of options is 4,000,000. Subject to
adjustment as provided in Section 11, the maximum number of Shares that
may be issued and/or delivered under the Plan to any individual over the
term of the Plan upon the exercise of options shall not exceed 400,000.
Such Shares may be either authorized and unissued or treasury Shares.
Any Shares (i) subject to an option which for any reason has terminated
or expired or has been cancelled prior to being fully exercised or (ii)
which have been received by the Company as full or partial payment for
Shares purchased pursuant to Section 8(b), may again be granted pursuant
to options under the Plan.
(b) Subject to adjustment as provided in Section 11, the
maximum number of Limited Rights which may be granted under the Plan is
4,000,000. Subject to adjustment as provided in Section 11, the maximum
number of Limited Rights that may be granted under the Plan to any
individual over the term of the Plan shall not exceed 400,000. Any
Limited Rights granted under the Plan which for any reason terminate or
expire or have been cancelled prior to being fully exercised may again
be granted under the Plan.
Section 4. Administration.
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The Plan shall be administered by a committee (the
"Committee") of the Board of Directors, consisting of three or more
directors, who shall from time to time be appointed by, and serve at the
pleasure of, the Board of Directors. No director shall serve as a
member of the Committee if (i) he or she does not qualify as a disinter-
ested person with respect to the Plan under Rule 16b-3 (or any successor
provision) under the 1934 Act or (ii) he or she does not qualify as an
outside director within the meaning of Section 162(m) of the Code.
The Committee shall have and exercise all the power and
authority granted to it under the Plan. Subject to the provisions of
the Plan, the Committee shall in its sole discretion determine the
persons to whom, and the times at which, Incentive Stock Options,
Nonqualified Options, Reload Options and Limited Rights shall be grant-
ed; the number of Shares to be subject to each option; the option price
per Share; and the term of each option. In making such determinations,
the Committee may take into consideration each participant's present
and/or potential contribution to the success of the Company and any
other factors which the Committee may deem relevant and proper. Subject
to the provisions of the Plan, the Committee shall also interpret the
Plan; prescribe, amend and rescind rules and regulations relating to the
Plan; correct defects, supply omissions and reconcile any
inconsistencies in the Plan; and make all other determinations necessary
or advisable for the administration of the Plan. The Committee may in
its discretion change the terms of any Limited Right granted hereunder
in connection with an Incentive Stock Option to permit the Limited Right
to be exercisable even though the Fair Market Value of a Share on the
date of exercise does not exceed the exercise price of the related
option. Such determinations of the Committee shall be conclusive. A
majority of the Committee shall constitute a quorum for meetings of the
Committee, and the act of a majority of the Committee at a meeting, or
an act reduced to or approved in writing by all members of the
Committee, shall be the act of the Committee.
Section 5. Eligibility.
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From time to time during the term of the Plan, the Committee
may grant one or more Incentive Stock Options, Nonqualified Options and
Reload Options to any person who is then an officer or other key
employee of the Company. Each Non-Employee Director shall be eligible
to receive Nonqualified Options granted under the formula provision set
forth in Section 7 of the Plan.
Section 6. Terms and Conditions of Options.
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(a) Written Agreement. The terms of each option granted under the
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Plan shall be set forth in a written agreement, the form of which shall
be approved by the Committee.
(b) Terms and Conditions of General Application. The following
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terms and provisions shall apply to all options granted under the Plan,
except to the extent otherwise provided in Sections 6(c), 6(d), 6(e),
6(f) and 7 hereof, if applicable:
(1) No option may be granted under the Plan at an
option price per Share which is less than the Fair Market Value of
a Share on the date of grant.
(2) No option may be exercised more than ten years
after the date of grant.
(3) No option shall be exercisable within one year
after the date of grant. At the time an option is granted, the
Committee may provide that after such one year period, the option
may be exercised with respect to all Shares subject thereto, or
may be exercised with respect to only a specified number of Shares
over a specified period or periods.
(4) Except as provided in Sections 6(b)(5) and
6(b)(6), an option may be exercised only if the grantee of such
option has been continuously employed by the Company since the
date of grant. Whether authorized leave of absence or absence for
military or governmental service shall constitute a termination of
employment shall be determined by the Committee in its sole
discretion.
(5) At the time an option is granted, or at such other
time as the Committee may determine, the Committee may provide
that, if the grantee of the option ceases to be employed by the
Company for any reason (including retirement or disability) other
than death, the option will continue to be exercisable by the
holder (including a transferee under Section 10 hereof) for such
additional period (not to exceed the remaining term of such
option) after such termination of employment as the Committee may
provide.
(6) At the time an option is granted, the Committee
may provide that, if the grantee of such option dies while
employed by the Company or while entitled to the benefits of any
additional exercise period established by the Committee with
respect to such option in accordance with Section 6(b)(5), then
the option will continue to be exercisable by the person or
persons to whom the grantee's rights with respect to such option
shall have passed by will or by the laws of descent and
distribution (or in accordance with the procedures set forth in
Section 10 hereof) for such additional period after death (not to
exceed the remaining term of such option) as the Committee may
provide.
(7) At the time an option is granted, the Committee
may provide for any restriction or limitation on the exercise of
such option and/or for any restriction or limitation on the
transferability of the Shares issuable upon the exercise of such
option as it may deem appropriate.
(c) Additional Provisions Applicable to Incentive Stock Options.
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The following additional terms and provisions shall apply to Incentive
Stock Options granted under the Plan, notwithstanding any provision of
Section 6(b) to the contrary:
(1) No Incentive Stock Option shall be granted to an
officer or other employee who possesses directly or indirectly
(within the meaning of Section 424(d) of the Code) at the time of
grant more than 10% of the voting power of all classes of shares
of the Company or of any parent corporation or any corporation,
50% or more of the voting stock of which is owned or controlled,
directly or indirectly, by the Company, unless the option price is
at least 110% of the Fair Market Value of the Shares subject to
the option on the date the option is granted and the option is not
exercisable after the expiration of five years from the date of
grant.
(2) The aggregate Fair Market Value (determined on the
date an Incentive Stock Option is granted) of Shares with respect
to which Incentive Stock Options are exercisable for the first
time by any individual in any calendar year (under the Plan and
all of the plans of the Company and any Subsidiary and any parent
corporation) shall not exceed $100,000, or such other maximum
amount permitted by the Code.
(3) Any Stock Option granted under the Plan may
contain a feature providing for, upon the exercise thereof, the
grant of a Reload Option subject to and in accordance with the
terms and conditions set forth in Section 6(d) below.
(d) Additional Provisions Applicable to Reload Options. Whenever
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the grantee of any option containing a reload feature (the "Original
Option") outstanding under this Plan exercises such Original Option, the
grantee of such Original Option (except as provided in Section 6(d)(5)
below) shall be granted on the date of such exercise (the "Reload Date")
a new Option (the "Reload Option") for a number of Shares (the "Original
Shares") equal to the number of Shares subject to the Original Option
being exercised less the number of Shares subject to the Original Option
which are (A) withheld by the Company as full or partial payment of the
option price for such Original Option, (B) otherwise disposed of for
purposes of having the proceeds applied for such purpose or (C) withheld
by the Company for purposes of tax withholding in accordance with Sec-
tion 8(d) hereof. The following additional terms and provisions shall
apply to Reload Options granted under the Plan, notwithstanding any
provision of Section 6(b) to the contrary:
(1) Option Price. The option price per Share covered by a
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Reload Option shall be an amount equal to the Fair Market Value
per Share as of the Reload Date.
(2) Expiration Date. Subject to Section 6(d)(4) below, the op
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tion exercise period shall expire on, and the Reload Option shall
no longer be exercisable following, the tenth anniversary of the
Reload Date.
(3) Vesting Period. Reload Options granted under this Section
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6(d) shall vest and become exercisable with respect to all Shares
covered thereby on the third anniversary of the Reload Date,
subject to Section 6(f) hereof.
(4) Automatic Cancellation. Except as otherwise provided in
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the agreement evidencing a Reload Option, a Reload Option shall be
immediately cancelled (without any action taken by the Company)
with respect to that number of Shares subject to such Reload
Option (such number of Shares being determined in accordance with
the succeeding sentence), effective
immediately upon any sale, disposition or purported assignment or
transfer of any or all of the Original Shares subject to the
Original Option prior to the third anniversary of the Reload Date.
The number of Shares subject to the Reload Option so cancelled
shall equal the number of Original Shares subject to the Original
Option so sold, disposed of, assigned or transferred prior to the
third anniversary of the Reload Date; provided,
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however, that such Shares subject to the Reload Option shall not be
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cancelled if such Original Shares are used in connection with the
exercise of another option with respect to which Section 6(d)
hereof applies.
(5) Active Employee. No Reload Option shall be granted to any
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person who is not employed by the Company at the time of exercise
of an Original Option.
(e) Waiver of Terms. Subject to the ten-year limitation in Section
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6(b)(3), the Committee may waive or modify at any time, either before or
after the granting of an option (including a Reload Option but excluding
any option granted under Section 7 hereof) any condition or restriction
with respect to the exercise of such option imposed by or pursuant to
this Section 6 in such circumstances as the Committee may deem appro-
priate (including, without limitation, in the event the holder retires
with the approval of the Company, or in the event of a proposed
Acquisition Transaction, a Change in Control, Tender Offer for Shares,
or other similar transaction involving the Company).
(f) Acceleration Upon Certain Events. Notwithstanding any other
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provision of the Plan to the contrary, in the event of a Tender Offer
(other than an offer by the Company) for Shares pursuant to which the
offeror acquires Shares, or in the event of an Acquisition Transaction,
a Change in Control or a Change in Composition of the Board, all
outstanding options granted hereunder (including Reload Options and
options granted pursuant to Section 7 below) shall become exercisable in
full (whether or not otherwise exercisable) effective on the date of the
first purchase of Shares pursuant to the Tender Offer, or the date of
shareholder approval of the Acquisition Transaction, or the date of
filing of the Schedule 13D or shareholder authorization of the control
share acquisition giving rise in either case to the Change in Control,
or the date of the Change in Composition of the Board, as the case may
be (the occurrence of any such event is hereinafter referred to as an
"Acceleration"); provided, however, that no option shall be exercisable
under this subpart (f) until six months after the date of grant.
Section 7. Non-Employee Directors Formula Options.
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The following additional terms and provisions of this Sec-
tion 7 shall apply to grants of options to Non-Employee Directors under
the Plan, notwithstanding any provision of Section 6(b) to the contrary.
The provisions of this Section 7 shall not be amended more than once
every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the
rules promulgated thereunder.
(a) General. Non-Employee Directors shall receive Nonqualified
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Options under the Plan. The option price per Share shall equal the Fair
Market Value of a Share on the date of grant.
(b) Initial Grants to Initial Directors. Upon the requisite
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approval of the Plan by the shareholders of the Company, each Initial
Director shall be granted automatically an option to purchase 300
Shares.
(c) Initial Grants To Subsequent Directors. Each Subsequent Direc-
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tor shall, at the time such director becomes a Non-Employee Director, be
granted automatically an option to purchase 300 Shares.
(d) Subsequent Grants To Directors. On January 3rd of each year
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beginning on January 3, 1997, each continuing Initial Director shall be
granted automatically an option to purchase a number of Shares deter-
mined below. On January 3rd of each year subsequent to a Subsequent
Director's becoming a Non-Employee Director, each Subsequent Director
shall be granted automatically an option to purchase a number of Shares
determined below. The number of Shares subject to each grant made
pursuant to this paragraph (d) shall equal the product obtained by
multiplying (w) 300, by (x) an adjustment factor (the "Factor"). The
Factor shall equal the quotient obtained by dividing (y) the "base line
number" for average "total compensation" paid to directors by companies
with annual sales in excess of $4 billion, as published in the Hay Con-
sulting Group's "Directors Compensation Report" (or comparable successor
report) in the calendar year immediately preceding the year in which
such grant is made, which report covers compensation paid in the year
ending immediately prior to the year of publication, by (z) $36,246. In
the event that such Directors Compensation Report (or comparable
successor report) is not published with respect to any year, the Factor
shall equal one (1).
(e) Exercisability. Subject to Section 6(f) hereof, each option
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granted under this Section 7 shall be exercisable as to 100 percent of
the Shares covered by the option on the first anniversary of the date
the option is granted.
(f) Termination. Upon the termination of a Non-Employee Director
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from such position, for any reason, after such director has attained
either age 70 or ten (10) years of service as a director of the Company
(whether or not as a Non-Employee Director), each option granted to such
Non-Employee Director pursuant to this Section 7 which is exercisable at
the time of such termination shall remain exercisable for the remainder
of its term. Upon the termination of a Non-Employee Director from such
position, for any reason, prior to the attainment of age 70 or ten (10)
years of service as a director of the Company (whether or not as a Non-
Employee Director), all options granted to such Non-Employee Director
pursuant to this Section 7 which are exercisable at the time of such
termination shall remain exercisable for a period of one year following
the date of such termination, but in no event may the term of an option
be extended beyond its expiration date. Each option granted pursuant to
this Section 7 which is not exercisable at the time of such termination
shall be immediately cancelled.
Section 8. Exercise of Options.
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(a) Notice of Exercise. The holder of an option granted under the
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Plan may exercise all or part of such option by giving written notice of
exercise to the Committee or its designee; provided, however, that an
option may not be exercised for a fraction of a Share. No holder of an
option nor such holder's legal representatives, legatees, transferees or
distributees will be, or will be deemed to be, a holder of any Shares
covered by such option unless and until the option shall have been exer-
cised in accordance with the Plan.
(b) Payment of Option Price. The option price for Shares with
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respect to which an option is exercised shall be paid in full at the
time such notice is given. An option shall be deemed exercised on the
date the Committee or its designee receives written notice of exercise,
together with full payment for the Shares purchased. The option price
shall be paid to the Company either in cash or Shares (including Shares
withheld from the Shares otherwise receivable by the option holder upon
the exercise of the option) having a Fair Market Value equal to the
option price (or a combination of cash and Shares such that the sum of
the Fair Market Value of the Shares plus the cash equals the option
price). The Committee shall have the authority, subject to such
conditions and procedures that it deems necessary and advisable, to au-
thorize the use of a cashless exercise procedure with a registered bro-
ker/dealer.
(c) Payment in Cancellation of Option. The Committee shall have the
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authority in its sole discretion to authorize the payment to an option
holder (with the consent of such holder), in exchange for the cancel-
lation of all or a part of such holder's option (other than an option
granted under Section 7 hereof), of cash in an amount per Share not to
exceed the difference between the aggregate Fair Market Value on the
date of such cancellation of the Shares and the aggregate option price
of such Shares; provided, however, that if an Acceleration has occurred,
for purposes of this subparagraph, "Fair Market Value" on the date of
such cancellation shall be calculated in the same manner as the "exer-
cise value" of a Limited Right would be calculated under Section 9(c)
with respect to such date (whether or not any Limited Rights are
actually outstanding).
(d) Tax Withholding. With the approval of the Committee, the holder
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of a Nonqualified Option may elect to have the Company retain from the
Shares to be issued upon the exercise of such option Shares having a
Fair Market Value on the Tax Date equal to all or any part of the
federal, state and local withholding tax payments (whether mandatory or
permissive) to be made by the holder with respect to the exercise of the
option (up to a maximum amount determined by the holder's top marginal
tax rate) in lieu of making such payments in cash. The Committee may
establish from time to time rules or limitations with respect to the
right of a holder to elect to have the Company retain Shares in
satisfaction of withholding payments; provided, however, that, in any
event, any such election made by a person subject to Section 16(b) of
the 1934 Act must be made in accordance with any applicable rules
established under such section.
Section 9. Limited Rights.
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(a) Grant of Limited Rights. The Committee may grant Limited Rights
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with respect to any option granted under the Plan (other than an option
granted under Section 7) either at the time the option is granted or at
any time thereafter prior to the exercise, cancellation, termination or
expiration of such option. The number of Limited Rights covered by any
such grant shall not exceed, but may be less than, the number of Shares
covered by the related option. The term of any Limited Right shall be
the same as the term of the option to which it relates. The right of a
holder to exercise a Limited Right shall be cancelled if and to the
extent a related option is exercised, and the right of a holder to exer-
cise an option shall be cancelled if and to the extent a related Limited
Right is exercised.
(b) Events Permitting Exercise of Limited Rights. A Limited Right
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shall be exercisable only if and to the extent that the related option
is exercisable; provided, however, that notwithstanding the foregoing,
(x) a Limited
Right shall not be exercisable during the first six months of its term,
and (y) in the case of a Limited Right issued in connection with an
Incentive Stock Option, such Limited Right shall not be exercisable
unless the Fair Market Value of a Share on the date of exercise exceeds
the exercise price of a Share subject to the related option. A Limited
Right which is otherwise exercisable may be exercised only during the
following periods:
(i) during a period of 30 days following the date of
expiration of a Tender Offer (other than an offer by the Company) for
Shares, if the offeror acquires Shares pursuant to such Tender Offer;
(ii) during a period of 30 days following the date of
approval by the shareholders of the Company of a definitive agreement:
(x) for the merger or consolidation of the Company into or with another
corporation, if the Company will not be the surviving corporation or
will become a subsidiary of another corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving or parent entity) at least 80% of the combined voting
power of the voting securities of the Company or such surviving or
parent entity outstanding immediately after such merger or
consolidation, or (y) for the sale of all or substantially all of the
assets of the Company (each of the foregoing transactions is hereinafter
referred to as an "Acquisition Transaction");
(iii) during a period of 30 days following: (x) the
date upon which the Company is provided a copy of a Schedule 13D (filed
pursuant to Section 13(d) of the 1934 Act and the rules and regulations
promulgated thereunder) indicating that any person or group (as such
terms are defined in Section 13(d)(3) of the 1934 Act) has become the
beneficial owner (as defined in Rule 13d-3 of the 1934 Act) of 20% or
more of the outstanding voting shares of the Company or (y) the date of
authorization, by both a majority of the voting power of the Company and
a majority of the portion of such voting power excluding the voting
power of interested shares, of a control share acquisition (as such term
is defined in Chapter 1701 of the Ohio Revised Code) (each of the
foregoing transactions is hereinafter referred to as a "Change in Con-
trol"); and
(iv) during a period of 30 days following a change in
the composition of the Board of Directors such that individuals who were
members of the Board of Directors on the date two years prior to such
change (or who were elected, or were nominated for election, by the
Company's shareholders with the affirmative vote of at least two-thirds
of the directors then still in office who were directors at the
beginning of such two year period) no longer constitute a majority of
the Board of Directors (such a change in composition is hereinafter
referred to as a "Change in Composition of the Board").
(c) Exercise of Limited Rights. Upon exercise of a Limited Right,
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the holder thereof shall receive from the Company a cash payment equal
to the excess of: (x) the aggregate "exercise value" on the date of
exercise (determined as provided below) of that number of Shares as is
equal to the number of Limited Rights being exercised over (y) the
aggregate exercise price under the related option of that number of
Shares as is equal to the number of Limited Rights being exercised. A
holder shall exercise a Limited Right by giving written notice of such
exercise to the Committee. A Limited Right shall be deemed exercised on
the date the Committee receives such written notice.
The "exercise value" of a Limited Right on the date of
exercise shall be:
(i) in the case of an exercise during a period de-
scribed in Section 9(b)(i), the highest price per Share paid pursuant to
any Tender Offer which is in effect at any time during the 60-day period
prior to the date on which the Limited Right is exercised;
(ii) in the case of an exercise during a period
described in Section 9(b)(ii), the greater of: (x) the highest sale
price of a Share during the 30-day period prior to the date of
shareholder approval of the Acquisition Transaction, as reported on the
New York Stock Exchange - Composite Transactions Tape, or (y) the
highest fixed or formula per Share price payable pursuant to the
Acquisition Transaction (if determinable on the date of exercise);
(iii) in the case of an exercise during a period
described in Section 9(b)(iii), the greater of: (x) the highest sale
price of a Share during the 30-day period prior to the date the Company
is provided with a copy of the Schedule 13D, or the date of
authorization of the control share acquisition, as reported on the New
York Stock Exchange - Composite Transactions Tape, or (y) the highest
acquisition price of a Share shown on such Schedule 13D or to be paid in
such control share acquisition; and
(iv) in the case of an exercise during a period
described in Section 9(b)(iv), the highest sale price of a Share during
the 30-day period prior to the date of the Change in Composition of the
Board, as reported on the New York Stock Exchange - Composite Trans-
actions Tape.
Notwithstanding the foregoing, in no event shall the exercise value of a
Limited Right issued in connection with an Incentive Stock Option exceed
the maximum permissible exercise value for such a right for purposes of
Section 422 of the Code and the regulations and interpretations issued
pursuant thereto. Any securities or property which form part or all of
the consideration paid for Shares pursuant to a Tender Offer or
Acquisition Transaction shall be valued at the higher of (1) the
valuation placed on such securities or property by the person making
such Tender Offer or the other party to such Acquisition Transaction, or
(2) the value placed on such securities or property by the Committee.
(d) Compliance with Law. The exercise of Limited Rights by
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directors and officers of the Company shall be subject to, and comply
with, the applicable requirements of Rule 16b-3(e) under the 1934 Act
(or any successor provision), as the same may be amended, modified or
superseded from time to time.
Section 10. Transfers Upon Death; Nonassignability.
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Except as provided in this Section 10, options granted under
the Plan may not be sold, pledged, assigned, hypothecated or transferred
other than by will or the laws of descent and distribution and may be
exercised during the lifetime of the grantee only by such grantee or by
his guardian or legal representative.
Upon the death of an option holder, outstanding options held
by such holder may be exercised only by the executor or administrator of
the holder's
estate or by a person who shall have acquired the right to such exercise
by will or by the laws of descent and distribution.
Subject to such conditions as the Committee may prescribe,
during an option grantee's lifetime, the Committee may permit the
transfer or assignment of an outstanding option by such grantee; pro-
vided, that such transfer or assignment shall not apply to (y) an option
which is an Incentive Stock Option (but only if nontransferability is
necessary in order for the option to qualify as an Incentive Stock
Option) and (z) an option granted to a person subject to Section l6 of
the l934 Act (but only if nontransferability is necessary in order for
the option to qualify for the exemption under Rule l6b-3 of the l934
Act).
Section 11. Adjustments Upon Changes in Capitalization.
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In the event of a change in outstanding Shares by reason of
a Share dividend, recapitalization, merger, consolidation, split-up,
combination or exchange of shares, or the like, or in the event of any
similar corporate transaction which the Committee determines requires
the adjustments described herein, the maximum number of Shares subject
to option during the existence of the Plan, the number of Limited Rights
which may be granted under the Plan, the number of Shares subject to,
and the option price of, each outstanding option, the maximum number of
Shares or Limited Rights which may be granted to any individual over the
term of the Plan, the number of Limited Rights outstanding, the Fair
Market Value of a Share on the date a Limited Right is granted, and the
like shall be appropriately adjusted by the Committee (disregarding any
fractional Shares resulting therefrom), whose determination in each case
shall be conclusive.
Section 12. Conditions Upon Granting and Exercise of Options and Limited Rights
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and Issuance of Shares.
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No option or Limited Right shall be granted, no option or
Limited Right shall be exercised and Shares shall not be issued or
delivered upon the exercise of an option unless the grant and exercise
thereof, and the issuance and/or delivery of Shares pursuant thereto, or
the payment therefor, shall comply with all relevant provisions of state
and federal law, including, without limitation, the Securities Act of
1933, as amended, the 1934 Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
Shares then may be listed.
Section 13. Amendment and Termination of Plan.
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(a) Amendment. The Board of Directors may from time to time amend
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the Plan, or any provision thereof, in such respects as the Board of
Directors may deem advisable; provided, however, that any such amendment
shall be approved by the holders of Shares by such vote and otherwise in
compliance with applicable federal or state law (including Rule 16b-3
(or any successor provision) under the 1934 Act) or the requirements of
any stock exchange upon which the Shares may then be listed.
(b) Termination. The Board may at any time terminate the Plan.
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(c) Effect of Amendment or Termination. No amendment to or
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termination of the Plan shall adversely affect any option or Limited
Right previously granted under the Plan without the consent of the
holder thereof.
Section 14. Notices.
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Each notice relating to this Plan shall be in writing and
delivered in person or by mail to the proper address. Each notice shall
be deemed to have been given on the date it is delivered or mailed,
except for a notice of exercise given in accordance with Section 8(b),
which shall be deemed to have been given on the date it is received by
the Committee with payment of the option price. Each notice to the
Committee shall be addressed as follows: The Mead Corporation, Mead
World Headquarters, Courthouse Plaza Northeast, Dayton, Ohio 45463,
Attention: Compensation Committee. Each notice to the holder of an
option or other person or persons then entitled to exercise an option
shall be addressed to such person or persons at the holder's address as
set forth in the records of the Company. Anyone to whom a notice may be
given under this Plan may designate a new address by written notice to
the party to that effect.
Section 15. Benefits of Plan.
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This Plan shall inure to the benefit of and be binding upon
each successor and assign of the Company. All rights and obligations
imposed upon the holder of an option and all rights granted to the
Company under this Plan shall be binding upon such holder's heirs, legal
representatives and successors.
Section 16. Pronouns and Plurals.
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All pronouns shall be deemed to refer to the masculine,
feminine, singular or plural, as the identity of the person or persons
may require.
Section 17. Shareholder Approval and Term of Plan.
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The Plan shall become effective upon its approval by the
affirmative vote of the holders of a majority of the Shares entitled to
vote thereon held by shareholders present in person or by proxy at any
shareholders' meeting at which a quorum is present. The Plan shall
expire on September 30, 2005, unless sooner terminated in accordance
with Section 13.
Section 18. Interpretation.
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The Plan is designed and intended to comply with Rule 16b-3
promulgated under the 1934 Act and Section 162(m) of the Code and all
provisions hereof shall be construed in a manner to so comply.