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EXHIBIT 10(a)
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THE DAVEY TREE EXPERT COMPANY
1987 INCENTIVE STOCK OPTION PLAN
PLAN ADOPTED BY BOARD OF DIRECTORS ON APRIL 20, 1987
PLAN APPROVED BY SHAREHOLDERS ON MAY 19, 1987
1. PURPOSE. This 1987 Incentive Stock Option Plan (the "Plan") is
designed to promote the interest of the Company by enabling the Company, by
grant of options to purchase Common Shares of the Company, to retain and attract
key employees for the Company and its affiliates, and to provide additional
incentive to those employees through increased stock ownership in the Company.
Options granted under the Plan ("Options") shall be incentive stock options
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended, as now in effect or as hereafter further amended (the "Code"). The term
"affiliates" where used in the Plan means subsidiary corporations as defined in
Section 425 of the Code.
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall have full power and authority to construe and interpret the
provisions and to supervise the administration of the Plan, and to grant Options
under the Plan. No Director who shall have been eligible within a period of one
year prior to his appointment to the Committee to participate in the Plan or any
other plan of the Company entitling participants therein to acquire shares,
stock appreciation rights, or options of the Company is entitled to serve on the
Committee. All decisions and designations made by the Committee pursuant to the
provisions of the Plan shall be made by a majority of its members.
3. EMPLOYEES WHO MAY PARTICIPATE IN THE PLAN. Employees to whom
options are granted shall be designated by the Committee. An Option may be
granted to any full-time salaried key employee of the Company or of an
affiliate, including any director or officer who is a key employee. An employee
may hold more than one Option. No employee may, however, be granted incentive
stock options under any and all stock option plans of the Company that become
exercisable for the first time by the employee during any calendar year for
shares that exceed an aggregate fair market value (determined on the date(s) of
grant) of $100,000.
4. SHARES SUBJECT TO THE PLAN. The aggregate number of Common Shares
that may be delivered upon the exercise of all Options granted under the Plan
may not exceed 100,000, subject, however, to adjustment as provided in Section
13. The Common Shares to be issued under the Plan shall be the Company's
authorized Common Shares and may be unissued shares or treasury shares as the
Committee, with the concurrence of the Board of Directors, may from time to time
determine. To the extent the Company shall reacquire Common Shares for such
purposes, shares may be reacquired at the time Options are exercised, or from
time to time in advance, whenever the Board of Directors may deem their purchase
advisable. If an option is surrendered or for any other reason ceases to be
exercisable in whole or in part, the Common Shares that are subject to the
Option, but as to which the option has not been exercised, shall again become
available for offering under the Plan, subject to the limitations contained in
the first sentence of this Section 4.
5. OPTION GRANTS. Options granted under this Plan shall be deemed to
be granted on the June 30 or December 31, whichever day occurs first,
immediately preceding approval by the Committee of the granting of such Options.
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6. OPTION PRICE. The Option price under each option shall be
determined by the Committee or by the Board of Directors. The option price shall
be not less than 100% of the fair market value of the Common Shares subject to
the option on the date the option is granted, except that, if the optionee owns,
at the time the Option is granted, shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of an affiliate,
the Option price shall be not less than 110% of the fair market value of the
shares on the date the option is granted. For purposes of the Plan, "fair market
value" of-shares shall be, with respect to options deemed to be granted on
December 31, the fair market value established by the trustee of the Company's
Employee Stock Ownership Trust ("ESOP Trustee") on that December 31, and with
respect to options deemed to be granted on June 30, the fair market value
established by the ESOP Trustee on that June 30.
7. NOTICE OF GRANT OF OPTION. Promptly after the Committee grants any
Option to an employee, the Committee shall cause the employee to be notified of
the fact that the option has been granted and of the terms of the option.
8. EXERCISE OF OPTIONS. No Option granted under the Plan may be
exercised prior to the completion of one year of continuous employment with the
Company or an affiliate after the date of grant, unless an option is accelerated
as provided in Section 10(b), and under no circumstances later than the
expiration date of the option. An option may be exercised only while the
optionee is in the employ of the Company or an affiliate, except as otherwise
provided in Section 9 or as may be permitted pursuant to substitute Options
granted under Section 14. An option shall become exercisable at such time or
times, in whole or in part, on a cumulative or non-cumulative basis, as the
Committee may determine at the time the Option is granted. No fraction of a
share may be purchased upon exercise of an Option.
9. EXERCISE OF OPTIONS AFTER TERMINATION OF EMPLOYMENT. Subject to
the provision found in Section 8, that under no circumstances may an option be
exercised later than the expiration date of the Option, an Option may be
exercised after termination of the optionee's employment only in the following
situations:
(a) If the termination of employment is due to retirement under
the applicable retirement plan or policy of the Company or an affiliate,
the optionee shall have the right within the period of three months next
following the date of termination to purchase all or any part of the Common
Shares that he would have been entitled to purchase if he had exercised his
option on the date of termination.
(b) Upon the termination of employment of an optionee due to
permanent and total disability or the death of an optionee while in the
employ of the Company or a subsidiary or within the three-month period
referred to in paragraphs (a) and (c) of this Section 9, the optionee or
the optionee's estate, personal representative, or beneficiary shall have
the right to exercise the Option in whole or in part within one year after
the date of termination or the optionee's death.
(c) If the termination of employment is due to any reason other
than the optionee's retirement as specified in (a) above or the optionee's
permanent and total disability or death as specified in (b) above, the
optionee may, provided the Committee or the Board of Directors consents,
exercise the option in whole or in part within the period of three months
after the date of termination of employment.
10. TERMINATION OF OPTIONS.
(a) An Option granted under the Plan shall terminate, and the right
of the optionee (or his estate, personal representative, or beneficiary)
to-purchase shares upon exercise of the Option shall expire, on the date
determined by the Committee at the time the option is granted. No Option,
however, may have a life of more than ten years after the date on which it
is granted, and, in the case of an optionee who owns, at the time the
Option is granted, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or a subsidiary, no
option may have a life of more than five years after the date on which it
is granted.
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(b) In the event of a proposed lease, sale, or other disposition of
all or substantially all of the assets of the Company to other
corporations, firms, or individuals or a proposed merger, consolidation,
combination (as defined in Section 1701.01(Q), Ohio Revised Code), or
majority share acquisition (as defined in Section 1701.01(R), Ohio Revised
Code) involving the Company and as a result of which the holders of shares
of the Company prior to the transaction would become, by reason of the
transaction, the holders of such number of shares of the surviving or
acquiring corporation as entitle them to exercise less than one-third of
the voting power of the surviving or acquiring corporation in the election
of directors, the Board of Directors of the Company may accelerate the date
on which any outstanding Option or any portion of an outstanding Option
becomes exercisable. If the Board of Directors so accelerates the date (i)
the Board of Directors shall give the optionee written notice of the
acceleration and the reasons therefor; (ii) the optionee may, not more than
ten days prior to the anticipated effective date of the proposed
transaction, exercise the Option to purchase any or all shares then subject
to the Option; (iii) any such exercise shall be conditioned upon the
consummation of the transaction and shall become effective immediately
prior to the consummation date, in which event the employee need not make
payment for the shares to be purchased upon exercise of the option until
five days after written notice by the Company to the employee that the
transaction has been consummated; (iv), if the proposed transaction is
consummated, each Option, to the extent not previously exercised prior to
the date specified in the foregoing notice, shall terminate on the
effective date of the consummation, and (v), if the proposed transaction is
abandoned, the shares then subject to the Option shall continue to be
available for purchase in accordance with the other provisions of the Plan,
and any acceleration of the date on which any outstanding Option, or part
thereof, becomes exercisable shall be deemed to have been rescinded. In
addition to the foregoing, the Committee may authorize the purchase by the
Company, from the optionee, of options previously granted to any person
who, at the time of any transaction described in the first sentence of this
paragraph (b) of Section 10, is a director or officer of the Company for a
price equal to the difference between the consideration per share payable
pursuant to the terms of the transaction and the option price.
(c) If, at the meeting of shareholders of the Company next
following the date on which the Board of Directors adopts the Plan, the
shareholders do not approve the Plan, any Option theretofore granted shall,
forthwith upon the final adjournment of the meeting of shareholders, become
null and void.
11. NOTICE OF EXERCISE; PAYMENT FOR COMMON SHARES. No
certificate for Common Shares purchased upon exercise of an option shall be
delivered until full payment of the purchase price for the Common Shares has
been made. An employee to whom an option has been granted shall have none of the
rights of a shareholder with respect to the Common Shares subject thereto until
the Option is exercised by delivery of written notice of exercise to the
Company. Following exercise of the Option, the employee shall have all of the
rights of a shareholder with respect to the Common Shares purchased upon the
exercise, except that he shall not have the right to vote the shares or to
receive dividends with respect thereto until payment therefor has been made in
full. Payment of the Option price must be made only in cash.
12. ASSIGNABILITY. Except as otherwise provided in Section
9(b), an Option granted under this Plan shall not be transferred and may be
exercised only by the employee to whom granted. Each employee to whom an Option
is granted, by accepting the Option, agrees with the Company that, in the event
the Company merges into, consolidates with, or sells or otherwise transfers all
or a substantial part of its assets to another corporation, he will consent to
the assumption of the Option, or accept a new incentive stock option in
substitution therefor, if the Committee or the Board of Directors requests him
to do so and the option is not otherwise terminated in accordance with the
provisions of Section 10(b).
13. ADJUSTMENTS UPON CHANGES IN SHARES. In the event of any
change in the Common Shares subject to the Plan or to any option granted under
the Plan by reason of a merger, consolidation, reorganization, recapitalization,
stock dividend, stock split-up, combination, or exchange of shares, or other
change in the corporate structure of the Company, the aggregate number of shares
as to which options may thereafter be granted under the Plan, the number of
shares subject to each outstanding option, and the option price with respect to
the shares shall be appropriately adjusted by the Board of Directors.
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14. SUBSTITUTE OPTIONS. The Board of Directors may grant
Options in substitution for, or upon the assumption of, options granted by
another corporation that is merged into, consolidated with, or all or a
substantial part of the assets or stock of which is acquired by the Company or a
subsidiary. Subject to the limit in Section 4 on the number of shares that may
be delivered upon the exercise of options granted under the Plan, the terms and
provisions of any options granted under this Section 14 may vary from the terms
and provisions otherwise specified in the Plan and may, instead, correspond to
the terms and provisions of the options granted by the other corporation.
15. PURCHASE FOR INVESTMENT. Each employee exercising an option
may be required by the Company, in its sole discretion, to give a representation
that he is acquiring the shares other than with a view to the distribution
thereof. The Company may release any investment representation obtained if it
subsequently determines that the representation is no longer required to insure
that a sale or other disposition of the shares would not involve a violation of
the provisions of the Securities Act of 1933, as amended, or of applicable state
blue sky laws.
16. COMPLIANCE WITH SECURITIES LAWS AND EXCHANGE REQUIREMENTS.
No certificate for shares shall be delivered upon exercise of an Option until
the Company shall have taken such action, if any, as is then required to comply
with the provisions of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Ohio Securities Act, as amended, any
applicable state blue sky laws, and with the requirements of any exchange on
which the Common Shares may, at the time, be listed.
17. DURATION AND TERMINATION OF THE PLAN. The Plan shall remain
in effect until April 20, 1997, and shall then terminate, unless terminated at
an earlier date by action of the Board of Directors. Except as provided in
Section 19, termination of the Plan shall not affect Options granted prior
thereto.
18. AMENDMENT OF THE PLAN. The Board of Directors may alter or amend
the Plan from time to time prior to its termination, except that, without
shareholder approval, no amendment may increase the aggregate number of shares
with respect to which Options may be granted (other than in accordance with the
provisions of Section 13), reduce the option price at which options may be
exercised (other than in accordance with the provisions of Section 13), extend
the time within which options may be granted or exercised, or change the
requirements relating to eligibility or to administration of the Plan. Except
for adjustments made in accordance with the provisions of Section 13, the Board
of Directors may not, without the consent of the holder of the Option, alter or
impair any Option previously granted under the Plan.
19. SHAREHOLDER APPROVAL. Approval of the Plan must be obtained by
no later than June 30, 1987, by the affirmative vote of the holders of shares of
the Company entitling them to exercise at least a majority of the voting power
on the approval. options may be granted prior to approval of the Plan by
shareholders, but no option may be exercised until after the Plan has been
approved by shareholders.
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