Exhibit 10(a)
PEOPLES BANCORP INC.
2006 Equity Plan
(Reflects amendments through June 8, 2006)
THIS PLAN was adopted on the 9th day of February, 2006, by the Board of
Directors of Peoples Bancorp Inc. and approved by the shareholders of Peoples
Bancorp Inc. on April 13, 2006. Section 12.1 of this Plan was amended by the
Board of Directors of Peoples Bancorp Inc. on June 8, 2006.
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 PURPOSE. The purpose of the Plan is to provide financial incentives for
selected Employees, Advisors and Non-Employee Directors, thereby promoting the
long-term growth and financial success of the Company by (a) attracting and
retaining Employees, Advisors and Non-Employee Directors of outstanding ability,
(b) strengthening the Company's capability to develop, maintain, and direct a
competent management team, (c) providing an effective means for selected
Employees, Advisor and Non-Employee Directors to acquire and maintain ownership
of Company Stock, (d) motivating Employees to achieve long-range Performance
Goals and objectives, and (e) providing incentive compensation opportunities
competitive with peer financial institution holding companies.
1.2 EFFECTIVE DATE AND EXPIRATION OF PLAN. The Plan will be effective upon its
adoption by the Board and approval by affirmative vote of the Shareholders
required under applicable rules and procedures, including those prescribed under
Sections 162(m) and 422 of the Code and applicable NASDAQ rules. Unless earlier
terminated by the Board pursuant to Section 12.2, the Plan shall terminate on
the tenth anniversary of its Effective Date. No Award shall be made pursuant to
the Plan after its termination date, but Awards made prior to the termination
date may extend beyond that date. Notwithstanding the foregoing, no Incentive
Stock Options may be granted more than ten years after the earlier of (a) the
adoption of this Plan by the Board or (b) the Effective Date.
ARTICLE II
DEFINITIONS
The following words and phrases, as used in the Plan, shall have the
meanings set forth in this section. When applying these definitions and any
other word, term or phrase used in this Plan, the form of any word, term or
phrase will include any and all of its other forms.
2.1 ADVISORS means any advisor who renders bona fide services to the Company
and/or one or more of the Subsidiaries as an advisory or marketing board member
and who is neither an Employee nor a director of the Company or any Subsidiary;
provided that the services rendered are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities.
2.2 AWARD means, individually or collectively, any Option, SAR, Restricted
Stock, Restricted Performance Stock, unrestricted Company Stock or Performance
Unit Award.
2.3 AWARD AGREEMENT means the written agreement between the Company and each
Participant that describes the terms and conditions of each Award. If there is a
conflict between the terms of the Plan and the Award Agreement, the terms of the
Plan will govern.
2.4 BOARD means the Board of Directors of the Company.
2.5 CAUSE with respect to any Participant, means: (a) Gross negligence or gross
neglect of duties; or (b) Commission of a felony or of a gross misdemeanor
involving moral turpitude in connection with the Participant's employment or
service, as the case may be, with the Company or any of its Subsidiaries; or (c)
Fraud, disloyalty, dishonesty or willful violation of any law or significant
Company policy committed in connection with the Participant's employment or
provision of services, as the case may be; or (d) Issuance of an order for
removal of the Participant by any agency which regulates the activities of the
Company or any of its Subsidiaries. Any determination of "Cause" under this Plan
shall be made by the Committee in its sole discretion.
2.6 COMPANY means Peoples Bancorp Inc., an Ohio corporation.
2.7 COMPANY DIRECTOR means a non-employee member of the Board.
2.8 COMPANY STOCK means the Company's common shares, without par value per
share.
2.9 CODE means the Internal Revenue Code of 1986, as amended or superseded after
the Effective Date, and any applicable rulings or regulations issued thereunder.
2.10 COMMITTEE means the Compensation Committee of the Board or a subcommittee
thereof.
2.11 DISABILITY means: (a) with respect to an Incentive Stock Option, "disabled"
within the meaning of Section 22(e)(3) of the Code; (b) with respect to any
Award subject to Section 409A of the Code, "disabled" as defined under Section
409A of the Code; and (c) with respect to any Award not described in subsections
(a) and (b) of this Section 2.11, a long-term disability as defined by the
Company's or Subsidiary's group disability insurance plan, or any successor plan
that is applicable to such Participant at the time of his or her Termination.
2.12 Effective Date means the date on which the Plan is approved by the
Shareholders of the Company, as provided in Section 1.2.
2.13 EMPLOYEE means any person who, on any applicable date, is a common law
employee of the Company or any Subsidiary. A worker who is classified as other
than a common law employee but who is subsequently reclassified as a common law
employee of the Company or any Subsidiary for any reason and on any basis will
be treated as a common law employee only from the date that reclassification
occurs and will not retroactively be reclassified as an Employee for any purpose
of this Plan.
2.14 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.15 EXERCISE PRICE means the amount, if any, that a Participant must pay to
exercise an Award (other than an Option).
2.16 FAIR MARKET VALUE means, as of any specified date, an amount equal to the
reported closing price on the specified date of a share of Company Stock on
NASDAQ or any other established stock exchange or quotation system on which the
Company Stock is then listed or traded or, if no shares of Company Stock have
been traded on such date, the closing price of a share of Company Stock on
NASDAQ or such other established stock exchange or quotation system as reported
on the first day prior thereto on which shares of Company Stock were so traded.
If the preceding sentence does not apply, Fair Market Value shall be determined
in good faith by the Committee using other reasonable means.
2.17 FISCAL YEAR means the fiscal year of the Company, which is the 52- or
53-week period ending on December 31.
2.18 INCENTIVE STOCK OPTION means an option within the meaning of Section 422 of
the Code.
2.19 NON-EMPLOYEE DIRECTOR means either a Company Director or a Subsidiary
Director.
2.20 NONQUALIFIED STOCK OPTION means an option granted under the Plan other than
an Incentive Stock Option.
2.21 OPTION means either a Nonqualified Stock Option or an Incentive Stock
Option to purchase Company Stock.
2.22 OPTION PRICE means the price at which Company Stock may be purchased under
an Option.
2.23 PARTICIPANT means an Employee, a Advisor or a Non-Employee Director to whom
an Award has been made under the Plan.
2.24 PERFORMANCE GOALS means goals established by the Committee pursuant to
Section 4.5.
2.25 PERFORMANCE Period means a period of time over which performance is
measured.
2.26 PERFORMANCE UNIT means the unit of measure determined under Article IX by
which is expressed the value of a Performance Unit Award.
2.27 PERFORMANCE UNIT AWARD means an Award granted under Article IX.
2.28 PERSONAL REPRESENTATIVE means the person or persons who, upon the death,
Disability, or incompetency of a Participant, shall have acquired, by will or by
the laws of descent and distribution or by other legal proceedings, the right to
exercise an Option or SAR or the right to any Restricted Stock Award or
Performance Unit Award theretofore granted or made to such Participant.
2.29 PLAN means the Peoples Bancorp Inc. 2006 Equity Plan.
2.30 PREDECESSOR PLANS means the Peoples Bancorp Inc. 2002 Stock Option Plan, as
amended, the Peoples Bancorp Inc. 1998 Stock Option Plan, the Peoples Bancorp
Inc. 1995 Stock Option Plan and the Amended and Restated Peoples Bancorp Inc.
1993 Stock Option Plan.
2.31 RESTRICTED PERFORMANCE STOCK means Company Stock subject to Performance
Goals.
2.32 RESTRICTED STOCK means Company Stock subject to the terms and conditions
provided in Article VI and including Restricted Performance Stock.
2.33 RESTRICTED STOCK AWARD means an Award granted under Article VI.
2.34 RESTRICTION PERIOD means a period of time determined under Section 6.2
during which Restricted Stock is subject to the terms and conditions provided in
Section 6.3.
2.35 RETIREMENT means any normal or early retirement by a Participant pursuant
to the terms of any pension plan or policy of the Company or any Subsidiary that
is applicable to such Participant at the time of the Participant's Termination.
2.36 SAR means a stock appreciation right granted under Section 5.7.
2.37 SHAREHOLDERS mean the shareholders of the Company.
2.38 SUBSIDIARY means a corporation or other entity the majority of the voting
stock of which is owned directly or indirectly by the Company.
2.39 SUBSIDIARY DIRECTOR means a non-employee member of the board of directors
of a Subsidiary who is not also a Company Director.
2.40 TERMINATION means a "separation from service" as defined under Section 409A
of the Code.
ARTICLE III
ADMINISTRATION
3.1 COMMITTEE TO ADMINISTER. The Plan shall be administered by the Committee, in
accordance with its Charter, as adopted from time to time by the Board;
provided, however, that the Board has the authority to grant Awards to Company
Directors.
3.2 POWERS OF COMMITTEE.
(a) The Committee and the Board shall have full power and authority to interpret
and administer the Plan and to establish and amend rules and regulations for its
administration. Any action or decision by the Board or the Committee shall be
final, binding and conclusive with respect to the interpretation of the Plan and
any Award made under it.
(b) Subject to the provisions of the Plan, the Committee or the Board, as the
case may be, shall have authority, in its discretion, to determine those
Employees, Advisors and Non-Employee Directors who shall receive an Award; the
time or times when such Award shall be made; the vesting schedule, if any, for
the Award; and the type of Award to be granted, the number of shares of Company
Stock to be subject to each Option and Restricted Stock Award, the value of each
Performance Unit and all other terms and conditions of any Award.
(c) The Committee or the Board, as the case may be, shall determine and set
forth in an Award Agreement the terms of each Award, including such terms,
restrictions, and provisions as shall be necessary to cause certain Options to
qualify as Incentive Stock Options. The Committee or the Board, as the case may
be, may correct any defect or supply any omission or reconcile any inconsistency
in the Plan or in any Award Agreement, in such manner and to the extent the
Committee or the Board, as appropriate, shall determine in order to carry out
the purposes of the Plan. The Committee or the Board, as the case may be, may,
in its discretion, accelerate (i) the date on which any Option or SAR may be
exercised, (ii) the date of termination of the restrictions applicable to a
Restricted Stock Award, or (iii) the end of a Performance Period under a
Performance Unit Award, if the Committee or the Board, as appropriate,
determines that to do so will be in the best interests of the Company and the
Participants in the Plan.
ARTICLE IV
AWARDS
4.1 AWARDS. Awards under the Plan shall consist of Incentive Stock Options,
Nonqualified Stock Options, SARs, Restricted Stock, Restricted Performance
Stock, unrestricted Company Stock and Performance Units. All Awards shall be
subject to the terms and conditions of the Plan and to such other terms and
conditions consistent with the Plan as the Committee or the Board, as the case
may be, deems appropriate. Awards under a particular section of the Plan need
not be uniform and Awards under two or more sections may be combined in one
Award Agreement. Any combination of Awards may be granted at one time and on
more than one occasion to the same Employee, Advisor or Non-Employee Director.
Awards of Performance Units and Restricted Performance Stock shall be earned
solely upon attainment of Performance Goals and the Committee shall have no
discretion to increase such Awards.
4.2 ELIGIBILITY FOR AWARDS. An Award may be made to any Employee or Advisor
selected by the Committee. In making this selection and in determining the form
and amount of the Award, the Committee may give consideration to the functions
and responsibilities of the respective Employee and/or Advisor, his or her
present and potential contributions to the success of the Company or any of its
Subsidiaries, the value of his or her services to the Company or any of its
Subsidiaries, and such other factors deemed relevant by the Committee.
Non-Employee Directors are eligible to receive Awards pursuant to Article VII.
4.3 SHARES AVAILABLE UNDER THE PLAN.
(a) The Company Stock to be offered under the Plan pursuant to Options, SARs,
Performance Unit Awards, Restricted Performance Stock and Restricted Stock and
unrestricted Company Stock Awards must be (i) Company Stock previously issued
and outstanding and reacquired by the Company or (ii) authorized but unissued
Company Stock not reserved for any other purpose. Subject to adjustment under
Section 12.2, the number of shares of Company Stock that may be issued pursuant
to Awards under the Plan (the "Section 4.3 Limit") shall not exceed, in the
aggregate, 500,000 shares.
(b) Any shares of Company Stock subject to Restricted Stock or unrestricted
Company Stock Awards shall not exceed 50% of the total shares available under
the Plan and the maximum number of shares of Company Stock that may be issued
subject to Incentive Stock Options is 500,000 subject to adjustment under
Section 12.1. The Section 4.3 Limit shall not have counted against it: (i) the
number of shares of Company Stock subject to an Option or any other Award which
is equal to the number of shares of Company Stock tendered by a Participant to
the Company in payment of the Option Price of such Option or the Exercise Price
of such other Award, as applicable; (ii) shares of Company Stock subject to an
Award which for any reason terminates by expiration, forfeiture, cancellation or
otherwise without having been exercised or paid; (iii) shares of Company Stock
withheld from any Award to satisfy a Participant's tax withholding obligations
or, if applicable, to pay the Option Price of an Option or the Exercise Price of
any other Award; (iv) if a SAR is settled in whole or in part by the issuance of
shares of Company Stock, the number of shares of Company Stock which represents
the difference between (A) the number of shares of Company Stock which remain
subject to such SAR on the date of such settlement and (B) the number of shares
of Company Stock actually issued upon settlement of such SAR; or (v) the number
of shares of Company Stock subject to an Option which is equal to the number of
shares of Common Stock acquired by the Company on the open market using the cash
proceeds received by the Company from the exercise of such Option; provided,
however, that such number of shares of Company Stock shall in no event be
greater than the number which is determined by dividing (A) the amount of cash
proceeds received by the Company from the Participant upon the exercise of such
Option by (B) the Fair Market Value of a share of the Company Stock on the date
of exercise of such Option.
(c) No awards shall be granted under any Predecessor Plan on and after the date
on which the Plan is approved by the Shareholders.
4.4 LIMITATION ON AWARDS. The maximum aggregate dollar value of, and the maximum
number of shares of Company Stock subject to, Restricted Stock and Performance
Units awarded to any Employee or Advisor with respect to a Performance Period or
Restriction Period may not exceed $500,000 and 500,000 shares of Company Stock
for each Fiscal Year included in such Performance Period or Restriction Period.
The maximum number of shares of Common Stock for which Options or SARs may be
granted to any Participant in any one Fiscal Year shall not exceed 500,000
subject to adjustment under Section 12.1.
4.5 GENERAL PERFORMANCE GOALS.
(a) Performance Goals relating to the payment or vesting of an Award that is
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code will be comprised of one or more of the following performance criteria
as the Committee may deem appropriate:
(i) Earnings per share (actual or targeted growth);
(ii) Net income after capital costs;
(iii) Net income (before or after taxes);
(iv) Return measures (including, but not limited to, return on
average assets, risk-adjusted return on capital, or return
on average equity);
(v) Efficiency ratio;
(vi) Full-time equivalency control;
(vii) Stock price (including, but not limited to, growth measures
and total shareholder return);
(viii) Noninterest income compared to net interest income ratio;
(ix) Expense targets;
(x) Operating efficiency;
(xi) EVA(R);
(xii) Credit quality measures;
(xiii) Customer satisfaction measures;
(xiv) Loan growth;
(xv) Deposit growth;
(xvi) Net interest margin;
(xvii) Fee income; and
(xviii) Operating expense.
(b) For any Awards not intended to qualify as "performance-based compensation"
under Section 162(m) of the Code, the Committee may establish Performance Goals
based on the performance criteria listed in Section 4.5(a) or other performance
criteria as it deems appropriate.
(c) Any of the performance criteria listed in Section 4.5(a) may be applied
solely with reference to the Company and/or any Subsidiary or relatively between
the Company and/or any Subsidiary and one or more unrelated entities. In
addition, different performance criteria may be applied to individual
Participants or to groups of Participants and, as specified by the Committee,
may be based on results achieved (i) separately by the Company or any
Subsidiary, (ii) any combination of the Company and the Subsidiaries or (iii)
any combination of business units or divisions of the Company and the
Subsidiaries.
(d) With respect to each Performance Period, the Committee will establish the
Performance Goals in writing no later than the earlier of (i) 90 days after the
beginning of the Performance Period or (ii) expiration of 25 percent of the
Performance Period.
(e) Except as otherwise provided in the Plan or the Award Agreement, as of the
end of each Performance Period, the Committee will certify in writing the extent
to which a Participant has or has not met the Participant's Performance Goal. To
the extent permitted under Section 162(m) of the Code, if applicable, the
Committee may disregard or offset the effect of any special charges or gains or
cumulative effect of a change in accounting in determining the attainment of
Performance Goals.
(f) To the extent permitted under Section 162(m) of the Code, if applicable, the
Committee shall make (i) appropriate adjustments to performance criteria to
reflect the effect on any performance criteria of any stock dividend or stock
split affecting Company Stock, recapitalization, merger, consolidation,
combination, spin-off, distribution of assets to Shareholders, exchange of
shares or similar corporate change and (ii) similar adjustments to any portion
of performance criteria that is not based on Company Stock but which is affected
by an event having an effect similar to those just described.
ARTICLE V
OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 AWARD OF OPTIONS. The Committee may, from time to time, and on such terms
and conditions as the Committee may prescribe, award (a) Incentive Stock
Options, subject to Section 5.5, to any eligible Employee of the Company or any
parent or subsidiary corporation (as permitted under Sections 422 and 424 of the
Code) and (b) Nonqualified Stock Options to any Employee or Advisor.
5.2 PERIOD OF OPTION.
(a) An Option granted under the Plan shall be exercisable only in accordance
with the vesting schedule approved by the Committee. The Committee may in its
discretion prescribe additional conditions, restrictions or terms on the vesting
of an Option, including the full or partial attainment of Performance Goals
pursuant to Section 4.5. After the Option vests, the Option may be exercised at
any time during the term of the Option, in whole or in installments, as
specified in the related Award Agreement. Subject to Article X and except as
provided in Section 5.5, the duration of each Option shall not be more than ten
years from the date of grant.
(b) Except as provided in Article X, a Participant may not exercise an Option
unless such Participant is then, and continually (except for sick leave,
military service, or other approved leave of absence) after the grant of the
Option has been, an Employee, Advisor, or Non-Employee Director.
5.3 AWARD AGREEMENT. Each Option shall be evidenced by an Award Agreement. The
Award Agreement shall specify whether the Option is intended to be an Incentive
Stock Option or a Nonqualified Stock Option.
5.4 OPTION PRICE, EXERCISE AND PAYMENT.
(a) Except as provided in Section 5.5, the Option Price of Company Stock under
each Option shall be determined by the Committee but shall be a price not less
than 100 percent of the Fair Market Value of Company Stock at the date such
Option is granted.
(b) Subject to Section 12.2, the Committee may not (i) amend an Option to reduce
its Option Price, (ii) cancel an Option and regrant an Option with a lower
Option Price than the original Option Price of the cancelled Option, or (iii)
take any other action (whether in the form of an amendment, cancellation or
replacement grant) that has the effect of "repricing" an Option, as defined
under applicable NASDAQ rules or the rules of the established stock exchange or
quotation system on which the Company Stock is then listed or traded.
(c) Vested Options may be exercised from time to time by giving written notice
to the Chief Financial Officer of the Company or the Secretary of the Committee,
or his or her designee, specifying the number of shares to be purchased. The
notice of exercise shall be accompanied by payment in full of the Option Price
in cash or the Option Price may be paid in whole or in part through the transfer
to the Company of shares of Company Stock in accordance with procedures
established by the Committee from time to time. In addition, in accordance with
the rules and procedures established by the Committee for this purpose, an
Option may also be exercised through a cashless exercise procedure involving a
broker or dealer, that affords Participants the opportunity to sell immediately
some or all of the shares underlying the exercised portion of the Option in
order to generate sufficient cash to pay the Option Price and/or to satisfy
withholding tax obligations related to the Option.
(d) In the event such Option Price is paid, in whole or in part, with shares of
Company Stock, the portion of the Option Price so paid shall be equal to the
value, as of the date of exercise of the Option, of such shares. The value of
such shares shall be equal to the number of such shares multiplied by the Fair
Market Value of such shares on the trading day coincident with the date of
exercise of such Option (or the immediately preceding trading day if the date of
exercise is not a trading day). The Company shall not issue or transfer Company
Stock upon exercise of an Option until the Option Price is fully paid.
5.5 LIMITATIONS ON INCENTIVE STOCK OPTIONS. Each provision of the Plan and each
Award Agreement relating to an Incentive Stock Option shall be construed so that
each Incentive Stock Option shall be an incentive stock option as defined in
Section 422 of the Code, and any provisions of the Award Agreement thereof that
cannot be so construed shall be disregarded. No Incentive Stock Option may be
granted to any Employee who, at the time of such grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or of its parent or subsidiary corporation (as determined under
Sections 422 and 424 of the Code), unless (a) the Option Price for such
Incentive Stock Option is at least 110 percent of the Fair Market Value of a
share of Company Stock on the date the Incentive Stock Option is granted and (b)
such Incentive Stock Option may not be exercised more than five years after it
is granted. Notwithstanding anything in the Plan to the contrary, to the extent
required by the Code, the exercise of Incentive Stock Options granted under the
Plan shall be subject to the $100,000 calendar year limit as set forth in
Section 422 of the Code; provided that, to the extent any grant exceeds such
$100,000 calendar year limit, the portion of such granted Option shall be deemed
a Nonqualified Stock Option in accordance with Section 422 of the Code.
5.6 RIGHTS AND PRIVILEGES. A Participant shall have no rights as a Shareholder
with respect to any shares of Company Stock covered by an Option until the
issuance of such shares to the Participant.
5.7 AWARD OF SARs.
(a) The Committee may, from time to time, and on such terms and conditions as
the Committee may prescribe, award SARs to any Employee and/or Advisor.
(b) A SAR shall represent the right to receive payment of an amount equal to (i)
the amount by which the Fair Market Value of one share of Company Stock on the
trading day immediately preceding the date of exercise of the SAR exceeds the
Exercise Price multiplied by (ii) the number of shares covered by the SAR.
Payment of the amount to which a Participant is entitled upon the exercise of a
SAR shall be made in cash, Company Stock, or partly in cash and partly in
Company Stock at the discretion of the Committee. The shares shall be valued at
their Fair Market Value on the date of exercise.
(c) SARs awarded under the Plan shall be evidenced by an Award Agreement between
the Company and the Participant.
(d) The Committee may prescribe conditions and limitations on the exercise of
any SAR. SARs may be exercised only when the Fair Market Value of a share of
Company Stock exceeds the Exercise Price.
(e) A SAR shall be exercisable only by written notice to the Chief Financial
Officer of the Company or the Secretary of the Committee, or his or her
designee.
(f) To the extent not previously exercised, all SARs shall automatically be
exercised on the last trading day prior to their expiration, so long as the Fair
Market Value of a share of Company Stock exceeds the Exercise Price, unless
prior to such day the holder instructs the Chief Financial Officer or Secretary,
Stock Option Committee otherwise in writing.
(g) Subject to Article X, each SAR shall expire on a date determined by the
Committee at the time of grant.
ARTICLE VI
RESTRICTED STOCK
6.1 AWARD OF RESTRICTED STOCK. The Committee may make a Restricted Stock Award
to any Employee and/or Advisor, subject to this Article VI and to such other
terms and conditions as the Committee may prescribe.
6.2 RESTRICTION PERIOD. At the time of making a Restricted Stock Award, the
Committee shall establish the Restriction Period applicable to such Award. The
Committee may establish different Restriction Periods from time to time and each
Restricted Stock Award may have a different Restriction Period, in the
discretion of the Committee. Restriction Periods, when established for a
Restricted Stock Award, shall not be changed except as permitted by Section 6.3.
6.3 OTHER TERMS AND CONDITIONS. Company Stock, when awarded pursuant to a
Restricted Stock Award, will be represented in a book entry account in the name
of the Participant who receives the Restricted Stock Award. The Participant
shall be entitled to receive dividends during the Restriction Period and shall
have the right to vote such Restricted Stock and shall have all other
Shareholder rights, with the exception that (i) unless otherwise provided by the
Committee, if any dividends are paid in shares of Company Stock, those shares
will be subject to the same restrictions as the shares of Restricted Stock with
respect to which they were issued, (ii) the Participant will not be entitled to
delivery of any stock certificate evidencing the Company Stock underlying the
Restricted Stock Award during the Restriction Period, (iii) the Company will
retain custody of the Restricted Stock during the Restriction Period, and (iv) a
breach of a restriction or a breach of the terms and conditions established by
the Committee pursuant to the Restricted Stock Award will cause a forfeiture of
the Restricted Stock Award. The Committee may, in addition, prescribe additional
restrictions, terms, or conditions upon or to the Restricted Stock Award
including the attainment of Performance Goals in accordance with Section 4.5.
6.4 RESTRICTED STOCK AWARD AGREEMENT. Each Restricted Stock Award shall be
evidenced by an Award Agreement.
6.5 PAYMENT FOR RESTRICTED STOCK. Restricted Stock Awards may be made by the
Committee under which the Participant shall not be required to make any payment
for the Company Stock or, in the alternative, under which the Participant, as a
condition to the Restricted Stock Award, shall pay all (or any lesser amount
than all) of the Fair Market Value of the Company Stock, determined as of the
date the Restricted Stock Award is made. If the latter, such purchase price
shall be paid in cash as provided in the Award Agreement.
ARTICLE VII
AWARDS FOR NON-EMPLOYEE DIRECTORS
7.1 AWARDS TO NON-EMPLOYEE DIRECTORS. The Board shall determine all Awards to
Company Directors and the Committee shall determine all Awards to Subsidiary
Directors. The Board or the Committee, as the case may be, retains the
discretionary authority to make Awards to Non-Employee Directors and any type of
Award (other than Incentive Stock Options) may be granted to Non-Employee
Directors under this Plan. All such Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions consistent with
the Plan as the Board or the Committee, as the case may be, deems appropriate.
7.2 NO RIGHT TO CONTINUANCE AS A DIRECTOR. None of the actions of the Company in
establishing the Plan, the actions taken by the Company, the Board, or the
Committee under the Plan, or the granting of any Award under the Plan shall be
deemed (i) to create any obligation on the part of the Board or the board of
directors of the applicable Subsidiary to nominate any Non-Employee Director for
reelection or (ii) to be evidence of any agreement or understanding, express or
implied, that the Non-Employee Director has a right to continue as a
Non-Employee Director for any period of time or at any particular rate of
compensation.
ARTICLE VIII
UNRESTRICTED COMPANY STOCK AWARDS FOR EMPLOYEES AND/OR ADVISORS
8.1 The Committee may make awards of unrestricted Company Stock to Employees
and/or Advisors on such terms and conditions as the Committee may prescribe.
ARTICLE IX
AWARD OF PERFORMANCE UNITS
9.1 AWARD OF PERFORMANCE UNITS. The Committee may award Performance Units to any
Employee and/or Advisor. Each Performance Unit shall represent the right of a
Participant to receive an amount equal to the value of the Performance Unit,
determined in the manner established by the Committee at the time of Award.
9.2 PERFORMANCE PERIOD. At the time of each Performance Unit Award, the
Committee shall establish, with respect to each such Award, a Performance Period
during which performance shall be measured. There may be more than one
Performance Unit Award in existence at any one time, and Performance Periods may
differ.
9.3 PERFORMANCE MEASURES. Performance Units shall be awarded to a Participant
and earned contingent upon the attainment of Performance Goals in accordance
with Section 4.5.
9.4 PERFORMANCE UNIT VALUE. Each Performance Unit shall have a maximum dollar
value established by the Committee at the time of the Award. Performance Units
earned will be determined by the Committee in respect of a Performance Period in
relation to the degree of attainment of Performance Goals. The measure of a
Performance Unit may, in the discretion of the Committee, be equal to the Fair
Market Value of one share of Company Stock.
9.5 AWARD CRITERIA. In determining the number of Performance Units to be granted
to any Participant, the Committee shall take into account the Participant's
responsibility level, performance, potential, cash compensation level, other
incentive awards, and such other considerations as it deems appropriate.
9.6 PAYMENT.
(a) Following the end of the applicable Performance Period, a Participant
holding Performance Units will be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Units, based on the achievement
of the Performance Goals for such Performance Period, as determined by the
Committee.
(b) Awards may be paid in cash or stock, or any combination thereof, as
determined by the Committee. Payment shall be made in a lump sum or in
installments and shall be subject to such other terms and conditions as shall be
determined by the Committee.
9.7 PERFORMANCE UNIT AWARD AGREEMENTS. Each Performance Unit Award shall be
evidenced by an Award Agreement.
ARTICLE X
GENERAL TERMINATION PROVISIONS
10.1 TERMINATION. Subject to Article XI and unless otherwise specified in the
applicable Award Agreement, the following provisions will govern the treatment
of a Participant's outstanding Awards following a Participant's Termination.
(a) If the Participant's Termination is due to death, Disability or Retirement,
all of the Participant's outstanding Options, SARs or Restricted Stock Awards
shall become fully vested and, if applicable, exercisable. Upon the
Participant's Termination for any other reason, any Awards that are not vested
and/or exercisable on the date of such Termination will immediately terminate
and be of no further force and effect.
(b) If the Participant Terminates for any reason other than (i) death, (ii)
Disability, (iii) Retirement or (iv) discharge for Cause, such Participant's
outstanding SARs or Options may be exercised at any time within three months
after such Termination, to the extent of the number of shares covered by such
Options or SARs which are exercisable at the date of such Termination; except
that an Option or SAR shall not be exercisable on any date beyond the expiration
date of such Option or SAR.
(c) Upon a Termination for Cause, any Options or SARs held by the Participant
(whether or not then exercisable) shall expire and any rights thereunder shall
terminate immediately. Any non-vested Restricted Stock Awards of such
Participant shall immediately be forfeited and any rights thereunder shall
terminate.
(d) Upon a Termination due to the Participant's death, any SARs or Options that
are then exercisable may be exercised by the Participant's Personal
Representative at any time before the earlier of (i) one year after the
Participant's death or (ii) the expiration date of the Award.
(e) Upon a Termination due to the Participant's Disability or Retirement, any
SARs or Options that are then exercisable may be exercised by the Participant at
any time before the earlier of (i) one year after the date of such Termination
or (ii) the expiration date of the Award; provided, however, that an Option
which is intended to qualify as an Incentive Stock Option will only be treated
as such to the extent it complies with the requirements of Section 422 of the
Code.
(f) If a Participant who Terminates due to Retirement dies prior to exercising
all of his or her outstanding Options or SARs, then such Options or SARs may be
exercised by the Participant's Personal Representative at any time before the
earlier of (i) one year after the Participant's death or (ii) the expiration
date of the Award; provided, however, that, an Option which is intended to
qualify as an Incentive Stock Option will only be treated as such to the extent
it complies with the requirements of Section 422 of the Code.
(g) Subject to Article XI, a Performance Unit Award shall terminate for all
purposes if the Participant Terminates at any time during the applicable
Performance Period, except as may otherwise be determined by the Committee. In
the event that a Participant holding a Performance Unit Terminates following the
end of the applicable Performance Period but prior to full payment according to
the terms of the Performance Unit Award, the Performance Unit Award shall
terminate except when the termination event is due to death, Disability or
Retirement.
ARTICLE XI
CHANGE IN CONTROL OF THE COMPANY
11.1 CONTRARY PROVISIONS. Notwithstanding anything contained in the Plan to the
contrary, the provisions of this Article XI shall govern and supersede any
inconsistent terms or provisions of the Plan.
11.2 DEFINITIONS
(a) CHANGE IN CONTROL. For purposes of this Plan, Change in Control shall mean a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company within the meaning of
Section 409A of the Code.
11.3 EFFECT OF CHANGE IN CONTROL ON CERTAIN AWARDS.
(a) If the Company is not the surviving corporation following a Change in
Control, and the surviving corporation following such Change in Control or the
acquiring corporation (such surviving corporation or acquiring corporation is
hereinafter referred to as the "Acquiror") does not assume the outstanding
Options, SARs, Restricted Stock, Restricted Performance Stock or Performance
Units or does not substitute equivalent equity awards relating to the securities
of such Acquiror or its affiliates for such Awards, then all such Awards shall
become immediately and fully exercisable (or in the case of Restricted Stock,
fully vested and all restrictions will immediately lapse). In the case of
Restricted Performance Stock and Performance Units, the target payout
opportunities under all outstanding Awards of Restricted Performance Stock and
Performance Units shall be deemed to have been fully earned based on targeted
performance being attained as of the effective date of the Change in Control. In
addition, the Board or its designee may, in its sole discretion, provide for a
cash payment to be made to each Participant for the outstanding Options,
Restricted Stock, Restricted Performance Stock, SARs or Performance Units upon
the consummation of the Change in Control, determined on the basis of the fair
market value that would be received in such Change in Control by the holders of
the Company's securities relating to such Awards. Notwithstanding the foregoing,
any Option intended to be an Incentive Stock Option under Section 422 of the
Code shall be adjusted in a manner to preserve such status.
(b) If the Company is the surviving corporation following a Change in Control,
or the Acquiror assumes the outstanding Options, SARs, Restricted Stock,
Restricted Performance Stock or Performance Units or substitutes equivalent
equity awards relating to the securities of such Acquiror or its affiliates for
such Awards, then all such Awards or such substitutes therefor shall remain
outstanding and be governed by their respective terms and the provisions of the
Plan.
(c) If (i) a Participant Terminates without Cause within twenty-four (24) months
following a Change in Control, and (ii) the Company is the surviving corporation
following such Change in Control, or the Acquiror assumes the outstanding
Options, SARs, Restricted Stock, Restricted Performance Stock or Performance
Units or substitutes equivalent equity awards relating to the securities of such
Acquiror or its affiliates for such Awards, then all outstanding Options, SARs,
Restricted Stock, Restricted Performance Stock or Performance Units shall become
immediately and fully exercisable (or in the case of Restricted Stock, fully
vested and all restrictions will immediately lapse). In the case of Restricted
Performance Stock and Performance Units, the target payout opportunities under
all outstanding Awards of Restricted Performance Stock and Performance Units
shall be deemed to have been fully earned based on targeted performance being
attained.
(d) If (i) the employment of a Participant with the Company and its Subsidiaries
is terminated for Cause within twenty-four (24) months following a Change in
Control and (ii) the Company is the surviving corporation following such Change
in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted
Stock, Restricted Performance Stock, or Performance Units or substitutes
equivalent equity awards relating to the securities of such Acquiror or its
affiliates for such Awards, then any Options or SARs of such Participant shall
expire, and any non-vested Restricted Stock, Restricted Performance Stock or
Performance Units shall be forfeited, and any rights under such Awards shall
terminate immediately.
(e) Outstanding Options or SARs which vest in accordance with Section 11.3, may
be exercised by the Participant in accordance with Article X; provided, however,
that a Participant whose Options or SARs become exercisable in accordance with
Section 11.3(c) may exercise such Options or SARs at any time within one year
after such Termination, except that an Option or SAR shall not be exercisable on
any date beyond the expiration date of such Option or SAR.
In the event of a Participant's death after such Termination, the
exercise of Options and SARs shall be treated in the same manner as determined
for retirement in Section 10.1(e).
11.4 AMENDMENT OR TERMINATION. This Article XI shall not be amended or
terminated at any time if any such amendment or termination would adversely
affect the rights of any Participant under the Plan.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 ADJUSTMENTS UPON CHANGES IN STOCK. In case of any reorganization,
recapitalization, reclassification, stock split, stock dividend, distribution,
combination of shares, merger, consolidation, rights offering, or any other
changes in the corporate structure or shares of the Company, appropriate
adjustments shall be made by the Committee or the Board, as the case may be, (or
if the Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) in the aggregate number and
kind of shares subject to the Plan, and the number and kind of shares and the
Option Price per share subject to outstanding Options or which may be issued
under outstanding Restricted Stock Awards or pursuant to unrestricted Company
Stock Awards. Appropriate adjustments shall also be made by the Committee or the
Board, as the case may be, in the terms of any Awards under the Plan, subject to
Article XI, to reflect such changes and to modify any other terms of outstanding
Awards on an equitable basis. Any such adjustments made by the Committee or the
Board pursuant to this Section 12.1 shall be conclusive and binding for all
purposes under the Plan.
12.2 AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN.
(a) The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that any Awards thereunder shall conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that no such
amendment shall, without approval, (i) except as provided in Section 12.1,
increase the number of shares of Company Stock which may be issued under the
Plan, (ii) expand the types of awards available to Participants under the Plan,
(iii) materially expand the class of employees and/or Advisor eligible to
participate in the Plan, (iv) materially change the method of determining the
Option Price of Options; (v) delete or limit the provision in Section 5.4
prohibiting the repricing of Options; (vi) extend the termination date of the
Plan or (vii) be made to the extent that Shareholder approval is required to
satisfy applicable law, regulation or any securities stock exchange, market or
other quotation system on or through which the Company Stock is listed or
traded. No such amendment, suspension, or termination shall materially adversely
alter or impair any outstanding Options, SARs, shares of Restricted Stock, or
Performance Units without the consent of the Participant affected thereby.
(b) The Committee may amend or modify any outstanding Options, SARs, Restricted
Stock Awards, or Performance Unit Awards in any manner to the extent that the
Committee would have had the authority under the Plan initially to award such
Options, SARs, Restricted Stock Awards, or Performance Unit Awards as so
modified or amended, including without limitation, to change the date or dates
as of which such Options or SARs may be exercised, to remove the restrictions on
shares of Restricted Stock, or to modify the manner in which Performance Units
are determined and paid.
(c) Notwithstanding the foregoing, the Plan and any Award Agreements may be
amended without any additional consideration to affected Participants to the
extent necessary to comply with, or avoid penalties under, Section 409A of the
Code, even if those amendments reduce, restrict or eliminate rights granted
prior to such amendments.
12.3 NONUNIFORM DETERMINATIONS. The Committee's (or, if applicable, the Board's)
determinations under the Plan, including without limitation, (a) the
determination of the Employees, Advisor and Non-Employee Directors to receive
Awards, (b) the form, amount, and timing of any Awards, (c) the terms and
provisions of any Awards and (d) the Award Agreements evidencing the same, need
not be uniform and may be made by it selectively among Employees, Advisor and/or
Non-Employee Directors who receive, or who are eligible to receive, Awards under
the Plan, whether or not such Employees, Advisors and/or Non-Employee Directors
are similarly situated.
12.4 GENERAL RESTRICTION. Each Award under the Plan shall be subject to the
condition that, if at any time the Committee shall determine that (a) the
listing, registration, or qualification of the shares of Company Stock subject
or related thereto upon NASDAQ or any other established stock exchange, market
or quotation system or under any state or federal law, (b) the consent or
approval of any government or regulatory body, or (c) an agreement by the
Participant with respect thereto, is necessary or desirable, then such Award
shall not become exercisable in whole or in part unless such listing,
registration, qualification, consent, approval, or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
12.5 NO RIGHT TO EMPLOYMENT. None of the actions of the Company in establishing
the Plan, the actions taken by the Company, the Board or the Committee under the
Plan, or the granting of any Award under the Plan shall be deemed (a) to create
any obligation on the part of the Company or any Subsidiary to retain any person
in the employ of, or continue the provision of services to, the Company or any
Subsidiary, or (b) to be evidence of any agreement or understanding, express or
implied, that the person has a right to continue as an employee, or advisor for
any period of time or at any particular rate of compensation.
12.6 GOVERNING LAW. The provisions of the Plan shall take precedence over any
conflicting provision contained in an Award Agreement. All matters relating to
the Plan or to Awards granted hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to the principles
of conflict of laws.
12.7 TRUST ARRANGEMENT. All benefits under the Plan represent an unsecured
promise to pay by the Company. The Plan shall be unfunded and the benefits
hereunder shall be paid only from the general assets of the Company resulting in
the Participants having no greater rights than the Company's general creditors;
provided, however, nothing herein shall prevent or prohibit the Company from
establishing a trust or other arrangement for the purpose of providing for the
payment of the benefits payable under the Plan.
12.8 INDEMNIFICATION OF BOARD AND COMMITTEE. Indemnification of the members of
the Board and/or the members of the Committee shall be in accordance with the
Code of Regulations of the Company as amended by the Shareholders from time to
time.
12.9 NO IMPACT ON BENEFITS. Awards are not compensation for purposes of
calculating a Participant's rights under any employee benefit plan that does not
specifically require the inclusion of Awards in calculating benefits.
12.10 BENEFICIARY DESIGNATION. Each Participant may name a beneficiary or
beneficiaries to receive or exercise any vested Award that is unpaid or
unexercised at the Participant's death. Unless otherwise provided in the
beneficiary designation, each designation will revoke all prior designations
made by the same Participant, must be made on a form prescribed by the Committee
and will be effective only when filed in writing with the Committee. If a
Participant has not made an effective beneficiary designation, the deceased
Participant's beneficiary will be the Participant's surviving spouse or, if
none, the deceased Participant's estate. The identity of a Participant's
designated beneficiary will be based only on the information included in the
latest beneficiary designation form completed by the Participant and will not be
inferred from any other evidence.
12.11 TAX WITHHOLDING. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, the minimum
statutory amount to satisfy federal, state and local taxes required by law or
regulation to be withheld with respect to any taxable event arising as a result
of the Plan. With respect to withholding required upon any taxable event arising
as a result of an Award granted hereunder, a Participant may elect, subject to
the approval of the Committee, to satisfy the withholding requirement, in whole
or in part, by having the Company withhold shares of Company Stock having a Fair
Market Value on the date the tax is to be determined equal to the minimum
statutory total tax that could be imposed on the transaction. All such elections
shall be irrevocable, made in writing and signed by the Participant, and shall
be subject to any restrictions or limitations that the Committee, in its sole
discretion, deems appropriate.