ADOPTED March 20, 1990
As Amended Through October 15, 1998
SCHULTZ SAV-O STORES, INC.
1990 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Schultz Sav-O Stores, Inc. 1990 Stock
Option Plan (the "Plan") is to promote the best interests of Schultz Sav-O
Stores, Inc. (the "Company") and its shareholders by providing key employees of
the Company and its Subsidiaries (as defined in Section 3) with an opportunity
to acquire a, or increase their, proprietary interest in the Company and thereby
develop a stronger incentive to put forth maximum effort for the continued
success and growth of the Company. In addition, the opportunity to acquire a
proprietary interest in the Company will aid in attracting and retaining key
personnel of outstanding ability. It is intended that certain of the options
granted pursuant to the Plan will constitute incentive stock options within the
meaning of Section 422A of the Internal Revenue Code ("Incentive Stock Options")
and the remainder of the options granted hereunder will constitute nonqualified
stock options ("Nonqualified Options"), as determined by the Committee (as
defined in Section 2).
2. ADMINISTRATION.
(a) The Plan shall be administered by the Compensation and Stock Option
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee shall consist of not less than three members of the
Board who shall qualify as "disinterested administrators" and/or "disinterested
persons" as either or both of such terms are defined in the then existing rules
and/or regulations promulgated under Section 16 ("Section 16 Rules") of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). A majority of the
members of the Committee shall constitute a quorum. All determinations of the
Committee shall be made by at least a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it had been made by a unanimous vote
at a meeting duly called and held.
(b) In accordance with the provisions of the Plan, the Committee shall
determine: (i) the key employees to whom options shall be granted hereunder;
(ii) the number of shares of Stock (as defined in Section 4) to be subject to
each option; (iii) the time at which the option is to be granted; (iv) the
option period; (v) the option price; (vi) the manner in which options become
exercisable and when such options terminate; (vii) whether the options shall be
Incentive Stock Options or Nonqualified Options; (viii) whether to grant tax
offset bonuses in connection with Nonqualified Options; and (ix) such other
provisions of the option granted as the Committee may deem necessary or
desirable.
(c) The Committee has authority to adopt such rules and regulations for
carrying out the Plan as it may deem proper and in the best interests of the
Company. The Committee shall have complete authority to resolve all questions
regarding interpretation, administration and application of this Plan, any
related option agreements or instruments and
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the value of shares of Stock subject to options for any purpose hereunder, and
any such determination shall be final.
3. ELIGIBILITY. Any key employee ("Employee") of the Company or its
future subsidiaries, as defined in Section 425(f) of the Internal Revenue Code
("Subsidiaries"), including any such Employee who is also an officer or director
of the Company or its Subsidiaries, whose judgment, initiative and efforts, in
the opinion of the Committee, contribute materially to the successful
performance of the Company or its Subsidiaries, shall be eligible to receive
options under the Plan. No option may be granted under the Plan to any director
of the Company who is not also an Employee or to any current or former member of
the Committee if such eligibility would then violate the disinterested
administration requirements of the Section 16 Rules.
4. SHARES SUBJECT TO THE PLAN. The shares to be subject to options
granted under the Plan shall be shares of the Company's Common Stock, $.05
current par value per share ("Stock"), and may be either authorized and unissued
or treasury shares. The total number of shares of Stock for which options may be
granted and which may be purchased pursuant to the exercise of options granted
under the Plan shall not exceed an aggregate of 450,000 shares, subject to
adjustment as provided in Section 10; provided, however, that in the event an
option granted under the Plan expires, is cancelled or is terminated unexercised
as to any shares of Stock covered thereby, such shares shall thereafter become
available for the granting of additional options under the Plan.
5. OPTION PRICE. The option price per share of Stock shall be fixed by
the Committee, but shall not be less than 100% of the fair market value of the
Stock on the date the option is granted, as determined by the Committee.
6. GRANT OF OPTIONS. Subject to the terms and conditions of the Plan,
the Committee may, from time to time, grant to selected Employees options to
purchase such number of shares of Stock and on such terms and conditions as the
Committee may determine. More than one option may be granted to the same
Employee. The day on which the Committee approves the granting of an option
shall be considered as the date on which such option is granted. Options granted
to Employees may be either Incentive Stock Options or Nonqualified Options, as
determined by the Committee. The granting of an option to an Employee shall give
such Employee no rights as a shareholder of the Company, except as to shares
actually issued to him upon exercise in accordance with the Plan.
7. OPTION PERIOD; INCENTIVE STOCK OPTION MAXIMUM.
(a) The Committee shall determine the expiration date of each option,
but such expiration date shall not be later than seven years after the date such
option is granted.
(b) The aggregate fair market value (determined at the time the option
is granted) of the Stock with respect to which any Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year under the
Plan or any other plan of the Company or any Subsidiary shall not exceed
$100,000.
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8. EXERCISE OF OPTIONS.
(a) An Employee entitled to exercise an option may, subject to its
terms and conditions and the terms and conditions of the Plan, exercise the
option in full at any time or in part from time to time by delivery to the
Company at its principal office in Sheboygan, Wisconsin, of a written notice of
exercise specifying the number of shares of Stock with respect to which the
option is being exercised; provided, however, that, if then required by the
Section 16 Rules, no option shall be exercisable until at least six months has
elapsed from the date of grant of such option, except in the case of the death
or disability of the Employee holding such option as set forth in the Employee's
option agreement, or as otherwise allowed under the Section 16 Rules.
(b) Any notice of exercise shall be accompanied by full payment of the
option price of the shares of Stock being purchased (i) in cash or its
equivalent; (ii) with the consent of the Committee as set forth in the option
agreement, by tendering previously acquired shares of Stock (valued at their
fair market value as of the date of exercise, as determined by the Committee);
or (iii) with the consent of the Committee as set forth in the option agreement,
by any combination of (i) and (ii). For purposes of (ii) and (iii) above, the
term "previously acquired shares of Stock" shall only include Stock owned by the
Employee prior to the exercise of the option for which payment is being made and
shall not include shares of Stock which are being acquired pursuant to the
exercise of such option.
(c) Except as may be provided in the option agreement, an option
granted under the Plan may be exercised only while the Employee is an employee
of the Company or its Subsidiaries and only if he has been continuously so
employed since the date the option was granted. Options may be exercised during
the life of the Employee only by the Employee (or his legal representative). No
shares of Stock shall be issued upon exercise until full payment therefor has
been made.
9. TAX OFFSET BONUS; TAX WITHHOLDING.
(a) A tax offset bonus may be granted in conjunction with all or part
of any Nonqualified Option granted under the Plan, either at the time of the
grant or at any time during the term of the Nonqualified Option by making
provision therefor in the option agreement or an amendment to the option
agreement. Upon exercise of a Nonqualified Option with respect to which a tax
offset bonus has been granted, the Employee shall be entitled to receive from
the Company an amount in cash determined by multiplying the excess of the fair
market value of the shares of Stock for which the Nonqualified Option is
exercised over the aggregate option price for such Stock by the Bonus Factor (as
defined in Section 9(b)). The fair market value of such shares of Stock shall be
determined by the Committee as of the date of exercise; provided, however, that,
if the Employee is an officer, director or 10% or more shareholder of the
Company and if then determined appropriate by the Committee, such fair market
value shall be determined as of the date which is six months after the date of
such exercise. The day on which the Employee exercises his Nonqualified Option
pursuant to Section 8 shall be considered the date on which such Nonqualified
Option was exercised.
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(b) The "Bonus Factor" shall be the fraction calculated by dividing the
Applicable Tax Rate, as hereinafter described, by an amount equal to one minus
the Applicable Tax Rate. The Committee shall from time to time determine the
Applicable Tax Rate or Rates to be used in determining the amount of tax offset
bonuses (which may, but need not, be the same for each Employee), taking into
account such factors as it may deem necessary, including without limitation, the
maximum income tax rates applicable to individuals and the salary rates and
grades of Employees; provided, however, that the Applicable Tax Rate(s) shall
not exceed the maximum income tax rate imposed on corporations. The tax offset
bonus shall be payable to the Employee within 15 days following exercise of a
Nonqualified Option with respect to which such bonus relates; provided, however,
that, in the case of an Employee who is an officer, director or 10% or more
shareholder of the Company, such bonus shall be payable within 15 days following
the date as of which the fair market value of the Stock purchased upon exercise
of the Nonqualified Option is determined. All determinations by the Committee
pursuant to this Section 9 shall be final.
(c) The Company may deduct and withhold from any cash otherwise payable
under this Section 9 such amount as may be required for the purpose of
satisfying the Company's obligation to withhold federal, state or local taxes.
Further, in the event the amount so withheld is insufficient for such purpose,
the Company may require that the Employee pay to the Company upon its demand or
otherwise make arrangements satisfactory to the Company for payment of, such
amount as may be requested by the Company in order to satisfy its obligation to
withhold any such taxes.
(d) With the consent of the Committee as set forth in the option
agreement, an Employee may be permitted to satisfy the Company's withholding
requirements upon exercise of a Nonqualified Option by electing to have the
Company withhold shares of Stock otherwise issuable to the Employee or to
deliver to the Company shares of Stock having a fair market value (as determined
by the Committee) on the date income is recognized pursuant to the exercise of a
Nonqualified Option equal to the minimum amount required to be withheld. The
election shall be made in writing and shall be made according to such rules and
in such form as the Committee shall determine.
10. CAPITAL ADJUSTMENTS AFFECTING STOCK. In the event of a capital
adjustment resulting from a stock dividend (other than a stock dividend in lieu
of an ordinary cash dividend), stock split, spin-off, split-up, reorganization,
recapitalization, merger, consolidation, combination or exchange of shares or
the like, the number of shares of Stock subject to the Plan and the number of
shares subject to outstanding options shall be adjusted in a manner consistent
with such capital adjustment; provided, however, that no such adjustment shall
require the Company to sell or issue any fractional shares and the adjustment
shall be limited accordingly in a manner determined by the Committee.
Additionally, the per share option price of any shares of Stock subject to
outstanding options shall be adjusted so that there will be no change in the
aggregate option price payable upon exercise of any such option. The
determination of the Committee as to any adjustment hereunder shall be final.
11. POWERS OF COMPANY NOT AFFECTED. The existence of the Plan or any
options granted under the Plan (including the option agreements or instruments
evidencing such options) shall not affect in any way the right or power of the
Company or its shareholders
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to make or authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Company's capital structure or its business, or any
merger, consolidation or business combination of the Company, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Stock or the rights of the holders thereof, or dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business or
any other corporate act or proceeding, whether of a similar character or
otherwise.
12. CORPORATE MERGERS AND OTHER CONSOLIDATIONS. The Committee may also
grant options having terms and provisions which vary from those specified in the
Plan, provided that any options granted pursuant to this Section 12 are granted
in substitution for, or in connection with the assumption of, existing options
or similar rights granted by another corporation and assumed or otherwise agreed
to be provided for by the Company pursuant to or by reason of a transaction
involving a corporate merger, consolidation, acquisition, business combination
or other reorganization to which the Company or a subsidiary is a party.
13. OPTION AGREEMENTS. All options granted under the Plan shall be
evidenced by written option agreements (which need not be identical) in such
form as the Committee shall determine. Each option agreement shall specify
whether the option granted thereunder is initially intended to constitute an
Incentive Stock Option or Nonqualified Option.
14. TRANSFER RESTRICTIONS.
(a) Except as otherwise provided by the Board or the Committee, options
granted under the Plan shall not be transferable other than as designated by the
Employee by will, or by the laws of descent and distribution. In the event that
the Board or the Committee shall permit a transfer of options granted under the
Plan, any permitted transferee shall have all of the rights of the Employee
under the Plan and option agreement(s), as if the Employee had retained such
options.
(b) Shares of Stock purchased pursuant to exercise of options granted
under the Plan may not be sold, offered for sale or otherwise disposed of,
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Act") or in a transaction that, in the opinion of
legal counsel to the Company, is exempt from registration under the Act.
15. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board shall
have the right to amend, suspend or terminate the Plan or any portion hereof at
any time; provided, however, that shareholder approval of any amendment to the
Plan shall also be obtained if (a) then required by the (i) Section 16 Rules in
order for the Plan to remain qualified under Rule 16b-3 (or any successor
provision) under the Exchange Act, (ii) Internal Revenue Code in order to allow
for Incentive Stock Options to still be granted under the Plan, or (iii)
quotation or listing requirements of NASDAQ or any principal securities exchange
or market on which the Stock is then traded in order to maintain the Stock's
quotation or listing thereon; (b) such amendment materially modifies the
eligibility requirements as provided in Section 3; (c) such amendment increases
the total number of shares of Stock, except as
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provided in Section 10, which may be purchased pursuant to the exercise of
options granted under the Plan as provided in Section 4; or (d) such amendment
reduces the minimum option price per share at which options may be granted to
less than 100% of the fair market value of the Stock, as determined by the
Committee, as provided in Section 5. No amendment, suspension or termination of
the Plan shall alter, impair or adversely affect any of the rights, benefits or
obligations of any Employee under any outstanding option previously granted
thereto, unless the written consent of such Employee is obtained.
16. EFFECTIVE DATE AND TERM OF PLAN. The effective date of the Plan is
the date of its adoption by the Board, subject to the approval of the Plan
within 12 months of such effective date at a meeting of shareholders, and all
options granted prior to such approval shall be subject to such approval and
shall not be exercisable until after such approval. The Plan shall terminate on
March 20, 1995, or on such earlier date as may be determined by the Board under
Section 15. Termination of the Plan, however, shall not adversely affect the
rights of Employees under options previously granted to them, and all unexpired
options shall continue in force and operation after termination of the Plan
except as they may lapse or be terminated by their own terms and conditions.
17. CHANGE IN CONTROL.
(a) Notwithstanding any other provision of the Plan, upon the
occurrence of a Change in Control (as defined in Section 17(c)) all options then
outstanding under the Plan shall become immediately exercisable in full for the
remainder of their terms and each Employee shall have the right for a period of
30 days following a Change in Control to require the Company to purchase his
outstanding options for cash at the aggregate Acceleration Price (as defined in
Section 17(b)) for all shares of Stock subject to such options held by such
Employee; provided, however, that, if then required by the Section 16 Rules,
Employees shall have the right to exercise outstanding options or require the
Company to purchase such options only if at least six months has elapsed between
the date of grant of such options and the Change in Control date.
(b) The "Acceleration Price" shall be the excess of the highest of the
following over each applicable option price per share (as the same may be
adjusted from time to time pursuant to Section 10) on the Change in Control
date:
(i) the highest reported ask price of the Stock, as reported on
NASDAQ or the principal securities exchange or market upon which the Stock is
then listed or traded, on or within the 60 days prior to and including the
Change in Control date;
(ii) the highest purchase or sale price of the Stock reported in a
Schedule 13D or an amendment thereto as paid or received on or within the 60
days prior to and including the Change in Control date; the highest tender offer
price paid or offered for the Stock on or within the 60 days prior to and
including the Change in Control date; and
(iii) the highest cash merger or similar price paid or offered for
the Stock on or within the 60 days prior to and including the Change of Control
date.
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(c) A "Change in Control" (and the Change in Control date) shall be the
occurrence of any one of the following events (certain defined terms used in
this Section 17(c) are defined in Section 17(d)):
(i) the first day of receipt by the Company of a Schedule 13D, any
amendment thereto or notice of a public announcement confirming that any Person
(other than any employee benefit plan of the Company or of any subsidiary of the
Company or any Person organized, appointed or established pursuant to the terms
of any such benefit plan or any Person who is an Employee), together with his
Affiliates or Associates, is or becomes the Beneficial Owner of securities
representing at least 20% of the combined voting power of the Company;
(ii) the first day on which two or more of the members of the
Board are not Continuing Directors;
(iii) the day on which the shareholders of the Company approve (A)
any business combination, consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; or
(iv) the day on which the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company.
(d) For purposes of this Section 17:
(i) a "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(ii) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act.
(iii) a Person shall be a "Beneficial Owner" of securities (A)
which such Person beneficially owns, directly or indirectly, or (B) which such
Person has the right to acquire (whether such right is exercisable immediately
or only with the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants, options or otherwise, other than if
such Person acquires or has the right to acquire such securities as an
underwriter, broker, dealer or selling group member in connection with the
public or private distribution of such securities pursuant to an underwriting or
similar agreement with the Company or upon exercise of Rights issued under the
Company's Rights Agreement with First Bank (N.A.) dated December 20, 1988, as
amended.
(iv) "Continuing Directors" means any member of the Board who was
a member of the Board on March 20, 1990, and any successor of a Continuing
Director who is recommended or elected to succeed the Continuing Director by a
majority of the remaining Continuing Directors.
(e) The Committee shall not have authority under Section 2 to modify
the time when options may be exercised under this Section 17.
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