LAWSON PRODUCTS, INC.
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LONG-TERM CAPITAL ACCUMULATION PLAN
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1. Purpose
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This Plan is designed to promote the interests of the Company by
providing long-term incentive compensation to selected key executives, based on
appreciation in the value of the Company, and thereby enhancing the ability of
the Company to attract, retain and motivate such key personnel.
2. Definitions
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(a) "Company" means Lawson Products, Inc. and any successor corporation
or corporations with or into which Lawson Products, Inc. may be consolidated or
merged.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "CEO" means the Chief Executive Officer of the Company.
(d) "Committee" means the Compensation Committee of the Board of
Directors or such other committee as the Board may designate to administer this
Plan.
(e) "Participant" means a key executive of the Company who is selected
by the Committee to receive Shareholder Value Appreciation Rights under this
Plan.
(f) "Shareholder Value Appreciation Right" or "SVAR" means a unit of
participation in this Plan that represents the potential right to receive up to
one-tenth of one percent (0.10%) of the Ending SVAR Pool Value.
(g) "Ending SVAR Pool Value" means the product of (i) the applicable
SVAR Participation Rate times (ii) the excess of (A) the Shareholder Value
Created over (B) the Aggregate SVAR Obligations.
(h) "SVAR Participation Rate" means ten percent (10%); provided,
however, that the SVAR Participation Rate shall be twelve and one-half percent
(12.5%) (i) if the Operating Income of the Company for calendar year 2008 equals
or exceeds $82.8 million or (ii) if, on any earlier date as of which the Ending
SVAR Pool Value is determined, the Operating Income of the Company for the
period of twelve (12) consecutive months ending with the month end coinciding
with or most recently preceding that valuation date equals or exceeds the level
previously designated by the Committee as the "Stretch" level of performance
(i.e., exceptional performance warranting payment of enhanced incentive
compensation under this Plan) for that period of twelve (12) months.
(i) "Operating Income" means consolidated operating earnings of the
Company and any subsidiaries before adjustment for income taxes and interest
income or expense, but after accrual for compensation payable under any annual
incentive compensation plans, all as determined in accordance with generally
accepted accounting principles applied consistently.
(j) "Shareholder Value Created" means the excess, if any, of (i) the
Ending Value of the Company over (ii) the sum of (A) the Initial Value of the
Company plus (B) the Compounded Preferred Return for Shareholders.
(k) "Initial Value of the Company" means $242.1 million, the amount
calculated by the Committee as the sum of (i) the product of (A) the EBITDA
Multiplier times (B) the EBITDA of the Company for calendar year 2003 plus (ii)
the Net Non-Operating Assets and Liabilities of the Company as of December 31,
2003.
(l) "EBITDA" means consolidated earnings of the Company and any
subsidiaries before adjustment for interest, income taxes, depreciation and
amortization, but after accrual for compensation payable under any annual
incentive compensation plans, all as determined in accordance with generally
accepted accounting principles applied consistently.
(m) "EBITDA Multiplier" means eight (8), the number that has been
determined by the Board as appropriate to translate the amount of annual EBITDA
into a value for the Company.
(n) "Compounded Preferred Return for Shareholders" means the sum of the
Preferred Return for Shareholders for each of the years (or any portion of a
year) during the period commencing January 1, 2004 and ending with the date as
of which the Ending SVAR Pool Value is determined.
(o) "Preferred Return for Shareholders" for any year or portion thereof
means the product of (i) the Preferred Rate of Return for Shareholders times
(ii) the Average Deemed Investment of Shareholders for that year or portion
thereof.
(p) "Preferred Rate of Return for Shareholders" means an annual rate of
ten percent (10%).
(q) "Average Deemed Investment of Shareholders" for any year or portion
thereof means the arithmetic mean of (i) the Deemed Investment of Shareholders
at the beginning of the year or portion thereof and (ii) the Deemed Investment
of Shareholders at the end of the year or portion thereof.
(r) "Deemed Investment of Shareholders" at any particular time means
the sum of (i) the Initial Value of the Company plus (ii) the aggregate amount
of all capital contributions paid to the Company by one or more shareholders
after December 31, 2003 plus (iii) the amount (which may be positive or
negative) obtained by subtracting from (A) the amount of the retained earnings
of the Company as of the particular time in question (B) the amount of the
retained earnings of the Company as of December 31, 2003.
(s) "Aggregate SVAR Obligations" at any particular time means the
aggregate amount that would be payable with respect to SVARs if the Ending SVAR
Pool Value were determined at that time and all SVARs then outstanding were
fully vested and finally valued at that time.
(t) "Ending Value of the Company" at any particular time means the sum
of (i) the EBITDA Component of Value plus (ii) the Net Non-Operating Assets and
Liabilities of the Company plus (iii) the Aggregate Net Payments to
Shareholders.
(u) "EBITDA Component of Value" at the end of any particular calendar
month means the product of (i) the EBITDA Multiplier times (ii) the EBITDA of
the Company for the period of twelve (12) consecutive months ending with that
month.
(v) "Net Non-Operating Assets and Liabilities of the Company" at any
particular time means the amount (which may be either positive or negative)
obtained by subtracting from (i) the aggregate value at that time (net of all
debt that is not included in Non-Operating Liabilities) of cash, marketable
securities, the cash surrender value of life insurance policies, and all the
Non-Operating Receivables (ii) the aggregate amount at that time of all
Non-Operating Liabilities and all accrued liabilities for deferred compensation
and for stock options, stock appreciation rights, and any similar equity-based
compensation awards, but excluding any accrued liabilities for awards made under
this Plan, all as carried in the consolidated accounts of the Company and its
subsidiaries.
(w) "Non-Operating Receivables" means amounts due to the Company which
are unrelated to its normal business affairs, as determined by the Committee in
its sole discretion.
(x) "Non-Operating Liabilities" means amounts due from the Company
which are unrelated to its normal business affairs, as determined by the
Committee in its sole discretion.
(y) "Aggregate Net Payments to Shareholders" as of any particular time
means the amount (which may be positive or negative) obtained by subtracting
from (i) the sum of (A) the aggregate amount of all dividend distributions by
the Company after December 31, 2003 plus (B) the aggregate amount of all
payments by the Company after December 31, 2003 to purchase stock of the Company
from one or more shareholders of the Company (ii) the aggregate amount of all
capital contributions paid to the Company by one or more shareholders of the
Company after December 31, 2003.
(z) "Permanent Disability" means that a Participant, after being unable
due to injury or illness to perform substantially all of the duties of his
employment with the Company for a period of at least six (6) months, has been
determined by the Board to be permanently prevented from performing
substantially all of such duties.
(aa) "Cause" for the termination of a Participant's employment means
(i) the Participant's willful or intentional failure to perform the duties of
his employment in any material respect, (ii) malfeasance or negligence in the
performance of the Participant's duties of employment in any material respect,
(iii) the Participant's commission of a felony under the laws of the United
States or any state thereof or any other jurisdiction in which the Participant
resides (whether or not in connection with his employment), (iv) the
Participant's disclosure of material confidential information about the business
of the Company or any of its subsidiaries to any individual or entity, other
than in the performance of the duties of his employment, (v) the Participant's
material violation of any formal written policy adopted by the Company, (vi) the
Participant's knowing certification of any misrepresentation or false
information in any filing by the Company with a government agency, (vii) the
Participant's commission of an act or acts that result in the imposition of
criminal or civil penalties against the Company by a government agency, or
(viii) any other act or omission by the Participant (other than an act or
omission resulting from the exercise by the Participant of good faith business
judgment) which is materially injurious to the financial condition or the
business reputation of the Company or any of its subsidiaries; provided,
however, that no act or omission by the Participant shall constitute Cause
unless the Company gives written notice thereof to the Participant, and the
Participant fails to remedy such act or omission within seven (7) days after
receiving such notice.
3. Eligibility
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The Committee shall from time to time select Participants in this Plan
from those key executives of the Company (or subsidiaries of the Company) who,
in the opinion of the Committee, have the capacity for contributing in
substantial measure to the long-term successful performance of the Company. The
Committee shall have full discretion as to the selection of employees to
participate in this Plan, including the right to determine whether or not an
employee shall be eligible to receive an award of SVARs before the employee has
completed at least twelve (12) months of full-time employment with the Company
or a subsidiary of the Company. No particular employee (regardless of title or
position) shall automatically be entitled to participate, and receiving one or
more awards under this Plan shall not entitle a Participant to receive any
further award.
4. Awards
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The Committee shall determine the size and the effective date (which
shall not be earlier than January 1, 2004) of each SVAR award made under this
Plan. The maximum number of SVARs that may be awarded under this Plan shall be
one thousand (1,000), but if any SVARs that have been awarded are then forfeited
without payment, the Committee may, in its discretion, cancel all or any portion
of such forfeited SVARs or declare them available for use in future awards. Any
SVAR for which payment is made under this Plan shall be cancelled and shall not
be available for use in future awards. An award of SVARs shall be evidenced by a
written instrument delivered to the Participant. The maximum number of SVARs
that may be awarded under this Plan to any one individual shall be three hundred
and fifty (350).
5. Administration
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(a) This Plan shall be administered by the Committee, which shall have
full authority to take any and all actions it deems necessary or appropriate to
serve the purposes of this Plan, including but not limited to:
(i) Prescribe the form of any and all instruments to be used in
connection with the Plan, which instruments may, at the Committee's
discretion, be different for each Participant;
(ii) Adopt, amend and rescind from time to time such rules and
regulations for the administration of the Plan, and for its own acts and
proceedings, as it may deem appropriate;
(iii) Make all determinations and decide all other questions and
settle all controversies which may arise in connection with the
administration or interpretation of this Plan; and
(iv) Impose conditions on any Participant in connection with receiving
or retaining any award under this Plan, which conditions may, at the
Committee's discretion, be different for each Participant.
(b) Any decisions, determinations, interpretations or other actions of
the Committee or the Board under this Plan shall be made in its sole discretion
and shall be binding and conclusive upon all parties, including the Company and
any Participant, and shall not be subject to arbitration under Section 21,
below, or to any other dispute resolution process. No member of the Committee or
the Board shall be liable for any action or determination made by him in good
faith with respect to this Plan or any award hereunder.
6. Valuation of SVARs
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(a) Each SVAR awarded with an effective date of January 1, 2004 shall
have a value, for purposes of payment pursuant to Section 11 or Section 12,
below, equal to one-tenth of one percent (0.10%) of the Ending SVAR Pool Value.
(b) Each SVAR awarded with an effective date after January 1, 2004
shall have a value, for purposes of payment pursuant to Section 11 or Section
12, below, determined by prorating the value of an SVAR described in paragraph
(a), above, on the basis of the ratio between (i) the period of time between the
effective date of that particular SVAR and the date as of which the Ending SVAR
Pool Value is determined and (ii) the period of time between January 1, 2004 and
the date as of which the Ending SVAR Pool Value is determined.
7. Vesting
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An SVAR awarded under this Plan to any Participant shall vest upon, and
only upon, the earliest to occur of (a) December 31, 2008, (b) a Sale of the
Company, (c) the termination of that Participant's employment with the Company
and all of its subsidiaries because of death, Permanent Disability or
termination by the Company without Cause, or (d) a decision by the Committee
under Section 9, below, to vest that particular SVAR.
8. Effect of Death, Permanent Disability or Termination without Cause
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If a Participant's employment with the Company and all of its
subsidiaries terminates because of the Participant's death or Permanent
Disability, or is terminated by the Company other than for Cause, that
Participant's SVARs shall vest in full at that time and shall be valued in
accordance with Section 6, above, with the applicable Ending SVAR Pool Value
being determined as of the calendar month end coinciding with or most recently
preceding the date of such termination of employment. Such value shall be paid
in accordance with the schedule described in Section 11, below. All such SVARs
shall automatically be permanently cancelled and shall not be available for use
in future awards.
9. Effect of Other Termination of Employment
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(a) If a Participant's employment with the Company and all of its
subsidiaries is terminated for Cause, all of the Participant's SVARs shall be
forfeited.
(b) If a Participant's employment terminates by resignation or is
terminated by the Company for inadequate performance (in relation to the
performance measures established in advance for the Participant), as reasonably
determined by the Committee in its discretion, all of the Participant's SVARs
shall be forfeited, unless the Committee in its discretion determines that the
overall circumstances of and reasons for the termination of employment warrant
payment for all or some portion of the Participant's SVARs, in which case
valuation, payment and cancellation for any SVARs as to which the Committee has
made such a determination shall be made pursuant to Section 8, above, as if
employment had terminated because of death, Permanent Disability or termination
by the Company without Cause. Prior to making such a determination, the
Committee may request a report from the CEO about the circumstances of and
reasons for the termination of employment.
(c) Because all SVARs awarded under this Plan remain entirely unvested
until the occurrence of one of the events described in Section 7, above, no
forfeiture of SVARs under this Section 9 shall be deemed a loss of earned
compensation.
10. Adjustments for Acquisitions and Other Major Transactions or
Restructurings
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If the Company expands its activities by acquiring another ongoing
business enterprise, or participates in any other type of major transaction, or
significantly restructures its assets and/or operations, and if the Committee
after consultation with the CEO determines that fairly measuring subsequent
changes in the value of the Company (as, for example, in the case of an
acquisition that is strategically advantageous for the Company but for which the
purchase price is at a multiple of earnings higher than the EBITDA Multiplier)
calls for adjustment of the method for calculating the Ending Value of the
Company for purposes of this Plan (which adjustment may include, but need not be
limited to, using a different EBITDA Multiplier with respect to the earnings of
an acquired enterprise), the Committee may adopt such adjustments as are deemed
appropriate.
11. Payment for SVARs
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(a) Unless earlier valuation and payment for particular SVARs are
provided for by Section 8 or Section 9, above, or Section 12, below, the Ending
SVAR Pool Value shall be determined as of December 31, 2008, and such
determination shall be made not later than March 31, 2009. Payment of the value
of all SVARs outstanding on December 31, 2008 shall be made in accordance with
paragraph (b), below.
(b) Subject to paragraphs (c) and (d), below, and after the Participant
has executed and delivered to the Company a release (in a form satisfactory to
the Committee) of all claims against the Company, payments to each Participant
holding vested SVARs shall be made in accordance with the following schedule.
(i) Within ten (10) days after the determination of the applicable
Ending SVAR Pool Value, each such Participant shall receive from the
Company a cash payment equal to fifty percent (50%) of the value of his
vested SVARs;
(ii) On each of the first and second anniversaries of the payment made
under subparagraph (i), above, each such Participant shall receive from the
Company a cash payment equal to twenty-five percent (25%) of the value of
his vested SVARs. No interest shall be payable with respect to those
deferred amounts.
(c) In lieu of the payment schedule described in paragraph (b), above,
a Participant may elect to defer (in any manner provided for by any elective
deferred compensation plan of the Company that is in effect at the time the
Participant receives an award of SVARs) payment of all or any portion of the
eventual value of an award of SVARs. Any such election must be made in
accordance with the applicable deferred compensation plan and applicable law
regarding deferral of taxation.
(d) If a Participant violates in any material respect a confidentiality
agreement or a non-competition agreement referred to in Section 14, below, the
Participant shall forfeit the right to receive any further payments under this
Plan, and the Company shall be entitled to recover any payments previously made
to the Participant under this Plan at a time or times when the Participant had
committed or was committing such a violation.
12. Sale of the Company
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(a) Any other provision of this Plan to the contrary notwithstanding,
in the event of a Sale of the Company (as defined in paragraph (b), below), the
vesting and valuation of and payment for SVARs awarded under this Plan shall be
governed by the provisions of this Section 12 rather than by the provisions of
Sections 6 through 11 of this Plan; provided, however, that no payments shall be
made for any SVARs in connection with a Sale of the Company unless the Ending
Value of the Company, determined pursuant to Section 2(t), above, as of the
month end coinciding with or most recently preceding the time of the Sale of the
Company, exceeds the sum of (i) the Initial Value of the Company plus (ii) the
Compounded Preferred Return for Shareholders.
(b) A "Sale of the Company" means (i) the acquisition (in one or a
series of transactions) by one or more related or affiliated entities or persons
(other than related or affiliated entities or persons who as of the effective
date of this Plan own more than fifty percent (50%) of the outstanding voting
securities of the Company) of more than fifty percent (50%) of the outstanding
voting securities of the Company, (ii) the sale or other disposition of all or
substantially all of the assets of the Company, (iii) the merger or
consolidation of the Company with or into another entity, as a result of which
merger or consolidation the holders of the outstanding voting securities of the
Company immediately prior to such transaction hold less than fifty percent (50%)
of the outstanding voting securities of the surviving entity immediately after
such transaction or (iv) any other transaction that is determined by the
Committee to constitute a major change in the ownership and control of the
assets previously held, and operations previously conducted, by the Company.
(c) Upon the occurrence of a Sale of the Company, all outstanding SVARs
awarded under this Plan which have not already vested shall vest in full.
(d) Upon the occurrence of a Sale of the Company, all SVARs which
remain available at that time for awarding under this Plan shall automatically
be allocated among all of the Participants who at that time hold SVARs
outstanding under this Plan and are still active employees of the Company or a
subsidiary of the Company, with such allocation to each such Participant being
in direct proportion to the number of outstanding SVARs held by that Participant
immediately prior to such allocation. Any SVAR so allocated shall be deemed
awarded under this Plan and shall have an effective date for each respective
Participant that is the same as the effective date of the most recent preceding
award of SVARs to that particular Participant.
(e) The Ending SVAR Pool Value shall be determined as of the time the
Sale of the Company occurs. However, except for purposes of Section 12(a) (for
which Section 2(t), above, shall apply), the Ending Value of the Company shall
be calculated on the basis of the terms of the Sale of the Company transaction,
rather than the terms of Section 2(t), above; and for purposes of calculating
the Ending SVAR Pool Value, subpart (B) shall be deleted from part (ii) of
Section 2(g), above.
(f) The total ending value of outstanding SVARs for each Participant,
determined in accordance with this Section 12, shall be paid to that Participant
in full within thirty (30) days after the closing of the Sale of the Company,
without regard to any deferred payment schedule described in other sections of
this Plan; provided, however, that if any portion of the Sale of the Company
consideration which is payable to the shareholders of the Company is not paid to
the shareholders at the time of the closing in cash, marketable securities, or
some other form of readily marketable property, then a corresponding pro rata
portion of the payments for SVARs awarded under this Plan shall, unless
otherwise determined by the Committee, not be paid to the Participants in
connection with the closing but shall be paid to the Participants at the same
time or times, and in the same proportion or proportions, and on the same terms
and conditions (including without limitation any applicable interest on deferred
amounts, any appreciation adjustment, and/or any adjustment for dividends or
other distributions with respect to shares) as the balance of the Sale of the
Company consideration is paid to the shareholders of the Company or becomes
readily marketable, as the case may be; and if the shareholders receive the
benefit of any guarantee or security arrangements with respect to any deferred
payments, then the Participants shall receive the benefit of the same (if
available) or equivalent arrangements. In determining whether property received
by the shareholders is readily marketable, any applicable restrictions on
transfer (including without limitation restrictions arising under federal or
state securities laws or otherwise imposed by the terms and conditions of the
contract governing the Sale of the Company transaction) shall be fully taken
into account.
13. Adjustments to Avoid Excise Tax.
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(a) Anything in this Plan to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Company to or for
the benefit of a Participant (whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise) would be subject
to the excise tax (the "Excise Tax") imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), then the amounts payable to the
Participant under this Plan shall be reduced to the extent necessary so that no
portion of the amounts payable under this Plan shall be subject to such excise
tax, but only if (i) the net amount of such payments, as so reduced (and after
imposition of the total amount of federal, state and local income tax on such
payments) is greater than (ii) the excess of (A) the net amount of such
payments, without reduction (but after imposition of the total amount of
federal, state and local income tax on such payments) over (B) the amount of
Excise Tax to which the Participant would be subject in respect of such
unreduced payments. If it is determined that Excise Tax will or might be imposed
on a Participant in the absence of such reduction, the Company and the
Participant shall make good faith efforts to seek to identify and pursue
reasonable action to avoid the need for such reduction or, if such reduction is
not applicable, to reduce the amount of Excise Tax imposed on the Participant;
provided, however, that this sentence shall not be construed to require the
Participant to accept any further reduction in the amount that would be payable
to him in the absence of this sentence. The provisions of this Section 13 shall
override and control any inconsistent provision in any other agreement with, or
compensation award to, any Participant.
(b) All determinations required to be made under this Section 13,
including whether reduction is required under paragraph (a), above, and the
amount of such reduction and the assumptions to be utilized in arriving at such
determination, shall be made in good faith by an independent accounting firm
selected by the Company in accordance with applicable law (the "Accounting
Firm"), in consultation with tax counsel reasonably acceptable to the
Participant. In the event that such Accounting Firm is serving as accountant or
auditor for the individual, entity or group acting as the acquirer in a Sale of
the Company, the Company shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to herein as the Accounting Firm). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. If the Accounting Firm
determines that no excise tax under Section 4999 of the Code is payable by any
particular Participant, the Company shall request that the Accounting Firm
furnish the Participant with written guidance that failure to report such excise
tax on the Participant's applicable federal income tax return would not result
in the imposition of a negligence or similar penalty.
14. Confidentiality and Non-Competition.
-----------------------------------
(a) If a Participant is not already a party to a confidentiality
agreement with the Company, the Participant shall, whenever requested by the
Company, enter into such an agreement as a condition to retaining SVARs awarded
under this Plan.
(b) As a condition to retaining SVARs awarded under this Plan, each
Participant shall, whenever requested by the Company, enter into a restrictive
agreement under the terms of which, during the term of the Participant's
employment with the Company and for a period of two (2) years thereafter, the
Participant shall not, directly or indirectly, engage in, be employed by, act as
a consultant to, be a director, officer, owner or partner of, or acquire any
other significant interest in, any business activity or entity which competes
directly or indirectly with the Company or any subsidiary of the Company. The
form and the specific terms of such a restrictive agreement shall be as
prescribed by the Company.
(c) This Section 14 does not limit in any way the scope of Section 5
(a)(iv), above.
15. Designation of Beneficiary
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Each Participant may designate a beneficiary or beneficiaries to
receive any remaining amounts due him under this Plan in the event of his death,
and may change such designation from time to time by filing a written
designation of beneficiaries with the Company, provided that no such designation
shall be effective unless so filed prior to the death of such Participant. If
there is no such designation in effect at the time of a Participant's death, any
such remaining amounts shall be paid to the Participant's estate.
16. No Right of Continued Employment
--------------------------------
The receipt of an award hereunder shall not give any Participant any
right to continued employment by the Company, and the right to dismiss any
Participant is expressly reserved by the Company, despite the possible adverse
effect hereunder on any such Participant. Because the Plan is a contractual
arrangement contingent on future events, neither the grant of an award nor a
payment hereunder shall be considered compensation for purposes of any
profit-sharing, stock purchase, pension or other similar plan of the Company.
17. No Segregation of Cash or Property
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The Company shall not be required to segregate any cash or any other
property in connection with any SVARs awarded under this Plan. No interest shall
be payable at any time with respect to any SVARs except as expressly provided
herein.
18. No Rights as a Shareholder
--------------------------
No award of SVARs under this Plan shall confer on any Participant any
voting or other rights or privileges of a shareholder of the Company. The right
of any Participant to receive any distribution or payment under this Plan shall
be that of an unsecured general creditor of the Company.
19. Assignments, Etc.
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This Plan shall be binding upon and inure to the benefit of any
Participant, his heirs, executors and administrators and the Company, its
successors and assigns. The rights, interests and benefits of any Participant or
any person or persons claiming benefits under such Participant by reason of the
Plan shall not be sold, transferred, alienated, assigned, pledged, hypothecated
or encumbered or otherwise disposed of except by will or by the laws of descent
and distribution and shall not be subject to execution, attachment, transfer by
operation of law or any other legal process. Any attempted sale, transfer,
alienation, assignment, pledge, hypothecation or encumbrance, or other
disposition of any rights, interests, and benefits under this Plan contrary to
the foregoing provisions, or the levy of any attachment or similar process
thereupon, shall be null and void and without effect.
20. Illinois Law to Govern
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All questions pertaining to the construction, validity and effect of
the provisions and administration of this Plan shall be determined in accordance
with the laws of the State of Illinois.
21. Controversy or Claim
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Any controversy or claim arising out of or relating to this Plan or any
alleged breach hereof shall, upon request by either party, be submitted to
arbitration in Chicago, Illinois, in accordance with the rules of the American
Arbitration Association (the "AAA") for the resolution of commercial disputes.
The arbitrator shall be selected by joint agreement of the Company and the
Participant involved, but if they do not so agree within seven (7) days of the
date of the request for arbitration, the selection shall be made in accordance
with the rules of the AAA. The award rendered by the arbitrator shall be
conclusive and binding upon the parties hereto and shall include a determination
as to the party or parties to pay the fees and expenses incident to the
arbitration, and a judgment may be entered upon the award in any court having
jurisdiction hereof.
22. Gender
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Wherever from the context of this Plan it appears appropriate, each
term stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in any one of the masculine, feminine or neuter
genders shall include the masculine, feminine and neuter.
23. Withholding Tax
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The Company shall have the right to deduct from any amount payable
hereunder any taxes required by law to be withheld with respect thereto.
24. Amendment or Termination of Plan
--------------------------------
The Committee may from time to time amend or terminate any or all of
the provisions of this Plan, except that without the consent of the Participant
affected no amendment or termination of this Plan shall affect in a material way
adverse to said Participant the vesting or valuation of, or payment for, any
SVARs previously awarded pursuant to this Plan; provided, however, that the
Committee may in any event amend or terminate any provision of this Plan and/or
any previously awarded SVAR to the extent such amendment or termination is
necessary to satisfy the requirements of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor to that Section 162(m),
so that all payments under this Plan will qualify as deductible
performance-based compensation.
25. Effective Date
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This Plan shall take effect upon adoption by the Board, but until the
material terms of the compensation opportunity under this Plan have been
approved by a majority vote of the shareholders of the Company, no payment shall
be made under this Plan that would be a non-deductible payment because of
Section 162(m) of the Code or any successor to that Section 162(m).