Exhibit 10.8
38
ALBEMARLE CORPORATION
1998 INCENTIVE PLAN
39
ALBEMARLE CORPORATION
1998 INCENTIVE PLAN
-------------------
ARTICLE I
DEFINITIONS
-----------
1.01. Administrator means the Committee and any delegate of
the Committee that is appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary" or "parent" corporation
(within the meaning of Code section 424) of the Company.
1.03. Agreement means a written agreement (including any
amendment or supplement thereto) between the Company and a
Participant specifying the terms and conditions of an award of
Restricted Stock, Performance Share award, or an Option or SAR, an
Incentive Award or a combination thereof, granted to such
Participant.
1.04. Board means the Board of Directors of the Company.
1.05. Change in Control has the same meaning as is given that
defined term in the Albemarle Corporation Supplemental Benefits
Trust.
1.06. Code means the Internal Revenue Code of 1986, and any
amendments thereto.
1.07. Committee means the Executive Compensation Committee of
the Board.
1.08. Common Stock means the Common Stock of the Company.
1.09. Company means Albemarle Corporation.
1.10. Control Change Date has the same meaning as is given
that defined term in the Albemarle Corporation Supplemental
Benefits Trust.
40
1.11. Corresponding SAR means an SAR that is granted in
relation to a particular Option and that can be exercised only upon
the surrender to the Company, unexercised, of that portion of the
Option to which the SAR relates.
1.12. Fair Market Value means, on any given date, the closing
price of a share of Common Stock as reported on the New York Stock
Exchange composite tape on such date, or if the Common Stock was
not traded on the New York Stock Exchange on such day, then on the
next preceding day that the Common Stock was traded on such
exchange, all as reported by such source as the Administrator may
select.
1.13. Incentive Award means an award which, subject to such
terms and conditions as may be prescribed by the Administrator,
entitles the Participant to receive a payment in cash or Common
Stock in an amount determined by the Administrator.
1.14. Initial Value means, with respect to a Corresponding
SAR, the option price per share of the related Option, and with
respect to an SAR granted independently of an Option, the Fair
Market Value of one share of Common Stock on the date of grant.
1.15. Option means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock
at the price set forth in an Agreement.
1.16. Participant means an employee of the Company or an
Affiliate, including an employee who is a member of the Board, or
an individual who provides services to the Company or an Affiliate
who satisfies the requirements of Article IV and is
41
selected by the Administrator to receive a Restricted Stock award,
Performance Share award, an Option, an SAR, an Incentive Award or
a combination thereof.
1.17. Performance Shares means an award which, in accordance
with and subject to an Agreement, will entitle the Participant, or
his estate or beneficiary in the event of the Participant's death,
to receive cash or an award of Restricted Stock or a combination
thereof.
1.18. Plan means the Albemarle Corporation 1998 Incentive
Plan.
1.19. Restricted Stock means Common Stock awarded to a
Participant under Article IX. Shares of Common Stock shall cease
to be Restricted Stock when, in accordance with the terms of the
applicable Agreement, they become transferable and free of
substantial risks of forfeiture.
1.20. SAR means a stock appreciation right that entitles the
holder to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the amount determined by
the Administrator and specified in an Agreement. In the absence of
such a determination, the holder shall be entitled to receive, with
respect to each share of Common Stock encompassed by the exercise
of such SAR, the excess of the Fair Market Value on the date of
exercise over the Initial Value. References to "SARs" include both
Corresponding SARs and SARs granted independently of Options,
unless the context requires otherwise.
1.21. Ten Percent Shareholder means any individual owning more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of an Affiliate. An individual
shall be considered to own any voting stock owned
42
(directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own
proportionately any voting stock owned (directly or indirectly) by
or for a corporation, partnership, estate or trust of which such
individual is a shareholder, partner or beneficiary.
ARTICLE II
PURPOSES
--------
The Plan is intended to assist the Company in recruiting
and retaining individuals with ability and initiative who provide
services to the Company or an Affiliate by enabling such persons to
participate in its future success and to associate their interests
with those of the Company and its shareholders. The Plan is
intended to permit the award of Performance Shares and shares of
Restricted Stock, the grant of SARs, the grant of both Options
qualifying under Code section 422 ("incentive stock options") and
Options not so qualifying, and the grant of Incentive Awards. No
Option that is intended to be an incentive stock option shall be
invalid for failure to qualify as an incentive stock option. The
proceeds received by the Company from the sale of Common Stock
pursuant to the Plan shall be used for general corporate purposes.
43
ARTICLE III
ADMINISTRATION
--------------
The Plan shall be administered by the Administrator.
The Administrator shall have authority to award Performance Shares
and Restricted Stock and to grant Options, SARs and Incentive
Awards upon such terms (not inconsistent with the provisions of the
Plan) as the Administrator may consider appropriate. Such terms
may include conditions (in addition to those contained in the Plan)
on the exercisability of all or any part of an Option or SAR or on
the transferability or forfeitability of Restricted Stock,
Performance Shares, or an Incentive Award, including by way of
example and not limitation, requirements that the Participant
complete a specified period of employment with the Company or an
Affiliate or that the Company achieve a specified level of
financial performance or financial return. Notwithstanding any
such conditions, the Administrator may, in its discretion,
accelerate the time at which any Option or SAR may be exercised,
the time at which Restricted Stock may become transferable or
nonforfeitable, or the time at which Performance Shares or
Incentive Awards are earned. In addition, the Administrator shall
have complete authority to interpret all provisions of the Plan; to
prescribe the form of Agreements; to adopt, amend, and rescind
rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of the Plan. The express grant in the Plan of any
specific power to the Administrator shall not be construed as
limiting any power or authority of the Administrator. Any
44
decision made, or action taken, by the Administrator in connection
with the administration of the Plan shall be final and conclusive.
Neither the Administrator nor any member of the Committee shall be
liable for any act done in good faith with respect to the Plan or
any Agreement, Option, SAR, Incentive Award, award of Performance
Shares, or Restricted Stock award. All expenses of administering
the Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or
more officers of the Company or the Executive Committee of the
Board, all or part of the Committee's authority and duties with
respect to grants and awards to individuals who are not subject to
the reporting and other provisions of Section 16 of the Securities
Exchange Act of 1934, as in effect from time to time. The
Committee may revoke or amend the terms of a delegation at any time
but such action shall not invalidate any prior actions of the
Committee's delegate or delegates that were consistent with the
terms of the Plan.
ARTICLE IV
ELIGIBILITY
------------
4.01. General. Any employee of the Company or an Affiliate
(including a corporation that becomes an Affiliate after the
adoption of the Plan) or a person who provides services to the
Company or an Affiliate (including a corporation that becomes an
Affiliate after the adoption of the Plan) is eligible to
participate in the Plan if the
45
Administrator, in its sole discretion, determines that such person
has contributed significantly or can be expected to contribute
significantly to the profits or growth of the Company or an
Affiliate. Directors of the Company who are employees of the
Company or an Affiliate may be selected to participate in the Plan.
A person who is a member of the Committee may not be granted
Options or SARs, or awarded Restricted Stock, Performance Shares,
or Incentive Awards under the Plan.
4.02. Grants. The Administrator will designate individuals to
whom shares of Restricted Stock or Performance Shares are to be
awarded and to whom Incentive Awards, Options and SARs are to be
granted and will specify the number of shares of Common Stock
subject to each award or grant. An Option may be granted with or
without a related SAR. An SAR may be granted with or without a
related Option. Each award of Performance Shares, each Incentive
Award, each Restricted Stock award, and all grants of Options and
SARs under the Plan shall be evidenced by Agreements which shall be
subject to the applicable provisions of the Plan and to such other
provisions as the Administrator may adopt. No Participant may be
granted incentive stock options or related SARs (under all
incentive stock option plans of the Company and its Affiliates)
that are first exercisable in any calendar year for stock having an
aggregate Fair Market Value (determined as of the date an Option is
granted) that exceeds the limitation prescribed by Code section
422(d). The preceding annual limitation shall not apply with
respect to Options that are not incentive stock options.
46
4.03. Limitation. No Participant may be granted Options and
SARs that are not related to Options in any calendar year for more
than 200,000 shares of Common Stock. For purposes of the preceding
sentence, an Option and Corresponding SAR are treated as a single
award. In addition, no Participant may, in any calendar year, be
awarded, in the aggregate, Restricted Stock, Performance Shares,
and/or Incentive Awards covering more than 100,000 shares of Common
Stock.
ARTICLE V
STOCK SUBJECT TO PLAN
---------------------
Upon the award of shares of Restricted Stock the Company
may issue shares of Common Stock from its authorized but unissued
Common Stock. Upon the exercise of any Option or SAR, the Company
may deliver to the Participant (or the Participant's broker if the
Participant so directs), shares of Common Stock from its authorized
but unissued Common Stock. The maximum aggregate number of shares
of Common Stock that may be issued pursuant to the exercise of
Options and SARs, the award of Restricted Stock, or in settlement
of Incentive Awards under the Plan is 3,000,000 shares. Subject to
the limitations set forth in the preceding sentence, the maximum
aggregate number of shares that may be issued pursuant to the
exercise of Options is 2,000,000. The maximum aggregate number of
shares of Common Stock that may be issued under the Plan shall be
subject to adjustment as provided in Article XII. If an Option is
terminated, in whole or in part, for any reason other than its
exercise or the exercise of a Corresponding SAR, the number of
shares of Common
47
Stock allocated to the Option or portion thereof
may be reallocated to other Options, SARs, Restricted Stock awards,
Incentive Awards, and awards of Performance Shares to be granted
under the Plan. If an SAR is terminated, in whole or in part, for
any reason other than its exercise or the exercise of a related
Option, the number of shares of Common Stock allocated to the SAR
or portion thereof may be reallocated to other Options, SARs,
Restricted Stock awards, Incentive Awards, and awards of
Performance Shares to be granted under the Plan. If an award of
Restricted Stock is forfeited, in whole or in part, the number of
shares of Common Stock allocated to the award of Restricted Stock
or portion thereof may be reallocated to other Options, SARs,
Restricted Stock awards, Incentive Awards, and awards of
Performance Shares to be granted under the Plan. If an award of
Performance Shares is forfeited, in whole or in part, without the
issuance of an award of Restricted Stock, the number of shares of
Common Stock allocated to the award of Performance Shares or
portion thereof may be reallocated to other Options, SARs,
Restricted Stock awards, Incentive Awards, and awards of
Performance Shares to be granted under the Plan.
ARTICLE VI
OPTION PRICE
------------
The price per share for Common Stock to be purchased on
the exercise of an Option shall be determined by the Administrator
on the date of grant; provided, however, that the price per share
for Common Stock to be purchased on the exercise of any Option that
is an incentive stock option shall not be less than the Fair Market
48
Value on the date the Option is granted and provided further that
the price per share shall not be less than 110% of such Fair Market
Value in the case of an incentive stock option granted to a
Participant who is a Ten Percent Shareholder on the date such
incentive stock option is granted.
ARTICLE VII
EXERCISE OF OPTIONS AND SARS
----------------------------
7.01. Maximum Option or SAR Period. The maximum period in
which an Option or SAR may be exercised shall be determined by the
Administrator on the date of grant, except that no Option that is
an incentive stock option or its Corresponding SAR shall be
exercisable after the expiration of ten years from the date such
Option or Corresponding SAR was granted. In the case of an
incentive stock option or its Corresponding SAR that is granted to
a participant who is a Ten Percent Shareholder, such Option and
Corresponding SAR shall not be exercisable after the expiration of
five years from the date of grant. The terms of any Option that is
an incentive stock option or Corresponding SAR may provide that it
is exercisable for a period less than such maximum period.
7.02. Nontransferability. Any Option or SAR granted under the
Plan shall be nontransferable except by will or by the laws of
descent and distribution. In the event of any such transfer, the
Option and any Corresponding SAR that relates to such Option must
be transferred to the same person or persons. During the lifetime
of the
49
Participant to whom the Option or SAR is granted, the Option
or SAR may be exercised only by the Participant. No right or
interest of a Participant in any Option or SAR shall be liable for,
or subject to, any lien, obligation, or liability of such
Participant.
7.03. Transferable Options and SARs. Section 7.02 to the
contrary notwithstanding, if the Agreement provides, an Option that
is not an incentive stock option or an SAR, other than a
Corresponding SAR that is related to an incentive stock option, may
be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such
family members or a partnership in which such family members are
the only partners, on such terms and conditions as may be permitted
under Securities Exchange Commission Rule 16b-3 as in effect from
time to time. The holder of an Option or SAR transferred pursuant
to this section shall be bound by the same terms and conditions
that governed the Option or SAR during the period that it was held
by the Participant; provided, however, that such transferee may not
transfer the Option or SAR except by will or the laws of descent
and distribution. An Option or its Corresponding SAR may only be
transferred if the awards are transferred to the same person or
persons or entity or entities.
7.04. Employee Status. For purposes of determining the
applicability of Code section 422 (relating to incentive stock
options), or in the event that the terms of any Option or SAR
provide that it may be exercised only during employment or
continued service or within a specified period of time after
termination of employment or
50
service, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of
continuous employment or service.
7.05. Change in Control. Section 7.01 to the contrary
notwithstanding, upon a Control Change Date each Option or SAR then
outstanding shall be fully exercisable thereafter in accordance
with the terms of the applicable Agreement.
7.06. Performance Objectives. The Committee may prescribe
that an Option or SAR is exercisable only to the extent that
certain performance objectives are attained. Such performance
objectives may be based on one or more of the Company's, an
Affiliate's or a business unit's (i) gross, operating or net
earnings before or after taxes, (ii) return on equity, (iii) return
on capital, (iv) return on sales, (v) return on assets or net
assets, (vi) earnings per share, (vii) cash flow per share,
(viii) book value per share, (ix) earnings growth, (x) sales
growth, (xi) volume growth, (xii) cash flow (as defined by the
Committee), (xiii) Fair Market Value, (xiv) share price or total
shareholder return, (xv) market share, (xvi) economic value added,
(xvii) market value added, (xviii) productivity, (xix) level of
expenses, (xx) quality, (xxi) safety, (xxii) customer satisfaction,
(xxiii) product development or improvement, (xxiv) peer group
comparisons of any of the aforementioned objectives or (xxv) such
other performance objectives, if any, as may be determined by the
Committee. If the Committee, on the date of the award, prescribes
that an Option or SAR shall become exercisable only upon the
attainment of performance objectives stated with respect to
51
one or more of the foregoing criteria, the Option or SAR shall
become exercisable only to the extent the Committee certifies
that such objectives have been achieved.
ARTICLE VIII
METHOD OF EXERCISE
------------------
8.01. Exercise. Subject to the provisions of Articles VII and
XIII, an Option or SAR may be exercised in whole at any time or in
part from time to time at such times and in compliance with such
requirements as the Administrator shall determine; provided,
however, that a Corresponding SAR that is related to an incentive
stock option may be exercised only to the extent that the related
Option is exercisable and when the Fair Market Value exceeds the
option price of the related Option. An Option or SAR granted under
the Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option or SAR could
be exercised. A partial exercise of an Option or SAR shall not
affect the right to exercise the Option or SAR from time to time in
accordance with the Plan and the applicable Agreement with respect
to the remaining shares subject to the Option or related to the
SAR. The exercise of either an Option or a Corresponding SAR shall
result in the termination of the other to the extent of the number
of shares with respect to which the Option or Corresponding SAR is
exercised.
8.02. Payment. Unless otherwise provided by the Agreement,
payment of the Option price shall be made in cash or a cash
equivalent acceptable to the Administrator.
52
Subject to rules established by the Committee, payment of all or
part of the Option price may be made with shares of Common Stock
of the Company. If Common Stock is used to pay all or part of the
Option price, the sum of the cash and cash equivalent and the Fair
Market Value of the shares (determined as of the day preceding the
date of exercise) must not be less than the Option Price of shares
for which the Option is being exercised.
8.03. Determination of Payment of Cash and/or Common Stock
Upon Exercise of SAR. At the Administrator's discretion, the
amount payable as a result of the exercise of an SAR may be settled
in cash, Common Stock, or a combination of cash and Common Stock.
No fractional share shall be deliverable upon the exercise of an
SAR but a cash payment will be made in lieu thereof.
8.04. Shareholder Rights. No Participant shall have any
rights as a stockholder with respect to shares subject to his
Option or SAR until the date of exercise of such Option or SAR.
ARTICLE IX
RESTRICTED STOCK
----------------
9.01. Award. In accordance with the provisions of Article IV
and subject to the limitations set forth in Article V, the
Administrator will designate each individual to whom an award of
Restricted Stock is to be made and will specify the number of
shares of Common Stock covered by the award.
53
9.02. Vesting. The Administrator, on the date of the award,
must prescribe that a Participant's rights in the Restricted Stock
shall be forfeitable or otherwise restricted for a period of time
or until satisfaction of such conditions as are set forth in the
Agreement. By way of example and not of limitation, the
restrictions may postpone transferability of the shares or may
provide that the shares will be forfeited if the Participant
separates from the service of the Company and its Affiliates before
the expiration of a stated term or if the Company, the Company and
its Affiliates or the Participant fails to achieve stated
objectives.
9.03. Performance Objectives. In accordance with Section
9.02, the Committee may prescribe that awards of Restricted Stock
will become vested or transferable or both based on objectives
stated with respect to one or more of the Company's, an Affiliate's
or a business unit's (i) gross, operating or net earnings before or
after taxes, (ii) return on equity, (iii) return on capital,
(iv) return on sales, (v) return on assets or net assets,
(vi) earnings per share, (vii) cash flow per share, (viii) book
value per share, (ix) earnings growth, (x) sales growth,
(xi) volume growth, (xii) cash flow (as defined by the Committee),
(xiii) Fair Market Value, (xiv) share price or total shareholder
return, (xv) market share, (xvi) economic value added,
(xvii) market value added, (xviii) productivity, (xix) level of
expenses, (xx) quality, (xxi) safety, (xxii) customer satisfaction,
(xxiii) product development or improvement, (xxiv) peer group
comparisons of any of the aforementioned objectives or (xxv) such
other performance objectives, if any, as may be determined by the
Committee. If the Committee, on the date of the award, prescribes
that a Restricted Stock award shall
54
become nonforfeitable and transferrable only upon the attainment of
performance objectives stated with respect to one or more of the
foregoing criteria, the shares subject to such Restricted Stock
award shall become nonforfeitable and transferrable only to the
extent the Committee certifies that such objectives have been
achieved.
9.04. Change in Control. Sections 9.02 and 9.03 to the
contrary notwithstanding, upon a Control Change Date each
Restricted Stock award then outstanding will become transferable
and nonforfeitable in accordance with the terms of the applicable
Agreement.
9.05. Shareholder Rights. If, and as provided in the
Agreement, prior to their forfeiture, a Participant will have all
rights of a shareholder with respect to Restricted Stock, including
the right to receive dividends and vote the shares; provided, how-
ever, that (i) a Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of Restricted Stock,
(ii) the Company shall retain custody of the certificates
evidencing shares of Restricted Stock, and (iii) the Participant
will deliver to the Company a stock power or powers, endorsed in
blank, with respect to each award of Restricted Stock. The
limitations set forth in the preceding sentence shall not apply
after the shares cease to be Restricted Stock.
55
ARTICLE X
INCENTIVE AWARDS
----------------
10.01. Awards. The Administrator shall designate Participants
to whom Incentive Awards are made for annual incentive payments.
All Incentive Awards shall be finally determined exclusively by the
Administrator under the procedures established by the
Administrator; provided, however, that in any calendar year no
Participant may receive an Incentive Award for an amount in excess
of $1.0 million.
10.02. Terms and Conditions. The Administrator, at the time an
Incentive Award is made, shall specify the terms and conditions
which govern the award. Such terms and conditions may include, by
way of example and not of limitation, requirements that the
Participant complete a specified period of employment with the
Company or an Affiliate or that the Company, Affiliate, or the
Participant attain stated objectives or goals as a prerequisite to
payment under an Incentive Award. Such performance objectives or
goals may be based on one or more of the Company's, an Affiliate's
or a business unit's (i) gross, operating or net earnings before or
after taxes, (ii) return on equity, (iii) return on capital,
(iv) return on sales, (v) return on assets or net assets,
(vi) earnings per share, (vii) cash flow per share, (viii) book
value per share, (ix) earnings growth, (x) sales growth,
(xi) volume growth, (xii) cash flow (as defined by the Committee),
(xiii) Fair Market Value, (xiv) share price or total shareholder
return, (xv) market share, (xvi) economic value added,
(xvii) market value added,
56
(xviii) productivity, (xix) level of expenses, (xx) quality,
(xxi) safety, (xxii) customer satisfaction, (xxiii) product
development or improvement, (xxiv) peer group comparisons of any
of the aforementioned objectives or (xxv) such other performance
objectives, if any, as may be determined by the
Committee. If the Committee, on the date of the award, prescribes
that the Incentive Award shall be earned only upon the attainment
of performance objectives stated with respect to one or more of the
foregoing criteria, such Incentive Award shall be earned only to
the extent that the Committee certifies that such objectives have
been achieved. The Administrator, at the time an Incentive Award
is made, shall also specify when amounts shall be payable under the
Incentive Award and whether amounts shall be payable in the event
of the Participant's death, disability, or retirement.
Except with respect to those Participants who are
covered employees (as determined under Code section 162(m)(3)) and
notwithstanding any other provision of the Plan, the Administrator,
in its discretion may adjust the terms, conditions or other
requirements applicable to Incentive Awards and may increase or
decrease the amounts otherwise payable under an Incentive Award, to
reflect unusual or extraordinary transactions or events. The
Administrator may make such adjustments with respect to one or more
Participants, with respect to all Participants as to Incentive
Awards made during a particular year, or with respect to all
outstanding Incentive Awards.
10.03. Determination of Payment of Cash and/or Common Stock In
Settlement of An Incentive Award. At the Administrator's
discretion, an Incentive Award may be
57
settled in cash, Common Stock, or a combination of cash and Common
Stock. No fractional share shall be deliverable in settlement of
an Incentive Award but a cash payment will be made in lieu thereof.
58
ARTICLE XI
PERFORMANCE SHARE AWARDS
-------------------------
11.01. Award. In accordance with the provisions of Article IV
and subject to the limitations set forth in section 4.03, the
Administrator will designate individuals to whom an award of
Performance Shares is granted and will specify the number of shares
of Common Stock covered by the award.
11.02. Earning the Award. The Administrator, on the date of
the grant of an award, may prescribe that the Performance Shares,
or portion thereof, will be earned, and the Participant will be
entitled to receive Common Stock pursuant to a Stock Award only
upon the satisfaction of certain requirements or the attainment of
certain objectives. By way of example and not of limitation, the
restrictions may provide that Performance Shares shall be earned
only upon the Participant's completion of a specified period of
employment with the Company or an Affiliate or upon the attainment
of stated performance objectives or goals. Such performance
objectives or goals may be based on one or more of the Company's,
an Affiliate's or a business unit's (i) gross, operating or net
earnings before or after taxes, (ii) return on equity, (iii) return
on capital, (iv) return on sales, (v) return on assets or net
assets, (vi) earnings per share, (vii) cash flow per share,
(viii) book value per share, (ix) earnings growth, (x) sales
growth, (xi) volume growth, (xii) cash flow (as defined by the
Committee), (xiii) Fair Market Value, (xiv) share price or total
shareholder return, (xv) market share, (xvi) economic value added,
(xvii) market value added,
59
(xviii) productivity, (xix) level of expenses, (xx) quality,
(xxi) safety, (xxii) customer satisfaction, (xxiii) product
development or improvement, (xxiv) peer group comparisons of
any of the aforementioned objectives or (xxv) such
other performance objectives, if any, as may be determined by the
Committee. If the Committee, on the date of the award, prescribes
that Performance Shares shall be earned only upon the attainment of
performance objectives stated with respect to one or more of the
foregoing criteria, such Performance Shares shall be earned only to
the extent the Committee certifies that such objectives have been
achieved.
11.03. Change in Control. Section 11.02 to the contrary
notwithstanding, in accordance with the terms of the applicable
Agreement, each Performance Share shall be earned and converted
into an award of Restricted Stock as of a Control Change Date and
such awards of Restricted Stock will become transferable and
nonforfeitable thereafter in accordance with the terms of the
applicable Agreement.
11.04. Shareholder Rights. No Participant shall, as a result
of receiving an award of Performance Shares, have any rights as a
shareholder until and to the extent that the award of Performance
Shares is earned and an award of Restricted Stock is made. If the
Agreement so provides, a Participant may receive a cash payment
equal to the dividends that are payable with respect to the number
of shares of Common Stock covered by the award between the date the
Performance Shares are awarded and the date an award of Restricted
Stock is made. A Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of a Performance Share
award or the right to receive Common Stock thereunder other than by
will or the laws of
60
descent and distribution. After an award of
Performance Shares is earned and an award of Restricted Stock is
made, a Participant will have all the rights of a shareholder as
described in Plan section 9.05.
ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The maximum number of shares as to which Restricted
Stock may be awarded, as to which Options and SARs may be granted,
and which may be issued in settlement of Incentive Awards or
Performance Shares under the Plan shall be proportionately
adjusted, and the terms of outstanding Restricted Stock awards,
Performance Share awards, Incentive Awards, Options, and SARs shall
be adjusted, as the Committee shall determine to be equitably
required in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of
shares or (ii) engages in a transaction to which Code section 424
applies or (b) there occurs any other event that, in the judgment
of the Committee, necessitates such action. Any determination made
under this Article XII by the Committee shall be final and
conclusive.
The issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof
shall be made with respect to, outstanding awards of Restricted
Stock, Performance Shares, Incentive Awards, Options or SARs.
The Committee may grant Performance Shares, shares of
Restricted Stock, Incentive Awards, Options, and SARs in
substitution for performance shares, stock awards, stock options,
stock appreciation rights, or similar awards held by an individual
who is or becomes an employee of the Company or an Affiliate in
connection with a transaction described in this Article XII.
Notwithstanding any provision of the Plan (other than the
limitations of Article V), the terms of such substituted
Performance Share awards, Restricted Stock awards, Incentive Awards
and Option or SAR grants shall be as the Committee, in its
discretion, determines is appropriate.
ARTICLE XIII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
-----------------------------
No Option or SAR shall be exercisable, no Common Stock
shall be issued, no certificates for shares of Common Stock shall
be delivered, and no payment shall be made under the Plan except in
compliance with all applicable federal and state laws and
regulations (including, without limitation, withholding tax
requirements), any stock listing agreement to which the Company is
a party, and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company shall have the right
to rely on an opinion of its counsel as to such compliance. Any
share
61
certificate issued to evidence Common Stock for which shares
of Restricted Stock are awarded or for which an Option or SAR is
exercised may bear such legends and statements as the Administrator
may deem advisable to assure compliance with federal and state laws
and regulations. No Option or SAR shall be exercisable, no
Restricted Stock shall be awarded, no Common Stock shall be issued,
no certificate for shares shall be delivered, and no payment shall
be made under the Plan until the Company has obtained such consent
or approval as the Administrator may deem advisable from regulatory
bodies having jurisdiction over such matters.
ARTICLE XIV
GENERAL PROVISIONS
-------------------
14.01. Effect on Employment. Neither the adoption of the Plan,
its operation, nor any documents describing or referring to the
Plan (or any part thereof) shall confer upon any individual any
right to continue in the employ or service of the Company or an
Affiliate or in any way affect any right and power of the Company
or an Affiliate to terminate the employment or service of any
individual at any time with or without assigning a reason therefor.
14.02. Unfunded Plan. The Plan, insofar as it provides for
grants, shall be unfunded, and the Company shall not be required to
segregate any assets that may at any time be represented by grants
under the Plan. Any liability of the Company to any person with
respect to any grant under the Plan shall be based solely upon any
62
contractual obligations that may be created pursuant to the Plan.
No such obligation of the Company shall be deemed to be secured by
any pledge of, or other encumbrance on, any property of the
Company.
14.03. Disposition of Stock. A Participant shall notify the
Administrator of any sale or other disposition of Common Stock
acquired pursuant to an Option that was an incentive stock option
if such sale or disposition occurs (i) within two years of the
grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing
and directed to the Secretary of the Company.
14.04. Rules of Construction. Headings are given to the
articles and sections of the Plan solely as a convenience to
facilitate reference. The reference to any statute, regulation, or
other provision of law shall be construed to refer to any amendment
to or successor of such provision of law.
14.05. Withholding Taxes. Each Participant shall be
responsible for satisfying any income and employment tax
withholding obligations attributable to participation in the Plan.
Unless otherwise provided by the Agreement, any such withholding
tax obligations may be satisfied in cash (including from any cash
payable in settlement of an SAR, Performance Share award, or
Incentive Award) or a cash equivalent acceptable to the Committee.
Any withholding tax obligations may also be satisfied by
surrendering shares of Common Stock to the Company, by withholding
or reducing the number of shares of Common Stock otherwise issuable
to the Participant upon the exercise of an Option or SAR, the
vesting of an award of Restricted Stock, or by any
63
other method as may be approved by the Committee. If shares of
Common Stock are used to pay all or part of such withholding tax
obligation, the Fair Market Value of the shares surrendered,
withheld or reduced shall be determined as of the day preceding
the date the Option or SAR is exercised, or the Restricted Stock
vests, as applicable.
14.06. Certain Reduction of Restrictive Payments. Any benefit,
payment, accelerated vesting or other right under the Plan may
constitute a "parachute payment" (as defined in Code section
280G(b)(2)(A), but without regard to Code section
280G(b)(2)(A)(ii)), with respect to a Participant and the
Participant may incur a liability under Code section 4999. In
accordance with the terms of an Agreement, the Company may reduce
or adjust any such parachute payments.
ARTICLE XV
AMENDMENT
---------
The Board may amend the Plan from time to time or
terminate it; provided, however, that no amendment may become
effective until shareholder approval is obtained if (i) the
amendment increases the aggregate number of shares of Common Stock
that may be issued under the Plan or (ii) the amendment changes the
class of individuals eligible to become Participants. No amendment
shall, without a Participant's consent, adversely affect any rights
of such Participant under any outstanding Restricted Stock award,
Performance Share award, Incentive Award or under any Option or SAR
outstanding at the time such amendment is made.
64
ARTICLE XVI
DURATION OF PLAN
----------------
No Performance Shares or shares of Restricted Stock may
be awarded and no Option, SAR, or Incentive Award may be granted or
made under the Plan more than ten years after the earlier of the
date that the Plan is adopted by the Board or the date that the
Plan is approved by shareholders as provided in Article XVII.
Awards of Restricted Stock, Performance Shares, Incentive Awards,
and Options and SARs granted before that date shall remain valid in
accordance with their terms.
ARTICLE XVII
EFFECTIVE DATE OF PLAN
----------------------
Shares of Restricted Stock and Performance Shares may be
awarded and Options, SARs, and Incentive Awards may be granted or
made under the Plan upon its adoption by the Board, provided that
no Restricted Stock award, Performance Share award, Incentive
Award, Option or SAR will be effective unless the Plan is approved
by a majority of the votes cast by the Company's shareholders,
voting either in person or by proxy, at a duly held shareholders'
meeting provided that the total vote cast for or against adoption
of the Plan represents over 50% of the outstanding Common Stock.