MOSINEE PAPER CORPORATION
1994 EXECUTIVE STOCK OPTION PLAN
As last amended effective
March 4, 1999
MOSINEE PAPER CORPORATION
1994 EXECUTIVE STOCK OPTION PLAN
Mosinee Paper Corporation, a corporation with its principal place
of business located in Mosinee, Wisconsin (the "Company"), hereby
adopts the Mosinee Paper Corporation 1994 Executive Stock Option Plan
(the "Plan"), as set forth herein.
Section 1. PURPOSE. The Plan is intended to attract and retain
key executive employees by permitting such employees of Mosinee Paper
Corporation (the "Company") or any parent or subsidiary of the Company
to acquire authorized and unissued, or reacquired, shares of common
stock of the Company pursuant to purchase options. The availability
of the options and grants thereof will furnish additional inducements
to such employees to continue employment with the Company, or any
parent or subsidiary of the Company, and encourage them, by giving them
an opportunity to acquire a greater stake in the Company's success, to
increase their efforts to promote the best interests of the Company
and its stockholders.
It is the express intent of the Company that, subject to Section
6.2(g) hereof, all options granted hereunder designated "Incentive
Stock Options" shall meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
successor section or sections. It is the further intent of the
Company that options granted
-1-
hereunder designated "Non-Qualified Stock Options" shall not meet the
requirements of Section 422 of the Code. A key employee may be granted
and may hold one or more options under this Plan.
Section 2. NUMBER OF SHARES AVAILABLE FOR OPTIONS. The aggregate
number of shares of common stock, no par value, of the Company (the
"Shares") which may be issued under options granted pursuant to the
Plan shall be 100,000.
Section 3. ADMINISTRATION OF THE PLAN.
Section 3.1 GENERAL. The Plan shall be administered by a
committee (the "Committee") consisting of at least two members
designated by the Board of Directors of the Company from among those
of its members who are not officers or employees of the Company or a
parent or subsidiary of the Company and who otherwise satisfy the
definition of a "Non-Employee Director" in Rule 16b-3(b)(3) promulgated
under Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act"). In the absence of specific rules to the contrary, action by the
Committee shall require the consent of a majority of the members of the
Committee, expressed either orally at a meeting of the Committee or in
writing in the absence of a meeting.
Section 3.2 AUTHORITY OF COMMITTEE. The Committee shall have full
and complete authority to grant options to such eligible employees on
-2-
such terms, which need not be the same as to all Optionees, as will, in
its discretion and subject only to the specific limitations elsewhere
contained in the Plan, carry out the purpose of the Plan. The
Committee shall also have full and complete authority to interpret the
Plan and adopt rules governing the administration of the Plan. The
Committee's decision on any matter with respect to the Plan shall be
final.
Section 3.3 INDEMNIFICATION OF COMMITTEE. To the extent permitted
by applicable law, the members of the Committee and each of them shall
be indemnified and saved harmless by the Company from any liability or
claim of liability which may arise from the administration of the Plan
if the acts giving rise to such liability or claim of liability were
taken in good faith and without negligence.
Section 4. ELIGIBLE EMPLOYEES.
Section 4.1 DEFINITION OF ELIGIBLE EMPLOYEES. Subject to the
limitations of Section 4.2, key employees (who may also be officers or
directors) of the Company (or any parent or subsidiary of the Company)
shall be eligible to participate in the Plan. For purposes of the
Plan, the term "key employee" shall include all employees of all
participating employers employed in management, administrative or
professional capacities.
-3-
Section 4.2 LIMITATIONS ON ELIGIBILITY. Directors of the Company
(or its parent or subsidiary) who are not also employees of such entity
shall not be eligible to receive options under the Plan. No person who
is serving as a member of the Committee shall be eligible to receive an
option; provided, however, that options outstanding prior to an
Optionee's becoming a member of the Committee shall remain in effect.
Section 5. GRANTING OF OPTIONS. Subject to the limitations of
Section 4.2, options to purchase Shares shall be granted to such key
employees who are eligible to participate in the Plan as the Committee
may, from time to time and at any time, select. Membership in a class
of eligible key employees shall not, without specific Committee action,
entitle a key employee to receive an option to purchase Shares.
Eligible key employees selected by the Committee shall be referred to
herein as "Optionees." Options to purchase Shares which are granted
prior to the approval of the Plan by the Company's stockholders shall
be expressly conditioned upon such approval.
Section 6. TERMS AND CONDITIONS OF THE OPTIONS.
Section 6.1 WRITTEN INSTRUMENT. Each option to purchase Shares
granted under the Plan shall be evidenced by a written option agreement
signed on behalf of the Company and the Optionee which sets forth the
name of the Optionee, the date granted, the price at which the Shares
-4-
subject to the option may be purchased (the "option price"), whether
the option is an Incentive Stock Option or a Non-Qualified Stock
Option, the number of Shares subject to the option and such other terms
and conditions consistent with the Plan as determined by the Committee.
The Committee may at the time of grant or at any time thereafter impose
such additional terms and conditions on the exercise of such option as
it deems necessary or desirable for compliance with Section 16 of the
Exchange Act and the regulations promulgated thereunder. Such option
agreement shall incorporate by reference all terms, conditions and
limitations set forth in the Plan.
Section 6.2 TERMS AND CONDITIONS OF THE OPTIONS. In addition to
any other limitations, terms and conditions specified in the Plan, each
option granted hereunder shall, as to each Optionee, satisfy the
following requirements:
(a) DATE OF GRANT. Options must be granted on or before October
19, 2004.
(b) EXPIRATION. No Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such option is granted.
No Non-Qualified Stock Option shall be exercisable after the expiration
of twenty years from the date such option is granted.
(c) PRICE. The option price as to any Share subject to either an
Incentive Stock Option or Non-Qualified Stock Option will be not less
-5-
than one hundred percent of the fair market value of the Share on the
date the option is granted. For purposes of the Plan, the fair market
value of a Share means:
(i) The mean between the high and the low prices at which the
Shares were traded if the Shares were then listed for trading
on a national or regional securities exchange or were then
traded on a bona fide over-the-counter market; or
(ii) If the Shares were not traded on an exchange or a bona fide
over-the-counter market, a value determined by an appraiser
selected by the Committee.
In the event that the date on which the fair market value of a Share is
to be determined is a date on which there is no trading of the Shares
on a national or regional securities exchange or on the
over-the-counter market, such fair market value shall be determined by
referring to the next preceding business day on which trading occurs.
(d) TRANSFERABILITY.
(i) No Incentive Stock Option shall be transferable by the
Optionee otherwise than by will or the laws of descent and
distribution nor can it be exercised by anyone other than the
Optionee during the Optionee's lifetime.
(ii) The Committee may, in its discretion, authorize all or a
portion of any options to be granted to an Optionee or which
were granted to any Optionee on or before October 31, 1996 to
-6-
permit transfer by the Optionee to (A) the spouse, children or
grandchildren of the Optionee ("Immediate Family"), (B) a
trust for the exclusive benefit of the Optionee or the
Optionee's Immediate Family, (C) a partnership in which the
Optionee or the Optionee's Immediate Family are the only
partners, or (D) to a former spouse of the Optionee pursuant
to a domestic relations order within the meaning of Rule
16a-12 promulgated under Section 16 of the Exchange Act;
provided, however, that (X) there may be not consideration for
any such transfer, (Y) the written option agreement required
by Section 6.1, or any amendment thereof approved by the
Committee, must expressly provide for transferability of the
option evidenced in such agreement in a manner consistent with
this Section 6.2(d), and (Z) once transferred pursuant to the
preceding provisions of the Section 6.2(d)(ii), no subsequent
transfer of any options shall be permitted except a transfer
by will or the laws of descent and distribution. In
authorizing all or any portion of an option to be transferred,
the Committee may impose any conditions on exercise, prescribe
a holding period for the Shares acquired upon such exercise
and/or impose any other conditions or limitations it deems
desirable or necessary in order to carry out the purposes and
requirements of the Plan. Following transfer, the
-7-
terms and conditions of the plan and the written option
agreement relating to such option shall continue to be
applicable in all respects to the Optionee making such
transfer and each transferred option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer as if such option had not been
transferred, including, but not limited to, the terms and
conditions with respect to the lapse and termination of such
option. For purposes of Section 7, the transferee of an
option shall be deemed an "Optionee". Neither the Company,
the Committee or any Optionee shall have any obligation to
inform any transferee of the termination or lapse of any
option for any reason. Notwithstanding any other provision of
the plan, (YY) following the termination of employment of an
Optionee, a transferred Non-Qualified Option shall be
exercisable by the transferee only to the extent, and
for the periods specified in Section 6(e) as if such option
had not been transferred and (ZZ) no Non-Qualified Stock
Option granted prior to October 31, 1996 may be transferred
until such option has been held by the Optionee for a period
of not less than six months after the date on which such
option was granted.
(e) EMPLOYMENT. Except as otherwise provided in the next
sentence, no option shall be exercisable unless the Optionee
shall have been employed by the Company (or any present or
future parent or subsidiary of
-8-
the Company) during the period beginning on the date the option is
granted and ending on a date ninety days before the date of exercise
(and subject to Section 10 herein); provided, however, that in the
event an Optionee dies while in the employ of the Company (or any
present or future parent or subsidiary of the Company) or within ninety
days after such employment had terminated, the employment period
requirement described above shall be deemed to have been satisfied. In
the event an Optionee has attained his Retirement Date (as defined
herein), (i) the provisions of the preceding sentence shall not be
applicable to such Optionee's Non-Qualified Stock Options and (ii) such
Optionee's Non-Qualified Stock Options shall not be exercisable after
the second anniversary of such Optionee's Retirement Date. For
purposes of this Plan, the term "Retirement Date" shall mean the date
on which the Optionee's employment with the Company (and any parent or
subsidiary of the Company) terminates (including termination because of
death) if the Optionee had then attained age 55 and completed ten
calendar years of service with the Company (or any parent or subsidiary
of the Company).
(f) MINIMUM HOLDING PERIOD. No option granted prior to November
1, 1996 may be exercised before the date which is six months after the
date on which such option was granted. Each option shall contain such
additional or other restriction or restrictions with respect to the
stated percentage of Shares covered by such option as to which such
option may be
-9-
exercised as the Committee may deem desirable or necessary in order to
carry out the purposes and requirements of the Plan.
(g) LIMITATION ON OPTION GRANTS. No Optionee may be granted
options in any calendar year with respect to more than 50,000 shares.
(h) ADDITIONAL RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS.
To the extent that the aggregate fair market value (determined as of
the time the option is granted) of the Shares for which Incentive Stock
Options are exercisable for the first time by an individual during any
calendar year (under this Plan or any other plan of the Company or any
of its subsidiaries) exceeds $100,000 (or such other individual limit
as may be in effect under the Code on the date of grant), such options
shall not be Incentive Stock Options. No Incentive Stock Option shall
be granted to an employee who, at the time such option is granted, owns
stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or any parent or
subsidiary of the Company within the meaning of Section 422(b)(6) of
the Code unless: (i) at the time the option is granted, the option
price is at least one hundred ten percent of the fair market value of
the Shares subject to the option, and (ii) such option by its terms is
not exercisable after the expiration of five years from the date
such option is granted.
Section 7. EXERCISE AND PAYMENT OF OPTION PRICE.
-10-
Section 7.1 EXERCISE OF OPTIONS. Options shall be exercised as to
all or a portion of the Shares by delivery of an irrevocable written
notice to the Company setting forth the exact number of Shares as to
which the option is being exercised and including with such notice
payment of the option price (plus minimum required tax withholding).
The date of exercise shall be the date such written notice and payment
have been delivered to the Secretary of the Company either in person or
by depositing said notice and payment in the United States mail,
postage pre-paid and addressed to such officer at the Company's home
office. No option may be exercised with respect to a fractional share
of stock. Notwithstanding the fact that an option has been transferred
pursuant to Section 6.2(d)(ii), the grantee of such option shall remain
liable for any required tax withholding.
Section 7.2 PAYMENT FOR SHARES. Payment of the option price (plus
minimum required tax withholding) may be made by (a) tendering cash (in
the form of a check or otherwise) in such amount, or (b) with the
consent of the Committee, tendering Shares with a fair market value on
the date of exercise equal to such amount, or (c) delivering a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the sale or loan proceeds
equal to such amount. Notwithstanding the fact that an option has been
transferred pursuant to Section 6.2(d)(ii), the grantee of such option
shall remain liable for any required tax withholding.
-11-
Section 8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the
Company shall, after the Effective Date, change its common stock into a
greater or lesser number of shares through a stock dividend, stock
split-up or combination of shares, then
(i) the number of Shares then subject to the plan but which are
not then subject to any outstanding option;
(ii) the number of Shares subject to each then outstanding option
(to the extent not previously exercised); and
(iii) the price per Share payable upon exercise of each then
outstanding option.
shall all be proportionately increased or decreased as of the record
date for such stock dividend, stock split-up or combination of shares
in order to give effect thereto. Notwithstanding any such
proportionate increase or decrease, no fraction of a Share shall be
issued upon the exercise of an option. If any split-up or combination
of shares shall involve a change of par value, the Shares subject to
options theretofore or thereafter granted shall be the Shares as so
changed.
If, after the Effective Date, there shall be any change in the
stock of the Company other than through a stock dividend, stock
split-up or combination of shares, or other change listed in Section 9
herein, then if (and only if) the Committee shall determine that such
change equitably requires an adjustment in the number or kind or option
price of Shares then subject to an option, or the number or kind of
Shares remaining subject to the Plan, such adjustment as the Committee
shall determine is
-12-
equitable and as shall be approved by the Board shall be made and shall
be effective and binding for all purposes of such option and the Plan.
If any member of the Board shall, at the time of such approval, be an
Optionee, he shall not participate in action in connection with such
adjustment.
Section 9. MERGER, REORGANIZATION, OR CHANGE IN CONTROL.
(a) Nothing contained in this Plan or in any option granted under
the Plan shall in any way prohibit the Company from merging with or
consolidating into another corporation, or from selling or transferring
all or substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in liquidation, or
from dissolving and terminating its corporate existence; and in any
such event (other than a merger in which the Company is the surviving
corporation and after which the Company remains an independent,
publicly held corporation), the Company or any surviving party to any
such merger, consolidation, or sale or transfer of assets may provide
by resolution of its Board of Directors that all rights of the person
or persons entitled to exercise then outstanding options granted under
the Plan, and such options, shall wholly and completely terminate at
the time of any such merger, consolidation, sale or transfer of assets,
liquidation, or dissolution, except that adequate provision for such
person or persons shall be made in accordance with paragraph (b) below.
(b) In the event that (i) any individual, corporation, partnership
or other person or group of persons or entities becomes the beneficial
-13-
owner, directly or indirectly, of 45% or more of the Company's then
outstanding common stock ("Change in Control" or (ii) any merger,
consolidation, liquidation, dissolution or termination after which the
Company will not survive as an independent, publicly-owned corporation
or any sales or transfer of all or substantially all of the Company's
assets ("Reorganization") occurs, then the Company shall pay with
respect to each outstanding option under this Plan an amount equal to
(x) the difference between the Fair Market Value (as defined in (c)
below) and exercise price of the option, multiplied by (y) the number
of Shares subject to such option. Such payment shall be made in cash
within 30 days after, in the case of a Reorganization requiring
approval by the Company stockholders, the date of such approval and, in
the case of a Change in Control, the date upon which such change
occurs.
(c) Solely for purposes of (b) above, "Fair Market Value" shall
mean the greater of (i) the highest price per share of the Company's
common stock paid by the acquiring person within twelve months of the
occurrence of the Change in Control to effect such change or provided
for in any agreement for the Reorganization, or (ii) fair market value
determined in accordance with Section 6.2(c) of this Plan.
Section 10. TERMINATION OR LAPSE OF OPTIONS. Each option shall
terminate or lapse upon the first to occur of (a) the expiration date
set forth in the applicable Stock Option Agreement, (b) the applicable
-14-
date set forth in Section 6.2(b), (c) the date of the Optionee's
voluntary resignation or termination for cause, or (d) the date which
is ninety days after the date of the Optionee's other termination of
employment with the Company or any present or future parent or
subsidiary of the Company; provided, however, that in the event of an
Optionee's death while in the employ of the Company or a parent or
subsidiary of the Company or, if the Optionee is no longer so employed,
in the event of the Optionee's death within ninety days after such
employment had terminated, an option may be exercised, to the extent
exercisable by the Optionee immediately prior to his death, in whole or
in part by the Optionee's estate or designee by will, or, if
applicable, the transferee of such option pursuant to Section 6.2(d)
but only if the date of exercise is on or before the first to occur of
(i) the expiration date set forth in the applicable Stock Option
Agreement, (ii) the applicable date set forth in Section 6.2(b), or
(iii) (A) for options subject to the first sentence of Section 6.2(e),
the date which is twelve months after the date of the Optionee's death,
and (B) for options subject to the second sentence of Section 6.2(e),
the second anniversary of the deceased Optionee's Retirement Date. For
purposes of this section, "for cause" shall mean affirmative acts in
violation of federal, state, or local criminal law.
-15-
Section 11. AMENDMENT AND TERMINATION OF PLAN.
Section 11.1 AMENDMENT OF PLAN. The Board of Directors of the
Company may amend the Plan from time to time and at any time; provided,
however, that no amendment shall adversely affect any option which has
been granted prior to the amendment and no amendment with respect to
the maximum number of Shares which may be issued pursuant to options or
the class of eligible employees, or which materially increases benefits
accruing to Optionees under the Plan (within the meaning of section
162(m) of the Code) shall be effective unless approved by a majority of
the shares entitled to vote at a meeting of shareholders.
Section 11.2 TERMINATION OF PLAN. The Plan shall terminate on the
first to occur of (a) October 19, 2004 or (b) the date specified by the
Board of Directors of the Company as the effective date of Plan
termination; provided, however, that the termination of the Plan shall
not limit or otherwise affect any options outstanding on the date of
termination.
Section 12. EFFECTIVE DATE. The Effective Date of the Plan shall
be October 20, 1994, the date of approval by the Board of Directors of
the Company; provided, however, that neither the Plan nor grants made
under the Plan shall be effective unless the adoption of the Plan is
-16-
approved at the annual meeting of the Company's stockholders next
following such date by the majority of the shares entitled to vote
at such meeting.
Section 13. INVESTMENT INTENT. Shares acquired pursuant to the
exercise of an option, if not registered by the Company under the
Securities Act of 1933 (the "Act"), will be "restricted" stock which
will not be freely transferable by the holder after exercise of the
option. Each participating employee and assignee in interest of the
employee accordingly represents, as a condition of participation in the
Plan, that Shares which are unregistered under the Act are being
acquired for the Optionee's (or his assignee's) own account for
investment only and not with a view to offer for sale or for sale in
connection with the distribution or transfer thereof.
Section 14. AVAILABILITY OF INFORMATION. The Company shall
furnish each Optionee with (a) a copy of the Plan and the Company's
most recent annual report to its shareholders at the time the option
agreement provided for in Section 6.1 is executed by the Optionee and
(b) a copy of each subsequent annual report, on or about the same date
as such report shall be made available to shareholders of the Company.
The Company will furnish, upon written request addressed to the
Secretary of the Company, but at no charge to the Optionee or any duly
authorized representative of the Optionee, copies of all reports filed
by the Company with the Securities and Exchange Commission or the
commissioner of securities of
-17-
any state, including, but not limited to, the Company's annual reports
on Form 10-K, its quarterly reports on Form 10-Q, and its proxy
statements.
Section 15. CONDITIONS OF EMPLOYMENT. Participation in or
eligibility for participation in the Plan shall not confer upon any
employee the right to be continued as an employee of the Company or any
present or future parent or subsidiary of the Company and the Company
and its participating subsidiaries hereby expressly reserve the right
to terminate the employment of any employee, with or without cause,
regardless of the Plan and any options granted pursuant to it.
Section 16. MISCELLANEOUS.
(a) The transfer of an employee from the Company to a parent or
subsidiary of the Company or from a parent or subsidiary of the Company
to the Company or another parent or subsidiary of the Company shall not
be a termination of employment or an interruption of continuous
employment for the purpose of the Plan.
(b) As used in the Plan, the term "parent" and "subsidiary" shall
have the meanings ascribed to them in Sections 421, 422A and 425 of the
Code.
Section 17. GOVERNMENT APPROVALS. If at any time the Company
shall be advised by its counsel that the exercise of any option or the
-18-
delivery of shares of Stock upon the exercise of an option is required
to be approved, registered or qualified under any applicable law, or
must be accompanied or preceded by a prospectus or similar circular
meeting the requirements of any applicable law, the Company will use
reasonable efforts to obtain such approval, to effect such
registrations and qualifications, or to provide such prospectus or
similar circular within a reasonable time, but exercise of the options
or delivery by the Company of certificates for shares of Stock may be
deferred until such approvals, registrations or qualifications are
effected, or until such prospectus or similar circular is available.
Section 18. Notwithstanding any other provision of this Plan or of
any option agreement relating to any option granted hereunder, the
consummation of the transactions contemplated by that certain Agreement
and Plan of Merger, dated as of August 24, 1997, by and among Wausau
Paper Mills Company, WPM Holdings, Inc. and the Company on
substantially the terms and conditions set forth therein as of August
24, 1997 shall not be deemed to constitute a "Change in Control" or any
other transaction described in Section 11(b) of this Plan and of any
corresponding or similar provision of any such option agreement.
Without limiting the generality of the foregoing, the consummation of
such transactions shall not result in the payment of any cash to any
holder of an option granted under this Plan.
-19-
AMENDMENT TO
MOSINEE PAPER CORPORATION
1994 EXECUTIVE STOCK OPTION PLAN
Amendment adopted March 4, 1999, replacing the provisions of Section 9
in its entirety with the following:
Section 9. CHANGE IN CONTROL.
Section 9.1 DEFINITION OF "CHANGE IN CONTROL." For purposes of
the Plan, a "Change in Control" means the happening of any of the
following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock the "Outstanding Corporation
Common Stock")of Wausau-Mosinee Paper Corporation(the "Corporation") or
(ii) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the
election of directors (the "Outstanding Corporation Voting
Securities"); excluding, however, the following: (A) any acquisition
directly from the Corporation other than an acquisition by
-20-
virtue of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the Corporation,
(B) any acquisition by the Corporation, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any entity controlled by the Corporation, (D) any
acquisition pursuant to a transaction which complies with clauses (i),
(ii), and (iii) of paragraph (c) of this Section 15.1, (E) except as
provided in paragraphs (d) and (e), any acquisition by any of the
Woodson Entities or any of the Smith Entities, or (F) any increase in
the proportionate number of shares of Outstanding Corporation Common
Stock or Outstanding Corporation Voting Securities beneficially owned
by a Person to 20% or more of the shares of either of such classes of
stock if such increase was solely the result of the acquisition of
Outstanding Corporation Common Stock or Outstanding Corporation Voting
Securities by the Corporation; provided, however, that this clause (F)
shall not apply to any acquisition of Outstanding Corporation Common
Stock or Outstanding Corporation Voting Securities not described in
clauses (A), (B), (C), (D), or (E) of this paragraph (a) by the Person
acquiring such shares which occurs after such Person had become the
beneficial owner of 20% or more of either the Outstanding Corporation
Common Stock or Outstanding Corporation Voting Securities by reason of
share purchases by the Corporation; or
(b) A change in the composition of the Board of Directors of the
Corporation (for purposes of this Section 9, the "Board") such that the
-21-
individuals who, as of the Effective Date, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of the Plan, that any individual who
becomes a member of the Board subsequent to the Effective Date whose
election, or nomination for election by the Corporation's shareholders,
was approved by a vote of at least a majority of those individuals who
are members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) shall be deemed
to be and shall be considered as though such individual were a member
of the Incumbent Board, but provided, further, that any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so deemed or
considered as a member of the Incumbent Board; or
(c) Consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the assets of
the Corporation or the acquisition of the assets or securities of any
other entity (a "Corporate Transaction"); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially all
-22-
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) (the "Resulting Corporation") in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (ii) no
Person (other than the Corporation, any employee benefit plan (or
related trust) of the Corporation, any Woodson Entity, any Smith
Entity, or such Resulting Corporation) will beneficially own, directly
or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the Resulting Corporation or the combined voting power
of the then outstanding voting securities of such Resulting Corporation
entitled to vote generally in the election of directors except to the
extent that such ownership existed with respect to the Corporation
-23-
prior to the Corporate Transaction, and (iii) individuals who were
members of the Incumbent Board will constitute at least a majority
of the members of the board of directors of the Resulting Corporation;
or
(d) The Woodson Entities acquire beneficial ownership of more than
35% of the Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities or of the outstanding shares of common
stock or the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the Resulting Corporation; or
(e) The Smith Entities acquire beneficial ownership of more than
35% of the Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities or of the outstanding shares of common
stock or the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the Resulting Corporation; or
(f) The approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
For purposes of this Section 9.1, the term "Woodson Entities" shall
mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice Richardson
Yawkey, members of their respective families and their respective
-24-
descendants (the "Woodson Family"), heirs or legatees of any of the
Woodson Family members, transferees by will, laws of descent or
distribution or by operation of law of any of the foregoing (including
of any such transferees) (including any executor or administrator of
any estate of any of the foregoing), any trust established by any of
Aytchmonde P. Woodson, Leigh Yawkey Woodson, or Alice Richardson
Yawkey, whether pursuant to last will or otherwise, any partnership,
trust or other entity established primarily for the benefit of, or any
other Person the beneficial owners of which consist primarily of, any
of the foregoing or any Affiliates or Associates of any of the
foregoing or any charitable trust or foundation to which any of the
foregoing transfers or may transfer securities of the Corporation
(including any beneficiary or trustee, partner, manager or director of
any of the foregoing or any other Person serving any such entity in a
similar capacity).
For purposes of this Section 9.1, the term "Smith Entities" shall
mean David B. Smith and Katherine S. Smith, members of their respective
families and their respective descendants (the "Smith Family"), heirs
or legatees of any of the Smith Family members, transferees by will,
laws of descent or distribution or by operation of law of any of the
foregoing (including of any such transferees) (including any executor
or administrator of any estate of any of the foregoing), any trust
-25-
established by either of David B. Smith or Katherine S. Smith, whether
pursuant to last will or otherwise, any partnership, trust or other
entity established primarily for the benefit of, or any other Person
the beneficial owners of which consist primarily of, any of the
foregoing or any Affiliates or Associates of any of the foregoing or
any charitable trust or foundation to which any of the foregoing
transfers or may transfer securities of the Corporation (including any
beneficiary or trustee, partner, manager or director of any of the
foregoing or any other Person serving any such entity in a similar
capacity).
For purposes of this Section 9.1, the terms "Affiliate" and
"Associate" shall have the meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange Act as
in effect on the date of this Plan.
Section 9.2 EFFECTS OF CHANGE IN CONTROL.
(a) In the event of a Change in Control,
(i) all options outstanding on the date on which such Change in
Control has occurred (the "Change in Control Date") shall, to
the extent not then exercisable or vested, immediately become
exercisable in full, and
-26-
(ii) each Optionee may elect, with respect to each option held by
such Optionee on the Change in Control Date (the Optionee's
"Election Right"), to surrender such option for an immediate
lump sum cash payment in an amount equal to the product of (A)
the number of shares of common stock of the Corporation (for
purposes of this Section 9.2, "Shares") then subject to the
option as to which the election is being exercised, multiplied
by (B) the excess, if any, of (1) the greater of (a) the
Change in Control Price or (b) the highest fair market value
of a Share on any day in the 60-day period ending on the
Change in Control Date, over (2) the option price of such
option. For purposes of this Section 9.2, the "Change in
Control Price" shall mean, if the Change in Control is the
result of a tender or exchange offer or a Corporate
Transaction (as defined in Section 9.1(c), the highest price
per Share paid in such tender or exchange offer or Corporate
Transaction; provided, however, that in the case of Incentive
Stock Options, the Change in Control Price shall be in all
cases the fair market value of the Shares on the date such
Incentive Stock Option is exercised. To the extent that the
consideration paid in any such transaction consists all or in
part of securities or other noncash consideration, the value
-27-
of such securities or other noncash consideration shall be
determined in the sole discretion of the Committee.
(b) The exercise of an Election Right must be in writing, specify
the option or options and the number of Shares as to which the
election is being exercised, and be delivered to the Secretary
of the Corporation either in person or by depositing said
notice and payment in the United States mail, postage pre-paid
and addressed to such officer at the Corporation's home office
on or before the 60th day following the Change in Control
Date.
(c) All payments due an Optionee pursuant to the provisions of
this Section 9.2 shall be made by the Corporation on or before
the 5th business day following the date on which the
Optionee's election has been delivered to the Corporation
pursuant to Section 9.2(b).
(d) Notwithstanding any other provision of this Section 9.2, if
the grant or the exercise of an Optionee's Election Right or
payment of cash provided for in Section 9.2(b) would make a
Change in Control transaction ineligible for
pooling-of-interests accounting treatment under APB No. 16,
that, but for the nature of such grant or exercise of Election
Rights or payment of cash, would otherwise be eligible for
such pooling-of-interests accounting treatment, the Committee
shall have the right and authority to
-28-
substitute for the cash payments to be made to the Optionee
pursuant to Section 9.2(a), Shares with a fair market value,
determined as of the date of delivery of such Shares, equal to
the cash that would otherwise be payable to such Optionee in
connection with the exercise of an Optionee's Election Right
hereunder or, to the extent necessary to preserve such
pooling-of-interests accounting treatment, to otherwise modify,
eliminate, or terminate such Election Right.
-29-