INCENTIVE STOCK PLAN OF
EAGLE-PICHER INDUSTRIES, INC.
Section 1. Purpose. The Incentive Stock Plan is intended to further the
attainment of the profit and growth objectives of Eagle-Picher Industries, Inc.
(the "Company") by providing incentive to those key executives whose management
and individual performance have a direct impact on achieving those objectives.
The Plan also is expected to encourage the continued employment of the Company's
key executives and to facilitate the recruiting of executive personnel in the
future. The Plan is not intended to be an "employee pension benefit plan" within
the meaning of Section 3 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
Section 2. Definitions. As used herein, the following terms shall have
the following meanings:
(a) "Affiliate" means any entity if, (i) the Company, directly or
indirectly, owns at least 50% of the combined voting power of all classes of
stock of such entity or at least 50% of the ownership interests in such entity,
(ii) such entity, directly or indirectly, owns at least 50% of the combined
voting power of all classes of stock of the Company, or (iii) such entity is at
least 50% owned (directly or indirectly) by one or more entities described in
(i) or (ii) above.
(b) "Agreed Share Price" means a US Dollar cash price per share of
Restricted Stock equal to the quotient of (A) the excess of (i) the sum of 6.54
times EBITDA for the Company's and the Company's Subsidiaries' most recently
ended fiscal year plus cash and cash equivalents of the Company and the
Company's Subsidiaries (but only to the extent the total of such cash and cash
equivalents exceeds $15 million) over (ii) the principal amount of outstanding
debt of the Issuer and its Subsidiaries owing to banks, or owing with respect to
securities issued by the Issuer or by any Subsidiary of the Issuer and the
aggregate liquidation preference of all outstanding preferred stock issued by
the Parent; divided by (B) the product of (i) the total number of outstanding
shares of Common Stock of the Company, on a fully diluted basis as if all
outstanding options on such Common Stock had been exercised in full, times (ii)
the share (expressed as a percentage) of the number of shares of Common Stock of
the Company described in (B)(i) above that is held directly or indirectly
through one or more intervening entities by the Issuer. The calculation of
Agreed Share Price shall be as of the Company's and the Company's Subsidiaries'
most recently ended fiscal year.
(c) "Award Date" of Units is the date the Committee resolves in writing
to award the Units to a Participant.
(d) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the Participant's rights under
the Plan upon the Participant's death, or, if there is no such designation or no
such designated person survives the Participant, then the person, persons,
trust or trusts entitled by will or applicable law to receive such rights or, if
no such person has such right then the Participant's executor or administrator.
(e) "Change of Control Date" shall mean the date as of which (i) any
person who as of February 25, 1998 does not beneficially own, directly or
indirectly, voting stock of the Company shall acquire (including by purchase or
merger) direct or indirect beneficial ownership of more than 50% of the voting
stock of the Company (or any successor of the Company) or (ii) substantially all
of the assets of the Company are sold, disposed of or liquidated.
(f) "Committee" shall mean the committee described in Section 3.
(g) "Company" shall mean Eagle-Picher Industries, Inc., or any successor
corporation.
(h) "EBITDA" (except to the extent modified according to Section 3(c) if
applicable) shall have the meaning such term has in the Credit Agreement among
E-P Acquisition, Inc., various lenders, and ABN AMRO Bank N.V. as Agent, dated
February 19, 1998.
(i) "Incapacitated" shall mean permanently and totally disabled within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended.
(j) "Issuer" shall mean Granaria Industries B.V., a Dutch corporation.
(k) "Parent" shall mean Eagle-Picher Holdings, Inc.
(l) "Participant" shall mean any senior officer or senior manager
(including a consultant) of the Company or of a Subsidiary or Affiliate of the
Company who is a member of a select group of executives and who, in the opinion
of the Committee, is in a position to have a direct and significant impact on
achieving the Company's profit and growth objectives and whom the Committee
designates as a Participant.
(m) "Plan" shall mean this Incentive Stock Plan in its entirety,
including any amendments, rules and regulations adopted pursuant hereto.
(n) "Restricted Stock" means non-voting certificates of beneficial
ownership ("certificaten van aandalen") in a voting trust ("stichting
administratie kantoor") established under Dutch law for the purpose of holding
Class B shares of the Issuer. A share of Restricted Stock is an amount of
Restricted Stock that represents a beneficial ownership interest in the voting
trust corresponding to one Class B share of the Issuer.
(o) "Subsidiary" of any person shall mean any entity in which the person
owns, directly or indirectly, at least 50% of the combined voting power of all
classes of stock in such entity or at least 50% of the ownership interests in
such entity.
(p) "Trust" shall mean the Eagle-Picher Management Trust established
under a trust agreement dated February 17, 1998, with Thomas E. Petry, Joel P.
Wyler and Andries Ruijssenaars as Trustees.
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(q) "Unit" shall mean a unit representing the right, subject to the
provisions of the Plan, to receive from the Trust one share of Restricted Stock,
which right has been awarded to a Participant pursuant to the Plan.
Section 3. Administration.
(a) The Committee shall be composed of three individuals each of whom
shall continue to serve until he resigns, dies or is Incapacitated. Initially,
the members of the Committee shall be Thomas E. Petry, Joel P. Wyler and Andries
Ruijssenaars, each of whom shall continue to serve until he resigns, dies or is
Incapacitated. In the event that either Mr. Petry or Mr. Ruijssenaars shall
resign, die or be Incapacitated, the remaining members of the Committee shall
appoint his successor. In the event that Mr. Wyler shall resign, die, or be
Incapacitated, his successor shall be appointed by the Issuer.
(b) The Plan shall be administered by and in the sole discretion of the
Committee which, by vote of a majority of the members, but only if Mr. Wyler (or
his successor appointed by the Issuer) is included in the majority, may
establish such rules and regulations as it deems necessary, make amendments
consistent with Section 11(d), make adjustments in the calculation of EBITDA
pursuant to Section 3(c), appoint successor Trustees (except as provided in the
last sentence of paragraph (a)), interpret the Plan and otherwise make all
determinations and take such action in connection with the Plan as it deems
appropriate. It is intended that the total number of Units awarded under the
Plan shall be not less than 1600; no member of the Committee shall exercise his
power to vote against the awarding of Units for the sole purpose of preventing
the eventual award of a total of 1600 Units.
(c) From time to time, the Committee in its sole discretion may make
adjustments in the Company's consolidated earnings derived from operations
before interest, taxes, depreciation and amortization determined in accordance
with GAAP for purposes of calculating EDITDA so that changes in accounting
principles; extraordinary or unusual charges or credits; acquisitions, mergers,
consolidations, and other corporate transactions; and other elements or factors
influencing calculation of EBITDA do not distort or affect the operation of the
Plan in a manner inconsistent with the achievement of its purposes.
(d) The decisions of the Committee shall be final, conclusive, and
binding upon all parties. In administering the Plan, the Committee may employ
accountants and counsel (who may be the independent auditors and outside counsel
for the Company or Issuer) and other persons to assist or render advice to it,
all at the expense of the Company or Issuer
Section 4. Eligibility.
(a) The Committee shall designate those persons who shall be
Participants and shall award Units to each Participant. Upon designating a
Participant, the Committee shall classify the Participant for purposes of the
Plan as either a Senior Officer or as a Senior Manager.
(b) The Committee shall record the designation and classification of a
Participant and the award of Units, in writing and shall notify the affected
Participant of such designation and award
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in writing. The Committee may at any time increase the number of Units awarded
to a Participant.
Section 5. Vesting. One half of a Senior Officer's Units will vest on
each of the 30th day after the Award Date of the Units and the second
anniversary of the Award Date. One fourth of a Senior Manager's Units will vest
on each of the 30th day after the Award Date and the first three anniversaries
of the Award Date. In the event that a Participant ceases to be an employee of
the Company and any Affiliate for any reason other than by reason of death or
being Incapacitated, any of the Participant's Units that have not yet vested as
of the date of such termination of his employment shall be forfeited and
cancelled. By written notice to the Participant at the time he is notified of
the award, the Committee may determine to apply a different vesting schedule to
the Units awarded. The Units of a Participant who dies or is Incapacitated while
employed by the Company or any Affiliate shall be immediately 100% vested as of
the date of death or incapacity. The Units of a Participant who is employed by
the Company or any Affiliate on any Change of Control Date shall be immediately
100% vested as of the Change of Control Date. At any time, the Committee may
accelerate the vesting schedule applicable to a particular Participant by
notifying the Participant in writing.
Section 6. The Trust. The Issuer has established the Trust for the
benefit of the Participants. Upon adoption of this Plan by the Board of
Directors of the Company, the Company shall transfer to the Trust not less than
$10 million to fund the Trust's purchase of Restricted Stock from the Issuer and
the Trust's expenses related to such purchase.
Section 7. Payout of Units.
(a) Upon the earlier of the date as of which a Participant has become
100% vested in all his awarded Units or the date as of which the Participant
forfeited Units pursuant to Section 5, the Trustees shall transfer to the
Participant or, if the Participant has died, to his Beneficiary, a number of
shares of Restricted Stock equal to the number of the Participant's Units that
have vested. The right of a Participant to receive Restricted Stock pursuant to
the preceding sentence shall be conditioned on the Participant's execution of
the Shareholders' Agreement described herein.
(b) The Shareholders Agreement will be an agreement (in form and
substance satisfactory to the Committee) among Granaria Holdings B.V., the
Issuer, the Company, and holders of Restricted Stock whereby such holders
designate a custodian of their shares of Restricted Stock (who shall be
appointed by the Committee), and grant to Granaria Holdings B.V. or its designee
a right of first refusal of any sale of Restricted Stock to any person other
than the Company or the Issuer.
(c) The Shareholders Agreement will provide that upon 30 days' written
notice to the Senior Manager or his Beneficiary, the Issuer may require a Senior
Manager who is, or has given notice that he will be, no longer employed by the
Company or any Affiliate (or his Beneficiary) to sell to the Issuer or its
designee any or all Restricted Stock held by the Senior Manager or Beneficiary
for a cash price per share of Restricted Stock equal to the Agreed Share Price.
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(d) The Shareholders Agreement will provide that (i) any Beneficiary or
any Incapacitated Participant at any time, (ii) any Participant who at the time
he attained age 62 is or was employed by the Company or any Affiliate, (iii) any
Senior Manager who has held Units and the associated Restricted Stock for an
aggregate period of not less than 10 years, and (iv) any Participant whose
employment with the Company and any Affiliate is involuntarily terminated solely
because of the sale, liquidation, or other disposition of a Subsidiary or
because of the termination, sale, or other disposition of a business or division
of the Company or of a Subsidiary may require the Company to purchase all or any
part of the Restricted Stock tendered by such person for a cash purchase price
per share of Restricted Stock equal to the Agreed Share Price. To exercise the
right described in the previous sentence, the holder of Restricted Stock shall
give to the Company 60 days written notice. In the event that before the 60th
day after such notice, Granaria Holdings B.V. or its designee has not purchased
the tendered shares of Restricted Stock for the Agreed Share Price, the Company
shall purchase the shares of Restricted Stock for the Agreed Share Price. The
rights described in this subparagraph (d) will terminate and be ineffective in
the event either the Restricted Stock or the Class B shares of the Issuer become
publicly traded.
(e) The Shareholders' Agreement will provide that, without the written
consent of the Committee, except for transfers described in paragraphs (c) and
(d), no Restricted Stock may be sold or transferred by a Participant unless the
Participant has attained age 62 or is a Senior Manager who has held Units and
the associated Restricted Stock for an aggregate period of not less than 10
years. Unless held by the Trust, certificates for Restricted Stock shall bear a
legend referring to the transfer restrictions contained in the Shareholders'
Agreement.
Section 8. Dividends.
(a) In the event that the Trust receives a dividend paid with respect to
Restricted Stock, the Trustees shall pay to each Participant an amount that
bears the same ratio to the aggregate dividend received by the Trust that the
number of vested Units awarded to the Participant bears to the total number of
shares of Restricted Stock held by the Trust on which dividends were paid.
(b) At the time the Trustees transfer Restricted Stock to a Participant
or Beneficiary, the Trustees shall also transfer to the Participant or
Beneficiary cash equal to the aggregate amount of dividends received by the
Trust on such an amount of Restricted Stock less the amount of dividends
previously distributed to the Participant and his Beneficiary pursuant to
paragraph (a).
Section 9. Designation of Beneficiaries.
(a) Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive the
amount, if any, payable under the Plan upon his death. A Participant may, from
time to time, revoke or change his Beneficiary designation without the consent
of any prior Beneficiary by filing a new designation with the Committee. The
last such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death, and
in no event shall it be effective as of a date prior to such receipt.
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(b) If the Committee is in doubt as to the right of any person to
receive such amount, the Committee may retain such amount, without liability for
any interest thereon, until the rights thereon are determined, or the Committee
may pay such amount into any court of appropriate jurisdiction and such payment
shall be a complete discharge of the liability of the Plan, the Company, the
Issuer, the Trustees and the Committee therefor.
Section 10. Tax Reimbursement. At the time any Units awarded to a
Participant become vested, the Company or any Subsidiary shall reimburse the
Participant (in the amount required in the judgment of professional tax advisors
to the Committee) to equal the aggregate income tax liability of the Participant
with respect to the sum of the fair market value of newly vested Units and the
amount of such reimbursement. In their discretion, the Committee or its
professional tax advisors may consult with the Participant or the Participant's
tax advisor. The Company shall indemnify a Participant for any income taxes
imposed on the Participant with respect to both the vesting of Units and any
payment under this Section 10 (including an indemnity payment pursuant to this
sentence). The Company shall make no reimbursement pursuant to this Section 10
either (i) in respect of any income tax liability resulting from a Participant's
election under Section 83(b) of the Internal Revenue Code of 1986, as amended,
or (ii) for taxes resulting from the Participant's transfer of Units or an
interest in Restricted Stock to any person.
Section 11. Miscellaneous.
(a) The Plan, the awarding of Units thereunder, the issuance and
delivery of shares of Restricted Stock with respect to Units and the other
obligations of the Company, the Trustees and the Issuer under the Plan, shall be
subject to all applicable federal, state, and Dutch laws, rules and regulations,
and to such approvals by any regulatory or governmental agency as may be
required. The Trustees, in their discretion, may postpone the issuance and
delivery of shares of Restricted Stock with respect to Units until completion of
such stock exchange listing or registration or qualification of such stock or
securities or other required action under any state, federal or Dutch law, rule
or regulation as the Trustees may consider appropriate, and may require any
Participant or Beneficiary to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of stock or securities in compliance with applicable laws, rules and
regulations.
(b) Nothing in the Plan shall confer upon any Participant the right to
continue in the employ of, or to continue as a director of the Company, or any
Affiliate, as the case may be, or to be entitled to any remuneration or benefits
not set forth in the Plan or to interfere with or limit in any way the right of
the Company or any Affiliate to terminate such Participant's employment or
directorship.
(c) The Company or any Affiliate and the Trustees are authorized to
withhold from any payment of cash or issuance of shares of Restricted Stock with
respect to Units under the Plan, amounts of withholding and other taxes due in
connection with any transaction under the Plan, and to take such other action as
the Committee may deem advisable to enable the Company and a Participant to
satisfy obligations for the payment of withholding taxes and other tax
obligations
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relating to any Unit or shares of Restricted Stock. This authority shall include
authority to withhold or receive shares of Restricted Stock or other securities
or other property and to make cash payments in respect thereof in satisfaction
of a Participant's tax obligations.
(d) The Committee may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Participant without such Participant's consent.
(e) Except as provided in Section 4, no person shall have any claim to
Units under the Plan. Except as provided specifically herein, Participants shall
have no rights as a stockholder with respect to any shares of Restricted Stock
until the date of the issuance of certificates to such Participants for such
shares of Restricted Stock. The Plan is for the benefit of the Participants and
their Beneficiaries and not for the benefit of any other person.
(f) No interest in the Trust or the Units shall be subject in any manner
to anticipation, alienation, pledge, transfer, or assignment, except by will or
by the laws of descent and distribution or with the written consent of the
Trustees and the Committee and any attempt to so anticipate, alienate, pledge,
transfer, or assign shall be void and the interest of the Participant shall be
forfeited.
(g) Neither the granting of, nor any payout of Restricted Stock with
respect to, any award of Units under the Plan shall limit a Participant's right
to receive, or to be eligible for, any other compensation or benefits from the
Company.
(h) Awards and payouts of Units will not be considered as compensation
for the purpose of computing employee contributions or benefits under the
Company's retirement, pension, thrift, group life insurance or other employee
benefit plan.
(i) In the event that a Participant violates the terms of any covenant
regarding confidentiality, return of property, soliciting customer accounts,
doing business with customers, non-competition, or soliciting or hiring of
employees of the Company or its Affiliates that is contained in any written
employment agreement as in effect at the time of such violation, then any rights
of the Participant under the Plan shall immediately terminate, any Units of the
Participant, whether or not vested, shall be cancelled, and the Participant
shall return to the Company any cash, Restricted Stock or property received by
him under the Plan. The Company shall have the right to set off against any
amount payable by the Company or any Affiliate to the Participant, including,
without limitation, salary, benefits or other amounts, any amounts owed by the
Participant to the Company under this paragraph (i). The Committee may waive the
provisions of this paragraph (i) if it determines in its sole discretion that
such action is in the best interests of the Company.
(j) Any payment by the Company that is to be made in cash shall be from
the general funds of the Company. No special or separate fund shall be
established or other segregation of assets made to assure any cash payment by
the Company under the Plan. No Participant or other person shall have under any
circumstances any interest whatever in any particular property or assets of the
Company.
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(k) If any provision of the Plan shall be determined to be illegal and
unenforceable by any court of law, the remaining provisions shall be severable
and enforceable in accordance with their terms.
(l) This Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Ohio without giving effect
to the conflicts of law principles thereof.
Section 12. Effective Date. The Plan shall be effective as of February
25, 1998.
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