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EXHIBIT 10.7
GENERAL BINDING CORPORATION
PHANTOM STOCK PLAN FOR DIRECTORS
1. Purpose. This Phantom Stock Plan for Directors (the "Plan")
has been established by General Binding Corporation (the "Company") to enable
the members of the Board of Directors of the Company to have flexibility with
respect to the receipt of income earned for acting as Directors and to receive
incentive compensation based on the appreciation of the common stock of the
Company and on the dividends declared on such stock. The Plan will also
promote a closer identity of interests between such directors and the
shareholders of the Company.
2. Definitions. The following definitions are applicable to the
Plan:
(a) "COMPANY" means General Binding Corporation and any
successor corporation or corporations with or into which General Binding
Corporation may be consolidated or merged.
(b) "BOARD" means the Board of Directors of the Company.
(c) "PARTICIPANT" means any current member of the Board,
or any former member of the Board who, while on the Board, elected to
participate in the Plan.
(d) "STOCK" means the common stock of the Company.
(e) "PHANTOM STOCK UNIT" means the basic unit of benefits
awarded under the Plan, corresponding to the value of, and the dividend rights
associated with, a single share of Stock.
(f) "PHANTOM STOCK UNIT ACCOUNT" means, with respect to
each Participant, an account established and maintained by the Company for the
purpose of recording the number of Phantom Stock Units with respect to which
that Participant has rights under the Plan.
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(g) "VALUE PER PHANTOM STOCK UNIT" as of a given date
means the average of the high and low prices per share at which the Stock
trades on the NASDAQ stock market on that date or, if there is no trading in
the Stock on that date, on the most recent preceding date on which such trading
occurred.
(h) "DIVIDEND EQUIVALENT" means, with respect to Phantom
Stock Units credited to a particular Participant, a dollar amount equal to the
cash dividend which the Participant would have been entitled to receive if the
Participant had been the owner, on the record date for a dividend paid on the
Stock, of a number of shares of Stock equal to the number of Phantom Stock
Units then properly credited to the Phantom Stock Unit Account of the
Participant.
(i) "DIVIDEND EQUIVALENT ACCUMULATION ACCOUNT" means,
with respect to each Participant, an account established and maintained by the
Company for the purpose of recording the amount of Dividend Equivalents
attributable to Phantom Stock Units of the Participant.
(j) "ANNUAL RETAINER" means the annual fee payable to a
Participant as compensation for serving on the Board.
(k) "MEETING FEE" means the fee payable to a Participant
as compensation for attending a particular meeting of the Board or of a
committee of the Board.
3. Administration. The authority to manage and control the
operation and administration of the Plan shall be vested in the Board. Subject
to the limitations of the Plan, the Board shall have the sole and complete
authority: (a) to interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan;
(b) to correct any defect or omission or to reconcile any inconsistency in the
Plan or in any payment made hereunder; and (c) to make all other determinations
and to take all other actions necessary or advisable for the
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implementation and administration of the Plan. The Board's determinations on
matters within its authority shall be conclusive and binding upon the Company
and all other persons. All expenses associated with the Plan shall be borne by
the Company.
4. Annual Election to Receive Phantom Stock Units. Any
Participant may, by written notice to the Company, elect to receive Phantom
Stock Units in lieu of the Annual Retainer and Meeting Fees which would
otherwise be payable to the Participant in cash. A notice of election under
this Section 4 shall be valid only if it is in writing, is signed by the
Participant, designates the fiscal year of the Company to which it relates, and
is filed with the Company prior to the fiscal year of the Company to which it
relates; provided, however, that (a) a notice of election which is filed with
the Company within ten (10) days after this Plan is adopted by the Board, or
(b) in the case of a new member of the Board, a notice of election which is
filed with the Company by the new member within ten (10) days after becoming a
member of the Board, may (if so specified in the notice) be effective for the
then current fiscal year of the Company, but only with respect to compensation
earned through the performance of services after the filing of the notice of
election. Any such notice of election shall be irrevocable for the fiscal year
for which it is given. Any such election may apply either to the Annual
Retainer only or to the Annual Retainer and all Meeting Fees, as specified in
the notice of election.
5. Crediting of Elected Phantom Stock Units. Phantom Stock Units
elected pursuant to Section 4, above, shall be credited to the Phantom Stock
Unit Account of the electing Participant in the following manner:
(a) Phantom Stock Units received in lieu of an Annual
Retainer shall be credited as of the date of the annual meeting of stockholders
of the Company during the fiscal year in question.
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The number of Phantom Stock Units so credited shall be determined by dividing
(i) the amount of the Annual Retainer by (ii) the Value per Phantom Stock Unit
on that date.
(b) Phantom Stock Units received in lieu of a Meeting Fee
shall be credited as of the date that the Meeting Fee is earned by attending
the applicable meeting. The number of Phantom Stock Units so credited shall be
determined by dividing (i) the amount of the Meeting Fee by (ii) the Value per
Phantom Stock Unit on that date.
6. Crediting of Dividend Equivalents. If, as of the record date
for a cash dividend on the Stock, Phantom Stock Units have been (or should have
been) properly credited to the Phantom Stock Unit Account of a Participant, the
Company shall credit to the Dividend Equivalent Accumulation Account of that
Participant, as of that record date, a Dividend Equivalent for such Phantom
Stock Units.
7. Application of Accumulated Dividend Equivalents. As of the
last day of each fiscal year of the Company, the balance in each Participant's
Dividend Equivalent Accumulation Account shall be converted into additional
Phantom Stock Units by:
(a) Adding to the Participant's Phantom Stock Unit
Account a number of Phantom Stock Units determined by dividing (i) the balance
in the Dividend Equivalent Accumulation Account by (ii) the Value per Phantom
Stock Unit as of that date; provided, however, that any fraction resulting from
that division shall not be converted into a fractional Phantom Stock Unit, but
the corresponding dollar amount shall be carried forward in the Participant's
Dividend Equivalent Accumulation Account for inclusion in the next annual
conversion; and
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(b) Reducing the Dividend Equivalent Accumulation Account
balance to the greater of (i) any dollar amount corresponding to a fraction
resulting from the division performed pursuant to paragraph (a), above, or (ii)
zero.
8. Adjustments. In the event of any change in the outstanding
shares of Stock by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares, or other similar
corporate change, the Board shall make such adjustments in each Participant's
Phantom Stock Unit Account, including the number of Phantom Stock Units, as it
deems to be equitable under the Plan in order fairly to give effect to such
change and to the purpose and intent of the Plan.
9. Redemption of Phantom Stock Units and Dividend Equivalents. A
Participant's Phantom Stock Units and any balance in his Dividend Equivalent
Accumulation Account shall be redeemed, within thirty (30) days after the
Participant ceases to be a member of the Board, through a lump-sum cash payment
which is the sum of:
(a) The product of (i) the number of Phantom Stock Units
properly credited to the Participant's Phantom Stock Unit Account on the last
day the Participant was a member of the Board, times (ii) the Value per Phantom
Stock Unit on that date; plus
(b) The balance, if any, in the Participant's Dividend
Equivalent Accumulation Account at the end of the last day the Participant was
a member of the Board.
10. Designation of Beneficiary. Each Participant who is credited
with Phantom Stock Units under the Plan may designate a beneficiary or
beneficiaries to receive any amounts payable under the Plan after his death,
and may change such designation from time to time, by filing a written
designation of beneficiary or beneficiaries with the Board on a form to be
prescribed by the Board,
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provided that no such designation shall be effective unless so filed prior to
the death of such Participant.
11. Discretion of Company and Board of Directors. Any decision
made or action taken by the Board arising out of or in connection with
the construction, administration, interpretation and effect of the Plan shall
lie within the absolute discretion of the Board and shall be conclusive and
binding upon all persons.
12. Absence of Liability. No member of the Board or officer of
the Company or any subsidiary of the Company shall be liable for any act or
action hereunder, whether of commission or omission, taken by any other member
or by any other officer, agent or employee or, except in circumstances
involving his bad faith, for anything done or omitted to be done by himself.
13. No Segregation of Cash or Shares. The Company shall not be
required to segregate any cash or any shares of Stock in connection with any
Phantom Stock Units credited under the Plan. No interest shall be allowable or
payable at any time with respect to any Phantom Stock Units.
14. No Rights as a Shareholder. No Participant shall have voting
or any other rights or privileges of a shareholder of Stock by reason of the
crediting of Phantom Stock Units under the Plan.
15. Company Not Trustee. The Company shall not, by virtue of any
provisions of the Plan, be deemed to be a trustee of any Stock or any other
property.
16. No Property Interest. The crediting of Phantom Stock Units
under the Plan shall not create any property interest for a Participant, and
the liabilities of the Company to any Participant pursuant to the Plan shall be
those of a debtor pursuant to such contractual redemption obligations as arise
under the Plan when a Participant ceases to be a member of the Board. No such
obligation
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of the Company shall be deemed to be secured by any pledge of or other
encumbrance on any property of the Company.
17. No Security for Phantom Stock Units. Amounts payable under
the Plan cannot be sheltered from the Company's general creditors. There can
be no posting of a bond, promissory note or any other safeguard to assure that
the Participant will be paid. The sole security for payment under the terms of
the Plan is the Company's promise to pay.
18. Assignments and Transfers. The rights and interests of a
Participant under the Plan may not be assigned, encumbered, pledged or
transferred except, in the event of the death of a Participant, to his
designated beneficiary or, in the absence of such designation, by will or the
laws of descent and distribution. Any such attempted action shall be void, and
no such interest shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of any Participant. If any
Participant shall become bankrupt or shall attempt to assign, encumber, pledge
or transfer any interest in the Plan, then the Board in its discretion may hold
or apply such interest or any part thereof to or for the benefit of such
Participant or his designated beneficiary, his spouse, children, blood
relatives, or other dependents, or any of them, in such manner and in such
proportions as the Board may consider proper.
19. Director Status. The Plan does not, and will not, give any
Participant the right to continue as a director of the Company, nor will the
Plan confer any right to any benefit under the Plan unless such right has
specifically accrued under the terms of the Plan.
20. Gender and Number. In construing the Plan, where the context
makes it appropriate, words in any gender shall be deemed to include any other
gender, words in the singular shall be deemed to include the plural, and words
in the plural shall be deemed to include the singular.
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21. Illinois Law to Govern. All questions pertaining to the
construction, regulation, validity and effect of the provisions of the Plan
shall be determined in accordance with the laws of the State of Illinois.
22. Amendment, Suspension or Termination of the Plan. The Board
may from time to time amend, suspend or terminate in whole or in part (and if
suspended or terminated may reinstate) any or all of the provisions of the
Plan, except that without the consent of the Participant no amendment,
suspension or termination of the Plan shall impair the rights of any
Participant as to any Phantom Stock Unit previously credited to the Participant
pursuant to the Plan.
23. Withholding Tax. The Company shall have the right to deduct
from any cash payment to be made to any Participant, his designated beneficiary
or his estate any taxes required by law to be withheld with respect thereto.
24. Effective Date. The Plan shall take effect upon approval and
adoption by the Board. 5-9-95
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