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Exhibit 10.4
TUSCARORA INCORPORATED
1997 STOCK INCENTIVE PLAN
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ADOPTED BY BOARD OF DIRECTORS
ON OCTOBER 17, 1997
APPROVED BY SHAREHOLDERS
ON DECEMBER 18, 1997
EFFECTIVE DECEMBER 18, 1997
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TUSCARORA INCORPORATED
1997 STOCK INCENTIVE PLAN
A purpose of the 1997 Stock Incentive Plan (the "Plan") is to encourage
eligible employees of Tuscarora Incorporated (the "Company") and its
Subsidiaries to increase their efforts to make the Company and each Subsidiary
more successful, to provide an additional inducement for such employees to
remain with the Company or a Subsidiary, to reward such employees by providing
an opportunity to acquire shares of the Common Stock, without par value, of the
Company (the "Common Stock") on favorable terms and to provide a means through
which the Company may attract able persons to enter the employ of the Company or
one of its Subsidiaries. Another purpose of the Plan is to promote the long-term
success of the Company by creating a long-term mutuality of interest between the
Company's non-employee directors (the "Nonemployee Directors") and the Company's
shareholders, to provide an additional inducement for the Nonemployee Directors
to remain with the Company and to provide a means through which the Company may
attract able persons to serve as Nonemployee Directors. For the purposes of the
Plan, the term "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing at least fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board").
The Board shall interpret the Plan and prescribe such rules, regulations
and procedures in connection with the operations of the Plan as it shall deem to
be necessary and advisable for the administration of the Plan consistent with
the purposes of the Plan.
The Board shall keep records of action taken. A majority of the Board shall
constitute a quorum at any meeting, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by a majority of the Board, shall be the acts of the Board.
SECTION 2
ELIGIBILITY
Those employees of the Company or any Subsidiary, including employees who
are directors of the Company, who share responsibility for the management,
growth or protection of the business of the Company or any Subsidiary shall be
eligible to be granted stock options (with or without alternative stock
appreciation rights and/or cash payment rights) and to receive awards of
restricted, performance and other shares as described herein. The Nonemployee
Directors shall be eligible to be granted nonstatutory stock options (with or
without alternative stock appreciation rights and/or cash payment rights) and to
receive awards of restricted shares as described herein.
Subject to the provisions of the Plan, the Board shall have full and final
authority, in its discretion, to grant stock options (with or without
alternative stock appreciation rights and/or cash payment rights) and to award
restricted, performance and other shares as described herein and to determine
the persons to whom any such grant or award shall be made and the number of
shares to be covered thereby. In determining the eligibility of any person, as
well as in determining the number of shares covered by each grant or award and
whether alternative stock appreciation rights and/or cash payment rights shall
be granted in conjunction with a stock option, the Board shall consider the
position and the responsibilities of the person being considered, the nature and
value to the Company or a Subsidiary of his or her services, his or her present
and/or potential contribution to the success of the Company or a Subsidiary and
such other factors as the Board may deem relevant.
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SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock that may be issued and
as to which grants or awards may be made under the Plan is 750,000 shares,
subject to adjustment and substitution as set forth in Section 7. If any stock
option granted under the Plan is canceled by mutual consent or terminates or
expires for any reason without having been exercised in full, the number of
shares subject thereto shall again be available for purposes of the Plan, except
that to the extent that alternative stock appreciation rights granted in
conjunction with a stock option under the Plan are exercised and the related
stock option surrendered the number of shares available for purposes of the Plan
shall be reduced by the number of shares of Common Stock issued upon exercise of
such alternative stock appreciation rights. Any restricted shares which are
surrendered or forfeited to the Company and any performance shares which are not
earned shall again be available for issuance under the Plan.
The shares which may be issued under the Plan may be either authorized but
unissued shares or treasury shares or partly each.
SECTION 4
GRANT OF STOCK OPTIONS, ALTERNATIVE
STOCK APPRECIATION RIGHTS AND CASH
PAYMENT RIGHTS AND AWARD OF RESTRICTED,
PERFORMANCE AND OTHER SHARES
The Board shall have authority, in its discretion, (i) to grant "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to grant "nonstatutory stock options" (i.e., stock options
which do not qualify under Sections 422 or 423 of the Code) or to grant both
types of stock options (but not in tandem), (ii) to award restricted shares,
(iii) to award performance shares and (iv) to make other share awards, all as
provided herein. The Board also shall have the authority, in its discretion, to
grant alternative stock appreciation rights in conjunction with incentive stock
options or nonstatutory stock options with the effect provided in Section 5(D)
and to grant cash payment rights in conjunction with nonstatutory stock options
with the effect provided in Section 5(E). Alternative stock appreciation rights
granted in conjunction with an incentive stock option may only be granted at the
time the incentive stock option is granted. Cash payment rights may not be
granted in conjunction with incentive stock options. Alternative stock
appreciation rights and/or cash payment rights granted in conjunction with a
nonstatutory stock option may be granted either at the time the stock option is
granted or at any time thereafter during the term of the stock option.
Notwithstanding any other provision contained in the Plan or in any
agreement referred to in Section 5(I), but subject to the possible exercise of
the Board's discretion contemplated in the last sentence of this Section 4, the
aggregate fair market value, determined as provided in Section 5(J) on the date
of grant, of the shares with respect to which incentive stock options are
exercisable for the first time by an employee during any calendar year under all
plans of the corporation employing such employee, any parent or subsidiary
corporation of such corporation and any predecessor corporation of any such
corporation shall not exceed $100,000. If the date on which one or more of such
incentive stock options could first be exercised would be accelerated pursuant
to any provision of the Plan or any stock option agreement, and the acceleration
of such exercise date would result in a violation of the limitation set forth in
the preceding sentence, then, notwithstanding any such provision, but subject to
the provisions of the next succeeding sentence, the exercise dates of such
incentive stock options shall be accelerated only to the date or dates, if any,
that do not result in a violation of such limitation and, in such event, the
exercise dates of the incentive stock options with the lowest option prices
shall be accelerated to the earliest such dates. The Board may, in its
discretion, authorize the acceleration of the exercise date of one or more
incentive stock options even if such acceleration would violate the $100,000
limitation set forth in the first sentence of this paragraph and even if such
incentive stock options are thereby converted in whole or in part to
nonstatutory stock options.
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SECTION 5
STOCK OPTIONS, ALTERNATIVE STOCK APPRECIATION
RIGHTS AND CASH PAYMENT RIGHTS
Stock options, alternative stock appreciation rights and cash payment
rights granted under the Plan shall be subject to the following terms and
conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be such price as the Board, in its discretion, shall
determine but shall not be less than one hundred percent (100%) of the fair
market value per share of the Common Stock on the date of grant. For purposes
of this Section 5(A), the fair market value of the Common Stock shall be
determined as provided in Section 5(J).
(B) The option price for each stock option shall be payable in cash in
United States dollars (including check, bank draft or money order); provided,
however, that in lieu of cash the person exercising the stock option may (if
authorized by the Board at the time of grant in the case of an incentive stock
option, or at any time in the case of a nonstatutory stock option) pay the
option price in whole or in part by delivering to the Company shares of the
Common Stock having a fair market value on the date of exercise of the stock
option, determined as provided in Section 5(J), equal to the option price for
the shares being purchased, except that (i) any portion of the option price
representing a fraction of a share shall in any event be paid in cash and (ii)
no shares of the Common Stock which have been held for less than one year may
be delivered in payment of the option price of a stock option. Delivery of
shares, if authorized, may also be accomplished through the effective transfer
to the Company of shares held by a broker or other agent. The Company will
also cooperate with any person exercising a stock option who participates in a
cashless exercise program of a broker or other agent under which all or part
of the shares received upon exercise of the stock option are sold through the
broker or other agent or under which the broker or other agent makes a loan to
such person. Notwithstanding the foregoing, unless the Board, in its
discretion, shall otherwise determine at the time of grant in the case of an
incentive stock option, or at any time in the case of a nonstatutory stock
option, the exercise of the stock option shall not be deemed to occur and no
shares of Common Stock will be issued by the Company upon exercise of the
stock option until the Company has received payment of the option price in
full. The date of exercise of a stock option shall be determined under
procedures established by the Board, and as of the date of exercise the person
exercising the stock option shall be considered for all purposes to be the
owner of the shares with respect to which the stock option has been exercised.
Payment of the option price with shares shall not increase the number of
shares of the Common Stock which may be issued under the Plan as provided in
Section 3.
(C) Each stock option shall be exercisable at such time or times as the
Board, in its discretion, shall determine, except that no stock option shall
be exercisable after the expiration of ten years from the date of grant. A
stock option to the extent exercisable at any time may be exercised in whole
or in part.
(D) Alternative stock appreciation rights granted in conjunction with a
stock option shall entitle the person exercising the alternative stock
appreciation rights to surrender the related stock option, or any portion
thereof, and to receive from the Company in exchange therefor that number of
shares of the Common Stock having an aggregate fair market value on the date
of exercise of the alternative stock appreciation rights equal to the excess
of the fair market value of one share of the Common Stock on such date of
exercise over the option price per share times the number of shares covered by
the related stock option, or portion thereof, which is surrendered.
Alternative stock appreciation rights shall be exercisable to the extent that
the related stock option is exercisable and only by the same person who is
entitled to exercise the related stock option; provided, however, that
alternative stock appreciation rights granted in conjunction with an incentive
stock option shall not be exercisable unless the then fair market value of the
Common Stock exceeds the option price of the shares subject to the incentive
stock option. Cash shall be paid in lieu of any fractional share. The Board
shall have the authority, in its discretion, to determine that the obligation
of the Company shall be paid in cash or part in cash and part in shares. The
date of exercise of alternative stock appreciation rights shall be determined
under procedures established by the Board, and as of the date of exercise the
person exercising the alternative stock appreciation rights shall be
considered for all purposes to be the owner of the shares to be received. To
the extent that a stock option as to which alternative stock
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appreciation rights have been granted is exercised, canceled, terminates or
expires, the alternative stock appreciation rights shall be canceled. For the
purposes of this Section 5(D), the fair market value of the Common Stock shall
be determined as provided in Section 5(J).
(E) Cash payment rights granted in conjunction with a nonstatutory stock
option shall entitle the person who is entitled to exercise the stock option,
upon exercise of the stock option or any portion thereof, to receive cash from
the Company (in addition to the shares to be received upon exercise of the
stock option) equal to such percentage as the Board, in its discretion, shall
determine not greater than one hundred percent (100%) of the excess of the
fair market value of a share of the Common Stock on the date of exercise of
the stock option over the option price per share of the stock option times the
number of shares covered by the stock option, or portion thereof, which is
exercised. Payment of the cash provided for in this Section 5(E) shall be made
by the Company as soon as practicable after the time the amount payable is
determined. For purposes of this Section 5(E), the fair market value of the
Common Stock shall be determined as provided in Section 5(J).
(F) Unless the Board, in its discretion, shall otherwise determine, (i) no
incentive stock option shall be transferable by the grantee otherwise than by
Will, or if the grantee dies intestate, by the laws of descent and
distribution of the state of domicile of the grantee at the time of death and
(ii) all incentive stock options shall be exercisable during the lifetime of
the grantee only by the grantee. Unless the Board, in its discretion, shall
otherwise determine, a nonstatutory stock option may be transferred by the
grantee by gift to the grantee's spouse or to any of the grantee's lineal
descendants or to the trustee(s) of a trust for the benefit of any such
person. Any nonstatutory stock option gifted to any such person or trust shall
be subject to the restrictions, terms and conditions of the Plan and the
agreement referred to in Section 5(I), and any such transferee shall be deemed
to be a grantee and shall upon receipt of such stock option, as a condition of
effectiveness of the transfer, sign a written agreement with the Company
agreeing to such restrictions, terms and conditions.
(G) (1) Subject to the provisions of Section 4 in the case of incentive
stock options and subject to the restriction on exercise set forth in Section
5(L), unless the Board, in its discretion, shall otherwise determine:
(i) If the employment of a grantee is voluntarily terminated with the
consent of the Company or a Subsidiary or a grantee retires under any
retirement plan of the Company or a Subsidiary, any outstanding stock
option granted to the grantee shall be exercisable (but only to the extent
exercisable immediately prior to the termination of employment, provided
that the restriction on exercise set forth in Section 5(L) shall not be
considered solely in determining the extent to which such stock option is
exercisable on the date of termination of employment) at any time prior to
the expiration date of such stock option or until three years after the
date of termination of employment of the grantee, whichever is the shorter
period, and to the extent not exercisable shall terminate;
(ii) Following the death of a grantee during employment, any
outstanding stock option granted to the grantee shall be exercisable in
full (whether or not so exercisable immediately prior to the death of the
grantee) by the holder of the stock option, or if the grantee held the
stock option at the time of death, by the person entitled to do so under
the Will of the grantee, or, if the grantee shall fail to make testamentary
disposition of the stock option or shall die intestate, by the legal
representative of the grantee, at any time prior to the expiration date of
the stock option or until three years after the date of death of the
grantee, whichever is the shorter period;
(iii) Following the death of a grantee after termination of employment
during a period when a stock option is exercisable, the stock option shall
be exercisable by the holder of the stock option, or if the grantee held
the stock option at the time of death, by such person entitled to do so
under the Will of the grantee or by such legal representative, at any time
during the shorter of the following two periods: (i) until the expiration
date of the stock option or (ii) until three years after the termination of
employment of the grantee or one year after the date of death of the
grantee (whichever is longer); and
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(iv) Unless Section 8(C) applies following termination of employment,
if the employment of a grantee terminates for any reason other than
voluntary termination with the consent of the Company or a Subsidiary,
retirement under any retirement plan of the Company or a Subsidiary or
death, any outstanding stock option granted to the grantee (whether or not
exercisable immediately prior to termination of employment) shall
automatically terminate.
Whether termination of employment is a voluntary termination with
the consent of the Company or a Subsidiary shall be determined, in its
discretion, by the Board and any such determination by the Board shall be
final and binding.
(G) (2) Unless the Board, in its discretion, shall otherwise determine:
(i) If a grantee ceases to serve as a Nonemployee Director for any
reason other than resignation, removal for cause or death, any outstanding
stock option granted to the grantee shall be exercisable (but only to the
extent exercisable immediately prior to ceasing to serve as a Nonemployee
Director) at any time prior to the expiration date of such stock option or
until three years after the date the grantee ceases to serve as a
Nonemployee Director, whichever is the shorter period, and to the extent
not exercisable shall terminate;
(ii) Following the death of a grantee during service as a Nonemployee
Director, any outstanding stock option granted to the grantee shall be
exercisable in full (whether or not so exercisable immediately prior to the
death of the grantee) by the holder of the stock option, or if the grantee
held the stock option at the time of death, by the person entitled to do so
under the Will of the grantee, or, if the grantee shall fail to make
testamentary disposition of the stock option or shall die intestate, by the
legal representative of the grantee, at any time prior to the expiration
date of the stock option or until three years after the date of death of
the grantee, whichever is the shorter period;
(iii) Following the death of a grantee after ceasing to serve as a
Nonemployee Director during a period when a stock option is exercisable,
the stock option shall be exercisable by the holder of the stock option, or
if the grantee held the stock option at the time of death, by such person
entitled to do so under the Will of the grantee or by such legal
representative, at any time during the shorter of the following two
periods: (i) until the expiration date of the stock option or (ii) until
three years after the grantee ceased to serve as a Nonemployee Director or
one year after the date of death of the grantee (whichever is longer); and
(iv) Unless Section 8(C) applies following termination of service, if
during his or her term of office as a Nonemployee Director a grantee
resigns from the Board or is removed from office for cause, any outstanding
stock option granted to the grantee (whether or not exercisable immediately
prior to resignation or removal) shall automatically terminate.
(H) If a grantee of a stock option (i) engages in the operation or
management of a business (whether as owner, partner, officer, director,
employee or otherwise) which is in competition with the Company or any of its
Subsidiaries (provided, however, that this clause shall not apply if Section
8(C) applies), (ii) induces or attempts to induce any customer, supplier,
licensee or other individual, corporation or other business organization
having a business relationship with the Company or any of its Subsidiaries to
cease doing business with the Company or any of its Subsidiaries or in any way
interferes with the relationship between any such customer, supplier, licensee
or other person and the Company or any of its Subsidiaries or (iii) solicits
any employee of the Company or any of its Subsidiaries to leave the employment
thereof or in any way interferes with the relationship of such employee with
the Company or any of its Subsidiaries, the Board, in its discretion, may
immediately terminate all outstanding stock options granted to the grantee.
Whether a grantee has engaged in any of the activities referred to the
preceding sentence which would cause the outstanding stock options to be
terminated shall be determined, in its discretion, by the Board, and any such
determination by the Board shall be final and binding.
(I) All stock options, alternative stock appreciation rights and cash
payment rights shall be confirmed by an agreement which shall be executed on
behalf of the Company by the Chief Executive Officer (if other than the
President), the President or any Vice President and by the grantee. The
agreement confirming a
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stock option shall specify whether the stock option is an incentive stock
option or a nonstatutory stock option. The provisions of the agreements need
not be identical.
(J) Fair market value of the Common Stock shall be the mean between the
following prices, as applicable, for the date as of which fair market value is
to be determined as quoted in The Wall Street Journal (or in such other
reliable publication as the Board, in its discretion, may determine to rely
upon): (i) if the Common Stock is listed on the New York Stock Exchange, the
highest and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (ii) if the Common Stock is
not listed on such exchange, the highest and lowest sales prices per share of
Common Stock for such date on (or on any composite index including) the
principal United States securities exchange registered under the Securities
Exchange Act of 1934, as amended (the "1934 Act") on which the Common Stock is
listed or (iii) if the Common Stock is not listed on any such exchange, the
highest and lowest sales prices per share of the Common Stock for such date on
the National Association of Securities Dealers Automated Quotations System or
any successor system then in use ("NASDAQ"). If there are no such sale price
quotations for the date as of which fair market value is to be determined but
there are such sale price quotations within a reasonable period both before
and after such date, then fair market value shall be determined by taking a
weighted average of the means between the highest and lowest sales prices per
share of the Common Stock as so quoted on the nearest date before and the
nearest date after the date as of which fair market value is to be determined.
The average should be weighted inversely by the respective numbers of trading
days between the selling dates and the date as of which fair market value is
to be determined. If there are no such sale price quotations on or within a
reasonable period both before and after the date as of which fair market value
is to be determined, then fair market value of the Common Stock shall be the
mean between the bona fide bid and asked prices per share of Common Stock as
so quoted for such date on NASDAQ, or if none, the weighted average of the
means between such bona fide bid and asked prices on the nearest trading date
before and the nearest trading date after the date as of which fair market
value is to be determined, if both such dates are within a reasonable period.
The average is to be determined in the manner described above in this Section
5(J). If the fair market value of the Common Stock cannot be determined on any
basis previously set forth in this Section 5(J) for the date as of which fair
market value is to be determined, the Board shall in good faith determine the
fair market value of the Common Stock on such date. Fair market value shall be
determined without regard to any restriction other than a restriction which,
by its terms, will never lapse.
(K) The obligation of the Company to issue shares of the Common Stock under
the Plan shall be subject to (i) the effectiveness of a registration statement
under the Securities Act of 1933, as amended, with respect to such shares, if
deemed necessary or appropriate by counsel for the Company, (ii) the condition
that the shares shall have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange, if any, on which the
Common Stock may then be listed and (iii) all other applicable laws,
regulations, rules and orders which may then be in effect.
(L) Notwithstanding any other provision of this Section 5 or any other
provision of the Plan or any stock option agreement, any grantee who has made
a hardship withdrawal from the Tuscarora Incorporated Savings Plan for
Salaried Employees (or any holder of a stock option granted to such a grantee)
shall be prohibited, for a period of twelve (12) months following such
hardship withdrawal, from exercising any stock option granted under the Plan
in such a manner and to the extent that the exercise of such stock option
would result in an employee elective contribution or an employee contribution
to an employer plan within the meaning of Treasury Regulation section
1.401(k)-1(d)(2)(iv)(B)(4) or any successor regulation thereto.
Subject to the foregoing provisions of this Section 5 and the other
provisions of the Plan, stock options, alternative stock appreciation rights and
cash payment rights granted under the Plan shall be subject to such restrictions
and other terms and conditions, if any, as shall be determined, in its
discretion, by the Board and set forth in the agreement referred to in Section
5(I).
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SECTION 6
RESTRICTED SHARES, PERFORMANCE SHARES AND
OTHER SHARE AWARDS
(A) Restricted Shares
Awards of restricted shares shall be confirmed by an agreement which shall
set forth the number of shares of the Common Stock awarded, the restrictions
imposed thereon (including, without limitation, restrictions on the right of the
grantee to sell, assign, transfer or encumber such shares (except as provided
below) while such shares are subject to other restrictions imposed under this
Section 6(A)), the duration of such restrictions, events (which may, in the
discretion of the Board, include termination of employment and/or
performance-based events) the occurrence of which would cause a forfeiture of
the restricted shares and such other terms and conditions as shall be
determined, in its discretion, by the Board. The agreement shall be executed on
behalf of the Company by the Chief Executive Officer (if other than the
President), the President or any Vice President and by the grantee. The
provisions of the agreements need not be identical. Awards of restricted shares
shall be effective on the date determined, in its discretion, by the Board.
Following the award of restricted shares and prior to the lapse or
termination of the applicable restrictions, share certificates for the
restricted shares shall be issued in the name of the grantee and deposited with
the Company in escrow together with related stock powers signed by the grantee.
Except as provided in Section 7, the Board, in its discretion, may determine
that dividends and other distributions on the shares held in escrow shall not be
paid to the grantee until the lapse or termination of the applicable
restrictions. Unless otherwise provided, in its discretion, by the Board, any
such dividends or other distributions shall not bear interest. Upon the lapse or
termination of the applicable restrictions (and not before such time), the share
certificates for the restricted shares (subject to the provisions of Section 10)
shall be released from escrow and unpaid dividends, if any, shall be paid. From
the date the award of restricted shares is effective, the grantee shall be a
shareholder with respect to all the shares represented by the share certificates
and shall have all the rights of a shareholder with respect to all the
restricted shares, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares, subject only
to the preceding provisions of this paragraph and the other restrictions imposed
by the Board.
If a grantee of restricted shares (i) engages in the operation or
management of a business (whether as owner, partner, officer, director, employee
or otherwise) which is in competition with the Company or any of its
Subsidiaries (provided, however, that this clause shall not apply if Section
8(D) applies), (ii) induces or attempts to induce any customer, supplier,
licensee or other individual, corporation or other business organization having
a business relationship with the Company or any of its Subsidiaries to cease
doing business with the Company or any of its Subsidiaries or in any way
interferes with the relationship between any such customer, supplier, licensee
or other person and the Company or any of its Subsidiaries or (iii) solicits any
employee of the Company or any of its Subsidiaries to leave the employment
thereof or in any way interferes with the relationship of such employee with the
Company or any of its Subsidiaries, the Board may immediately declare forfeited
all restricted shares awarded to the grantee as to which the restrictions have
not yet lapsed. Whether a grantee has engaged in any of the activities referred
to in the preceding sentence which would cause the restricted shares to be
forfeited shall be determined, in its discretion, by the Board, and any such
determination by the Board shall be final and binding.
Neither this Section 6(A) nor any other provision of the Plan shall
preclude a grantee from transferring restricted shares to (i) the trustee(s) of
a trust that is revocable by such grantee alone, both at the time of the
transfer and at all times thereafter prior to such grantee's death, or (ii) the
trustee(s) of any other trust to the extent approved in advance by the Board.
Restricted shares held by such trustee(s) shall be subject to all the
restrictions, terms and conditions of the Plan and the applicable agreement as
if such trustee(s) were a party to such agreement.
(B) Performance Shares
An award of performance shares shall entitle the grantee to receive up to
the number of shares of Common Stock covered by the award at the end of or at a
specified time or times during a specified award
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period contingent upon the extent to which one or more predetermined performance
targets have been met during the award period. All the terms and conditions of
an award of performance shares shall be determined, in its discretion, by the
Board and shall be confirmed by an agreement which shall be executed on behalf
of the Company by the Chief Executive Officer (if other than the President), the
President or any Vice President and by the grantee. The performance target or
targets may be expressed in terms of earnings per share, return on shareholder
equity, operating profit, return on capital employed or such other measures of
accomplishment by the Company or a Subsidiary, or any branch, department or
other portion thereof, or the grantee individually, as may be established, in
its discretion, by the Board. The performance target or targets may vary for
different award periods and need not be the same for each grantee receiving an
award for an award period.
At any time prior to the end of an award period, the Board may adjust
downward (but not upward) the performance target or targets as a result of major
events unforeseen at the time of the award, such as changes in the economy, in
the industry or laws affecting the operations of the Company or a Subsidiary, or
any branch, department or other portion thereof, or any other event the Board
determines would have a significant impact upon the probability of attaining the
previously established performance target or targets.
Payment of earned performance shares shall be made as soon as practicable
after the shares have been earned. The Board, in its discretion, may determine
that any dividends or other distributions that would have been paid on earned
performance shares had the shares been outstanding during the period from the
award to the payment of the performance shares shall also be paid. Unless
otherwise provided, in its discretion, by the Board, any such dividends or other
distributions shall not bear interest.
Unless otherwise provided in the agreement confirming the award of the
performance shares, if prior to the close of an award period, the employment of
a grantee of performance shares is voluntarily terminated with the consent of
the Company or a Subsidiary, the grantee retires under any retirement plan of
the Company or a Subsidiary or the grantee dies during employment, the Board in
its discretion, may determine to pay all or part of the performance shares based
upon the extent to which the Board determines the performance target or targets
have been achieved as of the date of termination of employment, retirement or
death, the period of time remaining until the end of the award period and/or
such other factors as the Board may deem relevant. If the Board, in its
discretion, determines that all or any part of the performance shares shall be
paid, payment shall be made as promptly as practicable following such
determination. Except as otherwise provided in Section 8(E), if the employment
of a grantee of an award of performance shares terminates prior to the time the
performance shares have been earned for any reason other than voluntary
termination with the consent of the Company or a Subsidiary, retirement under
any retirement plan of the Company or a Subsidiary or death, the unearned
performance shares shall be deemed not to have been earned and such shares shall
not be paid. Whether termination of employment is a voluntary termination with
the consent of the Company or a Subsidiary shall be determined, in its
discretion, by the Board and any such determination by the Board shall be final
and binding.
If a grantee of performance shares (i) engages in the operation or
management of a business (whether as owner, partner, officer, director, employee
or otherwise) which is in competition with the Company or any of its
Subsidiaries (provided, however, that this clause shall not apply if Section
8(E) applies), (ii) induces or attempts to induce any customer, supplier,
licensee or other individual, corporation or other business organization having
a business relationship with the Company or any of its Subsidiaries to cease
doing business with the Company or any of its Subsidiaries or in any way
interferes with the relationship between any such customer, supplier, licensee
or other person and the Company or any of its Subsidiaries or (iii) solicits any
employee of the Company or any of its Subsidiaries to leave the employment
thereof or in any way interferes with the relationship of such employee with the
Company or any of its Subsidiaries, the Board may immediately cancel the award.
Whether a grantee has engaged in any of the activities referred to the preceding
sentence which would cause the award of performance shares to be canceled shall
be determined, in its discretion, by the Board, and any such determination by
the Board shall be final and binding.
Neither this Section 6(B) nor any other provision of the Plan shall
preclude a grantee from transferring the right to receive performance shares to
(i) the trustee(s) of a trust that is revocable by such grantee alone, both at
the time of the transfer and at all times thereafter prior to such grantee's
death, or (ii) the trustee(s)
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of any other trust to the extent approved in advance by the Board. The right to
receive performance shares held by such trustee(s) shall be subject to all the
restrictions, terms and conditions of the Plan and the applicable agreement as
if such trustee(s) were a party to such agreement.
(C) Other Share Awards
The Board, in its discretion, may from time to time make other awards of
shares of Common Stock under the Plan as an inducement to the grantee to enter
the employment of the Company or a Subsidiary, in recognition of the
contribution of the grantee to the performance of the Company or a Subsidiary,
or any branch, department or other portion thereof, in recognition of the
grantee's individual performance or on the basis of such other factors as the
Board may deem relevant. Common Stock issued as a bonus pursuant to this Section
6(C) shall be issued for such consideration as the Board shall determine in its
sole discretion.
SECTION 7
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
subject to any outstanding stock options or performance share awards and the
number of shares of the Common Stock which may be issued under the Plan but are
not subject to outstanding stock options or performance share awards on the date
fixed for determining the shareholders entitled to receive such stock dividend
or distribution shall be adjusted by adding thereto the number of shares of the
Common Stock which would have been distributable thereon if such shares had been
outstanding on such date. Shares of Common Stock so distributed with respect to
any restricted shares held in escrow shall also be held by the Company in escrow
and shall be subject to the same restrictions as are applicable to the
restricted shares on which they were distributed.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock subject to any then outstanding stock option or
performance share award, and for each share of the Common Stock which may be
issued under the Plan but which is not then subject to any outstanding stock
option or performance share award, the number and kind of shares of stock or
other securities into which each outstanding share of the Common Stock shall be
so changed or for which each such share shall be exchangeable. Unless otherwise
determined by the Board, in its discretion, any such stock or securities, as
well as any cash or other property, into or for which any restricted shares held
in escrow shall be changed or exchangeable in any such transaction shall also be
held by the Company in escrow and shall be subject to the same restrictions as
are applicable to the restricted shares in respect of which such stock,
securities, cash or other property was issued or distributed.
In case of any adjustment or substitution as provided for in the first two
paragraphs of this Section 7, the aggregate option price for all shares subject
to each then outstanding stock option prior to such adjustment or substitution
shall be the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number.
If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash or extraordinary distribution
to holders of the Common Stock, (i) the Board shall make any adjustments to any
then outstanding stock option which it determines are equitably required to
prevent dilution or enlargement of the rights of grantees which would otherwise
result from any such transaction, and (ii) unless otherwise determined by the
Board, in its discretion, any stock, securities, cash or other property
distributed with respect to any restricted shares held in escrow or for which
any restricted shares held in escrow shall be exchanged in any such transaction
shall also be held by the Company in escrow and shall be subject to the same
restrictions
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as are applicable to the restricted shares in respect of which such stock,
securities, cash or other property was distributed or exchanged.
No adjustment or substitution provided for in this Section 7 shall require
the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution. Owners of restricted shares held in
escrow shall be treated in the same manner as owners of Common Stock not held in
escrow with respect to fractional shares created by an adjustment or
substitution of shares, except that, unless otherwise determined by the Board,
in its discretion, any cash or other property paid in lieu of a fractional share
shall be subject to restrictions similar to those applicable to the restricted
shares exchanged therefor.
If any adjustment or substitution provided for in this Section 7 requires
the approval of shareholders in order to enable the Company to grant incentive
stock options, then no such adjustment or substitution shall be made without the
required shareholder approval. Notwithstanding the foregoing, in the case of
incentive stock options, if the effect of any such adjustment or substitution
would be to cause the stock option to fail to continue to qualify as an
incentive stock option or to cause a modification, extension or renewal of such
stock option within the meaning of Section 424 of the Code, the Board may elect
that such adjustment or substitution not be made but rather shall use reasonable
efforts to effect such other adjustment of each then outstanding stock option as
the Board, in its discretion, shall deem equitable and which will not result in
any disqualification, modification, extension or renewal (within the meaning of
Section 424 of the Code) of the incentive stock option.
Except as provided in this Section 7, a grantee shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
SECTION 8
ADDITIONAL RIGHTS IN CERTAIN EVENTS
(A) Definitions.
For purposes of this Section 8, the following terms shall have the
following meanings:
(1) The term "Person" shall be used as that term is used in Sections 13(d)
and 14(d) of the 1934 Act as in effect on the effective date of the Plan.
(2) "Beneficial Ownership" shall be determined as provided in Rule 13d-3
under the 1934 Act as in effect on the effective date of the Plan.
(3) A specified percentage of "Voting Power" of a company shall mean such
number of the Voting Shares as shall enable the holders thereof to cast such
percentage of all the votes which could be cast in an annual election of
directors (without consideration of the rights of any class of stock other
than the common stock of the company to elect directors by a separate class
vote); and "Voting Shares" shall mean all securities of a company entitling
the holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the common stock
of the company to elect directors by a separate class vote).
(4) "Tender Offer" shall mean a tender offer or exchange offer to acquire
securities of the Company (other than such an offer made by the Company or any
Subsidiary), whether or not such offer is approved or opposed by the Board.
(5) "Continuing Directors" shall mean a director of the Company who either
(a) was a director of the Company on the effective date of the Plan or (b) is
an individual whose election, or nomination for election, as a director of the
Company was approved by a vote of at least two-thirds of the directors then
still in office who were Continuing Directors (other than an individual whose
initial assumption of office is in connection
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with an actual or threatened election contest relating to the election of
directors of the Company which would be subject to Rule 14a-11 under the 1934
Act, or any successor Rule).
(6) "Section 8 Event" shall mean the date upon which any of the following
events occurs:
(a) The Company acquires actual knowledge that any Person other than
the Company, a Subsidiary or any employee benefit plan(s) sponsored by the
Company or a Subsidiary has acquired the Beneficial Ownership, directly or
indirectly, of securities of the Company entitling such Person to 20% or
more of the Voting Power of the Company;
(b) A Tender Offer is made to acquire securities of the Company
entitling the holders thereof to 20% or more of the Voting Power of the
Company; or
(c) A solicitation subject to Rule 14a-11 under the 1934 Act (or any
successor Rule) relating to the election or removal of 50% or more of the
members of the Board or any class of the Board shall be made by any person
other than the Company or less than 51% of the members of the Board shall
be Continuing Directors; or
(d) The shareholders of the Company shall approve a merger,
consolidation, share exchange, division or sale or other disposition of
assets of the Company as a result of which the shareholders of the Company
immediately prior to such transaction shall not hold, directly or
indirectly, immediately following such transaction a majority of the Voting
Power of (i)in the case of a merger or consolidation, the surviving or
resulting corporation, (ii) in the case of a share exchange, the acquiring
corporation or (iii) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring corporation
which, immediately following the transaction, holds more than 10% of the
consolidated assets of the Company immediately prior to the transaction;
provided, however, that (i) if securities beneficially owned by a grantee are
included in determining the Beneficial Ownership of a Person referred to in
(a) above, (ii) a grantee is required to be named pursuant to Item 2 of the
Schedule 14D-1 (or any similar successor filing requirement) required to be
filed by the bidder making a Tender Offer referred to in (b) above or (iii) if
a grantee is a "participant" as defined in Instruction 3 to Item 4 of Schedule
14A under the 1934 Act (or any successor Rule) in a solicitation (other than a
solicitation by the Company) referred to in (c) above, then no Section 8 Event
with respect to such grantee shall be deemed to have occurred by reason of
such event.
(B) Acceleration of the Exercise Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(I) shall otherwise
provide, notwithstanding any other provision contained in the Plan, in case any
"Section 8 Event" occurs all outstanding stock options (other than those granted
to a person referred to in the proviso to Section 8(A)(6)) shall become
immediately and fully exercisable whether or not otherwise exercisable by their
terms.
(C) Extension of the Expiration Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(I) shall otherwise
provide, notwithstanding any other provision contained in the Plan, all
outstanding stock options granted to a grantee (other than a grantee referred to
in the proviso to Section 8(A)(6)) whose employment with the Company or a
Subsidiary terminates within one year of any Section 8 Event for any reason
other than voluntary termination with the consent of the Company or a
Subsidiary, retirement under any retirement plan of the Company or a Subsidiary
or death, or whose service as a Nonemployee Director ceases within one year of
any Section 8 Event for any reason other than removal for cause or death, which
are exercisable shall continue to be exercisable for a period of three years
from the date of such termination of employment or the date the grantee ceases
to be a Nonemployee Director, but in no event after the expiration date of the
stock option.
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(D) Lapse of Restrictions on Restricted Shares.
Unless the agreement referred to in Section 6(A) shall otherwise provide,
notwithstanding any other provision contained in the Plan, if any "Section 8
Event" occurs prior to the scheduled lapse of all restrictions applicable to
restricted shares (other than shares awarded to a person referred to in the
proviso to Section 8(A)(6)), all such restrictions shall lapse upon the
occurrence of any such "Section 8 Event" regardless of the scheduled lapse of
such restrictions.
(E) Payment of Performance Shares
Unless the agreement referred to in Section 6(B) shall otherwise provide,
notwithstanding any other provision contained in the Plan, if any "Section 8
Event" occurs prior to the end of an award period with respect to an award of
performance shares to a grantee, the performance shares (unless the grantee is a
person referred to in the proviso to Section 8(A)(6)) shall be deemed to have
been fully earned as of the date of the Section 8 Event, regardless of the
attainment or nonattainment of any performance target and shall be paid as
promptly as practicable after the Section 8 Event.
SECTION 9
EFFECT OF THE PLAN ON THE RIGHTS OF GRANTEES
Neither the adoption of the Plan nor any action of the Board pursuant to
the Plan shall be deemed to give any employee any right to be granted a stock
option (with or without alternative stock appreciation rights and/or cash
payment rights) or an award under the Plan. Nothing in the Plan, in any stock
option, alternative stock appreciation rights or cash payment rights granted
under the Plan or in any award under the Plan or in any agreement providing for
any of the foregoing shall confer any right on any employee to continue in the
employ of the Company or any Subsidiary or interfere in any way with the rights
of the Company or any Subsidiary to terminate the employment of any employee at
any time.
Neither the adoption of the Plan nor any action of the Board pursuant to
the Plan shall confer any right to any person to continue as a Nonemployee
Director of the Company or interfere in any way with the rights of the
shareholders of the Company or the Board to elect and remove Nonemployee
Directors.
SECTION 10
WITHHOLDING
Income or employment taxes may be required to be withheld by the Company or
a Subsidiary in connection with the exercise of a stock option or alternative
stock appreciation rights, upon a "disqualifying disposition" of the shares
acquired upon exercise of an incentive stock option, at the time restricted
shares are awarded or vest, performance shares are earned or other shares are
awarded, or upon the receipt by the grantee of cash in payment of cash payment
rights or dividends which are treated as compensation. Except as provided below,
the grantee shall pay the Company in cash the amount required to be withheld.
Unless the Board, in its discretion, shall otherwise determine, a grantee
may elect to have any withholding obligation at the time of the exercise of a
nonstatutory stock option or alternative stock appreciation rights or at the
time restricted shares vest, performance shares are earned or other shares are
awarded satisfied in whole or in part by the Company withholding from the shares
of Common Stock that would otherwise be received shares of the Common Stock
having a fair market value, determined as provided in Section 5(J), on the date
that the amount of tax to be withheld is determined (the "Tax Date") equal to or
less than the amount required to be withheld, and in this event the Company will
request that the grantee pay any additional amount required to be withheld
directly to the Company in cash.
Unless the Board, in its discretion, shall otherwise determine, a grantee
may also elect to have any withholding obligation at the time of the exercise of
a stock option or alternative stock appreciation rights, upon a "disqualifying
disposition" of the shares acquired upon the exercise of an incentive stock
option or at the time restricted shares are granted or vest, performance shares
are earned or other shares are awarded
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satisfied in whole or in part by the grantee delivering to the Company shares of
the Common Stock having a fair market value, determined as provided in Section
5(J), on the Tax Date equal to or less than the amount required to be withheld,
except that no shares of the Common Stock which have been held for less than one
year may be delivered, and in this event the Company will request that the
grantee pay any additional amount required to be withheld directly to the
Company in cash.
Unless the Board, in its discretion, shall otherwise determine, any income
or employment taxes required to be withheld by the Company or any of its
Subsidiaries upon the receipt of cash in payment of cash payment rights or
dividends will be satisfied by the Company by withholding the taxes required to
be withheld from the cash the grantee would otherwise receive.
If a grantee does not pay any income or employment taxes required to be
withheld by the Company or any of its Subsidiaries within ten days after a
request for the payment of such taxes, the Company or such Subsidiary may
withhold such taxes from any other compensation to which the grantee is entitled
from the Company or any of its Subsidiaries. The Company shall not be required
to deliver any shares or make any cash payment under the Plan until the
withholding obligation has been satisfied.
SECTION 11
AMENDMENT
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided that no such alteration or amendment of the Plan shall,
without shareholder approval, (i) increase the number of shares which may be
issued under the Plan as set forth in Section 3, (ii) decrease the purchase
price at which stock options may be granted to less than one hundred percent
(100%) of the fair market value per share of the Common Stock on the date of
grant, (iii) reprice outstanding stock options or other awards or (iv) extend
the duration of the Plan. No alteration, amendment, revocation or termination of
the Plan shall, without the written consent of the holder of an outstanding
grant or award under the Plan, adversely affect the rights of such holder with
respect to such outstanding grant or award.
SECTION 12
EFFECTIVE DATE AND DURATION OF PLAN
Subject to its approval by the shareholders of the Company, the Plan shall
be effective as of December 18, 1997. No stock option or alternative stock
appreciation rights granted under the Plan may be exercised and no restricted,
performance or other shares may be awarded until after such approval. No stock
option, alternative stock appreciation rights or cash payment rights may be
granted and no restricted, performance or other share awards may be made under
the Plan subsequent to December 17, 2007.
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