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EXHIBIT 10.7
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
1995 EQUITY PARTICIPATION PLAN
AMENDED AND RESTATED
AS OF FEBRUARY 25, 1999
1. PURPOSE
This 1995 Equity Participation Plan (the "Plan") of Schweitzer-Mauduit
International, Inc. (the "Corporation") is intended to encourage those employees
who materially contribute to the success of the Corporation or of an Affiliate,
to acquire an ownership interest in the Corporation, thereby increasing their
motivation for and interest in the Corporation's or Affiliate's long-term
success.
2. EFFECTIVE DATE
The Plan is effective as of the date of its adoption by the Board,
subject to approval by the stockholders of the Corporation at the Corporation's
1996 Annual Meeting of stockholders.
3. DEFINITIONS
"Affiliate" means any company in which the Corporation owns 20% or more
of the equity interest (collectively, the "Affiliates").
"Board" means the Board of Directors of the Corporation.
"Change of Control" shall mean the date as of which:(a) a third person,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, acquires actual or beneficial ownership of shares of the Company
having 15% or more of the total number of votes that may be cast for the
election of Directors of the Company; or (b) as the result of any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, provided
that if the requisite number of members of the Compensation Committee are not
Disinterested Persons, the Plan shall be administered by a committee, all of
whom are Disinterested Persons, appointed by the Board and consisting of two or
more directors with full authority to act in the matter. The term "Committee"
shall mean the Compensation Committee or the committee appointed by the Board,
as the case may be.
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"Common Stock" means the common stock, par value $0.10 per share, of
the Corporation and shall include both treasury shares and authorized but
unissued shares and shall also include any security of the Corporation issued in
substitution, in exchange for, or in lieu of the common stock.
"Disinterested Person" means a person who is so defined for purposes of
rule 16b-3 under the Exchange Act, or any successor provision, and who is also
defined as an "outside director" for purposes of section 162(m) of the Code or
any successor section.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as amended from time to time.
"Fair Market Value" means the mean between the high and low sales
prices of the Common Stock, on the relevant date as reported on the composite
list used by the Wall Street Journal for reporting stock prices, or if no such
trading in the common stock shall have taken place on that day, on the last
preceding day on which there was such trading in the common stock.
"Incentive Stock Option" means an Option which is so defined for
purposes of section 422 of the Code or any successor section.
"Insider" has the meaning set forth in subsection 12(g) of this Plan.
"Nonqualified Stock Option" means any Option which is not an Incentive
Stock Option.
"Option" means a right to purchase a specified number of shares of
Common Stock at a fixed option price equal to no less than 100% of the Fair
Market Value of the Common Stock on the date the Option is granted pursuant to
an Option Agreement.
"Option Agreement" means a written agreement entered into between the
Corporation and a Participant setting forth the terms and conditions applicable
to the Option granted to the Participant.
"Option Price" has the meaning set forth in subsection 6(b) of this
Plan.
"Participant" means an officer or employee who the Committee selects to
participate in and receive Options under this Plan (collectively, the
"Participants").
"Retirement" and "Retire" means the termination of employment on or
after the date the Participant is entitled to receive immediate payments under a
qualified retirement plan of the Corporation or an Affiliate; provided, however,
if the Participant is not eligible to participate under a qualified retirement
plan of the Corporation or its Affiliates
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then such Participant shall be deemed to have retired if his termination of
employment is on or after the date such Participant has attained age 55.
"SAR" has the meaning set forth in subsection 6(j) of this Plan.
"Securities Act" means the Securities Exchange Act of 1933, as amended.
"Total and Permanent Disability" means Totally and Permanently Disabled
as defined in the Schweitzer-Mauduit International, Inc. Retirement Plan,
provided the Committee shall make a determination of Total and Permanent
Disability for any Participant hereunder.
4. ADMINISTRATION
The Plan and all Options granted pursuant thereto shall be administered
by the Committee. The Committee, in its absolute discretion, shall have the
power to interpret and construe the Plan and any Option Agreements; provided,
however, that no action or determination may be made in a manner that would
result in the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section. Any interpretation or construction
of any provisions of this Plan or the Option Agreements by the Committee shall
be final and conclusive upon all persons. No member of the Board or the
Committee shall be liable for any action or determination made in good faith.
Within 60 days following the close of each calendar year that the Plan
is in operation, the Committee shall make a report to the Board specifying the
employees who received Options under the Plan during the prior year, the number
of Options to the individual employees, and the status of prior Options.
The Committee shall have the power to promulgate rules and other
guidelines in connection with the performance of its obligations, powers and
duties under the Plan, including its duty to administer and construe the Plan
and Option Agreements.
The Committee may authorize persons other than its members to carry out
its policies and directives to the limitations and guidelines set by the
Committee, except that: (a) the authority to grant Options, the selection of
employees for participation and decisions concerning the timing, pricing and
amount of an Option shall not be delegated by the Committee; (b) the authority
to administer Options with respect to persons who are subject to section 16 of
the Exchange Act shall not be delegated by the Committee; (c) any delegation
shall satisfy all applicable requirements of rule 16b-3 of the Exchange Act, or
any successor provision; and (d) no such delegation shall result in the
disallowance of a deduction to the Corporation under section 162(m) or any
successor section. Any person to whom such authority is granted shall continue
to be eligible to receive Options under the Plan.
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5. ELIGIBILITY
The Committee shall from time to time select the Plan Participants from
those employees whom the Committee determines either to be in a position to
contribute materially to the success of the Corporation or Affiliate or to have
in the past so contributed. Only employees (including officers and directors who
are employees) of the Corporation and its Affiliates are eligible to participate
in the Plan. No incentive Stock Option may be granted to an employee of an
Affiliate unless such Affiliate is a corporation which the Corporation owns at
least 50% of the equity interest.
6. OPTION TERMS
The Committee shall determine and designate from time to time those
Participants to whom Options are to be granted and the number of shares of
Common Stock to be optioned to each. Such Options may be in the form of
Incentive Stock Options or in the form of Nonqualified Stock Options. After
granting an Option to a Participant, the Committee shall cause to be delivered
to the Participant an Option Agreement evidencing the granting of the Option.
The Option Agreement shall be in such form as the Committee shall from time to
time approve. The terms and conditions of all Options granted under the Plan
need not be the same, but all Options must meet the applicable terms and
conditions specified in subsections 6(a) through 6(h).
(a) Period of Option. The period of each Option shall be no more than
10 years from the date it is granted.
(b) Option Price. The Option price shall be determined by the
Committee, but shall not in any instance be less than the Fair Market Value of
the Common Stock at the time that the Option is granted (the "Option Price").
(c) Vesting. The Option shall not be exercisable until at least one
year has expired after the granting of the Option, during which time the
Participant shall have been in the continuous employ of the Corporation or an
Affiliate. At any time during the period of the Option after the end of the
first year, the Participant may purchase up to 30 percent of the shares covered
by the Option; after the end of the second year, an additional 30 percent; and
after the end of the third year, the remaining 40 percent of the total number of
shares covered by the Option. Notwithstanding the foregoing, in the event of a
Change of Control the remaining portion of the Option shall become immediately
vested and exercisable in full.
(d) Exercise upon Termination. If the Participant's employment with the
Corporation or an Affiliate is terminated for any reason other than death,
Retirement or Total and Permanent Disability, the Option shall be exercisable
only for three months following such termination (or the expiration of the
option term, if earlier) and only for the number of shares of Common Stock which
were exercisable on the date of such termination. A termination of employment
with the Corporation or an Affiliate to accept
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immediate reemployment with the Corporation or an Affiliate shall not be deemed
to be a termination of employment for purposes of the Plan.
(e) Exercise after Death, Retirement and Disability. If a Participant
dies or becomes Totally and Permanently Disabled, without having exercised the
Option in full, the remaining portion of such Option may be exercised, without
regard to the limitations in subsection 6(c), within a period not to exceed (i)
three years from the date of any such death or Total and Permanent Disability or
(ii) the remaining period of the Option, whichever is earlier. Upon a
Participant's death, the Option may be exercised by the person or persons to
whom such Participant's rights under the Option shall pass by will or by
applicable law or, if no such person has such rights, by his executor or
administrator. If a Participant Retires without having exercised the Option in
full, the remaining portion of such Option may be exercised, without regard to
the limitations in subsection 6(c), within a period not to exceed (i) five years
or such longer period established by the Committee on the date the Option is
granted) from the date of such event or (ii) the remaining period of the Option,
whichever is earlier.
(f) Non-transferability. During the Participant's lifetime, Options
shall be exercisable only by such Participant. Options shall not be transferable
other than by will or the laws of descent and distribution upon the
Participant's death. Notwithstanding anything in this subsection 6(e) to the
contrary, at the same time as Nonqualified Stock Options are granted the
Committee may also grant to designated Participants the right to transfer such
Options, to the extent allowed under rule 16b-3 of the Exchange Act, subject to
terms and conditions of the Committee Rules on the date of grant.
(g) Exercise; Notice Thereof. Options shall be exercised by delivering
to the Corporation, at the office of the Treasurer, written notice of the number
of shares with respect to which Option rights are being exercised and by paying
in full the Option Price of the shares at the time being acquired. Payment may
be made in cash, a check payable to the Corporation or in shares of Common Stock
transferable to the Corporation and having a Fair Market Value on the transfer
date equal to the amount payable to the Corporation. The date of exercise shall
be deemed to be the date the Corporation receives the written notice and payment
for the shares being purchased. A Participant shall have none of the rights of a
stockholder with respect to shares covered by such Option until the Participant
becomes the record holder of such shares; provided, however that the Participant
shall be deemed to be the record holder of shares as of the date an Option is
exercised with respect to such shares.
(h) Purchase for Investment. It is contemplated that the Corporation
will register shares sold to Participants pursuant to the Plan under the
Securities Act. In the absence of an effective registration, however, a
Participant exercising an Option hereunder may be required to give a
representation that he/she is acquiring such shares as an investment and not
with a view to distribution thereof.
(i) Limitations on Incentive Stock Option Grants.
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(i) An Incentive Stock Option shall be granted only to an
individual who, at the time the Option is granted, does not own stock
possessing more than 10 percent of the total combined voting power of
all classes of stock of the Corporation or Affiliates.
(ii) The aggregate Fair Market Value of all shares with
respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year shall not exceed
$100,000. The aggregate Fair Market Value of such shares shall be
determined at the time the Option is granted.
(j) Options for Nonresident Aliens. In the case of any Option awarded
to a Participant who is not a resident of the United States or who is employed
by an Affiliate other than an Affiliate that is incorporated, or whose place of
business is, in a State of the United States, the Committee may (i) waive or
alter the conditions set forth in subsections 6(a) through 6(h) to the extent
that such action is necessary to conform such Option to applicable foreign law,
or (ii) take any action, either before or after the award of such Option, which
it deems advisable to obtain approval of such Option by an appropriate
governmental entity; provided, however, that no action may be taken hereunder if
such action would (1) materially increase any benefits accruing to any
Participants under the Plan, (2) materially increase the number of securities
which may be issued under the Plan, (3) modify the requirements for eligibility
to participate in the Plan, (4) result in a failure to comply with applicable
provisions of the Securities Act, the Exchange Act or the Code or (5) result in
the disallowance of a deduction to the Corporation under section 162(m) of the
code or any successor section.
(k) Election to Receive Cash Rather than Stock.
(i) At the same time as Nonqualified Stock Options are granted
the Committee may also grant to designated Participants the right to
convert a specified number of shares of Common Stock covered by such
Nonqualified Stock Options to cash, subject to terms and conditions of
this subsection 6(k). For each such Option so converted, the
Participant shall be entitled to receive cash equal to the difference
between the Participant's Option Price and the Fair Market Value of the
Common Stock on the date of conversion. Such a right shall be referred
to herein as a Stock Appreciation Right ("SAR"). Participants to whom
an SAR has been granted shall be notified of such grant and of the
Options to which such SAR pertains. An SAR may be revoked by the
Committee, in its sole discretion, at any time, provided, however, that
no such revocation may be taken hereunder if such action would result
in the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section.
(ii) A person who has been granted an SAR and who is an
insider for purposes of section 16 of the Exchange Act may exercise
such SAR during such
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periods as provided for in the rules promulgated under section 16 of
the Exchange Act. The SAR shall expire when the period of the subject
Option expires.
(iii) At the time a Participant pursuant to an SAR converts
one or more shares of Common Stock covered by an Option to cash, such
Participant must exercise one or more Nonqualified Stock Options, which
were granted at the same time as the Option subject to such SAR, for an
equal or greater number of shares of Common Stock. In the event that
the number of shares and the Option Price per share of all shares of
Common Stock subject to outstanding Options is adjusted as provided in
section 9 hereof, the above SARs shall automatically be adjusted in the
same ratio which reflects the adjustment to the number of shares and
the Option Price per share of all shares of Common Stock subject to
outstanding Options.
7. SHARES SUBJECT TO THE PLAN
The number of shares of Common Stock available with respect to Options
granted under this Plan shall not exceed 1,500,000 in the aggregate, subject to
the adjustment provision set forth in section 9 hereof. The shares of Common
Stock subject to the Plan may consist in whole or in part of authorized but
unissued shares or of treasury shares, as the Board may from time to time
determine. Shares subject to Options which become ineligible for purchase will
be available for grant under the Plan to the extent permitted by section 16 of
the Exchange Act (or the rules and regulations promulgated thereunder) and to
the extent determined to be appropriate by the Committee.
8. INDIVIDUAL LIMITS
The maximum number of shares of Common Stock covered by Options which
may be granted to any Participant within any 2 consecutive calendar year period
shall not exceed 400,000, in the aggregate. If an Option which had been granted
to a Participant is canceled, the shares of Common Stock which had been subject
to such canceled Option shall continue to be counted against the maximum number
of shares for which Options may be granted to the Participant. In the event that
the number of Options which may be granted is adjusted as provided in section 9
hereof, the above limits shall automatically be adjusted in the same ratio.
9. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or the
capitalization of the Corporation through a corporate transaction, such as any
merger, any acquisition through the issuance of capital stock of the
Corporation, any consolidation, any separation of the Corporation (including a
spin-off or other distribution of stock by the Corporation), any reorganization
of the Corporation (whether or not such reorganization comes with the definition
of such term in section 368 of the Code), or any partial or complete liquidation
by the Corporation, recapitalization, stock dividend, stock split or other
change in the
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corporate structure, appropriate adjustments and changes shall be made by the
Committee, to the extent necessary to preserve the benefit to the Participants
contemplated hereby, to reflect such changes in (a) the aggregate number of
shares subject to the Plan, (b) the maximum number of shares for which Options
may be granted to any Participant, (c) the number of shares and Option Price per
share of all shares of Common Stock subject to outstanding options, and (d) such
other provisions of the Plan as may be necessary and equitable to carry out the
foregoing purposes; provided, however, that no such adjustment or change may be
made to the extent that such adjustment or change will result in the
disallowance of a deduction to the Corporation under section 162(m) of the Code
or any successor section.
10. EFFECT ON OTHER PLANS
All benefits under the Plan shall constitute special compensation and
shall not affect the level of benefits provided to or received by any
Participant (or the Participant's estate or beneficiaries) as part of any
employee benefit plan of the Corporation or an Affiliate. The Plan shall not be
construed to affect in any way a Participant's rights and obligations under any
other plan maintained by the Corporation or an Affiliate on behalf of employees.
11. TERM OF THE PLAN
The Plan shall remain in effect until the tenth anniversary of the date
of its adoption by the Board, unless the Plan is terminated prior thereto by the
Committee. No Option may be granted after the termination date of the Plan, but
Options theretofore granted shall continue in force beyond that date pursuant to
their terms.
12. GENERAL PROVISIONS
(a) No Right of Continued Employment. Neither the
establishment of the Plan nor the payment of any benefits hereunder nor
any action of the Corporation, its Affiliates, the Board of Directors
of the Corporation or its Affiliates, or the Committee shall be held or
construed to confer upon any person any legal right to be continued in
the employ of the Corporation or its Affiliates, and the Corporation
and its Affiliates expressly reserve the right to discharge any
Participant without liability to the Corporation, its Affiliates, the
Board of Directors of the Corporation or its Affiliates, or the
Committee, except as to any rights which may be expressly conferred
upon a Participant under the Plan.
(b) Binding Effect. Any decision made or action taken by the
Corporation, the Board or by the Committee arising out of or in
connection with the construction, administration, interpretation and
effect of the Plan shall be conclusive and binding upon all persons.
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(c) Inalienability of Benefits and Interest. Except as
provided in subsection 6(e), no benefit payable or interest in the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such
attempted action shall be void and no such benefit or interest shall be
in any manner liable for or subject to debts, contracts, liabilities,
engagements, or torts of any Participant or beneficiary.
(d) Georgia Law to Govern. All questions pertaining to the
construction, interpretation, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws
of the State of Georgia.
(e) Purchase of Common Stock. The Corporation and its
Affiliates may purchase from time to time shares of Common Stock in
such amounts as they may determine for purposes of the Plan. The
Corporation and its Affiliates shall have no obligation to retain, and
shall have the unlimited right to sell or otherwise deal with for their
own account, any shares of Common Stock purchased pursuant to this
paragraph.
(f) Use of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to the exercise of Options shall
be used for general corporate purposes.
(g) Withholding. The Committee shall require the withholding
of all taxes as required by law. A Participant shall pay in cash any
amount required to be withheld under federal, state or local law with
respect to the exercise of an Option or may elect to have any portion
of the federal, state or local income tax withholding required with
respect to an exercise of a Nonqualified Stock Option satisfied by
tendering to the Corporation shares of Common Stock, which, in the
absence of such an election, would have been issued to such Participant
in connection with such exercise. In the event that the value of the
shares of Common Stock tendered to satisfy the withholding tax required
with respect to an exercise exceeds the amount of such tax, the excess
of such market value over the amount of such tax shall be returned to
the Participant, to the extent possible, in whole shares of Common
Stock, and the remainder in cash. The value of a share of Common Stock
tendered pursuant to this subsection 12(g) shall be the Fair Market
Value of the Common Stock on the date on which such shares are tendered
to the Corporation. An election pursuant to this subsection 12(g) shall
be made in writing and signed by the Participant. An election pursuant
to this subsection 12(g) is irrevocable. A Participant who exercises an
Option and who is required to report to the Securities and Exchange
Commission under section 16(a) of the Exchange Act (an "Insider") may
satisfy the income tax withholding due in respect of such exercise
pursuant to this subsection 12(g) by withholding shares under the
Option only if the Insider also satisfies an exemption under section
16(a) of the Exchange Act (or the rules or regulations promulgated
thereunder) for such withholding.
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(h) Amendments. The Committee may at any time amend, suspend,
or discontinue the Plan or alter or amend any or all Options and Option
Agreements under the Plan to the extent (1) permitted by law, (2)
permitted by the rules of any stock exchange on which the Common Stock
or any other security of the Corporation is listed, (3) permitted under
applicable provisions of the Securities Act and the Exchange Act
(including rule 16b-3) and (4) that such action would not result in the
disallowance of a deduction to the Corporation under section 162(m) of
the Code or any successor section (including the rules and regulations
promulgated thereunder); provided, however, that if any of the
foregoing requires the approval by stockholders of any such amendment,
suspension or discontinuance, then the Committee may take such action
subject to the approval of the stockholders. Except as provided in
subsection 6(i) no such amendment, suspension, or termination of the
Plan shall, without the consent of the Participant, adversely alter or
change any of the rights or obligations under any Options or other
rights previously granted the Participant under the Plan.
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