EXHIBIT 10.3
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JLG INDUSTRIES, INC.
STOCK INCENTIVE PLAN
(As Amended and Restated)
1. PURPOSE
The JLG Industries, Inc. Stock Incentive Plan (the "Plan"), as amended and
restated as of May 23, 1991, is designed to enable key personnel of JLG
Industries, Inc. (the "Company") and its Subsidiaries to acquire or
increase a proprietary interest in the Company, and thus to share in the
future success of the Company's business. Accordingly, the Plan is
intended as a further means not only of attracting and retaining
outstanding personnel, but also of promoting a closer identity of
interests between management and shareholders. Since the personnel
eligible to receive Awards under the Plan will be those who are in
positions to make important and direct contributions to the success of the
Company, the directors believe that the grant of Awards under the Plan
will be in the Company's interest.
2. DEFINITIONS
In this Plan document, unless the context clearly indicates otherwise,
words in the masculine gender shall be deemed to refer to females as well
as males, any term used in the singular also shall refer to the plural,
and the following capitalized terms shall have the following meanings set
forth in this Section 2:
(a) "Award" means an Option, Restricted Shares or a Right. Unless the
context clearly indicates otherwise, the term "Awards" shall include
Options, Restricted Shares and Rights.
(b) "Beneficiary" means the person or persons designated in writing by
the Grantee as his beneficiary in respect of an Award; or, in the
absence of an effective designation or if the designated person or
persons predecease the Grantee, the Grantee's Beneficiary shall be
the person or persons who acquire by bequest or inheritance the
Grantee's rights in respect of an Award. In order to be effective, a
Grantee's designation of a Beneficiary must be on file with the
Company before the Grantee's death. Any such designation may be
revoked and a new designation substituted therefor at any time
before the Grantee's death.
(c) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(d) "Change in Control" means the first to occur of the following
events:
(1) an acquisition (other than directly from the Company) of
securities of the Company by any person, immediately after
which such person, together with all securities law affiliates
and associates of such person, becomes the beneficial owner of
securities of the Company representing 25 percent or more of
the voting power; provided that, in determining whether a
Change in Control has occurred, the acquisition of securities
of the Company in a non-control acquisition will not
constitute an acquisition that would cause a Change in
Control; or
(2) three or more directors, whose election or nomination for
election is not approved by a majority of the members of the
incumbent Board then serving as members of the Board of
Directors, are elected within any single 12-month period to
serve on the Board of Directors; provided that an individual
whose election or nomination for election is approved as a
result of either an actual or threatened election contest or
proxy contest, including
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by reason of any agreement intended to avoid or settle any
election contest or proxy contest, will be deemed not to have
been approved by a majority of the incumbent Board for
purposes of this definition; or
(3) members of the incumbent Board cease for any reason to
constitute at least a majority of the Board of Directors; or
(4) approval by shareholders of the Company of: (i) a merger,
consolidation, or reorganization involving the Company, unless
(A) the shareholders of the Company, immediately before the
merger, consolidation, or reorganization, own, directly
or indirectly immediately following such merger,
consolidation, or reorganization, at least 75 percent of
the combined voting power of the outstanding voting
securities of the corporation resulting from such
merger, consolidation, or reorganization in
substantially the same proportion as their ownership of
the voting securities immediately before such merger,
consolidation, or reorganization;
(B) individuals who were members of the incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation, or
reorganization constitute at least a majority of the
board of directors of the surviving corporation; and
(C) no person (other than (I) the Company or any Subsidiary
thereof, (II) any employee benefit plan (or any trust
forming a part thereof) maintained by the Company, any
Subsidiary thereof, or the surviving corporation, or
(III) any person who, immediately prior to such merger,
consolidation, or reorganization, had beneficial
ownership of securities representing 25 percent or more
of the voting power) has beneficial ownership of
securities representing 25 percent or more of the
combined voting power of the Surviving Corporation's
then outstanding voting securities;
(ii) a complete liquidation or dissolution of the Company; or
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any person
(other than a transfer to a Subsidiary).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Committee" means a committee consisting of such number of members
of the Compensation Committee of the Board of Directors with such
qualifications as are required to satisfy the requirements of (i)
Rule 16b-3 under the Securities Exchange Act of 1934, as in effect
from time to time (or any successor rule of similar import) and (ii)
Section 162(m) of the Code, and the regulations thereunder, as in
effect from time to time (or any successor provision of similar
import), to the extent that Awards made under the Incentive Plan are
intended to qualify as performance-based compensation thereunder.
(g) "Company" means JLG Industries, Inc.
(h) "Disability" or "Disabled" means having a total and permanent
disability as defined in Section 22(e)(3) of the Code.
(i) "Fair Market Value" means, when used in connection with the Shares
on a certain date, the fair market value of a Share as determined by
the Committee, and shall be deemed equal to the mean of the high and
low prices at which Shares are traded on such date (or on the next
preceding day for which such information is ascertainable at the
time of the Committee's determination) as reported for such
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date by The Wall Street Journal (or if Shares are not traded on such
date, on the next preceding day on which Shares are traded) (or if
Shares are traded on such date but no edition of The Wall Street
Journal reporting such prices for such date is published, the fair
market value shall be deemed equal to the mean of the high and low
prices at which Shares are traded on such date as reported through
the National Association of Securities Dealers Automated Quotations
System in any other newspaper).
(j) "Grantee" means a person to whom an Award has been granted under the
Plan.
(k) "Incentive Stock Option" means an Option that complies with the
terms and conditions set forth in Section 422(b) of the Code and is
designated by the Committee as an Incentive Stock Option.
(l) "Limited Stock Appreciation Right" or "Right" means a right that
provides for payment in accordance with Section 10 hereof.
(m) "Non-qualified Stock Option" means an Option granted under the Plan
other than an Incentive Stock Option.
(n) "Option" means any option to purchase a Share or Shares pursuant to
the provisions of the Plan. Unless the context clearly indicates
otherwise, the term "Option" shall include both Incentive Stock
Options and Non-qualified Stock Options.
(o) "Option Agreement" means the written agreement to be entered into by
the Company and the Grantee, as provided in Section 7 hereof.
(p) "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code (or a successor provision of
similar import).
(q) "Performance-Based Restricted Shares" means Restricted Shares that
are intended to qualify as performance-based compensation under
Section 162(m) of the Code, and the regulations thereunder.
(r) "Plan" means the JLG Industries, Inc. Stock Incentive Plan, as
amended and restated on May 23, 1991, as set forth herein and as
amended from time to time (except where the context makes clear that
the reference is to the Plan as in effect prior to May 23, 1991,
which was called the JLG Industries, Inc. 1983 Stock Option Plan (as
amended and restated)).
(s) "Quota" means the portion of the total number of Shares subject to
an Option that the Grantee of the Option may purchase during each of
the several periods of the Term of the Option (if the Option is
subject to Quotas), as provided in Section 12(a) hereof.
(t) "Restricted Shares" means Shares granted pursuant to Section 11
hereof or purchased under a Non-qualified Stock Option pursuant to
Section 9(d) hereof and subject to such restrictions and other terms
and conditions as the Committee shall determine in accordance with
the Plan.
(u) "Retirement" means retirement pursuant to the JLG Industries, Inc.
Employees' Retirement Savings Plan, as amended from time to time.
(v) "Shares" means shares of the Company's $.20 par value common stock.
(w) "Subsidiary" means a subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code (or a successor provision
of similar import.)
(x) "Term" means the period during which a particular Option or Right
may be exercised.
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3. EFFECTIVE DATE AND DURATION OF THE AMENDED AND RESTATED PLAN
(a) This amendment and restatement of the Plan became effective as of
May 23, 1991, and shall continue in effect for a term of ten years
after that date. This amendment and restatement of the Plan as of
May 23, 1991 shall not affect the terms of any Option that was
outstanding on May 22, 1991; all such Options shall continue to be
governed by the terms of the Plan in effect on May 22, 1991.
(b) Awards may be granted at any time prior to the earlier of the
expiration of the ten-year term of the Plan, as described in
subsection (a) above, or the termination of the Plan pursuant to
Section 19 hereof. For the purpose of commencing the ten-year period
specified in Section 422(b)(2) of the Code during which Incentive
Stock Options may be granted, this amendment and restatement of the
Plan as of May 23, 1991 shall constitute the adoption of a new plan.
An Award outstanding at the time the Plan is terminated (either by
expiration of the ten-year term of the Plan or by termination of the
Plan pursuant to Section 19 hereof) shall not cease to be or cease
to become exercisable pursuant to its terms solely because of the
termination of the Plan.
4. NUMBER AND SOURCE OF SHARES SUBJECT TO THE PLAN
(a) Subject to the provision of subsection (d) below, the Company may
grant Awards (including Replacement Options granted under Section
13(b) hereof) under the Plan, as amended and restated as of May 23,
1991, and as further amended as of November 21, 1994, with respect
to not more than (i) the remaining number of Shares with respect to
which additional Options were authorized to be granted under the
Plan immediately prior to its amendment and restatement as of May
23, 1991 (namely 2,383 Shares) plus (ii) 500,000 additional Shares
(subject, however, to increase as provided in subsection (c) below
and to adjustment as provided in Section 17 hereof) which shall be
provided from Shares in the treasury or by the issuance of Shares
authorized but unissued.
(b) If an Option granted on or after May 23, 1991 is surrendered before
exercise, or lapses or is terminated without being exercised, in
whole or in part, for any reason other than the exercise of a Right,
the Shares subject to the Option shall be restored to the aggregate
maximum number of Shares (specified in subsection (a) above) with
respect to which Awards may be granted under the Plan, but only to
the extent that the Option or any related Right has not been
exercised. Similarly, if any Restricted Shares are forfeited and
returned to the Company, such forfeited Shares shall be restored to
such aggregate maximum number of Shares with respect to which Awards
may be granted under the Plan.
(c) If, on or after May 23, 1991, any of the Options granted before May
23, 1991 under the Plan as in effect before May 23, 1991 (which
Options, to the extent still outstanding on May 23, 1991, were
granted with respect to a total of 61,725 Shares) is surrendered
before exercise, or lapses or is terminated without being exercised,
in whole or in part, for any reason, the Company may grant Awards
under the Plan with respect to the Shares subject to the Option in
addition to the aggregate maximum number of Shares specified in
subsection (a) above, but only to the extent that the Option has not
been exercised.
(d) The Company may grant Incentive Stock Options under the Plan only
with respect to not more than 500,000 of the Shares specified in
subsection (a) above. If an Incentive Stock Option granted on or
after May 23, 1991 is surrendered before exercise, or lapses or is
terminated without being exercised, in whole or in part, for any
reason other than the exercise of a Right, the Shares subject to the
Incentive Stock Option shall be restored to the aggregate maximum
number of Shares (specified in subsection (a) above) with respect to
which Awards may be granted under the Plan and to the aggregate
maximum number (specified in the first sentence of this subsection
(d)) of those Shares with respect to which Incentive Stock Option
may be granted under the Plan, but only to the extent that the
Incentive Stock Option or any related Right has not been exercised.
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(e) The maximum number of Shares that can be the subject of Awards to
any individual in any fiscal year of the Company is 100,000 Shares.
For purposes of this subsection (e), (i) if an Award is canceled,
the canceled Award shall be counted against the maximum number of
Shares for which Awards may be granted to the individual, and (ii)
if, after grant, the exercise price of an Option or Right is reduced
(other than pursuant to the adjustment provisions of Section 17
hereof), the transaction shall be treated as the cancellation of the
Option or Right and the grant of a new Option or Right, and both the
Option or Right that is deemed to be canceled and the Option or
Right that is deemed to be granted shall reduce the maximum number
of Shares for which Options and Rights may be granted to the
individual.
5. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee.
(b) The Committee may adopt, amend and rescind rules and regulations
relating to the Plan as it may deem proper, shall make all other
determinations necessary or advisable for the administration of the
Plan, and may provide for conditions and assurances deemed necessary
or advisable to protect the interests of the Company, to the extent
not contrary to the express provisions of the Plan; provided,
however, that the Committee may take action only upon the agreement
of a majority of its members then in office. Notwithstanding the
provisions of the preceding sentence, no action or determination by
the Committee may adversely affect any right acquired by any Grantee
or Beneficiary under the terms of any Award granted before the date
such action or determination is taken or made, unless the affected
Grantee or Beneficiary shall expressly consent; but it shall be
conclusively presumed that any adjustment pursuant to Section 17
does not adversely affect any such right. Any action that the
Committee may take through a written instrument signed by all of its
members then in office shall be as effective as though taken at a
meeting duly called and held.
(c) The powers of the Committee shall include plenary authority to
interpret the Plan, and, subject to the provisions hereof, the
Committee may determine (i) the persons to whom Awards shall be
granted; (ii) the number of Shares subject to each Award; (iii) the
Term of each Award; (iv) the frequency of Awards and the date on
which each Award shall be granted; (v) the type of each Award; (vi)
the Quotas (if any), exercise periods, and other terms and
conditions applicable to each Option and Right, and the provisions
of each Option Agreement; (vii) any performance criteria pursuant to
which Awards may be granted; and (viii) the restrictions and other
terms and conditions of each grant of Restricted Shares and the
provisions of any instruments evidencing such grants. The Committee
also may accelerate at any time the exercisability of outstanding
Options, provided that no Option shall be exercisable prior to the
expiration of the mandatory six-month holding period specified in
Section 12(a) hereof.
(d) The determinations, interpretations, and other actions made or taken
by the Committee pursuant to the provisions of the Plan shall be
final, binding, and conclusive for all purposes and upon all
persons.
6. EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
(a) Awards may be granted under the Plan to key employees of the Company
or any Subsidiary (including employees who are directors and/or
officers). All determinations by the Committee as to the identity of
the persons to whom Awards shall be granted hereunder shall be
conclusive.
(b) Directors who are not regular salaried employees of the Company or a
Subsidiary shall not be eligible to receive Awards.
(c) An individual Grantee may receive more than one Award.
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7. OPTION AGREEMENT
(a) No Option or Right shall be exercised by a Grantee unless he shall
have executed and delivered an Option Agreement evidencing the grant
of such Option or Right. The Agreement shall set forth the number of
Shares subject to the Option or Right and the terms, conditions and
restrictions applicable thereto.
(b) Appropriate officers of the Company are hereby authorized to execute
and deliver Option Agreements in the name of the Company as directed
from time to time by the Committee.
8. INCENTIVE STOCK OPTIONS
(a) The Committee may authorize the grant of Incentive Stock Options to
officers and key employees, subject to the terms and conditions set
forth in the Plan. The Option Agreement relating to an Incentive
Stock Option shall state that the Option evidenced by the Option
Agreement is intended to be an "incentive stock option" within the
meaning of Section 422(b) of the Code.
(b) The Term of each Incentive Stock Option shall end (unless the Option
shall have terminated earlier under another provision of the Plan)
on a date fixed by the Committee and set forth in the applicable
Option Agreement. In no event shall the Term of an Incentive Stock
Option extend beyond ten years from the date of grant. In the case
of any Grantee who, on the date the Option is granted, owns (within
the meaning of Section 424(d) of the Code) more than ten percent of
the total combined voting power of all classes of stock of the
Company, a Parent, or a Subsidiary, the Term of the Option shall not
extend beyond five years from the date of grant.
(c) To the extent that the aggregate Fair Market Value of the stock with
respect to which Incentive Stock Options(determined without regard
to this paragraph (c)) are exercisable by any Grantee for the first
time during any calendar year (under all stock option plans of the
Company, its Parent and its Subsidiaries) exceeds $100,000, such
Options shall not be Incentive Stock Options. For the purpose of
this paragraph c), the Fair Market Value of stock shall be
determined as of the time the Option with respect to such stock is
granted. This paragraph (c) shall be applied by taking Options into
account in the order in which they were granted.
(d) The Option price to be paid by the Grantee to the Company for each
Share purchased upon the exercise of an Incentive Stock Option shall
be equal to the Fair Market Value of a Share on the date the Option
is granted, except that with respect to any Incentive Stock Option
granted to a Grantee who, on the date the Option is granted, owns
(within the meaning of Section 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock
of the Company, a Parent, or a Subsidiary, the Option price for each
Share purchased shall not be less than 110 percent of the Fair
Market Value of a Share on the date the Option is granted. In no
event may an Incentive Stock Option be granted if the Option price
per Share is less than the par value of a Share.
(e) Any Grantee who disposes of Shares purchased upon the exercise of an
Incentive Stock Option either (i) within two years after the date on
which the Option was granted, or (ii) within one year after the
transfer of such Shares to the Grantee, shall promptly notify the
Company of the date of such disposition and of the amount realized
upon such disposition.
9. NON-QUALIFIED STOCK OPTIONS
(a) The Committee may authorize the grant of Non-qualified Stock Options
subject to the terms and conditions set forth in the Plan. Unless an
Option is designated by the Committee as an Incentive Stock Option,
it is intended that the Option will not
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be an "incentive stock option" within the meaning of Section 422(b)
of the Code and, instead, will be a Non-qualified Stock Option. The
Option Agreement relating to a Non-qualified Stock Option shall
state that the Option evidenced by the Option Agreement will not be
treated as an Incentive Stock Option.
(b) The Term of each Non-qualified Stock Option shall end (unless the
Option shall have terminated earlier under another provision of the
Plan) on a date fixed by the Committee and set forth in the
applicable Option Agreement. In no event shall the Term of a
Non-qualified Stock Option extend beyond ten years from the date of
grant of the Option.
(c) In no event may a Non-qualified Stock Option be granted if the
Option price per Share is less than the par value of a Share.
(d) At the time of the grant of a Non-qualified Stock Option, the
Committee shall specify whether the Shares purchased under the
Option shall or shall not be Restricted Shares (or whether they
shall be a specified combination of Shares that are, and Shares that
are not, Restricted Shares). Restricted Shares purchased under an
Option shall be subject to the terms, conditions and restrictions
set out in subsections (b) through (e) of Section 11, and such
additional terms, conditions and restrictions as the Committee may
determine. Subject to the provisions of subsections (b) through (e)
of Section 11, the Committee, at the time of grant, shall determine
(and the Option Agreement shall specify) the terms and conditions of
any Restricted Shares that may be purchased under the Non-qualified
Stock Option, including the duration of the restrictions that shall
be imposed on the Restricted Shares, and the dates on which, or
circumstances in which, the restrictions shall expire, lapse or be
removed or the Restricted Shares shall be forfeited. Shares
purchased under an Option after the Company obtains actual knowledge
that a Change in Control has occurred shall not be subject to any
restrictions.
10. LIMITED STOCK APPRECIATION RIGHTS
(a) The Committee may authorize the grant of Limited Stock Appreciation
Rights in connection with all or part of any Option.
(b) A Right may be exercised only at such times, by such persons, and to
such extent, as the related Option is exercisable. Furthermore, a
Right may be exercised only within the 60-day period beginning on
the date on which the Company obtains actual knowledge that a Change
in Control has occurred. As soon as the Company obtains actual
knowledge that a Change in Control has occurred, the Company shall
promptly notify each Grantee in writing of the Change in Control,
whether or not the Grantee holds a Right.
(c) The Shares that are subject to a Right shall not be used more than
once to calculate the amount to be received pursuant to the exercise
of the Right. The right of a Grantee to exercise an Option shall be
canceled if and to the extent that the Shares subject to the Option
are used to calculate the amount to be received upon the exercise of
the related Right, and the right of a Grantee to exercise a Right
shall be canceled if and to the extent that the Shares with respect
to which the Right may be exercised are purchased upon the exercise
of the related Option.
(d) A Right may be granted coincident with or after the grant of any
related Option, provided that the Committee shall consult with
counsel before granting a Right after the grant of a related
Incentive Stock Option.
(e) The amount to be paid to the Grantee upon exercise of a Right that
is related to a Non-qualified Stock Option shall be paid in cash,
and shall be equal to the number of Shares with respect to which the
Right is exercised multiplied by the excess of
(1) the higher of (i) the highest Fair Market Value of a Share
during the period commencing on the ninetieth (90th) day
preceding the exercise of the
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Right and ending on the date of exercise; or (ii) if an event
described in paragraph (i) of the definition of "Change in
Control", above, has occurred, the highest price per Share (A)
paid for any Share in any transaction occurring during the
period described in clause (i) by any person or group (as
defined in the definition of "Change in Control", above) whose
acquisition of Shares caused the Change in Control to occur,
or (B) paid for any Share as shown on Schedule 13D (or an
amendment thereto) filed pursuant to Section 13(d) of the
Securities Exchange Act of 1934 by any such person or group,
over
(2) the Option price of the related Non-qualified Stock Option.
(f) The amount to be paid to the Grantee upon exercise of a Right that
is related to an Incentive Stock Option shall be paid in cash, and
shall be equal to the number of Shares with respect to which the
Right is exercised multiplied by the excess of (i) the Fair Market
Value (as of the exercise date of the Right) of a Share over (ii)
the Option price of the related Incentive Stock Option.
11. RESTRICTED SHARES
(a) The Committee may authorize the grant of Restricted Shares subject
to the terms and conditions set forth in the Plan. The following
terms, conditions and restrictions and such additional terms,
conditions and restrictions as may be determined by the Committee
shall apply to Restricted Shares. Subject to the provisions of this
Section 11 (including, in the case of Performance-Based Restricted
hares, paragraph (f)), the Committee shall determine at the time of
grant the size and the terms and conditions of each grant of
Restricted Shares, including the duration of the restrictions that
shall be imposed on the Restricted Shares, the dates on which, or
circumstances in which, the restrictions shall expire, lapse or be
removed or the Restricted Shares shall be forfeited, and the price
to be paid to the Company by the Grantee (and the terms of payment
thereof) for the Restricted Shares. In no event, however, shall the
price of a Restricted Share be less than the par value of a Share on
the date of grant. The Committee may cause to be issued an
instrument evidencing the grant of the Restricted Shares to the
Grantee, which instrument may set forth the restrictions and other
terms and conditions of the grant.
(b) A Grantee who has acquired Restricted Shares (pursuant to either a
grant of Restricted Shares or the exercise of an Option to purchase
Restricted Shares) shall have beneficial ownership of the Restricted
Shares, including the right to receive dividends on (subject, in the
case of Performance-Based Restricted Shares, to the provisions of
paragraph (f)) and the right to vote, the Restricted Shares. A
certificate or certificates representing the number of Restricted
Shares acquired shall be registered in the name of the Grantee. The
Committee, in its sole discretion, shall determine when the
certificate or certificates shall be delivered to the Grantee (or,
in the event of the Grantee's death, to his Beneficiary), may
provide for the holding of such certificate or certificates in
custody by a bank or other institution or by the Company itself
pending their delivery to the Grantee or Beneficiary, and may
provide for any appropriate legend to be borne by the certificate or
certificates referring to the terms, conditions and restrictions
applicable to the Shares. Any attempt to dispose of the Shares in
contravention of such terms, conditions and restrictions shall be
ineffective.
(c) While subject to the restrictions imposed by the Committee in
accordance with this Section 11, Restricted Shares
(1) shall not be sold, assigned, conveyed, transferred, pledged,
hypothecated, or otherwise disposed of, and
(2) shall be returned to the Company forthwith, and all the rights
of the Grantee to such Shares shall immediately terminate, if
the Grantee's continuous employment with the Company or any
Subsidiary shall
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terminate for any reason, except as provided in Section 11(d).
The return of the Shares shall be accomplished, if necessary,
by the Grantee's delivering or causing to be delivered to the
Company the certificate(s) for the Shares, accompanied by such
endorsement(s) and/or instrument(s) of transfer as may be
required by the Company. Upon the return of Shares in
accordance with this paragraph (2), the Company shall pay to
the Grantee an amount in cash equal to the lesser of the
aggregate price paid for the Shares returned or the current
fair market value of the Shares returned.
(d) Subject to the following provisions of this Section 11(d), the
restrictions imposed on Restricted Shares shall lapse on such date
or dates as the Committee shall determine when the Restricted Shares
(or any Option to purchase them) are granted. In addition, if a
Grantee who has been in the continuous employment of the Company or
a Subsidiary since the date on which he acquired the Restricted
Shares becomes Disabled or dies while in such employment, then the
restrictions imposed on the Restricted Shares shall lapse; provided
that, if such Restricted Shares are intended to qualify as
Performance-Based Restricted Shares, they shall cease to qualify as
performance-based compensation for purposes of Section 162(m) of the
Code if the restrictions lapse on the account of the Disability or
death of the Grantee. Further, all restrictions imposed on
Restricted Shares shall lapse immediately following the date on
which the Company obtains actual knowledge that a Change in Control
has occurred; provided that, if such Restricted Shares are intended
to qualify as Performance-Based Restricted Shares, they shall cease
to qualify as performance-based compensation for purposes of Section
162(m) of the Code if the restrictions lapse on account of a Change
in Control.
(e) If, after Restricted Shares are transferred to a Grantee (pursuant
to either a grant of Restricted Shares or the exercise of an Option
to purchase Restricted Shares), the Grantee properly elects,
pursuant to section 83(b) of the Code, to include in gross income
for Federal income tax purposes the amount determined under section
83(b) of the Code, the Grantee shall furnish to the Company a copy
of his completed and signed election form, and shall pay (or make
arrangements satisfactory to the Company to pay) to the Company any
Federal, state or local taxes required to be withheld with respect
to the Shares. If the Grantee fails to make such payments, the
Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct from any payment of any kind otherwise due
to the Grantee any Federal, state or local taxes of any kind
required by law to be withheld with respect to the Shares.
(f) The Committee may authorize the grant of Performance-Based
Restricted Shares subject to the following terms and conditions, in
addition to all other applicable terms and conditions set forth in
the Plan:
(1) The restrictions imposed on Performance-Based Restricted
Shares shall expire, lapse or be removed based solely on the
account of the attainment of performance targets established
by the Committee using one or more of the following objective
financial criteria pertaining to the Company as the applicable
business objectives: (i) earning per share, (ii) return on
equity, (iii) return on assets, (iv) stock price appreciation,
(v) annual sales and (vi) annual net income. The establishment
of the actual performance targets and, if an award is based on
more than one of the foregoing financial criteria, the
weighing of such financial criteria, shall be at the sole
discretion of the Committee; provided, however, that in all
cases the performance targets must be established by the
Committee in writing no later than 90 days after the
commencement of the fiscal year to which the performance
target(s) relates and when achievement of the performance
target(s) is substantially uncertain. Once established by the
Committee, the performance target(s) may not be changed to
increase the amount of compensation that otherwise would be
due upon the attainment of the performance target(s).
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(2) Dividends shall be payable on Performance-Based Restricted
Shares only to the extent of the Shares received based upon
the attainment of the preestablished performance target(s).
(3) Prior to the release of restrictions on any Performance-Based
Restricted Shares, the Committee shall certify in writing
(which may be set forth in the minutes of the Committee) that
the preestablished performance target(s) have been satisfied.
12. TERMS AND QUOTAS OF OPTION
(a) Each Option and Right granted under the Plan shall be exercisable
only during a Term commencing at least six months after the date on
which the Option or Right was granted. The Committee shall have
authority to grant both Options exercisable in full at any time
during their Term and Options exercisable in Quotas. In exercising
an Option that is subject to Quotas, the Grantee may purchase less
than the full Quota available under the Option during any period.
Quotas or portions thereof not purchased in earlier periods shall
accumulate and shall be available for purchase in later periods
within the Term of the Option.
(b) Upon the expiration of the mandatory six-month holding period
specified in subsection (a) above, any Option shall be exercisable
in full, notwithstanding the applicability of any Quota or other
limitation on the exercise of such Option, immediately following the
date on which the Company obtains actual knowledge that a Change in
Control has occurred.
13. EXERCISE OF OPTION OR RIGHT
(a) Options or Rights shall be exercised by delivering or mailing to the
Committee:
(1) a notice, in the form and in the manner prescribed by the
Committee, specifying the number of Shares to be purchased, or
the number of Shares with respect to which a Right shall be
exercised, and
(2) if an Option is exercised, payment in full of the Option price
for the Shares so purchased
(i) by money order, cashier's check, or certified check;
(ii) by the tender of Shares to the Company, or by the
attestation to the ownership of the Shares that otherwise
would be tendered to the Company in exchange for the Company's
reducing the number of Shares that it issues to the Grantee by
the number of Shares necessary for payment in full of the
Option price for the Shares so purchased;
(iii) by money order, cashier's check, or certified check and
the tender of Shares to the Company, or by money order,
cashier's check, or certified check and the attestation to the
ownership of the Shares that otherwise would be tendered to
the Company in exchange for the Company's reducing the number
of Shares that it issues to the Grantee by the number of
Shares necessary for payment in full of the Option price for
the Shares so purchased; or
(iv) unless the Committee expressly notifies the Grantee
otherwise (at the time of grant in the case of an Incentive
Stock Option or at any time prior to full exercise in the case
of a Non-qualified Stock Option), and except to the extent
that the Option is an Option to purchase Restricted Shares, by
the Grantee's (a) irrevocable instructions to the Company to
deliver the Shares issuable upon exercise of the Option
promptly to the broker for the Grantee's account and (b)
irrevocable instruction letter to the broker to sell Shares
sufficient to pay the exercise price and upon such sale to
deliver the exercise price to the Company, provided that at
the time of such
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exercise, such exercise would not subject the Grantee to
liability under section 16(b) of the Securities Exchange Act
of 1934, or would be exempt pursuant to Rule 16b-3 promulgated
under such Act or any other exemption from such liability. The
Company shall deliver an acknowledgment to the broker upon
receipt of instructions to deliver the Shares. The Company
shall deliver the Shares to the broker upon the settlement
date. The broker shall deliver to the Company cash sale
proceeds sufficient to cover the exercise price upon receipt
of the Shares from the Company.
Shares tendered or attested to in exchange for Shares issued
under the Plan must be held by the Grantee for at least six
months prior to their tender or their attestation to the
Company, and may not be Restricted Shares at the time they are
tendered or attested to. The Committee shall determine
acceptable methods for tendering or attesting to Shares to
exercise an Option under the Plan, and may impose such
limitations and prohibitions on the use of Shares to exercise
Options as it deems appropriate. For purposes of determining
the amount of the Option price satisfied by tendering or
attesting to Shares, such Shares shall be valued at their Fair
Market Value on the date of tender or attestation, as
applicable. Except as provided in this paragraph, the date of
exercise shall be deemed to be the date that the notice of
exercise and payment of the Option price are received by the
Committee. For exercise pursuant to Section 13(a)(2)(iv) of
the Plan, the date of exercise shall be deemed to be the date
that the notice of exercise is received by the Committee.
(b) At the time it grants a Non-qualified Stock Option, the Committee
may provide in the Option Agreement that if the Grantee exercises
the Non-qualified Stock Option (the "Exercised Option") by tendering
Shares to the Company to pay the Option price in accordance with
subsection (a) above, he shall be granted, as of the date of
exercise, a Non-qualified Stock Option (the "Replacement Option") to
purchase a number of Shares not exceeding the number of Shares he
tendered to pay the Option price in exercising the Exercised Option;
provided, however, that no Replacement Option shall be granted to
the extent that it, would cause the limitations set forth in
Sections 4(a) and 4(e) hereof to be exceeded. The terms of the
Replacement Option shall be identical to the terms of the Exercised
Option, except that (i) the Option price per Share shall be equal to
the Fair Market Value of a Share on the date on which the
Replacement Option is granted, but in no event shall the Option
price per Share be less than the par value of a Share on that date;
(ii) the Term shall commence at least six months after the date the
Replacement Option is granted, and (iii) the Committee may establish
new Quotas (or no Quotas at all) with respect to the Replacement
Option.
(c) Subject to subsection (d) below, upon receipt of the notice of
exercise and, if an Option is exercised, upon payment of the Option
price, the Company shall promptly deliver to the Grantee (or
Beneficiary) a certificate or certificates for the Shares purchased,
without charge to him for issue or transfer tax, and if a Right is
exercised, shall promptly distribute cash to be paid upon the
exercise of the Right.
(d) The exercise of each Option and Right and the grant or distribution
of Restricted Shares under the Plan shall be subject to the
condition that if at any time the Company shall determine (in
accordance with the provisions of the following sentence) that it is
necessary as a condition of, or in connection with, such exercise
(or the delivery or purchase of Shares thereunder), grant or
distribution (i) to satisfy withholding tax or other withholding
liabilities, (ii) to effect the listing, registration, or
qualification on any securities exchange or under any state or
Federal law of any Shares otherwise deliverable in connection with
such exercise, grant or distribution, or (iii) to obtain the consent
or approval of any regulatory body, then in any such event such
exercise, grant or distribution shall not be effective unless such
withholding, listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Company in its reasonable and good faith
judgment. Any such determination (described in the
29
preceding sentence) by the Company must be reasonable, must be made
in good faith, and must be made without any intent to postpone or
limit such exercise, grant or distribution beyond the minimum extent
necessary and without any intent otherwise to deny or frustrate any
Grantee's rights in respect of any Award. In seeking to effect or
obtain any such withholding, listing, registration, qualification,
consent or approval, the Company shall act with all reasonable
diligence. Any such postponement or limitation affecting the right
to exercise an Option or Right or the grant or distribution of
Restricted Shares shall not extend the time within which the Option
or Right may be exercised or the Restricted Shares may be granted or
distributed, unless the Company and the Grantee choose to amend the
terms of the Award to provide for such an extension; and neither the
Company nor its directors or officers shall have any obligation or
liability to the Grantee or to a Beneficiary with respect to any
Shares with respect to which the Award shall lapse, or with respect
to which the grant or distribution shall not be effected, because of
a postponement or limitation that conforms to the provisions of this
subsection (d).
(e) Except as provided in Section 13(f) below, Options and Rights
granted under the Plan shall be nontransferable other than by will
or by the laws of descent and distribution in accordance with
Section 14(a) hereof, and an Option or Right may be exercised during
the lifetime of the Grantee only by him.
(f) Subject to the approval of the Committee in its sole discretion,
Non-qualified Stock Options, Limited Stock Appreciation Rights that
are granted in connection with Non-qualified Stock Options, and
Restricted Stock may be transferable to members of the immediate
family of the Grantee and to one or more trusts for the benefit of
such family members, partnerships in which such family members are
the only partners, or corporations in which such family members are
the only stockholders. "Members of the immediate family" means the
Grantee's spouse, children, stepchildren, grandchildren, parents,
grandparents, siblings (including half brothers and sisters), and
individuals who are family members by adoption.
(g) Upon the purchase of Shares under an Option, the stock certificate
or certificates may, at the request of the purchaser, be issued in
his name and the name of another person as joint tenants with right
of survivorship.
14. EXERCISE OF OPTION OR RIGHT AFTER DEATH, DISABILITY, RETIREMENT, OTHER
TERMINATION OF EMPLOYMENT, OR CHANGE IN CONTROL
(a) Death
If a Grantee's employment with the Company and its Subsidiaries
shall cease due to the Grantee's death, or if the Grantee shall die
within three months after cessation of employment while an Option is
exercisable pursuant to subsection (d) or (e) below, any Option held
by the Grantee on the date of his death may be exercised only within
twelve months after the Grantee's death, and only by the Grantee's
Beneficiary, to the extent that the Option could have been exercised
immediately before the Grantee's death.
(b) Disability
If a Grantee's employment with the Company and its Subsidiaries
shall cease due to his Disability, after at least six months of
continuous employment with the Company and/or a Subsidiary
immediately following the date on which an Option was granted, the
Grantee may exercise the Option, to the extent that the Option could
be exercised at the cessation of employment, at any time within two
years after the Grantee shall so cease to be an employee.
(c) Retirement
If a Grantee's employment with the Company and its Subsidiaries
ceases due to his Retirement, after at least six months of
continuous employment with the Company and/or a Subsidiary
immediately following the date on which an Option
30
was granted, the Grantee may exercise the Option, to the extent the
Option could be exercised at the cessation of employment, at any
time within two years after the Grantee's Retirement.
(d) Termination of Employment for Any Other Reason The Option Agreement
shall specify the period, if any, during which an Option may be
exercised subsequent to the termination of a Grantee's employment
with the Company and its Subsidiaries at any time other than within
three months after the date on which the Company obtains actual
knowledge that a Change in Control has occurred and for any reason
other than those specified in subsections (a) through (c) above;
provided, however, that the Option Agreement shall not permit the
exercise of any Option later than three months after such
termination; and provided further that the Option may not be
exercised to an extent greater than the extent to which it could be
exercised at the cessation of employment.
(e) Termination of Employment After a Change in Control If, within three
months after the Company obtains actual knowledge that a Change in
Control has occurred, a Grantee's employment with the Company and
its Subsidiaries ceases for any reason other than those specified in
subsections (a) through (c) above, the Grantee may exercise the
Option at any time within three months after such cessation of
employment.
(f) Notwithstanding any other provision of this Section 14, in no event
shall an Option be exercisable after the expiration date specified
in the Option Agreement.
15. TAX WITHHOLDING
(a) The Company shall have the right to collect an amount sufficient to
satisfy any Federal, State and/or local withholding tax requirements
that might apply with respect to any Award to a Grantee (including,
without limitation, the exercise of an Option or Right, the
disposition of Shares, or the grant or distribution of Restricted
Shares) in the manner specified in subsection (b) or (c) below.
Alternatively, a Grantee may elect to satisfy any such withholding
tax requirements in the manner specified in subsection (d) or (e)
below to the extent permitted therein.
(b) The Company shall have the right to require Grantees to remit to the
Company an amount sufficient to satisfy any such withholding tax
requirements.
(c) The Company and its Subsidiaries also shall, to the extent permitted
by law, have the right to deduct from any payment of any kind
(whether or not related to the Plan) otherwise due to a Grantee any
such taxes required to be withheld.
(d) If the Committee in its sole discretion approves, a Grantee may
irrevocably elect to have any withholding tax obligation satisfied
by (i) having the Company withhold Shares otherwise deliverable to
the Grantee, or (ii) delivering Shares (other than Restricted
Shares) to the Company, provided that the Shares withheld or
delivered have a Fair Market Value (on the date that the amount of
tax to be withheld is determined) equal to the amount required to be
withheld.
(e) A Grantee may elect to have any withholding tax obligation satisfied
in the manner described in Section 13(a)(2)(iv) hereof, to the
extent permitted therein.
16. SHAREHOLDER RIGHTS
No person shall have any rights of a shareholder by virtue of an Option or
Right except with respect to Shares actually issued to him, and the
issuance of Shares shall confer no retroactive right to dividends.
17. ADJUSTMENT FOR CHANGES IN CAPITALIZATION
(a) Subject to the provisions of Section 18 hereof, in the event that
there is any change in the Shares through merger, consolidation,
reorganization, recapitalization or
31
otherwise; or if there shall be any dividend on the Shares, payable
in Shares; or if there shall be a stock split or a combination of
Shares, the aggregate number of shares available for Awards, the
number of Shares subject to outstanding Awards, and the Option price
per Share of each out standing Option may be proportionately
adjusted by the Board of Directors as it deems equitable in its
absolute discretion to prevent dilution or enlargement of the rights
of the Grantees; provided that any fractional Shares resulting from
such adjustments shall be eliminated.
(b) Subject to the provisions of Section 18 hereof, any Shares to which
a Grantee shall become entitled as a result of a stock dividend on
Restricted Shares, or as a result of a stock split, combination of
Shares, merger, consolidation, reorganization, recapitalization or
other event affecting Restricted Shares, shall have the same status,
be subject to the same restrictions, and bear the same legend (if
any) as the Shares with respect to which they were issued, except as
may be otherwise provided by the Board of Directors.
(c) The Board's determination with respect to any such adjustments shall
be conclusive.
18. EFFECTS OF MERGER OR OTHER REORGANIZATION
If the Company shall be the surviving corporation in a merger or other
reorganization, Awards shall extend to stock and securities of the Company
after the merger or other reorganization to the same extent that a person
who held, immediately before the merger or reorganization, the number of
Shares corresponding to the number of Shares covered by the Award would be
entitled to have or obtain stock and securities of the Company under the
terms of the merger or reorganization.
19. TERMINATION, SUSPENSION, OR MODIFICATION OF PLAN
The Board of Directors may at any time terminate, suspend, or modify the
Plan, except that the Board shall not, without approval by the affirmative
votes of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote, at a meeting duly held in
accordance with applicable law, change (other than through adjustment for
changes in capitalization as provided in Section 17 hereof) (a) the
aggregate number of Shares for which Awards may be granted; (b) the class
of persons eligible for Awards; (c) the minimum Option price, applicable
to Options or Rights, that is provided for under the terms of the Plan; or
(d) the maximum duration of the Plan. No termination, suspension or
modification of the Plan shall adversely affect any right acquired by any
Grantee, or by any Beneficiary, under the terms of any Award granted
before the date of such termination, suspension or modification, unless
such Grantee or Beneficiary shall expressly consent; but it shall be
conclusively presumed that any adjustment pursuant to Section 17 hereof
does not adversely affect any such right.
20. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of Shares (including
Restricted Shares) under the Plan shall be used for general corporate
purposes.
21. GENERAL PROVISIONS
The grant of an Award in any year shall not give the Grantee any right to
similar grants in future years or any right to be retained in the employ
of the Company or its Subsidiaries.
22. GOVERNING LAW
The Plan shall be construed and its provisions enforced and administered
in accordance with the laws of the Commonwealth of Pennsylvania except to
the extent that such laws may be superseded by any Federal law.
32