EXHIBIT 10.7
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JLG Industries, Inc.
Directors Stock Option Plan
1. Purpose
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The JLG Industries, Inc. Directors Stock Option Plan (the "Plan") is
designed to enable Outside Directors of JLG Industries, Inc. (the
"Company") 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 Outside Directors, but also of
promoting a closer identity of interests between Outside Directors and
shareholders.
2. Definitions
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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) "Beneficiary" means the person or persons designated in writing by
the Grantee as his beneficiary in respect of an Option; 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 Option. 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.
(b) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(c) "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 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:
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(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).
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(e) "Committee" means a committee consisting of such number (not less
than two) of members of the Compensation Committee of the Board of
Directors with such qualifications as are required to satisfy the
requirements of Rule 16b-3 of the Securities Exchange Act of 1934 as
in effect from time to time (or any successor rule of similar
import).
(f) "Company" means JLG Industries, Inc.
(g) "Disability" means having a total and permanent disability as
defined in Section 22(e)(3) of the Code.
(h) "Employee" means any person who is an employee , as defined in
Section 3401(c) of the Code, of the Company, any Subsidiary, or any
Parent.
(i) "Fair Market Value" means, when used in connection with the Shares
on a certain date, the mean of the high and low prices at which
Shares are traded on the trading day preceding the date of
determination as reported for such day by The Wall Street Journal
(or if Shares are not traded on such day, on the next preceding day
on which Shares are traded) or, if the prices at which Shares are
traded are not reported by the Wall Street Journal, any other
appropriate method that the Company deems fair and equitable.
(j) "Grantee" means a person to whom an Option has been granted under
the Plan.
(k) "Option" means any option to purchase a Share or Shares pursuant to
the provisions of the Plan.
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(l) "Option Agreement" means the written agreement to be entered into by
the Company and the Grantee, as provided in Section 5 hereof.
(m) "Outside Director" means each member of the Board of Directors who
is not an Employee.
(n) "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).
(o) "Plan" means the JLG Industries, Inc. Directors Stock Option Plan,
as set forth herein and as amended from time to time.
(p) "Shares" means shares of the Company's $.20 par value capital stock.
(q) "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).
(r) "Term" means the period during which a particular Option may be
exercised.
3. Adoption Date and Duration of the Plan
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The Plan is effective September 27, 1993, and shall continue in effect
until December 31, 2003, unless it is sooner terminated in accordance with
Section 13 hereof; provided, however, that if the Plan is not approved 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, the Plan and all Options
shall be of no effect. An Option outstanding at the time the Plan is
terminated 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
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(a) The Company may grant Options under the Plan with respect to not
more than 1,968,000 Shares, which shall be provided from Shares in
the Company's treasury, by the issuance of Shares authorized but
unissued, or from outstanding Shares purchased in the open market.
(b) If an Option previously granted is surrendered before exercise, or
lapses or is terminated without being exercised, in whole or in
part, the Shares subject to the Option shall become available for
the granting of Options under the Plan within the aggregate maximum
number of Shares stated in subsection (a), but only to the extent
that such Option has not been exercised.
5. Grant of Options
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(a) In each year during the term of the Plan, a single Option to
purchase 6,000 Shares shall automatically be granted to each
individual who is an Outside Director on the date of grant for that
year; provided, however, that such Options shall not be granted
unless the Company had a net profit before extraordinary events (as
determined by the Company's independent auditors and reflected in
the Company's annual report) for the immediately preceding fiscal
year. The date of grant of such Options in each year shall be the
date on which the results of the election of directors held at the
Company's annual meeting for that year are certified by the judge of
elections.
(b) At any time after shareholder approval of the Plan and prior to the
termination of the Plan, a single Option shall automatically be
granted to each individual who is appointed to the Board for the
first time by action of the Board and not action of the Company's
shareholders. The date of grant of such an Option shall be the date
on which the Outside Director is appointed to the Board for the
first time. The number of Shares subject to such an Option shall be
determined according to the following formula: 16.4384 x (365 -Y),
where Y is the number of days between the immediately preceding
annual meeting and the date of grant.
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(c) All such grants shall be subject to and conditioned upon shareholder
approval of the Plan as provided in Section 3. The Options shall not
be incentive stock options within the meaning of Section 422(b) of
the Code. Options may be granted under the Plan only as provided in
this Section 5.
(d) Appropriate officers of the Company are hereby authorized to execute
and deliver Option Agreements in the name of the Company.
6. Terms of Options
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(a) The Option price per Share of each Option shall be equal to the Fair
Market Value of a Share on the date of the grant of the Option.
(b) Each Option shall have a Term of ten years, unless it is sooner
terminated in accordance with the provisions of the Plan. In no
event shall an Option be exercisable after the expiration of such
Term.
(c) Each Option shall first become exercisable with respect to all of
the Shares on the first anniversary of the date of the grant of the
Option, except that no Option may be exercised prior to the
expiration of six months after the later of (i) the date of the
grant of the Option or (ii) the date of shareholder approval of the
Plan.
(d) A Grantee may at any time or from time to time during the Term of an
Option exercise all or any portion of the Option that is then
exercisable.
(e) Notwithstanding the provisions of subsection (c), upon the
expiration of the mandatory six-month holding period specified in
subsection (c) above, all outstanding Options shall become
exercisable in full, immediately following the date on which the
Company obtains actual knowledge that a Change in Control has
occurred.
7. Exercise of Option
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(a) Options shall be exercised by delivering or mailing to the Company:
(1) a notice, in the form and in the manner prescribed by the
Company, specifying the number of Shares to be purchased, and
(2) 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) a combination
thereof; or (iv) unless the Committee expressly notifies the
Grantee otherwise at any time prior to full exercise, 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 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.
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The Company 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 7(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) Subject to subsection (c) below, upon receipt of the notice of
exercise and 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.
(c) The exercise of each Option 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) (i) to satisfy
withholding tax or other withholding liabilities, (ii) to effect the
listing, registration, qualification on any securities exchange, on
any quotation system, or under any state or federal law, of any
Shares otherwise deliverable in connection with such exercise, or
(iii) to obtain the consent or approval of any regulatory body, then
in any such event such exercise 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. 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
shall not extend the time within which the Option may be exercised,
unless the Company and the Grantee choose to amend the terms of the
Option 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 by reason of any such postponement
or limitation.
(d) Except as provided in Section 7(e) below, Options granted under the
Plan shall be nontransferable other than by will or by the laws of
descent and distribution in accordance with Section 8(a) hereof, and
an Option may be exercised during the lifetime of the Grantee only
by him.
(e) Subject to the approval of the Committee in its sole discretion,
Options 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.
(f) 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.
8. Exercise of Option after Termination of Status as a Director
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(a) Death
If a Grantee's status as a member of the Board shall terminate due
to the Grantee's death, or if the Grantee shall die while an Option
is exercisable pursuant
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to subsection (d) below, any Option held by the Grantee on the date
of his death may be exercised at any time within twelve months after
the Grantee's death, and only by the Grantee's Beneficiary.
(b) Disability
If a Grantee's status as a member of the Board shall terminate due
to his Disability, the Grantee may exercise the Option at any time
within two years after such termination.
(c) Retirement
If a Grantee's status as a member of the Board shall terminate due
to his retirement, the Grantee may exercise the Option at any time
within two years after such termination.
(d) Termination of Status as a Director for any Other Reason
If a Grantee's status as a member of the Board shall terminate for
any reason other than those specified in subsection (a), (b) or (c)
above, the Grantee may exercise the Option at any time within six
months after the termination of such status, to the extent that the
Option was exercisable on the date of such termination.
(e) Notwithstanding any other provision of this Plan, except for the
six-month waiting period described in the final sentence of Section
6(c) and the ten-year Term of the Option described in Section 6(b),
an Option shall become immediately exercisable in full upon
Disability or death of the Grantee, and any Option that would have
become immediately exercisable in full upon the Grantee's Disability
or death but for the application of such six-month waiting period
shall become immediately exercisable in full upon the expiration of
such six-month waiting period.
9. Tax Withholding
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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 Option to a Grantee.
10. Shareholder Rights
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An Option shall not confer upon the Grantee any rights of a shareholder,
unless and until Shares are actually issued to him pursuant to the
exercise of the Option.
11. Adjustment for Changes in Capitalization
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Subject to the provisions of Section 13 hereof, in the event that there if
any change in the Shares through merger, consolidation, reorganization,
recapitalization or 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 number of Shares subject to outstanding
Options, and the Option price per Share of each outstanding Option may be
proportionately adjusted by the Board of Directors as it deems equitable
in its sole and 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.
12. Effects of Merger or Other Reorganization
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If the Company shall be the surviving corporation in a merger or other
reorganization, Options 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.
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13. Termination, Suspension or Modification of Plan
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The Board of Directors may at any time terminate, suspend, or modify the
Plan; provided 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, (a) change the class of persons
eligible for Options; (b) change the Option price of Options as provided
in Section 6 (other than through adjustments for changes in capitalization
as provided in Section 11 hereof); (c) increase the maximum duration of
the Plan; (d) materially increase the benefits accruing to participants
under the Plan; or (e) materially increase the number of securities that
may be issued under the Plan; and provided further that the provisions of
the Plan that affect the eligibility to participate in the Plan, or that
affect the number, Option price or timing of Options shall not be amended
more than once every six months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act, or the rules
thereunder. The last proviso is intended to comply with the exemption for
formula awards under 17 C.F.R. ss. 240.16b-3(c)(2)(ii)(B) and shall be
construed consistent with, applied only to the extent required by such
provision. 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 Option 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 11 hereof does not adversely affect any
such right.
14. Application of Proceeds
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The proceeds received by the Company from the sale of Shares under the
Plan shall be used for general corporate purposes.
15. General Provisions
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The grant of an Option in any year shall not confer upon the Grantee any
right to remain a member of the Board.
16. Governing Law
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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.
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