1
Exhibit 10.2
------------
THE GEON COMPANY
INCENTIVE STOCK PLAN
--------------------
(1993 PLAN)
(as amended and restated through August 31, 2000)
1. PURPOSE
-------
The purpose of The Geon Company Incentive Stock Plan (the "Plan") is to
promote the interests of the shareholders by furthering the long-term
performance of the Company and to enable the Company to be competitive in
encouraging key employees who perform services of special importance to the
management, operation and the development of the business of the Company or its
subsidiaries to remain in its service, to attract others to it, and to provide
such employees with an additional incentive to contribute to the prosperity of
the Company and its shareholders.
2. DEFINITIONS
-----------
In addition to the terms defined herein, the following terms shall have
the following meanings:
(a) "Common Stock" or "stock" - (i) for periods prior to the
Effective Time, Common Stock, $.10 par value, of the Company, and (ii)
for periods from and after the Effective Time, common shares, $.01 par
value, of the Company, including in both cases authorized and unissued
shares, treasury shares, and shares transferred from The Geon Share
Ownership Trust or the M.A. Hanna Company Associates Ownership Trust.
(b) "Company" - (i) for periods prior to the Effective Time,
The Geon Company, a Delaware corporation, and (ii) for periods from and
after the Effective Time, PolyOne Corporation, an Ohio corporation.
(c) "Effective Time" - The Effective Time as defined in the
Agreement and Plan of Consolidation, dated as of May 7, 2000, as
amended, by and among M.A. Hanna Company, The Geon Company and
Consolidation Corp.
3. INCENTIVES
----------
Incentives under the Plan may be granted in any one or a combination of
(a) stock options which may consist of (i) Incentive Stock Options (as defined
in Section 6) or other statutory stock options and/or (ii) non-qualified stock
options; (b) Stock Appreciation Rights (as defined in Section 8); (c) Limited
Stock Appreciation Rights (as defined in Section 9); and (d) stock awards which
may consist of (i) Restricted Stock (as defined in Section 10) and/or (ii)
Performance Stock (as defined in Section 10) (collectively, "Incentives"). All
Incentives shall be subject to the terms and conditions set forth herein and to
such other terms and conditions as may be established in the manner prescribed
by the Board of Directors of the Company (the "Board").
-1-
2
4. ADMINISTRATION
--------------
To the extent permitted by law the Board may delegate any or all of its
powers under this Plan to a committee (the "Committee") of not less than two
directors, who are not officers or employees of the Company, and who are not
eligible to participate in the Plan and have not participated in the Plan for at
least one year. The Board or the Committee may delegate to the chief executive
officer of the Company its duties under the Plan, with respect to not more than
10% of the shares authorized under this Plan, pursuant to such conditions or
limitations as the Board or Committee may establish, except that only the Board
or the Committee may select participants and grant options, appreciation rights
and stock awards to participants who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended. The Board, the Committee or the chief
executive officer, as the case may be, shall be referred to as the "Granting
Authority."
5. ELIGIBILITY
-----------
Regular key employees of the Company and its subsidiaries, including
officers, whether or not directors, shall be eligible to participate in the
Plan. Directors who are not regular employees are not eligible. Participation in
the Plan shall be limited to those key employees of the Company selected by the
Granting Authority.
6. STOCK OPTIONS
-------------
The Granting Authority may in its discretion from time to time grant to
eligible employees options to purchase, except as provided below, at a cash
price not less than 100% of the Fair Market Value (as defined in Section 16) on
the date of the grant (the "Option Price"), treasury stock or authorized but
unissued Common Stock of the Company, subject to the conditions set forth in
this Plan. Within 60 days of the Company's initial public offering, the Board or
the Committee may grant options to purchase Common Stock of the Company at less
than 100% of the Fair Market Value to Company employees who hold stock options
from The B.F. Goodrich Company in substitution for such options in compliance
with Section 424 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), on condition that (a) the eligible employees surrender all their
then unexercised stock options issued by The B.G. Goodrich Company; (b) the
eligible employees surrender the excess of the aggregate Fair Market Value of
all stock subject to the option immediately before such substitution over the
aggregate Option Price of such stock; and (c) the new options do not provide the
participant any additional benefits than the surrendered options.
The Granting Authority, at the time of granting to any employee an
Incentive under the Plan, may designate options "Incentive Stock Options"
pursuant to Section 422 of the Internal Revenue Code or any other statutory
stock option that may be permitted under the Internal Revenue Code from time to
time, provided, however that (a) the date on which such options and related
appreciation rights shall expire, if not exercised, may not be later than ten
years after the date of grant of the option, (b) in the case of options
designated as Incentive Stock Options, the aggregate Fair Market Value of stock
optioned to an employee (determined at time of grant) under this Plan or any
other plan of this Company and its subsidiaries with respect to which
-2-
3
incentive stock options are exercisable for the first time by such employee
during any calendar year shall be limited to $100,000 (unless such Section 422
limit is revised, then in conformance with such revision) and (c) in case of any
other statutory stock option permitted under the Internal Revenue Code, then in
accordance with such provisions as in effect from time to time.
Within the foregoing limitations, the Granting Authority shall have the
authority in its discretion to specify all other terms and conditions, including
but not limited to provisions for the exercise of options in installments, the
time limits during which options may be exercised, and in lieu of payment in
cash, the exercise in whole or in part of options by tendering Common Stock of
the Company owned by the employee, valued at the Fair Market Value on the date
of exercise or other acceptable forms of consideration equal in value to the
Option Price. The Board or Committee may, in its discretion, establish rules or
conditions with respect to utilization of Common Stock for all or part of the
Option Price. Furthermore, the Board or Committee may, in its discretion,
establish rules or conditions for the surrendering of a portion of a grant in
satisfaction of any withholding tax obligation.
7. APPRECIATION RIGHTS
-------------------
The Granting Authority may, in its discretion, grant Stock Appreciation
Rights and Limited Stock Appreciation Rights (as described in Sections 8 and 9,
respectively) in connection with any stock option, either at the time of grant
of such stock option or any time thereafter during the term of such stock
option. Except for the terms of this Plan with respect to Limited Stock
Appreciation Rights, each such appreciation right shall be subject to the same
terms and conditions as the related stock option and shall be exercisable at
such times and to such extent as the Granting Authority shall determine, but
only so long as the related option is exercisable. The number of both Stock
Appreciation Rights or Limited Stock Appreciation Rights granted shall not
exceed the number of shares which may be purchased upon exercise of a related
option. The number of both Stock Appreciation Rights and Limited Stock
Appreciation Rights shall be reduced not only by the number of appreciation
rights exercised but also by the number of shares purchased upon the exercise of
a related option. A related stock option shall cease to be exercisable to the
extent surrendered for the exercise of an appreciation right.
8. STOCK APPRECIATION RIGHTS
-------------------------
Upon surrender to the Company of the unexercised related stock option,
or any portion thereof, a "Stock Appreciation Right" shall entitle the optionee
to receive from the Company in exchange therefor (a) a payment in stock as
determined below, or (b) to the extent determined by the Granting Authority, the
cash equivalent of the Fair Market Value of such payment in stock on the
exercise date had the employee been awarded a payment in stock instead of cash,
or any combination of stock and cash. The number of shares which shall be issued
pursuant to the exercise of Stock Appreciation Rights shall be determined by
dividing (1) the total number of Stock Appreciation Rights being exercised
multiplied by the amount by which Fair Market Value of a share of Common Stock
of the Company on the exercise date exceeds the Option Price of the related
option, by (2) the Fair Market Value of a share of Common Stock of the Company
on the exercise date. No fractional shares shall be issued.
-3-
4
9. LIMITED STOCK APPRECIATION RIGHTS
---------------------------------
The grant of a "Limited Stock Appreciation Right" will permit a grantee
to exercise such right for cash during a 60-day period commencing on the date on
which any of the events described as a change in control in Section 14 herein
occurs, each of which events shall hereinafter be known as a "Change in
Control." Notwithstanding the foregoing, however, if the Change in Control
occurs within six months after the date on which a Limited Stock Appreciation
Right was granted, then the 60-day period during which such right may be
exercised for cash shall commence six months after the date on which the Limited
Stock Appreciation Right was granted. The amount of cash received upon the
exercise of any Limited Stock Appreciation Right under either of the preceding
two sentences shall equal the excess, if any, of the Fair Market Value of a
share of the Company's Common Stock on the date of exercise of the Limited Stock
Appreciation Right, over the Option Price of the stock option to which the
Limited Stock Appreciation Right relates.
10. STOCK AWARDS
------------
The Granting Authority, in lieu of or in addition to granting stock
options with or without appreciation rights under this Plan, may make awards
("Stock Awards") in Common Stock or denominated in units of Common Stock. All or
part of any Stock Award may be subject to conditions established by the Granting
Authority, which may include, but are not limited to, continuous service with
the Company ("Restricted Stock") and attainment of specific performance
objectives ("Performance Stock"). Stock Awards may include the awarding of
additional stock ("Additional Stock") upon attainment of performance objectives.
If the Common Stock is awarded subject to attainment of performance objectives
or continued service with the Company, the stock may be registered in the
participant's names when initially awarded, but possession of the certificates
for the stock, or appropriate book entry, shall be retained by the Company for
the benefit of participants, subject to the conditions of the Stock Awards. In
such event, each participant shall have the right to receive all dividends and
other distributions made with respect to Stock Awards registered in his or her
name and shall have the right to vote or execute proxies with respect to such
registered shares. Stock Awards with respect to which the restrictions are not
removed in accordance with the provision of the Stock Awards shall be forfeited
and shall revert to the treasury of the Company.
11. ASSIGNABILITY
-------------
Incentives granted under this Plan shall not be transferable other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Internal Revenue Code and such
Incentives shall be exercisable during the employee's lifetime only by the
employee or by the employee's guardian or legal representative or permitted
transferee or, in the event of death, by the employee's estate or by a person
who acquires the Incentives by bequest or inheritance.
-4-
5
12. CORPORATE REORGANIZATION
------------------------
The number and kind of shares authorized for delivery under this Plan
and, if appropriate, the purchase price per share, shall be adjusted
appropriately in the event of any stock split, stock dividend, combination of
shares, merger, consolidation, reorganization, or other change in the nature of
the shares of the Company (any one or more of the foregoing hereinafter a
"Corporate Reorganization"). The determination of what adjustments, if any, are
appropriate shall be made by the Board or Committee.
13. CORPORATE REORGANIZATIONS
-------------------------
In the event of a dissolution or liquidation of the Company or a sale
of all or substantially all of its assets or other Corporate Reorganization in
which the Company is not the surviving corporation, or any merger in which the
Company is the surviving corporation but the holders of its Common Stock receive
securities of another corporation, any outstanding options hereunder shall
terminate; provided that each optionee shall, in such event, have the right,
immediately prior to such dissolution, liquidation, sale of assets or Corporate
Reorganization in which the Company is not the surviving corporation or any
merger in which the Company is the surviving corporation but the holders of its
Common Stock receive securities of another corporation, to exercise any
unexpired option and/or Stock Appreciation Right in whole or in part without
regard to the exercise date contained in such option. Nothing herein contained
shall prevent the assumption and continuation of any outstanding option or the
substitution of a new option by the surviving corporation.
14. CHANGE IN CONTROL
-----------------
Options and any related appreciation rights that are not exercisable
shall become immediately exercisable upon a Change in Control. Anything to the
contrary notwithstanding, upon a Change in Control of the Company, an interim
removal of restrictions on all or a portion of the Performance Stock award and
the awarding of Additional Stock, if appropriate, shall be made to each
participant within five days following the occurrence of the Change in Control
with respect to all outstanding Performance Stock awarded to such participant
(the "Interim Action"). The Interim Action with respect to each outstanding
Performance Stock award shall be calculated (a) based upon the performance
objectives attained as of the end of the most recent quarter in the plan cycle
related to each such award (the "Determination Date") ending prior to the Change
in Control and as if the Determination Date were the end of the last quarter in
such plan cycle and (b) based upon the number of full and partial months through
the occurrence of the Change in Control that have elapsed in the plan cycle with
respect to each such Performance Stock award. The amount of such Interim Action
with respect to each such outstanding Performance Stock award shall be a
prorated portion (based upon the number of full and partial months through the
occurrence of the Change in Control that have elapsed in the plan cycle related
to such award) of the amount of the Performance Stock award that would have been
payable to the participant at the end of the relevant plan cycle, calculated
assuming attainment of the greater of (a) 100% of the performance objective with
respect to such plan cycle or (b) the actual percentage (annualizing a partial
year, if any) of the performance objective attained as of the Determination Date
and as if the Determination Date were the end of the plan cycle related to such
Performance Stock award. The Interim Action shall not reduce the obligation
of the
-5-
6
Company to make a final removal of restrictions or award of Additional Stock
("Final Action") under the terms of the Plan, but any Interim Action made with
respect to a Performance Stock award shall be offset against the Final Action,
if any, required under the terms of the Plan with respect to such Performance
Stock award at the actual end of the plan cycle related to such Performance
Stock award. Notwithstanding the foregoing, in no event shall a participant be
required to return stock or refund to the Company, or have offset against any
other payment due such participant from or on behalf of the Company, all or any
portion of an Interim Action. Upon a Change in Control all restrictions on
Restricted Stock shall lapse and the participant shall immediately receive all
Restricted Stock free of further restrictions. For purposes of the Plan, a
Change in Control shall mean:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes such Person to own 20% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
be deemed to result in a Change in Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of
subsection (c) below; provided, further, that if any Person's
beneficial ownership of the Outstanding Company Voting Securities
reaches or exceeds 20% as a result of a transaction described in clause
(i) or (ii) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of the Company, such
subsequent acquisition shall be treated as an acquisition that causes
such Person to own 20% or more of the Outstanding Company Voting
Securities; and provided, further, that if at least a majority of the
members of the Incumbent Board (as defined below) determines in good
faith that a Person has acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the Outstanding Company Voting Securities inadvertently, and
such Person divests as promptly as practicable a sufficient number of
shares so that such Person beneficially owns (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) less than 20% of the
Outstanding Company Voting Securities, then no Change in Control shall
have occurred as a result of such Person's acquisition; or
(ii) individuals who, as of November 6, 1996, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to November 6, 1996 whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
-6-
7
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another corporation ("Business Combination")
or, if consummation of such Business Combination is subject, at the
time of such approval by shareholders, to the consent of any government
or governmental agency, the obtaining of such consent (either
explicitly or implicitly by consummation); excluding, however, such a
Business Combination pursuant to which (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of Common Stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Voting
Securities, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of Common Stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding any other provision of this Plan, during the 60-day
period from and after a Change in Control (the "Exercise Period"), unless the
Granting Authority shall determine otherwise at the time of grant, an optionee
shall have the right, whether or not the stock option is fully exercisable and
in lieu of the payment of the exercise price for the Common Stock being
purchased under the stock option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the stock option to the
Company and to receive cash, within 30 days of such notice, in an amount equal
to the amount by which the Change in Control Price (as defined below) per share
of Common Stock on the date of such election shall exceed the exercise price per
share of Common Stock under the stock option multiplied by the number of shares
of Common Stock granted under the stock option as to which the right granted
under this Section 14 shall have been exercised.
-7-
8
For purposes of the Plan "Change in Control Price" shall mean the
higher of (i) the highest reported sales price, regular way, of a share of
Common Stock in any transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the date of a Change in
Control or (ii) if the Change in Control is the result of a tender or exchange
offer or a Business Combination, the highest price per share of Common Stock
paid in such tender or exchange offer or Business Combination; provided,
however, that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change in Control Price shall be
in all cases the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other noncash consideration, the value of such
securities or other noncash consideration shall be determined in the sole
discretion of the Board.
15. SHARES AVAILABLE FOR INCENTIVES
-------------------------------
Subject to adjustment as provided in the following paragraph, there is
hereby reserved for issuance under the Plan, 4,000,000 shares in 1993, and in
each calendar year thereafter one percent of the outstanding shares of the
Company's Common Stock as of the first business day of each calendar year. The
shares available for granting Incentives in any year shall be increased by the
number of shares available under the Plan in previous years but not covered by
Incentives granted under the Plan in those years plus any shares as to which
options or other benefits granted under the Plan have lapsed, expired,
terminated, forfeited or been canceled for any reason without being exercised.
However, upon surrender of a stock option on exercise of the related
appreciation right, the number or shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the Plan and
shall not be available for future options.
16. FAIR MARKET VALUE
-----------------
For all purposes of this Plan the "Fair Market Value" of a share of
stock shall be the mean of the high and low prices of the Company's Common Stock
on the relevant date or, if no sale was made on such date, then on the next
preceding day on which such a sale was made (a) if the Company's stock is listed
on the New York Stock Exchange, as reported on the New York Stock Exchange
Composite Transactions listing (or similar report), or (b) if the Company's
stock is listed on the NASDAQ National Market System, then as reported on such
system, or (c) if not listed on either the New York Stock Exchange or the NASDAQ
National Market System, as determined by the Board or Committee.
17. TERMINATION OF EMPLOYMENT
-------------------------
Upon the termination of employment of any employee for any reason, his
or her options and any related appreciation rights shall terminate at the time
with respect to all shares which were not then purchasable by him or her,
provided, however, that if the termination of employment is by reason of death,
disability or retirement the Board may in its sole discretion provide that such
options and related appreciation rights shall not terminate upon death,
-8-
9
disability or retirement and may become immediately exercisable or continue to
become exercisable in accordance with the terms of the original grant.
18. COMPLIANCE WITH LAW
-------------------
Notwithstanding any other provisions of the Plan, the issuance or
delivery of any shares may be postponed for such period as may be required to
comply with any applicable requirements of any national securities exchange or
any requirements under any other law or regulation applicable to the issuance or
delivery of such shares, and the Company shall not be obligated to issue or
deliver any such shares if the issuance or delivery thereof shall constitute a
violation of any provision of any law or any regulation of any governmental
authority or any national securities exchange.
19. EMPLOYMENT
----------
Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the employment
of the Company or affect any right which the Company may have to terminate the
employment of such participant.
20. GRANTING AUTHORITY'S DETERMINATION
----------------------------------
The Granting Authority's determinations under the Plan including
without limitation, determinations of the participants to receive awards or
grants, the form, amount and timing of such awards or grants, the terms and
provisions of such awards or grants and the agreements evidencing same, and the
establishment of any performance objectives need not be uniform and may be made
by it selectively among participants who receive, or are eligible to receive
Incentives under the Plan whether or not such participants are similarly
situated.
21. INTERPRETATION AND AMENDMENT
----------------------------
The Board or Committee shall have the power to interpret the provisions
of this Plan and of all Incentives granted hereunder and the Board shall have
the power to amend this Plan from time to time, provided, however, that no
amendment shall be made without the approval of shareholders which has the
effect of increasing the number of shares of stock subject to this Plan (other
than in connection with a Corporate Reorganization), changing the class of
employees eligible to participate, reducing the purchase price of shares
pursuant to options to an amount less than 100% of the Fair Market Value on the
date of grant or extending the time during which options may be granted
hereunder, or otherwise materially increasing the benefits accruing to
participants under this Plan. The Granting Authority shall have the authority to
amend the terms of any Incentive granted by it subject to the foregoing
limitations and provided that no such amendment shall deprive any optionee of
any rights thereunder without his written consent unless such amendment or
rescission is required by law. In furtherance and not in limitation of the
authority granted in this paragraph, any interpretation by a majority of the
incumbent directors then serving on the Committee or the Board as to whether a
sale or other disposition of assets by the Company or an acquisition of assets
of another corporation constitutes a "sale or other disposition of all or
substantially all of the assets of the Company or the acquisition of assets of
another corporation" for purposes of clause (iii) of the definition of Change in
Control
-9-
10
in Section 14 above shall be final and binding for all purposes of this Plan and
any Incentive hereunder, notwithstanding that the transaction in question was,
or is contemplated to be, submitted to shareholders of the Company for their
approval and notwithstanding such approval.
-10-